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Factoring Contract

This Factoring Contract (the “Factoring Contract” or “Agreement”) is made as of the Effective Date set forth below between Produce Pay Inc., a Delaware corporation (hereinafter “ProducePay” or “Company”), and (NAME)(“Seller”), as of the Effective Date. By executing this Agreement Seller agrees that the terms contained herein shall be legally binding on the Seller. Company and Seller hereinafter referred to collectively the “Parties” or individually as a “Party.”

KEY TERMS & INFORMATION

The Seller agrees that the purchase price for any invoice sold to Company shall be set forth in a Bill of Sale. The Seller shall provide its contact information in writing for Notices pursuant to this Factoring Contract when it executes the Factoring Contract electronically. The Payment Terms for invoice purchases shall be within 24 hours after Company receives proper verification of the receivable and/or invoice being acquired. Company shall make final determinations in its sole discretion of whether to acquire any invoice, and will only consider receivables which are payable within 30 days of delivery of the Produce (i.e. no repayment term in excess of Net 30 days), pursuant to standard accounts receivables aging reporting practices.

RECITALS

WHEREAS, Seller operates in the produce industry and is engaged in the business of growing, buying and selling perishable agricultural commodities (“Produce”) in domestic or foreign commerce for sale in the United States market, and the Produce is regulated under the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C. §§ 499a (“PACA”), regardless of whether the Seller holds a USDA-issued PACA license;

WHEREAS, Seller desires and intends to sell certain of its Produce-related Accounts and Receivables in order to mitigate the impact of slow payment practices, eliminate the risk of nonpayment and otherwise improve its cash flow by converting certain of its Produce-related Accounts and Receivables to cash, thereby making said assets more freely available;

WHEREAS, Seller, sells or intends to sell Produce to other Growers or Producers in the United States market;

WHEREAS, Seller desires and intends to sell, assign, convey, and transfer to Company all or the entirety of its beneficial interests in and to certain of its Produce-related Accounts and Receivables for sales generated related to the Factoring Contract, along with any and all of its PACA Trust Rights appurtenant thereto, including without limitation its Rights to receive prompt payment and to enforce its beneficial interests in and to the U.S. Account Debtor’s PACA Trust Assets;

WHEREAS, Company is engaged in the business of purchasing Produce receivables and other contract- based rights to receive payments at a discount for the benefit of its private investors;

The contracts that Produce Pay establishes with its customers and trading partners are carefully designed to facilitate and incentivize trading in Produce in a manner that is more efficient, stable and profitable for participants in the nationwide Produce distribution chain.

WHEREAS, Seller and Company desire that this Factoring Contract shall incorporate all of the terms of the “Guidelines for Produce Pay Invoice Purchases” (the “Guidelines”) found at https://producepay.com/guidelines-invoice-purchases/

THEREFORE, Seller hereby agrees to sell certain of its Accounts and Receivables, and Company agrees to purchase the same, subject to the terms and conditions set forth in this Factoring Contract and as set forth in a Bill of Sale accompanying each invoice purchased by Company, which shall become a schedule to this Factoring Contract. The term of this Factoring Contract shall commence on the signature Date and shall stay in effect until the Company notifies in writing, or in the event that the Seller wishes to modify it, both parties must agree to such modification in writing.

TERMS AND CONDITIONS

  1. Incorporation of Key Terms & Information: The information contained in the “Key Terms & Information” and the “Recitals” sections above are hereby incorporated into this Factoring Contract as though fully set forth in this section one and shall constitute material terms of this Factoring Contract.
  2. Incorporation of Guidelines: The terms and provisions of the Guidelines and all forms therein are hereby incorporated and made a part hereof and are an integral part of this Factoring Contract. In the event of any conflict, inconsistency, or discrepancy between any of the provisions of the Guidelines and any of the provisions of this Factoring Contract, the provisions of this Factoring Contract shall control and be binding upon Company and the Seller. The Seller hereby (a) acknowledges that it has received and reviewed the Guidelines; and (b) agrees to be bound by the terms and conditions set forth in the Guidelines contained in the abovementioned link.
  3. Additional Documents and Instruments: Seller and Company agree to execute and deliver to the other such reasonable and additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of the Guidelines, including but not limited to all forms and notices identified in and/or attached to the Guidelines.
  4. Agency Designation: Seller designates Company as its agent solely for the purposes of serving any notice to a buyer of Produce for the purposes of preserving trust rights under PACA.  Nothing contained herein shall relieve Seller of any obligation set forth in the Guidelines.
  5. Execution and Counterparts: This Factoring Contract, and any exhibits or attachments to the Factoring Contract and/or the Guidelines that may be required to be executed under the terms of the Factoring Contract, may be executed simultaneously in any number of counterparts in any instance where a Company signature is necessary, and/or executed electronically. Each counterpart shall be deemed an original, and all such counterparts shall constitute one and the same instrument.
  6. Modification of Agreement: No modification of this Agreement or of any covenant, condition or limitation contained herein shall be valid or effective unless it is in writing and/or through any electronic method authorized by Company and duly executed by the parties hereto.
  7. Information Furnished by Seller: Seller is required to furnish the Company with information or material about its entity, business or products/services as part of the Company Due Diligence process. Seller represents, warrants and agrees that (a) such information and material is true, accurate, current and complete, and (b) it will maintain and promptly amend all information and material to keep it true, accurate, current and complete.
  8. Transaction Supporting Document: Seller agrees that for each sale of Produce conducted, both the Seller and the Buyer shall jointly execute and submit a supporting document that shall include, but is not limited to, the type of Produce, estimated volume, estimated start terms, nature of the transaction, pricing, commission, and other material terms. All such documents must comply with the Company’s established rules and regulations, as well as the requirements of applicable laws and standards, including but not limited to PACA. Seller shall immediately notify the Company in writing of any changes to the transaction terms that differ from those previously provided in the supporting document. In the event of such changes, Seller shall provide a signed, written amendment to the supporting document, executed by all parties involved. The amendment shall be subject to the Company’s review and approval, and no such amendment shall be valid unless and until the Company has given its final consent in writing.
  9. Produce Inspection: The Company shall have the right at any time and at its own discretion to inspect the shipped Produce that is offered for sale related to this Factoring Contract upon its arrival into the possession of the Buyer, at the location where the Buyer possesses the Produce or at a subsequent destination of the Produce. The Company shall pay for the cost of such inspection, provided that if the inspection determines that less than 95% of the produce in any one truckload is not according to the grade agreed to in the term sheet, the Seller hereby agrees that it shall pay for such inspection. If the permissible percentage for acceptable grade for the commodity at issue is less than 95% under the applicable standards set forth in the Fruits and Vegetables Import Requirements (“FAVIR”) applied by the USDA’s Animal and Plant Health Inspections Services (“APHIS”), then the FAVIR standard shall apply for determining whether Seller must pay for the inspection. The inspection described herein is at the sole discretion of Company and utilized solely for the purposes of the Company’s administration, and is not a replacement for any inspection or regulatory obligation required by any other government agency.
  10. Site Inspections: A Seller shall permit the Company to visit and inspect its ranches, properties and other facilities involved in the growing, harvesting, packaging, receiving or storing of Produce, whether such ranches, properties and other facilities are owned or controlled by the Seller or the Seller’s third party vendors, at any time and at the sole discretion of Company. Seller shall provide written instruction to any third party which owns or controls the facilities and properties referenced herein to provide access to Company for inspection.
  11. Malfeasance Guaranty. Seller’s principal(s) shall each execute an unconditional guaranty in favor of Company that ensures the validity, as opposed to collectability, of the Purchased Accounts or Receivables and imposes personal liability upon Seller’s principal(s) for any malfeasance (i.e., deliberate misrepresentations or fraudulent behavior) in connection with any transaction(s) contemplated or consummated hereunder. Seller agrees to be bound by the provisions set forth in the Malfeasance Guaranty that is attached hereto as Exhibit A and incorporated herein by this reference.
  12. Assignment: This Agreement shall not be assigned or delegated by the Seller in whole or in part without the prior written consent of Company, which may be withheld by Company in its sole discretion.
  13. Waiver; Severability: Failure by the Company to enforce a provision of this Agreement shall not constitute a waiver of that or any other provision of the Agreement. If one or more provisions of this Agreement are held to be unenforceable under applicable statute, regulation or other law, Company and the Seller shall renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each party as close as possible to that under the provision rendered unenforceable. If Company and the Seller cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded, and (c) the balance of the Agreement shall be enforceable in accordance with its terms.
  14. Notification of Change: The Seller shall provide Company with written notice at least thirty (30) calendar days prior to the Seller’s change of name or location.
  15. Governing Law; Consent to Jurisdiction: This Agreement and all documents, agreements, contracts and instruments executed in connection herewith shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to its conflict of laws provisions that would require the application of the laws of another jurisdiction. Seller hereby irrevocably submits to the non-exclusive jurisdiction of any United States federal court or California state court located in Los Angeles County, California, in any action or proceeding in which Company is a named party arising out of or relating to this Agreement or any documents executed in connection herewith and Seller hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such United States Federal Court or California state court. Seller irrevocably consents to the service of any and all process in any such action or proceeding brought in any court in or of the State of California by the delivery of copies of such process to it at its address set forth in this Agreement by certified mail directed to such address or such other address as may be designated by Seller in a notice to the Company.
  16. Attorneys’ Fees: In any action between Seller and Company arising out of or relating to this Agreement, the non-prevailing party will pay the substantially prevailing party’s reasonable attorneys’ fees, costs, and necessary disbursements, whether or not the action is prosecuted to award or judgment.
  17. Controlling Translation: While a translation of this Agreement may be provided for the convenience of Seller, the English version shall govern in the event of any conflicts with any other translation of this Agreement.

EXHIBIT A

CONTINUING AND UNCONDITIONAL MALFEASANCE GUARANTY

THIS CONTINUING AND UNCONDITIONAL MALFEASANCE GUARANTY is made and entered into by and between Produce Pay Inc., a Delaware corporation (hereinafter “Company” or Buyer”), and the seller (“Seller”) agreeing to this Continuing and Unconditional Malfeasance Guaranty hereinafter (“Guaranty”), and the Signer in his personal capacity (“Principal”).

Recitals

A. SELLER, by and through Principal, wishes to make certain of SELLER’s (“Seller”) Produce related Accounts and Receivables available to Company for purchase, and Company has agreed, subject to the terms and conditions of the Factoring Agreement (the “Contract”) with Seller, to purchase certain Eligible Accounts and Receivables from SELLER.
B. In order to induce Company to purchase SELLER’s Eligible Accounts and Receivables, Principal hereby agrees to personally and unconditionally guaranty the validity of each of SELLER’s Eligible Accounts and Receivables.
C. Pursuant to the Contract, SELLER is or will be obligated, among other things, to provide certain notifications to the Account Debtors on Purchased Accounts or Receivables and to continue to provide (i.e., post-sale) collection services to Company on Purchased Accounts or Receivables pursuant to the Contract.
D. The parties agree and understand that the validity of the Purchased Accounts or Receivables and SELLER’s agreement to, in good faith, provide Company with post-sale collection services related to said Purchased Accounts or Receivables are material to the Contract.
E. Nothing in this Guaranty is intended to or shall be construed as Principal’s guarantee that the Purchased Accounts or Receivables are collectable. Rather, the intent of the Contract is that all risk of non-payment or slow payment with respect to the Purchased Accounts or Receivables transfers from SELLER to Company upon the execution of the relevant Bill of Sale and SELLER’s receipt of good funds in the amount identified on said Bill of Sale.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals, SELLER’s receipt of the Purchase Price identified in any and all applicable Bills of Sale, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Principal and Company hereby covenant and agree as follows:

  1. Recitals; Definitions.The recitals set forth above are true and correct and incorporated herein by reference. Certain terms, capitalized but not defined herein shall have the meanings given to them in the Contract.
  2. Unconditional Personal Guaranty.Principal hereby personally and unconditionally guarantees:

(a) All AR registered with the Platform represent bona fide sales of SELLER and bona fide and existing obligations of SELLER’s Account Debtors identified in the relevant Schedule of Accounts or Receivables;

(b) All AR arose out of SELLER’s sale of Produce or its provisioning of services to the Account Debtor identified on the relevant Schedule of Accounts or Receivables in the ordinary course of SELLER’s business;

(c) No AR, as well as any and all related or supporting documents, shall be forged or fictitious in any particular or manner whatsoever;

(d) All documents or other evidence SELLER submits to Company in connection with any transaction or obligation set forth in or contemplated under the parties’ Contract shall be original unaltered copies and true and correct copies of any and all modifications, alterations, or other changes to said original documents;

(e) All AR presented to Company for Purchase qualifies as Eligible Accounts or Receivables under the Contract and neither SELLER nor Principal shall knowingly, present for sale, sell, assign, or transfer to Company any Account or Receivable that does not qualify as an Eligible Account or Receivable;

(f) If requested, SELLER will utilize its relationship with its Account Debtor to asset in Company’s normal collection efforts with respect to all AR;

(g) That neither SELLER nor Principal shall receive, hold, or otherwise fail to immediately turn over to Company the proceeds of or any payments related to any and all AR;

(h) All accountings, reports, or other documents of every nature whatsoever submitted by SELLER or Principal to Company shall be true, complete, and correct in all material respects;

(i) To save and hold Company harmless and fully indemnify Company from and against any and all loss, damage, or injury (direct or indirect) which it may in any manner sustain in whole or in part by reason of any: (1) fraud, deceit, or criminal act committed by either the undersigned or SELLER, including any of its officers, directors, employees, or agents, or (2) intentional and materially false, erroneous, misleading, inaccurate, incorrect, or incomplete statement or Information made or furnished to Company by either the undersigned or SELLER;

(j) To save and hold Company harmless and fully indemnify Company from and against: (1) any and all losses, costs, claims, expenses, penalties and fines, fees, and liabilities of any kind resulting from a breach by SELLER of the Contract; (2) a claim by any Person arising in connection with a failure by SELLER to comply in all respects with the Contract; (3) any action taken by SELLER resulting in damages to Company, and; (4) any and all legal fees and other costs and expenses incurred by Company in connection with or in any way related to the performance of SELLER’s obligations under the Contract.

  1. Obligations Created.The undersigned waive any and all notices or demand regarding the creation, renewal, extension, or accrual of any obligation hereunder or of Company’s reliance upon this Guaranty. Principal’s individual obligations, and each of them, shall conclusively be deemed to have been created, contracted, or incurred in reliance upon this Guaranty.
  2. Cumulative Rights. The undersigned each agree and understand that all rights and remedies of Company hereunder or under the Contract shall be separate and cumulative and may be exercised singly or concurrently with the exercise of any one remedy not acting as an exclusion to or bar upon Company’s exercise of any other remedies available to Company in law or equity and Company’s exercise of or failure to exercise any remedy shall not limit or prejudice any other legal or equitable remedies Company may possess.
  3. Acknowledgment.The undersigned hereby acknowledges and agrees that the Contract or any related documents (e.g., Schedule of Accounts or Receivables, Bill of Sale, etc.) may be altered, extended, modified, released, or cancelled pursuant to the terms of the Contract and the undersigned agree that this Guaranty and Principal’s liability hereunder shall be in no way affected, diminished, or released by any such alteration, extension, modification, release, or cancellation.
  4. Indemnification Rights.Company may enforce its indemnification rights under this Guaranty without being required to initiate and prosecute any collection, enforcement, or other legal proceeding against an Account Debtor or other Person. It is the intent of the parties to this Guaranty that Principal’s personal liability hereunder be primary to and separate from any liability SELLER may have to Company under the Contract. If any action is instituted to enforce the terms hereof, the prevailing party shall be entitled to the full amount of its costs and reasonable attorneys’ fees.
  5. Waiver.The undersigned hereby waives any and all legal requirements that Company shall institute any action or proceedings at law or equity against SELLER, an Account Debtor identified in any Schedule of Accounts or Receivables, or other Person in respect to the Contract as a condition precedent to bringing action against the undersigned upon this Guaranty.

PRINCIPAL AND THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTY AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR COMPANY ENTERING INTO THIS GUARANTY.

  1. Primary Liability.It is understood and agreed that until the obligations of SELLER under the Contract are fully and timely satisfied as aforesaid and each and every of the terms, covenants, and conditions of this Guaranty are fully performed, the undersigned shall not be released by any act or thing that might, but for this provision of this instrument, be deemed a legal or equitable discharge of a surety, or by reason of any waiver, extension, modification, forbearance, or delay or other act or omission of Company or its failure to proceed promptly or otherwise, or by reason of any action taken or omitted or circumstance that may or might vary the risk or affect the rights or remedies of the undersigned or by reason of any further dealings between SELLER and Company, whether relating to the Contract or otherwise, and the undersigned hereby expressly waives and surrenders any defenses to its liability hereunder based upon any of the foregoing acts, omissions, things, or agreements or waivers of SELLER; it being the purpose and intent of the parties hereto that the obligations of the undersigned hereunder are absolute and unconditional under any and all circumstances.
  2. Notices.Notices to Company or Principal should be to the addresses set forth below, which may be changed only by written notification from either party:

Company:          Produce Pay Inc.

c/o Michael Schaeman, CCO

447 S Hewitt St., Suite B,

Los Angeles, CA 90013

The undersigned hereby waives notice of acceptance of this Guaranty by Principal and or presentment, demand, protect, notice of protect and of dishonor, notices of default, and all other notices relative to this Guaranty of every kind and description now or hereafter provided by any agreement between Company and Principal or any statute or rule of law.

  1. Governing Law.This Agreement shall be governed and construed in accordance with the laws of the State of Delaware.
  2. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior promises, covenants, commitments, representations, warranties, statements, negotiations, agreements or understandings, whether oral or written, between the parties or others acting on behalf of either of the parties relating to the subject matter hereof.
  3. Identical Counterparts.This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument, but only one of which need be produced.
  4. Modification and Waiver.No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. Compliance with the provisions of this Agreement may be waived only by an instrument in writing executed by the party granting the waiver.
  5. Severability.Should any court of competent jurisdiction decide, hold, adjudge or decree that any provision, paragraph, clause or term of this Agreement is void or unenforceable in whole or as applied in a particular situation, such determination shall not affect any other provision of this Agreement and all other provisions of this Agreement shall remain in full force and effect in such situation, and all provisions to this Agreement shall remain in full force and effect in any and all other situations.
  6. Binding Effect.This Guaranty shall be binding upon the undersigned and its successors and assigns and shall inure to the benefit of Company and its successors and assigns.