STANDARD TERMS AND CONDITIONS FOR
INSTANT ADVANCE PURCHASE MASTER AGREEMENT
(Effective as of March 25, 2020)
- Sale of Future Receivables to PCF. Upon PCF’s payment of the purchase price specified in the applicable Instant Advance Details (“Advance Amount”), Supplier absolutely and unconditionally assigns and sells to PCF, and PCF purchases from Supplier, without recourse against Supplier except as otherwise provided herein, an undivided ownership interest in Future Receivables equal to the Purchased Amount (the “Ownership Interest”), free and clear of all liens, claims, security interests, set-offs, defenses and encumbrances adverse to the Ownership Interest of PCF. The Advance Amount so paid by PCF (and any Rebate, if any, paid by PCF) for the Ownership Interest is not intended to be, nor shall it be construed as, a loan from PCF to Supplier. Supplier shall mark its books and records and shall account for each Instant Advance Transaction (as defined below herein) as a sale to PCF of an Ownership Interest in the Future Receivables. Because the IAP Master Agreement effectuates a sale to PCF of the Ownership Interest, and not a loan by PCF, Supplier is not committed to any scheduled, fixed payments or any fixed term of payment and also is not paying (and PCF is not charging) any interest, finance charges, points, late fees or any similar fees on the Advance Amount or any other amount, except as permitted by applicable law in connection with any civil judgment which may be later entered in favor of PCF and against Supplier. PCF acknowledges that ultimately its receipt of Collections on account of its Ownership Interest is contingent upon (a) Supplier’s future sales of goods and services to Supplier’s customers after the date hereof (and the date of each Instant Advance Transaction, as set forth in the corresponding Instant Advance Details), (b) account debtors’ payment of the Future Receivables generated by such sales of goods and services and (c) the timing of receipt of Collections of Future Receivables. PCF further acknowledges that, in the event and to the extent that Supplier’s future business does not produce sufficient Future Receivables (or sufficient Collections on Future Receivables) to result in PCF receiving from Collections on account of its Ownership Interest funds equal to its full Purchased Amount, by these facts alone and absent violation or contravention of any term or provision of or failure to perform any obligation under the IAP Master Agreement, Supplier will not have breached the terms of the IAP Master Agreement. PCF expressly assumes and undertakes the risk that, for any reason other than Supplier’s breach of its obligations under the IAP Master Agreement, the share of Collections out of Future Receivables which PCF receives on account of its Ownership Interest may be less than the full Purchased Amount. Absent Supplier’s breach of the IAP Master Agreement, PCF shall have no claim or recourse against Supplier as a result of PCF’s assumption of such risk. Supplier shall have no obligation to repurchase the Ownership Interest conveyed to PCF under each Instant Advance Transaction.
At such time that PCF has received and retained both the full Purchased Amount plus any and all other amounts owed by Supplier to PCF under the IAP Master Agreement, PCF shall (but only with respect to such Purchased Amount) cease to have any further Ownership Interest in Supplier’s Future Receivables. Notwithstanding the foregoing, however, in the event that PCF is required for any reason to disgorge, return or otherwise relinquish ownership of any funds PCF had received on account of its Ownership Interest in the Future Receivables, the then-outstanding balance of the Purchased Amount as to the applicable Instant Advance Transaction shall be increased by the amount of such disgorged, returned or relinquished funds and PCF shall be entitled to recover such same amount from Collections of other Future Receivables as they thereafter arise and are collected.
The Parties intend and agree that the Purchase Price paid by PCF for PCF’s Ownership Interest shall constitute a fair market value of PCF’s Ownership Interest in the Future Receivables.
- Evidence of Sale. The financing statement filing Supplier authorizes pursuant Section 14 of the IAP Master Agreement also shall constitute evidence of and shall perfect Supplier’s sale to PCF of PCF’s Ownership Interest in the Future Receivables. Other details as to Supplier’s sale(s) of Future Receivables to PCF may be set forth within the Supplier’s dashboard in the Payability System.
- Re-characterization of Sale and Purchase as a Loan. Without limitation of any other term or condition of the IAP Master Agreement, in the event that a court of competent jurisdiction determines that any Purchased Amount paid by PCF constitutes and should be characterized and treated as a loan by PCF to Supplier in that amount, contrary to the express intent of the Parties that this is IAP Master Agreement effectuate and constitute a purchase by PCF and sale by Supplier of an Ownership Interest in the Future Receivables, and finds that PCF has charged or received interest thereon, or otherwise charged interest, in excess of the highest applicable rate permitted by applicable law, such interest and charges hereunder shall automatically be reduced to the maximum rate permitted by applicable law, and PCF shall promptly refund to Supplier any interest or other charges received by PCF in excess of the maximum lawful rate, it being the intent of all Parties to the IAP Master Agreement that Supplier not pay or contract to pay, and that PCF not receive or contract to receive, directly or indirectly in any manner whatsoever, interest or other charges in excess of that which may be paid by Supplier under applicable law.
- Timing and Method of PCF’s Payment of Advance Amount. Promptly upon the consummation of the Instant Advance Transaction, PCF will pay the purchase price for the Ownership Interest to the Supplier’s designated bank account or to the Supplier’s Payability Account, in which event the Supplier may deposit such funds either to a pre-funded MasterCard or directly to Supplier’s bank account through the Payability System.
- Delivery of Collections. All funds arising from collections of all Future Receivables – i.e., the funds attributable to Supplier’s retained ownership interest in such Future Receivables and the funds attributable to PCF’s undivided Ownership Interest in Future Receivables acquired hereunder – (the “Collections”) shall be delivered as follows:
For Instant Advance Transactions subject to ACH Collections, as specified by the applicable Instant Advance Details, Collections shall be delivered to the Designated ACH Debit Bank Account, as set forth in the ACH Agreement, for subsequent payment to PCF as set forth in the IAP Master Agreement. Supplier agrees that it shall direct each applicable Marketplaces to send all such Collections solely to the Designated ACH Debit Bank Account.
For all other Instant Advance Transactions, Collections shall be delivered directly into an account maintained by PCF at MB Financial Bank or any other account at any other bank maintained and designated by PCF to receive such funds (the “Collection Account”), for subsequent division as between PCF and Supplier as set forth in the IAP Master Agreement. Supplier hereby expressly authorizes and directs each Marketplace and Amazon to send all such Collections directly to the Collection Account maintained by PCF. In the event and to the extent Supplier receives any Collections, Supplier shall deliver such funds to PCF promptly (in no more than two Business Days) and, pending such transfer, shall hold such funds in trust for the benefit of PCF, to the extent of PCF’s interest therein. PCF shall have no obligation to segregate, in the Collection Account or otherwise, the Collections from any other funds. Nevertheless, PCF shall maintain records as to all Collections deposited into and disbursed out of the Collection Account. Any funds arising from the collection of Future Receivables sent to the Collection Account which are attributable to Supplier’s retained ownership interest in such Future Receivables shall be received by PCF, as agent, on behalf of Supplier, as principal, for collection and disbursement to Supplier. Supplier hereby agrees that receipt by PCF of funds arising from the collection of Future Receivables shall satisfy the obligation of the account debtor to make payment with respect to such Future Receivables.
In the event that funds PCF receives out of Collections during any calendar week with respect to an Instant Advance Transaction represent less than one-fifth of PFC’s Purchased Amount, thereafter PCF shall be entitled, in its discretion and on more than one occasion, to increase the PCF Share for such Instant Advance Transaction to a percentage up to forty (40) percentage points. (By way of example, if Collections retained by PCF through four weeks on a Purchased Amount of $80,000 is less than $16,000, and if the PCF Share specified in the applicable Instant Advance Details (the “Reserve for Repayment”) is 25%, then after week 4 PCF would be allowed to increase the PCF Share to any amount greater than 25% but no more than 40%, in one or more increases.)
- PCF’s Disbursements of Collections out of the Collection Account. With respect to any Collections deposited into the Collection Account, (i) on account of PCF’s undivided Ownership Interest, unless and until PCF has received and retained the entirety of the full Purchased Amount, and any other amounts, if any, due hereunder, PCF shall be entitled to disburse to itself and retain the PCF Share, and (ii) on account of the Supplier’s undivided ownership interest, PCF shall disburse the Supplier Share to the Supplier’s designated bank account or to the Supplier’s Payability Account. If at any time the Rebate to which Supplier would be entitled, if PCF received payment of the full Purchased Amount at such time, would exceed the difference of the Purchased Amount less the amount of Collections retained by PCF which is attributable to PCF’s undivided Ownership Interest (the “Outstanding Amount”), PCF shall be entitled, in its discretion, to disburse to itself and retain the Outstanding Amount from Collections, and the PCF Share shall be increased accordingly.
Notwithstanding the foregoing provisions regarding disbursement of the Supplier Share to the Supplier, if and to the extent applicable as a result of Supplier also having entered into any Instant Access Transaction as to such undivided ownership interest of Supplier, all or any portion of the Supplier Share nevertheless may be retained by PCF to the extent such funds are due and owing to PCF as a result of such Instant Access Transaction.
- Rebate. If an Instant Advance Transaction is eligible for a Rebate, as set forth in the applicable Instant Advance Details, in the event and to the extent that PCF receives payment of its full Purchased Amount out of Collections within the Expected Duration specified in those Instant Advance Details (the “Supplemental Period”), then PCF shall become obligated to pay Supplier a supplement to the Advance Amount (the “Rebate”) calculated as follows:
Number of full weeks less than the Supplemental Period
Supplemental Percentage specified in the Instant Advance Details
Additional Percentage of the Purchased Amount due as Rebate
For example, if the applicable Instant Advance Details specify that the Supplemental Period is 20 full weeks and the Supplemental Percentage is 1%, if PCF receives payment of its full Purchase Amount out of Collections within 17 weeks, then PCF shall pay Supplier with respect to such Instant Advance Transaction a Rebate equal to three percent (3%) of the Purchased Amount.
- Timing and Method of PCF’s Payment of Rebate. Within three Business Days after PCF’s receipt of payment of its full Purchased Amount, if any Rebate is owed, PCF will pay the Rebate to the Supplier’s designated bank account or make such amount available to Supplier on Supplier’s Payability Account, in which case Supplier may then direct PCF to deposit the amount either to a Payability Seller Card or directly to Supplier’s bank account through the Payability System.
- Certain Agreements and Covenants regarding Financial Condition and History. Supplier and each Principal authorize PCF and its agents to investigate their respective financial condition and history and authorize any processor to provide PCF with any information on Supplier upon PCF’s request. Supplier will provide to PCF, within five (5) days of a request by PCF, any documents relating to Supplier’s financial condition and history. A photocopy of this authorization will be deemed as acceptable for release of financial information. Supplier shall give PCF written notice within 24 hours of any bankruptcy filing involving Supplier. Supplier shall give PCF written notice within seven days of the closing of any sale of all or substantially all of Supplier’s assets or ownership interests. Supplier shall promptly give PCF written notice of any other material adverse changes in Supplier’s financial condition.
- NO LIABILITY FOR PUNITIVE DAMAGES. In no event will PCF be liable for any claims asserted by Supplier or any Principal under any legal theory for lost profits, lost revenues, lost business opportunities, exemplary, punitive, special, incidental, indirect or consequential damages, each of which is waived by Supplier and each Principal, to the fullest extent permitted by law. As additional consideration to induce PCF to enter into the IAP Master Agreement and purchase Future Receivables from time to time hereunder, Supplier and each Principal (i) expressly waive, release and relinquish any and all such claims, (ii) covenant and agree not to assert any such claims against PCF and (iii) indemnify PCF as to any losses, costs, damages or expenses on account of any such claims.
- Power of Attorney. Subject to the applicable restrictions and condition set forth in this Section 11, Supplier hereby irrevocably appoints PCF as Supplier’s agent and attorney-in-fact with full authority to take any action or execute any instrument or document to collect all Future Receivables, including, without limitation to (i) receive, endorse and collect any checks, notes, drafts, instruments, documents or chattel paper made payable to Supplier; (ii) sign Supplier’s name on any invoice, bill of lading, or assignment directing customers or account debtors to make payment directly to PCF; (iii) contact any Approved Marketplace direct such Approved Marketplace to make payment directly to PCF of all or any portion of the amounts received or held by such Approved Marketplace for or on behalf of Supplier and to provide any information regarding Supplier requested by PCF; and (iv) otherwise take any action to collect, in the name of Supplier or in the name of PCF, all Future Receivables owed to Supplier by its customers, both then existing and thereafter arising, as PCF deems proper to achieve such collections, including by instituting suit or by compromise or settlement. Notwithstanding the foregoing, PCF covenants and agrees not to exercise its rights to act as agent or attorney-in-fact for Supplier (a) unless and until Supplier is in Default under the IAP Master Agreement or (b) at any time that PCF has no Ownership Interest in Future Receivables and Supplier has no outstanding obligations to PCF under the IAP Master Agreement. Each Approved Marketplace may rely on this section as constituting Supplier’s written authorization to provide any information requested by PCF and to make payments to PCF as aforesaid. Each Approved Marketplace is hereby irrevocably authorized and directed by Supplier to follow any instruction of PCF regarding payment or transfer of funds as instructed by PCF, without inquiry as to PCF’s right or authority to give such instructions. Supplier shall not interfere with PCF’s instructions to any Approved Marketplace or any Approved Marketplace’s compliance with the IAP Master Agreement or request any modification to PCF’s instructions without PCF’s prior written consent.
- Special Covenants regarding collection and related matters. Without PCF’s express prior written consent, at any time that PCF holds an Ownership Interest in Future Receivables or that Supplier has any outstanding obligation PCF under the IAP Master Agreement, Supplier will: (i) not materially change the nature and manner of the business Supplier conducts from the type of business originally disclosed to PCF by Supplier in connection with Parties’ initial entry into the IAP Master Agreement; (ii) not amend, modify, rescind or revoke or terminate its relationship with any Approved Marketplace, without PCF’s prior written consent; (iii) not change Supplier’s Payability Account; (iv) not block PCF from receiving Collections into the Collection Account or making any withdrawals or disbursements from the Collection Account; (v) not instruct any Approved Marketplace or Amazon to pay to a person other than PCF or any person approved by PCF in writing; (vi) not sell Supplier’s business (whether by an issuance, sale or transfer of ownership interests in Supplier that results in a change in ownership or voting control of Supplier, or by a sale, change of control or transfer of substantially all of the assets of Supplier,) without the express prior written approval of PCF, which shall be granted provided the buyer thereof, before such event occurs, agrees, by documentation acceptable to PCF, to fully assume all of Supplier’s obligations hereunder, and on condition that the buyer also provides fresh guarantees from new guarantors, acceptable to PCF, in writing, of buyer’s obligations to PCF under the IAP Master Agreement as so assumed by the buyer; (vii) not sell, convey, pledge, grant a security interest in or otherwise encumber Supplier’s Future Receivables, other than to PCF; (viii) not to change its place of business, legal name, trade name, entity type, or state of formation, domicile or residence from those set forth herein, without the prior written approval of PCF, and in all events following at least twenty (20) days prior written notice to PCF of any such request; (ix) otherwise change its arrangements or procedures for payment with any Approved Marketplace, without the prior written consent of PCF; (x) block PCF from debiting the Collection Account; (xi) deposit the Future Receivables, or cause the Future Receivables to be paid, to any account other than the Collection Account; (xii) deposit or comingle any Collections with any other funds or assets of Supplier or (xiii) otherwise willfully, purposefully or fraudulently interfere with PCF’s ability to collect its Ownership Interest in the Future Receivables. Moreover, and without limitation of the foregoing, all Future Receivables shall arise from Supplier’s bona-fide delivery of goods and services to Approved Marketplaces, each of whom shall not be affiliated with Supplier, on an arms-length basis for fair consideration, and none shall be based in whole or in part or arise from fraud or other intentional misconduct by Supplier or its principals. Supplier’s breach of any of these special covenants in this Section 12 shall entitle PCF to recover liquidated damages under Section 25 below.
- Further covenants regarding taxes, insurance and operation of Supplier’s business. Supplier promptly shall pay all necessary taxes, including but not limited to income, employment and sales and use taxes, associated with Supplier’s business. Supplier agrees to maintain business-interruption or other types of insurance in amounts and against risks as are normal and customary for businesses of its size, nature and character, or as otherwise satisfactory to PCF, and upon request shall provide PCF proof of such insurance. Supplier shall permit PCF to conduct a site inspection of Supplier’s business, including Supplier’s books and records, at any reasonable time. Without limitation thereof, Supplier shall grant PCF full access to Supplier’s books and records with respect to the Future Receivables and shall allow PCF to copy the same, at Supplier’s cost and expense.
- Security interests in favor of PCF/ Security Agreement. As collateral security for Supplier’s present and future obligations of any kind to PCF (whether under the IAP Master Agreement or any other agreement or document), Supplier hereby grants and pledges to PCF a first-priority security interest in all of Supplier’s right, title and interest in (a) all now existing and hereafter arising accounts, including but not limited to any and all Future Receivables and (b) all of Supplier’s chattel paper, documents, equipment, general intangibles, instruments, investment property, goods and inventory (as these terms are defined in Article 9 of the Uniform Commercial Code of any applicable state (the “UCC”), both now owned and hereafter acquired, and the proceeds of all of the foregoing, together with all furniture, fixtures, and all rights in returned goods; land and real property interests, including leasehold interests, credits arising hereunder in favor of Supplier; guarantees, supporting obligations and letter of credit rights with respect to the foregoing; insurance policies, and books and records, both now owned and hereafter acquired, and the proceeds of all of the foregoing (collectively, the “Collateral”). Supplier authorizes PCF to file UCC-1 financing statements, including financing statements describing the Collateral as “all assets” or “all personal property” or words of like meaning, to evidence, maintain and perfect its interests in the Collateral. Supplier acknowledges and agrees that this IAP Master Agreement also constitutes and serves as a security agreement for all purposes of the UCC.
- No competing security interests. Until such time as PCF no longer holds any Ownership Interest in any Future Receivables (and has received and retained out of the collections from such Future Receivables the full Purchased Amount owed on all Instant Advance Transactions, plus all other fees, costs and other amounts owed by Supplier to PCF pursuant to the IAP Master Agreement), Supplier shall not (a) sell, assign or convey its accounts receivable, or any partial interests therein, to anyone other than PCF, (b) shall not pledge or voluntarily encumber in any way any Future Receivable or any Collateral pledged to PCF, in whole or in part, to any other person (other than PCF), and (c) permit to exist, directly or indirectly, any lien, encumbrance or security interest on any of the Collateral other than those granted herein to PCF. Notwithstanding the foregoing, neither this Section 16 nor any other term or provision of the IAP Master Agreement shall preclude Supplier from entering into any Instant Access Transaction with PCF and conveying to PCF an ownership interest and/or security interest in all of Supplier’s right, title and interest (whether a whole interest or an undivided interest) in any Future Receivables or existing receivables (which conveyance shall not encumber, hinder, impair or in any way compromise PCF’s Ownership Interest obtained through the IAP Master Agreement).
- Further assurances. Supplier shall reasonably cooperate with PCF, including but not limited to executing and filing such further documents and agreements as PCF reasonably may request in order for PCF (a) to evidence, perfect, maintain and retain (i) its Ownership Interest in the Future Receivables and (ii) its first-priority perfected security interest in the Collateral and (b) otherwise to realize and give full effect to all of its rights under the IAP Master Agreement.
- Confidentiality. Supplier and each Principal understands and agrees that the terms and conditions of all transactions between PCF and Supplier, including the IAP Master Agreement and any other agreements with PCF and any corresponding documents (collectively, “Confidential Information”) are proprietary and confidential information of PCF. Accordingly, unless disclosure is required by law or court order, neither Supplier nor any Principal may disclose such Confidential Information to any person other than an attorney, accountant, financial advisor or employee of Supplier who needs to know such information for the purpose of advising Supplier (“Advisor”), provided such Advisor uses such information solely for the purpose of advising Supplier and first agrees in writing to be bound by the terms of this Section 17.
- Publicity. Supplier and each Principal authorizes PCF to use its, his or her name in a listing of clients and in advertising and marketing materials.
- D/B/As. Supplier and each Principal hereby acknowledges and agrees that PCF may be using “doing business as” or “d/b/a” names in connection with various matters relating to the transaction between PCF and Supplier, including the filing of financing statements and other notices or filings required under the Uniform Commercial Code.
- Right to Contact and Telephone Monitoring. Supplier and each Principal agree (i) to be contacted from time to time by PCF and its agents, regarding the IAP Master Agreement and the performance thereof, by telephone, email, SMS, text message or through the Payability System (ii) such contacts are not considered unsolicited or inconvenient and (iii) any such contact may be made to any wireless, mobile, cellular or other number that Supplier or any Principal gives PCF, using any e-mail address Supplier or any Principal gives PCF, or using an automated dialing and announcing or similar device, unless prohibited by law. This authorization is binding upon Supplier and each Principal upon signing the IAP Master Agreement and shall not be deemed withdrawn or revoked should the IAP Master Agreement be terminated. PCF may choose to monitor and/or record telephone calls with Supplier, each Principal and Supplier’s owners, employees, agents and representatives. By signing the IAP Master Agreement, Supplier and each Principal agrees that any call between PCF and Supplier, any Principal or an owner, employee, agent or representative of Supplier or of the Principal may be monitored and/or recorded for training, compliance, quality control and other legal purposes.
- Representations and Warranties. As of the date of the IAP Master Agreement, and also as of the date of each Instant Advance Transaction, Supplier and each Principal represents and warrants that Supplier and each Principal: (i) is not contemplating and has not filed any petition for bankruptcy protection and there has been no involuntary petition brought or pending against it; (ii) is equitably solvent, in the sense of being able to pay its obligations, as they become due; (iii) is balance sheet solvent; and (iv) is not contemplating going out of business during the next year. As of the date of the IAP Master Agreement, and also as of the date of each Instant Advance Transaction, Supplier further represents and warrants the following: (i) any of Supplier’s bank and financial statements furnished to PCF fairly represent the financial condition and ownership of Supplier at their respective dates, and there has been no material change in financial condition or ownership or in the operation of Supplier since that time; (ii) Supplier is in compliance with all laws and regulations to which it is subject, both state and federal, and has valid permits, authorizations and licenses to own, operate and lease its properties and to conduct the business in which it is presently engaged; (iii) Supplier and each Principal have full power and authority to incur and perform the obligations under the IAP Master Agreement, all of which have been duly authorized; (iv) except for the security interests in favor of PCF provided for under the IAP Master Agreement, Supplier has good, complete and marketable title to all its existing and Future Receivables sold to PCF, to the extent of its Ownership Interest therein, and Supplier also has good, complete and marketable title to all Collateral pledged to PCF in this transaction, in each case free and clear of any and all liabilities, liens, claims, set-offs, recoupments, changes, restrictions, conditions, options, rights, mortgages, security interests, equities, pledges and encumbrances of any kind or nature whatsoever or any other rights or interests that may be inconsistent with the transactions contemplated by the IAP Master Agreement or adverse to the interests of PCF; (v) Supplier is a valid business in good standing under the laws of the jurisdictions in which it is organized and/or now operates; (vi) Supplier is entering into the IAP Master Agreement for business purposes, and not as a consumer, and Supplier will use the Purchase Price paid by PCF solely for business purposes (which shall not include the payment of any payroll), and not for personal, family or household purposes; and (vii) Supplier’s execution of and/or performance under the IAP Master Agreement will not cause or create an event of default by Supplier under any contract between Supplier and any other person or entity.
- Certain further covenants. Unless and until any Termination hereunder, Supplier (i) shall operate in full compliance with all applicable laws and regulations, (ii) shall not refuse PCF full access to Supplier’s books and records with respect to its business affairs, including regarding the Future Receivables or any of the Collateral, or deny PCF the right to copy the same at Supplier’s cost and expense, and (iii) shall not suffer a material adverse change in its financial condition, operations, or business prospects, compared to that existing on the date hereof. Unless and until any Termination hereunder, Supplier and each Principal shall timely deliver to PCF financial statements and records of their respective present financial condition, forthwith upon demand, and shall allow PCF to inspect the underlying records and support therefore.
- Estoppel Certificate. Within no more two (2) days after PCF’s request, Supplier shall execute, acknowledge and promptly deliver to PCF and/or to any other person, person firm or corporation specified by PCF, a statement certifying that the IAP Master Agreement is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications) and stating the dates which the collections as to the Purchased Amount of PCF’s Ownership Interest or any portion thereof was collected by PCF.
- Default / Power of Attorney. It shall be an event of default hereunder (a “Default”) if Supplier or any Principal shall: (i) violate any of its duties, covenants and obligations herein, or breach any of its representations or warranties in the IAP Master Agreement, or, as to any Principal, under its Guaranty; (ii) suffer any judgment against it in excess of $25,000.00 which is not bonded and stayed within fifteen (15) days; or (iii) terminate the IAP Master Agreement unilaterally, while PCF holds any Ownership Interest and before PCF has received and collected all amounts due it under the IAP Master Agreement. Without limitation of PCF’s rights to liquidated damages in certain events under Section 25 hereof, in the event of Default, PCF may proceed to protect and enforce its rights or remedies under the IAP Master Agreement by suit in equity or by action at law, or both, in such order and manner as PCF deems fit, in its sole discretion and Supplier may also proceed against the Principal(s) as Guarantor of Supplier’s obligations and duties to PCF. All rights, powers and remedies of PCF upon Default are cumulative and not exclusive. To the extent not prohibited by applicable law, Supplier and each Principal are jointly and severally liable to pay to PCF all damages and costs arising from any Default or from the enforcement by PCF of its rights under the IAP Master Agreement, including, but not limited to, court costs and reasonable attorneys’ fees. It is further agreed that these obligations of Supplier and Principal to pay attorney fees and collection costs under this Section 24 survive entry of judgment in favor PCF against Supplier and/or the Principals.
- Liquidated Damages. Without limitation of its Default rights in the preceding Section 24 and any other remedy available to PCF, at law or in equity, Supplier and each Principal agrees to pay PCF liquidated damages equal to the uncollected Purchased Amount of Future Receivables in the event that Supplier breaches any of its covenants under Section 12 or Section 15 hereof.
- Notices. Any notice or other communication made or given with respect to or pursuant to the IAP Master Agreement or any other documents or instruments executed and delivered in connection therewith shall be in writing and may be personally served or sent by nationally recognized overnight courier service and shall be deemed to have been given when delivered. Notices for PCF shall be addressed to:
Payability Commercial Factors, LLC
(a Texas limited liability company)
10955 Lowell, Suite 800
Overland Park, KS 66210
Attn. Mr. Keith Smith
Notices to Supplier shall be delivered to the name and address of Supplier as recorded in the Payability System.
- Waiver and Remedies. No failure on the part of PCF to exercise, and no delay in exercising, any right under the IAP Master Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right under the IAP Master Agreement preclude any other or further exercise thereof or the exercise of any other right. The remedies provided hereunder are cumulative and not exclusive of any remedies provided by law or equity.
- Binding Effect, Governing Law, Venue, Jurisdiction and Personal Jurisdiction. The IAP Master Agreement shall be binding upon and inure to the benefit of Supplier, each Principal and PCF and their respective successors and assigns. Supplier and each Principal shall not assign their rights hereunder or any interest herein without the prior written consent of PCF, which consent may be withheld in PCF’s sole discretion. PCF may assign the IAP Master Agreement without any prior written notice to or consent of Supplier or any Principal. The IAP Master Agreement and any dispute or claim arising out of or based upon the IAP Master Agreement (including the interpretation, performance, breach or enforcement hereof) shall be governed by and construed in accordance with the laws of the State of Texas.
Supplier and each Principal acknowledges that it understands that PCF (i) may be entering into similar Instant Advance Transactions with other suppliers in other locations through the United States, (ii) understandably desires and needs consistency and uniformity in the legal recognition, treatment and characterization of all such Instant Advance Transactions with all such suppliers and (iii) is entering into the IAP Master Agreement with Supplier in reliance upon an express expectation that (A) all Instant Advance Transactions hereunder shall be treated as sales of an Ownership Interest to PCF, and not as a loan or loans by PCF to Supplier, and (B) Texas law will govern as provided in the IAP Master Agreement. Supplier and each Principal acknowledges and agrees that (i) it also is entering into the IAP Master Agreement with Supplier in reliance upon an express expectation that (A) all Instant Advance Transactions hereunder shall be treated as sales of an Ownership Interest to PCF, and not as a loan or loans by PCF to Supplier, and (B) Texas law will govern as provided in the IAP Master Agreement and (ii) each has agreed specifically to the choice of Texas law as such governing law as a material inducement to PCF entering into the IAP Master Agreement.
In the event that, despite the provisions of Section 35 hereof, any dispute or claim arising out of or based upon the IAP Master Agreement (including the interpretation, performance, breach or enforcement hereof) is not presented or asserted in an arbitration proceeding and instead is presented or asserted to a court , then any such suit, action or proceeding presenting or asserting any such dispute or claim shall be instituted by PCF, Supplier or any Principal only and exclusively in a federal or state court sitting in or with jurisdiction over Harris County, Texas (the “Acceptable Forums”). Supplier and each Principal acknowledge and agree that the Acceptable Forums are convenient, submit to the jurisdiction of the Acceptable Forums, waive any and all objections to jurisdiction, venue or personal jurisdiction and expressly consent to jurisdiction and personal jurisdiction in the Acceptable Forums.
- Survival of Representation. All representations, warranties, duties and covenants of Supplier and its Principals herein shall survive the execution and delivery of the IAP Master Agreement and shall continue in full force until PCF has recovered and retained the Purchased Amount and all other obligations of Supplier to PCF under the IAP Master Agreement shall have been satisfied in full.
- Severability. In case any provision in the IAP Master Agreement is found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any other provision contained herein shall not in any way be affected or impaired.
- Entire Agreement. The IAP Master Agreement (which includes the IAP Master Agreement, these Terms, and the Instant Advance Details for each and every Instant Advance Transaction) embodies the entire agreement between Supplier, each Principal and PCF and supersedes all prior agreements and understandings relating to the subject matter hereof. No modification or amendment of any provision of the IAP Master Agreement shall be effective unless the same shall be in writing and signed by Supplier and PCF.
- Execution by PCF in Texas; Payment by Supplier to PCF in Texas. The execution of the IAP Master Agreement and the consummation of each Instant Advance Transaction by PCF shall occur or shall be deemed to have occurred in Harris County, Texas. Each disbursement from the Collection Account to PCF hereunder shall be deemed to be made in, and received by PCF in, Harris County, Texas.
- JURY TRIAL WAIVER. SUPPLIER, PCF AND EACH PRINCIPAL SIGNING THE IAP MASTER AGREEMENT (EACH INDIVIDUALLY REFERRED TO IN THE IAP MASTER AGREEMENT AS A “PARTY” AND COLLECTIVELY REFERRED TO HEREIN AS “PARTIES”) HERETO WAIVE TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS OF WHICH THE IAP MASTER AGREEMENT IS A PART OR THE ENFORCEMENT HEREOF. THE PARTIES HERETO ACKNOWLEDGE THAT EACH MAKES THIS WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH THEIR ATTORNEYS.
- CLASS ACTION WAIVER. THE PARTIES WAIVE THE RIGHT TO PARTICIPATE IN A CLASS ACTION. NEITHER SUPPLIER NOR ANY PRINCIPAL WILL HAVE THE RIGHT TO: (I) PARTICIPATE IN A CLASS ACTION, PRIVATE ATTORNEY GENERAL ACTION OR OTHER REPRESENTATIVE ACTION IN COURT, EITHER AS A CLASS REPRESENTATIVE OR CLASS MEMBER IN REGARD TO ANY CLAIM, DISPUTE OR CONTROVERSY (WHETHER IN CONTRACT, TORT OR OTHERWISE, WHETHER PRE-EXISTING, PRESENT OR FUTURE, AND INCLUDING STATUTORY, COMMERCIAL LAW, TORT AND EQUITABLE CLAIMS) RELATING TO OR ARISING OUT OF THE IAP MASTER AGREEMENT; OR (II) JOIN OR CONSOLIDATE CLAIMS RELATING TO OR ARISING OUT OF THE IAP MASTER AGREEMENT WITH CLAIMS OF ANY OTHER PERSON.
- Arbitration. Except as otherwise stated below, and not withstanding any other term or provision of the IAP Master Agreement addressing the possibility of litigation in a court, any “Claim” of any Party hereto (as defined below) must be presented and asserted through binding arbitration pursuant to (i) this Arbitration Provision and (ii) the code of procedure of the national arbitration organization to which the Claim is referred (as in effect when the Claim is filed). Claims will be referred to the American Arbitration Association (the “AAA”), pursuant to the AAA Commercial Arbitration Rules. If for any reason AAA cannot, will not or ceases to serve as an arbitration administrator, any Party may substitute another widely recognized arbitration organization that uses a similar code of procedure and is mutually acceptable to the other Parties. If the Parties cannot agree on an arbitration organization, then any Party may ask a court of competent jurisdiction to appoint a qualified arbitration organization.
SIGNIFICANCE OF ARBITRATION; LIMITATIONS AND RESTRICTIONS. IN SUCH BINDING ARBITRATION, NO PARTY WILL HAVE THE RIGHT TO (i) HAVE A COURT OR JURY DECIDE THE CLAIM BEING ARBITRATED, (ii) ENGAGE IN PRE-ARBITRATION DISCOVERY (THAT IS, THE RIGHT TO OBTAIN INFORMATION FROM ANY OTHER PARTY) TO THE SAME EXTENT THAT THE PARTY COULD IN COURT, (iii) PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS IN A CLASS ACTION, IN COURT OR IN ARBITRATION, RELATING TO ANY CLAIM SUBJECT TO ARBITRATION OR (iv) JOIN OR CONSOLIDATE CLAIMS OTHER THAN ANY PARTY’S OWN. OTHER RIGHTS AVAILABLE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION. Except as set forth below, the arbitrator’s decision will be final and binding. Only a court may decide the validity of items (iii) and (iv) above. If a court holds that items (iii) or (iv) are limited, invalid or unenforceable, then this entire Arbitration Provision will be null and void. A Party can appeal any such holding. If a court holds that any other part(s) of this Arbitration Provision (other than items (iii) and (iv)) are invalid, then the remaining parts of this Arbitration Provision will remain in force. An arbitrator will decide all other issues pertaining to arbitrability, validity, interpretation and enforceability of this Arbitration Provision. The decision of an arbitrator is as enforceable as any court order and may be subject to very limited review by a court. An arbitrator may decide any Claim upon the submission of documents alone. A Party may request a telephonic hearing if permitted by applicable rules. The exchange of non-privileged information relevant to any Claim, between the Parties, is permitted and encouraged. Any Party may submit relevant information, documents or exhibits to the arbitrator for consideration in deciding any Claim.
Broad Meaning of “Claims.” The term “Claims” in this Arbitration Provision is to be given the broadest possible meaning and includes (by way of example and without limitation) claims arising from or relating to (i) Supplier’s offer for sale and PCF’s acceptance for purchase of Future Receivables, (ii) any transaction effectuated pursuant to the IAP Master Agreement, (iii) terms of the IAP Master Agreement, (iv) collection of Future Receivables purchased pursuant to the IAP Master Agreement, (v) advertisements, promotions or oral or written statements relating to the IAP Master Agreement or any transactions between Supplier and PCF pursuant to the IAP Master Agreement, including any Claims regarding information obtained by PCF from, or reported by PCF to, credit reporting agencies or others, (vi) claims between any Party and PCF or PCF’s parent, wholly or majority owned subsidiaries, affiliates, predecessors, successors, assigns, agents, independent contractors, employees, officers, directors or representatives arising from any transaction between Supplier and PCF pursuant to the IAP Master Agreement, and (vii) claims regarding the validity, enforceability or scope of this Arbitration Provision or the IAP Master Agreement, including but not limited to enforcement and effectuation of the IAP Master Agreement as a sale of accounts (and not as a loan).
Arbitration Procedure and Costs. For a copy of the relevant code of procedure, to file a Claim or for other information about AAA, write them, visit their web site or call them at: AAA, 1633 Broadway, 10th Floor, New York, NY 10019, http://www.adr.org, or 1-800-778-7879. If any Party fails to submit to arbitration following a proper demand to do so, that Party will bear the costs and expenses, including reasonable attorneys’ fees, incurred by the Party compelling arbitration. Any physical arbitration hearing that any Party attends will be held in the federal judicial district selected by PCF. The Party initiating the arbitration will pay the filing fee. Supplier or any Principal may seek a waiver of the initial filing fee or any other fees incurred in arbitration. Each Party will pay for its respective attorneys’, experts’ and witness fees, regardless of which Party prevails in the arbitration. A Party may recover any or all expenses from another Party if the arbitrator, applying applicable law, so determines. Allocation of fees and costs relating to appeals in arbitration will be handled in the same manner. For an explanation and schedule of the fees that apply to an arbitration proceeding, please contact AAA at the address above. The appropriate fee schedule in effect from time to time is hereby incorporated by reference into this Arbitration Provision. The cost of arbitration may be higher or lower than the cost of bringing a Claim in court, depending upon the nature of the Claim and how the arbitration proceeds. Having more than one Claim and holding face-to-face hearings can increase the cost of arbitration. Again, no Party will be permitted to arbitrate claims on a class-wide (that is, on other than an individual) basis. An arbitration proceeding can decide only a Party’s Claims. Neither Supplier nor any Principal may join other persons (or consolidate Claims).
Continued Effect of Arbitration Provision. This Arbitration Provision will continue to govern any Claims that may arise without regard to any termination or cancellation of the IAP Master Agreement. If any portion of this Arbitration Provision (other than the provisions prohibiting class-wide arbitration, joinder or consolidation) is deemed invalid or unenforceable under the FAA, it will not invalidate the remaining portions of this Arbitration Provision. If a conflict or inconsistency arises between the code of procedures of the selected arbitration administrator and this Arbitration Provision, this Arbitration Provision will control.
- Other Defined Terms. Any capitalized term not defined herein shall have the meaning set forth for it in the IAP Master Agreement. In addition, as used herein or in the IAP Master Agreement, the following terms shall have the definitions set forth below:
“Approved Marketplace” shall mean a Marketplace which has been approved by PCF.
“Collections” shall have the meaning assigned to such term in Section 5 of these Terms.
“Instant Access Transaction” shall mean each transaction pursuant to any Instant Access Transaction Document.
“Instant Access Transaction Documents” shall mean the Supplier Early Payment Agreement, the Standard Terms and Conditions of Supplier Early Payment Agreement and any related documents.
“Instant Advance Transaction” shall mean each purchase of Future Receivables pursuant to the terms offered by PCF and accepted by Supplier, as set forth in the corresponding IAP Master Agreement and these Terms.
“Marketplace” means an account debtor of the Supplier, together with its successors and assigns.
“Payability Account” means the representation of funds available to the Supplier, within the Payability System, to be spent or deposited to any of the Supplier’s deposit accounts that are approved and on file within the Payability System. This includes but is not limited to bank account and routing information for both ACH and wire deposits, a Payability provided pre-funded MasterCard, or other future deposit or spending methods made available by Payable to Supplier via the Payability System.
“Payability API”, means the application programming interface which allows (a) certain data regarding Supplier (such as, without limitation, Electronic Earnings Data and Update Adjustments thereto, contact, and payment information) to be transmitted to, or electronically requested from, Payability Operations by certain Marketplaces, and (b) Payability Operations to Electronically Transmit such information to PCF.
“Payability System” means the combination of equipment, software, documentation, website and services, such as the Payability API, which, among other things, Payability Operations, LLC, offers to Supplier and to PCF, to enable PCF to purchase the Future Receivables and settle related payment obligations on the terms of the IAP Master Agreement.
“PCF Share” shall mean that percentage, specified as the Reserve for Repayment in the Instant Advance Details (or, in the event no such percentage is specified in such Instant Advance Details, twenty-five percent (25%)), share of Collections to be retained by PCF until PCF retains out of Collections its full Purchased Amount – either based upon the Reserve for Repayment specified in the applicable Instant Advance Details, or any increased percentage pursuant to Section 6 of these Terms and set forth in the Instant Advance Details accordingly.
“Purchase Price” shall mean the Advance Amount or, whenever applicable, the Advance Amount as supplemented by the Rebate.
“Purchased Receivable” shall have the meaning assigned to such term in the Instant Access Transaction Documents.
“Supplier Share” shall mean the remainder of Collections after subtraction of the PCF Share.
“Termination” shall have the meaning assigned to such term in Section 38 of the IAP Master Agreement.
- Automatic Alteration of Parties’ Rights to Accommodate any Instant Access Transactions. The Parties recognize and contemplate that Supplier and PCF also may enter into one or more Instant Access Transactions by which Supplier would sell to PCF all of Supplier’s remaining right, title and interest in one or more specific Purchased Receivables at a time that PAF also holds an ongoing interest in Supplier’s Future Receivables under the IAP Master Agreement. In the event and to the extent of any such Instant Access Transactions, with respect to Supplier’s right, title and interest in any specific Purchased Receivable that Supplier conveys to PCF in an Instant Access Transaction at any time that PCF also continues to have an interest in Future Receivables under the IAP Master Agreement, the relative rights and interests of Supplier and PCF established and granted in the Instant Access Transaction Documents are and shall be deemed modified as follows, automatically and without execution or delivery of any further documentation or agreement, effective as of the effectiveness of the applicable Instant Access Transaction: (a) the undivided ownership of PCF in each such Purchased Receivable created under the IAP Master Agreement shall continue in existence and shall be excluded from whatever right, title or interest of Supplier in such Purchased Receivable is conveyed by Supplier to PCF under any Instant Access Transaction Documents (including but not limited to any security interest Supplier grants to PCF under the Instant Access Transaction Documents); (b) PCF’s security interest in each such Purchased Receivable (and proceeds thereof) granted under the IAP Master Agreement shall remain in full force and effect notwithstanding any applicable Instant Access Transaction, but PCF hereby expressly consents to release and termination of such security interest as to any such proceeds or collections effective automatically upon any disbursement or release of such proceeds or collections to PCF pursuant to or as contemplated by the Instant Access Transaction Documents; (c) whatever right, title and interest of Supplier in each such Purchased Receivable is conveyed by Supplier to PCF in each Instant Access Transaction (including any security interest granted to PCF under the Instant Access Transaction Documents) is and shall be subject to PCF’s pre-existing interests therein granted by the IAP Master Agreement, which pre-existing interests automatically shall cease upon any disbursement or release to PCF of the proceeds or collections attributable whatever right, title or interest in any Purchased Receivable PCF acquired under the applicable Instant Access Transaction Documents; and (d) any and all covenants, representations or warranties made by Supplier in any Instant Access Transaction Documents with respect to its right, title and interest in the Purchased Receivable (including, but not limited to, Supplier conveying to PCF thereunder an ownership or a security interest in any Purchased Receivable free and clear of any competing claims or interests) are deemed modified to permit as an exception all right, title and interest PCF holds under the terms and provisions of the IAP Master Agreement. The Parties expressly intend and agree that (i) no provision of the IAP Master Agreement shall preclude Supplier from conveying to PCF in any Instant Access Transaction whatever right, title or interest Supplier holds in any specific Purchased Receivable (including but not limited to whatever undivided interest is not acquired by PCF under the IAP Master Agreement) and (ii) subject to the modifications expressly noted above in this Section 37, PCF shall continue to retain and hold all rights, interests, claims and benefits of and under the IAP Master Agreement notwithstanding PCF and Supplier also subsequently entering into any Instant Access Transaction with respect to any Purchased Receivable arising while the IAP Master Agreement is in effect.
- Termination and Reinstatement of the IAP Master Agreement. The IAP Master Agreement shall continue in full force unless and until PCF’s Ownership Interest conveyed under the IAP Master Agreement has ceased and Supplier has satisfied in full all of its obligations to PCF under the IAP Master Agreement, including PCF receiving from the Collections or the Supplier the full Purchased Amount set forth in each applicable Instant Advance Details, as well payment of any other amounts due to PCF hereunder, at which point the IAP Master Agreement shall be deemed to have been terminated (“Termination”). Notwithstanding the foregoing, after any such Termination the IAP Master Agreement nevertheless may be reinstated for future transactions hereunder by the Parties’ subsequent execution of any additional schedule to initiate and effectuate another Instant Advance Transaction hereunder (each a “Reinstatement”).