TERMS & CONDITIONS

R09272022

The following are the Factoring Agreement Terms and Conditions (Terms and Conditions) that are incorporated by reference in the Factoring Master Agreement between Seller and, as applicable and as according to the Factoring Master Agreement itself, either eCapital Groups [(ECAPITAL FREIGHT FACTORING, INC.; ECAPITAL FREIGHT FACTORING ITC INC.; ECAPITAL FREIGHT FACTORING, LTD.), (collectively referred to as “eCapital Group,” from time to time) and (“Purchaser,” as applicable)] and Seller. Each of the aforementioned companies are separate and distinct entities, although through servicing agreements, common ownership or otherwise, utilize these Terms and Conditions interchangeably. They are referred to herein collectively for convenient reference only. Nothing contained herein shall alter the Factoring Master Agreement with respect to which specific Purchaser is a party thereto, and nothing contained herein shall create liability among the remaining entities for the debts and obligations of the particular entity that is the exact Purchaser under the applicable Factoring Master Agreement. Capitalized terms not herein defined shall have the meaning set forth in the Factoring Master Agreement and vice versa. All other capitalized terms not otherwise defined shall have the meaning set forth in the PPSA.

Definitions and Index to Definitions.  The following terms used herein shall have the following meaning :

  • “Account” – An account receivable by the Seller from the Account Debtor or any monetary obligation, whether or not it has been earned by performance, which an Account Debtor has towards the Seller.
  • “Account Debtor” – A debtor of the Seller obligated to make payments pursuant to an Account.
  • “Applicable Law” shall mean, with respect to any person, property, transaction, event or other matter, any law, rule, statute, regulation, order, judgment, decree, treaty, directive or other requirement having the force of law relating or applicable to such person, property, transaction, event or other matter, and shall also include any interpretation thereof by any person having jurisdiction over it or charged with its administration or interpretation.
  • “Avoidance Claim” – Any claim that any payment received by Purchaser is avoidable under bankruptcy or insolvency law or any other debtor relief statute.
  • “Business Day” – A day on which chartered banks are open for business during normal banking hours in Toronto, Ontario.
  • “Clearance Days”  – One Business Days for checks drawn on banks and for electronic funds transfers and for all other payments.
  • “Closed” – A Purchased Account is closed upon receipt of full payment by Purchaser from a Payor or from the Seller (including its being charged to the Reserve Account).
  • “Collateral”- All Seller’s now owned and hereafter acquired real and personal property and assets wheresoever located, including, without limitation Accounts, inventory, equipment, instruments, investment property, documents, entitlements, money, leases and intangibles; provided always that the term “Collateral” when used herein shall not include any consumer goods of the Seller. Any reference to “Collateral” herein shall be deemed to be a reference to the Collateral or any part thereof.
  • “Complete Termination” – Complete Termination occurs upon satisfaction of the following conditions:
    • Payment in full of all Obligations of Seller to Purchaser; and
    • Seller has executed and delivered to Purchaser a general release in the form of Schedule C attached hereto.
  • “Default Discount” – The product of:
    • The Default Discount Rate, and
    • The amount of any past due Obligations.
  • “Default Discount Rate” – The Discount 0.07%/day calculated daily, and compounded monthly.
  • “Discount” – As set forth in Schedule A.
  • “Early Termination Date” – The Termination Date set forth in a Termination Notice, other than at the end of the Term.
  • “Early Termination Fee” – As set forth in the Schedule A.
  • “Eligible Account” – An Account that is acceptable for purchase as determined by Purchaser in the exercise of its reasonable sole credit or business judgment.
  • “Encumbrance” – Any encumbrance of any kind whatsoever, choate or inchoate, whether arising by contract, law or otherwise, including without limitation a security interest, assignment, mortgage, hypothec, pledge, prior claim, hypothecation, charge, trust or deemed trust, conditional sale agreement, lease or other title-retention agreement.
  • “Events of Default” – See Section 17.1.
  • “Exposed Payments” – Payments received by Purchaser from or for the Account of a Payor that has become subject to a bankruptcy, insolvency or similar proceeding and for which the trustee, custodian, or similar officer (a “Trustee”) makes a claim that such funds or payments constitutes a preference, reviewable transaction or otherwise, thereby permitting or requiring the payment(s) to be paid to the Trustee or as a court of competent jurisdiction otherwise orders.
  • “Extended Term” – As set forth in Section 20.1.
  • “Face Amount” – The face amount due on an Account at the Purchase Date.
  • “Initial Fee” – As set forth in Schedule A.
  • “Invoice” – The document that evidences or is intended to evidence an Account. Where the context so requires, reference to an Invoice shall be deemed to refer to the Account to which it relates.
  • “Recourse Payment Date” – As set forth in Schedule A.
  • “Leases” subject to section 8.4, all leases now owned or hereafter acquired by the Seller as tenant (whether oral or written) or any agreement therefor, together with all of the Seller’s erections, improvements and fixtures situate thereupon.
  • “Maximum Amount Limit” – As set forth in Schedule A.
  • “Misdirected Payment Fee” – 15% of the amount of any payment (but in no event less than $1,000) on account of a Purchased Account (and, after the occurrence of an Event of Default, payments on account of any Account) which has been received by Seller or a third party and not paid by Seller to Purchaser on the next Business Day following the date of receipt by Seller or the date of Seller’s knowledge of receipt by such third party, or 30% of the amount of any such payment which has been received by Seller or any third party as a result of any action taken by or inaction from Seller to cause such payment to be made to Seller or any third party.
  • “Missing Notation Fee” – 15% of the Face Amount.
  • “Obligations” – All present and future obligations owing by Seller to Purchaser whether arising hereunder or otherwise, and whether arising before, during or after the commencement of any bankruptcy or insolvency case or similar proceeding in which Seller is a debtor.
  • “Parties” – Seller and Purchaser.
  • “Payor” – An Account Debtor or other obligor on an Account, or entity making payment thereon for the account of such party.
  • “Permitted Encumbrances” shall mean, at any time, the following:
    • Encumbrances resulting from the application of Section 2724 of the Civil Code of Quebec;
    • Encumbrances against the Seller in favour of Purchaser; and
    • Such other Encumbrances against the Seller (if any) as may be permitted in writing by Purchaser and as set forth in Schedule D hereto.
  • “Purchase Date” – The date on which Seller has been advised in writing that Purchaser has agreed to purchase an Account.
  • “Purchase Price” – The Face Amount of a Purchased Account less the Initial Fee.
  • “Purchased Accounts” – Accounts purchased hereunder which have not been Closed.
  • “Required Reserve Amount” – The Reserve Percentage multiplied by the unpaid balance of Purchased Accounts
  • “Reserve Account” – A bookkeeping account on the books of the Purchaser representing the portion of the Purchase Price which has not been paid by Purchaser to Seller, maintained by Purchaser to ensure Seller’s performance with the provisions hereof.
  • “Reserve Percentage” – As set forth in Schedule A.
  • “Reserve Shortfall” – The amount by which the Reserve Account is less than the Required Reserve Amount.
  • “Resolve” – See Section 13.
  • “Schedule of Accounts” – A form supplied by Purchaser from time to time wherein Seller lists such of its Accounts as it requests that Purchaser purchase under the terms of this Agreement.
  • “Security Interest” – See Section 8.
  • “Sequestrator” – As set forth in Section 2305 and following of the Civil Code of Quebec.
  • “Term” – A one year period, computed from the on which this Agreement is signed by the Parties.
  • “Termination Date” – The earlier of (i) the Early Termination Date, or (ii) the end of the Term or Extended Term which was not followed by an extension or renewal under Section 20.1 hereof.
  • “Termination Notice” – See Section 20.1.
  • “Trustee” – See Section 1.18.
  1. Sale; Purchase Price; Billing
    • Assignment and Absolute Sale.
      • Seller shall offer to sell to Purchaser as absolute owner, with full recourse, such of Seller’s Accounts as are listed from time to time on a Schedule of Accounts at a Discount determined in accordance with Section 6.
      • Each Schedule of Accounts shall be accompanied by such documentation supporting and evidencing the Account, as Purchaser shall from time to time request.
      • Seller must offer for sale to Purchaser all Accounts owing to Seller by an Account Debtor.
      • Purchaser may, but need not, purchase from Seller such Accounts as Purchaser determines to be Eligible Accounts.
      • Purchaser does not intend to purchase any Account which will cause the unpaid balance of Purchased Accounts to exceed the Maximum Amount Limit.
      • Purchaser shall pay the Purchase Price of any Purchased Account less any amounts due to Purchaser from Seller hereunder, within one (1) Business Day of the Purchase Date, whereupon the Accounts shall be effectively purchased hereunder.
      • Seller will arrange for the Account Debtors to be notified of the purchase of the Purchased Accounts and will obtain an acknowledgement by the Account Debtor of such purchase as set forth in Schedule B, the whole in accordance with Section 35 of the present Agreement and Section 1641 of the Civil Code of Québec.
      • In the event where the Account Debtor cannot be found in the province of Quebec, Seller will arrange for a notice to be published in accordance with the rules of the Code of Civil Procedure (chapter C-25.01) for notification by public notice, the whole in accordance with Section 1641 of the Civil Code of Québec.
      • Where the Purchaser purchases a universality of Seller’s Accounts, the Seller will arrange for the said purchase to be registered in the register of personal and movable real rights of Québec, the whole in accordance with Section 1642 of the Civil Code of Québec.
      • Where the Account Debtor sets up against Purchaser a payment made to Seller between the Purchase Date and the date at which the notification at Section 2.1.7 is done, the Seller shall be liable to pay to Purchaser the amount received pursuant to this payment, the whole in accordance with Section 1643 of the Civil Code of Québec.
    • Billing.
      • Purchaser may send a monthly statement to all Payors itemizing their account activity during the preceding billing period. All Payors will be instructed to make payments to Purchaser.
  1. Reserve Account.
    • Seller shall pay to Purchaser on demand the amount of any Reserve Shortfall.
    • So long as no Event of Default has occurred, Purchaser shall pay to Seller any amount by which the Reserve Account exceeds the Required Reserve Amount.
    • Purchaser may charge the Reserve Account with any Obligation not paid when due.
    • Purchaser may pay any amounts due to Seller hereunder by a credit to the Reserve Account.
    • Purchaser may retain the Reserve Account until 120 days after the Complete Termination at which time Purchaser will return any balance remaining in the Reserve Account to the Seller.
  2. Exposed Payments.
    • In the event that a claim is made by a Trustee in respect of any Exposed Payments prior to Termination Date then, Seller shall pay to Purchaser (or Purchaser may retain from any other funds then held by Purchaser which would otherwise be payable by the Purchaser to the Seller), to hold in a non-segregated non-interest bearing account the amount of all Exposed Payments (the “Preference Reserve”).
    • Purchaser may charge the Preference Reserve with the amount of any Exposed Payments that Purchaser pays to the Trustee of the Payor that made the Exposed Payment, on account of a claim asserted under any bankruptcy, insolvency or any similar law.
    • In the event that a claim is made by a Trustee with respect to an Exposed Payment, Purchaser shall provide notice to Seller and to the Payor that made the Exposed Payment of such claim by the Trustee.  In the event that neither Seller nor the Payor that made the Exposed Payment has obtained either agreement of the Trustee to hold its claim in abeyance or an order of a court of competent jurisdiction enjoining Purchaser from making a payment to the Trustee (such order being obtained on notice to Purchaser and for which Purchaser agrees to take no position on the motion or application and for which Seller and the Payor would not seek costs as against Purchaser), Purchaser shall pay the amount to the Trustee of the claim – whether from the Preference Reserve or, if insufficient funds are available in the Preference Reserve, from such other sources of funding as may be available to Purchaser and the Seller shall be thereby prevented from asserting any claim or defence as against the Purchaser that the Purchaser should not have made payment to the Trustee.
    • Purchaser shall refund to Seller from time to time that balance of the Preference Reserve for which a claim under any bankruptcy, insolvency or any similar law can no longer be asserted due to the expiry of prescription, settlement with the Trustee of the Payor or otherwise as Purchaser may determine in its sole and unfettered discretion.
    • In the event that no claims are made by any Trustee prior to a Complete Termination in respect of any Exposed Payment(s) but that such a claim is made following a Complete Termination, Purchaser shall give notice of such claim(s) to Seller and to the Payor(s) that made the Exposed Payment(s) and shall make the payment(s) to the Trustee(s) in accordance with Section 4.3 and Seller agrees to indemnify and hold harmless Purchaser for any and all amounts that Purchaser may pay, or may be required to pay to the Trustee within ten (10) days of the Purchaser making any such payment.  This Section shall survive the Termination Date and a Complete Termination.
  3. Authorization for Purchases.
    • Subject to the terms and conditions of this Agreement, Purchaser is authorized to purchase Accounts upon telephonic, facsimile, electronic communication or other instructions received from anyone purporting to be an officer, employee or representative of Seller.
  4. Fees and Expenses.
    • Seller shall pay to Purchaser:
      • Discount. The Discount will be charged on the Face Amount of the Account as defined Schedule A.
      • Default Discount. The Default Discount, on the first day of the month following its accrual.
      • Misdirected Payment Fee. Any Misdirected Payment Fee is payable by Seller immediately upon its accrual.  It is recognized that the costs imposed upon Purchaser by the Seller’s action or inaction resulting in the imposition of this fee are difficult to ascertain, and this fee represents the good faith effort to compensate Purchaser without imposing upon the Parties the expensive burden of litigating that cost, and is the agreed liquidated damages with result therefrom.
      • Missing Notation Fee. The Missing Notation Fee shall be paid by Seller to Purchaser for any Invoice that is sent by Seller to a Payor that does not contain the notice as required by Section 12.3 hereof.  It is recognized that the costs imposed upon Purchaser by the Seller’s action or inaction resulting in the imposition of this fee are difficult to ascertain, and this fee represents the good faith effort to compensate Purchaser without imposing upon the Parties the expensive burden of litigating that cost, and is the agreed liquidated damages with result therefrom.
      • Early Termination Fee. In the event that Seller elects to terminate this Agreement other than pursuant to Section 20.1, Seller will remit to Purchaser a sum equal to the Early Termination Fee.
      • Standard Banking Charges. The following Standard Banking Charges apply:
        • Wire – $30.00
        • Electronic fund transfer – $00.00

Standard Banking Charges are subject to revisions with 30 days’ notice

  1. Repurchase Of Accounts.
    • Purchaser may require that Seller repurchase, by payment of the then unpaid Face Amount thereof, together with any unpaid fees relating to the Purchased Account on demand, or, at Purchaser’s option, by Purchaser’s charge to the Reserve Account:
      • Any Purchased Account, the payment of which has been disputed by the Payor or the Account Debtor obligated thereon, Purchaser being under no obligation to determine the validity of such dispute;
      • Any Purchased Account regarding which Seller has breached any warranty as set forth in the Section 14.
      • Any Purchased Account owing from an Account Debtor or Payor which (i) in Purchaser’s reasonable credit judgment has become insolvent or (ii) which has indicated an inability or unwillingness to pay the Purchased Account when due;
      • All Purchased Accounts upon the occurrence of an Event of Default, or upon the Termination Date of this Agreement; and
      • Any Purchased Account that remains unpaid beyond the Late Payment Date defined in Schedule A.
  1. Security Interest.
    • As continuing collateral security for the due and timely payment and performance by the Seller of the Obligations, Seller hereby charges, pledges, assigns, transfers, sets over to the Purchaser, and grants to Purchaser a general and continuing first ranking hypothec in the Collateral (the “Security Interest”).
    • The Security Interest shall extend to all proceeds (other than consumer goods) of the Collateral.
    • The Seller hereby acknowledges that value has been given by the Purchaser for the granting of the Security Interest, that the Seller has rights in the Collateral (other than future and hereafter acquired Collateral), and that the Parties have agreed not to postpone the time for attachment of the Security Interest.
    • The last day of the term of any Lease, sublease or agreement therefor, oral or written, now held or hereafter acquired by the Seller is specifically excepted from the Security Interest and shall not form part of the Collateral, but the Seller agrees to stand possessed of such last day in trust for such person as the Purchaser may direct and the Seller shall assign and dispose thereof in accordance with such direction.
    • To the extent that the Security Interest would constitute a breach or cause the acceleration of any agreement, lease, contractual right, licence, approval, privilege, franchise or permit to which the Seller is a party, the Security Interest shall not attach thereto but the Seller shall hold its interest therein in trust for the Purchaser, and shall grant a security interest in such agreement, contractual right, licence or permit to the Purchaser forthwith upon obtaining the appropriate consents to the creation of such security interest.
  2. Clearance Days.
    • For all purposes under this Agreement, Clearance Days will be added to the date on which Purchaser receives any payment.
  3. Authorization to Purchaser.
    • Seller irrevocably authorizes Purchaser, at Seller’s expense, to exercise at any time any of the following powers until all of the Obligations have been paid in full:
      • Receive, take, endorse, assign, deliver, accept and deposit, in the name of Purchaser or Seller, proceeds of any Collateral;
      • Take or bring, in the name of Purchaser or Seller, all steps, actions, suits or proceedings deemed by Purchaser necessary or desirable to effect collection of or other realization upon Purchaser’s Accounts and otherwise collect such accounts in whatever reasonable and lawful manner Purchaser sees fit, including the right to make compromises and settlements with the Payor and generally to perform any acts necessary or expedient for the purpose of collecting the Purchaser’s Account;
      • To attend and vote in Seller’s name or Purchaser’s name at all meetings of creditors, to file proofs of claim and generally to perform any acts necessary or expedient for the purpose of collecting Purchased Accounts;
      • Pay any sums necessary to discharge any Encumbrance which is senior to Purchaser’s Security Interest, which sums shall be included as Obligations hereunder, and in connection with which sums the Default Discount shall accrue and shall be immediately due and payable;
      • Notify any Payor obligated with respect to any Account, that the underlying Account has been assigned to Purchaser by Seller and that payment thereof is to be made to the order of and directly and solely to Purchaser; and
      • Communicate directly with Seller’s Payors to verify the amount and validity of any Account created by Seller.
      • After an Event of Default:
        • Change the address for delivery of mail to Purchaser and to receive and open mail from Account Debtors addressed to Seller;
        • Extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all Accounts and discharge or release any Payor (including filing of any public record releasing any Encumbrance granted to Seller by such Payor), without affecting any of the Obligations;
      • File any initial financing statements and financing change statements.
    • Seller irrevocably appoints Purchaser or any person designated by Purchaser as its lawful attorney (which appointment is coupled with an interest) to accept, endorse and deposit on behalf of Seller any checks tendered by an Account Debtor “in full payment” of its obligation to Seller. Seller shall not assert against Purchaser any claim arising therefrom.
  4. Electronic Funds Transfer Authorization.
    • In order to satisfy any of the Obligations, Seller authorizes Purchaser to initiate electronic debit or credit entries to any deposit account maintained by Seller.
  5. Covenants By Seller.
    • After written notice by Purchaser to Seller, and automatically, without notice, after an Event of Default, Seller shall not (a) grant any extension of time for payment of any of its Accounts, (b) compromise or settle any of its Accounts for less than the full amount thereof, (c) release in whole or in part any Payor, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of the Accounts.
    • From time to time as requested by Purchaser, at the sole expense of Seller, Purchaser shall have access, during reasonable business hours if prior to an Event of Default and at any time if on or after an Event of Default, to all premises where Collateral is located for the purposes of inspecting (and removing, if after the occurrence of an Event of Default) any of the Collateral, including Seller’s books and records, and Seller shall permit Purchaser to make copies of such books and records or extracts therefrom as Purchaser may request. Without expense to Purchaser, Purchaser may use any of Seller’s personnel, equipment, including computer equipment, programs, printed output and computer readable media, supplies and premises for the collection of Accounts and realization on other Collateral as Purchaser, in its sole discretion, deems appropriate.  Seller hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Purchaser at Seller’s expense all financial information, books and records, work papers, management reports and other information in their possession relating to Seller.
    • Before sending any Invoice to an Account Debtor, Seller shall mark same with such notice of assignment as Purchaser may require.
    • Seller shall pay when due all rents, rates, levies, assessments, payroll, taxes and other charges lawfully levied, imposed upon or assessed against or in respect of the Collateral, or the income and profits of the Seller, and shall provide proof thereof to Purchaser in such form as Purchaser shall reasonably require.
    • Seller shall not create, incur, assume or permit to exist any Encumbrance upon or with respect to any assets in which Purchaser now or hereafter holds a Security Interest.
    • Seller shall not effect a change in the Seller’s name or authorize it to use a version in any other language of its name without giving 30 days prior written notice to Purchaser.
    • The Seller shall promptly notify the Purchaser in writing of the details of:
      • any claim, litigation or proceedings before any court, administrative board or other tribunal which either does or could have a material adverse effect on the Collateral or the Seller;
      • any claim, Encumbrance, attachment, execution or other process made or asserted against or with respect to the Collateral which either does or could have a material adverse effect on the Security Interest;
      • any transfer in the location of the Collateral; or
      • any material loss of or damage to the Collateral, whether or not such loss or damage is covered by insurance.
    • Notwithstanding Seller’s obligation to pay the Misdirected Payment Fee, Seller shall pay to Purchaser on the next Business Day following the date of receipt by Seller the amount of:
      • Any payment on account of a Purchased Account.
      • After the occurrence of an Event of Default, any payment on account of any Account.
    • The funds received by Seller as described in Section 12.8 shall be held by Seller in trust for Purchaser and shall not be commingled with any funds of Seller.
    • The Seller shall not, without the prior written consent of the Purchaser, amalgamate with any other corporation or corporations or enter into any arrangement or agreement, which, either separately or in combination with any other transactions, arrangements or agreements, would have the effect of the Seller merging, amalgamating or entering into any joint venture or co-tenancy arrangement with any other person.
    • The Seller will keep its records concerning its accounts receivable and other accounts located at the address set out in Section 35 as the initial address for notice to the Seller and provide Purchaser with at least thirty (30) days prior written notice of its intention to move its business or the Collateral from the address set out in Section 35.
    • The Seller shall keep the Collateral insured against loss or damage by fire, theft and other usual perils, in such amounts and with such insurers as the Purchaser may reasonably require from time to time. All policies of insurance shall name the Creditor’s as loss payee, mortgagee or additional insured, and shall have attached a clause stating same, said clause having been approved by the Insurance Bureau of Canada or otherwise acceptable to the Purchaser, and the Seller shall deliver to the Purchaser evidence of such insurance satisfactory to the Purchaser. The Purchaser may apply any proceeds of such insurance which it is entitled to receive towards payment of the Obligations, whether or not due, in such order of application as the Purchaser may determine.
    • Avoidance Claims.
      • Seller shall indemnify Purchaser from any loss arising out of the assertion of any Avoidance Claim and shall pay to Purchaser on demand the amount thereof.
      • Seller shall notify Purchaser within two Business Days of it becoming aware of the assertion of an Avoidance Claim.
      • This provision shall survive the Termination Date and Complete Termination.
  1. Account Disputes.
    • Subject to Section 7, Seller shall notify Purchaser promptly of and, if requested by Purchaser, will settle all disputes concerning any Purchased Account, at Seller’s sole cost and expense. Purchaser may, but is not required to, attempt to settle, compromise, or litigate (collectively, “Resolve”) the dispute upon such terms as Purchaser in its sole discretion deems advisable, for Seller’s account and risk and at Seller’s sole expense. Upon the occurrence of an Event of Default Purchaser may Resolve such issues with respect to any Account of Seller, at Seller’s cost.
  2. Representation and Warranties. Seller represents and warrants that:
    • It is a corporation incorporated and organized and validly existing under the laws of its jurisdiction of incorporation, and has full corporate power, authority and capacity to own its property, to carry on the business carried on by it, and to enter into and perform this Agreement;
    • It is duly qualified and has full legal right to own its property and to carry on the business carried on by it, and is in compliance in all material respects with all Applicable Law.
    • It has taken all corporate action necessary to be taken by it to authorize the execution, delivery and performance of this Agreement and the related documents. Except as has been obtained and is in full force and effect, no consent, waiver or authorization of, or filing with or notice to, any person (including any creditors or shareholders of Seller) is required to be obtained in connection with the execution, delivery or performance by Seller of this Agreement and the related documents. This Agreement has been executed and delivered by Seller and will, when executed and delivered by all counterparties to such agreements other than the Seller, constitute, a legal, valid and binding agreement of Seller enforceable against Seller in accordance with its terms subject to the qualification that enforceability may be limited by bankruptcy and laws affecting the enforcement of creditors’ rights generally and that equitable remedies may be limited by the co
    • The execution, delivery and performance by Seller of this Agreement and the related documents will not conflict with or result in a breach of any Applicable Law, and will not conflict with, or result in a breach of, or constitute a default under, any of the provisions of (i) the articles of incorporation, other constating documents or by-laws of Seller, or (ii) any agreement, permit or other contractual obligation to which Seller is a party or by which it is bound, in any material respect.
    • There is no action, suit or proceeding (whether or not purportedly on behalf of Seller) pending or, to the knowledge of Seller, threatened, against or affecting Seller before any court or before or by any governmental department, commission or agency, in Canada or elsewhere, or before any arbitrator or board and Seller is not in default with respect to any order or award of any arbitrator or government department, commission or agency or otherwise seeking damages or payment of monies which exceed the sum of $5,000.00 and which has not been disclosed in writing to Purchaser.
    • Seller is the legal and beneficial owner of all Accounts offered for sale by it to Purchaser hereunder, in each case free of all Encumbrances other than Permitted Encumbrances.
    • Seller is solvent and in good standing in the jurisdiction of its organization and all jurisdictions where it carries on business.
    • To the extent of the Purchased Accounts:
      • They are and will validly remain existing obligations created by the sale and delivery of goods or the rendition of services in the ordinary course of Seller’s business;
      • To the best of Seller’s knowledge, unconditionally owed and will be paid to Purchaser without defenses, disputes, offsets, counterclaims, or rights of return or cancellation;
      • Seller has not given any consents, approvals or waivers, or agreed to any amendments, or made any representations, warranties or commitments to the Account Debtor thereunder, which would in any way impair the rights of Seller (or of Purchaser) to receive all amounts expressed to be payable thereunder when due;
      • the Account Debtor thereunder has no valid basis for contestation of the right of Seller (or of Purchaser) to receive all amounts expressed to be payable thereunder when due;
      • no person other than Seller has any right, title or interest in or to such Accounts;
      • such Purchased Accounts are not sales to any entity that is affiliated with Seller or in any way not an “arms length” transaction.
    • Seller has not received notice or otherwise learned of actual or imminent bankruptcy, insolvency, or material impairment of the financial condition of any applicable Account Debtor regarding Purchased Accounts.
  3. Indemnification.
    • Seller agrees to indemnify Purchaser against and save Purchaser harmless from any and all manner of suits, claims, liabilities, demands and expenses (including reasonable legal fees and collection costs) resulting from or arising out of this Agreement, whether directly or indirectly, including the transactions or relationships, contemplated hereby (including the enforcement of this Agreement) except which results from gross negligent or willful misconduct of the Purchaser, and any failure by Seller to perform or observe its obligations under this Agreement.
  4. Disclaimer of Liability.
    • In no event will Purchaser be liable to Seller for any lost profits, lost savings or other consequential, incidental or special damages resulting from or arising out of or in connection with this Agreement, the transactions or relationships contemplated hereby or Purchaser’s performance or failure to perform hereunder, even if Purchaser has been advised of the possibility of such damages.
  5. Default.
    • Events of Default.
      • The following events will constitute an Event of Default hereunder:
        • Seller defaults in the payment of any Obligations when due or in the performance of any provision hereof or of any other agreement now or hereafter entered into with Purchaser, or any warranty or representation contained herein proves to be false in any way, howsoever minor;
        • Seller or any guarantor shall generally not pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceedings shall be instituted by or against the Seller or any guarantor seeking to adjudicate it as bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of insolvent debtors, or seeking the entry of an order for relief by the appointment of a Sequestrator or a Trustee for it or any substantial part of its property, and if such proceeding has been instituted against the Seller or any guarantor, such proceeding has not been stayed or dismissed within 30 days; or a Sequestrator or a Trustee is appointed for it or any substantial part of its property; or all or any substantial part of its property shall be seized or repossessed by any secured party, under any process of execution or otherwise by or on behalf of any creditor; or voluntarily suspends the conduct of its business or operations; or the Seller or any guarantor takes any corporate action to authorize any of the actions described in this paragraph;
        • Any guarantor fails to perform or observe any of such guarantor’s obligations to Purchaser or shall notify Purchaser of its intention to rescind, modify, terminate or revoke any guaranty of the Obligations, or any such guaranty shall cease to be in full force and effect for any reason whatever; or
        • Purchaser for any reason, in good faith, deems itself insecure with respect to the prospect of repayment or performance of the Obligations.
      • Remedies.
        • Upon the occurrence of any Event of Default, in addition to any rights Purchaser has under this Agreement or Applicable Law, Purchaser may immediately terminate this Agreement, at which time all Obligations shall immediately become due and payable without notice;
        • Purchaser may appoint or reappoint by instrument in writing any person to be an agent or any person to be a Sequestrator of the Collateral and to remove any Sequestrator so appointed and to appoint another if the Purchaser so desires;
        • Purchaser may make payments to discharge any claim or Encumbrance on properties on which either the Seller or the Purchaser may hold Encumbrances (whether or not ranking in priority to the Security Interest);
        • Purchaser may enter upon, use and occupy any and all premises owned, leased or occupied by the Seller where the Collateral may be located;
        • Subject to the requirements of the Applicable Law, Purchaser may take immediate possession of all or any part of the Collateral and require the Seller to assemble and deliver possession of the Collateral at a location or locations specified by the Purchaser, with power to exclude the Seller, its officers, directors, employees and agents therefrom;
        • Purchaser may notify the Payor under any Accounts of the assignment of such accounts to the Purchaser and direct such Payor to make payment of all amounts due or to become due to the Seller thereunder directly to the Purchaser and give valid and binding receipts and discharges therefor and in respect thereof and, upon such notification and at the expense of the Seller, enforce collection of any Accounts, and adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Seller might have done;
        • Purchaser may enjoy and exercise all of the rights and remedies of a secured party under the Civil Code of Quebec and the Civil Code of Procedure of Quebec;
        • Purchaser may file such proofs of claim or other documents as may be necessary or desirable to have its claim lodged in any bankruptcy, winding‑up, liquidation, dissolution or other proceedings (voluntary or involuntary) relating to the Seller;
        • Purchaser may preserve, protect and maintain the Collateral and make such replacements thereof and additions thereto as the Purchaser shall deem advisable;
        • Subject to the requirements of the Applicable Law, Purchaser may sell, consign, lease or otherwise dispose of all or any part of the Collateral whether by public or private sale, consignment or lease or otherwise and on any terms so long as every aspect of the disposition is commercially reasonable, including, without limitation, terms that provide time for payment on credit; provided that:
          • neither the Purchaser nor any Sequestrator will be required to sell, consign, lease or dispose of the Collateral, but may peaceably and quietly take, hold, use, occupy, possess and enjoy the Collateral without molestation, eviction, hindrance or interruption by the Seller or any other person or persons whomsoever for such period of time as is commercially reasonable;
          • the Purchaser or any Sequestrator may dispose of all or any part of the Collateral in the condition in which it was on the date possession of it was taken, or after any commercially reasonable repair, processing or preparation for disposition;
          • the Purchaser or any Sequestrator may convey, transfer and assign to a purchaser or purchasers the title to any of the Collateral so sold; and
          • the Seller will be entitled to be credited with the actual proceeds of any such sale, consignment, lease or other disposition only when such proceeds are received by the Purchaser or any Sequestrator in cash;
        • Default Discount shall accrue and be payable; and
        • The Early Termination Fee shall become immediately due and payable without notice.
  1. Account Stated.
    • Purchaser shall render to Seller a statement setting forth the transactions arising hereunder. Each statement shall be considered correct and binding upon Seller as an account stated, except to the extent that Purchaser receives, within seven (7) days after receipt by Seller of such statement, written notice from Seller of any specific exceptions by Seller to that statement, and then it shall be binding against Seller as to any items to which it has not objected.
  2. Amendment and Waiver.
    • Only a writing signed by all Parties hereto may amend this Agreement. No failure or delay in exercising any right hereunder shall impair any such right that Purchaser may have, nor shall any waiver by Purchaser hereunder be deemed a waiver of any default or breach subsequently occurring. Purchaser’s rights and remedies herein are cumulative and not exclusive of each other or of any rights or remedies that Purchaser would otherwise have.
  3. Termination; Effective Date.
    • This Agreement will be effective on the date it is signed by the Parties, shall continue for the Term, and shall be automatically extended for successive terms of one year each (“Extended Term”) unless Seller shall provide at least sixty (60) days prior written notice to Purchaser of its intention to terminate (“Termination Notice”) whereupon this Agreement shall terminate on the end of the existing Term.
    • All Obligations shall be due and payable on the Termination Date.
  4. No Encumbrance Termination without Release.
    • Notwithstanding payment in full of all Obligations by Seller, Purchaser shall not be required to record any terminations or satisfactions of any of Purchaser’s Encumbrances on the Collateral unless and until Complete Termination has occurred.
    • Upon Complete Termination, and upon receipt of Seller’s written request, and at Seller’s reasonable expense, Purchaser shall execute and deliver to Seller, such financing statements, instruments, agreements and documents as Purchaser may reasonably consider necessary or desirable to discharge the Security Interest granted by Seller, to release and discharge the Collateral therefrom and to record such release and discharge in all appropriate offices of public record.
  5. Conflict.
    • Unless otherwise expressly stated in any other agreement between Purchaser and Seller, if a conflict exists between the provisions of this Agreement and the provisions of such other agreement, the provisions of this Agreement shall control.
  6. Severability.
    • In the event any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect, then such provision shall be ineffective only to the extent of such prohibition or invalidity, and the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.
  7. Legal Fees.
    • Seller agrees to reimburse Purchaser on demand for:
      • The actual amount of all costs and expenses, including legal fees, which Purchaser has incurred or may incur in:
        • Negotiating, preparing, or administering this Agreement and any documents prepared in connection herewith;
        • Any way arising out of or in connection with this Agreement, and whether or not arising out of a dispute which does not involve Purchaser;
        • Protecting, preserving or enforcing any Encumbrances granted by Seller to Purchaser or arising under Applicable Law, whether or not suit is brought, including but not limited to the defense of any Avoidance Claims or the defense of Purchaser’s Encumbrance priority;
      • The actual costs, including photocopying (which, if performed by Purchaser’s employees, shall be at the rate of $.10/page), travel, and legal fees and expenses incurred in complying with any subpoena or other legal process in any way relating to Seller.
      • The actual amount of all costs and expenses, including legal fees, which Purchaser may incur in enforcing this Agreement and any documents prepared in connection herewith, or in connection with any insolvency proceeding commenced by or against Seller.
      • These provisions shall survive the Termination Date and Complete Termination.
  1. Application of Moneys

25.1     Subject to the requirements of the Applicable Law, all money or other proceeds of realization collected or received by the Purchaser or any Sequestrator upon the realization of the Security Interest or on exercise of any other rights or remedies herein contained with respect to the Collateral shall be applied on account of the Obligations in such manner as the Purchaser deems best or, at the option of the Purchaser, may be held unapportioned in a collateral account or released to the Seller, all without prejudice to the liability of the Seller or the rights of the Purchaser hereunder.  The balance of such proceeds, if any, shall be paid in accordance with the PPSA and any other Applicable law.

  1. Liability for deficiency

26.1     If the proceeds of realization received by or on behalf of the Purchaser from the disposition of the Collateral are not sufficient to satisfy the Obligations in full, the Seller shall be liable to pay such deficiency to the Purchaser forthwith on demand if such liability is permissible by Applicable Law.

  1. Compensation

27.1     Without in any way limiting any other rights or remedies available to the Purchaser, the Purchaser shall have the right (but shall not be obligated), at any time and from time to time after the occurrence of an Event of Default and without notice to the Seller (such notice being expressly waived by the Seller), to operate compensation against the Obligations or any of the deposits (general or special) or moneys then held by the Purchaser or any other indebtedness owing by the Purchaser to, or held by the Purchaser for the credit of, the Seller, regardless of the currency in which such indebtedness is denominated and notwithstanding that such indebtedness is not then due.

  1. Entire Agreement.

28.1     There are no representations, agreements, warranties, conditions, covenants or terms, express or implied, collateral or otherwise, affecting this agreement or the Security Interest or the Seller’s obligations and liabilities hereunder other than as expressed herein.

  1. Choice of Law.
    • This Agreement and all transactions contemplated hereunder and/or evidenced hereby shall be governed by, construed under, and enforced in accordance with the laws of the Province of Quebec.
  2. Time of the Essence.
    • It is agreed that time is of the essence in all matters herein.
  3. Service of Process.
    • Seller agrees that Purchaser may effect service of process upon Seller by regular mail at the address set forth herein or at such other address as may be reflected in the records of Purchaser, or at the option of Purchaser by service upon Seller’s agent for the service of process.
  4. Assignment
    • Purchaser may assign its rights and delegate its duties hereunder. Upon such assignment, Seller shall be deemed to have attorned to such assignee and shall owe the same obligations to such assignee and shall accept performance hereunder by such assignee as if such assignee were Purchaser.  The Seller shall not have the right to assign its rights nor delegate its duties hereunder.
  5. Counterparts.
    • This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures were upon the same instrument. Delivery of an executed counterpart of the signature page to this Agreement by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement, and any party delivering such an executed counterpart of the signature page to this Agreement by facsimile or electronic transmission to any other party shall thereafter also promptly deliver a manually executed counterpart of this Agreement to such other party, provided that the failure to deliver such manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.
  6. Currency
    • Unless otherwise specifically provided for herein, all monetary amounts referred to herein shall be in lawful Canadian dollars.
  7. Notice.

All notices required to be given to Purchaser, except as specified in paragraph 13.1 (notice of termination), shall be sent to: 174 West Street S., Orillia, Ontario, L3V 6L4; Attn: The General Manager; and if to Seller, at the address, fax number or email address furnished on the Finance Application or Factoring Master Agreement, or to such other addresses as each such party may in writing hereafter indicate. ss of such party for all purposes of this Agreement

  1. Relationship of Parties
    • The relationship of the parties hereto shall be that of Seller and Purchaser of Accounts, and Purchaser shall not be a fiduciary of the Seller, although Seller may be a fiduciary of the Purchaser, nor that of lender & borrower.
  1. Headings and Titles of Clauses.The headings and the titles of clauses in this Agreement are for descriptive purposes only and do not control or alter the meaning of this Agreement as set forth in the text thereof and are not to be taken into account in the construction or interpretation of any provisions to which they refer.

 

FORM OF GENERAL RELEASE

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned and each of them (collectively “Releasor”) hereby forever releases, discharges and acquits eCapital Freight Factoring, Inc. (“Releasee”), its parent, affiliates, subsidiaries, directors, shareholders, agents, contractors and employees, of and from any and all claims, demands, obligations, liabilities, indebtedness, breaches of contract, breaches of duty of any relationship, acts, omissions, misfeasance, malfeasance, cause or causes of action, debts, sums of money, accounts, compensations, contracts, controversies, promises, damages, costs, losses and expenses (collectively “Claims”), of every type, kind, nature, description or character, and irrespective of how, why, or by reason of what facts, whether heretofore existing, now existing or hereafter arising, or which could, might, or may be claimed to exist, of whatever kind or name, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, each as though fully set forth herein at length, to the extent that they arise out of or are in way connected to or are related to Releasor’s factoring relationship with Releasee.

Releasor agrees that the matters released herein are not limited to matters which are known or disclosed, and the Releasor waives any and all rights and benefits which it now has, or in the future may have, conferred upon it by virtue of the provisions of the laws of any state that may impose a limit or limits on the extent to which a general release may exclude matters which are not known by or disclosed to Releasor.

Releasor acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims which are presently unknown, unanticipated and unsuspected, and it acknowledges that this Release has been negotiated and agreed upon in light of that realization and that it nevertheless hereby intends to release, discharge and acquit the Releasee from any such unknown Claims.

Acceptance of this Release shall not be deemed or construed as an admission of liability by any party released.

In the event of any litigation arising out of or related to this Release, the prevailing party shall recover its reasonable legal fees and expenses from the unsuccessful party. It shall be presumed (subject to rebuttal only by the introduction of competent evidence to the contrary) that the amount recoverable is the amount billed to the prevailing party by its counsel and that such amount will be reasonable if based on the billing rates charged to the prevailing party by its counsel in similar matters.

 

Releasor acknowledges that either (a) it has had advice of counsel of its own choosing in negotiations for and the preparation of this release, or (b) it has knowingly determined that such advice is not needed.