EXHIBIT 10.1



 


FACTORING
AND SECURITY AGREEMENT


 


This
Factoring and Security Agreement is dated for purposes of reference June ___, 2016 is by and between the undersigned, Quest Solution,
Inc. which has its offices and principal place of business at 12272 Monarch Street, Garden Grove, CA, 97402, Quest Marketing,
Inc. which has its offices and principal place of business at 12272 Monarch Street, Garden Grove, CA, 97402, Bar Code Specialties,
Inc. which has its offices and principal place of business at 12272 Monarch Street, Garden Grove, CA, 97402 (hereinafter each
referred to as “CLIENT” and collectively taken together referred to as “CLIENT”) and ACTION CAPITAL CORPORATION
(hereinafter, “ACTION”), which has its executive office and principal place of business at 230 Peachtree St. NW, Suite
1910, Atlanta, GA 30303. CLIENT and ACTION agree as follows:


 


	I.	PURPOSE
    OF AGREEMENT


 


CLIENT
desires to obtain short-term financing by selling and assigning to ACTION acceptable accounts receivable. The purpose of this
financing is commercial in nature, and not for household, family, and/or personal use. In the event CLIENT and ACTION are currently
operating under an earlier Agreement, this Agreement is and shall be a modification and continuation of such earlier Agreement
and in the event of any inconsistencies or contradictions within the Agreements, CLIENT and ACTION agree that the terms of this
Agreement shall control.


 


	II.	DEFINITIONS
	 	 
	2.1	“ACCOUNT”
    means both present and future accounts, contract rights and other forms of obligations for the payment of money arising
    out of the sale by CLIENT of goods or the performance by CLIENT of services.
	 	 
	2.2	“ACCEPTABLE
    ACCOUNT” means an ACCOUNT offered by CLIENT to ACTION for sale which ACCOUNT ACTION has reviewed and has, in its
    sole discretion, approved for purchase in whole or in part, and which ACCOUNT conforms to the warranties and terms set forth
    herein and in the Agreement for the Sale and Assignment of Invoices form accompanying each offer to sell.
	 	 
	2.3	“AFFILIATE”
    means any entity that CLIENT or any officer, shareholder, director or other principal of CLIENT or any spouse or other
    familial relative of such person shall have the power to direct the management and policies of such entity, directly or indirectly,
    whether through ownership of voting securities or otherwise.
	 	 
	2.4	“CUSTOMER”
    means CLIENT’s customer or the account debtor.
	 	 
	2.5	“INVOICE”
    means the document evidencing any ACCOUNT referenced in and made subject to any Agreement for the Sale and Assignment
    thereof entered into between the CLIENT and ACTION.
	 	 
	2.6	“RESERVE
    ACCOUNT” means a bookkeeping account on the books of ACTION representing the unpaid portion of an ACCEPTABLE ACCOUNT
    sold and assigned hereunder by CLIENT to ACTION or any ACCOUNT that is subject to the security hereunder granted to ACTION
    by CLIENT or otherwise coming into the possession or control of ACTION.
	 	 
	III.	WARRANTIES
    AND COVENANTS BY CLIENT
	 	 
	3.1	To
    the best of CLIENT’s knowledge, CLIENT’s business is solvent, and CLIENT ispresently paying its debts as they
    become due. To the best of CLIENT’s knowledge, CLIENT has never filed for bankruptcy under federal or state law or had
    an involuntary bankruptcy petition filed against it to the best of its knowledge. To the best of CLIENT’s knowledge,
    CLIENT has made and shall continue to make timely payment of all required taxes to the best of its knowledge. To the best
    of CLIENT’s knowledge and based on CLIENT’s reasonable business practices, each CUSTOMER is solvent.



 






    	 		 



    	 		 



    

 


	3.2	Each
    ACCOUNT offered for sale to ACTION hereunder is and shall be, as of the time of such offer, a bona fide and existing obligation
    of CLIENT’s CUSTOMER for the payment of money arising out of the sale by CLIENT of goods or the performance by CLIENT
    of services, which is owed to CLIENT, free from any liens, claims, disputes, off-sets or equities of third parties, that CLIENT
    is the lawful owner of and has good and undisputed title to the ACCOUNTs offered for sale to ACTION hereunder, and that no
    ACCOUNT offered or to be offered for sale to ACTION hereunder represents consigned or guaranteed sales, and that no ACCOUNT
    offered or to be offered for sale and assignment shall be due from an AFFILIATE. 
	 	 
	3.3	CLIENT
    has not transferred, pledged or granted a security interest in CLIENT’s ACCOUNTs to any other party except as otherwise
    disclosed to ACTION and CLIENT will not transfer, pledge or grant a security interest to any other party in said ACCOUNTs
    for the term of this agreement and for as long as CLIENT is indebted to ACTION hereunder. Additionally, CLIENT will not sell
    or assign ACCOUNTs except to ACTION for the period of this agreement, and/or for as long as any indebtedness whatsoever remains
    owing by CLIENT to ACTION. 
	 	 
	3.4	FINANCIAL
    INFORMATION: CLIENT will furnish ACTION financial statements as reasonably required by ACTION from time to time and will furnish
    ACTION, satisfactory proof of payment and/or compliance with all Federal, State and/or local tax requirements. ACTION will
    keep any information it receives with respect to the financial or other records of CLIENT or CLIENT’s CUSTOMERS strictly
    confidential. This covenant of confidentially survives this Agreement.
	 	 
	3.5	All
    financial records, statements, books or other documents shown to ACTION by CLIENT at any time, either before or after the
    signing of this Agreement, are true and accurate to the best of CLIENT’s belief.
	 	 
	3.6	 ACTION
    or any person designated by ACTION shall have the right at any reasonable time with reasonable notice to inspect, audit, check
    and make copies or extracts from CLIENT’s books, records, journals, orders, receipts, and other correspondence and other
    data relating to CLIENT’s business and any other transaction between ACTION and CLIENT without hindrance or delay, provided
    that such activities will not be disruptive to Quest’s overall operations. 
	 	 
	3.7	CLIENT
    will not, under any circumstances or in any manner whatsoever, interfere with any of ACTION’s rights under this Agreement.
	 	 
	3.8	CLIENT
    will promptly notify ACTION in writing of any change in the location of CLIENT’s place(s) of business, name, identity,
    legal entity, corporate structure, officers, principals, partners, and/or owners.
	 	 
	3.9	CLIENT
    has full power and authority to execute, deliver and perform this Agreement.
	 	 
	IV.	FURTHER
    PROMISES
	 	 
	4.1
    	SECURITY
    INTEREST/COLLATERAL: CLIENT gives to ACTION, as collateral for the repayment of any and all obligations and liabilities whatsoever
    of CLIENT to ACTION, a security interest, under the Uniform Commercial Code, in the following described property (hereinafter
    collectively called “Collateral”): All presently existing or hereafter arising, now owned or hereafter acquired
    accounts, accounts receivable, contract rights, chattel paper, documents, instruments, general intangibles, reserves, reserve
    accounts, rebates, and all books and records (including without limitation, customer lists, computer programs, print outs,
    and other computer material and records) pertaining to the foregoing and all proceeds of the foregoing property. CLIENT agrees
    to not assign or grant a security interest in the collateral described herein to any other person.



 






    	 		 



    	 		 



    

 


	4.2
    	NOTIFICATION:
    ACTION will, at its discretion, notify any CUSTOMER to make payments directly to ACTION for any ACCOUNT using the form of
    notification attached hereto as Exhibit A.
	 	 
	4.3	ASSIGNMENT:
    CLIENT shall from time to time at CLIENT’s option, sell, transfer and assign ACCEPTABLE ACCOUNTs to ACTION, to be identified
    on a form known as ACTION’s Agreement for Sale and Assignment of Invoices together with an original INVOICE and all
    supporting documents appropriate to CLIENT’s business.
	 	 
	4.4
    	PURCHASE
    PRICE: Each ACCEPTABLE ACCOUNT purchased by ACTION hereunder shall be purchased for a price equal to the net amount of such
    ACCEPTABLE ACCOUNT. As used herein, the “net amount” of an ACCEPTABLE ACCOUNT means the face amount thereof less
    discounts or allowances of any nature, calculated on the basis of the shortest selling terms provided. 
	 	 
	4.5	INTEREST
    AND FEES: ACTION agrees to provide financing to CLIENT for the fees as indicated below:


 


	 	(a)	with
    respect to the daily average balance of unpaid advances outstanding hereunder (computed on a monthly basis), interest at a
    per annum rate equal to the “Prime Rate” of Wells Fargo Bank N.A. (as such rate is announced from time
    to time with changes in such rate to be effected on the first day of each month based on the Prime Rate in effect as of the
    last business day of the prior month) plus two percent (Prime + 2.0%), plus a monthly fee equal to three-quarters of
    one percent (0.75%) of such average outstanding balance. All interest and fees hereunder shall be billed monthly in arrears
    with payment due on the billing date. All calculations of interest shall be computed on the basis of a 360 day year, for actual
    days elapsed. 
	 	 	 
	 	(b)	all
    other costs incurred by ACTION including all bank fees for wire transfers, lien search fees, lien recording fees.


 


	4.6	DATE
    OF ADVANCE: ACTION will buy ACCEPTABLE ACCOUNTs at the net amount less any specified reserve which will be advanced to CLIENT
    at the time the ACCOUNT is accepted.
	 	 
	4.7	RESERVE:
    ACTION will reserve and withhold an amount in a reserve account equal to ten percent (10%) of the face amount of each ACCOUNT
    purchased hereunder. The reserve account may be held by ACTION and applied against charge-backs or any obligations of CLIENT
    to ACTION, known or anticipated, and the reserve account shall not be due and payable to CLIENT until any and all obligations
    of CLIENT to ACTION are fully paid and/or satisfied. Notwithstanding the foregoing, as each ACCOUNT is paid in full, the reserve
    associated with the paid ACCOUNT will be paid to CLIENT provided, however, there does not then exist an event or condition
    of default and further provided, however, that in no event at any time shall the aggregate balance in the reserve account
    be less than ten percent (10%) of CLIENT’s then unpaid ACCEPTABLE ACCOUNTs purchased by ACTION.
	 	 
	4.8	RECOURSE:
    ACTION shall have full recourse against CLIENT when an ACCOUNT is not paid by CUSTOMER when due, including without limitation,
    the right to charge-back or sell back any such ACCOUNT, if not paid within 90 days of the date of purchase. 
	 	 
	4.9
    	DISPUTED
    ACCOUNTS: CLIENT will immediately notify ACTION and accept back (repurchase) from ACTION any ACCOUNT subject to a dispute
    between CUSTOMER and CLIENT of any kind whatsoever.
	 	 
	4.10	HOLD
    IN TRUST: CLIENT will hold in trust and safekeeping, as the property of ACTION, and immediately turn over to ACTION the identical
    check or other form of payment received by CLIENT, whenever any payment on any ACCOUNT comes into CLIENT’s possession;
    any failure by CLIENT in this regard constitutes a default under this Agreement (pursuant to SECTION V hereinbelow) and may
    result in civil and/or criminal actions against CLIENT and /or the person(s) responsible for such failure.



 






    	 		 



    	 		 



    

 


	4.11
    	RESPONSIBILITY
    FOR TAXES: All taxes and governmental charges with respect to goods or services represented by ACCOUNTs purchased by ACTION
    shall be the obligation and responsibility of CLIENT. CLIENT has no obligation for ACTION’s income or property taxes
    or any other taxes with respect to ACTION’s business.
	 	 
	4.12
    	NOTICE
    OF LEVY: CLIENT will promptly notify ACTION of any material attachment, tax assessment or other legal process levied against
    CLIENT or any of CLIENT’s CUSTOMERS.
	 	 
	4.13
    	BOOK
    ENTRY: CLIENT will, immediately upon sale of ACCOUNTs to ACTION, make proper entries on its books and records disclosing the
    absolute sale of said ACCOUNTs to ACTION subject to the terms and conditions of this Agreement.
	 	 
	4.14
    	LEGAL
    FEES: Except as is prohibited by law, CLIENT shall pay to ACTION all reasonable costs and expenses, including without limitation
    attorney’s fees and expenses, and costs incurred by ACTION in the prosecution or enforcement of any of ACTION’s
    rights, claims or courses of action which arise out of, relate to or pertain to this Agreement.
	 	 
	4.15
    	POWER
    OF ATTORNEY: CLIENT hereby names, appoints, and constitutes ACTION and its designees as CLIENT’s true and lawful attorney-in-fact,
    and does hereby request, authorize, empower and direct ACTION or its designee, for and in the name and instead of CLIENT,
    either in CLIENT’s name or ACTION’s name to:


 


	 	(a)	compromise,
    adjust or settle any claim of a CUSTOMER with respect to an ACCOUNT;
	 	 	 
	 	(b)	demand,
    sue for, collect and give release for any and all monies due or to become due on ACCOUNTs;
	 	 	 
	 	(c)	make
    any and all corrections or completions on any of the invoices or other documents constituting the ACCOUNTS;
	 	 	 
	 	(d)	endorse
    CLIENT’s name an any checks, drafts, instruments or other evidences of payment with respect to any ACCOUNT or to otherwise
    collect the same;
	 	 	 
	 	(e)	receive,
    open and dispose of all mail addressed to CLIENT with respect to any ACCOUNT; and
	 	 	 
	 	(f)	do
    all other acts and things necessary to carry out the purpose and intent of this Agreement. All acts of ACTION as attorney-in-fact
    are hereby ratified and approved and ACTION shall not be liable for any errors of commission or omission nor for any error
    of or mistake of law or fact excepting acts constituting gross negligence or willful misconduct. This power of attorney in
    coupled with an interest and is irrevocable for so long as CLIENT is indebted to ACTION. The authority granted ACTION shall
    remain in full force and effect until all assigned accounts are paid in full and any indebtedness of CLIENT to ACTION is discharged.


 


	4.16	ACH
    AUTHORIZATION: In order to satisfy any of the obligations to ACTION under this Agreement, CLIENT hereby authorizes ACTION
    to initiate electronic debit or credit entries through the Automated Clearing House system to any bank account maintained
    by CLIENT wherever located.



 






    	 		 



    	 		 



    

 


	V.	DEFAULT
	 	 
	5.1
    	EVENTS
    OF DEFAULT: Any one or more of the following shall be a default hereunder:


 


	 	(a)	CLIENT’s
    breach of any promise, covenant or warranty under this Agreement or any other Agreements between CLIENT and ACTION or obligation
    of CLIENT to ACTION, including without limitation, payment of any indebtedness to ACTION when due;
	 	 	 
	 	(b)	the
    appointment of any receiver or trustee of all or a substantial portion of the assets of CLIENT; insolvency or inability to
    pay debts as they mature; a general assignment for the benefit of creditors; the voluntary or involuntary filing of a petition
    for relief under any bankruptcy or similar law;
	 	 	 
	 	(c)	issuance
    of any levies of attachment, executions, tax assessments or similar process against the Collateral;
	 	 	 
	 	(d)	CLIENT’s
    tender to ACTION of information that is false or incorrect in any material respect.


 


	5.2	REMEDIES
    AFTER DEFAULT: In the event of any default, ACTION may do any one or more of the following:


 


	 	(a)	declare
    any indebtedness including outstanding ACCOUNTS purchased by ACTION, immediately due and payable;
	 	 	 
	 	(b)	notify
    any CUSTOMER of CLIENT to make payments directly to ACTION with respect to any and all ACCOUNTS of CLIENT;
	 	 	 
	 	(c)	require
    CLIENT to send copies of records and files pertaining to ACCOUNTs to ACTION and, with reasonable notice, enter the premises
    of CLIENT and make copies of the COLLATERAL and the records pertaining to the ACCOUNTs and any other COLLATERAL;
	 	 	 
	 	(d)	hold
    CLIENT liable for any deficiency.


 


	VI.	MISCELLANEOUS
	 	 
	6.1	MAXIMUM
    ACCOUNT: The outstanding amount of CLIENT’s account with ACTION (that is, at any time, the unpaid and owing principal
    amount of advances made by ACTION to CLIENT) shall not exceed Five Million U.S. Dollars ($5,000,000.00).
	 	 
	6.2.1	TERMINATION:
    This Agreement shall continue in full force and effect until terminated by written notice by either party, such notice shall
    require written notice 30 days prior to termination effective date. In the case of an Event of Default which is continuing
    and uncured, and notice of such default has been provided to CLIENT, Termination notice provided to CLIENT shall be effective
    immediately.
	 	 
	6.3
    	POST-TERMINATION:
    After termination CLIENT shall be liable to ACTION for the full and prompt payment of the full amount of ACCOUNTs which have
    been sold and assigned to ACTION and are then outstanding and unpaid, disputed or undisputed, as well as any other indebtedness
    whatsoever. ACTION shall continue to have a security interest in the COLLATERAL of CLIENT until any existing indebtedness
    of CLIENT to ACTION is paid in full.
	 	 
	6.4
    	APPLICABLE
    LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia and shall be binding
    upon the successors, assigns and representatives of the parties hereto. CLIENT and ACTION hereby agree that any suit, action,
    or proceeding arising out the subject matter hereof, or the interpretation, performance or breach of this Agreement shall
    be instituted in the Superior Court of the State of Georgia located in Atlanta, Fulton County, Georgia (hereinafter, “Fulton
    County Superior Court”). CLIENT and ACTION hereby agree that Fulton County Superior Court is convenient to each party
    hereto and CLIENT and ACTION irrevocably submit to such jurisdiction, irrevocably agree to be bound by any judgment rendered
    thereby in connection with this Agreement, and forever waive any and all objections to jurisdiction or venue that each party
    may have under the laws of the State of Georgia or otherwise in those courts in any such suit, action or proceeding. If any
    such proceeding is initiated in any other jurisdiction, CLIENT hereby waives any right to oppose any motion or application
    made by ACTION as a consequence of such proceeding having been commenced in a jurisdiction other than Fulton County Superior
    Court



 






    	 		 



    	 		 



    

 


	6.5
    	ENTIRE
    AGREEMENT-AMENDMENT: This document contains the entire Agreement between the parties as of the date specified below. This
    Agreement may be modified only by a written instrument executed by the parties hereto.


 


Executed
and accepted this _____ day of June, 2016.


 


	 	 	CLIENT:
    QUEST SOLUTION, INC.
	 	 	 	 
	 	 	By:	/s/
    Gilles Normand Gaudreault
	 	 	Name:	Gilles
    Normand Gaudreault
	 	 	Title:	Chief
    Executive Officer
	 	 	 	 
	Attested
    by:	 	 	 
	 	 	 	 
	/s/
    Tom Miller	 	 	 
	Tom
    Miller	 	 	 
	President	 	 	 
	 	 	 	 
	Affix
    Corporate Seal	 	 	 
	 	 	 	 
	 	 	CLIENT:
    QUEST MARKETING, INC.
	 	 	 	 
	 	 	By:	/s/
    Gilles Normand Gaudreault
	 	 	Name:	Gilles
    Normand Gaudreault
	 	 	Title:	Chief
    Executive Officer
	 	 	 	 
	Attested
    by:	 	 	 
	 	 	 	 
	/s/
    Tom Miller	 	 	 
	Tom
    Miller	 	 	 
	President	 	 	 
	 	 	 	 
	Affix
    Corporate Seal	 	 	 
	 	 	 	 
	 	 	CLIENT:
    BAR CODE SPECIALTIES, INC.
	 	 	 	 
	 	 	By:	/s/
    Gilles Normand Gaudreault
	 	 	Name:	Gilles
    Normand Gaudreault
	 	 	Title:	Chief
    Executive Officer
	 	 	 	 
	Attested
    by:	 	 	 
	 	 	 	 
	/s/
    Tom Miller	 	 	 
	Tom
    Miller	 	 	 
	President	 	 	 
	 	 	 	 
	Affix
    Corporate Seal	 	 	 
	 	 	 	 
	 	 	ACTION:
    Action Capital Corporation
	 	 	 	 
	 	 	By:	/s/
    Patrick A. Thom
	 	 	Name:	Patrick
    A. Thom
	 	 	Title:	President