Document:

Exhibit 10.3

Exhibit 10.3

NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

AMERICAN LITHIUM MINERALS, INC.
130 King Street West, Suite 3670
Toronto, ON M5X 1A9
Attention: Hugh Aird

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
CONVERTIBLE DEBENTURE

UNITED STATES ACCREDITED INVESTORS

INSTRUCTIONS TO PURCHASER

		
	

   1. 
	

   This Subscription form is for use by United States Accredited Investors.

	

   
	

    

	

   2.
	

   COMPLETE the information on page 2 of this Subscription Agreement.

	

   
	

    

	3.	COMPLETE the Questionnaire attached on page 3 to this Subscription Agreement (the "US Questionnaire").
		 
	4.	All other information must be filled in where appropriate.

 

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

TO: American Lithium Minerals, Inc. (the “Issuer” or the “Company”)

Subject and pursuant to the terms set out in this Subscription Agreement and the other schedules and appendices attached which are hereby incorporated by reference, the Purchaser hereby irrevocably subscribes for, and on Closing will purchase from the Issuer, the following securities at the following price:

					
	 	Debenture in the principal amount of USD$500,000, for a total purchase price of USD$500,000. 	 
	 		 		 
	 	The Purchaser owns, directly or indirectly, the following securities of the Issuer:	 
	 		  		 
	 		 		 
	 	[Check if applicable] The Purchaser is an [   ] affiliate of the Issuer. 	 

The Purchaser directs the Issuer to issue, register and deliver the certificates representing the Purchased Securities as follows:

					
	 	REGISTRATION INSTRUCTIONS	 	DELIVERY INSTRUCTIONS	 
	 				 
	 	Look Back Investments, Inc.		 	  
	 	Name to appear on certificate		Name and account reference, if applicable	 
	 				 
	  	Calle Eusebio A. Morales, Suite 1-A, #5		 	 
	 	 		Contact name	 
	   	El Cangrejo, Panama City, Panama		 	  
	 	Address		Address	 
	 	 		 	  
	 	  	 	Telephone Number	  

EXECUTED by the Purchaser this _______ day of _____________, 2011. By executing this Subscription Agreement, the Purchaser certifies that the Purchaser and any beneficial purchaser for whom the Purchaser is acting is resident in the jurisdiction shown as the “Address of Purchaser”.

					
	 	WITNESS:	 	EXECUTION BY PURCHASER:	 
	 	/s/Michelle Peralta		/s/Yodaus Murillo	 
	 	Signature of Witness		Authorized signatory	 
	 	Michelle Peralta		Look Back Investments, Inc.	 
	 	Name of Witness		Name of Purchaser	 
	 	 		 	 
	 	Address of Witness		Name of authorized signatory (please print)	 
	  	 		Calle Eusebio A. Morales, Suite 1-A, #5	 
	 	Accepted this 21st day of November, 2011		El Cangrejo, Panama City, Panama	 
	 	AMERICAN LITHIUM MINERALS, INC.		Address of Purchaser	 
	 	Per:		 	 
	 	/s/Hugh Aird		*Telephone Number	 
	 	Authorized Signatory		 	 
	 	  		*EIN/Tax ID No.:	 

*Required from all Purchasers

By signing this acceptance, the Issuer agrees to be bound by the General Provisions on pages 3 to 12 of this Subscription Agreement and the other schedules and appendices incorporated by reference.

 

UNITED STATES
ACCREDITED INVESTOR QUESTIONNAIRE

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Subscription Agreement.

This Questionnaire is for use by the Purchaser who is a US person (as that term is defined Regulation S of the United States Securities Act of 1933 (the “1933 Act”)) and has indicated an interest in purchasing Debentures of the Issuer. The purpose of this Questionnaire is to assure the Issuer that the Purchaser will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws. The Issuer will rely on the information contained in this Questionnaire for the purposes of such determination. The Securities will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act. This Questionnaire is not an offer of the Securities or any other securities of the Issuer in any state other than those specifically authorized by the Issuer.

All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, each Purchaser agrees that, if necessary, this Questionnaire may be presented to such parties as the Issuer deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Securities hereunder.

The Purchaser covenants, represents and warrants to the Issuer that it satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the 1933 Act, as adjusted by Section 413 of the Dodd-Frank Wall Street Reform Consumer Protection Act, as indicated below: (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Purchaser satisfies.)

			
	________ Category 1		An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of US $5,000,000.
			 
	________ Category 2		A natural person whose individual net worth, or joint net worth with that person’s spouse, on the date of purchase exceeds US $1,000,000, excluding the value of such person’s primary residence.
			 
	________ Category 3		A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
			 
	________ Category 4		A “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000
established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the

 

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employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors.

			
	________ Category 5		A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States).
			 
	________ Category 6		A director or executive officer of the Issuer.
			 
	________ Category 7		A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act.
			 
	________ Category 8		An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories.

Note that prospective Purchaser claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Issuer with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Purchaser’s status as an Accredited Investor.

If the Purchaser is an entity which initialled Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

	
	

    

	

   The Purchaser hereby certifies that the information contained in this Questionnaire is complete and accurate and the Purchaser will notify the Issuer promptly of any change in any such information. If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the Purchaser represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.

	

    

	

   IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ___ day of _______________, 2011.

 

			
	If a corporation, partnership or other entity:		If an individual:
	 		 
	Print Name of Purchaser/Disclosed Principal		Print Name of Purchaser/Disclosed Principal
	 		 
	Signature of Authorized Signatory		Signature
	 		 
	Name and Position of Authorized Signatory		Representative Capacity, if applicable
	 		 
	 
	Jurisdiction of Residence of Purchaser/Disclosed Principal Jurisdiction of Residence of Purchaser/Disclosed
Principal

 

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GENERAL PROVISIONS

1. Subscription

1.1 The undersigned (the "Purchaser") hereby irrevocably subscribes for and agrees to purchase from the Issuer, on the basis of the representations and warranties and subject to the terms and conditions set forth herein, such number of Convertible Debentures (the "Debentures") as indicated on page 2 hereof, in the principal amount of US$500,000 per Debenture, for the aggregate principal amount indicated thereon (the “Subscription Proceeds”) (the “Offering”).

1.2 The Issuer and Purchaser acknowledge and agree that the purchase and sale pursuant to the Subscription Agreement is part of and is the first purchase under an agreement dated August 9, 2011 and executed August 15, 2011 between the Issuer and Purchaser whereby the Purchaser pursuant to the terms of that Agreement may subscribe for up to $2,500,000 of Debentures pursuant to the terms and conditions of such Agreement.

1.3 The Subscription will be effective upon the Closing Date (as defined in below Section 4.) subject to the prior delivery of the Subscription Proceeds and to the execution and delivery by the parties of this Subscription Agreement and all agreements and documents referenced herein.

1.4 Notwithstanding anything to the contrary herein, the Purchaser acknowledge that, as at the date of this Agreement, the Company has insufficient authorized capital to effect a conversion of the Debentures in accordance with the terms of this Agreement. In addition, Purchaser acknowledges that the Company has made no representation or warranty regarding its ability to increase its authorized capital. However, the Company and the Purchaser each agrees to use commercially reasonable efforts to increase the authorized capital of the Company in an amount sufficient to accommodate the potential conversion of the Debentures in accordance with this Agreement.

2. Description of Debentures

2.1 Each Debenture has a face value of USD$500,000, and shall be secured against the Company's Borate Hills Property located in Nevada in accordance with the Security Agreement attached hereto as Exhibit B hereto. Certificate(s) representing the Debenture will be in the form attached as Exhibit A hereto. Each Debenture shall have a term expiring on the date that is five (5) years from the date of issuance (the "Due Date"). All or any portion of the outstanding principal sum and accrued interest of each Debenture is convertible from time to time on or after the Closing Date at the option of the Purchaser into common shares (the "Shares") in the capital stock of Company. The price per share at which the Debenture may be converted shall be one half of the average of the closing price of the Issuer’s common stock (as quoted by OTC Markets) on the five (5) trading days immediately following receipt of notice of conversion and ending on the Conversion Date. The Debenture is due and payable on the Due Date, if not converted on the Due Date. The Purchaser may, at its option, elect to convert the Debenture held by him in accordance with the foregoing in lieu of receiving any funds payable under the Debenture. The Debenture and the Shares are herein collectively referred to as the “Securities”.

2.2 The Debenture carries interest at the rate of eleven percent (11%) per annum, payable quarterly in arrears.

3. Payment

3.1 The Subscription Proceeds must accompany this Subscription and shall be paid by certified cheque or bank draft drawn on a bank in the United States reasonably acceptable to the Issuer, and made payable and delivered to the Issuer. Alternatively, the Subscription Proceeds may be wired to the Issuer or its designee pursuant to wiring instructions that will be provided to the Purchaser upon request. If the funds are wired to the designee, the designee and Issuer shall confirm acceptance and delivery of the funds to the satisfaction of the Issuer.

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3.2 The Purchaser acknowledges and agrees that this Subscription Agreement, the Subscription Proceeds and any other documents delivered in connection herewith will be held on behalf of the Issuer. In the event that this Subscription Agreement is not accepted by the Issuer for whatever reason, which the Issuer expressly reserves the right to do, within 30 days of the delivery of an executed Subscription Agreement by the Purchaser, this Subscription Agreement, the Subscription Proceeds (without interest thereon) and any other documents delivered in connection herewith will be returned to the Purchaser at the address of the Purchaser as set forth in this Subscription Agreement.

3.3 Where the Subscription Proceeds are paid to the Issuer, the Issuer is entitled to treat such Subscription Proceeds as an interest free loan to the Issuer until the earlier of such time as the Subscription is accepted and the certificates representing the Debentures have been issued to the Purchaser and 30 days following the delivery of an executed Subscription Agreement by the Purchaser.

4. Closing

4.1 Closing of the offering of the Debentures (the “Closing”) shall occur on or before August 18, 2011 (the “Closing Date”).

5. Acknowledgements of Purchaser

5.1 The Purchaser acknowledges and agrees that:

			
	

   
	

   (a)
	

   the Securities have not been registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the 1933 Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons (as defined herein), except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state securities laws;

	

   
	

   
	

    

	

   
	

   (b)
	

   the Issuer will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

	

   
	

   
	

    

	

   
	

   (c)
	

   Subject to compliance with applicable securities laws, the Purchaser may enter into lawful hedging transactions in the course of any hedging position the Purchaser assumes and may enter into lawful short positions or other lawful derivative transactions relating to the Securities or to interests in the Securities and may deliver the Securities or such interests in the Securities to close out the Purchaser’s short or other positions or to otherwise settle such derivative transactions, and the Purchaser may loan or pledge the Securities or interests in the Securities to third parties who in turn may dispose of the Securities.

	

   
	

   
	

    

	

   
	

   (d)
	

   the decision to execute this Subscription Agreement and purchase the Securities agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Issuer and such decision is based entirely upon a review of public information contained in the Issuer’s filings with the United States Securities and Exchange Commission (the "Issuer Public Information"). If the Issuer has presented a business plan or any other type of corporate profile to the Purchaser, the Purchaser acknowledges that the business plan, the corporate profile and any projections or predictions contained in any such documents may not be achieved or be achievable;

	

   
	

   
	

    

	

   
	

   (e)
	

  the Purchaser and the Purchaser's advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Issuer regarding the Offering, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify

 

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the accuracy of the information contained in the Issuer Public Information, or any business plan, corporate profile or any other document provided to the Purchaser;

			
	

   
	

   (f)
	

   the books and records of the Issuer were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Purchaser during reasonable business hours at its principal place of business and that all documents, records and books pertaining to this Offering have been made available for inspection by the Purchaser, the Purchaser's attorney and/or advisor(s);

	

   
	

   
	

    

	

   
	

   (g)
	

   subject to sections 3.2 and 3.3 of this Subscription Agreement, by execution hereof the Purchaser has waived the need for the Issuer to communicate its acceptance of the purchase of the Securities pursuant to this Subscription Agreement;

	

   
	

   
	

    

	

   
	

   (h)
	

   the Issuer is entitled to rely on the representations and warranties and the statements and answers of the Purchaser contained in this Subscription Agreement and in the Questionnaire, and the Purchaser will hold harmless the Issuer from any loss or damage it may suffer as a result of the Purchaser's failure to correctly complete this Subscription Agreement or the Questionnaire;

	

   
	

   
	

    

	

   
	

   (i)
	

   the Purchaser will indemnify and hold harmless the Issuer and, where applicable, its respective directors, officers, employees, agents, advisors and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Purchaser contained herein, the Questionnaire or in any other document furnished by the Purchaser to the Issuer in connection herewith, being untrue in any material respect or any breach or failure by the Purchaser to comply with any covenant or agreement made by the Purchaser to the Issuer in connection therewith;

	

   
	

   
	

    

	

   
	

   (j)
	

   the Purchaser has been advised to consult its own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions and it is solely responsible (and the Issuer is not in any way responsible) for compliance with applicable resale restrictions;

	

   
	

   
	

    

	

   
	

   (k)
	

   the Securities are not listed on any stock exchange or on the NASDAQ automated dealer quotation system and no representation has been made to the Purchaser that any of the Securities will become listed on any stock exchange or on the NASDAQ automated dealer quotation system;

	

   
	

   
	

    

	

   
	

   (l)
	

   the Securities are currently quoted on the OTC (QB) electronic inter-dealer quotation system operated by OTC Markets Group, Inc., however there is no guarantee that the Securities will remain quoted on the OTC (QB) or on any other inter-dealer quotation system;

	

   
	

   
	

    

	

   
	

   (m)
	

   neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities ;

	

   
	

   
	

    

	

   
	

   (n)
	

   no documents in connection with this Offering have been reviewed by the SEC or any state securities administrators;

	

   
	

   
	

    

	

   
	

   (o)
	

   there is no government or other insurance covering any of the Securities; and

	

   
	

   
	

    

	

   
	

   (p)
	

  this Subscription Agreement is not enforceable by the Purchaser unless it has been accepted by the Issuer, and the Purchaser acknowledges and agrees that the Issuer reserves the right to reject any Subscription for any reason.

 

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6. Representations, Warranties and Covenants of the Purchaser

6.1 The Purchaser hereby represents and warrants to and covenants with the Issuer (which representations, warranties and covenants shall survive the Closing) that:

			
	 	

   (a)
	

   the Purchaser and each beneficial purchaser for whom it is acting is resident in, or if not an individual, has its head office in, the jurisdiction set out on the execution page of this Subscription Agreement and such address was not created and is not used solely for the purpose of acquiring the Debentures;

	 	

   
	

    

	 	

   (b)
	

   if the Purchaser or any beneficial purchaser for whom the Purchaser is acting is resident in the United States, the Purchaser is U.S. Accredited Investor (as defined in Rule 501(a) of Regulation D) and is acquiring the Debentures as an investment for its own account, or for the account of a as to which it exercises sole investment discretion, and not with a view to any resale, distribution or other disposition of the Debentures in violation of the federal or state securities laws of the United States, and the Purchaser has concurrently executed and delivered to the Issuer a completed United States Accredited Investor Questionnaire in the form attached to this Subscription Agreement;

	 	

   
	

    

	 	

   (c)
	

   the Purchaser has received and carefully read this Subscription Agreement;

	 	

   
	

    

	 	

   (d)
	

   the Purchaser has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Purchaser is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Purchaser;

	 	

   
	

    

	 	

   (e)
	

   the Purchaser (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

	 	

   
	

    

	 	

   (f)
	

   the Purchaser is aware that an investment in the Issuer is speculative and involves certain risks, including the possible loss of the investment;

	 	

   
	

    

	 	

   (g)
	

   the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Purchaser, or of any agreement, written or oral, to which the Purchaser may be a party or by which the Purchaser is or may be bound;

	 	

   
	

    

	 	

   (h)
	

   the Purchaser has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser;

	 	

   
	

    

	 	

   (i)
	

   the Purchaser has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Issuer, and the Purchaser is providing evidence of such knowledge and experience in these matters through the information requested in the Questionnaire;

	 	

   
	

    

	 	

   (j)
	

  the Purchaser understands and agrees that the Issuer and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Purchaser shall promptly notify the Issuer;

 

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   (k)
	

   all information contained in the Questionnaire is complete and accurate and may be relied upon by the Issuer, and the Purchaser will notify the Issuer immediately of any material change in any such information occurring prior to the Closing Date of the purchase of the Debentures;

	

   
	

   
	

    

	

   
	

   (l)
	

   the Purchaser is purchasing the Securities for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest is such Securities, and the Purchaser has not subdivided his interest in the Securities with any other person;

	

   
	

   
	

    

	

   
	

   (m)
	

   the Purchaser is not an underwriter of, or dealer in, the common shares of the Issuer, nor is the Purchaser participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

	

   
	

   
	

    

	

   
	

   (n)
	

   the Purchaser has made an independent examination and investigation of an investment in the Securities and the Issuer and has depended on the advice of its legal and financial advisors and agrees that the Issuer will not be responsible in anyway whatsoever for the Purchaser's decision to invest in the Securities and the Issuer;

	

   
	

   
	

    

	

   
	

   (o)
	

   if the Purchaser is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the investor accounts for which the Purchaser acts as a fiduciary or agent satisfy the definition of an "Accredited Investor", as the term is defined under Regulation D of the 1933 Act;

	

   
	

   
	

    

	

   
	

   (p)
	

   if the Purchaser is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the Purchaser has sole investment discretion with respect to each such account, and the Purchaser has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account;

	

   
	

   
	

    

	

   
	

   (q)
	

   the Purchaser is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and

	

   
	

   
	

    

	

   
	

   (r)
	

  no person has made to the Purchaser any written or oral representations:

 

			
	

   
	

   (i) 
	

   that any person will resell or repurchase any of the Securities ;

	

   
	

    
	

    

	

   
	

   (ii) 
	

   that any person will refund the purchase price of any of the Securities ;

	

   
	

   
	

    

	

   
	

   (iii)
	

  as to the future price or value of any of the Securities; or

 

			
	

   
	

   (s)
	

  that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the securities of the Issuer on any stock exchange or automated dealer quotation system.

7. Acknowledgement and Waiver

7.1 The Purchaser has acknowledged that the decision to purchase the Securities was solely made on the basis of the Issuer Public Information (as defined in paragraph 5.1 (d) above). Accordingly, the Purchaser hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Purchaser might be entitled in connection with the distribution of any of the Securities.

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8. Representations and Warranties of the Issuer

8.1 The Issuer represents and warrants to the Purchaser as of the date hereof and as of each applicable Closing Date that:

			
	

   
	

   (a)
	

   the Issuer is a corporation duly organized, existing and in good standing under the laws of the State of Nevada and has the power and authority to conduct the business which it conducts and proposes to conduct;

	

   
	

   
	

    

	

   
	

   (b)
	

   the Issuer’s execution, delivery, performance of this Agreement, the Securities and any other agreement executed and delivered by the Issuer pursuant to this Agreement or in connection herewith (collectively the “Transaction Documents”) have been duly authorized, executed and delivered by the Issuer and are valid and binding agreement enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity. The Issuer has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder;

	

   
	

   
	

    

	

   
	

   (c)
	

   no consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the Issuer, or any other Person is required for the execution by the Issuer of the Transaction Documents and compliance and performance by the Issuer of its obligations under the Transaction Documents including, without limitation, the issuance and sale of the Securities;

	

   
	

   
	

    

	

   
	

   (d)
	

   except as disclosed in the Issuer Public Information, the Issuer is not in default of any material term, covenant or condition under or in respect of any judgment, order, agreement or instrument to which it is a party or to which it or any of the property or assets thereof are or may be subject, and no event has occurred and is continuing, and no circumstance exists which has not been waived, which constitutes a default in respect of any commitment, agreement, document or other instrument to which the Issuer is a party or by which it is otherwise bound entitling any other party thereto to accelerate the maturity of any amount owing thereunder or which could have a material adverse effect upon the condition (financial or otherwise), property, assets, operations or business of the Issuer;

	

   
	

   
	

    

	

   
	

   (e)
	

  the Securities have been duly authorized and, when issued in accordance with the terms of this Agreement and the Securities, as applicable, and upon payment of the agreed upon consideration therefore:

 

			
	
	(i) 
	will be, free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the 1933 Act and any applicable state securities laws;
	
	 
	 
	
	(ii) 
	will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Issuer; and
	
	
	 
	
	(iii)
	assuming the representations and warrants of the Purchaser pursuant to this Agreement are true and correct, will not result in a violation of Section 5 under the 1933 Act.

The Issuer will use its reasonable commercial efforts to reserve from its duly authorized capital stock the common shares issuable pursuant to the Debentures in order to issue the Shares;

			
	

   
	

   (f)
	

  the Issuer has not engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Securities;

 

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   (g)
	

   During the two (2) years prior to the date hereof, the Issuer has filed annual, quarterly and current reports pursuant to US securities laws and has filed all reports required to be filed by it under such US securities laws (all of the foregoing filed prior to the date hereof or prior to the Closing Date, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective dates, such reports complied in all material respects with the requirements under US securities laws except to the extent that the Issuer filed amendments to such reports in which event the SEC Documents, as amended, complied in all material aspects with the requirements under US securities laws and the rules and regulations of the SEC promulgated thereunder. None of the SEC Documents at the time they were filed with the SEC contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

	

   
	

   
	

    

	

   
	

   (h)
	

   there is no action, suit or legal proceeding (“Action”) which adversely affects or challenges the legality, validity or enforceability of any of the Loan Documents or the Securities. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Issuer under US securities laws;

	

   
	

   
	

    

	

   
	

   (i)
	

   the Issuer is not, and is not an affiliate of, and immediately following the Closing Date will not have become, and “investment company” within the meaning of the Investment Company Act of 1940, as amended;

	

   
	

   
	

    

	

   
	

   (j)
	

   Neither the Issuer, nor to the knowledge of the Issuer, any agent or other Person acting on behalf of the Issuer, has, directly or indirectly:

	

   
	

   
	

    

		 	(i) used any funds, or will use any proceeds from the sale of the Debentures, for any unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity;
			 
		 	(ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign political parties or campaigns from corporate funds;
			 
		 	(iii) failed to disclose fully any contribution made by the Issuer (or made by any Person acting on their behalf of which the Issuer is aware) which is in violation of law; or
			 
		 	(iv) has violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder;
	

   
	

   
	

    

	

   
	

   (k)
	

   The operation of the Issuer are and have been conducted at all times in compliance with the money laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations, guidelines, issued, administered or enforced by any applicable governmental agency (collectively the “Money Laundering Laws”) and no action, suit, or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Issuer with respect to the Money Laundering Laws is pending, or the best knowledge of the Issuer, threatened;

	

   
	

   
	

    

	

   
	

   (l)
	

  None of the Issuer, any of their affiliates and any Person acting in their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of the shareholders of the Issuer for the purposes of any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Issuer are listed, designated or quoted;

 

- 10 -

	 	(m)      	

   the Issuer is not in violation of any term of or in default under any certificate of designations of any outstanding series of common or preferred stock of the Issuer, its Articles of Incorporation or Bylaws or their organizational charter or certificate of incorporation or bylaws, respectively. The Issuer is not in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Issuer, and the Issuer will not conduct its business in violation of any of the foregoing, except for possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Issuer possesses all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and the Issuer has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

	 	 	 
	 	(n)      	

   the Issuer understands and acknowledges that the number of Shares issuable upon conversion of the Debentures will increase in certain circumstances. The Issuer further acknowledges that its obligation to issue Shares upon conversion of the Debentures in accordance with this Agreement and the Debentures is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Issuer;

	 	 	 
	 	(o)      	

   the Issuer has leasehold title to all real property and good and marketable title to all personal property owned by them which is material to the business of the Issuer, free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Issuer. Any real property and facilities held under lease by the Issuer are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Issuer; and

	 	 	 
	 	(p)      	

   the Issuer:

	 	 	

   
 

	 	(i)      	

   is in compliance with any and all Environmental Laws (as hereinafter defined);

	 	 	 
	 	(ii)      	

   has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and

	 	 	 
	 	(iii)      	

   is in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

9. Legending of Subject Securities

9.1 The Purchaser hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Securities will bear a legend in substantially the following form:

- 11 -

NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

9.2 The Purchaser hereby acknowledges and agrees to the Issuer making a notation on its records or giving instructions to the registrar and transfer agent of the Issuer in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.

10. Costs

10.1 The Purchaser acknowledges and agrees that all costs and expenses incurred by the Purchaser (including any fees and disbursements of any special counsel retained by the Purchaser) relating to the purchase of the Debentures shall be borne by the Purchaser.

11. Governing Law

11.1 This Subscription Agreement will be governed by and construed in accordance with the internal laws of Nevada (without reference to its rules governing the choice or conflict of laws), and the parties hereto irrevocably attorn and submit to the exclusive jurisdiction of the courts of Nevada with respect to any dispute related to this Subscription Agreement.

12. Survival

12.1 This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Securities by the Purchaser pursuant hereto.

13. Assignment

13.1 This Subscription Agreement is not transferable or assignable.

14. Severability

14.1 The invalidity or unenforceability of any particular provision of this Subscription Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.

15. Entire Agreement

15.1 Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Securities and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Issuer or by anyone else.

16. Notices

16.1 All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Purchaser shall be directed to the address on page 2 and notices to the Issuer shall be directed to it at AMERICAN LITHIUM MINERALS, INC. 130 King Street West, Suite 3670, Toronto, ON M5X 1A9 Attention: Hugh Aird

- 12 -

17. Counterparts and Electronic Means

This Subscription Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall constitute an original and all of which together shall constitute one instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date hereinafter set forth.

18. Time is of the essence

Time shall be of the essence of this Subscription Agreement.

EXHIBIT A

NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

US$500,000

SECURED 11% CONVERTIBLE DEBENTURE

Issued by:

AMERICAN LITHIUM MINERALS, INC.
(herein the “Company”)

		
	Due August 18, 2016	Debenture #_____

All amounts described herein refer to US dollars unless otherwise specified.

1. PROMISE TO PAY

	 	(a)      	

   Principal

For value received, the Company, a Nevada corporation, having an office at _130 King Street West, Suite 3670, Toronto, ON M5X 1A9, HEREBY PROMISES TO REPAY to Look Back Investments Inc. (the “Holder”) the principal sum of FIVE HUNDRED THOUSAND DOLLARS in the lawful money of United States of America (US$500,000), together with interest on the balance of the principal sum from time to time remaining unpaid as provided for in Section 1(b) hereof, at 4:00 p.m. (Pacific Standard Time) on August 18, 2016 (the “Due Date”) subject to such principal sum being reduced through conversion of a portion of same into common shares in the capital of the Company pursuant to Section 5 hereof.

	 	(b)      	

   Interest

The outstanding portion of the principal sum from time to time will bear interest at a rate equal to eleven percent (11%) per annum, payable quarterly in arrears.

2. DEFAULT

	 	(a)      	

   One hundred percent (100%) of the principal money hereby secured and accrued interest shall immediately become due and payable:

	 	 	

   
 

	 	(i)      	

   if the Company defaults in the observance or performance of any term, covenant or condition contained in this Debenture and such default is not remedied within fifteen (15)

- 2 -

business days after service on the Company by the Holder of a notice in writing requiring that such default be remedied;

	 	(ii)      	

   if the Company becomes bankrupt or insolvent or goes into liquidation, either voluntarily or under any order of a court of a competent jurisdiction, or makes a general assignment for the benefit of its creditors, or otherwise acknowledges its insolvency;

	 	 	 
	 	(iii)      	

   the Company ceases or threatens to cease to carry on business;

	 	 	 
	 	(iv)      	

   a receiver, receiver and manager or receiver-manager of any property, assets or undertaking of the Company is appointed;

	 	 	 
	 	(v)      	

   any execution, sequestration or other process of any kind becomes enforceable against the Company, or a distress or analogous process is levied upon any property or asset of the Company;

	 	 	 
	 	(vi)      	

   the Company defaults in or under any obligation or agreement, other than this Debenture, which requires payment by the Company of any amount in excess of Two Hundred and Fifty Thousand Dollars in the lawful money of the United States (US$250,000);

	 	 	 
	 	(vii)      	

   the holder of any encumbrance against any property or asset of the Company does anything to enforce or realize on such encumbrance;

	 	 	 
	 	(viii)      	

   the Company permits any sum which has been admitted as due and payable by it, or which is not disputed to be due and payable by it, to remain unpaid for ninety (90) days after legal proceedings have been taken to compel payment thereof;

	 	 	 
	 	(ix)      	

   the Company loses its certificate of incorporation by expropriation, forfeiture or otherwise; or

	 	 	 
	 	(x)      	

   the Holder in good faith believes, and has commercially reasonable grounds to believe, that the prospect of payment or performance of any of the obligations of the Company is materially impaired.

3. COVENANTS OF THE COMPANY

The Company hereby covenants with the Holder that at all times during the currency of this Debenture it:

	 	(a)      	

   will well and truly pay all monies which it may become obligated to pay to the Holder;

	 	 	 
	 	(b)      	

   promptly pay as and when due all amounts and perform all obligations as may be required in order to prevent the enforcement of any security interests which may rank prior to or equally with the security interests granted to the Holder in respect of this Debenture;

	 	 	 
	 	(c)      	

   will maintain and secure its incorporation and corporate organization in good standing;

	 	 	 
	 	(d)      	

   will conduct its business in a proper and businesslike manner and, subject to all the provisions herein contained, diligently preserve all the rights, powers, privileges and goodwill owned by it;

	 	 	 
	 	(e)      	

   will assume and pay all costs, charges and expenses, including legal costs of the Holder incidental to:

	 	 	

   
 

	 	(i)      	

   the preparation of this Debenture; and

	 	 	

   
 

- 3 -

	 	(ii)      	

   any proceedings taken to enforce the remedies under this Debenture, or by reason of non- payment or procuring payment of the monies secured by this Debenture; and

	 	 	

   
 

	 	(f)      	

   will strictly comply with every covenant and undertaking hereunder.

4. WAIVER

The Holder may waive any breach of the Company of any of the provisions contained in this Debenture, or any default by the Company in the observance or performance of any covenant or condition required to be observed or performed by the Company under the terms of this Debenture; provided always that no failure or delay on the part of the Holder to exercise any right, power or remedy given herein or by statute or at law or in equity or otherwise shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

5. CONVERSION

Upon issuance of this Debenture, the Holder shall have the right to convert all or any portion of the principal sum and accrued interest of this Debenture remaining outstanding and owing to the Holder (the “Convertible Indebtedness”) (as at the date of the election to so convert) into common shares (the “Shares”) in the capital stock of the Company. The price per share shall be one half (1/2) of the average of the closing price of the Company’s common stock (as quoted by OTC Markets) on the five (5) trading days immediately following receipt of the notice of conversion and ending on the date of conversion. The Holder may, at its option, elect to convert the Debentures held by the Holder in accordance with the foregoing in lieu of receiving any funds payable under the Debentures.

Such conversion may be effected by the presentation of this Debenture at the offices of the Company, accompanied by a conversion notice (the “Conversion Notice”) in the form attached as Appendix 1, signed by the Holder, notifying the Company as to the exercise of the right of conversion, specifying the amount of the Convertible Indebtedness being converted, and setting forth the name(s) and address(es) of the nominee(s) of the Holder in whose name(s) the Shares issuable upon such conversion are to be registered. Such conversion shall be deemed to have been effected immediately prior to the close of business on the date the Company receives the Conversion Notice.

As promptly as practicable after the presentation of this Debenture for conversion, the Company shall cause to be issued to the Holder or the Holder’s nominee(s) a certificate or certificates representing the number of fully paid and non-assessable Shares into which all or any portion of the Convertible Indebtedness has been converted and shall cause the Holder or the Holder’s nominee(s) to be entered in its books as the holder(s) of the number of Shares into which any of the Convertible Indebtedness is converted.

In the event that any amounts remain outstanding hereunder after giving effect to such conversion, the Company shall issue a new Debenture having a face amount equal to the remaining Convertible Indebtedness owing by the Company to the Holder as promptly as practicable after the presentation of this Debenture for conversion.

The conversion of the Convertible Indebtedness shall in respect of the amount so converted be deemed to have been made immediately prior to the close of business on the date on which this Debenture is surrendered for conversion. The Holder’s rights in respect of the converted portion shall terminate at such time of surrender, and the nominee(s) of the Holder entitled to receive the Shares into which all or any portion of any of the Convertible Indebtedness is converted shall be treated, as between the Company and such person or persons, as having become the holder or holders of record of such Shares on that date, provided that if this Debenture is surrendered for conversion on any day on which the register for the Company’s common shares is closed, the Holder or the Holder’s nominee(s) entitled to receive Shares upon the conversion of this Debenture shall become the shareholder(s) of record of such Shares as of the date on which the common share register is next open.

- 4 -

6. FRACTIONAL SHARES

No fractional Shares shall be issued upon conversion of any Debentures, and in lieu of any fractional Shares which would otherwise be issuable upon conversion, the Company shall pay a cash adjustment equal to such fraction multiplied by the Conversion Price then in effect; and in determining the number of Shares and the payment, if any in lieu of fractional shares that the Holder shall receive, the principal sums of all debentures being converted as at a particular date shall be aggregated.

7. SECURITY INTEREST

(a) The Debenture is secured by a security interest granted to the Holder for the benefit of the Holder pursuant to a Security Agreement, as delivered by the Company. The Company acknowledges and agrees that should a proceeding under any bankruptcy or insolvency law be commenced by or against the Company, or if any of the Collateral (as defined in the Security Agreement) should become the subject of any bankruptcy or insolvency proceeding, then the Holder should be entitled to, among other relief to which the Holder may be entitled under this Agreement and any other agreement to which the Holder and Company are parties (collectively, "Loan Documents") and/or applicable law, an order from the court granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder to exercise all of its rights and remedies pursuant to the Loan Documents and/or applicable law. The Company expressly waives the benefit of the automatic stay imposed by 11 U.S.C. Section 362. Furthermore, the Company expressly acknowledges and agrees that neither 11 U.S.C. Section 362 nor any other section of the bankruptcy code or other statute or rule (including, without limitation, 11 U.S.C. Section 105) shall stay, interdict, condition, reduce or inhibit in any way the ability of the Holder to enforce any of its rights and remedies under the Loan Documents and/or applicable law. The Company hereby consents to any motion for relief from stay that may be filed by the Holder in any bankruptcy or insolvency proceeding initiated by or against the Company and, further, agrees not to file any opposition to any motion for relief from stay filed by the Holder. The Company represents, acknowledges and agrees that this provision is a specific and material aspect of the Loan Documents, and that the Holder would not agree to the terms of the Loan Documents if this waiver were not a part of this Debenture. The Company further represents, acknowledges and agrees that this waiver is knowingly, intelligently and voluntarily made, that neither the Holder nor any person acting on behalf of the Holder has made any representations to induce this waiver, that the Company has been represented (or has had the opportunity to he represented) in the signing of this Note and the Loan Documents and in the making of this waiver by independent legal counsel selected by the Company and that the Company has discussed this waiver with counsel.

8. RESERVES AND ADJUSTMENTS

	 	(a)      	

   The Company covenants and agrees that so long as this Debenture is outstanding it will at all times reserve out of its unissued share capital against the conversion rights conferred on the holder of such Debenture a sufficient number of unissued Shares to entitle all of the principal sum and accrued interest outstanding under such Debenture outstanding to be converted upon the basis and upon the terms and conditions provided for in this Debenture.

	 	 	 
	 	(b)      	

   in the event of any subdivision or redivision or change of the Shares at any time while this Debenture is outstanding into a greater number of Shares, the Company shall deliver, at the time of the exercise thereafter of the right of conversion by the registered holder of this Debenture, such additional number of Shares as would have resulted from such subdivision, redivision or change if the right of conversion had been exercised prior to the date of such subdivision, redivision or change. In the event of any consolidation or change of the Shares any time while this Debenture is outstanding into a lesser number of Shares, the number of Shares deliverable by the Company on the exercise thereafter of the right of conversion shall be reduced to such number of Shares as would have resulted from such consolidation or change if the right of conversion had been exercised prior to the date of such consolidation or change; and

	 	 	 
	 	(c)      	

   if the Company shall declare and pay a stock dividend upon its Shares or a dividend upon its Shares payable at the option of the respective holders either in Shares or in cash then in each such case from and after the payment date of such dividend the conversion right herein provided for

	 	 	 

- 5 -

shall be increased in proportion to the increase in the number of outstanding Shares of the appropriate class resulting from such dividend.

9. NOTICES

Any notice, direction or other instrument required or permitted to be given under this Debenture by the Holder to the Company or the Company to the Holder shall be in writing and may be given by delivering same or transmitting same by facsimile transmission or similar method of the following address:

			
	 	If to the Company:
	 	 
	 	American Lithium Minerals, Inc.
	 	130 King Street West, Suite 3670
	 	Toronto, ON M5X 1A9
	 	Attention: Hugh Aird
	 	 
	 	If to the Holder:
	 	 
	 	Look Back Investments Inc.
	 	.	 
	 	Calle Eusebio A. Morales,
	 	Suite 1-A, #5 El Cangrejo
	 	Panama City, Panama
	 	 	 
	 	Attention:	Evelyn Quintero Gonzalez, President

Any notice, direction or instrument aforesaid shall:

	 	(a)      	

   if delivered, be deemed to have been given or made at the time of delivery; and

	 	 	 
	 	(b)      	

   if transmitted by facsimile transmission or similar method will be deemed to have been given or made on the next business day following the day on which it was so transmitted.

Any party may give written notice of change of address in the same manner, in which event such notice shall thereafter be given to it as above provided at such changed address.

10. NO MERGER

This Debenture shall not operate by way of merger of any indebtedness or liability of the Company or any other person or persons to the Holder hereunder or under any deed, guarantee, contract, draft, bill of exchange, promissory note or other negotiable instrument by which the same may now or at any time hereafter be represented or evidenced and no judgment recovered by the Holder shall merge or in any way affect the Holder’s right to interest as aforesaid.

11. ENUREMENT

This Debenture and the charges created hereby and all its provisions shall enure to the benefit of the Holder, its successors and permitted assigns, and shall be binding upon the Company, its successors and assigns.

12. ASSIGNABILITY

- 6 -

The obligations of the Company under this Debenture are not assignable without the consent of the Holder. This Debenture shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of the Holder and the permitted assigns of the Debenture.

13. TIME IS OF THE ESSENCE

Time shall be of the essence of this Debenture.

14. INTERPRETATION

The following rules shall be applied in interpreting this Debenture:

	 	(a)      	

   Cross Reference

	 	 	 
	 	 	

   Unless otherwise stated a reference herein to a numbered or lettered clause refers to the clause bearing that number or letter in this Debenture.

	 	 	 
	 	(b)      	

   Proper Law

	 	 	 
	 	 	

   The proper law of this Debenture is the law of the State of Nevada (without reference to its rules governing the choice or conflict of laws), and the parties hereto irrevocably attorn and submit to the exclusive jurisdiction of the courts of Nevada in all matters concerning the interpretation and enforcement of this Debenture.

	 	 	 
	 	(c)      	

   Severability

	 	 	 
	 	 	

   If a provision of this Debenture shall be found to be wholly or partially invalid, this Debenture shall be interpreted as if the invalid provision had not been a part hereof.

	 	 	 
	 	(d)      	

   Headings

	 	 	 
	 	 	

   The headings of the clauses of this Debenture have been inserted for reference only and do not defined, limit, alter or enlarge the meaning of any provision of this Debenture.

	 	 	

   
 

	
	IN WITNESS WHEREOF this Debenture has been executed and delivered this 18th day of August, 2011
	 
	AMERICAN LITHIUM MINERALS LTD.
	 
	Per: ________
	Name:
	Title
	 
	I have authority to bind the Company

 

APPENDIX 1
FORM OF CONVERSION NOTICE

TO: American Lithium Minerals, Inc.

The undersigned, the registered holder (the “Holder”) of the enclosed Debenture, hereby irrevocably elects to convert such Debenture (or $__________ of the principal amount and accrued interest thereof) into common shares (the “Shares”) of American Lithium Minerals, Inc. (the “Company”), in accordance with the terms of the enclosed Debenture and directs that the Shares issuable and deliverable upon the conversion be issued and delivered to the person indicated below.

					
	DATED:	 	 	 
		 	 	Name of Holder (Please Print)
		 	 		 
		 	  	By:	 
		 			Authorized Signatory
		 	  		 
		 	 	 
		 	 	Official Capacity or Title (Please Print)
		 	 		 
		 		 
		 	 	Address
		 	 		 
		 	 	 
		 	 	Address
		 	 		 
		 	 	 
		 	 	Telephone Number
		 	 		 
		 	 		 
	Register the Shares as set forth below:	 	Deliver the Shares as set forth below:
		 	 		 
	 	 	 
	Name	 	Name
		 	 		 
	 	 	 
	Account reference, if applicable	 	Account reference, if applicable
		 	 		 
	 	 	 
	Address	 	Contact Name
		 	 		 
	 	 	 
	Address	 	Address
		 	 		 
		 	 	 
		 	 	Address
		 	 		 
		 	 	 
		 	 	Telephone Numberex10-1.htm

Exhibit 10.1

 

AMENDED AND RESTATED ACCOUNT PURCHASE AGREEMENT

 

This Amended and Restated Account Purchase Agreement dated as of November 21, 2011, is entered into between Wells Fargo Bank, National Association (together with its participants, successors and assigns, “WFBC”), acting through its Wells Fargo Business Credit operating division, and TS Staffing Services, Inc., a Texas corporation (the “Customer”), successor by merger to TS Staffing Corp., a Florida corporation.

 

RECITALS

 

          WHEREAS, the Customer and WFBC are parties to an Account Purchase Agreement dated April 1, 2008 (as amended from time to time, the “Former Account Purchase Agreement”); and

 

          WHEREAS, the Customer and WFBC have agreed to amend and restate the Former Account Purchase Agreement pursuant to the terms and conditions set forth herein.

 

          NOW THEREFORE, in consideration of the premises and the mutual promises herein contained, the parties hereto agree that the Former Account Purchase Agreement is hereby amended and restated to read in its entirety as follows:

 

Article 1.

Purpose of Agreement

 

1.01     Purpose of Agreement. The Customer desires to sell, transfer and assign to WFBC all of the Customer’s right, title and interest in certain of its Accounts, all Related Rights with respect thereto and all proceeds of the foregoing and WFBC desires to purchase all of the Customer’s right, title and interest in such Accounts, all Related Rights with respect thereto and all proceeds of the foregoing on the terms and conditions set forth herein. The purchase of Accounts and Related Rights hereunder shall be full recourse and shall be on a notification of assignment basis. The purpose of this Agreement is commercial in nature and not for household, family or personal use. Terms which are not defined herein shall have the meaning set forth in the Uniform Commercial Code as adopted in the State of Colorado. The Customer acknowledges and agrees that WFBC has not made any representations or warranties concerning the tax, accounting or legal characteristics of the transaction set forth herein and in the Related Documents and that the Customer has obtained and relied upon such tax, accounting and legal advice from its own experts concerning such transaction as it deems appropriate.

 

Article 2.

Definitions

 

2.01     “Acceptable Account” means an Account, in an amount equal to the aggregate face amount of such Account, net of any credits or allowances of any nature, which (a) conforms to the representations, warranties and terms set forth herein and (b) is not an Unacceptable Account as defined below.

 

  

  

  

 

2.02     “Account” means any right of payment of the net amount for goods sold, or leased and delivered or services rendered in the ordinary course of the Customer’s business which is not evidenced by an instrument or chattel paper.

 

2.03     “Account Debtor” means the Customer’s customer or any other Person owing money to the Customer with respect to an Account.

 

2.04     “Affiliate” means (a) any Person that directly, or indirectly through one or more intermediaries, controls another Person (as used in this Section 2.04, a “Controlling Person”) or (b) any Person which is controlled by or is under common control with a Controlling Person. As used herein, the term “control” means possession, directly or indirectly, of the power to vote ten percent (10%) or more of any class of voting securities of a Person or to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

2.05     “Affiliate Account Purchase Agreements” means (a) the Account Purchase Agreement by and between Insurance Overload Services, Inc. and WFBC dated as of August 27, 2010, (b) the Account Purchase Agreement by and between Corporate Resource Development Inc. and WFBC dated as of November 2, 2010, and (c) the Account Purchase Agreement by and between Diamond Staffing Services, Inc. and WFBC dated as of January 31, 2011.

 

2.06     “Aggregate Facility Maximum” means $50,000,000.

 

2.07     “Agreement” means this Account Purchase Agreement.

 

2.08     “Assignment and Schedule of Accounts” means an Assignment and Schedule of Accounts, in form and substance acceptable to WFBC in its sole discretion.

 

2.09     “Business Day” means a day on which the Federal Reserve Bank of New York is open for business.

 

2.10     “Change of Control” means the occurrence of any of the following events: Any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) who does not have an ownership interest in the Customer on the Closing Date is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that any such Person, entity or group will be deemed to have “beneficial ownership” of all securities that such Person, entity or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than ten percent (10%) of the voting power of all classes of ownership of the Customer.

 

2.11     “Closing Date” means November 21, 2011.

 

  

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2.12     “Collateral” shall mean all of the following property of the Customer whether now owned or existing or hereafter created or acquired or arising, or in which the Customer now has or hereafter acquires any rights, and wheresoever located: (a) all Purchased Accounts and all of the Related Rights; (b) all Accounts; (c) all chattel paper (including electronic chattel paper); (d) all inventory and goods; (e) all equipment; (f) all commercial tort claims; (g) all documents (including warehouse receipts, bills of lading, and other documents of title); (h) all general intangibles (including (i) payment intangibles, (ii) intellectual property and (iii) all other choses in action, causes of action, actions, suits, and other legal proceedings of any kind); (i) all instruments; (j) all investment property; (k) all letters of credit and letter of credit rights; (1) all supporting obligations; (m) the Collected Reserve Account and all monies and other things of value contained in the Collected Reserve Account; (n) all of the Customer’s deposit accounts and all of the Customer’s blocked accounts, lockbox accounts or collateral accounts established with or for the benefit of WFBC, and all items in any lockbox established with or for the benefit of WFBC; (o) all Records and all other tangible and electronic books and records of the Customer (including all mail and electronic mail); (p) all amendments, modifications, products, replacements, and substitutions to any of the foregoing; (q) in the case of all goods set forth above, all accessions; (r) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any goods set forth above; (s) all warehouse receipts, bills of lading and other documents of title now or hereafter covering any goods set forth above; (t) all collateral subject to the Lien of any Related Document; (u) all money and other assets of the Customer that now or hereafter come into the possession, custody, or control of WFBC; and (v) all proceeds (including cash, insurance and condemnation proceeds) of, all substitutions and replacements for, and all products of, any of the foregoing.

 

2.13     “Confidential Information” shall have the meaning set forth in Section 11.17.

 

2.14     “Collected Reserve Account” means the internal general ledger account to and from which from time to time credits, debits and disbursements will be made in accordance with this Agreement.

 

2.15     “D & D Account Purchase Agreement” means the Amended and Restated Account Purchase Agreement by and between D & D Staffing, Corp. and WFBC dated as of November 21, 2011.

 

2.16     “Event of Termination” shall have the meaning set forth in Article 9.

 

2.17     “Facility Maximum” means, subject to the availability of Acceptable Accounts and the exercise of WFBC’s discretion as provided herein, the Aggregate Facility Maximum less (a) the aggregate Outstanding Balance (as defined in the applicable Affiliate Account Purchase Agreement) of all Purchased Accounts (as defined in the applicable Affiliate Account Purchase Agreement) under the Affiliate Account Purchase Agreements, less (b) the sum of (i) the Outstanding Balance (as defined in the D & D Account Purchase Agreement) of all Purchased Accounts (as defined in the D & D Account Purchase Agreement) under the D & D Account Purchase Agreement and (ii) any other amounts owing by D & D Staffing, Corp. to WFBC under the D & D Account Purchase Agreement.

 

2.18     “Final Termination Date” shall have the meaning set forth in Section 11.26.

 

2.19     “Former Plan” means any employee benefit plan in respect of which the Customer or a Subsidiary has engaged in a transaction described in Section 4069 or Section 4212(c) of ERISA.

 

2.20     “Guarantor” means every Person now or in the future who agrees to guaranty the obligations of the Customer to WFBC.

 

  

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2.21     “Guaranty” means each guaranty of the obligations of the Customer to WFBC, executed by a Guarantor in favor of WFBC.

 

2.22     “Indemnified Liabilities” shall have the meaning set forth in Section 11.07(a).

 

2.23     “Indemnitees” shall have the meaning set forth in Section 11.07(a).

 

2.24     “Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

2.25     “Insolvency Proceeding” means any proceeding under Title 11 of the United States Code or under the Bankruptcy and Insolvency Act (Canada) or the Companies Creditors Arrangement Act (Canada), any general assignment for the benefit of creditors, any proceeding instituted by or against a Person 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 debtors, or any proceeding seeking the entry of an order for relief by the appointment of a receiver, trustee, custodian or similar official for its or a substantial part of its property.

 

2.26     “LIBOR” means, as of a selected date, the greater of (a) forty-five one hundredths of one percent (0.45%) and (b) the rate per annum (rounded upward, if necessary, to the nearest whole 1/16th of one percent (1.0%) determined pursuant to the following formula:

	 	  	  
	 	
LIBOR =

	
Base LIBOR

	 	  	
100% - LIBOR Reserve Percentage

 

	  	
          (a)          “Base LIBOR” means the rate per annum for United States Dollar deposits quoted by WFBC for the purpose of calculating the effective floating interest rate for loans that reference Daily Three Month LIBOR as the Inter-Bank Market Offered Rate in effect from time to time for 3 month delivery of funds in amounts approximately equal to the principal amount of such loans.

	  	  
	  	
          (b)          “Daily Three Month LIBOR” means, for any day, the rate of interest equal to LIBOR then in effect for delivery for a 3 month period. When interest is determined in relation to Daily Three Month LIBOR, each change in the interest rate shall become effective each Business Day that WFBC determines that Daily Three Month LIBOR has changed.

	  	  
	  	
          (c)          “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by WFBC for expected changes in such reserve percentage during the then current Term.

 

The Customer understands and agrees that WFBC may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as WFBC in its discretion deems appropriate, including the rate offered for U.S. Dollar deposits on the London Inter-Bank Market. WFBC’s determination of LIBOR shall be conclusive, absent manifest error.

 

  

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2.27     “Lien” means any security interest, assignment (whether absolute or by way of security), mortgage, deed of trust, pledge, lien (statutory or otherwise), charge, encumbrance, title retention agreement or analogous instrument or device, including without limitation the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a person or entity, whether now owned or subsequently acquired and whether arising by agreement or operation of law.

 

2.28     “Material Adverse Effect” means any effect upon the business, operations, property or financial or other condition of the Customer which, in the sole determination of WFBC, materially adversely affects (a) the interest of WFBC in the Purchased Accounts, the Related Rights or the Collateral, (b) the collectibility and enforceability of the Purchased Accounts, the Related Rights or the Collateral or WFBC’s rights thereunder or (c) the ability of the Customer to perform its obligations under this Agreement or any of the Related Documents.

 

2.29     “Multiemployer Plan” means a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

2.30     “Other Taxes” shall have the meaning set forth in Section 11.20(b).

 

2.31     “Outstanding Balance” means, for any Purchased Account, the total amount due and payable by the Account Debtor for goods or services rendered by the Customer in respect of such Purchased Account, after reduction for any payments, discounts, credits, rebates, allowances, reserves, incentives, penalties or other reductions or similar adjustments, as determined by WFBC in it sole discretion.

 

2.32     “Participant” shall have the meaning set forth in Section 11.02.

 

2.33     “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto).

 

2.34     “Permitted Lien” and “Permitted Liens” shall have the meaning set forth in Section 6.13.

 

2.35     “Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a governmental entity.

 

2.36     “Plan” means, at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Customer or a Subsidiary is an “employer” as defined in Section 3(5) of ERISA.

 

2.37     “Purchase Limit” means the limit WFBC sets from time to time in its sole discretion establishing the maximum gross face amount of Purchased Accounts which are approved as Acceptable Accounts at any given time owed by a particular Account Debtor.

 

  

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2.38     “Purchase Price” means, for any Purchased Account and the Related Rights with respect thereto, an amount equal to 90% of the gross face amount of such Purchased Account, less any charges with respect to such Purchased Account and less any amount of any trade discounts, credits or allowances, or any other reductions or adjustments to such Purchased Account taken by the Account Debtor. This percentage may be adjusted by WFBC at any time at WFBC’s sole discretion.

 

2.39     “Purchased Account” and “Purchased Accounts” shall have the meanings set forth in Section 3.01(a).

 

2.40     “Purchased Amount” means, at any time, an amount equal to (a) the aggregate Purchase Price, minus (b) the aggregate amount paid to WFBC hereunder on account of Purchased Accounts and Related Rights, net of all fees, interest, expenses and costs hereunder.

 

2.41     “Records” means all tangible and electronic books, records, reports and other documents and information (including hard copies of all data maintained in databases of the Customer on tapes, disks and punch cards) maintained in respect of the Purchased Accounts, the Related Rights, the Collateral and the Account Debtors.

 

2.42     “Related Document” means any agreement, document, exhibit, notice or other written communication to which the Customer is a party or which has at any time been delivered by or on behalf of the Customer to WFBC in connection with this Agreement, including each Guaranty and each guaranty by the Customer in favor of WFBC.

 

2.43     “Related Rights” shall have the meaning set forth in Section 3.01.

 

2.44     “Related Security” means, with respect to the Purchased Accounts, (a) all Liens, and all property subject thereto, from time to time purporting to secure payment of any Purchased Account, including any security deposit, whether pursuant to any related agreement or otherwise; (b) all of the Customer’s right, title and interest in, to and under all guarantees, indemnities, letters of credit, insurance policies (and proceeds and premium refunds thereof) and other agreements or arrangements of whatsoever character from time to time supporting or securing payment of any Purchased Account, whether pursuant to the related agreement or otherwise; (c) all related Records; and (d) all proceeds of or relating to the foregoing and any Purchased Account.

 

2.45     “Reorganization” means with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

2.46     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. § 2615 or any successor regulation thereto.

 

2.47     “Repurchase Price” means, for any Purchased Account and the Related Rights with respect thereto, (a) the lesser of (i) the Purchase Price related to such Purchased Account and the Related Rights with respect thereto and (ii) the Outstanding Balance of such Purchased Account, plus (b) all fees, costs or expenses associated with the repurchase or collection of such Purchased Account and the Related Rights with respect thereto.

 

  

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2.48     “Single Employer Plan” means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

 

2.49     “Subsidiary” means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; unless otherwise specified, “Subsidiary” means a Subsidiary of the Customer.

 

2.50     “Taxes” shall have the meaning set forth in Section 11.20(a).

 

2.51     “Term” means, the period from the date hereof to and including August 27, 2013 and, thereafter, each subsequent twenty-four (24) month period unless WFBC or the Customer notifies the other in writing, at least sixty (60) days prior to the end of the current Term, that such party will deem this Agreement terminated on the last day of the current Term.

 

2.52     “Termination Date” means the earliest of (a) the last day of the current Term, (b) the date WFBC terminates this Agreement pursuant to Section 3.11, (c) the date the Customer terminates this Agreement pursuant to Section 3.11 or Section 11.02, (d) the date on which an Event of Termination described in Section 9.01(d) occurs, or (e) during the continuation of an Event of Termination, the date on which WFBC exercises its right to cease purchasing Accounts.

 

2.53     “Unacceptable Account” means any Account which is not acceptable in WFBC’s sole discretion including the following:

 

           (a)          Accounts unpaid ninety (90) days or more after the invoice date;

 

          (b)         Accounts owed by any unit of government, whether foreign or domestic (provided, however, that Unacceptable Accounts shall not include that portion of Accounts owed by such units of government for which the Customer has provided evidence satisfactory to WFBC that (i) WFBC has a first priority perfected security interest in such Accounts and (ii) such Accounts may be enforced by WFBC directly against such unit of government under all applicable laws);

 

           (c)          Accounts not payable in United States Dollars;

 

           (d)          Any Account which is not an “account” or “payment intangible” within the meaning of Article 9 of the Uniform Commercial Code of all applicable jurisdictions;

 

           (e)          Any Account which (i) does not arise under a contract which is in full force and effect, (ii) does not constitute the legal, valid and binding obligation of the related Account Debtor enforceable against such Account Debtor in accordance with its terms, (iii) is subject to counterclaim, defense or other Lien (other than Permitted Liens), or (iv) is an executory contract or unexpired lease within the meaning of Section 365 of the Bankruptcy Code;

 

  

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           (f)          Any Account which arises under a contract which (i) does not contain an obligation to pay a specified sum of money or is subject to contingencies, (ii) requires the Account Debtor under such contract to consent to the sale, transfer or assignment of the rights to payment under such contract, (iii) limits or restricts the sale, transfer or assignment (whether absolutely or by way of security) of such contract, or (iv) contains a confidentiality provision that purports to restrict WFBC’s exercise of rights under this Agreement, including the right to review such contract;

 

           (g)          Any Account which, in whole or in part, contravenes any law, rule or regulation applicable thereto (including those relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), which contravention would reasonably be expected to have a Material Adverse Effect;

 

           (h)          Accounts owed by an Account Debtor which (i) is not acceptable to WFBC or (ii) is located outside the United States or Canada;

 

           (i)          Accounts owed by an Account Debtor that is insolvent, the subject of an Insolvency Proceeding or has ceased doing business;

 

           (j)           Accounts owed by an owner, shareholder, Subsidiary, Affiliate, officer or employee of the Customer;

 

           (k)          Accounts not beneficially or legally owned by the Customer immediately prior to purchase by WFBC;

 

           (1)         Accounts which represent indebtedness of an Account Debtor that constitutes an illegal, invalid or unenforceable obligation of such Account Debtor to pay the amount thereof on the maturity date stated therein;

 

           (m)         Accounts which, upon purchase by WFBC, are not subject to a duly perfected Lien in WFBC’s favor or which are subject to any Lien in favor of any Person other than WFBC, including any payment or performance bond;

 

           (n)          Accounts that have been restructured, extended, amended or modified;

 

           (o)          Any Account whose sale, transfer or assignment (whether absolutely or by way of security) is limited or restricted by the terms of the contract evidencing or relating to such Account (unless such limitation or restriction has been complied with and WFBC is satisfied in its sole discretion that the sale, transfer or assignment of such Account hereunder is valid and effective);

 

           (p)          That portion of Accounts that constitutes freight fees, allowances, finance charges, service charges or sales or excise taxes;

 

           (q)          Accounts that have been invoiced, paid or partially paid in advance of the full delivery and acceptance of goods or the performance and acceptance of services or in advance of the submission of such Accounts to WFBC;

 

           (r)          Any Account which was not generated in the ordinary course of the Customer’s business;

 

  

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           (s)           Any Account as to which not all of the related invoices have been made available to WFBC in a form acceptable to WFBC, and which are not included in an Assignment and Schedule of Accounts acceptable to WFBC in its sole discretion prior to the proposed purchase of such Accounts;

 

           (t)          Any Account which is subject to any asserted reduction (including any reduction on account of any offsetting account payable of the related Account Debtor or the Customer to an Account Debtor), cancellation, rebate or refund or any dispute, offset, counterclaim, Lien or defense whatsoever; provided that an Account that is subject only in part to any of the foregoing but otherwise qualifies as an Acceptable Account (as determined by WFBC in its sole discretion) shall be an Acceptable Account to the extent not subject to reduction, cancellation, refund, dispute, offset, counterclaim, Lien or other defense;

 

           (u)          Accounts which would cause the Purchase Limit for such Account Debtor to be exceeded;

 

           (v)          Accounts which would cause the Purchased Amount to exceed the Facility Maximum; and

 

           (w)         Accounts, or portions thereof, that fail to conform to the representations and warranties contained herein or are otherwise deemed unacceptable by WFBC in its sole discretion.

 

2.54     “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of Colorado; provided, however, to the extent the law of any other state or other jurisdiction applies to the attachment, perfection, priority or enforcement of any Lien granted to WFBC in any of the Collateral, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other state or jurisdiction for purposes of the provisions hereof relating to such attachment, perfection, priority or enforcement of a Lien in such Collateral. To the extent this Agreement defines the term “Collateral” by reference to terms used in the Uniform Commercial Code, each of such terms shall have the broadest meaning given to such terms under the Uniform Commercial Code as in effect in any state or other jurisdiction.

 

2.55     “Wells Receivers” shall have the meaning set forth in Section 11.17.

 

2.56     “WFBC Discount” means, with respect to each Purchased Account and the Related Rights with respect thereto, an amount equal to the lesser of (i) the sum of LIBOR, which interest rate shall change whenever LIBOR changes, plus five and three tenths of one percent (5.30%) per annum, or (ii) the lawful maximum, if any, in effect from time to time for advances to customers of the type, in the amount, for the purposes and otherwise of the kind herein contemplated. Upon the occurrence and during the continuation of an Event of Termination, with respect to each Purchased Account and the Related Rights with respect thereto, the WFBC Discount shall be equal to the sum of LIBOR, which interest rate shall change whenever LIBOR changes, plus eight and three tenths of one percent (8.30%) per annum, or such lesser amount as WFBC in its sole discretion may determine (but in no event shall such fee be more than the lawful maximum, if any, in effect from time to time for advances of the type, in the amount, for the purposes and otherwise of the kind herein contemplated). The WFBC Discount shall be calculated on the basis of a 360-day year for the actual number of days elapsed. WFBC may increase the WFBC Discount if WFBC’s cost of funds increases for any reason. Such change shall be effective upon the actual change in WFBC’s cost of funds.

 

  

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2.57     “WFBC Discount Fee” shall have the meaning set forth in Section 3.08(a).

 

Article 3.

Purchase and Assignment of Accounts

 

3.01     Purchase and Assignment of Accounts. Pursuant to the terms herein and in consideration for amounts paid to the Customer on the date hereof as well as amounts paid to the Customer during the term hereof, the Customer hereby agrees to sell, transfer and assign to WFBC, with recourse, as absolute owner, and WFBC hereby agrees to purchase from the Customer, during the period from the Closing Date to but excluding the Termination Date, as of the date of each delivery of each Assignment and Schedule of Accounts acceptable to WFBC in its sole discretion, all of the Customer’s right, title and interest in and to the following:

 

           (a)          Each Acceptable Account generated by the Customer which is offered for sale, transfer and assignment by the Customer pursuant to an Assignment and Schedule of Accounts delivered to WFBC by the Customer and accepted by WFBC in its sole discretion (collectively, the “Purchased Accounts” and each, a “Purchased Account”);

 

            (b)         All rights of action (including all rights of stoppage in transit, replevin, repossession, reclamation, setoff, detinue, repurchase and all other rights of action of a consignor, consignee, unpaid vendor, mechanic, artisan or other lienor) accrued or to accrue on each Purchased Account, including full power to collect, sue for, compromise, assign, in whole or in part, or in any other manner enforce collection thereof in the Customer’s name or otherwise;

 

           (c)          All right, title and interest of the Customer in and to the Records, the Related Security, all agreements, documents or instruments relating to the Purchased Accounts and the proceeds thereof, and all deposits and other security for the obligation of any Person under or relating to the Purchased Accounts, in each case whether presently existing or hereafter arising, now owned or hereafter acquired;

 

           (d)          All inventory and goods relating to, or which by sale have resulted in, Purchased Accounts, including all returned inventory and goods; and

 

           (e)          All proceeds of the foregoing in any form (collectively, with the assets described in Section 3.01(b), Section 3.01(c), and Section 3.01(d), the “Related Rights”).

 

The foregoing sales, transfers and assignments do not constitute, and are not intended to result in, an assumption by WFBC of any liability or obligation of the Customer or any other Person in connection with the Purchased Accounts, the Related Rights or under any agreement or instrument relating thereto.

 

3.02     Approval. WFBC shall not purchase an Account and the Related Rights with respect thereto unless such Account is first submitted to WFBC by the Customer for approval. WFBC is not obligated to buy from the Customer any Account and the Related Rights with respect thereto that WFBC does not deem acceptable in its sole discretion.

 

  

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3.03     Required Forms. When the Customer offers an Account and the Related Rights with respect thereto to WFBC for sale, transfer and assignment, WFBC shall receive (a) an Assignment and Schedule of Accounts, in a form satisfactory to WFBC in its sole discretion and signed by an authorized representative of the Customer, (b) an original invoice or an electronic equivalent thereof, either of which must be in a form acceptable to WFBC in its sole discretion, (c) a copy of the bill of lading if applicable, (d) proof of delivery, (e) contract, purchase order, or purchase order number which corresponds with such invoice, as appropriate to the business of the Customer, (f) notification of assignment and waiver of offset signed by the applicable Account Debtor in a form acceptable to WFBC in its sole discretion, and (g) any other document which WFBC may require.

 

3.04     Purchase. Upon approval and acceptance by WFBC of an Account and the Related Rights with respect thereto for the sale, transfer and assignment to WFBC of such Account and such Related Rights, WFBC shall purchase and the Customer shall sell, transfer and assign to WFBC such Account and such Related Rights.

 

3.05     Purchase Price. As consideration for the sale, transfer and assignment to WFBC of an Account and the Related Rights with respect thereto, WFBC shall pay to the Customer the Purchase Price for such Account and such Related Rights on the terms and conditions as stated herein.

 

3.06     Payment of Purchase Price. Upon the sale, transfer and assignment of an Account and the Related Rights with respect thereto to WFBC, and receipt of all documents and forms described in Section 3.03 and upon fulfillment of all conditions precedent to such sale, transfer and assignment as more fully set forth herein, WFBC shall pay the Purchase Price for such Purchased Account and such Related Rights to the Customer as follows, as determined by WFBC in its sole discretion: (i) WFBC shall pay such Purchase Price to the Customer or to any third party at the Customer’s written direction to WFBC, or (ii) WFBC shall advance such Purchase Price to the Collected Reserve Account.

 

3.07     Repurchase of Accounts. The Customer shall (a) repurchase any and all Purchased Accounts and the Related Rights with respect thereto, whether disputed or undisputed, as may be requested by WFBC, from time to time in its sole discretion, and (b) pay on demand the Repurchase Price for such Purchased Accounts and the Related Rights with respect thereto. In any event where repurchase is required under this Agreement, WFBC, at its discretion, may charge the Repurchase Price to the Customer’s Collected Reserve Account which may create a deficit balance in the Collected Reserve Account.

 

3.08     Fees.

 

           (a)          WFBC Discount Fee. The Customer shall pay WFBC a fully earned fee equal to the product of the WFBC Discount multiplied by the aggregate Outstanding Balance of the Purchased Accounts (the “WFBC Discount Fee”). The WFBC Discount Fee shall accrue daily and shall be due and payable in arrears on the first day of each month and on the Final Termination Date.

 

  

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           (b)          Audit Fees. The Customer shall pay WFBC, on demand, audit fees in connection with any audits or inspections conducted by WFBC of the Purchased Accounts, the Related Rights, the Collateral or the Customer’s operations or business, at the rates established from time to time by WFBC as its audit fees, together with all actual out of pocket costs and expenses incurred in conducting any such audit or inspection; provided that the Customer shall not, with the exception of fees, costs, and expenses incurred during the continuation of an Event of Termination, be required to reimburse WFBC for more than two (2) such audits or inspections in any calendar year.

 

           (c)          Termination Fee. If the Termination Date occurs before the last day of the then current Term, including any renewal Terms, in addition to any and all other amounts due hereunder, the Customer shall pay to WFBC an early termination fee equal to the product of (i) one percent (1.0%) times the Aggregate Facility Maximum times (ii) a fraction, the numerator of which is the average Purchased Amount for the six-month period ending on the date such termination fee is paid and the denominator of which is the sum of the average Purchased Amount for the six-month period ending on the date such termination fee is paid plus the average Purchased Amount (as defined in each Affiliate Account Purchase Agreement) for the six-month period ending on the date such termination fee is paid under each Affiliate Account Purchase Agreement.

 

3.09     Mandatory Payments. Unless WFBC shall otherwise consent in a written agreement that sets forth the terms and conditions which WFBC in its discretion may deem appropriate, if the Purchased Amount is at any time greater than the Facility Maximum, the Customer shall pay to WFBC, upon demand, the amount necessary to eliminate such excess. Any such payment received by WFBC under this Agreement may be applied to the amounts owing to WFBC from the Customer, in such order and in such amounts as WFBC in its sole discretion may determine from time to time.

 

3.10     Collected Reserve Account and Reporting and Statement of Account.

 

           (a)          After collection by WFBC of a Purchased Account and the Related Rights with respect thereto, if any, WFBC shall credit the Collected Reserve Account with the amount collected on such Purchased Account and such Related Rights less: (i) the Purchase Price, and (ii) any fees, expenses or charges owed to WFBC as more fully described herein. Any fee, charge or other obligation of the Customer under this Agreement or any Related Document may be charged against the Collected Reserve Account in WFBC’s sole discretion. Provided no Event of Termination has occurred and is continuing, or any event has occurred which with the passage of time or notice would be an Event of Termination, any available balance held in the Collected Reserve shall be released twice weekly to the Customer or to any third party, at the Customer’s written direction to WFBC. Upon the occurrence and during the continuation of an Event of Termination, or the continuation of an event which with the passage of time or notice would become an Event of Termination, WFBC may hold any balance in the Collected Reserve Account as Collateral for any obligations of the Customer to WFBC and WFBC may charge any such obligations against the Collected Reserve Account in its sole discretion.

 

  

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           (b)          On a weekly basis, or as otherwise determined by WFBC at its sole discretion, WFBC shall prepare, and make available to the Customer through WFBC’s online reporting system referred to as “Commercial Electronic Office” or any replacement thereof, an accounting of the purchases, collections, and amounts credited to or charged against the Collected Reserve Account during that week or other period. Should such a statement of account indicate a deficit balance, such balance shall be due and payable and the Customer shall immediately pay to WFBC the amount of such deficit plus accrued interest on such deficit balance. Interest shall accrue on any deficit balance at the annual rate of eighteen percent (18%), calculated on a daily basis, not to exceed the applicable legal limit, until such deficit is paid in full.

 

3.11     Termination of this Agreement. The Customer may terminate this Agreement at any time if it (a) gives WFBC at least thirty (30) days advance written notice prior to the proposed Termination Date and (b) pays WFBC applicable termination fees in accordance with the terms of this Agreement. If the Customer terminates this Agreement, on such Termination Date, (x) all amounts due hereunder shall be immediately due and payable and (y) the Customer shall repurchase all outstanding Purchased Accounts and the Related Rights with respect thereto and immediately pay the Repurchase Price for such Purchased Accounts and the Related Rights with respect thereto. If any Affiliate Account Purchase Agreement is terminated, then, in WFBC’s sole discretion, WFBC may terminate this Agreement, and (x) all amounts due hereunder, including applicable termination fees, shall be immediately due and payable and (y) the Customer shall repurchase all outstanding Purchased Accounts and the Related Rights with respect thereto and immediately pay the Repurchase Price for such Purchased Accounts and the Related Rights with respect thereto.

 

3.12     Sole Property. Once WFBC has purchased an Account, any and all payments from whatever source as to such Purchased Account are the sole property of WFBC.

 

3.13     Credit Risk. The purchase of Accounts hereunder shall be on a full recourse to Customer basis.

 

3.14     Miscellaneous Payments. Should WFBC receive a duplicate payment on a Purchased Account or other payment which is not identified, WFBC shall carry these sums as open items in its accounting, shall return any duplicate payment to the Account Debtor or apply such unidentified payment pursuant to the terms hereof upon proper identification and documentation and shall use commercially reasonable efforts to notify the Customer thereof (provided that WFBC’s failure to do so shall not be a breach of this Agreement). In the event WFBC receives payment on an Account which has not been purchased hereunder and can be identified as being the property of the Customer, such payment will be credited to the Collected Reserve Account and released in accordance with this Agreement.

 

3.15     Misdirected Payments. With respect to misdirected payments, whenever any payment on any Purchased Account comes into the Customer’s possession, the Customer shall hold such payment in trust and safekeeping, as the property of WFBC, and immediately turn over to WFBC such payment in the same form as it was received by the Customer to WFBC. The Customer shall pay a misdirected payment fee in the amount of fifteen percent (15%) of the amount of any payment on account of a Purchased Account which has been received by the Customer and not delivered in kind to WFBC on the next Business Day following the date of receipt by the Customer. Further, the Customer shall segregate and hold in trust and safekeeping, as the property of WFBC, and immediately turn over to WFBC, any goods or inventory returned to, reclaimed or repossessed by the Customer which constitute Related Rights related to a Purchased Account.

 

  

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3.16     Repayment of Account Debtor. In the event WFBC is required to repay any Account Debtor for a payment received by WFBC on an Account or Related Right, the amount of the repayment by WFBC shall be an obligation of the Customer to WFBC whether or not this Agreement has been terminated. In the event the Customer receives a payment from WFBC to which the Customer has no rights, repayment of the funds to WFBC is an obligation of the Customer to WFBC whether or not this Agreement has been terminated. In either event, if the obligation is not paid upon five (5) days notice of the obligation to pay from WFBC to the Customer, WFBC may file a financing statement in connection with the security interest granted herein (if necessary) or otherwise perfect its interest in the Collateral and exercise any and all rights it has under this Agreement, any Related Document or otherwise to collect the amounts due.

 

3.17     Hold Harmless. The Customer shall hold WFBC harmless against any Account Debtor ill will arising from WFBC’s collecting or attempting to collect on any Purchased Account and the Related Rights with respect thereto, provided that WFBC acts in a commercially reasonable manner.

 

3.18     Book Entry. The Customer shall, immediately upon sale to WFBC of each Account and the Related Rights with respect thereto, make proper entries on its books and records disclosing the absolute sale of such Accounts to WFBC on said books and records and other documents as so directed by WFBC.

 

3.19     Third Party Information. In the event WFBC provides financial information to the Customer regarding a third party, whether by setting a Purchase Limit, at the request of the Customer or otherwise, the Customer understands that WFBC is not making any representations or warranties or expressing an opinion as to the creditworthiness of any such third party.

 

3.20     Payment Terms.

 

           (a)          All accrued and unpaid fees, expenses, default interest, costs and any other amounts due from the Customer shall be due and payable (i) on the date set forth herein or, if no date is set forth herein, upon demand by WFBC, and (ii) on the Final Termination Date. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the fees, expenses, interest, costs and any other amounts due hereunder, as the case may be.

 

           (b)          All amounts to be paid by or deposited hereunder will be paid or deposited not later than 1:00 p.m. (Denver, Colorado time) on the day when due in same day funds. All computations of interest and fees shall be calculated for the actual days elapsed based on a 360 day year.

 

  

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           (c)          Amounts due to WFBC hereunder shall be remitted to WFBC in United States Dollars.

 

           (d)          The Customer shall pay, as a full recourse obligation, all fees, interest, costs and expenses, including all amounts payable under Section 11.07.

 

           (e)          The Customer will pay on demand to WFBC interest (before and after default and before and after judgment, with interest on overdue interest at the same rate) on all amounts not paid to or deposited when due hereunder (other than amounts due under Section 3.10(b)) at a rate equal to LIBOR, which interest rate shall change whenever LIBOR changes, plus eight and three tenths of one percent (8.30%) per annum calculated daily.

 

           (f)          The Customer will make all payments required to be made by it hereunder without deduction or setoff regardless of any defense or counterclaim.

 

           (g)          The Customer acknowledges that (i) WFBC may maintain records of the Purchased Amount, all Purchased Accounts, all proceeds of Collateral and all amounts paid by the Customer to WFBC hereunder, including all fees, interest, costs and expenses; (ii) such records shall, absent manifest error, be conclusive evidence thereof and (iii) the failure of WFBC to maintain any such records shall not limit or otherwise affect the obligations of the Customer or the rights and remedies of WFBC hereunder or under any Related Document.

 

Article 4.

Conditions Precedent

 

4.01     Conditions Precedent to Initial Purchase. Prior to the initial purchase hereunder, the Customer shall deliver to WFBC, unless waived by it, the following items and documents, in form and substance satisfactory to WFBC:

 

           (a)          an executed copy of this Agreement;

 

           (b)          (i) a certificate of an officer of the Customer containing a copy of its articles of incorporation and bylaws, an appropriate resolution of its directors, and the names and true signatures of the officers authorized to sign this Agreement and the Related Documents on its behalf, and (ii) a certificate of an officer of the Customer containing the names and true signatures of the officers authorized to sign all reports and other submissions under this Agreement and the Related Documents on its behalf, on which certificates WFBC shall be entitled to conclusively rely until such time as WFBC receives from the Customer a replacement certificate meeting the requirements of this Section 4.01(b)(i) or (ii), as the case may be;

 

           (c)          a certificate of status, good standing or compliance in respect of the Customer issued by its jurisdiction of incorporation and a certificate of status, good standing or compliance in respect of the Customer issued by the appropriate authorities in each jurisdiction in which the Customer is required to be registered in order to conduct its business;

 

           (d)          evidence (which shall include an officer’s certificate of the Customer), in form and substance satisfactory to WFBC, that the Customer and the other parties to (i) the Acquisition and Share Exchange Agreement by and among Corporate Resource Services, Inc., the Customer and Robert Cassera, dated November 21, 2011, and (ii) all other documents, instruments and agreements related thereto, will be prepared to close, upon the funding of the initial purchase hereunder, such transactions substantially upon the terms set forth in such agreements;

 

  

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           (e)          a guaranty by the Customer guaranteeing the obligations owing under each Affiliate Account Purchase Agreement;

 

           (f)          an amended and restated account purchase agreement with D & D Staffing, Corp.;

 

           (g)          an amendment to each Affiliate Account Purchase Agreement;

 

           (h)          an amended and restated guaranty by Corporate Resource Services, Inc.;

 

           (i)           an amendment to each guaranty by Insurance Overload Services, Inc., Corporate Resource Development Inc. and Diamond Staffing Services, Inc.;

 

           (j)             separate tri-party agreements by and among each Affiliate that is party to an Affiliate Account Purchase Agreement, TS Employment Inc. and WFBC;

 

           (k)           an amendment to continuing guaranty and waiver and waiver, duly executed by Tri-State Employment Services, Inc.;

 

           (1)           an amendment to securities pledge agreement, duly executed by Tri-State Employment Services, Inc., Tri-State North Carolina, Inc. and the Customer;

 

           (m)          a continuing guaranty and waiver by Robert Cassera;

 

           (n)          an amendment to standby letter of credit agreement, duly executed by the Customer.

 

           (o)          favorable legal opinions of counsel to the Customer, in form and substance satisfactory to WFBC;

 

           (p)          executed copies of all discharges and releases, if any, necessary to discharge or release all Liens (other than Permitted Liens) and other rights or interests of any Person in the Purchased Accounts, the Related Rights or the Collateral previously granted by the Customer, together with file stamped copies of the relevant UCC-3 financing statements;

 

           (q)          current searches of appropriate filing offices showing that (i) no Liens have been filed and remain in effect against the Customer except Permitted Liens or Liens held by Persons who have agreed in writing that upon receipt of proceeds of the initial purchase, they will satisfy, release or terminate such Liens in a manner satisfactory to WFBC, and (ii) WFBC has duly filed all financing statements necessary to perfect its Lien on the Purchased Accounts, the Related Rights and the Collateral to the extent it is capable of being perfected by filing, and such other similar instruments or documents as may be necessary and, in WFBC’s reasonable discretion, advisable under any applicable statute to perfect, record or protect WFBC’s interest in the Purchased Accounts, the Related Rights or the Collateral;

 

  

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           (r)          payment of all fees due under the terms of this Agreement through the date of the initial purchase and payment of all expenses incurred by WFBC and through such date and that are required to be paid by the Customer under this Agreement; and

 

           (s)          such other approvals, opinions or documents as WFBC in its sole discretion may require.

 

4.02     Conditions Precedent to Subsequent Purchases. Each subsequent purchase of an Account and the Related Rights with respect thereto shall be subject to the conditions precedent that, on the date of such purchase before and after giving effect to such purchase, (a) the Customer has delivered to WFBC an Assignment and Schedule of Accounts acceptable to WFBC in its sole discretion which includes the Accounts to be purchased, (b) the representations and warranties of the Customer hereunder are correct on and as of the date of such purchase as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date and (c) no event has occurred and is continuing, or would result from such purchase, which constitutes an Event of Termination or would constitute an Event of Termination but for the requirement that notice be given or time elapse or both.

 

Article 5.

The Customer’s Representations and Warranties

 

The Customer hereby represents and warrants to WFBC as follows and any request by the Customer to sell, transfer and assign Accounts to WFBC will be deemed a representation by the Customer that all representations and warranties in this Article 5 are true, correct and complete as of the time of the request, unless they relate exclusively to an earlier date:

 

5.01     Existence and Trade Names. The Customer is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly qualified to carry on business in each jurisdiction in which the failure to be so qualified could reasonably be expected to have a Material Adverse Effect. Attached as Exhibit A is a true, correct and complete list of (a) the legal name of the Customer, each Affiliate of the Customer that is a party to an Affiliate Account Purchase Agreement and STS Group, Inc. and (b) each trade name, DBA or other fictitious name used by the Customer, each Affiliate of the Customer that is a party to an Affiliate Account Purchase Agreement and STS Group, Inc., which Exhibit A may be updated from time to time as set forth in Section 6.18 Where necessary, such trade names have been properly filed and published as required by applicable law.

 

5.02     Corporate Power and Authority. The Customer has all requisite corporate power and authority to execute and deliver, and to perform all of its obligations under, this Agreement and all of the Related Documents to which it is a party.

 

5.03     Corporate Action. The Customer has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and all of the Related Documents to which it is a party.

 

5.04     Authorization. The execution, delivery and performance by the Customer of this Agreement and all of the Related Documents to which it is a party have been duly authorized and do not require the consent or approval of the Customer’s shareholders.

 

  

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5.05     Binding Effect. This Agreement and all of the Related Documents to which it is a party have been duly executed and delivered by the Customer and constitute the legally binding obligation of the Customer enforceable against it in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting creditors’ rights generally and equitable principles of general application (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

5.06     No Contravention; No Consent Required. The Customer’s execution and delivery of this Agreement or any Related Document to which it is a party and compliance with their respective terms and conditions will not (a) result in a violation of the Customer’s articles of incorporation or bylaws or any resolutions passed by the Customer’s directors or shareholders; (b) result in a violation of any applicable law, rule, regulation, order, judgment, injunction, award or decree; (c) result in a breach of, or constitute a default under, any loan agreement, indenture, trust deed or any other agreement or instrument to which the Customer is a party or by which it is bound which could reasonably be expected to have a Material Adverse Effect; (d) require any approval or consent of, or any notice to or filing with, any governmental authority or agency having jurisdiction except such as has already been obtained, or (e) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the properties now owned or subsequently acquired by the Customer.

 

5.07     Chief Executive Office. The Customer’s chief executive office is at the location(s) set out under the Customer’s name on the signature pages to this Agreement. All other places of business have been disclosed on the application provided to WFBC.

 

5.08     Solvency of the Customer. The Customer is solvent and is not subject to any Insolvency Proceeding.

 

5.09     Taxes. The Customer has made and shall continue to make timely payment and remittance to applicable governmental authorities of all taxes and other amounts required to be paid and remitted by the Customer pursuant to applicable law, except (a) for such taxes as may be contested by the Customer in good faith and for which appropriate reserves have been established as determined by WFBC in its sole discretion and (b) for taxes the non-payment of which would not materially adversely affect the interest of WFBC in the Purchased Accounts, the Related Rights or the Collateral or the collectibility and enforceability of the Purchased Accounts, the Related Rights or the Collateral or WFBC’s rights thereunder.

 

5.10     Good Title; No Liens. The Customer is, at the time of purchase of each Account and the Related Rights with respect thereto by WFBC, the lawful owner of and has good and undisputed title to such Account and the Related Rights with respect thereto. At the time of purchase, each Account and the Related Rights with respect thereto are free from any Liens other than Permitted Liens. Each Account offered for sale, transfer and assignment to WFBC is an Acceptable Account.

 

5.11     Solvency of Account Debtors. To the best of the Customer’s information and knowledge, each Account Debtor’s business is solvent at the time of this Agreement and at the time each Account of such Account Debtor and the Related Rights with respect thereto are presented to WFBC for purchase.

 

  

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5.12     Accounts Undisputed; Transferable. Each Account or portion thereof, as the case may be, offered for sale, transfer and assignment to WFBC (a) is an accurate and undisputed statement of indebtedness owed by the applicable Account Debtor to the Customer for a certain sum which is due and payable in thirty (30) days or less, or within such term as is agreed to by WFBC and the Customer, and (b) is for a bona fide sale, delivery and acceptance of merchandise or performance of services which have been received and finally accepted by such Account Debtor. The Customer has all rights to sell, transfer or assign such Accounts and the Related Rights with respect thereto to WFBC and such Accounts and the Related Rights with respect thereto are payable by the applicable Account Debtor without offset, deduction or counterclaim.

 

5.13     No Ownership; Control of Account Debtors. The Customer does not own, control or exercise dominion over, in any way whatsoever, any Account Debtor or the business of any Account Debtor for whom Accounts are to be, or have been, sold by the Customer to WFBC.

 

5.14     Accuracy of Information. All of the Records and all other records, statements, books or other written information shown to WFBC by the Customer at anytime, either before or after the signing of this Agreement, are true and accurate in all material respects.

 

5.15     No Actions; Suits. There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or to the knowledge of the Customer, threatened against or affecting the Customer, which if adversely determined, would have a Material Adverse Effect.

 

5.16     Material Adverse Effect. Since the date of the Customer’s most recent audited financial statements, there has been no Material Adverse Effect.

 

5.17     TS Employment Inc. The Customer outsources the management of human resources, employee benefits, payroll and other services to TS Employment Inc., a professional employer organization. The Customer does not outsource such services to any other Person, other than TS Employment Inc.

 

5.18     Transactions with Certain Affiliates.

 

          (a)          Prior to the date hereof, the Customer has not transferred any assets or liabilities to Tri-State Employment Service Inc., and STS Group, Inc., a Florida corporation that is a wholly owned Subsidiary of the Customer, has not transferred any assets or liabilities to Tri- State Employment Service Inc.

 

          (b)         On or prior to the date hereof, STS Group, Inc., a Florida corporation, has, for good and valuable consideration, sold, transferred, assigned and delivered unto the Customer and its successors and assigns all of the assets of STS Group, Inc. of any kind or character relating to STS Group, Inc.’s staffing services business or the customers of such business, free and clear of all encumbrances.

 

          (c)         The Customer has not offered for sale to WFBC any accounts generated by On Demand Staffing, Inc., a New York corporation, a wholly owned Subsidiary of the Customer.

 

  

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5.19     Mistakenly Billed Accounts. Prior to the date hereof, Tri-State Employment Service Inc. mistakenly billed, and offered for sale to WFBC, certain accounts receivable under the names of “Tri State Florida” billing as Tri-State Employment Service, “Tri State American Work Force” billing as American Workforce, “Tri State 9: NY Temps” billing as Tri-State Employment Service and “On Demand Staffing” assigned to WFBC by Tri-State Employment Service, all of which accounts receivable were generated by, and should have been billed and offered for sale to WFBC by, the Customer.

 

Article 6.

The Customer’s Covenants

 

The Customer agrees as follows:

 

6.01     Compliance with Governing Documents; Laws. The Customer will comply in all material respects with its articles of incorporation and bylaws and all applicable laws, rules, regulations and orders with respect to it, its properties, and all Purchased Accounts and the Related Rights with respect thereto, and will preserve and maintain its existence, rights, franchises, qualifications, and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing in each jurisdiction where the failure to be so qualified could result in a Material Adverse Effect.

 

6.02     Accounts Free from Defenses, etc. The Customer will ensure that none of the Accounts presented for purchase, the Purchased Accounts or the Related Rights is subject to any defense, withholding, setoff, counterclaim, deduction, discount or any dispute with respect to underlying goods or services, and that each such Account and the Related Rights with respect thereto are free of any claim by the applicable Account Debtor.

 

6.03     Compliance with Account Debtor Agreements. The Customer will, at its own expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the agreements with its Account Debtors and under all other agreements related to any Purchased Accounts or Related Rights. WFBC’s exercise of any rights hereunder shall not relieve the Customer from such obligations. The Customer will not make any change in the character of its business that could (a) result in a Material Adverse Effect or (b) result in a Purchased Account becoming an Unacceptable Account.

 

6.04     Ensure Payment of Purchased Accounts; Defend WFBC Title. The Customer will (a) take all steps reasonably necessary or reasonably requested by WFBC to (i) ensure payment of all Purchased Accounts and the Related Rights with respect thereto by the Account Debtors and (ii) defend the title of WFBC to each Purchased Account and the Related Rights with respect thereto and the proceeds thereof against the claims of all other Persons and (b) consult with WFBC with respect to any actions taken pursuant to clause (a) hereof.

 

6.05     Delivery of Instruments, etc. Upon request by WFBC after the occurrence and during the continuation of an Event of Termination, the Customer will promptly deliver to WFBC in pledge all instruments, documents and chattel paper constituting Collateral or otherwise evidencing any Purchased Account or the Related Rights with respect thereto, duly endorsed or assigned by the Customer.

 

  

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6.06     Payment Instructions. The Customer will not issue any payment instructions to any Account Debtor other than in accordance with the terms of this Agreement and the Related Documents. The Customer will not alter any electronic or other instruction, code or password which could result in payment from an Account Debtor being made to any Person other than WFBC.

 

6.07     Reporting Requirements. The Customer will provide to WFBC the following:

	  	  
	  	
          (a)          as soon as available and in any event within 45 days after the end of each quarter, year-to-date unaudited financial statements of the Customer and its Subsidiaries including a statement of quarterly income and a balance sheet of the Customer and its Subsidiaries, certified by an authorized officer of the Customer and its Subsidiaries, as applicable;

	  	  
	  	
          (b)          as soon as available and in any event within 120 days after the Customer’s fiscal year end, the Customer’s and each Subsidiary’s audited financial statements prepared by an independent certified public accountant acceptable to WFBC, which shall include the Customer’s and each Subsidiary’s balance sheet, income statement, and statement of retained earnings, prepared, if requested by WFBC, on a consolidated and consolidating basis to include Corporate Resource Services, Inc. and each Subsidiary of Corporate Resource Services, Inc.;

	  	  
	  	
          (c)          within 45 days after the end of each quarter, the Customer will deliver to WFBC a certificate in form acceptable to WFBC in its reasonable discretion which is signed by an officer of the Customer and shall include: (i) a compliance certificate regarding the occurrence of an Event of Termination and (ii) a listing by Account Debtor of the outstanding Purchased Accounts of such Account Debtor, as of the last day of such quarter, determined in accordance with this Agreement and the instructions of WFBC;

	  	  
	  	
          (d)          within 30 days after the end of each month, the Customer will deliver to WFBC a detailed accounts receivable aging and a detailed accounts payable aging, each as of the last day of such month and each in form acceptable to WFBC in its reasonable discretion;

	  	  
	  	
          (e)          promptly upon discovery, written notice of any commercial tort claims brought by the Customer against any Person with respect to a Purchased Account, any Related Rights or any Collateral, including the name and address of each defendant, a summary of the facts, an estimate of the Customer’s damages, copies of any complaint or demand letter submitted by the Customer, and such other information as WFBC may request; and

	  	  
	  	
          (f)          such other information documents, records or reports in respect of the Purchased Accounts, the Related Rights, the Collateral or the condition or operations, financial or otherwise, of the Customer or any of its Subsidiaries as WFBC may from time to time reasonably request.

 

  

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6.08     Notification. Prior to purchasing any Account, WFBC may notify the Account Debtor owing such Account of the assignment of all Accounts and instruct such Account Debtor to make payment on all Accounts directly to WFBC.

 

6.09     Notation on Invoices. The Customer shall make a notation on each original invoice (or the electronic equivalent of an invoice) or other such documentation accepted by WFBC for each Account which indicates that such Account has been sold, transferred and assigned to WFBC. Such notation shall read as follows or as otherwise agreed to by WFBC in writing:

 

This invoice has been sold, transferred and assigned to

and is payable to:

WELLS FARGO BUSINESS CREDIT

Dept. 1494

Denver, Colorado 80291-1494

For information call 303/964-7400

 

Wire Instructions:

WELLS FARGO BANK, N.A.

San Francisco, CA

ABA# 121000248

Beneficiary: Wells Fargo Business Credit

Acct# 6355033300

 

In addition, the Customer shall make a notation, in form and substance acceptable to WFBC in its sole discretion, on any other form of documentation accepted by WFBC for each Account and all Related Rights which indicates that such Account and Related Rights have been sold, transferred and assigned to WFBC. In the event any invoice (or the electronic equivalent of an invoice) or other form of documentation is sent or transmitted to any Account Debtor without the notation required hereunder, a fee equal to two and one half of one percent (2.50%) of the face amount of the related Account shall be immediately due and payable to WFBC.

 

6.10     Directions to Account Debtors. On or prior to the date hereof, the Customer shall have given written directions to each Account Debtor to remit all amounts due in respect of any Account to the address and the wiring instructions set forth in Section 6.08. All items deposited in the deposit account set forth in Section 6.08 shall be subject to final payment. If any such item is returned uncollected, the Customer agrees to pay WFBC on demand the amount of that item. The Customer agrees to take any action reasonably requested by WFBC to facilitate the foregoing.

 

6.11     No Interference. The Customer will not under any circumstances or in any manner whatsoever, interfere with any of WFBC’s rights under this Agreement.

 

6.12     No Sale or Assignment. For the duration of this Agreement and for any period thereafter as long as any obligation to repurchase or indebtedness whatsoever remains owing by the Customer to WFBC, the Customer will not sell, transfer or assign Accounts or any Related Rights to any party other than WFBC.

 

  

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6.13     Permitted Liens. The Customer shall not create, incur or suffer to exist any Lien upon any of its assets, now owned or later acquired, as security for any indebtedness, with the exception of the following (each a “Permitted Lien”; collectively, “Permitted Liens”): (a) in the case of real property, covenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with the Customer’s business or operations as presently conducted; (b) Liens in existence on the date of this Agreement that are described in Exhibit B; (c) the Liens created by this Agreement or any Related Document; and (d) purchase money Liens relating to the acquisition of equipment not exceeding the lesser of cost or fair market value and so long as no Event of Termination has occurred and is then in existence and none would exist immediately after such acquisition.

 

6.14     No Modification of Invoices. Without the prior written consent of WFBC, the Customer will not change or modify the terms of the original invoice or agreement with any Account Debtor or the order of payment on Accounts sold to WFBC.

 

6.15     Material Disputes. The Customer will promptly (but in any event within three Business Days of obtaining knowledge thereof) notify WFBC of (a) any material dispute between the Customer and an Account Debtor in which $50,000 or more is in dispute, (b) the return or returns by an Account Debtor or its Affiliates to the Customer of any product with a fair market value of $50,000 or more in the aggregate at any one time or (c) any material claim, loss or offset of any kind against the Customer or WFBC in excess of $50,000 asserted by an Account Debtor owing a Purchased Account.

 

6.16     Insurance. The Customer will maintain such insurance covering the Customer’s business or the property of the Account Debtors as is customary and adequate for businesses similar to the business of the Customer in an amount as is sufficient to compensate for reasonably foreseeable loss, and promptly pay all premiums with respect to the policies covering such insurance. Further, the Customer will have WFBC named as lender loss payee for such insurance.

 

6.17     Chief Executive Office; Location of Books and Records. The Customer will notify WFBC in writing prior to any change in the location of any of its places of business, including the location of the Customer’s inventory or, if the Customer has or intends to acquire any additional place of business. The Customer will not change its chief executive office or the office or offices where the Customer’s books and records concerning Purchased Accounts and the Related Rights are kept without thirty (30) days’ prior written notice to WFBC. The Customer will not remove any Collateral from the jurisdictions in which the Collateral is located on the date of this Agreement without the prior written consent of WFBC.

 

  

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6.18     Notification of Changes; Additional Trade Names; Dissolution. The Customer will notify WFBC in writing at least thirty (30) days prior to any (a) proposed change of the Customer’s legal name, jurisdiction of incorporation, identity, legal entity, or corporate structure or (b) business dissolution; provided that the Customer shall merge with and into TS Staffing Services, Inc., a Delaware corporation, with TS Staffing Services, Inc., a Delaware corporation, as the surviving entity, on or before December 31, 2011. At least thirty (30) days prior to any use of any trade name, DBA or other fictitious name not listed on Exhibit A on the date hereof by the Customer, any Affiliate of the Customer that is a party to an Affiliate Account Purchase Agreement and STS Group, Inc., the Customer will provide WFBC with an updated Exhibit A in substantially the form of Exhibit A, which updated Exhibit A (i) shall contain all information required by WFBC with respect to each such additional trade name, DBA or other fictitious name, (ii) shall be executed by each of the Customer, each Affiliate of the Customer that is a party to an Affiliate Account Purchase Agreement, STS Group, Inc., Corporate Resource Services, Inc. and each other Guarantor, (iii) shall be acceptable to WFBC in its sole discretion, (iv) shall be effective on the date that WFBC acknowledges its acceptance of such updated Exhibit A by executing and dating such updated Exhibit A and (v) shall replace any previous Exhibit A and be deemed the Exhibit A to this Agreement and each Affiliate Account Purchase Agreement on the date that WFBC acknowledges its acceptance of such updated Exhibit A by executing and dating such updated Exhibit A. Customer will notify WFBC in writing within five (5) Business Days after an officer of the Customer or any Subsidiary becomes the direct or indirect owner of twenty five percent (25%) or more of the equity interests in the Customer.

 

6.19     Notification of Legal Proceedings. No later than three days after discovery, the Customer will notify WFBC in writing of (a) any litigation or other proceeding before any court or governmental agency which seeks a monetary recovery against the Customer in excess of $100,000 or (b) any Insolvency Proceeding against the Customer.

 

6.20     USA PATRIOT Act. The Customer will (i) ensure, and cause each Subsidiary to ensure, that no equity owner shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control, the Department of the Treasury or included in any Executive Orders, (ii) not use or permit the use of the proceeds of this Agreement or any other financial accommodation from WFBC to violate any of the foreign asset control regulations of the Office of Foreign Assets Control or other applicable law, (iii) comply, and cause each Subsidiary to comply, with all applicable Bank Secrecy Act laws and regulations, as amended from time to time, and (iv) otherwise comply with the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) as required by federal law and WFBC’s policies and practices.

 

6.21     Transactions with Certain Affiliates. The Customer has not entered, and shall not enter, into any transaction with Tri-State Employment Services, Inc., Tri-State Employment Service Inc., D & D Staffing, Corp., any Subsidiary of Corporate Resource Services, Inc. or any Affiliates of any of the foregoing (other than Corporate Resource Services, Inc.), unless in each case it is entered into in the ordinary course of business undertaken by the Customer in good faith and upon fair and reasonable terms no less favorable to the Customer than the Customer would obtain in a comparable arms-length transaction.

 

6.22     Professional Employer Organizations. The Customer will (a) provide WFBC with at least thirty (30) days prior written notice before outsourcing any services to any professional employer organization other than TS Employment Inc. and (b) prior to outsourcing any services to any such professional employer organization, deliver to WFBC a Tri-Party Agreement, in form and substance acceptable to WFBC in its sole discretion, duly executed by the Customer and such professional employer organization.

 

  

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Article 7.

Security Interest

 

7.01     Security Interest/Collateral. As further inducement for WFBC to enter into this Agreement, the Customer hereby pledges, assigns and grants to WFBC a Lien and security interest in the Collateral as security for the payment and performance of any and all obligations and liabilities whatsoever of the Customer to WFBC under this Agreement or any Related Document. Following request by WFBC, the Customer shall grant WFBC a Lien and security interest in all Collateral consisting of commercial tort claims that it may have against any Person.

 

7.02     Security Documents. The Customer authorizes WFBC, at the Customer’s expense, to file financing statements naming the Customer or any trade name, DBA or other fictitious name used by the Customer as debtor and describing the Purchased Accounts, the Related Rights and the Collateral to perfect WFBC’s Lien in the Purchased Accounts, the Related Rights and the Collateral, and WFBC may describe the Collateral as “all personal property” or “all assets” or describe specific items of Collateral including commercial tort claims, as WFBC may consider necessary or useful to perfect WFBC’s Lien in the Purchased Accounts, the Related Rights and the Collateral. All financing statements filed before the date of this Agreement to perfect such Lien were authorized by the Customer. Following the Final Termination Date, WFBC will, at the Customer’s expense and within the time periods required under applicable law, release or terminate any and all filings or other agreements that perfect its Liens in the Purchased Accounts, the Related Rights and the Collateral.

 

Article 8.

Operational Provisions

 

8.01     Power of Attorney. In order to carry out this Agreement, the Customer irrevocably appoints WFBC, its successors and each assignee, and any Person designated by WFBC, its successors or such assignees (which appointment is coupled with an interest) as its attorney in fact, with right of substitution, to:

 

           (a)          in order to evidence or protect WFBC’s interest in the Purchased Accounts, the Related Rights and the Collateral, execute and file, in the Customer’s name and on the Customer’s behalf, such recording, financing or similar statements (including any amendments, renewals and continuation statements) under applicable laws in such jurisdictions where it may be necessary to validate, perfect or protect WFBC’s interest in any of the Purchased Accounts, the Related Rights and the Collateral;

 

           (b)         strike through the Customer’s remittance information on all invoices delivered to Account Debtors and note WFBC’s remittance information on all invoices;

 

           (c)         receive, open, read and thereafter forward to the Customer as appropriate all mail addressed to the Customer (including any trade name of the Customer) sent to WFBC’s address; provided that any payments received shall be processed in accordance with this Agreement;

 

           (d)          in WFBC’s name or in the Customer’s name, as the Customer’s agent and attorney-in-fact, notify the United States Postal Service to change the address for delivery of the Customer’s mail to any address designated by WFBC, otherwise intercept the Customer’s mail, and receive, open and dispose of the Customer’s mail, applying all proceeds of Purchased Accounts, Related Rights and Collateral as permitted under this Agreement and holding all other mail for the Customer’s account or forwarding such mail to the Customer’s last known address;

 

  

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           (e)         at the expense of the Customer, notify, or cause the Customer to notify, any Account Debtor or other Person obligated to pay a Purchased Account that such right to payment has been sold, transferred and assigned to WFBC and instruct, or cause the Customer to instruct, any Account Debtor or other Person to (i) make and remit payments due under the Accounts and any Related Rights directly to the address or wiring instructions set forth in Section 6.08 or (ii) deliver payments due under the Accounts and any Related Rights to WFBC by wire transfer, ACH, or other means as WFBC may direct, in each case for deposit to the Collected Reserve Account or for direct application to the amounts due and owing to WFBC;

 

           (f)          at any time after the Customer or WFBC gives notice as set forth in Section 8.01(e) to an Account Debtor or other obligor and with or without notice to the Customer, in WFBC’s name or in the Customer’s name, (a) demand, sue for, file any claims or take any action or institute any proceedings for, collect, give releases for or receive any money or property at any time payable or receivable on account of or securing, any such right to payment, or (b) grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such Account Debtor or other obligor;

 

           (g)          endorse the name of the Customer or the Customer’s trade names on any checks or other evidences of payment that may come into the possession of WFBC with respect to any Purchased Account, or on any other documents relating to any of the Purchased Accounts, the Related Rights or the Collateral;

 

          (h)          process any payments received directly by WFBC on a Purchased Account or any Related Rights either by delivery to the address or wiring instructions set forth in Section 6.08 if WFBC so directs or by direct collection and subsequent crediting of the Collected Reserve Account, and individually deliver any other payment for the benefit of the Customer directly to the Customer in the form received in accordance with this Agreement;

 

           (i)          compromise, prosecute, or defend any action, claim or proceeding as to any Purchased Account, any Related Right or any Collateral;

 

           (j)          upon the occurrence and during the continuation of an Event of Termination, offer a trade discount to any Account Debtor exclusive of the Customer’s normal business custom with such Account Debtor;

 

           (k)         initiate electronic debit or credit entries through the ACH system to or from any deposit account maintained by the Customer in which proceeds of the Collateral are deposited;

 

           (l)          sign the Customer’s name on any notice of assignment or on any notices to Account Debtors;

 

  

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           (m)        take any other actions WFBC deems necessary or advisable to collect, endorse, negotiate or otherwise realize on the Purchased Accounts, the Related Rights, the Collateral or any part thereof, any negotiable instrument, or other right of any kind, held or owned by the Customer and sold, transferred, assigned or delivered to or received by WFBC as payment on account or otherwise in respect of any of the Purchased Accounts, the Related Rights or the Collateral; and

 

           (n)         take any and all actions required (as determined by WFBC in its sole discretion) to enforce WFBC’s rights and remedies hereunder or under any Related Document and to otherwise carry out the purposes of this Agreement or any Related Document, including exercising any of the remedies set forth in this Agreement or any Related Document.

 

The authority granted to WFBC under this Section 8.01 shall remain in full force and effect until the payment in full of all amounts due and owing to WFBC, the satisfaction of all obligations of the Customer to WFBC hereunder and under each Related Document and termination of all obligations of WFBC hereunder and under each Related Document. WFBC’s performance of such actions shall be taken or not taken in its sole discretion and shall not relieve the Customer from any obligation or cure any default under this Agreement or any Related Document. The powers of attorney described in this Section 8.01 are coupled with an interest and are irrevocable, shall survive the Customer’s dissolution and shall not be affected by the Customer’s insolvency or bankruptcy in any manner.

 

8.02     Certifications. The Secretary or Assistant Secretary of the Customer shall certify to WFBC the names and signatures of the persons who, on the date hereof, are duly elected, qualified and acting as the officers or agents referred to in the resolutions adopted by the Customer with respect to this Agreement, and the Secretary or Assistant Secretary shall from time to time hereafter, upon a change in the facts so certified, certify to WFBC the names and signatures of the persons then authorized to sign or to act within three Business Days after any such change. WFBC shall be fully protected in relying on such certificates and on the obligation of the Secretary or Assistant Secretary of the Customer to certify to WFBC any change in any facts so certified. At all times, there shall be at least two officers or agents authorized to sign or to act under this Agreement and the Related Documents on behalf of the Customer, and the Customer shall have delivered to WFBC certificates containing the names and true signatures of each such agent and officer, on which certificates WFBC shall be entitled to conclusively rely.

 

8.03     License. The Customer hereby grants to WFBC a non exclusive, worldwide and royalty free license to use or otherwise exploit all intellectual property rights of the Customer (whether owned or licensed) for the purpose of collecting the Purchased Accounts and selling, leasing or otherwise disposing of any or all Related Rights and Collateral during the existence of an Event of Termination.

 

8.04     Reports. In the event the Customer requests information from WFBC regarding the Customer’s account hereunder, such requests shall be subject to the schedule of fees provided by WFBC which schedule may be adjusted by WFBC from time to time in its discretion. Any billing statement, aging or other accounting or report provided by WFBC to the Customer (a) shall be presumed correct unless proven otherwise by the Customer and (b) shall be conclusive and binding unless the Customer notifies Wells Fargo, within 30 days of receipt thereof in a detailed written notice, of its intention to dispute a billing statement, aging or other accounting or report.

 

  

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8.05     Account Verification. WFBC or its agent may, at any time and from time to time, send or require the Customer to send requests for verification of Purchased Accounts (including amounts owed to the Customer) to Account Debtors and other obligors or, so long as an Event of Termination has occurred and is continuing, notices of assignment to Account Debtors and other obligors.

 

8.06     Books and Records; Collateral Examination; Inspection; Premises. The Customer shall hold the Records in trust for WFBC and keep complete and accurate books and records with respect to the Purchased Accounts, the Related Rights and the Collateral and the Customer’s business and financial condition and any other matters that WFBC may request, in accordance with generally accepted accounting principles. The Customer shall permit any employee, attorney, accountant or other agent of WFBC to examine and inspect the Related Rights and the Collateral and any property of the Customer related to the Purchased Accounts, the Related Rights or the Collateral and to audit, review, make extracts from and copy any of its books and records (a) at any time during ordinary business hours as long as no Event of Termination has occurred and is continuing and (b) at any time during the continuation of an Event of Termination, and to discuss the Customer’s affairs with any of its directors, managers, officers, employees, owners or agents. The Customer authorizes all accountants and other Persons acting as its agent to disclose and deliver to WFBC’s employees, accountants, attorneys and other Persons acting as its agent (each of whom, as a Wells Receiver, is subject to the terms of Section 11.17), at the Customer’s expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Customer. If WFBC occupies or uses the premises of the Customer hereunder, WFBC shall not be obligated to pay or account for any rent or other compensation for such occupancy or use; provided, however, that if WFBC does pay or account for any rent or other compensation for such occupancy or use, the Customer shall reimburse WFBC on demand for the full amount thereof.

 

8.07     Duty of Care and Related Matters. WFBC’s duty of care with respect to any Purchased Accounts, Related Rights or Collateral in its possession (as imposed by law) will be deemed fulfilled if it exercises reasonable care in physically keeping such Purchased Accounts, Related Rights, or Collateral or in the case of Related Rights and Collateral in the custody or possession of a bailee or other third Person, exercises reasonable care in the selection of the bailee or third Person, and WFBC need not otherwise preserve, protect, insure or care for such Purchased Accounts, Related Rights or Collateral. WFBC shall not be obligated to preserve rights the Customer may have against prior parties, to liquidate the Purchased Accounts, the Related Rights and the Collateral at all or in any particular manner or order or apply the proceeds of the Purchased Accounts, the Related Rights and the Collateral in any particular order of application. WFBC has no obligation to clean up or prepare Collateral for sale. The Customer waives any right it may have to require WFBC to pursue any third Person for any amounts payable to WFBC by the Customer.

 

8.08     Notice of Assignment to Account Debtor. The Customer shall label its records in a manner reasonably acceptable to give proper notice of the sale, transfer and assignment of the Purchased Accounts and Related Rights to WFBC.

 

  

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Article 9.

Events of Termination

 

9.01     Events of Termination. Any one or more of the following shall be an Event of Termination hereunder (each, an “Event of Termination”):

 

            (a)          The Customer shall fail to pay any indebtedness to WFBC when due or repurchase any Purchased Account when required hereunder.

 

           (b)          The Customer shall breach any term, provision, promise or covenant under this Agreement, any Related Document or under any other agreements or contracts, between the Customer and WFBC.

 

           (c)          Any representation, warranty, certification or statement made, or deemed made by the Customer in, or pursuant to, this Agreement, any Related Document or any other agreements or contracts, between the Customer and WFBC proves to have been incorrect or misleading in any material respect when made or deemed made.

 

           (d)          The Customer shall become insolvent or unable to pay debts as they mature; the Customer shall make a general assignment for the benefit of creditors or voluntarily commence any Insolvency Proceeding affecting the Customer; any involuntary Insolvency Proceeding shall be filed against the Customer and is not dismissed within sixty (60) days; or any proceeding shall be instituted seeking the entry of an order for relief by the appointment of a receiver, trustee, custodian or similar official for the Customer or a substantial part of its property.

 

           (e)          The Customer shall create, incur or suffer to exist any Lien upon any Purchased Account, Related Rights or Collateral (other than a Permitted Lien) or any levies, attachment, executions, or similar process shall be issued against any Purchased Account, Related Rights or Collateral.

 

           (f)          Any financial statements, profit and loss statements, or schedules, other statements, information or documents furnished by the Customer to WFBC are incorrect or misleading in any material respect.

 

           (g)          Any document or other information submitted by the Customer to WFBC for the purchase of an Account is fraudulent or erroneous, or the Customer fails to submit any document or other information required by WFBC under this Agreement for the purchase of an Account.

 

           (h)          Any Account Debtor shall assert a claim or offset of any kind against the Customer or WFBC which may have a material adverse impact on payment of any Purchased Account or on any Related Rights.

 

            (i)          A Change of Control shall occur.

 

           (j)          (i) An Event of Termination (as defined in any Affiliate Account Purchase Agreement or in any other applicable Account Purchase Agreement between WFBC and any other Affiliate of the Customer) shall occur and be continuing under any Affiliate Account Purchase Agreement, (ii) an Event of Default (as defined in the Account Purchase Agreement by and between STS Group, Inc. and WFBC dated as of April 7, 2008) shall occur and be continuing under the Account Purchase Agreement by and between STS Group, Inc. and WFBC dated as of April 7, 2008, or (iii) TS Employment Inc. is in default under, or otherwise breaches or violates any terms of, any agreement that it has entered into with, or in favor of, WFBC.

 

  

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           (k)          (i) D & D Staffing, Corp. shall fail to pay any amounts owing to WFBC when due, or fail to repurchase any account when required, under the D & D Account Purchase Agreement, and the Final Termination Date (as defined in the D & D Account Purchase Agreement) shall not have occurred within three (3) Business Days of such failure or (ii) any other Event of Termination (as defined in the D & D Account Purchase Agreement) shall occur under the D & D Account Purchase Agreement, and the Final Termination Date (as defined in the D & D Account Purchase Agreement) shall not have occurred within ten (10) Business Days of such Event of Termination.

 

           (1)          Any Guarantor of the Customer’s obligations hereunder is in default under, or otherwise breaches or violates any terms of, its Guaranty or any Guarantor withdraws, disaffirms or revokes its Guaranty.

 

           (m)          (i) The Customer, directly or indirectly, disaffirms or contests in writing the validity or enforceability of this Agreement or any Related Document or (ii) this Agreement or any Related Document fails to be the enforceable obligation of the Customer.

 

           (n)          One or more judgments or decrees shall be entered against the Customer involving in the aggregate at any time a liability (net of any insurance or indemnity payments actually received in respect thereof prior to or within sixty (60) days from the entry thereof, or to be received in respect thereof in the event any appeal thereof shall be unsuccessful) equal to or in excess of $250,000 and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within sixty (60) days from the entry thereof.

 

           (o)          (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Customer or any Subsidiary, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is reasonably likely to result in the termination of such Plan for purposes of Title IV of ERISA (other than a standard termination pursuant to Section 4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA (other than a standard termination pursuant to Section 404l(b) of ERISA), (v) any of the Customer or any Subsidiary shall, or is reasonably likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, (vi) the occurrence or expected occurrence of any event or condition which results or is reasonably likely to result in any of the Customer’s or any Subsidiary’s becoming responsible for any liability in respect of a Former Plan (other than a standard termination pursuant to Section 404l(b) of ERISA), or (vii) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vii) above, such event or condition, together with all other such events or conditions, if any, would be reasonably expected to result in liability which would have a Material Adverse Effect.

 

  

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Article 10.

Remedies

 

10.01   Remedies. Upon the occurrence of an Event of Termination, WFBC may do any one or more of the following:

 

           (a)          Accelerate and declare immediately due and payable, and charge back, all indebtedness of the Customer to WFBC, whether mature, contingent or otherwise, whereupon all such amounts shall become and be forthwith due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which the Customer hereby expressly waives.

 

           (b)         Require the Customer to repurchase any and all Purchased Accounts, including the Related Rights with respect thereto, whether disputed or undisputed, and to pay on demand the Repurchase Price for those Purchased Accounts, including such Related Rights, as provided herein, and, in the event the Repurchase Price is not paid in full on demand, WFBC or its designee may collect such Purchased Accounts and charge a reasonable fee in connection with such collection activities in addition to any other fees or charges provided for herein.

 

           (c)          Cease purchasing any Account under this Agreement.

 

           (d)         Notify, or cause the Customer to notify, any Account Debtor or other Person obligated to pay a Purchased Account that such right to payment has been sold, transferred and assigned to WFBC and instruct, or cause the Customer to instruct, any Account Debtor or other Person to (i) make and remit payments due under the Purchased Accounts and any Related Rights directly to the address or wiring instructions set forth in Section 6.08 or (ii) deliver payments due under the Purchased Accounts and any Related Rights to WFBC by wire transfer, ACH, or other means as WFBC may direct, in each case for deposit to the Collected Reserve Account or for direct application to the amounts due and owing to WFBC.

 

           (e)          Take possession of any Related Rights or Collateral, with or without judicial process.

 

           (f)          Settle any disputed Purchased Account directly with the Account Debtor for any amount without relieving the Customer of its obligations with respect to such Purchased Account under this Agreement, grant extensions and compromise claims, all without prior notice to, or consent of, the Customer.

 

           (g)          Require the Customer to assemble the Related Rights and the Collateral and make them available to WFBC at a place designated by WFBC.

 

           (h)          Enter and take non-exclusive possession of the Customer’s premises, take possession of the Related Rights and Collateral, and use such premises (at no cost to WFBC) only to hold, process, sell, use, store, liquidate, realize upon or otherwise dispose of items that are Purchased Accounts, Related Rights or Collateral and for other purposes that WFBC may in good faith deem to be related or incidental purposes.

 

  

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           (i)          Use, solely in connection with any assembly, disposition or collection of the Purchased Accounts, the Related Rights or the Collateral, any trademark, trade name, trade style, copyright, patent right or technical process used or utilized by the Customer in generating such Purchased Accounts or with respect to such Related Rights or Collateral.

 

           (j)          Initiate electronic credit or debit entries through the ACH system to and from any deposit account maintained by the Customer wherever located.

 

           (k)         Collect from the Customer all amounts due and owing to WFBC in connection with this Agreement or any Related Document.

 

           (1)         Hold the Customer liable for any deficiency for any amounts due and owing to WFBC.

 

           (m)        Cease making reports or accountings to the Customer as otherwise required by this Agreement.

 

           (n)         Exercise and enforce any and all rights and remedies available upon default to a secured party under the Uniform Commercial Code, including the right to take possession of the Purchased Accounts, the Related Rights and the Collateral, or any evidence thereof, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which the Customer hereby expressly waives) and the right to sell, lease or otherwise dispose of any or all of the Purchased Accounts, Related Rights and Collateral (with or without giving any warranties as to the Purchased Accounts, Related Rights or Collateral, title to the Purchased Accounts, Related Rights or Collateral or similar warranties).

 

           (o)         Require the Customer to hold all proceeds of Collateral separate and apart from its general funds in a segregated trust account for the benefit of WFBC, to invest all such proceeds so held as directed by WFBC and to remit such amounts so held together with any interest thereon as directed by WFBC.

 

           (p)         Without regard to any waste, adequacy of the security or solvency of the Customer, apply for the appointment of a receiver of the Collateral, to which appointment the Customer hereby consents, whether or not foreclosure proceedings have been commenced and whether or not a foreclosure sale has occurred.

 

           (q)         Exercise any other rights and remedies available to the Customer with respect to the Purchased Accounts, the Related Rights or the Collateral.

 

           (r)          Exercise any other rights and remedies available to it by law or agreement.

 

Notwithstanding the foregoing, upon the occurrence of an Event of Termination described in Section 9.01(d), amounts payable by the Customer to WFBC shall be immediately due and payable automatically without presentment, demand, protest or notice of any kind.

 

  

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10.02     Sale of Collateral. During the continuation of an Event of Termination, if WFBC sells any of the Collateral on credit, the amounts payable to WFBC hereunder will be reduced only to the extent of payments actually received. If the purchaser fails to pay for any Collateral, WFBC may resell such Collateral and shall apply any proceeds actually received to the amounts payable by the Customer to WFBC.

 

10.03     Certain Notices. During the continuation of an Event of Termination, if notice to the Customer of any intended disposition of Purchased Accounts, Related Rights or Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in Section 11.18) at least ten calendar days before the date of intended disposition or other action.

 

Article 11.

Miscellaneous Provisions

 

11.01     Binding on Future Parties. This Agreement inures to the benefit of and is binding upon the successors and assigns of the parties hereto; provided, however, that the Customer shall not assign its rights hereunder or any interest herein without WFBC’s prior written consent which may be withheld in its sole discretion.

 

11.02     Participations. WFBC may sell to one or more Persons (each a “Participant”) participating interests in the interests of WFBC hereunder. WFBC shall remain solely responsible for performing its obligations hereunder, and the Customer shall continue to deal solely and directly with WFBC in connection with WFBC’s rights and obligations hereunder. Each Participant shall be entitled to the benefits of Section 11.07 and shall have the right of setoff through its participation in amounts owing hereunder to the same extent as if it were WFBC. If any Participant has the right to deal directly with the Customer regarding the Customer’s rights and obligations hereunder, the Customer may terminate this Agreement with thirty (30) days prior written notice to WFBC.

 

11.03     Cumulative Rights. No failure or delay by WFBC in exercising any right, power or remedy under this Agreement, any Related Document or any Related Right shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under this Agreement, any Related Document or any Related Right. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

 

11.04    Setoff. WFBC may, at any time and from time to time, in its sole discretion and without demand or notice to anyone, setoff any liability owed to the Customer by WFBC against any amounts payable to WFBC by the Customer, whether or not due; provided that WFBC will make commercially reasonable efforts to notify the Customer after such setoff, unless such setoff is made (a) against the Collected Reserve Account or otherwise in WFBC’s normal course of business consistent with past practices or (b) during the continuation of an Event of Termination; provided, further, that WFBC’s failure to so notify the Customer shall not be a breach of this Agreement.

 

  

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11.05     Waiver. WFBC may not waive its rights and remedies unless the waiver is in writing and signed by WFBC. A waiver by WFBC of a right or remedy under this Agreement on one occasion is not a waiver of the right or remedy on any subsequent occasion.

 

11.06     Failure to Perform. If the Customer fails to perform any of its agreements or obligations hereunder or under any Related Document or any Related Right, WFBC may (but will not be required to) itself perform, or cause to be performed, such agreement or obligation.

 

11.07     Indemnity.

 

            (a)       In addition to the payment of expenses pursuant to Section 11.19, the Customer shall indemnify, defend and hold harmless WFBC, and any of its participants, parent entities, subsidiary entities, affiliated entities, successor entities, and all present and future officers, directors, employees, attorneys and agents of the foregoing (the “Indemnitees”) from and against any and all liabilities, losses, damages, penalties, judgments, suits, claims, costs and expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel) arising out of or otherwise relating to this Agreement, any Related Document, the transactions contemplated hereby and thereby, any Purchased Account, any Related Rights, any Collateral, any action taken or omitted by any of the Indemnitees, any actions to be performed by the Customer hereunder or otherwise, or in connection with any of the foregoing, any investigative, administrative or judicial proceedings, whether or not such Indemnitee shall be designated a party thereto, which may be imposed on, incurred by or asserted against any such Indemnitee, the purchase of Accounts, the use or intended use of the proceeds of the payments made to the Customer, or any of the following (collectively, “Indemnified Liabilities”):

 

(i)          any representation or warranty made or deemed to be made by the Customer (or any of the Customer’s officers) in or in connection with this Agreement or any Related Document, which was incorrect in any material respect when made or deemed made or delivered;

 

(ii)        the failure of the Customer to perform or observe any of its covenants, duties or obligations hereunder or under any of the Related Documents;

 

(iii)        the failure by the Customer to comply with any applicable law, rule, regulation, order, injunction, award or decree with respect to any Purchased Account or Related Rights, including any applicable bulk sales legislation, or the nonconformity thereof with any applicable law, rule, regulation, order, injunction, award or decree;

 

(iv)        the return or transfer by WFBC to the Customer of any payments received by WFBC pursuant hereto to which WFBC is entitled pursuant to the terms of this Agreement;

 

(v)          any loss of a perfected Lien or ownership interest (or in the priority of such Lien or ownership interest) as a result of any commingling by the Customer of funds to which WFBC is entitled hereunder with any other funds;

 

(vi)       any dilution, claims, disputes, damages, offsets, penalties, losses or defenses arising from any Purchased Account or Related Rights or any claims, disputes, offsets or defenses in connection with any merchandise or services which are the subject of the Related Rights, including any product liability claim or personal injury or property damage suit (provided, however, that nothing contained in this subsection shall limit the liability of the Customer or limit the recourse of WFBC to the Customer for any amounts otherwise specifically provided to be paid by the Customer hereunder);

 

  

34

  

 

                           (vii)          any failure of (a) any agreement with an Account Debtor to contain an enforceable right of assignment and an express right to make information of such Account Debtor available to the Customer’s assignees and their agents; and (b) the Customer to bring such rights to the attention of the related Account Debtor in compliance with applicable law; and

 

                           (viii)         any claims, demands, expenses, loss or damage resulting from or growing out of honoring or relying on the signature or other authority (whether or not properly used) of any officer or person whose name and signature was certified pursuant to Section 8.02, or refusing to honor any signature or authority not so certified.

 

Notwithstanding the foregoing, the Customer shall not be obligated to indemnify any Indemnitee for (A) any Indemnified Liability caused directly by the gross negligence or willful misconduct of such Indemnitee or (B) any overall net income taxes imposed on such Indemnitee by the jurisdiction under the law of which such Indemnitee is organized or otherwise considered doing business or any political subdivision thereof.

 

            (b)          If any investigative, judicial or administrative proceeding arising from any of the foregoing is brought against any Indemnitee, upon such Indemnitee’s request, the Customer and counsel, designated by the Customer and satisfactory to the Indemnitee, will resist and defend such action, suit or proceeding to the extent and in the manner directed by the Indemnitee, at the Customer’s cost and expense. Each Indemnitee will use commercially reasonable efforts to cooperate in the defense of any such action, suit or proceeding. If the foregoing undertaking to indemnify, defend and hold harmless may be held to be unenforceable because it violates any law or public policy, the Customer shall nevertheless make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

             (c)          The obligations of the Customer under this Section 11.07 shall survive the termination of this Agreement and the discharge of the other obligations of the Customer hereunder.

 

11.08     Increased Cost and Reduced Return. After the date of this Agreement, if the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by WFBC with any request or directive (whether or not having the force of law) of any such governmental authority (a) subjects WFBC to any charge or withholding on or in connection with this Agreement or any Related Document or any Purchased Account, (b) changes the basis of taxation of payments to WFBC in respect of any amounts payable under this Agreement or any Related Document (except for changes in the rate of tax on the overall net income before tax of WFBC), (c) imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or any credit extended by WFBC, (d) has the effect of reducing the rate of return on WFBC’s capital to a level below that which WFBC could have achieved but for such adoption, change or compliance (taking into consideration WFBC’s policies concerning capital adequacy) or (e) imposes any other condition, and the result of any of the foregoing is (x) to impose a cost on, or increase the cost to WFBC of its purchasing, maintaining or funding any interest acquired under this Agreement or any Related Document, (y) to reduce the amount of any sum received or receivable by, or to reduce the rate of return of WFBC under this Agreement or any related transaction document or (z) to require any payment calculated by reference to the amounts received by it hereunder, then, upon demand by WFBC, the Customer shall pay to WFBC (with respect to amounts owed to it) such additional amounts as will compensate WFBC for such increased cost or reduction.

 

  

35

  

 

11.09    Choice of Law. This Agreement shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of Colorado.

 

11.10    Invalid Provisions. Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

 

11.11    Entire Agreement. This Agreement, including all Exhibits hereto, together with the Related Documents, or any other document or agreement described in or related to this Agreement, comprises the complete and integrated agreement of the parties on the subject matter of this Agreement and supersedes all prior agreements, whether oral or in writing. All Exhibits hereto are incorporated into this Agreement and made a part hereof.

 

11.12    Amendment. Except as otherwise provided herein, any amendment, addendum or modification hereto must be signed by both parties.

 

11.13    Further Documents. The Customer, at its expense, will from time to time execute, deliver, endorse and authorize the filing of any instruments, documents, conveyances, assignments, security agreements, financing statements, control agreements and other agreements that WFBC may reasonably request in order to secure, protect, perfect or enforce WFBC’s rights under this Agreement, the Related Documents, the Related Rights or any other document or agreement described in or related to this Agreement or its Lien in the Purchased Accounts, Related Rights and Collateral (but any failure to request or assure that the Customer executes, delivers, endorses or authorizes the filing of any such item shall not affect or impair the validity, sufficiency or enforceability of this Agreement, the Related Documents, the Related Rights or any other document or agreement described in or related to this Agreement or WFBC’s Lien in the Purchased Accounts, Related Rights and Collateral, regardless of whether any such item was or was not executed, delivered or endorsed in a similar context or on a prior occasion).

 

11.14    Retention of Records. WFBC shall have no obligation to maintain electronic records or retain any documents, schedules, invoices, agings, or other Records delivered to WFBC by the Customer in connection with this Agreement or the Related Documents or any other document or agreement described in or related to this Agreement beyond the time periods set forth for retention of records in WFBC’s internal policies.

 

  

36

  

 

11.15    Effective. This Agreement shall become effective when it is executed and delivered by an authorized officer of each party. This Agreement may be executed in counterparts and each counterpart shall constitute one and the same original. Manually executed counterparts of the signature pages of this Agreement and any of its Exhibits may be delivered by the parties electronically so long as transmitted pages are reproducible on paper medium upon receipt. Each party is duly authorized to print any executed signature page so received and attach it to this Agreement or a relevant Exhibit, as applicable, whereupon this Agreement or such Exhibit shall be deemed to have been duly executed and delivered by the transmitting party and the paper copy of this Agreement or such Exhibit assembled by the recipient with such signature page attached shall be deemed an original for all purposes, absent manifest error or bad faith.

 

11.16    Data Transmission. WFBC assumes no responsibility for privacy or security risks as a result of the method of data transmission selected by the Customer. WFBC only assumes responsibility for data transmitted from the Customer once the data is received within WFBC’s internal network. WFBC assumes no responsibility for privacy or security data transmitted from WFBC to the Customer once the data is dispensed from WFBC’s internal network.

 

11.17    Confidential Information. WFBC covenants and agrees to hold this Agreement and other nonpublic information regarding the Customer, its Affiliates, and their respective businesses (collectively, “Confidential Information”) in confidence, and agrees not to use and not to disclose any of the contents of, provide any Person with copies of, or use for any purpose not related to the purchases made hereunder, any Confidential Information other than disclosure to, granting permission to use to, and discussion with (a) Wells Fargo & Co., any direct or indirect Subsidiaries of Wells Fargo & Co. (including WFBC) or any officers, directors, members, managers, employees or outside accountants, auditors, attorneys or other agents of Wells Fargo & Co. or such Subsidiaries (the “Wells Receivers”), (b) any prospective or actual assignees, syndication parties or participants, (c) any rating agency of WFBC and (d) governmental authorities with appropriate jurisdiction over WFBC; provided that each such Person is informed of the confidential nature of the Confidential Information, and has agreed to treat the Confidential Information as confidential in accordance with terms and conditions no less protective than as set forth in this Section. Notwithstanding the above stated obligations, no Person will be liable for disclosure or use of Confidential Information which (i) was required by law, including pursuant to a subpoena or other legal process, (ii) was in such Person’s possession or known to such Person prior to receipt in connection with purchases made hereunder, (iii) is or becomes known to the public (without breach of any obligations hereunder), (iv) is or becomes available to such Person from a source, other than a Wells Receiver, which is not known to such Person to be under an obligation of confidentiality to the Customer; or (v) is independently developed by such Person without the use of the Confidential Information. Notwithstanding any provision hereof to the contrary, WFBC covenants and agrees that it shall not use the name of the Customer or any Affiliate of the Customer, or any trademarks, trade names or service marks of the Customer or any Affiliate of the Customer, or quote the opinion of any employee of the Customer or any Affiliate of the Customer, in any advertising or marketing material (including press releases) without first obtaining the prior written consent of an officer of the Customer or such Affiliate, as applicable.

 

  

37

  

 

11.18    Notices Hereunder. Except as otherwise expressly provided herein, all notices, requests, demands and other communications provided for under this Agreement and the Related Documents shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier of national reputation for which a receipt is available, (d) transmitted by telecopy, or (e) sent as electronic mail, in each case delivered or sent to the party to whom notice is being given to the business address, telecopier number, or e-mail address set forth below next to its signature or, as to each party, at such other business address, telecopier number, or e-mail address as it may hereafter designate in writing to the other party pursuant to the terms of this Section 11.18. All such notices, requests, demands and other communications shall be deemed to be an authenticated record communicated or given on (w) the date received if personally delivered, (x) five days after the date deposited in the mail if delivered by mail, (y) the date delivered to the courier if delivered by overnight courier, or (z) the date of transmission if sent by confirmed telecopy or e-mail. All notices, financial information, or other business records sent by any party to this Agreement may be transmitted, sent, or otherwise communicated via such medium as the sending party may deem appropriate and commercially reasonable; provided, however, that the risk that the confidentiality or privacy of such notices, financial information, or other business records sent by any party may be compromised shall be borne exclusively by the Customer.

 

11.19    Costs and Expenses. Except as is prohibited by law, the Customer agrees to pay on demand all costs and expenses, including reasonable attorneys’ fees (including in-house counsel), incurred by WFBC in connection with this Agreement, any other Related Document, the Related Rights and the transactions contemplated hereby and thereby, including all such costs, expenses and fees set forth in the schedule of fees provided by WFBC, which schedule may be adjusted by WFBC from time to time in its discretion, and all such costs, expenses and fees incurred in connection with the negotiation, due diligence, preparation, execution, amendment, modification, administration, performance, collection and enforcement of this Agreement, the Related Documents, the Related Rights, all obligations of the Customer hereunder and thereunder and the creation, perfection, protection, satisfaction, foreclosure or enforcement of any security interest granted hereunder and the collection of any Purchased Account, any Related Right or any obligation owed by the Customer to WFBC.

 

11.20    Taxes.

 

            (a)          Except as otherwise provided in this Section 11.20, any and all payments made by the Customer hereunder shall be made free and clear and without deductions for or on account of any present or future U.S., foreign, federal, provincial, state, municipal, local or other taxes of any kind or nature whatsoever, including any capital, income, sales, excise, business, property, stamp, documentary, customs, imposts, deductions, charges or withholdings, and all liabilities with respect thereto (excluding taxes that are imposed on WFBC’s overall net income by any taxing authority) (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities of any kind or nature whatsoever and interest, penalties and additions to tax in respect thereof being hereinafter referred to as “Taxes”). If any such withholdings or deductions are so required, (i) the sum payable hereunder shall be increased as may be necessary so that after all required deductions are taken into account (including any required with respect to payments made pursuant to this Section 11.20(a)), WFBC shall receive an amount equal to the sum it would have received had no such deduction been made, (ii) the Customer shall make such deductions and (iii) the Customer shall pay the full amount deducted to the appropriate authority before penalties attach thereto or interest accrues thereon. If the Customer pays any such Taxes, it shall deliver official tax receipts evidencing that payment or certified copies thereof to WFBC on or before the thirtieth day after payment.

 

  

38

  

 

            (b)          In addition, the Customer shall pay any present or future U.S., foreign, federal, provincial, state, municipal, local or other taxes of any kind or nature whatsoever, including any capital, income, sales, excise, business, property, stamp, documentary, customs, imposts, deductions, charges or withholdings, and all liabilities and interest, penalties and additions to tax in respect thereof imposed by any taxing authority (other than taxes that are imposed on WFBC’s overall net income by any taxing authority) that arises from any payment made hereunder, under any Related Document or from any proceeds of any Purchased Account or Related Right or any withholding or deduction by an Account Debtor (hereinafter referred to as “Other Taxes”).

 

             (c)          Except as otherwise provided in this Section 11.20, the Customer shall indemnify WFBC for and hold it harmless against the full amount of the Taxes and Other Taxes paid by WFBC on account of any transaction contemplated by this Agreement or any Related Document or the purchase of the Purchased Accounts and the Related Rights.

 

11.21    Limitation. In no event shall WFBC be liable to the Customer for any consequential, incidental, special, punitive, or indirect loss or damage arising out of or related to any provision of this Agreement, including loss of profits or revenue, loss of opportunity or like items of loss or damage except as specifically provided herein regardless of the legal basis for any such claim and the Customer hereby releases WFBC therefrom. In no event shall the Customer be liable to WFBC for any consequential or punitive loss or damage arising out of or related to any provision of this Agreement.

 

11.22    Prohibited Rate. In no event shall any interest or fee to be paid hereunder exceed the maximum rate permitted by applicable law. In the event any such interest rate or fee exceeds such maximum rate, such rate shall be adjusted downward to the highest rate (expressed as a percentage per annum) or fee that the parties could validly have agreed to by contract on the date hereof under applicable law. It is further agreed that any excess actually received by WFBC shall be credited against any amount owing hereunder.

 

11.23    Jurisdiction. The parties hereby (a) consent to the personal jurisdiction of the state and federal courts located in the State of Colorado, and any appellate court from which any appeals therefrom are available, in connection with any controversy related to this Agreement or any Related Document; (b) waive any argument that venue in any such forum is not convenient; (c) agree that any litigation initiated by WFBC or the Customer in connection with this Agreement or any Related Document may be venued in the state or federal courts located in the City and County of Denver, Colorado; and (d) agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

11.24    Negotiations. The parties agree that this Agreement has been mutually negotiated at arm’s length by both of them with benefit of legal counsel and such other advice as they deemed appropriate and no provision hereof is to be construed more severely against one of the parties than it is to be construed against the other based on the party responsible for the drafting thereof.

 

  

39

  

 

11.25    USA PATRIOT Act Notice. WFBC hereby notifies the Customer that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies the Customer, which information includes the name and address of the Customer and other information that will allow WFBC to identify the Customer in accordance with the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

 

11.26    Termination. This Agreement shall terminate on the first date following the Termination Date when the Purchased Amount has reduced to zero, all other amounts due to WFBC under this Agreement and the Related Documents have been indefeasibly paid in full, WFBC has no further obligations hereunder or any Related Document and all obligations of the Customer to WFBC hereunder and under each Related Document have been satisfied, in each case as determined by WFBC in its sole discretion (the “Final Termination Date”).

 

11.27    Terms Generally. Defined terms include in the singular number the plural and in the plural number the singular. The use of the singular or the plural number shall be deemed to include the use of the other when the context so requires. Whenever the context require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context in which used herein otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or”. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, subsections, Exhibits, Schedules and the like shall be construed to refer to Articles, Sections and subsections of, or Exhibits or Schedules attached to, this Agreement unless otherwise expressly provided and (e) all references herein to Articles, Sections, subsections and the like shall be construed to include therein references to all Sections and subsections thereof unless otherwise expressly provided. Article and Section headings in this Agreement are for reference only and shall not affect the construction of this Agreement. Reference to any law, rule, regulation, order, decree, requirement, policy, guideline, directive or interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect on the determination date, including rules and regulations promulgated thereunder. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles.

 

  

40

  

 

11.28    Release. The Customer and each Guarantor by signing the Acknowledgment and Agreement of Guarantors set forth below, each hereby absolutely and unconditionally releases and forever discharges WFBC, and any and all participants, parent entities, subsidiary entities, affiliated entities, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which the Customer or such Guarantor has had, now has or has made claim to have against any such Person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Agreement, whether such claims, demands and causes of action are matured or unmatured or known or unknown

 

11.29    References. All references in any other agreement, instrument or document to the Former Account Purchase Agreement shall be deemed to refer to this Amended and Restated Account Purchase Agreement.

 

11.30    No Waiver. The execution of this Agreement and the acceptance of all other agreements, instruments and documents related hereto shall not be deemed to be a waiver of any Event of Termination existing under the Former Account Purchase Agreement, or a waiver of any breach, default or event of default under any agreement, instrument or document related hereto or under any other document held by WFBC, whether or not known to WFBC and whether or not existing on the date of this Agreement.

 

[This space intentionally left blank.]

 

  

41

  

 

11.31    WAIVER OF JURY TRIAL. EACH OF THE CUSTOMER AND WFBC HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW OR IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT OR ANY RELATED DOCUMENT.

	  	  	  	  	  
	
TS STAFFING SERVICES, INC.

	  	
WELLS FARGO BANK, NATIONAL ASSOCIATION

	  	  	  	  	  
	
By:

	
/s/ Jay H. Schecter

	  	
By:

	
/s/ Jason M. Cole

	
Name: Jay H. Schecter

	  	
Name: Jason M. Cole

	
Its: Chief Executive Officer

	  	
Its: Authorized Signatory

 

The Customer and WFBC have executed this Agreement through their authorized officers as of the date set forth above.

	  	  	  	  
	
Wells Fargo Bank, National Association

	  	
WELLS FARGO BANK, NATIONAL ASSOCIATION

	
14800 Quorum Drive, Suite 320,

	  	
 

	
Dallas, Texas 75254

	  	  	  
	
Telecopier: (866) 968-6697

	  	  	  
	
Attention: Jason M. Cole

	  	
By:

	
/s/ Jason M. Cole

	
Email: Jason.M.Cole@wellsfargo.com

	  	
Name: Jason M. Cole

	  	  	
Its: Authorized Signatory

	
and

	  	  	  
	  	  	  	  
	
110 East Broward Blvd. #1100

	  	  	  
	
Ft. Lauderdale, Florida 33301

	  	  	  
	
MAC: Z6186-110

	  	  	  
	
Telecopier: (954) 761-4202

	  	  	  
	
Attention: Beverly R. Ferrara

	  	  	  
	
Email: Beverly.R.Ferrara@wellsfargo.com

	  	  	  
	  	  	  	  
	
TS Staffing Services, Inc.

	  	
TS STAFFING SERVICES, INC.

	
160 Broadway, 11th Floor

	  	  	  
	
New York, New York 10038

	  	  	  
	
Telecopier: (212) 346-9601

	  	  	  
	
Attention: Jay H. Schecter

	  	  	  
	
Email: jschecter@tristateemployment.com

	  	
By:

	
/s/ Jay H. Schecter

	
Federal Employer ID No.: 45-3668647

	  	
Name: Jay H. Schecter

	
Organization No.: TX 801497197

	  	
Its: Chief Executive Officer

 

Signature Page to Amended and Restated Account Purchase Agreement

 

  

  

  

 

ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS

 

          Each of the undersigned, each a guarantor of the debts, obligations and liabilities of TS Staffing Services, Inc., a Texas corporation (the “Customer”) to Wells Fargo Bank, National Association (together with its participants, successors/and assigns, “WFBC”), pursuant to (a) a Continuing Guaranty by Robert Cassera in favor of WFBC, dated as of August 27, 2010, (b) an Amended and Restated Continuing Guaranty by Corporate Resource Services, Inc. in favor of WFBC, dated as of November 21, 2011, (c) a Continuing Guaranty by Corporate Resource Development Inc. in favor of WFBC, dated as of August 27, 2010, (d) a Continuing Guaranty by Insurance Overload Services, Inc. in favor of WFBC, dated as of August 27, 2010, and (e) a Continuing Guaranty by Diamond Staffing Services, Inc. in favor of WFBC, dated as of January 31, 2011 (each of the foregoing as amended or otherwise modified from time to time, a “Guaranty”), hereby (i) acknowledges receipt of the foregoing Amended and Restated Account Purchase Agreement (the “Agreement”); (ii) consents to the terms (including without limitation the release set forth in Section 11.28 of the Agreement) and execution thereof; (iii) reaffirms all obligations to WFBC pursuant to the terms of his or its Guaranty; and (iv) acknowledges that WFBC may amend, restate, extend, renew or otherwise modify the Agreement and any debts, obligations, liabilities or agreement of the Customer, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the liability of the undersigned under his or its Guaranty for all of the Customer’s present and future debts, obligations and liabilities to WFBC. This Acknowledgment and Agreement of Guarantors may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument.

	  	  	  	  	  
	  	  	  	
Corporate Resource Services, Inc.

	  	  	  	  	  
	
/s/ Robert Cassera

	  	
By:

	
/s/ Jay H. Schecter

	
Robert Cassera

	  	
Name: Jay H. Schecter

	  	  	  	
Title: Chief Executive Officer

	  	  	  
	
Corporate Resource Development Inc.

	  	
Insurance Overload Services, Inc.

	  	  	  	  	  
	
By:

	
/s/ Jay H. Schecter

	  	
By:

	
/s/ Jay H. Schecter

	
Name: Jay H. Schecter

	  	
Name: Jay H. Schecter

	
Title: Chief Executive Officer

	  	
Title: Chief Executive Officer

	  	  	  	  	  
	
Diamond Staffing Services, Inc.

	  	  	  
	  	  	  	  	  
	
By:

	
/s/ Jay H. Schecter

	  	  	  
	
Name: Jay H. Schecter

	  	  	  
	
Title: Chief Executive Officer

	  	  	  

 

Signature Page to Acknowledgment and Agreement of Guarantors

 

  

  

  

 

Exhibit A

To

Account Purchase Agreement

 

Legal Names, Trade Names, DBAs and other Fictitious Names

 

	
Legal Name and

Jurisdiction

	
Trade Name, DBA or

Fictitious Name Used1

	
Date of First Use of Trade

Name, DBA or Fictitious

Name; How Acquired

	
State(s) in which

Trade Name, DBA

or Fictitious Name

is registered

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
ACCOUNTEKNOLOGY GROUP

	
Assumed name certificate

filed on June 15, 20112

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
ALDAN TROY GROUP

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
B. BARNES ASSOCIATES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
CORPORATE RESOURCE DEV INC.

	
Assumed name certificate

filed on June 15, 2011

	
New York County

 

 

 

 

1 Corporate Resource Development Inc. has also sold accounts to Wells Fargo under the following names: Aldan Troy Group Division; Decorum Consulting Division; Diversity Services DC; Diversity Staffing Division; FSI Services Division; HR Staffing Division; J.D. & Tuttle Hospitality Division; Lerner Cumbo & Associates Division; Lerner Cumbo & Assoc. Division; On the Marks Division; People Finders Plus Division; Personnel Specialists Division; Prompt Personnel Division; Pyramid Staffing Division; RWP Solutions Division; Searchpoint 1 Division; Segue Staffing Fla Division; Segue Staffing NY Division; Segue NY TP Division; Segue Search Division; Staff One Division; Staff Design Division; Staffing Remedies Division; Staffing Remedies NJ Division; Staffing Remedies Suffolk Division; Staffing Unlimited.com Division; Strategic Resources Division; Synergy Personnel Division; TDF Consulting Division; Temp Alternatives Division; Temporary Services Division; The Source (Barneys) Division; The Professionals a Division of Tuttle Medical; Tuttle IT Division; Tuttle Agency Division; Triangle Associates Division; and Troy Associates Division.

 

TS Staffing Services, Inc. has also sold accounts to Wells Fargo under the following names: American Work Force; Tri State American Workforce; Tri-State Staffing (3); NY Temps; Tri State Florida; Tri State 9; and Tri State 9: NY Temps.

 

STS Group, Inc. has also sold accounts to Wells Fargo under the name STS Group.

 

2 All trade names, DBAs and fictitious names listed on this Exhibit A for Corporate Resource Development Inc. were acquired through an acquisition transaction with GT Systems Inc. that occurred on or about March 24, 2010.

 

  

A-1

  

 

	
Legal Name and

Jurisdiction

	
Trade Name, DBA or

Fictitious Name Used1

	
Date of First Use of Trade

Name, DBA or Fictitious

Name; How Acquired

	
State(s) in which

Trade Name, DBA

or Fictitious Name

is registered

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
CREATIVE NETWORK SYSTEMS

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
DECORUM CONSULTING GROUP

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
DIVERSITY SERVICES OF DC

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
DIVERSITY STAFFING

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE EMPLOYMENT SOURCE INC.

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
F.S.I. SERVICES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
H R STAFFING

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
J.D. & TUTTLE HOSPITALITY STAFFING

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
LERNER, CUMBO & ASSOCIATES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE MILLER CANG AGENCY

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
ON THE MARKS PERSONNEL

	
Assumed name certificate

filed on June 15, 2011

	
New York County

 

  

A-2

  

 

	
Legal Name and

Jurisdiction

	
Trade Name, DBA or

Fictitious Name Used1

	
Date of First Use of Trade

Name, DBA or Fictitious

Name; How Acquired

	
State(s) in which

Trade Name, DBA

or Fictitious Name

is registered

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
PARK AVENUE DESIGN PLACEMENT

	
Assumed name certificate

filed on November 4, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
PAULSON SEARCH

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
PEOPLE FINDERS PLUS

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
PERSONNEL SPECIALIST

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
PROMPT PERSONNEL ASSOCIATES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
PYRAMID STAFFING SERVICE

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
RWP SOLUTIONS

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
SEARCHPOINT 1

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
SEGUE SEARCH OF CONNECTICUT

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
SEGUE SEARCH

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
STAFF “ONE”

	
Assumed name certificate

filed on June 15, 2011

	
New York County

 

  

A-3

  

 

	
Legal Name and

Jurisdiction

	
Trade Name, DBA or

Fictitious Name Used1

	
Date of First Use of Trade

Name, DBA or Fictitious

Name; How Acquired

	
State(s) in which

Trade Name, DBA

or Fictitious Name

is registered

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
STAFF DESIGN

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
STAFFING REMEDIES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
STAFFING UNLIMITED.COM

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
STRATEGIC RESOURCES STAFFING

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
SYNERGY PERSONNEL

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TDF CONSULTING GROUP

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TEMPORARY ALTERNATIVES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TEMPORARY SERVICES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE DRAYER SEARCH GROUP

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE GOLD STANDARD

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE PROFESSIONALS PERSONNEL

	
Assumed name certificate

filed on June 15, 2011

	
New York County

 

  

A-4

  

 

	
Legal Name and

Jurisdiction

	
Trade Name, DBA or

Fictitious Name Used1

	
Date of First Use of Trade

Name, DBA or Fictitious

Name; How Acquired

	
State(s) in which

Trade Name, DBA

or Fictitious Name

is registered

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE TUTTLE AGENCY INC.

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TRIANGLE PERSONNEL ASSOCIATES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TROY ASSOCIATES

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TUTTLE AGENCY OF PENNSYLVANIA

	
Assumed name certificate

filed on June 15, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
CRD STAFFING

	
Assumed name certificate

filed on or about November 18, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE SOURCE

	
Assumed name certificate

filed on or about November 18, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
THE SOURCE (BARNEYS)

	
Assumed name certificate

filed on or about November 18, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TUTTLE MEDICAL

	
Assumed name certificate

filed on or about November 18, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TUTTLE HOSPITALITY

	
Assumed name certificate

filed on or about November 18, 2011

	
New York County

	
Corporate Resource

Development Inc.,

a Delaware corporation

	
TUTTLE IN-HOUSE STAFF

	
Assumed name certificate

filed on or about November 18, 2011

	
New York County

	  	  	  	  
	
Insurance Overload

Services, Inc.,

a Delaware corporation

	
NONE

	
N/A

	
N/A

 

  

A-5

  

 

	
Legal Name and

Jurisdiction

	
Trade Name, DBA or

Fictitious Name Used1

	
Date of First Use of Trade

Name, DBA or Fictitious

Name; How Acquired

	
State(s) in which

Trade Name, DBA

or Fictitious Name

is registered

	
Diamond Staffing

Services, Inc.,

a Delaware corporation

	
CAMEO PERSONNEL SYSTEMS

	
Assumed name certificate

filed on April 18, 20113

	
New Jersey

	  	  	  	  
	
TS Staffing

Services, Inc.,

a Texas corporation

	
[Intentionally left blank]

	
Although not a DBA, effective November 10, 2011, TS Staffing Corp. merged into TS Staffing Services, Inc., a TX corp., which was the surviving entity4

	
N/A

	
TS Staffing

Services, Inc.,

a Texas corporation

	
AMERICAN WORKFORCE

	
Assumed name certificate filed on January 7, 2008; Registered fictitious name of TS Staffing Corp.; acquired by merger

	
Florida

	
TS Staffing

Services, Inc.,

a Texas corporation

	
TRI-STATE STAFFING

	
Assumed name certificate filed on January 7, 2008; Registered fictitious name of TS Staffing Corp.; acquired by merger

	
Florida

	
TS Staffing

Services, Inc.,

a Texas corporation

	
ON DEMAND STAFFING

	
Assumed name certificate to be filed on or about November 23, 2011

	
Texas

	  	  	  	  
	
STS Group, Inc., a

Florida Corporation

	
TRI-STATE EMPLOYMENT

SERVICES, INC.

	
Assumed name certificate filed on January 30, 2003; Registered fictitious name

	
Florida

 

 

 

 

3 Diamond Staffing Services, Inc. acquired substantially all of the assets of Cameo Personnel Systems, Inc. on April 10, 2011. Corporate Resource Services, Inc. acquired Diamond Staffing Services, Inc. through a merger transaction with Tri-Diamond Staffing Inc. on or about January 10, 2011. Tri-Diamond Staffing Inc. acquired Diamond Staffing, Inc. on January 1, 2009 from a third party.

 

4 TS Staffing Services, Inc. is being acquired as of even date herewith by Corporate Resource Services, Inc. from Robert Cassera.

 

  

A-6

  

 

Exhibit B

To

Account Purchase Agreement

 

Permitted Liens

 

NONE

 

 

B-1

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