Exhibit 10.3
SALE AND PURCHASE AGREEMENT
as of August 11, 1997
Stratus Services Group, Inc.
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Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Ladies and Gentlemen:
This letter will set forth the agreement between AGR Financial, LLC
(together with its successors and assigns, "AGR") and Stratus Services Group,
Inc., a corporation organized and existing under the laws of Delaware (the
"Seller"), with respect to the terms upon which AGR may purchase accounts
receivable from the Seller.
Receivables to be Offered; Procedures for Purchase.
Upon the terms and conditions provided herein, the Seller will
from time to time offer to sell and assign to AGR, on an exclusive basis (except
to the extent otherwise agreed in writing by AGR) and AGR shall purchase (to the
extent set forth herein), all of those certain present and future accounts
receivable, contract rights and other obligations for payment of money (the
"Receivables"), owing to the Seller arising out of the performance by Seller
(including, without limitation, by employees, agents, independent contractors or
other personnel employed by Seller or contracted for by Seller) of temporary or
personnel services for any third party approved by AGR (each, a "Payor"). The
Receivables purchased by AGR shall be identified from time to time in an
assignment (each, an "Assignment") substantially in the form of Exhibit A.
Seller acknowledges and agrees that prior to offering any
Receivables to AGR hereunder which Seller has purchased from any person,
corporation or entity which is a debtor in a case under the U.S. Bankruptcy Code
or which arises out of any contract or agreement purchased or acquired by Seller
from such a debtor, Seller shall notify AGR in writing and deliver to AGR such
agreements, documents, opinions and court orders as AGR may reasonably request.
Receivables will be purchased from time to time in groups (each such
group of Receivables, a "Batch"). Information with respect to each proposed
Batch shall be transmitted to AGR by modem or in diskette form acceptable to
AGR, electronically pursuant to instructions provided from time to time by AGR
or in any other medium acceptable to AGR. Simultaneously with providing such
information, the Seller shall
deliver to AGR copies of invoices with respect to the Receivables in such
proposed Batch, in the same order as presented on the diskette or in the
electronic transmission, accompanied by a copy of the Internal Revenue Service
tax deposit forms and an original of the deposit receipts, stamped by a
depository bank, evidencing all prior weeks' tax deposits since the most recent
delivery of such information hereunder and any other information as requested by
AGR from time to time.
The Seller shall offer the Batches of Receivables to AGR by
providing the information referred to in Section 1(b). Upon review of such
information, AGR shall determine which Receivables shall be purchased (the
"Purchased Receivables") and shall send to the Seller the fully completed
Assignment with respect to each such Batch of Purchased Receivables. The Seller
shall promptly execute and return the Assignment to AGR upon Seller's approval
of the terms thereof.
AGR hereby agrees that, to the extent that (i) Receivables offered
by the Seller are otherwise in compliance with the terms and provisions of this
Agreement, including, without limitation, the representations contained herein,
(ii) the Seller is not an Impaired Seller (as defined below) at such time, and
(iii) AGR has approved such Payor and AGR's then existing internal credit limits
with respect to the Payor of such Receivables will not be exceeded, AGR will
purchase Batches of Receivables from the Seller for the term of this Agreement
set forth in Section 12 hereof, provided, however, under no circumstances shall
AGR be obligated to purchase a Batch of Receivables if, after giving effect to
such purchase, the Aggregate Advance Exposure (as defined in Section 2(d)) of
all Batches of Receivables purchased from the Seller outstanding on such date
exceeds $3,000,000 or such higher amount as AGR shall in its sole discretion
approve (the "Advance Limit").
As used herein, "Impaired Seller" means the Seller at such time as
any of the following events shall have occurred and be continuing with respect
to Seller: default in payment of any amount due hereunder to AGR, whether on
demand or otherwise; suspension or liquidation by the Seller of its usual
business or suspension or expulsion of the Seller from any exchange; calling of
a meeting of creditors; assignment by the Seller for the benefit of creditors;
dissolution, bulk sale or notice thereof effected or given by the Seller;
creation of a security interest in any assets of the Seller which are or shall
be subject to liens granted to AGR by the Seller without consent of AGR;
insolvency of any kind, attachment, distraint, garnishment, levy, execution,
judgment, application for or appointment of a receiver or custodian, filing of a
voluntary or involuntary petition under any provision of the U.S. Bankruptcy
Code or amendments thereto, of, by or against the Seller or any property or
rights of the Seller, which in the case of any such involuntary proceeding shall
remain undismissed for a period of sixty (60) days or more; filing of a petition
or institution of any proceeding by or against the Seller for any relief under
any bankruptcy or insolvency laws or any laws relating to the relief of debtors,
readjustment of indebtedness, reorganizations, compositions or extensions, which
in the case of any such involuntary proceeding shall remain undismissed for a
period of sixty (60) days or more; any governmental authority or any court at
the instance of any governmental authority shall take possession of any
substantial part of the property of the Seller or shall
assume control over the affairs or operations of the Seller; any statement,
representation or warranty made by the Seller in any document, agreement or
financial statement delivered to AGR shall prove to be false in any material
respect when made; failure of the Seller or any other party thereto to comply
with any term of this Agreement or any other document or agreement executed in
connection herewith (collectively, the "Purchase Documents"); failure of the
Seller, on request, to furnish to AGR any financial information, or to permit
inspection by AGR of any books or records; any change in, or discovery with
regard to, the condition or affairs of the Seller which, in AGR's opinion,
increases its risk; or if AGR for any other reason deems itself insecure.
The sale of the Batches of Purchased Receivables includes all
accounts and general intangibles, all rights, remedies, guaranties, security
interests and liens, all records (including computer records) and other property
evidencing any of the foregoing and all proceeds of any of the foregoing which
relate to or are associated with that Batch of Purchased Receivables
(collectively, the "Transferred Property").
All invoices with respect to Receivables sent by the Seller to
Payors shall show on the face thereof the following legend and Seller shall not
change such legend or permit any Payor to deviate from the payment instructions
therein:
This Receivable has been assigned to and is owned by or subject to a security
interest of AGR Financial, LLC and is payable only in United States Dollars. All
payments shall be made to AGR Financial, LLC, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
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Purchase Price, etc.
The purchase price (the "Purchase Price") for each Batch of
Purchased Receivables purchased by AGR will be paid in the following two
components: (i) an initial cash amount (the "Advanced Amount") equal to 90%,
except that AGR may in its sole discretion reduce such percentage to 85% (such
percentage in effect from time to time, the "Advance Rate") multiplied by the
net face amount of each Purchased Receivable in such Batch less all discounts
(calculated on shortest terms), credits and allowances of any nature at any time
issued, owed or claimed by Payors (the "Expected Net Receivable"); and (ii) a
Seller Interest (as hereinafter defined) in all amounts collected with respect
to such Batch in excess of the Break-even Point (as hereinafter defined) with
respect thereto.
The Seller Interest will be any amounts collected in excess of the
Break-even Point and will be determined separately for each Batch purchased from
the Seller, in accordance with the schedule included in each Assignment, except
as set forth in Section 2(c).
The "Break-even Point" with respect to a Batch will be an amount
equal to the Advanced Amount plus the Purchase Fee (as defined below) applicable
thereto and any other charges, costs and fees agreed to by Seller and AGR (the
"Other Fees"); provided however, that after the Seller has ceased selling
Receivables to AGR or AGR
has ceased purchasing Batches from the Seller, unless such event has been caused
by the Advance Limit set forth in Section 2(d), AGR shall combine all Batches
for which the Break-even Point has not yet been reached, and treat such Batches
as a single Batch, at which time the Break-even Point will become the total
Advanced Amount plus the total Purchase Fees and Other Fees for all of such
combined Batches.
As of any date of determination, the "Aggregate Advance Exposure"
will be an amount equal to the aggregate of the Advanced Amounts of all Batches
of Receivables which have not yet reached the Break-even Point, less any
collections with respect to such Batches of Receivables.
The Purchase Fee is an amount calculated by multiplying the Expected
Net Receivable by 1.3765% at such times as the Advance Rate is 90% and 1.3% at
such times as the Advance Rate is 85%, subject to adjustment from time to time
as calculated by AGR in the event that the prime rate of interest established
from time to time by Summit Bank N.A. shall increase or decrease above or below
8.5% per annum (the "Purchase Fee"). The Purchase Fee shall be deducted from the
collections on Receivables and retained by AGR.
The parties hereby acknowledge and agree that the Purchase Price has
been calculated to take into account any services provided by the Seller with
respect to Purchased Receivables, and no other amount with respect to the
providing of services for any Batch shall be payable to the Seller.
The Seller acknowledges and agrees that the Advance Rate and
percentage used for calculating the Purchase Fee may be changed from time to
time in the sole discretion of AGR.
In the event that any Purchased Receivable shall not be paid within
the number of days after invoice date set forth in the schedule in the
Assignment covering such Purchased Receivable, the Seller shall pay to AGR a
daily percentage finance charge equal to .043%, subject to adjustment from time
to time as calculated by AGR in the event that the prime rate of interest
established from time to time by Summit Bank N.A. shall increase or decrease
above or below 8.5% per annum, on the unpaid amount of such Purchased Receivable
for the period from such number of days after the invoice date until the earlier
of the payment thereof and the date the Break-even Point is reached with respect
to the Batch of Receivables which included such Purchased Receivables.
Certain Procedures.
AGR will transmit by wire or, if requested by Seller, by check the
Advanced Amount of the Purchase Price for each Batch of Purchased Receivables on
the next business day following the business day of AGR's receipt of the
Assignment covering such Batch executed by the Seller or, if such Assignment is
received after 1:00 p.m., on the second business day thereafter (a "Purchase
Date").
All wire and other transfer charges shall be for the account of the
Seller.
Upon such payment, the Seller will have sold to AGR all of the
Seller's right, title and interest in such Batch of Purchased Receivables and
other Transferred Property and in any proceeds thereof, and AGR will be the sole
and absolute owner thereof and will own all of the Seller's rights and remedies
represented by such Batch of Purchased Receivables (including, without
limitation, rights to direct or indirect payment from the respective Payors on
such Batch of Purchased Receivables), and AGR will have obtained all of the
Seller's rights under all guarantees, assignments and securities with respect to
each Purchased Receivable included in such Batch.
The Seller shall execute (or cause to be executed) all required
Uniform Commercial Code releases or financing statements in favor of AGR.
Collection and Servicing of Purchased Receivables. Prior to the sale
of any Batch of Receivables hereunder, the Seller shall establish an account for
all of its Receivables (the "Lockbox Account"), at Summit Bank or at such other
bank as AGR may approve in writing (the "Lockbox Bank"), and shall enter into an
agreement relating thereto in form and substance satisfactory to AGR and the
Lockbox Bank. The Lockbox Account shall be an account in the name of AGR or its
designee, and shall be the sole and exclusive property of AGR and its designee.
All charges in connection with the Lockbox Account shall be for the
account of the Seller.
In the event that the Seller directly receives any payments in
respect of Purchased Receivables, the Seller shall within two (2) Business Days
after receipt thereof (i) deposit in the Lockbox Account all such payments on
Purchased Receivables and (ii) send to AGR or its designee all remittance
advices accompanying such payments or, if no such remittance advice accompanied
any such payment, notice of the amount so received.
Upon AGR's receipt of a remittance advice from the Lockbox Bank
confirming that it has received payments on Receivables purchased, funds will be
posted by AGR (the "Application of Payments"), to the specific Receivable within
AGR's respective Batch. Such funds will be retained by AGR until the aggregate
Break-even Point with respect to such Batch is reached. Thereafter, such amounts
shall be payable to Seller as the Seller Interest promptly after receipt thereof
(subject, in each case, to permitted offsets under this Agreement) on each
Friday or if such day is not a business day, the next succeeding business day
(each a "Settlement Date").
On each Settlement Date, AGR will deliver to the Seller a report
(the "Settlement Report") substantially in the form of Exhibit B hereto. Each
Settlement Report will set forth AGR's Application of Payments with respect to a
Batch together with a list of Ineligible Receivables (as defined in Section 6
below) included in such Batch. Such Settlement Report may also list those
Receivables included in such Batch
with respect to which AGR has been unable to make a determination as to their
continuing eligibility (the "Outstanding Receivables"). In the event that Seller
has not disputed the Application of Payments contained in any Settlement Report
within thirty (30) business days after its receipt by Seller, then all such
undisputed Application of Payments shall be deemed final.
The Seller shall be responsible for servicing and collection of
Purchased Receivables subject to the terms and conditions of a Servicing
Agreement, dated as of August __, 1997 by and between the Seller, as primary
servicer (the "Primary Servicer"), and AGR. AGR shall have the right, upon the
terms and conditions set forth in such Servicing Agreement, to terminate such
Servicing Agreement and to designate a "Back-up Servicer" which may be AGR.
Misdirected Payments; Erroneous Payments.
If a Payor shall make payment of a Purchased Receivable to the
Seller or to a person or location other than as provided in the invoice therefor
("Misdirected Payments"), the Seller (at its own cost and expense) shall
promptly take all necessary steps to effect collection of such Misdirected
Payment from any other party claiming an interest therein or having possession
thereof and (i) hold such payment in trust for AGR, (ii) segregate such payment
and not deposit such payment in the Seller's own account, nor commingle such
payment with the Seller's own funds or other assets and (iii) deliver such
payment no later than the close of business on the day of receipt to the Lockbox
Account.
The Seller agrees to pay, on demand, a finance charge on any
Misdirected Payment received by the Seller that is not deposited in the Lockbox
Account within 48 hours after receipt by the Seller during the period from the
Seller's receipt thereof until such payment is deposited at a rate per day equal
to .043%, but in no event in excess of the maximum rate permitted under
applicable law (the "Interest Rate").
If AGR shall receive any payment from any Payor of any
receivable or claim not included as a Purchased Receivable in any Batch
("Erroneous Payment"), AGR shall, upon identification of such Erroneous Payment
by Seller, and confirmation by AGR (at the sole cost and expense of Seller) that
such is an Erroneous Payment, use its best efforts to promptly take all
necessary steps to deliver or remit funds equal to the amount of such Erroneous
Payment to Seller on the next Settlement Date.
The Seller will cooperate with AGR and its agents in the
identification of sums deposited into the Lockbox Account, which cooperation
shall continue until all Purchased Receivables sold hereunder have been
collected. In the event any sums deposited into the Lockbox Account cannot be
identified to the satisfaction of AGR, such sum shall be posted to the
appropriate Purchased Receivable as determined by AGR in its sole discretion.
Ineligible Receivables and Defaulted Receivables.
If a breach of any of the representations or warranties contained
herein relating to a Purchased Receivable (each, an "Ineligible Receivable")
shall be discovered at any time prior to the date the Break-even Point is
reached with respect to the Batch of Receivables including such Purchased
Receivable, the Seller shall cure such breach in accordance with this Section 6.
If any Purchased Receivable shall not be paid in full within 90 days following
its original invoice date (or, in the case of any Purchased Receivable
designated by AGR from time to time prior to AGR's purchase thereof, 60 days
after its original invoice date), such Purchased Receivable shall be treated as
a Defaulted Receivable hereunder.
The Seller shall, on the next Settlement Date after discovery of an
Ineligible Receivable or Defaulted Receivable or in the absence of a Settlement
Date, promptly upon demand, repurchase any Ineligible Receivable or Defaulted
Receivable (a "Repurchased Receivable") from AGR at a repurchase price (the
"Repurchase Price") equal to (i) the Break-even Point determined for such
Repurchased Receivable, less (ii) any amount collected by AGR with respect to
such Ineligible Receivable or Defaulted Receivable (which amount AGR shall
retain), plus (iii) interest equal to the Interest Rate on such difference of
(i) minus (ii) for each day from the earlier of either the Settlement Date that
payment of the Repurchase Price is due or the date the Repurchase Price is
demanded to but excluding the date the Repurchase Price is paid. The Break-even
Point for any such Repurchased Receivable shall be the allocable portion of the
Advanced Amount for the Batch that included such Repurchased Receivable and of
the Purchase Fee with respect thereto.
Upon payment of the Repurchase Price, AGR shall be deemed to have
resold the Ineligible Receivable or Defaulted Receivable, including any
Transferred Property with respect thereto, to the Seller without any
representation, warranty or recourse whatsoever, and shall have no further
obligation to the Seller with respect to such Repurchased Receivable, but such
resale shall not affect or impair any security interest therein held by AGR or
AGR's rights under Section 2(h). AGR shall take such actions as may be
reasonably required to reassign an Ineligible Receivable or Defaulted Receivable
to the Seller. In addition to all other rights and remedies available to AGR at
law or in equity, AGR may offset against any amounts it owes the Seller under
this Agreement any amounts due AGR with respect to Repurchased Receivables.
If after receipt of any payment of all or any part of the Repurchase
Price for any Repurchased Receivable, AGR is compelled to surrender such payment
to any person or entity because such payment is determined to be void or
voidable as a preference, impermissible set-off, or for any other reason caused
by or related to the Seller, the Seller shall be liable to AGR for, and shall
indemnify and hold AGR harmless for, the amount of such payment surrendered and
any damages resulting therefrom. The Seller's obligations under this Section
6(d) shall survive any termination of this Agreement.
Closing Costs.
Closing costs of approximately $10,000 as set forth in a closing
cost statement prepared by AGR will be subtracted from the initial Advanced
Amount. Closing costs include but are not limited to the expense of AGR's site
review, legal fees and expenses, fees and expenses arising from the development
of the electronic or manual interface with AGR or its designee, as well as the
costs of administration and documentation.
Any filing fees and filing taxes relating to filing UCC Financing
Statements, UCC Terminations and UCC Releases required to be filed by Seller
shall be paid by Seller or reimbursed to AGR at closing.
Representations and Warranties. The Seller represents and warrants
to AGR as set forth in Exhibit C annexed hereto and made a part hereof.
Covenants. The Seller covenants and agrees with AGR as follows:
In connection with the initial purchase of Receivables by AGR,
the Seller will execute such financing statements under the Uniform Commercial
Code - Secured Transactions (naming AGR as secured party) as AGR may reasonably
request with respect to all Receivables. From time to time, upon reasonable
request, the Seller will provide AGR with any additional information, will
execute and deliver to AGR any additional agreements, instruments, documents or
financing statements and will take all actions deemed by AGR as necessary or
desirable to effectuate the provisions of the Purchase Documents, to evidence,
protect and perfect the assignment of the title to the Purchased Receivables and
to facilitate the collection of the Purchased Receivables.
With respect to each Batch of Receivables purchased hereunder,
each of AGR and the Back-up Servicer described in the Servicing Agreement, and
their agents and representatives are hereby irrevocably constituted and
designated as the Seller's attorneys-in-fact, which irrevocable power of
attorney is coupled with an interest, (i) to endorse or sign the Seller's name
to financing statements, remittances, invoices, assignments, checks, drafts or
other instru ments or documents in respect of the Receivables, (ii) to notify
Payors to make payments on the Receivables directly to AGR, and (iii) to bring
suit in the Seller's or their name and to settle or compromise such Purchased
Receivables as AGR or the Back-up Servicer may, in its discre tion, deem
appropriate.
The Seller will pay all AGR's costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses, which may be
expended or incurred by or on behalf of AGR in enforcing or attempting to
enforce any of AGR's rights against the Seller under the Purchase Documents, all
of which costs and expenses if not paid within ten (10) business days after
written demand shall bear interest at the Interest Rate for each day to but
excluding the payment date.
The Seller will (i) treat transfers to AGR of Receivables
hereunder as a sale for tax purposes, and, with respect to reporting on its
financial statements, in accordance with generally accepted accounting
principles (which method is presently contemplated by the Seller to be the
reporting of such transfer as a sale), and will advise all persons who inquire
about the ownership of such Receivables that they have been sold to AGR; (ii)
not treat any such Receivables as an asset on the Seller's books and records;
(iii) record in Seller's books, records and computer files that such Receivables
have been sold to AGR; (iv) pay all taxes, if any, relating to the transfer of
such Receivables to AGR; (v) not assign or grant any security interest in any
Receivables except to AGR; (vi) in the event AGR collects any Receivables, not
impede or interfere with AGR's collection of such Receivables; (vii) not amend,
waive or otherwise permit or agree to any deviation from the terms or conditions
of such Receivables; and (viii) promptly ▇▇▇▇ Receivables on the same bases and
using the same policies and practices that it has used in the past unless AGR
has been advised in writing of a change prior to the purchase of such
Receivables. AGR or its designated representatives from time to time may contact
Payors to verify Receivables and payments thereof, inspect, check, take copies
of or extracts from the Seller's books, records and files, and the Seller will
make the same available to AGR or such representatives at any reasonable time
for such purposes.
Notwithstanding anything to the contrary set forth in this Section
9(d), the Seller shall not be required to treat any of the transactions
contemplated by this Agreement in a manner that would not comply with any
applicable law or not comply with any requirement imposed by Seller's accounting
firm in order for such accounting firm to certify that Seller's financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied.
If deemed necessary by AGR or the Back-up Servicer and upon
reasonable notice, the Seller agrees that AGR or the Back-up Servicer, upon the
request of AGR, will be permitted to have at least one of its agents or
representatives physically present in the Seller's administrative offices during
normal business hours to assist and/or monitor the Seller in performing its
obliga tions under this Agreement.
So long as this Agreement is in effect, the Seller will
deliver to AGR (i) within 45 days after the end of each fiscal quarter, the
Seller's consolidated financial statements for such period and for that portion
of its fiscal year through the end of such period, certified by its chief
financial officer, (ii) within 90 days after the end of the Seller's fiscal
year, the Seller's audited annual consolidated financial statements for such
year (or if such statements are not audited, statements certified by the
Seller's chief financial officer), and (iii) promptly upon request, such other
information concerning the Seller as AGR may from time to time request. All
financial statements delivered to AGR will be prepared in accordance with
generally accepted accounting principles consistently applied and on a basis
consistent with those previously submitted to AGR. The Seller will not change
its accounting coding system for its Receivables without prior written
notification to AGR of such change.
The Seller shall promptly notify AGR in the event of any
action, suit, proceeding, dispute, offset, deduc tion, defense or counterclaim
that is or may be asserted by a Payor with respect to any Purchased Receivable
or upon the occurrence of any event of default under any loan agreement or note
to which the Seller is a party or by which it is bound. The Seller shall make
all payments to the Payors necessary to prevent the Payors from offsetting any
earlier overpayment to the Seller or other obligation of the Seller against any
amounts the Payors owe on any Purchased Receivables.
Upon request by AGR, the Seller shall execute and deliver to
AGR a security agreement, in form and substance acceptable to AGR, granting to
AGR a first priority security interest in and to any and all of the Seller's
personal property and assets and all the proceeds thereof, as security for any
and all obligations the Seller may owe AGR hereunder.
The Seller shall notify AGR in writing at least 30 days prior to any
change in the location of the Seller's principal place of business, chief
executive office or any other locations where the Seller maintains any assets or
records with respect to its accounts, or any change in the name of the Seller as
set forth at the beginning of this Agreement or in the other names (if any) set
forth under its name on the signature pages hereof.
Security Interest. In the event that, contrary to the mutual intent
of the Seller and AGR, any purchase of Purchased Receivables is not
characterized as a sale, the Seller shall, effective as of the date hereof, be
deemed to have granted (and the Seller does hereby grant) to AGR a first
priority security interest in and to any and all the Purchased Receivables and
the proceeds thereof to secure the repayment of all amounts advanced to the
Seller hereunder with accrued interest thereon, and this Agreement shall be
deemed to be a security agreement. With respect to such grant of a security
interest, AGR may at its option exercise from time to time any and all rights
and remedies available to it under the Uniform Commercial Code or otherwise. The
Seller agrees that ten (10) business days shall be reasonable prior notice of
the date of any public or private sale or other disposition of all or part of
the Purchased Receivables.
Remedies. Each of AGR's rights and remedies under this Agreement is
cumulative, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies AGR may have under applicable law.
AGR shall have the right, in AGR's sole discretion, to determine which rights
and remedies, and in which order any of the same, are to be exer cised. No act,
failure or delay by AGR shall constitute a waiver of any of AGR's rights and
remedies.
Term and Termination. The term of this Agreement shall be 24 months
from the date of the first purchase of a Batch hereunder and shall be renewable
automatically for successive one-year terms unless either the Seller or AGR
shall have notified the other party, not less than 60 days prior to the
expiration of the current term of
this Agreement, of its intention not to renew such term. However, AGR may
terminate this Agreement at any time upon notice to the Seller in the event that
AGR is unable to continue its financing or funding necessary to perform its
obligations hereunder. All other provisions of this Agreement, including without
limitation Sections 6 and 13, shall survive the termination of this Agreement.
The Seller shall not permit any of its subsidiaries or affiliates
(which shall include all persons, firms, corporations or other entities who
control the Seller, are controlled by the Seller or are under common control
with the Seller and which are engaged in the temporary or other personnel or
employee leasing business) to sell or assign or grant security interests in any
of their accounts receivable or other rights to payment of money without the
prior written consent of AGR.
No Assumption; Indemnification; Etc.
(a) This Agreement shall not constitute an assumption by AGR of any
obliga tion to a Payor.
(b) The Seller shall indemnify and hold harmless AGR and its
officers, directors, members, employees and agents, from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including
reasonable attorneys' fees) which may be imposed on, incurred by or asserted
against any of them in any way relating to or arising out of (i) any breach by
the Seller of any representation, warranty or covenant contained in any Purchase
Document, or (ii) the purchase of Receivables by AGR and the other transactions
contemplated by the Purchase Documents, provided, however, that with respect to
clause (ii) of this Section 13(b), Seller shall not be obligated to indemnify or
pay any such amount to the extent resulting from the gross negligence or willful
misconduct of AGR.
(c) Any amount payable by the Seller to AGR under any provision of
this Agreement shall be paid without any deduction, counterclaim, recoupment or
set-off by the Seller of any kind.
Controlling Law. This Agreement, each of the other Purchase
Documents and all of the rights and obligations of the parties hereunder and
thereunder shall be governed by and interpreted in accordance with the laws of
the State of New York.
WAIVER OF JURY TRIAL AND JURISDICTION. EACH OF THE SELLER AND AGR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENT OR
AGREEMENT EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE SELLER OR AGR. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR AGR'S ENTERING INTO THIS AGREEMENT.
The Seller hereby agrees that ANY LEGAL ACTION OR PROCEEDING AGAINST
THE SELLER WITH RESPECT TO THIS AGREEMENT OR ANY PURCHASE DOCUMENT MAY BE
BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ IN THE CITY OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, as AGR may
elect, and, by execution and delivery hereof, the Seller accepts and consents
to, for itself and in respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts and agrees that such jurisdiction shall
be exclusive, unless waived by AGR in writing. Nothing herein shall limit the
right of AGR to bring proceedings against the Seller in the courts of any other
jurisdiction. Service of process out of any such courts may be made, without
limitation, by mailing copies thereof by registered or certified mail, postage
prepaid, to the Seller at its address for notices as specified herein and will
become effective 30 days after such mailing. The Seller agrees that Sections 5
1401 and 5 1402 of the General Obligations Law of the State of New York shall
apply to this Agreement and the Purchase Documents and waives any right to any
defense of, or to dismiss any action or proceeding brought before said court on
the basis of, forum non conveniens.
Miscellaneous.
This Agreement and the related agreements, instruments and
documents executed in connection herewith embody the entire agreement and
understanding of the parties concerning the subject matter con tained herein and
therein. This Agreement and such related instruments, agreements and documents
supersede any and all prior agreements and understandings between the parties
with respect to such subject matter, whether oral or written.
This Agreement may only be amended in writing signed by all of
the parties hereto. No waiver shall be effective unless it is in writing and is
signed by the waiving party. Any waiver shall be effective only in the specific
instance and for the specific purpose for which it is given.
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective succes sors and assigns.
Notwithstanding the foregoing, the Seller may not assign this Agreement or its
rights hereunder without first obtaining AGR's prior written consent, and any
such purported assignment without AGR's prior written consent shall be void and
of no force and effect. The Seller acknowledges and consents that AGR may
pledge, assign or transfer its rights and obliga tions hereunder and its
interest in the Purchase Documents, the Purchased Receivables, any security
agreement referred to in Section 9(h) and any security interest referred to in
Section 10 to another party or parties, including as collateral security for any
indebtedness or obligations of AGR.
The invalidity or unenforceability of any provi sion of this
Agreement shall not impair the validity or enforce ability of any other
provisions.
All notices and other communications provided for herein shall
be in writing and shall be deemed to have been given when delivered by facsimile
transmission (with evidence of transmission) or overnight delivery service or
three days after the date mailed by first class registered or certified mail,
postage prepaid, to the following addresses, or at such other address as may be
furnished from time to time by notice to the other party:
If to AGR: AGR Financial, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: (▇▇▇)▇▇▇-▇▇▇▇
If to the Seller: Stratus Services Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopier No: (▇▇▇)▇▇▇-▇▇▇▇
The representations, warranties and covenants of the Parties
contained herein shall survive the purchase of the Purchased Receivables and
shall remain in effect notwithstanding any investigation made by or on behalf of
AGR and notwithstanding any knowledge (actual or implied) that AGR may have
which is inconsistent herewith.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall
constitute one and the same instrument.
If the foregoing is acceptable to the Seller and the Seller agrees
to comply with the terms set forth in this Agreement, please acknowledge the
Seller's acceptance of and agreement to the foregoing by signing and returning
to AGR a copy of this Agreement. Upon signature by the parties below, it is the
intention of the parties to be legally bound hereby. The date of this Agreement
is the date it is signed by AGR as identified below.
AGR FINANCIAL, LLC
By: /s/ G. ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: G. ▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Member
Accepted and Agreed to:
Name of Seller:
STRATUS SERVICES GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name:
--------------------------
Title: President
-------------------------
Address(es) of Chief Executive
Office and Chief Place of
Business of Seller:
Stratus Services Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Other names used by Seller in past six years and trade names and names under
which Seller conducts business (if none, so state):
________None___________________
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
Address(es) of all other offices and places of business of Seller (if none, so
state):
None, except as set forth in the Security Questionnaire dated the date
hereof executed by Seller.
EXHIBIT A TO SALE
AND PURCHASE AGREEMENT
ASSIGNMENT
The undersigned hereby sells, transfers and assigns to AGR
Financial, L.L.C., a Delaware limited liability company (together with its
successors and assigns, "AGR") the Receivables described in Schedule A annexed
hereto and made a part hereof. Capitalized terms used herein and not defined
herein shall have the meanings ascribed thereto in the Sale and Purchase
Agreement dated as of August 11th, 1997 between the undersigned and AGR (as
amended, modified or supplemented from time to time, the "Agreement"). The sale
of Receivables hereunder is made upon and subject to the terms and conditions
contained in the Agreement and as set forth in Schedule A hereto.
The undersigned hereby certifies that no breach of any
representation, warranty or covenant contained in the Agreement by the
undersigned has occurred.
IN WITNESS WHEREOF, the undersigned has executed this Assignment as
of the 11th day of August, 1997.
STRATUS SERVICES GROUP, INC.
-------------------------------
(TYPE OR PRINT NAME OF SELLER)
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name:
Title:
SCHEDULE A
TO ASSIGNMENT
BATCH NO. _______
INVOICE NO. PAYOR EXPECTED NET RECEIVABLE
----------- ----- -----------------------
_______________________
Total $________
Expected Net Receivables $__________
Advance Rate: __________%
Advanced Amount: $__________
Percentage for calculating
Purchase Fee: __________%
Purchase Fee: $__________
Other Fees: $__________
Break-even Point: $__________
Original Seller Interest $__________
Maximum No. of Days
after invoice date
permitted for payment: ______days
Daily Finance Charge: __________%
EXHIBIT B TO SALE
AND PURCHASE AGREEMENT
AGR FINANCIAL, L.L.C
SETTLEMENT REPORT
Report as of Batch No.: _____
Week No. ____ Batch Date: _____
1. Expected Net Receivables $__________
2. Advanced Amount $__________
3. Purchase Fee $__________
4. Other Fee $__________
5. Break-even Point $__________
6. Cumulative Cash Collection
as of end of week $__________
7. Cash Collected and Posted
- Above Break-even $__________
- Below Break-even $__________
8. Ineligible Receivables
- Cumulative __________
- This period __________
9. Cumulative Collections Applied
at end of week $__________
10. Outstanding Purchased Receivables $__________
11. Purchase Price $__________
12. Original Seller Interest $__________
13. Cumulative Payments on Seller Interest $__________
14. Payments this Period $__________
15. Charges for Receivables
over ___ days $__________
16. Amount of Unpaid Seller Interest $__________
EXHIBIT C
ANNEXED TO AND MADE A PART OF
SALE AND PURCHASE AGREEMENT
Seller represents and warrants as follows:
(a) With respect to the Seller, as of the date hereof and as of the date of each
purchase of Receivables:
(i) If the Seller is a corporation or a partnership, the Seller is duly
organized, validly existing and in good standing as such under the laws of the
jurisdiction of its organization, and has all the power and authority necessary
to carry on its business as now conducted and to enter into and perform this
Agreement and the other Purchase Documents. The execution, delivery and
performance by the Seller of the Purchase Documents have been duly authorized by
all appropriate action on behalf of the Seller. If the Seller is a sole
proprietorship, the Seller has the necessary power and capacity under applicable
law to carry on its business as now conducted and to enter into and perform the
Purchase Documents.
(i) When executed and delivered, the Purchase Documents will be legal, valid and
binding obligations of the Seller, enforceable against the Seller in accordance
with their respective terms. Upon the filing of financing statements and any
release or termination statements required prior to the purchase of any Batch in
all appropriate jurisdictions, any security interest in favor of AGR granted
under Section 9 will be valid, perfected and of the first priority.
(i) The Seller is not in violation of its charter or by-laws or other
organizational documents or in default in the performance or observance of any
contract, indenture, mortgage, loan agreement, lease or other material
instrument to which the Seller is a party or by which it or any of its
properties may be bound. The execution, delivery and performance of the Purchase
Documents will not violate any provision of law or regulation or any order or
decree of any court or governmental agency, or violate any provision of the
Seller's organizational documents (if a corporation or partnership) or any
agreement to which the Seller is a party or by which any of its assets are
bound, and will not be in conflict with, result in a breach of, or constitute a
default under, any such agreement or result in the creation of any lien or
security interest upon any of the Seller's assets, except in favor of AGR.
(ii) The Seller has all permits, licenses, certifications, authorizations,
approvals, consents and agreements of all Payors, governmental agencies and
instrumentalities and any other person, necessary or required for the Seller to
own the assets that it now owns, to carry on its business as now conducted, to
execute, deliver and perform the Purchase Documents, and to receive payments
from the Payors.
(i) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by the Seller of this Agreement or any other
Purchase Document to be delivered hereunder except for the filing of the UCC
financing statements, all of which shall be in full force and effect.
(i) There are no actions, suits, investigations or proceedings pending or
threatened against the Seller before any court, government agency or other
tribunal, which, if adversely determined, could materially and adversely affect
its financial condition or operations or ability to perform under the Purchase
Documents, or could result in cost, loss, liability or expense in excess of
$10,000, and the Seller is not currently subject to, and has no intention of
commencing, any bankruptcy or insolvency proceeding.
(i) The Seller has properly filed all returns for all federal, state and local
taxes, including income and payroll taxes, on a timely basis or has an agreement
of settlement with an approved payment plan with the relevant agency or, if not
filed, extensions have been properly secured. The Seller has not failed to pay
any taxes, or interest and penalties relating hereto, on or before the due dates
thereof.
(i) The Seller is in compliance with all laws, acts, rules, regulations, orders,
decrees and directions of any governmental authority applicable to the Purchased
Receivables or any part thereof or any related contracts and with respect to the
Seller and its business and properties, a violation of which could materially
and adversely affect its financial condition or operations or its ability to
carry out its obligations hereunder or with respect to the Receivables.
(i) The pension and profit-sharing plans, if any, of the Seller (and its
subsidiaries, if any) are maintained in compliance with all laws and are fully
funded in accordance with the obligations of the Seller (and its subsidiaries,
if any) thereunder.
(i) The Seller is not aware of the occurrence of any event which materially and
adversely affects or could affect its financial condition or operations,
including its ability to perform its obligations hereunder and the transactions
contemplated in this Agreement, other than the events it has disclosed herein.
(i) There is no injunction, writ, restraining order or other order of any nature
materially and adversely affecting the Seller's performance of its obligations
hereunder and the transactions contemplated in this Agreement.
(i) The name of the Seller as set forth herein is the same as in its
organizational documents as filed in the jurisdiction in
which it is organized, such name has not been changed in the last six years, and
the Seller has no trade names, fictitious names, assumed names or "doing
business as" names except as disclosed on the signature pages hereof.
(i) The address of the chief place of business of the Seller and the location(s)
of the office(s) where the Seller keeps all of the documents, agreements, books
and records relating to the Receivables are listed on the signature pages of
this Agreement and there have been no other such locations during the prior six
years.
(i) The Seller is solvent and will not become insolvent after giving effect to
the transactions contemplated by this Agreement, is paying its debts as they
become due and, after giving effect to the transactions contemplated by this
Agreement, will have adequate capital to conduct its business.
(i) The Seller has no subsidiaries and does not own any interest in any
partnership, joint venture or limited liability company, except as disclosed in
writing to AGR.
(a) With respect to each Receivable, as of the date such Receivable is purchased
(and after giving effect to such purchase):
(i) All documents and agreements relating to the Receivable that have been
delivered to AGR with respect to such Receivable are true and correct, and there
are no other documents or agreements modifying or affecting such Receivables;
the Seller has timely and properly invoiced the applicable Payor, and the Seller
has delivered or caused to be delivered to such Payor all supporting documents
with respect to such Receivable required by the applicable Payor; all
information set forth in the invoice and supporting claim documents is true,
complete and correct, and, if additional information is requested by the Payor,
the Seller will promptly provide the same and, if necessary, rebill such
Receivable.
(i) The Receivable is exclusively owned by the Seller and there is no security
interest, encumbrance, charge or lien in favor of any third party, nor any
recording or filing against the Seller, as debtor, covering or purporting to
cover any interest of any kind in any Receivable, except as has been released in
a manner satisfactory to AGR. With respect to the Purchased Receivable, all
right, title and interest of the Seller is vested in AGR, free and clear of any
lien, security interest, claim or encumbrance of any kind, and the Seller agrees
to defend the same against the claims of all persons.
(i) The Purchased Receivable (A) is payable, in an amount not less than its
Expected Net Receivable, by the Payor identified by the Seller as being
obligated to do so as of the date of purchase, (B) is based on an actual and
bona fide rendition of
services or sale of goods to the Payor by the Seller in the ordinary course of
business, (C) is denominated and payable only in lawful currency of the United
States, and (D) is an account or general intangible within the meaning of the
Uniform Commercial Code of the state in which the Seller has its principal place
of business, or is a right to payment under a policy of insurance or proceeds
thereof, and is not evidenced by any instrument or chattel paper. There is no
obligor on any Purchased Receivable other than the Payor identified by the
Seller as the payor primarily liable on any Purchased Receivable.
(i) The Purchased Receivable is collectible in accordance with its terms and is
not past due and is not subject to any action, suit, proceeding or dispute
(pending or threatened), set-off, counterclaim, defense, abatement, suspension,
deferment, deductible, reduction or termination by the Payor.
(i) The Seller does not have any guaranty of, letter of credit providing credit
support for, or collateral security for, the Purchased Receivable, other than
any such guaranty, letter of credit or collateral security as has been assigned
to AGR, and any such guaranty, letter of credit or collateral security is not
subject to any lien, security interest, charge or encumbrance in favor of any
other person.
(i) No action other than the execution and delivery of this Agreement and the
Assignment, the filing of UCC financing statements in the State in which the
Seller's principal place of business and chief executive office is located and
the payment of the Advanced Amount by AGR is required to perfect the interest of
AGR, as a purchaser, assignee and transferee of accounts receivable, in the
Purchased Receivables, and all such actions have been or will be accomplished no
later than the date of its acquisition by AGR.
(i) Each Purchased Receivable complies with all laws and regulations applicable
thereto.
(i) None of the Purchased Receivables represents services furnished or provided
to or on behalf of any subsidiary, parent, associate or other entity or person
affiliated with the Seller.
(i) The Payor with respect to the Purchased Receivable is (A) not currently the
subject of any bankruptcy, insolvency or receivership proceeding, nor is it
unable to make payments on its obligations when due, and (B) located in the
United States.
(i) The proceeds of the sale of the Purchased Receivables will be used for the
business and commercial purposes of the Seller. The sale of the Purchased
Receivable hereunder is made in good faith and without actual intent to hinder,
delay or defraud present or future creditors of the Seller.
(i) The Purchased Receivable constitutes the legal, valid and binding obligation
of the Payor enforceable in accordance with its terms.
(i) The Seller has the right to sell, assign and transfer each Purchased
Receivable pursuant to this Agreement, no consent from the related Payor or any
other person is required to effect the sale of any Purchased Receivable to AGR
and this Agreement vests and thereafter at all times will vest in AGR full right
and title in the Purchased Receivables purported to be conveyed hereby, and such
conveyance of the Purchased Receivables will constitute a valid assignment in
such Purchased Receivables enforceable against the Seller and all creditors of
and purchasers from the Seller prior to all other assignments, liens or pledges
thereof.
(i) There are no proceedings or investigations pending or threatened before any
court or governmental authority (a) asserting the invalidity in whole or in part
of such Purchased Receivable or any contract related thereto, (b) to the best of
the Seller's knowledge, asserting the bankruptcy or insolvency of the related
Payor, or (c) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Purchased Receivable or
any contract related thereto.
(i) No Purchased Receivable or contract related thereto contravenes any federal,
state or local laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury, consumer protection,
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy), and no party to such
related contract is in violation of any such law, rule or regulation.
(i) The representations, warranties and statements made by the Seller in the
Purchase Documents, any financial information with respect to the Seller
delivered to AGR or any other related documents, including, without limitation,
any description of the Purchased Receivable, remain true and correct and do not
contain any untrue statement of material fact or omit to state a material fact
necessary to make the statements made therein not misleading.
(i) No Purchased Receivable has aged more than 30 days from the date of service
giving rise thereto.
