AGREEMENT AND PLAN OF MERGER By and among RESOLVE STAFFING, INC. ELS ESI MERGER SUB LLC and ELS EMPLOYER SERVICES, INC. As of October 1, 2006
By
and among
RESOLVE
STAFFING, INC.
ELS
ESI MERGER SUB LLC
and
ELS
EMPLOYER SERVICES, INC.
As
of October 1, 2006
TABLE
OF
CONTENTS
Section
1.01 Merger
into ELS ESI.
ARTICLE
II. CLOSING
Section
2.01 Closing
ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF ELS ESI
Section
3.01 Corporate
Existence and Qualification: Corporate Documents.
ARTICLE
IV. REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND RESOLVE
Section
4.01 Corporate
Existence and Qualification; Corporate Documents
ARTICLE
V. SURVIVAL
Section
5.01 Survival
of Representations and Warranties
ARTICLE
VI. INDEMNIFICATION
Section
6.01 Obligation
of ELS ESI to Indemnify
ARTICLE
VII. POST-CLOSING OBLIGATIONS
Section
7.01 Further
Assurances
ARTICLE
IX. DEFINITIONS
Section
9.01 Affiliate
This
AGREEMENT AND PLAN OF MERGER (the “Agreement”)
is
made and entered into as of October 1, 2006, by and among Resolve Staffing,
Inc., a Nevada corporation (“Resolve”),
ELS
Employer Merger Sub LLC, an Ohio limited liability company (“Merger
Sub”)
and
ELS Employer Services, Inc., a Michigan corporation (“ELS
ESI”).
Preliminary
Statements
A. The
issued and outstanding capital stock of ELS ESI is set forth on Exhibit
A
hereto;
and
B. Resolve
owns 100% of the issued and outstanding stock of Merger Sub; and
C. It
is
proposed that Merger Sub be merged with and into ELS ESI, with ELS ESI as the
surviving corporation (the “Merger”),
and
that the presently issued and outstanding shares of common stock, without par
value, of ELS ESI be converted into merger consideration as set forth herein;
and
D. The
Boards of Directors and shareholders of ELS ESI and the sole member of Merger
Sub have each approved the Merger upon the terms and conditions set forth herein
and have approved this Agreement; and
E. ELS
ESI
and Merger Sub desire to enter into and carry out the transactions contemplated
by this Agreement in accordance with the terms hereof, and the provisions of
the
Ohio Revised Code and the Michigan Business Corporation Act; and
F. The
parties intend that the Merger shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Internal
Revenue Code").
Capitalized
terms used herein but not defined herein shall have the respective meanings
given such terms in Article IX hereof.
Agreement
In
consideration of the premises, mutual covenants and agreements contained herein
and the benefits to accrue to the parties hereto, and subject to the
satisfaction or waiver of the conditions contained herein, the parties hereto
hereby agree as follows:
ARTICLE
I.
THE
MERGER
Section
1.01 Merger
into ELS ESI.
At
the
Effective Time on the Effective Date (each as hereinafter defined), Merger
Sub
shall be merged with and into ELS ESI, with ELS ESI (hereinafter sometimes
called the “Surviving
Corporation”)
as the
surviving corporation of the Merger. Following the Effective
Time,
the
corporate existence of ELS ESI shall continue unaffected and unimpaired, and
as
the Surviving Corporation of the Merger, ELS ESI shall continue to be a
corporation governed by the laws of the State of Michigan. On the Closing Date,
ELS ESI and Merger Sub shall cause (a) a Certificate of Merger to be executed
and filed with the Secretary of State of Ohio in form required by the Ohio
Revised Code (the “Ohio
Certificate of Merger”);
and
(b) a Certificate of Merger to be executed and filed with the Secretary of
State
of Michigan in form required by the Michigan Business Corporation Act (the
“Michigan
Certificate of Merger”).
Section
1.02 Effective
Time and Effective Date
.
The
effective date of the Merger shall be October 1, 2006 (the “Effective
Date”),
and
the effective time of the Merger shall be 12:01 a.m. on October 1, 2006 (the
“Effective
Time”).
Section
1.03 Effects
of the Merger
. The
Merger shall have the effects set forth in the Michigan Business Corporation
Act, as amended.
Section
1.04 Articles
of Incorporation and Code of Regulations
.
(a) The
articles of incorporation of ELS ESI, as in effect immediately prior to the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The
bylaws of ELS ESI as in effect immediately prior to the Effective Time shall
be
the code bylaws of the Surviving Corporation, until thereafter changed or
amended as provided therein or by applicable law.
Section
1.05 Directors
.
The
directors of the Surviving Corporation from and after the Effective Time, and
until the earlier of their respective death, resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be,
shall be the directors of ELS ESI.
Section
1.06 Officers
.
The
officers of the Surviving Corporation from and after the Effective Time, and
until the earlier of their respective death, resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be,
shall be the officers of ELS
ESI.
Section
1.07 Rights
and Obligations.
At
the
Effective Time, the separate existence of Merger Sub shall cease, and in
accordance with the terms of this Agreement, ELS ESI shall possess and be vested
with all of the rights, privileges, franchises, immunities and powers and all
property (real, personal or mixed) of Merger Sub, debts due to Merger Sub,
choses in action and all other things belonging to Merger Sub, and ELS ESI
shall
be subject to all of the restrictions, liabilities, disabilities and duties
of
Merger Sub.
The
identity, existence, purposes, powers, objects, franchises, privileges, rights
and immunities of ELS ESI shall continue unaffected and unimpaired by the
Merger.
CLOSING
Section
1.08 Closing
.
The
closing of the transactions contemplated hereby (the “Closing”)
shall
be held as of 12:01 a.m., as of October 1, 2006 at the offices of Xxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxx
00000, unless another date or place is agreed to in writing by the parties
hereto. The date upon which the Closing occurs is hereinafter referred to as
the
“Closing
Date.”
Section
1.09 Deliveries
by Merger Sub to ELS
ESI
.
At the
Closing, Merger Sub shall deliver to ELS ESI:
(a) the
resignations of all officers and managers of Merger Sub;
(b) the
stock
books, stock ledgers or other records reflecting the ownership of all
outstanding membership units, minute books and corporate seals, if any of Merger
Sub;
(c) a
certificate of the sole member of Merger Sub certifying, as complete and
accurate as of the Closing, as to attached copies of the Articles of
Organization of Merger Sub and all necessary action on behalf of Merger Sub
approving its execution, delivery and performance of this
Agreement;
(d) a
certificate of good standing of Merger Sub issued by the Secretary of State
of
Ohio;
(e) a
certificate of good standing of Resolve issued by the Secretary of State of
the
State of Nevada;
(f) certificates
for shares of Resolve Common Stock (defined below) issued in accordance with
Section 2.04; and
(g) a
promissory note, duly executed by Resolve, in accordance with Section 2.04.
Section
1.10 Deliveries
by ELS ESI to Merger
Sub
.
At
the
Closing, ELS ESI shall deliver to Merger Sub:
(a) a
certificate of the Secretary of ELS ESI certifying, as complete and accurate
as
of the Closing, as to attached copies of the Articles of Incorporation and
Bylaws of ELS ESI and all necessary corporate action on behalf of ELS ESI
approving its execution, delivery and
performance of this Agreement; and
(b) a
certificate of good standing of ELS ESI issued by the Secretary of State of
the
State of Michigan.
Section
1.11 Conversion
of Equity.
(a) At
the
Effective Time on the Effective Date, (i) all shares of common stock, par value
$1.00 per share, of ELS ESI (“ELS
ESI Common Stock”)
issued
and outstanding immediately prior thereto and owned by Xxxxxxx X. Xxxx shall
be
converted into the right to receive, collectively, 200,000 shares of common
stock, par value $0.0001 per share, of Resolve (“Resolve
Common Stock”)
for
all shares of ELS ESI Common Stock so converted; and (ii) all shares of ELS
ESI
Common Stock issued and outstanding immediately prior thereto and owned by
Xxxxxxx X. Xxxxxx shall be converted into the right to receive, collectively,
for all shares of ELS ESI Common Stock so converted (A) a promissory note from
Resolve in the principal amount of $105,000, and (B) 25,000 shares of Resolve
Common Stock (collectively, the “ELS
ESI Merger Consideration”).
On
the Closing Date, Resolve will send irrevocable instructions to its transfer
agent to issue certificates to Xxxxxxx X. Xxxx and Xxxxxxx X. Xxxxxx
representing 200,000 and 25,000 shares of Resolve Common Stock, respectively,
to
be issued hereunder. For purposes of this Agreement, the shares of Resolve
Stock
being issued hereunder are valued at $2.00 per share.
(b) The
shares of Resolve Common Stock to be issued as set forth in the above paragraph
shall not be registered under state or federal securities laws but shall qualify
as exempt from registration under Regulation D promulgated under the Securities
Act of 1933 (“Act”)
or
other recognized exemptions from registration, and as such, shall be deemed
to
be restricted securities as defined in Rule 144(a)(3) of the Act. As such,
the
Resolve Common Stock shall include a customary form of restrictive legend which
indicates that the shares may not be resold, transferred, pledged or
hypothecated by the holder(s) thereof unless such shares are registered under
the Act or in accordance with a legal opinion permitting such sale or transfer,
which legal opinion shall be in form and substance acceptable to counsel for
Resolve.
(c) All
equity of Merger Sub outstanding at the Effective Time shall be cancelled as
of
the Effective Time.
Section
1.12 Surrender
of Certificates.
From
and
after the Effective Time, each holder of certificates representing shares of
ELS
ESI Common Stock converted by virtue of the Merger into the right to receive
merger consideration, upon surrender of such certificates to Resolve (the
“Exchange
Agent”),
shall
be entitled forthwith to receive in exchange therefor, respectively, only the
ELS ESI Merger Consideration to which such holder is entitled pursuant to the
terms of this Agreement. Such conversion shall be complete and effective at
the
Effective Time without regard to the date or dates upon which outstanding
certificates of common stock are surrendered for the applicable merger
consideration.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF ELS
ESI
Subject
to the limitations of Section 6.04 hereof, ELS ESI represents and warrants
to
Merger Sub as of the Closing Date as set forth in this Article:
Corporate
Existence and Qualification: Corporate Documents.
(a) ELS
ESI
is duly organized, validly existing and in good standing under the laws of
its
state of incorporation and is not required to be qualified to do business as
a
foreign corporation in any other jurisdiction where the failure to so qualify
would have a material adverse effect on it. ELS ESI has all requisite corporate
power and authority to own its Properties and carry on its business as presently
conducted. The copies of the Articles of Incorporation and Bylaws of ELS ESI
attached to the Secretary’s Certificate for ELS ESI delivered pursuant to
Section 2.04(c) are complete and reflect all amendments thereto through the
date
hereof.
(b) The
stock
and minute books of ELS ESI have been made available to Merger Sub for review
and contain a complete and accurate record of all shareholders of ELS ESI and
all material actions of the shareholders and directors (and any committees
thereof) taken at meetings of shareholders or directors of ELS ESI or by written
consent.
(c) ELS
ESI
has no subsidiaries, participates in any partnership or joint venture, or owns
any outstanding capital stock of any other entity.
Section
2.02 Capitalization
and Ownership
.
As of
the date of this Agreement, the entire authorized capital stock of ELS ESI
is
set forth on Exhibit
A
hereto,
and all issued and outstanding shares of common stock of ELS ESI are owned
of
record and beneficially as set forth on Exhibit
A
hereto.
All of the presently outstanding shares of common stock of ELS ESI have been
validly authorized and issued and are fully paid and non-assessable. ELS ESI
has
not issued any other shares of its capital stock and there are no outstanding
options, warrants, subscriptions or other rights or obligations to purchase
or
acquire any of such shares, nor any outstanding securities convertible into
or
exchangeable for such shares. Except as contemplated under this Agreement,
or as
set forth in Schedule
3.02
with
respect to the Articles of Incorporation, By-Laws and certain Agreements, there
are no agreements to which ELS ESI or its shareholders is a party regarding
the
issuance, registration, voting or transfer of its outstanding shares of its
capital stock. No dividends are accrued but unpaid on any capital stock of
ELS
ESI.
Section
2.03 Preemptive
Rights; Registration Rights
.
ELS
ESI’s Articles of Incorporation do not afford pre-emptive rights to any
shareholder. There have been no shares of ELS ESI issued to which preemptive
rights accrued or are outstanding. There are no registration rights affecting
the issuance or sale of capital stock of ELS ESI.
Section
2.04 No
Defaults or Consents
.
Neither
the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will:
(i) violate
or conflict with any of the terms, conditions or provisions of the Articles
of
Incorporation or Bylaws of ELS ESI;
(ii) violate
in any material respect any Legal Requirements applicable to ELS
ESI;
(iii) result
in
the creation of any lien, charge or other encumbrance on the shares of capital
stock or any Property of ELS ESI; or
(iv) require
ELS ESI to obtain or make any waiver, consent, action, approval or authorization
of, or registration, declaration, notice or filing with, any private
non-governmental third party or any Governmental Authority except where the
failure to so obtain or make would not have a Material Adverse
Effect.
Section
2.05 No
Proceedings
.
No
suit, action or other proceeding is pending or, to the Knowledge of ELS ESI,
threatened before any Governmental Authority seeking to restrain ELS ESI or
prohibit its entry into this Agreement or prohibit the Closing, or seeking
damages against ELS ESI or its Properties, as a result of the consummation
of
the transactions contemplated by this Agreement.
Section
2.06 Absence
of Certain Changes
.
Since
August 31, 2006, ELS ESI has not:
(a) suffered
any Material Adverse Change;
(b) contracted
for the purchase of any capital assets having a cost in excess of $10,000 or
paid any capital expenditures in excess of $10,000, except in the ordinary
course of business consistent with past practice;
(c) incurred
any indebtedness for borrowed money or issued or sold any debt securities,
except in the ordinary course of business consistent with past
practice;
(d) incurred
or discharged any material liabilities or obligations except in the ordinary
course of business consistent with past practice;
(e) paid
any
amount on any indebtedness prior to the due date, forgiven or canceled any
material debts or claims or released or waived any material rights or claims,
except in the ordinary course of business consistent with past
practice;
(f) mortgaged,
pledged or subjected to any security interest, lien, lease or other charge
or
encumbrance any of its Properties or Company Assets;
(g) suffered
any damage or destruction to or loss of any Company Assets (whether or not
covered by insurance) that has materially adversely affected its
business;
(h) acquired
or disposed of any material Company Assets except in the ordinary course of
business consistent with past practice;
(i) made
any
payments to any person or entity except in the ordinary course of business
consistent with past practice or loaned any money to any person or entity that
is not reflected in the Financial Statements;
(j) formed
or
acquired or disposed of any interest in any corporation, partnership, joint
venture or other entity;
(k) redeemed,
purchased or otherwise acquired, or sold, granted or otherwise disposed of,
directly or indirectly, any of its capital stock or securities or any rights
to
acquire such capital stock or securities, or agreed to change the terms and
conditions of any such rights or paid any dividends or made any distribution
to
the holders of its capital stock;
(l) entered
into or terminated any material agreement with any person or group, or modified
or amended in any material respect the terms of any existing agreement except
in
the ordinary course of business consistent with past practice;
(m) received
any indication from any customer or supplier that it intends to discontinue
or
change the terms of its relationship with ELS ESI;
(n) materially
changed its accounting methods; or
(o) entered
into any agreement (written or oral) to do any of the foregoing.
Section
2.07 Insurance
.
ELS ESI
has previously made available to Resolve a list of all insurance policies
(including self insurance arrangements) with respect to the property, assets
and
operations of ELS ESI’s business and a summary of the loss experience of ELS
ESI. All such insurance policies and arrangements are in full force and effect.
There are no pending claims by ELS ESI relating to its business under such
insurance policies as to which the insurers listed thereon have denied
liability.
Section
2.08 Patents,
Trademarks, Service Marks and Copyrights.
(a) ELS
ESI
owns all material patents, trademarks, service marks and copyrights
(collectively “Proprietary
Rights”),
if
any, necessary to conduct its business, or possesses adequate licenses or other
rights (except for licenses for the use of non-customized software), if any,
therefor, without conflict with the rights of others.
(b) To
its
knowledge, ELS ESI has the sole and exclusive right to use the Proprietary
Rights without infringing or violating the rights of any third parties. To
its
knowledge, use of the Proprietary Rights does not require the consent of any
other person and the Proprietary Rights are freely transferable. No claim has
been asserted by any person to the ownership of or right to use any material
Proprietary Right or challenging or questioning the validity or effectiveness
of
any license or agreement constituting a part of any material Proprietary Right.
To its knowledge, each of the Proprietary Rights is valid and subsisting, has
not been canceled, abandoned or otherwise terminated and, if applicable, has
been duly issued or filed.
Section
2.09 Title
to Assets; Condition of Assets.
(a) ELS
ESI
owns no real property.
(b) ELS
ESI
has good and marketable title to its Company Assets (other than those disposed
of in the ordinary course of business), free and clear of all security
interests, liens, charges and other encumbrances, except for liens for taxes
not
yet due and payable or being contested in good faith in appropriate proceedings.
All material facilities, machinery, equipment,
(c) fixtures,
vehicles and other properties owned, leased or used by ELS ESI are in good
operating condition and repair, normal wear and tear excepted, are adequate
and
sufficient for the business of ELS ESI and conform in all material respects
with
all applicable ordinances, regulations and laws relating to their use and
operation.
(d) No
shareholder of ELS ESI has any interest in any of the Company Assets except
for
salary, and no shareholder of ELS ESI has any financial interest in any
transaction of ELS ESI.
Section
2.10 Compliance
with Laws
.
ELS ESI
has all material franchises, Permits, licenses and other rights and privileges
necessary to permit it to own its Properties and to conduct its businesses
as
presently conducted. The business and operations of ELS ESI have been and are
being conducted in all material respects in accordance with all applicable
laws,
rules and regulations, and ELS ESI is not in violation of any judgment, law
or
regulation except where any such violation would not have a Material Adverse
Effect. ELS ESI has not received any written notice from any Governmental
Authority or any other person or entity regarding any actual, alleged or
potential violation or failure to comply in any material respect with any Legal
Requirement.
Section
2.11 Litigation;
Default
.
There
are no claims, actions, suits, investigations or proceedings against ELS ESI
pending or, to the Knowledge of ELS ESI, threatened in any court or before
or by
any Governmental Authority, or before any arbitrator, other than worker’s
compensation claims that are covered by ELS ESI’s self insurance arrangement.
Section
2.12 Other
Transactions
.
Except
as contemplated by this Agreement, ELS ESI has not entered into any agreements
or arrangements and there are no pending offers or discussions concerning or
providing for the merger or consolidation of ELS ESI, the sale of all or any
substantial portion of its assets, the sale by ELS ESI of any securities of
ELS
ESI or any similar transaction affecting ELS ESI.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF MERGER
SUB AND RESOLVE
Each
of
Merger Sub and Resolve, jointly and severally, represents and warrants to ELS
ESI as of the Closing Date that:
Section
3.01 Corporate
Existence and Qualification; Corporate Documents
.
Each of
Merger Sub and Resolve is duly organized, validly existing and in good standing
under the laws of its state of jurisdiction, and is not required to be qualified
to do business as a foreign corporation in any other jurisdiction where the
failure to so qualify would have a material adverse effect on either of them.
Each of Merger Sub and Resolve has all required corporate or limited liability
company power and authority to own its properties and to carry on its business
as presently conducted.
Section
3.02 Authority,
Approval and Enforceability
.
This
Agreement and each other agreement to which Merger Sub or Resolve is a party
have been duly executed and delivered by
such
entity, and each of Merger Sub and Resolve has all requisite corporate or
limited liability company power and legal authority to execute and deliver
this
Agreement and each other agreement to which it is a party, to consummate the
transactions contemplated hereby and thereby, and to perform its obligations
hereunder and thereunder. This Agreement and each other agreement to which
Merger Sub or Resolve is a party will constitute the legal, valid and binding
obligations of such entity, enforceable in accordance with their respective
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and except as the
availability of equity remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
Section
3.03 No
Defaults or Consents
.
Neither
the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will:
(a) violate
or conflict with any of the terms, conditions or provisions of the Articles
of
Incorporation or Organization or Code or Regulations or Bylaws of Merger Sub
or
Resolve;
(b) violate
any Legal Requirements applicable to Merger Sub or Resolve;
(c) result
in
the creation of any lien, charge or other encumbrance on the shares of capital
stock or any Property of Merger Sub or Resolve; or
(d) require
Merger Sub or Resolve to obtain or make any waiver, consent, action, approval
or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority
Section
3.04 No
Proceedings
.
No
suit, action or other proceeding is pending or, to the Knowledge of each of
Merger Sub and Resolve, threatened before any Governmental Authority seeking
to
restrain Merger Sub or Resolve or prohibit either's entry into this Agreement
or
prohibit the Closing, or seeking damages against Merger Sub or Resolve or their
Properties, as a result of the consummation of the transaction contemplated
by
this Agreement.
Section
3.05 Securities
.
The
authorized capital stock of Resolve is 50,000,000 shares of common stock, par
value $0.0001 per share, and 10,000,000 shares of preferred stock, par value
$0.0001 per share. The shares of Resolve Common Stock to be issued hereunder
have been duly authorized and, when issued in accordance with the terms of
this
Agreement, will be validly issued, fully paid and non-assessable and will be
issued in compliance with all applicable federal and state securities laws.
There are no outstanding options, warrants, subscriptions or other rights or
obligations to purchase or acquire any of shares of Resolve Common Stock, nor
any outstanding securities convertible into or exchangeable for such shares.
SURVIVAL
Section
3.06 Survival
of Representations and Warranties
.
Notwithstanding any right of any party hereto fully to investigate the affairs
of any other party hereto and notwithstanding any knowledge of facts determined
or determinable by any party hereto pursuant to such investigation or right
of
investigation, each of Merger Sub and Resolve, on the one hand, and ELS ESI,
on
the other hand, has the right to rely fully upon the representations,
warranties, covenants and agreements of Merger Sub and Resolve and ELS ESI,
as
the case may be, contained in this Agreement, or in any certificate delivered
pursuant to any of the foregoing; provided, that no party hereto shall be
entitled to rely on any representation or warranty made by any other party
hereto herein to the extent that such party has actual knowledge that such
representation or warranty is untrue or incorrect in any material respect.
All
such representations and warranties shall survive the execution and delivery
of
this Agreement and the Closing hereunder, and, except as otherwise specifically
provided in this Agreement, shall thereafter terminate and expire at the end
of
the twenty fourth (24th) month following the Closing Date, subject to the
limitations on indemnification set forth in Section 6.04 hereof. Notwithstanding
the foregoing, the representations and warranties set forth in Sections 3.01,
3.02, 3.09(b), 4.01 and 4.02, and all covenants and agreements, shall survive
indefinitely and shall not terminate or expire.
ARTICLE
IV.
INDEMNIFICATION
Section
4.01 Obligation
of ELS ESI to Indemnify
.
Subject
to the limitations contained in Article V and Section 6.04 hereof, ELS ESI
agrees to indemnify, defend and hold harmless Merger Sub and Resolve (and their
Affiliates, successors and assigns and their respective officers and directors)
from and against all losses, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties and reasonable attorneys’ fees and
disbursements, but offset by any proceeds from insurance and taking into account
the present value of any tax savings to Merger Sub and Resolve resulting from
such losses, liabilities, damages, deficiencies, costs or expenses)
(“Losses”)
based
upon, arising out of or otherwise in respect of any inaccuracy in or any breach
of any representation, warranty, covenant or agreement of ELS ESI contained
in
this Agreement.
Section
4.02 Obligation
of Merger Sub and Resolve to Indemnify
.
Each of
Merger Sub and Resolve, jointly and severally, agrees to indemnify, defend
and
hold harmless ELS ESI from and against any Losses based upon, arising out of
or
otherwise in respect of any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of Merger Sub or Resolve contained in this
Agreement.
Section
4.03 Notice
and Opportunity to Defend.
(a) Notice
of Asserted Liability.
Promptly after receipt by any party hereto (the “Indemnitee”)
of
notice of any demand, claim or circumstances which, with the lapse of time,
would or might give rise to a claim or the commencement (or threatened
commencement) of any action, proceeding or investigation (an “Asserted
Liability”)
that
may result in a Loss, the
(b) Indemnitee
shall give notice thereof (the “Claims
Notice”)
to any
other party (or parties) obligated to provide indemnification pursuant to
Section 6.01 or 6.02 (the “Indemnifying Party”). The Claims Notice shall
describe the Asserted Liability in reasonable detail and shall indicate the
amount (estimated, if necessary and to the extent feasible) of the Loss that
has
been or may be suffered by the Indemnitee.
(c) Opportunity
to Defend.
The
Indemnifying Party may elect to compromise or defend, at its own expense and
by
its own counsel, any Asserted Liability. If the Indemnifying Party elects to
compromise or defend such Asserted Liability, it shall within thirty (30) days
(or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the compromise of, or defense against,
such Asserted Liability at the sole cost of the Indemnifying Party. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise
any
claim over the objection of the other, provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event,
the
Indemnitee and the Indemnifying Party may participate (but not control), at
their own expense, in the defense of such Asserted Liability. If the
Indemnifying Party chooses to defend the claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
Section
4.04 Limitations
on Indemnification
.
The
indemnification provided for in Sections 6.01 and 6.02 shall be subject to
the
following limitations:
(a) ELS
ESI
shall not be obligated to pay any amounts for indemnification under this Article
VI arising out of any Losses based upon, arising out of or otherwise in respect
of any inaccuracy or breach disclosed to Merger Sub and Resolve prior to the
Closing.
(b) Neither
ELS ESI nor Merger Sub and Resolve shall be obligated to pay any amounts for
indemnification for breach of a representation or warranty under this Article
VI, except those based upon, arising out of or otherwise in respect of Section
3.01, 3.02, 3.09(b), 4.01, or 4.02 hereof (which shall be indemnifiable from
the
first dollar), until the aggregate indemnification payments, exclusive of those
payable with respect to Sections 3.01, 3.02, 3.09(b), 4.01, or 4.02 equals
$1,000,000 (the “Deductible”),
whereupon Merger Sub and Resolve, or ELS ESI, as the case may be, shall be
obligated to pay any indemnification payments, in excess of the Deductible,
in
full. This Section 6.04(b) will not apply to any breach of any representation
and warranty of which the breaching party had Knowledge at any time prior to
the
date on which such representation and warranty is made or any intentional breach
by any party of any covenant or obligation.
(c) After
the
Closing, the indemnification rights set forth in this Article VI shall be each
party's sole and exclusive remedy against the other party for any breach of
any
representation, warranty or covenant contained in this Agreement.
Notwithstanding the foregoing, nothing herein shall prevent any party from
bringing an action based upon allegations of fraud in connection with this
Agreement.
(d)
POST-CLOSING
OBLIGATIONS
Section
4.05 Further
Assurances
.
Following the Closing, each of the parties shall execute and deliver such
documents, and take such other action, as shall be reasonably requested by
any
other party hereto to carry out the transactions contemplated by this
Agreement.
Section
4.06 Access
to Records
.
From
and after the Closing, (i) ELS ESI shall (A) deliver to Resolve all books,
records, files, agreements and other information relating to ELS ESI, and (B)
use best efforts to permit Resolve and its authorized employees, agents,
accountants, legal counsel and other representatives to have access to the
employees, counsel, accountants and other representatives of ELS ESI, in each
case, to the extent and at all times reasonably requested by Resolve for the
purpose of investigating or defending any claim made against Resolve in
connection with periods ending on or before the Closing Date, and (ii) Resolve
shall (A) permit ELS ESI and its authorized employees, agents, accountants,
legal counsel and other representatives to have access to the books, records,
files, agreements and other information of or regarding ELS ESI, and (B) use
its
best efforts to permit ELS ESI and its authorized employees, agents,
accountants, legal counsel and other representatives to have access to the
employees, counsel, accountants and other representatives of Resolve and its
Affiliates, in each case, to the extent and at all times reasonably requested
by
ELS ESI, for the purpose of (I) investigating or defending any claim made
against ELS ESI in connection with Article VI, or (II) with respect to any
pre-Closing Date tax matters affecting ELS ESI.
ARTICLE
V.
MISCELLANEOUS
Section
5.01 Brokers
.
Regardless of whether the Closing shall occur, (i) ELS ESI shall indemnify
and
hold harmless Merger Sub and Resolve from and against any and all liability
for
any brokers or finders' fees arising with respect to brokers or finders retained
or engaged by ELS ESI in respect of the transactions contemplated by this
Agreement, and (ii) Merger Sub and Resolve, jointly and severally, shall
indemnify and hold harmless ELS ESI from and against any and all liability
for
any brokers' or finders' fees arising with respect to brokers or finders
retained or engaged by Merger Sub and/or Resolve in respect of the transactions
contemplated by this Agreement.
Section
5.02 Costs
and Expenses
.
Each of
the parties to this Agreement shall bear its own expenses incurred in connection
with the negotiation, preparation, execution and closing of this Agreement
and
the transactions contemplated hereby.
Section
5.03 Notices
.
Any
notice, request, instruction, correspondence or other document to be given
hereunder by any party hereto to another (herein collectively called
“Notice”)
shall
be in writing and delivered personally or mailed by registered or certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
Merger
Sub or Resolve: Resolve
Staffing, Inc.
ELS
Human
Resource Solutions, Inc.
0000
Xxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Telecopy
No.: (000) 000-0000
With
a
copy to: Xxxx
Xxxxxx, Esq.
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Telecopy
No.: (000) 000-0000
ELS
ESI: c/o
Employee Leasing Services, Inc.
0000
Xxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxx
Telecopy
No.: (000) 000-0000
With
a
copy to: Xxxxxx
X.
Xxxxxxx, Esq.
Xxxx,
Stettinius & Hollister LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000-0000
Telecopy
No.: 000-000-0000
Each
of
the above addresses for notice purposes may be changed by providing appropriate
notice hereunder. Notice given by personal delivery or registered mail shall
be
effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours,
or
at the beginning of the recipient's next normal business day after receipt
if
not received during the recipient's normal business hours. All Notices by
telecopier shall be confirmed by the sender thereof promptly after transmission
in writing by registered mail or personal delivery. Anything to the contrary
contained herein notwithstanding, Notices to any party hereto shall not be
deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons
to
whom copies are provided above to be given.
Section
5.04 Governing
Law
.
The
provisions of this Agreement and the documents delivered pursuant hereto shall
be governed by and construed in accordance with the laws of the State of Ohio
(excluding any conflict of law rule or principle that would refer to the laws
of
another jurisdiction).
Section
5.05 Entire
Agreement, Amendments and Waivers
.
This
Agreement, together with all exhibits and schedules attached hereto, constitutes
the entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or
shall constitute a waiver of any other provision hereof (regardless of
whether
similar),
nor shall any such waiver constitute a continuing waiver unless otherwise
expressly provided.
Section
5.06 Binding
Effect and Assignment
.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, executors, legal representatives, permitted
successors and assigns; but neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned, by operation of law or
otherwise, by any party hereto without the prior written consent of the other
party. Nothing in this Agreement, express or implied, is intended to confer
upon
any person or entity, other than the parties hereto and their respective heirs,
executors, legal representatives, permitted successors and assigns, any rights,
benefits or obligations hereunder.
Section
5.07 Remedies
.
The
rights and remedies provided by this Agreement are cumulative, and the use
of
any one right or remedy by any party hereto shall not preclude or constitute
a
waiver of its right to use any or all other remedies provided by this
Agreement.
Section
5.08 Exhibits
and Schedules
.
The
exhibits and schedules referred to herein are attached hereto and incorporated
herein by this reference.
Section
5.09 Multiple
Counterparts
.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
Section
5.10 References
.
Whenever required by the context, and as used in this Agreement, the singular
number shall include the plural and pronouns and any variations thereof shall
be
deemed to refer to the masculine, feminine, neuter, singular or plural, as
the
identification of the person may require. References to monetary amounts and
specific named statutes are intended to be and shall be construed as references
to United States dollars and statutes of the United States, respectively, unless
the context otherwise requires.
Section
5.11 Survival
.
Any
provision of this Agreement which contemplates performance or the existence
of
obligations after the Closing Date, and any and all representations and
warranties set forth in this Agreement, shall not be deemed to be merged into
or
waived by the execution and delivery of the instruments executed at the Closing,
but shall expressly survive Closing for the time period set forth in Section
6.01 hereof and shall be binding upon the party or parties obligated thereby
in
accordance with the terms of this Agreement, subject to any limitations
expressly set forth in this Agreement.
ARTICLE
VI.
DEFINITIONS
Capitalized
terms used in this Agreement shall have the respective meanings ascribed to
such
terms in this Article IX, unless otherwise defined in this
Agreement.
Section
6.01 Affiliate
.
The
term “Affiliate”
shall
mean, with respect to any person, any other person controlling, controlled
by or
under common control with such person. The term “control” as used in the
preceding sentence means, with respect to a corporation, the right
to
exercise,
directly or indirectly, more than fifty percent (50%) of the voting rights
attributable to the shares of the controlled corporation and, with respect
to
any person other than a corporation, the possession, directly or indirectly,
of
the power to direct or cause the direction of the management or policies of
such
person.
Section
6.02 Company
Assets
.
The
term “Company
Assets”
shall
mean, with respect to ELS ESI, all of the Properties, Contracts and Permits
Used
by ELS ESI as of the Closing Date.
Section
6.03 Governmental
Authorities
.
The
term “Governmental
Authorities”
shall
mean any nation or country (including but not limited to the United States)
and
any commonwealth, territory or possession thereof and any political subdivision
of any of the foregoing, including but not limited to courts, departments,
commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
Section
6.04 Knowledge
.
The
term “Knowledge”
shall
mean the actual knowledge of a party and, in the case of ELS ESI, of any of
its
directors or executive officers with respect to the representation being
made.
Section
6.05 Legal
Requirements
.
The
term “Legal
Requirements”,
when
described as being applicable to any person, shall mean any and all laws
(statutory, judicial or otherwise), ordinances, regulations, judgments, orders,
directives, injunctions, writs, decrees or awards of, and any contracts with,
any Governmental Authority, in each case as and to the extent applicable to
such
person or such person's business, operations or Properties.
Section
6.06 Material
Adverse Change
.
The
term “Material
Adverse Change”
shall
mean a material adverse change in ELS ESI’s condition (financial or otherwise),
operations, results of operations, business, Properties or
liabilities.
Section
6.07 Material
Adverse Effect
.
The
term “Material
Adverse Effect”
shall
mean a material adverse effect on ELS ESI’s operations, business, Properties,
financial condition or results of operations.
Section
6.08 Permits
.
The
term “Permits”
shall
mean any and all permits or orders under any Legal Requirement or otherwise
granted by any Governmental Authority.
Section
6.09 Properties
.
The
term “Properties”
shall
mean any and all properties and assets (real, personal or mixed, tangible or
intangible).
Section
6.10 Regulations
.
The
term “Regulations”
shall
mean any and all regulations promulgated by the Department of the Treasury
pursuant to the Code.
Section
6.11 Taxes
or Tax
.
The
term “Taxes”
or
“Tax”
means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, gift, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code §59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
Tax
Returns
.
The
term “Tax
Return”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
Section
6.12 Used
.
The
term “Used”
shall
mean, with respect to the Properties, Contracts or Permits of ELS ESI, those
owned, leased, licensed or otherwise held by ELS ESI which were acquired for
use
or held for use by ELS ESI in connection with ELS ESI’s business and operations,
whether or not reflected on the books of account.
EXECUTED
as of the date first written above.
ELS
EMPLOYER MERGER SUB LLC
By:
Resolve Staffing, Inc.,
Sole
member
By:
/s/ Xxxxxx Xxxxxxxxxx
Xxxxxx
X.
Xxxxxxxxxx
Director
and Authorized
Representative
RESOLVE
STAFFING, INC.
By:/s/
Xxxxxx E Quarterman_______________
Xxxxxx
X.
Xxxxxxxxxx
Director
and Authorized
Representative
ELS
EMPLOYER SERVICES, INC.
By:/s/Xxxxxxx
Roux__________________________
Xxxxxxx
X. Xxxx
President
Signature
Page
Exhibit
A
Capitalization
ELS
Employer Services, Inc.
Authorized
Capital Stock = 60,000
shares
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxx 280
Xxxxxxx
X. Xxxx 720
Schedule
3.02
Agreements
1. |
Agreement
dated as of December 31, 2002, by and between ELS Administrative
Services,
LLC, Rockmor Group, Inc., Foxstar, Inc., Luxor Solutions, Inc., ELS
Employer Services, Inc., Streamline Management, Inc., Imperial Human
Resources, Inc., Rio Services, Inc., Integrated Payroll Solutions,
Inc.,
ELS Advantage, Inc., ELS Outsource Services, Inc., and ELS Employer
Services, Inc.
|
2. |
Management
Agreement dated as of December 31, 2002, between ELS Employer Services,
Inc. and ELS Administrative Services,
LLC.
|