SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this “Agreement”)
is
made and entered into as of the 1st
day of
October, 2006, by and among
ELS HUMAN RESOURCE SOLUTIONS, INC.,
an Ohio
corporation (“ELS
HRS”),
RESOLVE
STAFFING, INC.,
a
Nevada corporation (“Resolve”),
MANDALAY
SERVICES, INC.,
a
Michigan corporation (“Mandalay”),
DIVERSIFIED
SUPPORT SYSTEMS, LLC,
an Ohio
limited liability company (“Diversified”),
ELS
EMPLOYER SERVICES, INC.,
a
Michigan corporation (“ELS
ES”),
and
each subsidiary of ELS HRS set forth on the signature pages hereto (the
“ELS
HRS Subsidiaries”;
each
of ELS HRS, Resolve, Mandalay, Diversified, ELS ES, and the ELS HRS Subsidiaries
being referred to herein individually as a "Debtor,"
and
collectively, jointly and severally, as the “Debtors”),
XXXXXX
X. XXXXXXXX (“Xxxxxxxx”),
THE XXXXXXX X. XXXXXXXX YEAR 2002 REVOCABLE TRUST DATED
August 16, 2002,
Xxxxxxx
X. Xxxxxxxx, Trustee, or successor (the “Xxxxxxxx
Trust”),
XXXXXXX X. XXXXXX
(“Xxxxxx”;
each
individually a "Secured
Party,"
and
collectively, the “Secured
Parties”),
and
XXXXXX
X. XXXXXXXX,
in his
capacity as agent (in such capacity, the “Agent”)
for
himself and the Secured Parties.
WITNESSETH:
WHEREAS,
Resolve
and ELS HRS have made and entered into or will make and enter into certain
Promissory Notes payable to one or more of the Secured Parties (each being
referred to individually as a “Note,”
and
collectively as the “Notes”),
in
connection with that certain Stock Purchase Agreement (the “Stock
Purchase Agreement”)
made
by and among ELS HRS, the Xxxxxxxx Trust, and Xxxxxx; that certain Agreement
and
Plan of Merger (the “Forward
Merger Agreement”)
made
by and among ELS HRS, Resolve, and the Constituent Companies party thereto;
that
certain Agreement and Plan of Merger made by and among Resolve, Mandalay
Merger
Sub LLC, and Mandalay Services, Inc. (the “Mandalay
Merger Agreement”);
that
certain Agreement and Plan of Merger made by and among Resolve, Diversified
Merger Sub LLC, and Diversified Support Systems, LLC (the “Diversified
Merger Agreement”);
and
that certain Agreement and Plan of Merger made by and among Resolve, ELS
Employer Merger Sub LLC, and ELS Employer Services, Inc. (the “ELS
Employer Merger Agreement”)
(the
Forward Merger Agreement, Mandalay Merger Agreement, Diversified Merger
Agreement, and ELS Employer Merger Agreement being referred to collectively
herein as the “Merger
Agreements”);
and
WHEREAS,
Resolve has absolutely and unconditionally guarantied the obligations of
ELS HRS
under the Notes, the Stock Purchase Agreement, the Merger Agreements, and
related documents and instruments pursuant to that certain Guaranty given
by
Resolve in favor of Agent and Secured Parties, dated of even date herewith
(the
“Guaranty”);
and
WHEREAS,
it is a condition precedent to the effectiveness of the Stock Purchase Agreement
and the Merger Agreements that Debtors deliver to the Agent, for the benefit
of
himself and Secured Parties, this Security Agreement and various other documents
securing the obligations of the Debtors to Secured Parties;
NOW
THEREFORE, in consideration of the willingness of Secured Parties to enter
into
the Notes, the Stock Purchase Agreement, the Merger Agreements, the Guaranty,
and related documents and instruments, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
it
is hereby agreed as follows:
1. Grant
of Security Interest.
To
secure Debtors’ prompt, punctual, and faithful payment and performance of all
and each of their debts, liabilities, and obligations owed to Agent and Secured
Parties, whether direct or indirect, absolute or contingent, due or to become
due, now in existence or hereafter created or arising, including any extensions
or renewals thereof, and whether incurred alone or with others as maker,
endorser, guarantor or surety, plus interest thereon and all costs of
collection, legal expenses and attorneys’ fees paid or incurred by Agent or
Secured Parties in administering, collecting, or enforcing any such
indebtedness, liabilities or obligations, or realizing on the security given
hereby or otherwise (all such indebtedness, liabilities, obligations, interest,
costs, fees, and expenses being hereinafter referred to as the “Secured
Obligations”),
each
of the Debtors hereby pledges and grants to Agent, for the benefit of himself
and Secured Parties, a security interest in and liens against, all
of
each Debtor’s assets, whether currently owned or hereafter acquired, including
without limitation the following described collateral (collectively, the
"Collateral"):
(a) each
and
every "account"
(as
such term is defined in the Uniform Commercial Code as adopted in any applicable
jurisdiction (as adopted in any such jurisdiction and as amended from time
to
time, the "UCC")
of
Debtors or in which any Debtor now or hereafter has any rights, including,
but
not limited to, all rights of Debtors to payment for "inventory" (as hereinafter
defined) and other goods sold or leased or for services rendered, all accounts
receivable and receivables of Debtors, and all payments, royalties, rents,
revenues, fees, and other sums (from whatever source, including, without
limitation, from insurers, from third parties, and from any government or
subdivision, department, or agency thereof) whatsoever owed to Debtors, in
each
case regardless of whether now owned or existing or hereafter acquired,
accruing, or arising; and
(b) all
of
the “books”
of
Debtors, including all of the now owned or hereafter acquired books and records
of Debtors (including all of Debtors’ records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of its
records relating to its business operations or financial condition, and all
of
its goods or General Intangibles related to such information); and
(c) all
“investment
property”
(as
such term is defined in the UCC) of Debtors or in which any Debtor now or
hereafter has any rights, including, but not limited to, any and all supporting
obligations in respect thereof; and
(d) each
and
every “general
intangible”
(as
such term is defined in the UCC) of Debtors or in which any Debtor now or
hereafter has any right, title or interest, including payment intangibles,
contract rights, rights to payment, rights arising under common law, statutes
or
regulations, choses or things in action, goodwill associated with the Debtors’
businesses,
patents,
trade names, trademarks, service marks, copyrights, domain names, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any
royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
money, deposit accounts, insurance premium rebates, tax refunds, and tax
refund
claims, and any and all supporting obligations in respect thereof;
and
(e) each
and
every "document,"
"instrument,"
and
"chattel
paper"
(as
such terms are defined in the UCC) of Debtors or in which any Debtor now
or
hereafter has any rights, including, but not limited to, all of Debtors'
contract rights and rights to refunds of federal, state and local income
taxes,
in each case regardless of whether now owned or existing or hereafter acquired,
accruing, or arising; and
(f) each
and
every item of "equipment"
and
"fixture"
(as
such terms are defined in the UCC) of Debtors or in which any Debtor now
or
hereafter has any rights, including, but not limited to, all of Debtors'
machinery, parts, accessories, attachments, trade fixtures, tools, furniture,
furnishings and other goods, in each case regardless of whether now owned
or
existing or hereafter acquired; and
(g) all
"inventory"
(as
such term is defined in the UCC) and all other property and assets of Debtors
or
in which any Debtor now or hereafter has any rights, and all goods, merchandise
and other personal property of Debtors held for sale or rental or use and
all
raw materials and supplies used or useful in the conduct of Debtors' business,
in each case regardless of whether now owned or existing or hereafter acquired;
and
(h) all
“negotiable
collateral”
of
Debtors, including all of the now owned and hereafter acquired right, title,
and
interest of any Debtor with respect to letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any
and all
supporting obligations in respect thereof; and
(i) all
insurance policies of Debtors and the proceeds thereunder or therefrom, in
each
case regardless of whether now owned or existing or hereafter acquired or
coming
into existence, and refunds of all premiums therefor; and
(j) all
of
Debtors’ bank accounts, including, but not limited to, all demand, time,
savings, passbook and similar accounts maintained with any bank, savings
and
loan association or similar institution, in each case whether now in existence
or hereafter created or arising; and
(k) the
proceeds and products, whether tangible or intangible, of any and all of
the
foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all “accounts,” “books,” “equipment,” “general intangibles,”
“inventory,” “investment property,” “negotiable collateral,” money, deposit
accounts, or other tangible or intangible property
resulting
from the sale, exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
2. Obligations
Secured.
This
Agreement is made, and the pledge of and security interest in the Collateral
is
granted, as security for the Secured Obligations, including but not limited
to,
the following: any and all of Debtors’ debts, liabilities, and obligations under
the Notes, the Guaranty, that certain Stock Pledge Agreement made by and
among
ELS HRS, Resolve, Secured Parties, and the Pledged Stock Issuers party thereto,
dated of even date herewith (the “Pledge
Agreement”),
the
Stock Purchase Agreement, and the Merger Agreements, as the same may be amended,
restated, supplemented, and/or renewed from time to time, whether now in
existence or hereafter created or arising, and any and all debts, liabilities,
and obligations of any Debtor under
any
other document or instrument running to the benefit of a Secured Party from
either of the Debtors, whether now in existence or hereafter created or
arising.
This
Agreement, the Guaranty, the Pledge Agreement, and any and all other documents
or instruments providing security for the Secured Obligations, as the same
may
be modified, amended, restated, or supplemented from time to time, shall
be
referred to herein as the “Security
Documents.”
3. Representations
and Warranties.
Each of
the Debtors jointly and severally represents and warrants to Agent and Secured
Parties that:
(a) One
or
more of Debtors is the owner of the Collateral, free and clear of all liens,
security interests and other encumbrances of any kind whatsoever, and, except
in
connection with the above described security interests, no security agreement,
assignment, financing statement, or similar document or instrument covering
the
Collateral is on file or of record in any federal, state, or local governmental
office or records.
(b) Each
of
the Debtors has full power and authority to enter into this Agreement and
grant
to Agent and Secured Parties the pledge, lien, and security interest in,
the
Collateral in accordance herewith.
(c) The
principal place of business of Debtors and their respective chief executive
offices and accounting offices are located in Xxxxxxxx County,
Ohio.
(d) Debtors
have been duly and validly incorporated in the jurisdictions set forth in
the
preamble to this Agreement, and are qualified to do business in the following
jurisdictions: [________________________].
(e) The
Federal Employer Identification Number (“EIN”)
for
each Debtor is as set forth on Exhibit
A
attached
hereto and incorporated herein by reference.
(f) The
pledge of, and grant of the lien against and security interest in, the
Collateral by Debtors in the manner and for the purposes contemplated by
this
Agreement have been duly and validly authorized; this Agreement has been
duly
executed and delivered and constitutes the legally binding and enforceable
obligation of Debtors; and no registration with or
approval
of any governmental agency of any kind is required for the due execution
and
delivery, or the enforceability, of this Agreement.
(g) Debtors
hereby irrevocably authorize Agent to file Uniform Commercial Code Financing
Statements containing sufficient legal descriptions of the Collateral and
otherwise in form and substance sufficient for filing in every governmental,
municipal, or other office in every jurisdiction necessary to perfect Agent’s
and Secured Parties’ lien against and security interest in the
Collateral.
(h) Debtors
own or have the exclusive right to use all intellectual property used in
the
Debtors’ business, including, but not limited to, all copyrights, patents,
trademarks, service marks, domain names, and software (the “Intellectual
Property”).
None
of the Intellectual Property infringes upon or otherwise violates the
intellectual property or other proprietary rights of any third party, and
none
of the Debtors has received any notice of any claim of infringement or any
other
claim or proceeding relating to the Intellectual Property.
4. Covenants.
Each of
the Debtors covenants and agrees with Agent and Secured Parties that
it:
(a) shall
defend in good faith the Collateral against the claims and demands of all
persons;
(b) shall
advise Agent in writing, at least 30 days prior thereto, of any change in
any
Debtor's name, any change in any Debtor’s state of organization or any merger,
consolidation, conversion, reorganization or recapitalization involving any
Debtor, and, in such event, Debtor shall promptly authorize the filing of
(and
Debtors hereby authorize the filing of) new or amended UCC financing statements
describing the Collateral specified herein and otherwise in form and substance
sufficient for recordation wherever necessary or appropriate, as determined
in
Agent’s sole discretion, to perfect or continue perfected Agent’s and Secured
Parties’ pledge and security interest in the Collateral based upon such changes,
and Debtors shall pay all filing and recording fees and taxes in connection
with
the filing or recordation of such financing statements and shall immediately
reimburse Agent therefor if it pays the same;
(c) shall
advise Agent in writing, at least 30 days prior thereto, of any change in
the
location of the Collateral or the principal place of business of any
Debtor;
(d) shall
not
permit any liens, security interests or other encumbrances of any kind
whatsoever to attach to any of the Collateral;
(e) shall
pay
and perform the Secured Obligations strictly in accordance with their terms
and
shall pay promptly when due all taxes, assessments, and governmental charges
upon or affecting the Collateral;
(f) shall
take any and all necessary and appropriate steps to renew, preserve, and
otherwise maintain any Debtor’s rights in any and all Intellectual Property,
including, but not limited to, currently existing and hereafter acquired
registrations of domain names;
(g) shall
provide Agent and/or its agents and representatives access to any Debtor’s books
and records, accountants’ reports, financial information, and any and all other
information and materials related to Debtors’ business; permit Agent and/or its
agents or representatives to visit the offices of Debtors and examine the
Collateral; and permit Agent and/or its agents or representatives to discuss
the
Debtors’ business with Debtors’ accountants;
(i) shall
immediately notify Agent in writing of any information which any Debtor has
or
may receive with respect to the Collateral which might in any manner materially
and adversely affect the value thereof or the rights of Agent or Secured
Parties
with respect thereto; and
(j) shall
maintain adequate casualty and loss insurance coverage on the Collateral
in an
amount no less than the insurable value thereof, and Agent and Secured Parties
shall be named as additional insureds or loss payees, as the case may be,
with
respect to such policies of insurance.
5. Power
of Attorney.
In the
event that Debtors fail to take any and all necessary action to renew, preserve,
and/or otherwise maintain the Collateral, included, but not limited to, any
domain names included in the Intellectual Property, Debtors hereby irrevocably
appoint Agent as their attorney-in-fact (a) to execute and deliver any such
documents and take such actions as may be necessary to renew, maintain or
otherwise preserve Debtors’ rights in and to the Collateral, and (b) to take
such other actions as may be necessary or incidental to the foregoing. The
costs
of taking any such actions shall be added to and included in the Secured
Obligations. The foregoing power of attorney shall
be
deemed to be a power coupled with an interest, and is irrevocable.
6. Events
of Default.
An
"Event
of Default"
shall
occur hereunder if: (a) any Secured Party shall have failed to receive, when
due, any portion of the indebtedness, liabilities, or obligations owing to
him
by any Debtor; (b) any Debtor shall commit any breach of its covenants and/or
obligations, or any default or Event of Default, under this Agreement, any
of
the Notes, the other Security Documents, the Stock Purchase Agreement, or
any
Merger Agreement, that certain Revolving Note made by and among Employee
Leasing
Services, Inc., Rockmor Group, Inc. and Fifth Third Bank, dated effective
as of
December 30, 2005, and any document providing security for or guaranteeing
the
obligations of the borrowers thereunder, or that certain Revolving Note made
by
and between Resolve and Fifth Third Bank, dated effective as of May 30, 2006,
and any document providing security for or guaranteeing the obligations of
the
borrowers thereunder, in each case as amended or supplemented, or under any
agreement, document, or instrument between any Debtor and any Secured Party
or
running to benefit of any Secured Party from any Debtor; (c) any representation
or warranty made by any Debtor herein or in any of the agreements, documents,
or
instruments referenced in (b) above is, or becomes, untrue or misleading
in any
material respect; (d) any Debtor shall: (i) become insolvent, (ii) become
generally unable to pay its respective debts as they become due, (iii) make
an
assignment
for
the
benefit of creditors, or (iv) call a meeting of creditors for the composition
of
debts; (e) there shall be filed by or against any Debtor a petition in
bankruptcy or for reorganization or a custodian, receiver or agent is appointed
or authorized to take charge of any of its properties; (f) there shall occur
any
material and adverse change in the business operations and condition, financial
or otherwise, of any Debtor; (g) there shall occur a material casualty loss
with
respect to the Collateral or other security for any of the Secured Obligations
which is not covered by insurance; (h) the Collateral or other security for
any
of the Secured Obligations shall decline in value with the result that Secured
Parties’ security for the Secured Obligations is materially diminished; or (i)
any default or event of default shall occur under any other agreement, document,
or instrument between any Debtor and any Secured Party or running to the
benefit
of any Secured Party from any Debtor.
8. Remedies
Upon Event of Default.
Upon
the occurrence of an Event of Default, Agent and Secured Parties shall have
all
rights and remedies in and against the Collateral and otherwise of a secured
party under the UCC and all other applicable laws and shall also have all
other
rights provided herein and in any of the other documents, all of which rights
and remedies shall be cumulative to the fullest extent permitted by law.
In
addition to, and without limiting the generality of the foregoing, upon the
occurrence of an Event of Default, Secured Parties (at their election but
without notice of their election and without demand) may authorize and instruct
Agent to do any of the following on behalf of Secured Parties (and Agent,
acting
on the instruction of Secured Parties, shall do the same on behalf of Secured
Parties), with or without the judicial process or the aid or assistance of
others and to the extent permitted by law:
(a) Require
Debtors, at Debtors’ sole expense, to assemble the Collateral, make the
Collateral available to Agent at a place reasonably convenient to Agent,
and
deliver possession of the Collateral to Agent at a place reasonably convenient
to Agent.
(b) Sell
the
Collateral at public or private sale, from time to time, as determined in
its
sole discretion. Debtors shall pay, as part of the indebtedness and obligations
hereby secured, all amounts (including, but not limited to, Agent and each
Secured Party’s reasonable attorneys', accountants' and appraisers' fees as
permitted by applicable law, with interest thereon at the highest rate specified
in any of the documents) paid or incurred by Agent or any Secured Party for
taxes or levies on the Collateral, or any part thereof, and in taking possession
of, disposing of, repairing, improving, or preserving the
Collateral.
(c) Enter
any
premises where any part of the Collateral may be located, to assemble and
prepare the Collateral for sale and to conduct an auction sale on the premises
or to remove the same from the premises without being deemed guilty of trespass.
All expenses incurred by Agent or any Secured Party in exercising its rights
under this Section
8
shall be
chargeable to and borne by Debtors, and shall be added to and included in
the
Secured Obligations.
Notwithstanding
any of the foregoing,
(x) Neither
Agent nor Secured Parties shall be obligated to make any sale of Collateral
if
they shall determine not to do so, regardless of the fact that notice of
sale of
Collateral may have been given. Agent and Secured Parties may, without notice
or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and
place
to which the same was so adjourned.
(y) The
requirement of reasonable notice of time and place of sale or disposition
of
Collateral by Agent and Secured Parties shall be conclusively met if such
notice
is provided to Debtors at the address specified in the notices section of
this
Agreement at least ten (10) days before the time of the sale or
disposition.
(z) Any
Secured Party may bid upon and purchase any or all of the Collateral at any
sale
thereof free from all rights of redemption of Debtors.
(aa) Agent
and
Secured Parties may sell all or any part of the Collateral at one or more
times
and from time to time and upon such terms and conditions, including a credit
sale, as it determines in its sole discretion. Agent and Secured Parties
shall
apply the net proceeds of any such disposition of the Collateral or any part
thereof in accordance with Section
9(k)
of this
Agreement.
(bb) Debtors
shall remain absolutely and jointly and severally liable for any deficiency
in
the Secured Obligations that remains due. To the extent permitted by law,
Debtors waive all rights of redemption in or with respect to the
Collateral.
(cc) Agent
shall have the right to notify any account debtors obligated on any Debtor’s
accounts to make payment thereof directly to Agent or Secured Parties, and
Agent
shall have the right in its own name or in the name of any Secured Party
or
Debtor to demand, collect, receive, receipt for and xxx for any or all amounts
due or to become due on the accounts, and Agent, in its sole discretion,
may
take any other action which Agent may deem necessary or appropriate to protect,
preserve, and realize upon its security interest in the accounts.
9. Agent.
(a) Appointment
of Agent.
Each
Secured Party hereby designates Xxxxxx X. Xxxxxxxx as Agent to act as herein
specified. Each Secured Party hereby irrevocably authorizes the Agent to
take
such action on his behalf under the provisions of this Agreement, the Notes,
and
the other Security Documents, and to exercise such powers and to perform
such
duties hereunder and thereunder as are specifically delegated to or required
of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent shall hold all Collateral and all
payments of principal, interest, fees, charges and expenses received pursuant
to
this Agreement, the Notes, and the other Security Documents for the ratable
benefit of Secured Parties.
The
provisions of this Section
9
are
solely for the benefit of the Agent and Secured Parties, and no Debtor shall
have any rights as a third party beneficiary of any of the provisions hereof.
In
performing his functions and duties under this Agreement, the Agent shall
act
solely as agent of Secured Parties and does not assume and shall not be deemed
to have assumed any obligation toward or relationship of agency or trust
with or
for any Debtor.
(b) Nature
of
Duties of Agent.
The
Agent
shall have no duties or responsibilities except those expressly set forth
in
this Agreement. The Agent shall not be liable for any action taken or omitted
by
him as such hereunder or in connection herewith, unless caused by its gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Secured Party; and nothing
in this Agreement, expressed or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of this Agreement
except
as expressly set forth herein.
(c) Lack
of
Reliance on Agent.
Independently
and without reliance upon the Agent, each Secured Party, to the extent it
deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial or other condition and affairs of each Debtor
in
connection with the taking or not taking of any action in connection herewith
and (ii) its own appraisal of the creditworthiness of each Debtor.
The
Agent
shall not be responsible to any Secured Party for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, collectability,
priority or sufficiency of this Agreement, the Notes, the Security Documents,
or
the financial or other condition of any Debtor. The Agent shall not be required
to make any inquiry concerning either the performance or observance of any
of
the terms, provisions or conditions of this Agreement, the Notes, the Security
Documents, or the financial condition of any Debtor, or the existence or
possible existence of any default or Event of Default, unless specifically
requested to do so in writing by a Secured Party.
(d) Certain
Rights of the Agent.
The
Agent
shall have the right to request instructions from Secured Parties. If the
Agent
shall request instructions from Secured Parties with respect to any act or
action (including the failure to act) in connection with this Agreement,
the
Agent shall be entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from Secured Parties
and
the Agent shall not incur liability to any person by reason of so refraining.
Without limiting the foregoing, no Secured Party shall have any right of
action
whatsoever
against the Agent as a result of the Agent acting or refraining from acting
hereunder in accordance with the instructions of Secured Parties.
(e) Reliance
by Agent.
The
Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any
note, writing, resolution, notice, statement, certificate, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. The
Agent may consult with legal counsel (including counsel for one or more of
the
Debtors with respect to matters concerning one or more of the Debtors),
independent public accountants and other experts selected by him and shall
not
be liable for any action taken or omitted to be taken by him in good faith
in
accordance with the advice of such counsel, accountants or experts.
(f) Indemnification
of Agent.
To
the
extent the Agent is not reimbursed and indemnified by one or more of the
Debtors, each Secured Party will reimburse and indemnify the Agent in proportion
to the principal outstanding on its respective Notes for and against any
and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits,
costs, expenses (including counsel fees and disbursements) or disbursements
of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder, or in any way relating
to
or arising out of this Agreement; provided however,
that no
Secured Party shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent’s gross negligence or willful
misconduct.
(g) The
Agent
in his Individual Capacity.
With
respect to his rights and obligations as a Secured Party hereunder and under
the
Notes and the other Security Documents, the Agent shall have the same rights
and
powers hereunder as any other Secured Party and may exercise the same as
though
he were not performing the duties specified herein; and the term “Secured
Parties” or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity.
(h) Successor
Agent.
The
Agent
may, upon five (5) business days’ notice to Secured Parties, resign at any time
(effective upon the appointment of a successor Agent pursuant to the provisions
of this Section
9(h))
by
giving written notice thereof to Secured Parties. Upon any such resignation,
Secured Parties shall have the right, upon five (5) days’ notice, to appoint a
successor Agent. If no successor Agent shall have been so appointed by Secured
Parties, and shall have accepted such appointment, within thirty (30) days
after
the retiring Agent’s giving of notice of resignation, then, upon five (5) days’
notice, the retiring Agent may, on behalf of Secured Parties, appoint a
successor Agent.
Upon
the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Section
9
shall
inure to its benefit as to any actions taken or omitted to be taken by it
while
it was Agent under this Agreement.
(i) Collateral
Matters.
Each
Secured Party authorizes and directs the Agent to enter into the Guaranty
and
the Pledge Agreement, and any other Security Documents. The Agent is hereby
authorized on behalf of each Secured Party, without the necessity of any
notice
to or further consent from any Secured Party, from time to time prior to
an
Event of Default, to take any action with respect to any Collateral, the
Notes,
or the other Security Documents that may be necessary or appropriate to perfect
and maintain perfected the security interest in and liens upon the Collateral
granted pursuant to any of the foregoing documents.
Secured
Parties hereby authorize the Agent, at his option and in his discretion,
to
release any lien granted to or held by the Agent upon any Collateral upon
termination of the Secured Obligations and payment in cash and satisfaction
of
all of the obligations at any time arising under or in respect of this
Agreement, the Notes, the other Security Documents, or the transactions
contemplated hereby or thereby. Upon request by the Agent at any time, Secured
Parties will confirm in writing the Agent’s authority to release particular
types or items of Collateral pursuant to this Section
9(i).
Upon
any
sale and transfer of Collateral which is expressly permitted pursuant to
the
terms of this Agreement, or consented to in writing by Secured Parties, as
applicable, and upon at least five (5) business days’ prior written request by
any Debtor, the Agent shall (and is hereby irrevocably authorized by Secured
Parties to) execute such documents as may be necessary to evidence the release
of the liens granted to the Agent for the benefit of Secured Parties herein
or
pursuant hereto upon the Collateral that was sold or transferred; provided,
that
(i) the Agent shall not be required to execute any such document on terms
which,
in the Agent’s opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such liens
without recourse or warranty and (ii) such
release
shall not in any manner discharge, affect or impair the Secured Obligations
or
any liens upon all interests retained by any Debtor, including (without
limitation) the proceeds of the sale, all of which shall continue to constitute
part of the Collateral. In the event of any sale or transfer of Collateral,
or
any foreclosure with respect to any of the Collateral, the Agent shall be
authorized to deduct all of the expenses reasonably incurred by the Agent
from
the proceeds of any such sale, transfer or foreclosure.
The
Agent
shall have no obligation whatsoever to Secured Parties or to any other person
to
assure that the Collateral exists or is owned by any Debtor or is cared for,
protected or insured or that the liens granted to the Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
or to continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted
or
available to the Agent in this Section
9(i)
or in
any of the Security Documents, it being understood and agreed that in respect
of
the Collateral, or any act, omission or event related thereto, the Agent
may act
in any manner he may deem appropriate, in his sole discretion, given the
Agent’s
own interest in the Collateral as one of Secured Parties and that the Agent
shall have no duty or liability whatsoever to Secured Parties, except for
his
gross negligence or willful misconduct.
(j) Actions
with Respect to Defaults.
In
addition to the Agent’s right to take actions on his own accord as permitted
under this Agreement, the Agent shall take such action with respect to a
default
or Event of Default as shall be directed by Secured Parties; provided
that,
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with
respect to such default or Event of Default as he shall deem advisable and
in
the best interests of Secured Parties.
(k) Application
of Proceeds upon an Event of Default.
All
proceeds of Collateral received by the Agent pursuant to the exercise of
remedies under this Agreement, the Notes, or the other Security Documents
or
otherwise realized upon the occurrence and during the continuation of an
Event
of Default shall, when received by the Agent in cash or its equivalent, be
applied as follows: first,
to all
reasonable costs and expenses of the Agent (including, without limitation,
reasonable attorneys’ fees and expenses) incurred in connection with the
implementation and/or enforcement of this Agreement, the Notes, or the other
Security Documents; second,
to all
costs and expenses of Secured Parties incurred in connection with the
implementation and/or enforcement of this Agreement, the Notes, or the other
Security Documents; third,
to be
applied ratably to pay interest then due in respect of the Notes until paid
in
full; fourth,
to be
applied ratably to the respective remaining principal installments of the
Notes
in inverse order of maturity; and fifth,
to the
payment of the surplus, if any, to whomever may be lawfully entitled to receive
such surplus. The Debtors shall remain liable to the Agent and Secured Parties
for any deficiency.
Notwithstanding
anything to the contrary in this Agreement, the Notes, or the other Security
Documents, all proceeds of Collateral received by the Agent pursuant to the
exercise of remedies under the such documents shall be applied in accordance
with this Section
9(k).
10. Miscellaneous.
(a) Notices.
Any
notice required, permitted, or contemplated hereunder shall be in writing
and
addressed to the party to be notified at the address set forth below or at
such
other address as each party may designate for itself from time to time by
notice
hereunder, and shall be deemed validly given (i) three (3) days following
deposit in the U.S. mails, with proper postage prepaid, or (ii) the next
business day after such notice was delivered to a regularly scheduled overnight
delivery carrier with delivery fees either prepaid or an arrangement,
satisfactory with such carrier, made for the payment thereof, or (iii) upon
receipt of notice given by telecopy, mailgram, telegram, telex or personal
delivery:
To
Debtors: c/o
Resolve Staffing, Inc.
0000
Xxxx
Xxxxx
Xxxxxxxxxx,
Xxxx 00000
with
a
copy to: Xxxx
Xxxxxx, Esq.
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
To
Agent: Xxxxxx
X.
Xxxxxxxx
0000
Xxxx
Xxxxx
Xxxxxxxxxx,
Xxxx 00000-0000
with
a
copy to: Xxxxxx
X.
Xxxxxxx, Esq.
Xxxx,
Stettinius & Hollister LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx,
Xxxx 00000-0000
(b) Further
Assurances.
From
time to time Debtors shall take such action and execute and deliver to Secured
Parties such additional documents and instruments as Secured Parties may
reasonably request to effectuate the purposes of this Agreement and to assure
Secured Parties the benefits of the collateral security provided
herein.
(c) Successors
and Assigns.
This
Agreement shall be binding upon
the
parties hereto and upon their respective successors and assigns, and shall
inure
to the benefit of the heirs, successors, and assigns of Secured
Parties.
(d) Amendment.
This
Agreement cannot be changed or amended except by an agreement in writing
signed
by the party against whom enforcement of the change or amendment is
sought.
(e) Number
and Gender.
For
purposes of this Agreement, the singular shall be deemed to include the plural
and the plural shall be deemed to include the singular, and the neuter shall
be
deemed to include the masculine and feminine and the masculine and feminine
shall be deemed to include the neuter, as the context may require.
(f) Captions.
The
captions preceding the text of the paragraphs of this Agreement are inserted
only for convenience of reference and shall not constitute a part of this
Agreement, nor shall they in any way affect its meaning, construction or
effect.
(g) Governing
Law.
The
provisions of this Agreement shall be
construed
in accordance with the laws of the State of Ohio, except to the extent that
the
laws
of
other jurisdictions may apply to the creation, perfection, or priority of
the
pledge,
lien,
and
security interests granted herein.
(h) Severability.
The
invalidity or unenforceability, whether in general or in any particular
circumstance, of any provision of this Agreement shall not affect its validity
or enforceability in any other circumstance or any other provision hereof.
The
parties hereto agree that this Agreement shall be interpreted so as to give
effect and validity to all of the provisions hereof to the fullest extent
permitted by law.
[signature
page to follow]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day,
month, and year first written above.
DEBTORS:
ELS
HUMAN
RESOURCE SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
RESOLVE
STAFFING, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
Director and Authorized Representative
MANDALAY
SERVICES, INC.
By:/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
President
DIVERSIFIED
SUPPORT SYSTEMS, LLC
By:/s/
Xxxxxx Xxxxxxxx
Name:
Xxxxxx X. Xxxxxxxx
Title:
President
ELS
EMPLOYER SERVICES, INC.
By:/s/
Xxxxx Xxxx
Name:
Xxxxx Xxxx
Title:
President
EMPLOYEE
LEASING SERVICES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
OUTSOURCE SERVICES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
PREMIER
HR SERVICES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
FOXSTAR,
INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
PERSONNEL SERVICES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
RIO
SERVICES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
IMPERIAL
HUMAN RESOURCES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
HR,
INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
LUXOR
SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
STREAMLINE
MANAGEMENT, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS,
INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
PAYROLL SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
HUMAN
RESOURCES, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
INTEGRATED
PAYROLL SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
TEMPORARY SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
RESOLVE
HR SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
FIDELITY
CAPITAL, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
PAYROLL MANAGERS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
ELS
ADVANTAGE, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
SECURED
PARTIES:
/s/
Xxxxxx Xxxxxxxx
Xxxxxx
X.
Xxxxxxxx
/s/
Xxxxxxx Xxxxxx
Xxxxxxx
X.
Xxxxxx
THE
XXXXXXX X. XXXXXXXX YEAR 2002 REVOCABLE TRUST DATED August 16, 2002
/s/Xxxxxxx
Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx,
Trustee
AGENT:
/s/
Xxxxxx Heieneman
Xxxxxx
X.
Xxxxxxxx
EXHIBIT
A
Debtor
Employee Identification Numbers
|
Company
Name
|
EIN
|
|
Resolve
Staffing, Inc.
|
00-0000000
|
|
ELS
Human Resource Solutions, Inc.
|
|
|
Mandalay
Services, Inc.
|
00-0000000
|
|
Diversified
Support Systems, LLC
|
00-0000000
|
|
ELS
Employer Services, Inc.
|
00-0000000
|
|
Employee
Leasing Services, Inc.
|
00-0000000
|
|
ELS
Outsource Services, Inc.
|
00-0000000
|
|
Premier
HR Services, Inc.
|
00-0000000
|
|
Foxstar,
Inc.
|
00-0000000
|
|
ELS
Personnel Services, Inc.
|
00-0000000
|
|
Rio
Services, Inc.
|
00-0000000
|
|
Imperial
Human Resources, Inc.
|
00-0000000
|
|
ELS
HR, Inc.
|
00-0000000
|
|
Luxor
Solutions, Inc.
|
00-0000000
|
|
Streamline
Management, Inc.
|
00-0000000
|
|
ELS,
Inc.
|
00-0000000
|
|
ELS
Payroll Solutions, Inc.
|
00-0000000
|
|
ELS
Human Resources, Inc.
|
00-0000000
|
|
Integrated
Payroll Solutions, Inc.
|
00-0000000
|
|
ELS
Temporary Solutions, Inc.
|
00-0000000
|
|
Resolve
HR Solutions, Inc.
|
00-0000000
|
|
Fidelity
Capital, Inc.
|
00-0000000
|
|
ELS
Payroll Managers, Inc.
|
00-0000000
|
|
ELS
Advantage, Inc.
|
82-0578054
|
