PLEDGE AGREEMENT
THIS
PLEDGE AGREEMENT (this “Agreement”)
is
entered into as of October 1, 2006 by and among Resolve Staffing, Inc., a Nevada
corporation (“Resolve”),
and
ELS Human Resource Solutions, Inc., an Ohio corporation (“ELS
HRS”;
each
of Resolve and ELS HRS being referred to herein as a “Pledgor”
and
collectively, jointly and severally, the “Pledgors”),
the
Pledged Stock Issuers listed on Schedule
1
hereto,
and 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”),
and
Xxxxxxx X. Xxxxxx (“Xxxxxx”),
and
Xxxxxxxx, as agent for himself, the Xxxxxxxx Trust, and Xxxxxx (in such
capacity, the “Agent”).
WITNESSETH
WHEREAS,
in
connection with that certain Stock Purchase Agreement by and among ELS HRS,
the
Xxxxxxxx Trust and Xxxxxx, dated of even date herewith (the “Stock
Purchase Agreement”);
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”),
ELS
HRS and Resolve have made and entered into or will make and enter into certain
Promissory Notes payable to one or more of Xxxxxxxx, the Xxxxxxxx Trust, and
Xxxxxx (each being referred to individually as a “Note,”
and
collectively as the “Notes”);
and
WHEREAS,
the obligations of the Pledgors under the Notes are secured by various security
documents, including, but not limited to, a Security
Agreement by and among Xxxxxx, Xxxxxxxx (in his individual capacity and as
Agent
for himself, the Xxxxxxxx Trust, and Xxxxxx), the Xxxxxxxx Trust, ELS HRS,
Resolve, Mandalay Services, Inc., Diversified Support Systems, LLC, ELS Employer
Services, Inc., and the subsidiaries of ELS HRS signatory thereto, dated of
even
date herewith (the “Security
Agreement”),
and a
Guaranty
given by Resolve in favor of Xxxxxx, Xxxxxxxx (in his individual capacity and
as
Agent for himself, the Xxxxxxxx Trust, and Xxxxxx), and the Xxxxxxxx Trust,
dated of even date herewith
(the
“Guaranty”);
and
WHEREAS,
one or more of the Pledgors own all of the outstanding capital stock of each
Pledged Stock Issuer, and the Pledgors and the Pledged Stock Issuers believe
that the effectiveness of the Notes, the Stock Purchase Agreement, and the
Merger Agreements, will be beneficial to them; and
WHEREAS,
it is a condition precedent to the effectiveness of the Stock Purchase Agreement
and the Merger Agreements that the Pledgors and the Pledged Stock Issuers
execute and deliver this Agreement to the Agent;
29
1. Certain
Definitions.
(a) As
used
in this Agreement the following terms shall have the following
definitions:
(i) “Pledged
Collateral”
means
the Pledged Stock and any collateral now or hereafter pledged hereunder and
the
products and proceeds of any and all of the foregoing.
(ii) “Pledged
Stock”
means
the shares of capital stock of each Pledged Stock Issuer listed on Schedule
1
hereto
and any additional securities or interests of any Pledged Stock Issuer in which
any Pledgor now or hereafter has any rights, as well as any additional
securities or interests now or hereafter pledged hereunder.
(b) Capitalized
terms used but not defined herein shall have the respective meanings ascribed
to
such terms in the Security Agreement. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular,
and
references to the singular include the plural.
2. Security
Interest.
To
secure the prompt, punctual and faithful payment and performance of each and
all
of the Secured Obligations and to secure Resolve’s obligations under the
Guaranty, the Pledgors hereby deposit with and pledge to the Agent (for
the
benefit of himself and Xxxxxxxx, the Xxxxxxxx Trust, and Xxxxxx)
the
Pledged Collateral and hereby grant to the Agent (for the benefit of himself
and
Xxxxxxxx and Xxxxxx) a security interest in and lien on all of the Pledgors’
right, title, and interest in and to the Pledged Collateral. In connection
with
the foregoing, the Pledgors covenant and agree concurrently herewith to deliver
to the Agent the original share certificates representing all of the Pledged
Stock and to execute and deliver to the Agent blank stock powers (in form and
substance satisfactory to the Agent) relating to each of such share
certificates.
3. Special
Warranties and Covenants of the Pledgors.
The
Pledgors hereby jointly and severally warrant and covenant to the Agent and
to
Xxxxxxxx, the Xxxxxxxx Trust, and Xxxxxx that:
(a) The
Pledged Collateral is duly and validly pledged to the Agent in accordance with
law and the Pledgors warrant and will defend the Agent’s right, title, and
security interest in and to the Pledged Collateral against the claims and
demands of all persons whatsoever.
(b) This
Agreement and the delivery of the Pledged Collateral to the Agent create a
perfected first priority security interest in all of the Pledged Collateral
in
favor of the
(c) Agent
securing payment of the Secured Obligations, and all actions that the Agent
required, or hereafter requires, of the Pledgors necessary to achieve such
perfection have been, and will be, taken.
(d) Each
Pledgor has good and valid title to its Pledged Collateral free and clear of
all
claims, mortgages, pledges, liens, security interests, and other encumbrances
of
every nature whatsoever, except only for the pledge and security interest in
favor of the Agent created by this Agreement.
(e) All
of
the Pledged Stock has been duly and validly issued to the applicable Pledgor
and
is fully paid and nonassessable.
(f) The
Pledged Stock constitutes all of the presently issued and outstanding capital
stock of each of the Pledged Stock Issuers issued to the Pledgors.
(g) If
any
additional shares of capital stock, of any class, of any of the Pledged Stock
Issuers or other securities or interests of any of the Pledged Stock Issuers
are
acquired by any Pledgor after the date hereof, the same shall constitute Pledged
Collateral and shall be deposited and pledged with the Agent simultaneously
with
such acquisition.
(h) If
at any
time and from time to time any Pledged Collateral consists of an uncertificated
security or a security in book entry form, then the applicable Pledged Stock
Issuer shall immediately register or enter the Pledged Collateral, as the case
may be, in the name of the Agent or otherwise cause the Agent’s security
interest thereon to be perfected in accordance with applicable law.
(i) Each
Pledgor has taken all steps it deems necessary or appropriate to be informed
on
a continuing basis of changes or potential changes, if any, affecting the
Pledged Collateral (including rights of conversion and exchange, rights to
subscribe, payment of dividends, reorganizations or recapitalization, tender
offers, and voting rights), and each Pledgor agrees that the Agent shall have
no
responsibility or liability for informing such Pledgor of any such changes
or
potential changes or for taking any action or omitting to take any action with
respect thereto.
(j) All
information herein or hereafter supplied to the Agent by or on behalf of the
Pledgors in writing with respect to the Pledged Collateral is, or in the case
of
information hereafter supplied will be, accurate and complete in all material
respects.
(k) The
Pledgors will not sell, convey, or otherwise dispose of any of the Pledged
Collateral, nor will the Pledgors create, incur, or permit to exist any pledge,
mortgage, lien, charge, encumbrance, or security interest whatsoever with
respect to any of the Pledged Collateral, other than liens on and security
interests in the Pledged Collateral created in favor of the Agent by this
Agreement.
(l) The
Pledgors will not consent to or approve the issuance of any additional shares
of
capital stock, of any class, of any of the Pledged Stock Issuers if such
issuance would violate the terms of the Security Agreement or would cause a
default or Event of Default under the Notes or the Security Agreement and,
in
the event that any such additional shares of capital
(m) stock
are
issued to any Pledgor, they shall be deposited and pledged with the Agent
simultaneously with such issuance.
(n) Neither
the pledge of the Pledged Collateral pursuant to this Agreement nor the
extensions of credit represented by the Secured Obligations violates any of
Regulation T, U, or X of the Board of Governors of the Federal Reserve
System.
(o) The
chief
executive office of the Pledgors are located, respectively, at 0000 Xxxx Xxxxx,
Xxxxxxxxxx, Xxxx 00000. No Pledgor will change its jurisdiction of incorporation
or the location of its chief executive office without providing the Agent 30
days advance written notice.
4. Further
Assurances.
(a) The
Pledgors agree that from time to time, at the expense of the Pledgors, the
Pledgors will promptly execute and deliver all further instruments and
documents, and take all further actions that may be necessary or desirable,
that
the Agent may reasonably request in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, each
Pledgor and each Pledged Stock Issuer, as the case may be: (i) will, at the
request of the Agent, xxxx conspicuously its records pertaining to the Pledged
Collateral with a legend, in form and substance reasonably satisfactory to
the
Agent, indicating that such Pledged Collateral is subject to the security
interest granted hereby; (ii) does hereby authorize the Agent to prepare and
to
file such financing or continuation statements, or amendments thereto, and
such
other instruments or notices, as may be necessary or desirable, or as the Agent
may deem appropriate, in order to perfect and preserve the security interests
granted or purported to be granted hereby; (iii) will allow inspection of the
Pledged Collateral by the Agent or persons designated by the Agent; and (iv)
will appear in and defend any action or proceeding that may affect any Pledgor’s
title to or the Agent’s security interest in the Pledged
Collateral.
(b) Any
reproduction of this Agreement or any financing statement covering the Pledged
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Upon
request, the Pledgors will furnish to the Agent: (i) a certificate executed
by the Pledgors or an authorized officer, manager, or member of each of the
Pledgors, as the case may be, and dated as of the date of delivery to the Agent,
itemizing in such detail as the Agent may request, the Pledged Collateral which,
as of the date of such certificate, has been delivered to the Agent by the
Pledgors pursuant to the provisions of this Agreement; and (ii) such
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral
as
the Agent may reasonably request.
5. Covenants
of Pledgors.
The
Pledgors, jointly and severally, covenant and agree that each Pledgor
shall:
(a) timely
perform each and every covenant in the Notes and Security Agreement applicable
to the Pledgors; and
(b) upon
receipt by any Pledgor of any material notice, report, or other communication
from any of the Pledged Stock Issuers relating to all or any part of the Pledged
Collateral, deliver such notices, reports, and other communications to the
Agent
as soon as possible, but in no event later than 5 calendar days following the
receipt thereof by such Pledgor.
6. The
Agent as the Pledgor’s Attorney-in-Fact.
(a) Each
Pledgor hereby irrevocably appoints the Agent as such Pledgor’s
attorney-in-fact, with full authority in the place and stead of the Pledgor
and
in the name of the Pledgor, the Agent, or otherwise, from time to time at the
Agent’s discretion, to take any action and to execute any instrument that the
Agent may reasonably deem necessary or advisable to accomplish the purposes
of
this Agreement, including after the occurrence of an Event of Default: (i)
to
receive, endorse, and collect all instruments made payable to any Pledgor
representing any dividend, interest payment, or other distribution in respect
of
the Pledged Collateral or any part thereof to the extent permitted hereunder
and
to give full discharge for the same and to execute and file governmental
notifications and reporting forms; (ii) to issue any
notifications/instructions the Agent deems necessary pursuant to this Agreement;
or (iii) to arrange for the transfer of the Pledged Collateral on the books
of each Pledged Stock Issuer to the name of the Agent or to the name of the
Agent’s nominee.
(b) In
addition to the designation of the Agent as each Pledgor’s attorney-in-fact in
subsection (a),
each
Pledgor hereby irrevocably appoints the Agent as such Pledgor’s agent and
attorney-in-fact to make, execute, and deliver any and all documents and
writings which may be necessary or appropriate for approval of, or be required
by, any regulatory authority located in any city, county, state, or country
where any Pledgor or any of the Pledged Stock Issuers engage in business, in
order to transfer or to more effectively transfer any of the Pledged Shares
after the occurrence of an Event of Default or otherwise to enforce the Agent’s
rights hereunder. The
powers-of-attorney in described in subsection
(a)
and this
subsection
(b)
shall be
deemed to be powers coupled with an interest, and are irrevocable.
7. Distributions.
In
case, upon the dissolution, winding up, liquidation, or reorganization of any
of
the Pledged Stock Issuers, whether in bankruptcy, insolvency, or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of such Pledged Stock Issuer or
otherwise, any sum shall be paid or any property shall be distributed upon
or
with respect to any of the Pledged Collateral, such sum shall be paid over
to
the Agent to be held as collateral security for the Secured Obligations. In
case
any stock dividend shall be declared on any of the Pledged Collateral, or any
share of stock or fraction thereof shall be issued pursuant to any stock split
involving any of the Pledged Collateral, or any distribution of capital
(including cash dividends, except those expressly allowed under the Security
Agreement) shall be made on any of the Pledged Collateral, or any property
shall
be distributed upon or with respect to the Pledged Collateral pursuant to
recapitalization or reclassification of the capital of any of the Pledged Stock
Issuers, or any shares of or other equity in any of the Pledged Stock Issuers
shall at any time be issued to any Pledgor, the shares or other property so
distributed or issued (along with any blank stock powers and/or indorsements
that the Agent deems appropriate) shall promptly be delivered to the Agent
to be
held as collateral security for the Secured Obligations.
8. Events
of Default.
Any
Event of Default as defined and provided in the Security Agreement shall
constitute an “Event
of Default”
under
this Agreement.
9. Rights
and Remedies of the Secured Parties.
After
the occurrence of any Event of Default, the Agent and Xxxxxxxx, the Xxxxxxxx
Trust, and Xxxxxx shall have the following rights and remedies:
(a) all
rights and remedies provided by law, including, without limitation, those
provided by the Uniform Commercial Code as adopted in the states of
incorporation of the Pledged Stock Issuers (the “Uniform
Commercial Code”);
(b) all
rights and remedies provided in this Agreement; and
(c) all
rights and remedies provided in the Security Agreement or in any other
agreement, document, or instrument pertaining to the Secured Obligations or
security therefor.
10. Right
to Transfer into Name of the Agent, etc.
After
the occurrence of any Event of Default, the Agent may cause all or any of the
Pledged Collateral to be transferred into its name or into the name of its
nominee or nominees. In addition, the Agent shall have the right at any time
to
exchange certificates or instruments representing or evidencing any Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
11. Right
of the Agent to Exercise Voting Power, etc.
So long
as no Event of Default shall have occurred, the Pledgors shall be entitled
to
exercise as the Pledgors shall deem fit, but in a manner consistent with the
terms hereof and of the Secured Obligations, the voting power with respect
to
the Pledged Collateral. After the occurrence of any Event of Default, the Agent
shall be entitled to exercise the voting power with respect to the Pledged
Collateral and to receive and retain, as collateral security for the Secured
Obligations, any and all dividends and other distributions at any time and
from
time to time declared or made upon any of the Pledged Collateral, and to
exercise any and all rights of payment, conversion, exchange, subscription,
or
any other rights, privileges, or options pertaining to the Pledged Collateral
as
if it were the absolute owner thereof, including, without limitation, the right
to exchange, at its discretion, any and all of the Pledged Collateral upon
the
merger, consolidation, reorganization, recapitalization, or other readjustment
of any of the Pledged Stock Issuers or, upon the exercise of any such right,
privilege, or option pertaining to any of the Pledged Collateral, and in
connection therewith, to deposit and deliver any and all of the Pledged
Collateral with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms and conditions as the Agent may determine,
all
without liability except to account for property actually received. The Agent
shall have no duty to exercise any of the aforesaid rights, privileges, or
options and shall not be responsible for any failure to do so or delay in so
doing.
12. Right
of the Agent to Dispose of Collateral, etc.
(a) After
the
occurrence of any Event of Default, the Agent shall have the right at any time
or times thereafter to sell, resell, assign, and/or deliver any or all of the
Pledged Collateral in one or more parcels at any exchange or broker’s board or
at public or private sale. The Agent will give the Pledgors at least 10 days
prior written notice at the address of the Pledgors specified in Section
23
hereof
of the time and place of any public sale thereof or of the
(b) time
after which any private sale or any other intended disposition thereof is to
be
made. Any such notice shall be deemed to meet any requirement hereunder or
under
any applicable law (including any applicable Uniform Commercial Code) that
reasonable notification be given of the time and place of such sale or other
disposition. Such notice may be given without any demand of performance or
other
demand, all such demands being hereby expressly waived by the Pledgors. All
such
sales shall be conducted in a commercially reasonable manner and shall be at
such commercially reasonable price or prices as the Agent shall deem best and
either for cash or on credit or for future delivery (without assuming any
responsibility for credit risk). At any such sale or sales, the Agent may
purchase any or all of the Pledged Collateral to be sold thereat upon such
terms
as the Agent may deem best. Upon any such sale or sales, the Pledged Collateral
so purchased shall be held by the purchaser absolutely free from any claims
or
rights of whatsoever kind or nature, including any equity of redemption and
any
similar rights, all such equity of redemption and any similar rights being
hereby expressly waived and released by the Pledgors. In the event any consent,
approval, or authorization of any governmental agency will be necessary to
effectuate any such sale or sales, the Pledgors shall execute, and hereby agree
to cause each Pledged Stock Issuer to execute, all such applications or other
instruments as may be required. The proceeds of any such sale or sales shall
be
applied as provided in the Security Agreement.
(b) The
Pledgors recognize that the Agent may be unable to effect a public sale of
all
or a part of the Pledged Collateral by reason of certain prohibitions contained
in the Securities Act of 1933, but may be compelled to resort to one or more
private sales to a restricted group of purchasers, each of whom will be
obligated to agree, among other things, to acquire such Pledged Collateral
for
its own account, for investment, and not with a view to the distribution or
resale thereof. The Pledgors acknowledge that private sales so made may be
at
prices and upon other terms less favorable to the seller than if such Pledged
Collateral were sold at public sales, and that the Agent has no obligation
to
delay sale of any such Pledged Collateral for the period of time necessary
to
permit such Pledged Collateral to be registered for public sale under the
Securities Act of 1933. The Pledgors agree that any such private sale shall
not
be deemed to have been made in a commercially unreasonable manner solely because
it shall have been made under the foregoing circumstances.
(c) If
the
Agent determines to exercise its right to sell all or any portion of the Pledged
Collateral pursuant to this Section
12,
each
Pledged Stock Issuer shall, upon the request of the Agent and at such Pledged
Stock Issuer’s own expense,
do or
cause to be done all such other acts and things as may be reasonably necessary
to make such sale of the Pledged Collateral or any part thereof valid and
binding and in compliance with applicable law.
(d) The
Pledgors acknowledge that there is no adequate remedy at law for failure by
them
to comply with the provisions of this Section
12
and that
such failure would not be adequately compensable in damages, and therefore
agree
that the Pledgors’ agreements contained in this Section
12
may be
specifically enforced.
13. Collection
of Amounts Payable on Account of Pledged Collateral, etc.
After
the occurrence of any Event of Default, the Agent may, but without obligation
to
do so, demand, xxx for, and/or collect any money or property at any time due,
payable, or receivable, to which the Agent may be entitled hereunder, on account
of or in exchange for any of the Pledged Collateral
14. and
the
Agent shall have the right, for and in the name, place, and stead of the
Pledgors, to execute any endorsements, assignments, or other instruments of
conveyance or transfer with respect to all or any of the Pledged
Collateral.
15. Care
of Pledged Collateral in the Agent’s Possession.
Beyond
the exercise of reasonable care to assure the safe custody of the Pledged
Collateral while held hereunder, the Agent shall have no duty or liability
to
collect any sums due in respect of the Pledged Collateral or to protect or
preserve rights pertaining to the Pledged Collateral, and shall be relieved
of
all responsibility for the Pledged Collateral upon surrendering the same to
the
Pledgors.
16. WAIVERS,
ETC.
THE
PLEDGORS HEREBY WAIVE PRESENTMENT, DEMAND, NOTICE, PROTEST, AND, EXCEPT AS
IS
OTHERWISE PROVIDED HEREIN, ALL OTHER DEMANDS AND NOTICES IN CONNECTION WITH
THIS
AGREEMENT OR THE ENFORCEMENT OF THE AGENT’S RIGHTS HEREUNDER OR IN CONNECTION
WITH ANY SECURED OBLIGATIONS OR ANY PLEDGED COLLATERAL. THE PLEDGORS FURTHER
CONSENT TO AND WAIVE NOTICE OF THE GRANTING OF RENEWALS, EXTENSIONS OF TIME
FOR
PAYMENT, OR OTHER INDULGENCES TO ANY OF THE PLEDGED STOCK ISSUERS OR TO ANY
THIRD PARTY, OR SUBSTITUTION, RELEASE, OR SURRENDER OF ANY PLEDGED COLLATERAL
FOR ANY OF THE SECURED OBLIGATIONS, THE ADDITION OR RELEASE OF PERSONS PRIMARILY
OR SECONDARILY LIABLE ON ANY OF THE SECURED OBLIGATIONS OR ON ANY PLEDGED
COLLATERAL FOR ANY OF THE SECURED OBLIGATIONS, THE ACCEPTANCE OF PARTIAL
PAYMENTS ON ANY OF THE SECURED OBLIGATIONS, OR ON ANY PLEDGED COLLATERAL FOR
ANY
OF THE SECURED OBLIGATIONS, AND/OR THE SETTLEMENT OR COMPROMISE THEREOF. NO
DELAY OR OMISSION ON THE PART OF THE AGENT IN EXERCISING ANY RIGHT HEREUNDER
SHALL OPERATE AS A WAIVER OF SUCH RIGHT OR OF ANY OTHER RIGHT HEREUNDER. ANY
WAIVER OF ANY SUCH RIGHT ON ANY ONE OCCASION SHALL NOT BE CONSTRUED AS A BAR
TO
OR WAIVER OF ANY SUCH RIGHT ON ANY FUTURE OCCASION. THE PLEDGORS FURTHER WAIVE
ANY RIGHT THEY MAY HAVE UNDER THE CONSTITUTION OF THE STATE OF OHIO (OR UNDER
THE CONSTITUTION OF ANY OTHER STATE IN WHICH ANY OF THE PLEDGED COLLATERAL
MAY
BE LOCATED), OR UNDER THE CONSTITUTION OF THE UNITED STATES OF AMERICA, TO
NOTICE (OTHER THAN ANY REQUIREMENT OF NOTICE PROVIDED HEREIN) OR TO A JUDICIAL
HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THIS AGREEMENT
TO THE AGENT AND WAIVE THEIR RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY
SALE
DULY CONSUMMATED IN ACCORDANCE WITH THE FOREGOING PROVISIONS HEREOF ON THE
GROUNDS (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT A PRIOR
JUDICIAL HEARING. THE PLEDGORS’ WAIVERS UNDER THIS SECTION HAVE BEEN MADE
VOLUNTARILY, INTELLIGENTLY, AND KNOWINGLY AND AFTER THE PLEDGORS HAVE BEEN
APPRISED AND COUNSELED BY THEIR ATTORNEYS AS TO THE NATURE THEREOF AND THEIR
POSSIBLE ALTERNATIVE RIGHTS.
17. Termination;
Assignment, etc.
This
Agreement and the security interest in the Pledged Collateral created hereby
shall terminate when all of the Secured Obligations have been
18. indefeasibly
paid and finally discharged in full in cash. For all purposes of this Agreement,
no default or Event of Default shall be deemed to have been waived except as
expressly provided in the Security Agreement. No waiver by the Agent or by
any
other holder of Secured Obligations of any default shall be effective unless
in
writing nor operate as a waiver of any other default or of the same default
on a
future occasion. In the event of a sale or assignment by the Agent or Xxxxxxxx,
the Xxxxxxxx Trust, or Xxxxxx of all or any of the Secured Obligations held
by
them in accordance with the terms of the Notes and the Security Agreement,
the
Agent or Xxxxxxxx, the Xxxxxxxx Trust, or Xxxxxx may assign or transfer any
right and/or interest of the Agent or Xxxxxxxx, the Xxxxxxxx Trust, or Xxxxxx
under this Agreement in whole or in part to the purchaser or purchasers of
such
Secured Obligations, whereupon such purchaser or purchasers shall become vested
with all of the powers and rights of the Agent or Xxxxxxxx, the Xxxxxxxx Trust,
or Xxxxxx, as the case may be, hereunder, and the Agent or Xxxxxxxx, the
Xxxxxxxx Trust, or Xxxxxx, as the case may be, shall thereafter be forever
released and fully discharged from any liability or responsibility hereunder
with respect to the rights and interests so assigned.
19. Reinstatement.
Notwithstanding anything to the contrary herein, this Agreement shall continue
to be effective or be reinstated, as the case may be, if at any time any amount
received by the Agent in respect of the Secured Obligations is rescinded or
must
otherwise be restored or returned by the Agent upon the insolvency, bankruptcy,
dissolution, liquidation, or reorganization of any of the Pledged Stock Issuers
or any Pledgor or upon the appointment of any intervenor or conservator of,
or
trustee or similar official for, any of the Pledged Stock Issuers or any Pledgor
or any substantial part of their respective properties, or otherwise, all as
though such payments had not been made.
20. Governmental
Approvals, etc.
Upon
the exercise by the Agent of any power, right, privilege, or remedy pursuant
to
this Agreement that requires any consent, approval, qualification, or
authorization of any governmental authority or instrumentality, the Pledgors
will execute and deliver, or will cause to be executed and delivered, all
applications, certificates, instruments, and other documents and papers that
the
Agent may be required to obtain for such governmental consent, approval,
qualification, or authorization.
21. Restrictions
on Transfer, etc.
To the
extent that any restrictions imposed by the charter, articles or certificate
of
incorporation, or code of regulations or by-laws of any of the Pledged Stock
Issuers or any agreement among the holders of capital stock of any of the
Pledged Stock Issuers or other document or instrument would in any way affect
or
impair the pledge of the Pledged Collateral hereunder or the exercise by the
Agent of any right granted hereunder, including, without limitation, the right
of the Agent to dispose of any of the Pledged Collateral upon the occurrence
of
any Event of Default, each Pledgor and each Pledged Stock Issuer hereby waives
such restrictions. Each Pledged Stock Issuer and each Pledgor hereby covenants,
represents, and warrants that it has taken each necessary action to waive such
restrictions. Each Pledged Stock Issuer and each Pledgor will take any further
action which the Agent may reasonably request in order that the Agent may obtain
and enjoy the full rights and benefits granted to the Agent by this Agreement
free of any such restrictions.
22. Amendments.
No
amendment or waiver of any provision of this Agreement nor consent to any
departure by the Pledgors herefrom shall in any event be effective unless the
same
23. shall
be
in writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
24. Security
Interest Absolute.
To the
maximum extent permitted by law, all rights of the Agent, all security interests
hereunder, and all obligations of the Pledgors hereunder, shall be absolute
and
unconditional irrespective of:
(a) any
lack
of validity or enforceability of any of the Secured Obligations or any other
agreement or instrument relating thereto or providing security
therefor;
(b) any
change in the time, manner, or place of payment of, or in any other term of,
all
or any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from any other agreement or instrument relating thereto
or providing security therefor;
(c) any
exchange, release, or non-perfection of any other collateral, or any release
or
amendment or waiver of or consent to departure from any guaranty for all or
any
of the Secured Obligations; or
(d) any
other
circumstances that might otherwise constitute a defense available to, or a
discharge of, the Pledgors.
To
the
maximum extent permitted by law, the Pledgors hereby waive any right to require
the Agent to: (i) proceed against or exhaust any security held from the
Pledgors; or (ii) pursue any other remedy in the Agent’s power
whatsoever.
25. Waiver
of Marshaling.
Each
Pledgor and the Agent each acknowledge and agree that in exercising any rights
under or with respect to the Pledged Collateral: (i) the Agent is under no
obligation to marshal any Pledged Collateral; (ii) the Agent may, in its
absolute discretion, realize upon the Pledged Collateral in any order and in
any
manner it so elects; and (iii) the Agent may, in its absolute discretion,
apply the proceeds of any or all of the Pledged Collateral to the Secured
Obligations in any order and in any manner it so elects. The Agent and Pledgors
waive any right to require the marshaling of any of the Pledged
Collateral.
26. Notices.
Except
as otherwise provided herein, all notices to any Pledgor or any of the Pledged
Stock Issuers or to the Agent shall be in writing and shall be deemed to have
been sufficiently given or served for all purposes hereof if made in accordance
with and delivered to the respective addresses provided on the signature pages
and Schedule
1
hereto.
27. Governing
Law; Jurisdiction; Waiver of Jury Trial.
This
Agreement, including the validity hereof and the rights and obligations of
the
parties hereunder, shall be construed in accordance with and governed by the
laws of the State of Ohio. Each Pledgor, to the extent that it may lawfully
do
so, hereby consents to the jurisdiction of the state and federal courts located
in Xxxxxxxx County, Ohio, as well as to the jurisdiction of all courts to which
an appeal may be taken from such courts, for the purpose of any suit, action,
or
other proceeding arising out of any of its obligations hereunder or with respect
to the transactions contemplated hereby, and expressly waives any and all
objections it may have as to venue in any such courts. Each Pledgor further
agrees that a summons and complaint commencing an action or proceeding
in
28. any
of
such courts shall be properly served and shall confer personal jurisdiction
if
served personally or by certified mail to it at its address as provided in
Section
23
hereof
or as otherwise provided under the laws of the State of Ohio. Each Pledgor
irrevocably waives all right to a trial by jury in any suit, action, or other
proceeding instituted by or against it in respect of its obligations hereunder
or the transactions contemplated hereby.
29. Power
of Attorney; Confession of Judgment.
Each
Pledgor and Pledged Stock Issuer hereby irrevocably authorizes and empowers
any
attorney-at-law to appear for such Pledgor or Pledged Stock Issuer in any action
upon or in connection with this Agreement at any time after any of the
obligations of such Pledgor or Pledged Stock Issuer under this Agreement becomes
due in any court in or of the State of Ohio or elsewhere, and waives the
issuance and service of process with respect thereto, and irrevocably authorizes
and empowers any such attorney-at-law to confess judgment in favor of Agent
against any Pledgor or Pledged Stock Issuer, the amount due thereon or hereon,
plus interest as herein provided, and all costs of collection, and waive and
release all errors in any said proceedings and judgments and all rights of
appeal from the judgment rendered. Each Pledgor and Pledged Stock Issuer agrees
and consents that the attorney confessing judgment on behalf of such Pledgor
or
Pledged Stock Issuer hereunder may also be counsel to Agent and/or any affiliate
or affiliates of Agent, and each Pledgor and Pledged Stock Issuer hereby further
waives any conflict of interest which might otherwise arise and consents to
Agent's paying such confessing attorney a legal fee or allowing such attorneys'
fees to be paid from proceeds of collection of this Agreement and/or any and
all
collateral and security for the obligations of Pledgors and the Pledged Stock
Issuers hereunder. This
power-of-attorney shall be deemed to be a power coupled with an interest, and
is
irrevocable.
26. Miscellaneous.
(a) This
Agreement supersedes all prior agreements, whether written or oral, between
the
parties with respect to its subject matter and constitutes (along with the
documents, if any, referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to
its
subject matter.
(b) If
any
provision of this Agreement shall be held to be invalid or unenforceable for
any
reason, the remaining provisions shall continue to be valid and enforceable.
If
a court finds that any provision of this Agreement is invalid or unenforceable,
but that by limiting such provision it would become valid or enforceable, then
such provision shall be deemed to be written, construed, and enforced as so
limited.
(c) This
Agreement shall inure to the benefit of and shall be binding upon the parties
and their respective heirs, executors, administrators, successors, and assigns;
provided, however, that no Pledgor shall assign any part of its rights or duties
under this Agreement without the prior written consent of the Agent, which
the
Agent may grant or withhold in its sole discretion, and any such assignment
by a
Pledgor without the Agent’s prior written consent shall be void and of no force
or effect. In the event of a merger, sale, transfer, consolidation, or
reorganization involving the Agent, this Agreement shall continue in full force
and effect and shall be binding upon, and inure to the benefit of, the Agent’s
successors and assigns.
(d) The
headings of the Sections and paragraphs of this Agreement are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
(e)
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange
of copies of this Agreement and of signature pages by facsimile or electronic
mail transmission shall constitute effective execution and delivery of this
Agreement as to the parties and may be used in lieu of the original Agreement
for all purposes. Signatures of the parties transmitted by facsimile or
electronic mail shall be deemed to be their original signatures for all
purposes.
(f) This
Agreement has been entered into in conjunction with the provisions of and the
security interests granted to the Agent under the Notes, the Guaranty, and
the
Security Agreement. The rights and remedies of each Pledgor, each Pledged Stock
Issuer, and the Agent with respect to the security interests granted herein
are
in addition and without prejudice to those set forth in the Notes, the Guaranty,
and the Security Agreement, all terms and provisions of which are hereby
incorporated herein by reference.
WARNING--BY
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU
DO
NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS
OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS,
FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
[SIGNATURE
PAGE FOLLOWS]
29
IN
WITNESS WHEREOF, the parties have executed this Pledge Agreement as of the
date
first written above.
|
PLEDGORS:
|
|
ELS
HUMAN RESOURCE SOLUTIONS, INC.
0000
Xxxx Xxxxx
Xxxxxxxxxx,
Xxxx 00000
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
RESOLVE
STAFFING, INC.
0000
Xxxx Xxxxx
Xxxxxxxxxx,
Xxxx 00000
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
Director and Authorized Officer
|
|
THE
PLEDGED STOCK ISSUERS:
|
|
MANDALAY
SERVICES, INC.
By:/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
President
ELS
HUMAN RESOURCE SOLUTIONS, INC.
By:/s/
Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President
DIVERSIFIED
SUPPORT SYSTEMS, LLC
By:/s/
Xxxxxx Heinemana
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
|
|
THE
AGENT:
|
|
/s/
Xxxxxx Xxxxxxxx
Xxxxxx
X. Xxxxxxxx
|
29
SCHEDULE
1 TO PLEDGE AGREEMENT
PLEDGED
STOCK
Address
for all Pledged Stock Issuers: 0000 Xxxx Xxxxx, Xxxxxxxxxx, XX
00000
ELS
Human Resource Solutions
|
Description
(class
and/or
series)
of
Pledged
Stock
|
Number
of
Shares
|
Percentage*
|
Certificate
Number
|
Pledgor
|
|
Common
Stock
|
100%
|
Resolve
|
||
Mandalay
Services, Inc.
|
Common
Stock
|
100
|
100%
|
Resolve
|
|
Diversified
Support Systems, LLC
|
Units
|
100%
|
Resolve
|
ELS
Employer Services, Inc.
|
Common
Stock
|
1,000
|
100%
|
Resolve
|
Employee
Leasing Services, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
ELS
Outsource Services, Inc.
|
Common
Stock
|
1,000
|
100%
|
ELS
HRS
|
Premier
HR Services, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
Foxstar,
Inc.
|
Common
Stock
|
1,000
|
100%
|
ELS
HRS
|
ELS
Personnel Services, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
Rio
Services, Inc.
|
Common
Stock
|
1,000
|
100%
|
ELS
HRS
|
Imperial
Human Resources, Inc.
|
Common
Stock
|
1,000
|
100%
|
ELS
HRS
|
ELS
HR, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
Luxor
Solutions, Inc.
|
Common
Stock
|
100
|
100%
|
ELS
HRS
|
Streamline
Management, Inc.
|
Common
Stock
|
500
|
100%
|
ELS
HRS
|
ELS,
Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
ELS
Payroll Solutions, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
ELS
Human Resources, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
Integrated
Payroll Solutions, Inc.
|
Common
Stock
|
1,000
|
100%
|
ELS
HRS
|
ELS
Temporary Solutions, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
Resolve
HR Solutions, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
Fidelity
Capital, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
ELS
Payroll Managers, Inc.
|
Common
Stock
|
100%
|
ELS
HRS
|
||
ELS
Advantage, Inc.
|
Common
Stock
|
1,000
|
100%
|
ELS
HRS
|
*
For the
purposes of this Schedule
1,
“Percentage” means the percentage of all of the issued and outstanding shares of
capital stock of the Pledged Stock Issuer on a fully diluted basis.
