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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and
entered into effective this 15th day of April, 1996, by
and between Elizabeth McFarland, an Indiana resident
("Pledgor"), and Personnel Management, Inc., an Indiana
corporation ("Pledgee").
WITNESSETH THAT:
WHEREAS, Pledgee has twice previously authorized the
making of a loan to Pledgor under the Personnel
Management, Inc. Loan Plan for Key Employees for the
purpose of paying income tax with respect to Pledgor's
December 29, 1994 exercise of non-qualified stock options
to purchase shares of common stock of Pledgee, which loan
was never disbursed, and Pledgor previously executed a
promissory note in connection with such loan, which
promissory note has been terminated and cancelled because
of such non-disbursement of funds; and
WHEREAS, concurrently with the execution of this
Agreement, Pledgee is making a loan to Pledgor outside of
the Loan Plan for Key Employees in the principal amount
of $123,352 (the "Loan") for the purpose of assisting
Pledgor in satisfying her personal tax obligations in
connection with Pledgor's option exercise; and
WHEREAS, the parties desire to enter into this
Agreement in order to secure the payment and performance
of Pledgor's obligations under the Promissory Note
executed by Pledgor in favor of Pledgee in connection
with the Loan and dated concurrently herewith (the Note);
NOW, THEREFORE, in consideration of the premises,
and of the mutual promises, covenants, agreements,
representations and warranties contained herein, and of
other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Security Interest. Pledgor grants to Pledgee
a security interest in 24,670 of the shares of Common
Stock of Pledgee owned by Pledgor and all proceeds and
replacements thereof (the "Shares"). The security
interest granted to Pledgee shall secure the performance
and payment of all obligations of Pledgor under the Note
(all such obligations hereinafter being referred to as
the "Obligations"). Concurrently herewith Pledgor has
delivered to Pledgee certificates representing the Shares
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together with stock powers duly executed for transfer of
the Shares to Pledgee. Pledgee shall hold and dispose of
such certificates as provided in this Agreement.
2. Shareholders' Rights. Unless and until an
Event of Default (as defined herein) has occurred,
Pledgor shall be entitled:
(a) To exercise all voting rights with
respect to the Shares; and
(b) To receive and collect or to have paid
over all dividends and distributions declared or
paid on the Shares, except (i) dividends or
distributions constituting stock dividends, (ii)
dividends or distributions in kind, or (iii)
liquidating dividends (either partial or complete),
provided that any and all such excepted dividends
and distributions shall constitute additional
collateral for the purposes of this Agreement and
shall be delivered and pledged to Pledgee, together
with appropriate stock powers or other assignments,
and Pledgee shall have in respect thereof all of
the powers and rights as are herein provided in
respect to the initial Shares.
3. Representations and Warranties of Pledgor.
Pledgor represents, warrants, covenants, and agrees that:
(a) Pledgor is the owner beneficially and of
record of the Shares, free and clear of any lien,
security interest or other claim to the Shares,
except the security interest granted to Pledgee
under this Agreement.
(b) Pledgor has full power to transfer and
pledge the Shares without obtaining the consent or
approval of any other person, financial
institution, or governmental authority.
4. Event of Default.
(a) "Event of Default" shall mean the
occurrence of any of the following events:
(i) Pledgor fails to pay within ten (10)
days from and after the date when due any
amount required to be paid to Pledgee under
the Note (including sums that become payable
by reason of acceleration);
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(ii) Pledgor breaches any term,
condition, representation, covenant or
warranty contained in this Agreement;
(iii) Pledgor fails to perform any of
her obligations under this Agreement and such
failure to perform continues uncured for a
period of fifteen (15) days after written
notice of such failure to perform is delivered
to Pledgor by Pledgee, provided, however,
that if the nature of the failure to perform
is such that it can be cured by Pledgor but
cannot be cured within the fifteen (15) day
period provided above, and if Pledgor
commences efforts to effect such cure within
such fifteen (15) day period and thereafter
diligently proceeds to take such actions as
may be reasonably required to effect such
cure, the fifteen (15) day cure period
provided above shall be extended for a period
ending the earlier of (A) forty-five (45) days
after the expiration of such fifteen (15) day
cure period provided above, (B) the date as of
which Pledgor shall cease the diligent pursuit
of such actions as may be reasonably required
to effect such cure, or (C) the date as of
which the cure of such failure to perform by
Pledgor shall become impossible;
(iv) Pledgor admits to being insolvent, a
receiver is appointed for any of Pledgor's
property, Pledgor makes an assignment for the
benefit of creditors or any proceeding is
commenced either by Pledgor or against Pledgor
under any bankruptcy or insolvency laws and
remains undismissed for sixty (60) days.
(b) Upon the occurrence of an Event of
Default, Pledgee shall have all the rights and
remedies with respect to the Shares of a secured
party under the Indiana Uniform Commercial Code and
any other applicable law and may declare all
obligations secured hereby immediately due and
payable if they are not already due and payable.
Pledgor shall pay or reimburse Pledgee on demand
for all reasonable out of pocket costs and expenses
(including reasonable attorney fees and legal
expenses) incurred by Pledgee in connection with
the enforcement of this Agreement.
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5. Release of Shares. Upon payment in full of the
Obligations, Pledgee shall promptly return to Pledgor the
stock certificates and stock powers delivered to Pledgee
hereunder with respect to the Shares, except for any of
the Shares that might have been sold (or otherwise
applied to the Obligations) pursuant to this Agreement.
6. Waiver. None of the provisions in this
Agreement and no right of Pledgee hereunder shall be
deemed to have been waived by reason of any failure or
delay in the exercise of such right or the enforcement of
such provisions and none of the rights of Pledgee shall
be waived unless such waiver shall be expressed in a
writing duly signed by Pledgee. No waiver of any of the
provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing
waiver.
7. Binding Effect. All the terms, covenants and
conditions of this Agreement shall be binding upon, and
inure to the benefit of, and be enforceable by the
parties hereto and their respective successors, heirs,
beneficiaries, personal representatives, administrators,
executors, trustees and assigns.
8. Severability. If any term or application
thereof in this Agreement is held to be unenforceable or
invalid for any reason, then the validity of all the
remaining terms and applications shall not be affected,
and, if generally consistent with the basic purposes of
this Agreement, the rights and obligations of each of the
parties shall be construed and be in force as if this
Agreement did not contain such invalid term or
application.
9. Governing Law. This Agreement shall be
construed, interpreted and governed in all respects by
the laws of the State of Indiana.
10. Notices. Any notice, request, communication,
or other document to be given hereunder to any of the
parties by any other party shall be in writing and shall
be personally delivered or sent by prepaid same day or
overnight courier or certified mail, return receipt
requested, postage prepaid, addressed as follows (or
addressed to such other addresses as shall be given in
writing by any party to the others):
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If to Pledgor
addressed to: Elizabeth McFarland
8153 Lower Bay Lane
Indianapolis, Indiana 46236
If to Pledgee,
addressed to: Personnel Management, Inc.
1499 Windhorst Way, Suite 100
Greenwood, Indiana 46143
Attn: Don R. Taylor, President
11. Further Assurance. Pledgor agrees that, upon
the request of Pledgee, she will execute and deliver to
Pledgee such other documents or instruments as shall be
deemed reasonably necessary or appropriate by Pledgee to
confirm or perfect its pledge of Shares as expressed in
Section 1 above.
12. Additional Collateral. All certificates
evidencing any shares of Common Stock of Pledgee
hereafter issued to Pledgor on account of her ownership
of the Shares (including, without limitation, stock
splits and stock dividends), regardless of class or type,
or any other securities issued with respect to the Shares
including, without limiting the generality of the
foregoing, those issued pursuant to any rights or
warrants or by way of stock split or pursuant to a
merger, consolidation, reorganization or otherwise, or
any substituted securities issued upon conversion,
reorganization or otherwise, shall be forthwith pledged
and delivered by Pledgor to Pledgee, and the security
interest herein granted shall extend thereto.
13. Application of Proceeds. The proceeds of any
sale of all or any part of the Shares, and any other cash
at the time held by Pledgee under this Agreement, shall
be applied by Pledgee in the following order:
(a) to the payment of the reasonable costs
and expenses of any such sale, including sales
commissions paid by Pledgee and their agents and
counsel, and all other reasonable expenses,
liabilities and advances made or incurred by
Pledgee in connection herewith;
(b) to the payment of the amounts then due
and unpaid on the Obligations in such order as
Pledgee may determine; and
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(c) to Pledgor, her estate, heirs,
beneficiaries, successors or assigns, or as a court
of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
14. Pledge Absolute. This Agreement and the pledge
and security interest provided for hereunder shall be
absolute and unconditional, irrespective of the
regularity, validity or enforceability of the Obligations
and shall not be affected or impaired by any compromise,
release, renewal, extension, indulgence, alteration,
change in or modification of the Obligations. Upon the
occurrence of an Event of Default as defined in this
Agreement, there shall be no obligation on the part of
Pledgee at any time to resort for payment to Pledgee
before proceeding to exercise its rights under this
Agreement with respect to the Shares, or to resort to any
other collateral security or other rights or remedies
whatsoever and Pledgee shall have the right to enforce
this Agreement irrespective of whether or not other
proceedings or steps are pending seeking resort to or
realization for, or upon any of the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective as of the date first above
written.
PLEDGEE
PERSONNEL MANAGEMENT, INC.
By /s/ Don R. Taylor
Don R. Taylor, President
PLEDGOR
/s/ Elizabeth McFarland
Elizabeth McFarland
0669\EDGAR\PLEDGE.AGR