AGREEMENT AND PLAN OF MERGER

 

 

 

AGREEMENT AND PLAN OF MERGER

 

By and among

 

ELS HUMAN RESOURCE SOLUTIONS, INC.

RESOLVE STAFFING, INC.

ELS OF DAYTON PREMIER BUSINESS SOLUTIONS, LLC

and

ELS ADMINISTRATIVE SERVICES, L.L.C.

 

 

 

 

As of October 1, 2006

 

 

TABLE OF CONTENTS

ARTICLE I. The Merger		1
Section 1.01	Merger into ELS HRS.	1
Section 1.02	Effective Time and Effective Date	2
Section 1.03	Effects of the Merger	2
Section 1.04	Articles of Incorporation and Code of Regulations	2
Section 1.05	Directors	2
Section 1.06	Officers	2
Section 1.07	Rights and Obligations.	2
ARTICLE II. CLOSING
Section 2.01	Closing	3
Section 2.02	Deliveries by each Constituent Company to ELS HRS	3
Section 2.03	Deliveries by ELS HRS to the Constituent Companies	3
Section 2.04	Conversion of Equity.	4
Section 2.05	Surrender of Certificates.	6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE CONSTITUENT COMPANIES		6
Section 3.01	Corporate Existence and Qualification: Corporate Documents.	6
Section 3.02	Capitalization and Ownership	7
Section 3.03	Preemptive Rights; Registration Rights	7
Section 3.04	No Defaults or Consents	7
Section 3.05	No Proceedings	7
Section 3.06	Absence of Certain Changes	7
Section 3.07	Insurance	9
Section 3.08	Patents, Trademarks, Service Marks and Copyrights.	9
Section 3.09	Title to Assets; Condition of Assets.	9
Section 3.10	Compliance with Laws	9
Section 3.11	Litigation; Default	10
Section 3.12	Other Transactions	10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ELS HRS AND RESOLVE		10
Section 4.01	Corporate Existence and Qualification; Corporate Documents	10
Section 4.02	Authority, Approval and Enforceability	10
Section 4.03	No Defaults or Consents	11
Section 4.04	No Proceedings	11
Section 4.05	Securities	11
ARTICLE V. SURVIVAL		11
Section 5.01	Survival of Representations and Warranties	11
ARTICLE VI. INDEMNIFICATION		12
Section 6.01	Obligation of each Constituent Company to Indemnify	12
Section 6.02	Obligation of ELS HRS and Resolve to Indemnify	12
Section 6.03	Notice and Opportunity to Defend.	12
Section 6.04	Limitations on Indemnification	14
ARTICLE VII. POST-CLOSING OBLIGATIONS		14
Section 7.01	Further Assurances	14
Section 7.02	Access to Records	14
ARTICLE VIII. MISCELLANEOUS		15
Section 8.01	Brokers	15
Section 8.02	Costs and Expenses	15
Section 8.03	Notices	15
Section 8.04	Governing Law	16
Section 8.05	Entire Agreement, Amendments and Waivers	16
Section 8.06	Binding Effect and Assignment	16
Section 8.07	Remedies	17
Section 8.08	Exhibits and Schedules	17
Section 8.09	Multiple Counterparts	17
Section 8.10	References	17
Section 8.11	Survival	17
ARTICLE IX. DEFINITIONS		17
Section 9.01	Affiliate	17
Section 9.02	Company Assets	17
Section 9.03	Governmental Authorities	18
Section 9.04	Knowledge	18
Section 9.05	Legal Requirements	18
Section 9.06	Material Adverse Change	18
Section 9.07	Material Adverse Effect	18
Section 9.08	Permits	18
Section 9.09	Properties	18
Section 9.10	Regulations	18
Section 9.11	Taxes or Tax	18
Section 9.12	Tax Returns	18
Section 9.13	Used	18

 

 

 

 

This AGREEMENT AND PLAN OF MERGER (the “ Agreement ”) is made and entered into as of October 1, 2006, by and among ELS Human Resource Solutions, Inc., an Ohio corporation (“ ELS HRS ”), Resolve Staffing, Inc., a Nevada corporation (“ Resolve ”), ELS of Dayton Premier Business Solutions, LLC, an Ohio limited liability company (“ Dayton ”) and ELS Administrative Services, L.L.C (“ Admin ”)(Admin and Dayton each a “ Constituent Company ” and collectively the “ Constituent Companies ”).

Preliminary Statements

A.   The issued and outstanding membership units of the Constituent Companies are set forth on Exhibit A hereto; and

B.   Resolve owns 100% of the issued and outstanding stock of ELS HRS; and

C.   It is proposed that each Constituent Company be merged with and into ELS HRS, with ELS HRS as the surviving corporation (the “ Merger ”), and that the presently issued and outstanding membership units of the Constituent Companies be converted into merger consideration as set forth herein; and

D.   The Managers and members of the Constituent Companies and the Board of Directors and sole shareholder of ELS HRS have each approved the Merger upon the terms and conditions set forth herein and have approved this Agreement; and

E.   The Constituent Companies and ELS HRS desire to enter into and carry out the transactions contemplated by this Agreement in accordance with the terms hereof, and the provisions of the Ohio Revised Code; and

F.   The parties intend that the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the " Internal Revenue Code ").

Capitalized terms used herein but not defined herein shall have the respective meanings given such terms in Article IX hereof.

Agreement

In consideration of the premises, mutual covenants and agreements contained herein and the benefits to accrue to the parties hereto, and subject to the satisfaction or waiver of the conditions contained herein, the parties hereto hereby agree as follows:

ARTICLE I.

The Merger

Section 1.01  

 

 

Merger into ELS HRS .

At the Effective Time on the Effective Date (each as hereinafter defined), each Constituent Company shall be merged with and into ELS HRS, with ELS HRS (hereinafter sometimes called the “ Surviving Corporation ”) as the surviving corporation of the Merger. Following the Effective Time, the corporate existence of ELS HRS shall continue unaffected and unimpaired, and as the Surviving Corporation of the Merger, ELS HRS shall continue to be a corporation governed by the laws of the State of Ohio. On the Closing Date, each Constituent Company and ELS HRS shall cause a Certificate of Merger to be executed and filed with the Secretary of State of Ohio in form required by the Ohio Revised Code (the “ AOhio Certificate of Merger ”).

Section 1.02   Effective Time and Effective Date

. The effective date of the Merger shall be October 1, 2006 (the “ Effective Date ”), and the effective time of the Merger shall be 12:01 a.m. on October 1, 2006 (the “ Effective Time ”).

Section 1.03   Effects of the Merger

.  The Merger shall have the effects set forth in the Ohio Revised Code, as amended.

Section 1.04   Articles of Incorporation and Code of Regulations

. 

(a)   The articles of incorporation of ELS HRS, as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law.

(b)   The code of regulations of ELS HRS as in effect immediately prior to the Effective Time shall be the code of regulations of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable law.

Section 1.05   Directors

. The directors of the Surviving Corporation from and after the Effective Time, and until the earlier of their respective death, resignation or removal or until their respective successors are duly elected and qualified, as the case may be, shall be the directors of ELS HRS.

Section 1.06   Officers

. The officers of the Surviving Corporation from and after the Effective Time, and until the earlier of their respective death, resignation or removal or until their respective successors are duly elected and qualified, as the case may be, shall be the officers of ELS HRS.

Section 1.07   Rights and Obligations .

At the Effective Time, the separate existence of each Constituent Company shall cease, and in accordance with the terms of this Agreement, ELS HRS shall possess and be vested with all of the rights, privileges, franchises, immunities and powers and all property (real, personal or mixed) of each Constituent Company, debts due to each Constituent Company, choses in action and all other things belonging to each Constituent Company, and ELS HRS shall be subject to all of the restrictions, liabilities, disabilities and duties of ELS HRS.

 

 

The identity, existence, purposes, powers, objects, franchises, privileges, rights and immunities of ELS HRS shall continue unaffected and unimpaired by the Merger.

 

ARTICLE II.

CLOSING

Section 2.01   Closing

. The closing of the transactions contemplated hereby (the “ Closing ”) shall be held as of 12:01 a.m. as of October 1, 2006 at the offices of Taft, Stettinius & Hollister LLP, 425 Walnut Street, Suite 1800, Cincinnati, Ohio 45202, unless another date or place is agreed to in writing by the parties hereto. The date upon which the Closing occurs is hereinafter referred to as the “ Closing Date .”

Section 2.02   Deliveries by each Constituent Company to ELS HRS

. At the Closing, each Constituent Company shall deliver to ELS HRS:

(a)   the resignations of all officers and members of the board of managers of each Constituent Company;

(b)   the stock books, stock ledgers or other records reflecting the ownership of all outstanding membership units, minute books and corporate seals, if any of each Constituent Company;

(c)   a certificate of the Manager of each Constituent Company certifying, as complete and accurate as of the Closing, as to attached copies of the Articles of Organization and Operating Agreement of each Constituent Company and all necessary action on behalf of each Constituent Company approving its execution, delivery and performance of this Agreement; and

(d)   a certificate of good standing of each Constituent Company issued by the Secretary of State of Ohio.

Section 2.03   Deliveries by ELS HRS to the Constituent Companies

. At the Closing, ELS HRS shall deliver to the Constituent Companies:

(a)   a certificate of the Secretary of ELS HRS certifying, as complete and accurate as of the Closing, as to attached copies of the Articles of Incorporation and Code of Regulations of ELS HRS and all necessary corporate action on behalf of ELS HRS approving its execution, delivery and performance of this Agreement;

(b)   a certificate of good standing of ELS HRS issued by the Secretary of State of the State of Ohio;

(c)   a certificate of good standing of Resolve issued by the Secretary of State of the State of Nevada;

(d)  

 

 

certificates for shares of Resolve Common Stock (defined below) issued in accordance with Section 2.04; and

(e)   promissory notes, duly executed by Resolve, in accordance with Section 2.04.

Section 2.04   Conversion of Equity .

(a)   Dayton . At the Effective Time on the Effective Date, (i) all membership units of Dayton issued and outstanding immediately prior thereto (“ Dayton Equity ”) and owned by William J. Walton shall be converted into the right to receive, collectively, a promissory note from Resolve in the principal amount of $249,922 for all Dayton Equity so converted; (ii) all Dayton equity owned by FTJ Consulting, LLC shall be converted into the right to receive, collectively, 250,000 shares of common stock, par value $0.0001 per share of Resolve (“ Resolve Common Stock ”) for all Dayton Equity so converted; (iii) all Dayton Equity owned by Kim Kelly shall be converted into the right to receive, collectively, 250,000 shares of Resolve Common Stock for all Dayton Equity so converted; (iv) all Dayton Equity owned by Charles Keish, Jr. shall be converted into the right to receive, collectively, 39,470 shares of Resolve Common Stock for all Dayton Equity so converted; and (v) all Dayton Equity owned by Ronald E. Heineman shall be converted into the right to receive, collectively, a promissory note from Resolve in the principal amount of $249,922 for all Dayton Equity so converted (collectively, the “ Dayton Merger Consideration ”). On the Closing Date, Resolve will send irrevocable instructions to its transfer agent to issue certificates to FTJ Consulting, LLC, Kim Kelly and Charles Keish, Jr. representing 250,000, 250,000 and 39,470 shares of Resolve Common Stock, respectively, to be issued hereunder.

(b)   Admin . At the Effective Time on the Effective Date, (i) all membership units of Admin issued and outstanding immediately prior thereto (“ Admin Equity ”) and owned by William J. Walton shall be converted into the right to receive, collectively, a promissory note from Resolve in the principal amount of $284,615 for all Admin Equity so converted; (ii) all Admin equity owned by Scott D. Horne shall be converted into the right to receive, collectively, 50,000 shares of Resolve Common Stock for all Admin Equity so converted; (iii) all Admin Equity owned by Stephen R. Roux shall be converted into the right to receive, collectively, 50,000 shares of Resolve Common Stock for all Admin Equity so converted; and (iv) all Admin Equity owned by Ronald E. Heineman shall be converted into the right to receive, collectively, 97,692 shares of Resolve Common Stock and a promissory note from Resolve in the principal amount of $89,231 for all Admin Equity so converted (collectively, the “ Admin Merger Consideration ”). On the Closing Date, Resolve will send irrevocable instructions to its transfer agent to issue certificates to Scott D. Horne, Stephen R. Roux and Ronald E. Heineman representing 50,000, 50,000 and 97,692 shares of Resolve Common Stock, respectively, to be issued hereunder. For purposes of this Agreement, the shares of Resolve Stock being issued hereunder are valued at $2.00 per share.

(c)   The shares of Resolve Common Stock to be issued as set forth in the above paragraphs shall not be registered under state or federal securities laws but shall qualify as exempt from registration under Regulation D promulgated under the Securities Act of 1933 (“ Act ”) or other recognized exemptions from registration, and as such, shall be deemed to be

(d)  

 

 

restricted securities as defined in Rule 144(a)(3) of the Act. As such, the Resolve Common Stock shall include a customary form of restrictive legend which indicates that the shares may not be resold, transferred, pledged or hypothecated by the holder(s) thereof unless such shares are registered under the Act or in accordance with a legal opinion permitting such sale or transfer, which legal opinion shall be in form and substance acceptable to counsel for Resolve.

(e)   Shares of ELS HRS capital stock outstanding at the Effective Time shall not be converted or changed as a result of the Merger

Section 2.05   Surrender of Certificates .

From and after the Effective Time, each holder of certificates, if any, representing Dayton Equity and Admin Equity converted by virtue of the Merger into the right to receive merger consideration, upon surrender of such certificates to ELS HRS (the “ Exchange Agent ”), shall be entitled forthwith to receive in exchange therefor, respectively, only the Dayton Merger Consideration or Admin Merger Consideration to which such holder is entitled pursuant to the terms of this Agreement. Such conversion shall be complete and effective at the Effective Time without regard to the date or dates upon which outstanding certificates are surrendered for the applicable merger consideration.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE CONSTITUENT COMPANIES

Subject to the limitations of Section 6.04 hereof, each Constituent Company represents and warrants to ELS HRS as of the Closing Date as set forth in this Article:

Section 3.01   Corporate Existence and Qualification: Corporate Documents .

(a)   Such Constituent Company is duly organized, validly existing and in good standing under the laws of its state of organization and is not required to be qualified to do business as a foreign entity in any other jurisdiction where the failure to so qualify would have a material adverse effect on it. Such Constituent Company has all requisite limited liability company power and authority to own its Properties and carry on its business as presently conducted. The copies of the Articles of Organization and Operating Agreement of such Constituent Company attached to the Manager’s Certificate for such Constituent Company delivered pursuant to Section 2.04(c) are complete and reflect all amendments thereto through the date hereof.

(b)   The minute books of such Constituent Company have been made available to ELS HRS for review and contain a complete and accurate record of all members of such Constituent Company and all material actions of the members and managers (and any committees thereof) taken at meetings of members or managers of such Constituent Company or by written consent.

(c)   Such Constituent Company has no subsidiaries, participates in any partnership or joint venture, or owns any outstanding capital stock of any other entity.

(d)  

 

 

Capitalization and Ownership

. As of the date of this Agreement, the entire authorized equity of such Constituent Company is set forth on Exhibit A hereto, and all issued and outstanding membership units of such Constituent Company are owned of record and beneficially as set forth on Exhibit A hereto. All of the presently outstanding membership units of such Constituent Company have been validly authorized and issued and are fully paid and non-assessable. Such Constituent Company has not issued any other equity, and there are no outstanding options, warrants, subscriptions or other rights or obligations to purchase or acquire any of such equity, nor any outstanding securities convertible into or exchangeable for such equity. Except as contemplated under this Agreement, or as set forth in Schedule 3.02 with respect to the Articles of Organization, Operating Agreement and certain agreements, there are no agreements to which such Constituent Company or its members is a party regarding the issuance, registration, voting or transfer of its outstanding equity. No dividends are accrued but unpaid on any equity of such Constituent Company.

Section 3.02   Preemptive Rights; Registration Rights

. Such Constituent Company’s Articles of Organization do not afford pre-emptive rights to any member. There have been no interests of such Constituent Company issued to which preemptive rights accrued or are outstanding. There are no registration rights affecting the issuance or sale of equity of such Constituent Company.

Section 3.03   No Defaults or Consents

. Neither the execution nor delivery of this Agreement nor the carrying out of the transactions contemplated hereby will:

Section 3.04   No Proceedings

. No suit, action or other proceeding is pending or, to the Knowledge of such Constituent Company, threatened before any Governmental Authority seeking to restrain such Constituent Company or prohibit its entry into this Agreement or prohibit the Closing, or seeking damages against such Constituent Company or its Properties, as a result of the consummation of the transactions contemplated by this Agreement.

Section 3.05   Absence of Certain Changes

. Since August 31, 2006, such Constituent Company has not:

 

 

suffered any Material Adverse Change;

(a)   contracted for the purchase of any capital assets having a cost in excess of $10,000 or paid any capital expenditures in excess of $10,000, except in the ordinary course of business consistent with past practice;

(b)   incurred any indebtedness for borrowed money or issued or sold any debt securities, except in the ordinary course of business consistent with past practice;

(c)   incurred or discharged any material liabilities or obligations except in the ordinary course of business consistent with past practice;

(d)   paid any amount on any indebtedness prior to the due date, forgiven or canceled any material debts or claims or released or waived any material rights or claims, except in the ordinary course of business consistent with past practice;

(e)   mortgaged, pledged or subjected to any security interest, lien, lease or other charge or encumbrance any of its Pro