Exhibit 10.14
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of November 26, 1997, made by COMFORCE
Corporation, a Delaware corporation (the "Pledgor"), in favor of The Bank of New
York, in its capacity as collateral agent (in such capacity, the "Collateral
Agent") for the ratable benefit of the holders (the "Securityholders") of the
15% Senior Secured PIK Debentures due 2009 (the "Debentures") issued by the
Pledgor under an Indenture dated as of November 26 1997, between the Company and
The Bank of New York, in its capacity as Trustee (the "Indenture").
W I T N E S S E T H :
WHEREAS, NatWest Capital Markets Limited (the "Initial Purchaser") and the
Pledgor have entered into a Purchase Agreement dated November 19, 1997 (the
"Purchase Agreement"), pursuant to which, among other things, the Initial
Purchaser has agreed to purchase the Debentures from the Pledgor; and
WHEREAS,the Pledgor is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined) issued by COMFORCE Operating, Inc. (the
"Issuer"); and
WHEREAS, it is a condition precedent to the obligation of the Initial
Purchaser to purchase the Debentures under the Purchase Agreement, that the
Pledgor shall have executed and delivered this Pledge Agreement to the
Collateral Agent;
NOW, THEREFORE, in consideration of the premises and to induce the Initial
Purchaser to enter into the Purchase Agreement and to purchase the Debentures,
the Pledgor hereby agrees with the Collateral Agent, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are defined
in the Indenture and used herein are so used as so defined, and the meanings
assigned to terms defined herein or in the Indenture shall be equally applicable
to both the singular and plural forms of such terms; and the following terms
shall have the following meanings:
"Collateral" means the Pledged Stock and all Proceeds.
"Obligations" means the unpaid principal of, any premium applicable to, and
interest on the Debentures (including, without limitation, interest accruing
after the maturity of the Debentures and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Pledgor, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of the Pledgor to the Securityholders,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Debentures, the Indenture or this Pledge Agreement (in each such case
as the same may be amended, supplemented or modified from time to time) and any
other document made,
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delivered or given in connection therewith or herewith, whether on account of
principal, premium, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel) or otherwise.
"Pledge Agreement" means this Pledge Agreement, as further amended,
supplemented or otherwise modified from time to time.
"Pledged Stock" means the shares of capital stock of the Issuer listed on
Schedule I hereto, together with all stock certificates, options or rights of
any nature whatsoever that may be issued or granted by the Issuer to the Pledgor
in respect of the Pledged Stock while this Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in Section 9-306(l)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Stock, collections thereon or distributions with
respect thereto.
"UCC" means the Uniform Commercial Code from time to time in effect in the
State of New York.
2. Pledge; Grant of Security Interest; Endorsement. The Pledgor hereby
delivers to the Collateral Agent all the Pledged Stock and hereby grants to the
Collateral Agent a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
3. Perfection of Security. The Pledgor authorizes the Collateral Agent to
file such financing statements and other documents and do such acts, matters and
things as the Collateral Agent may consider appropriate to perfect and continue
the Collateral Agent's security interest in the Collateral, to protect and
preserve the Collateral Agent's security interest in the Collateral and to
realize upon the Collateral Agent's security interest in the Collateral.
4. Stock Powers. Concurrently with the delivery to the Collateral Agent of
each certificate representing one or more shares of Pledged Stock to the
Collateral Agent, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor, with signature guaranteed.
5. Representations and Warranties. The Pledgor represents and warrants
that:
(a) the shares of Pledged Stock listed on Schedule I constitute (i)
all the issued and outstanding shares of all classes of the capital stock
of the Issuer that are owned by the Pledgor and (ii) the percentage listed
on Schedule I of the aggregate number of the issued and outstanding
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shares of the identified class of capital stock of the Issuer owned by the
Pledgor;
(b) all the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Pledgor is the legal and beneficial owner of, and has good and
marketable title to, the Pledged Stock listed on Schedule I, free of any
and all Liens or options in favor of, or claims of, any other Person,
except the Lien created by this Pledge Agreement; and
(d) upon delivery to the Collateral Agent of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge
Agreement will constitute a valid, perfected first priority Lien on the
Pledged Stock, enforceable as such against all creditors of the Pledgor.
6. Covenants. The Pledgor covenants and agrees with the Collateral Agent
that, from and after the date of this Pledge Agreement until the obligations are
paid in full:
(a) If the Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate or
any certificate or other instrument evidencing ownership of any partnership
interest (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution for, as a conversion of, or in exchange for any shares of the
Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept
the same as the agent of the Collateral Agent, hold the same in trust for
the Collateral Agent and deliver the same forthwith to the Collateral Agent
in the exact form received, duly indorsed by the Pledgor to the Collateral
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor and with signature
guaranteed, to be held by the Collateral Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums
paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of the Issuer shall be paid over to the Collateral Agent, and
in case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to
the Pledged Stock pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of the
Pledged Stock shall be received by the Pledgor, the Pledgor shall, until
such money or property is paid or delivered to the Collateral Agent, hold
such money or property in trust for the Securityholders, segregated from
other funds of the Pledgor, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the Collateral Agent, the
Pledgor will not (i) permit the Issuer to issue any stock or other equity
securities of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any stock or other equity
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securities of any nature of the Issuer, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral, or (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided for by
this Pledge Agreement. The Pledgor will defend the right, title and
interest of the Collateral Agent in and to the Collateral against the
claims and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Collateral Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Collateral Agent
harmless from, any and all liabilities with respect to, or resulting from
any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by
this Pledge Agreement.
7. Cash Dividends and Distributions; Voting Rights. Unless an Event of
Default shall have occurred and be continuing, the Pledgor shall be permitted to
receive and retain all cash dividends in respect of the Pledged Stock and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which results in any violation of any provision of the
Indenture, the Notes or this Pledge Agreement.
8. Rights of the Collateral Agent. (a) If an Event of Default shall occur
and be continuing, (i) promptly upon receipt thereof by the Pledgor and without
any request therefor by the Collateral Agent, the Pledgor shall deliver to the
Collateral Agent any and all cash dividends paid in respect of the Pledged Stock
and the Collateral Agent may make application thereof to the Obligations in such
order as the Collateral Agent may determine, (ii) all shares of the Pledged
Stock shall be registered in the name of the Collateral Agent or its nominee,
and the Collateral Agent or its nominee may thereafter exercise (A) all voting,
corporate and other rights, privileges or options pertaining to such shares of
the Pledged Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Stock upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of the Issuer, or upon the
exercise by the Pledgor or the Collateral Agent of any right, privilege or
option pertaining to such shares of Pledged Stock, and in connection therewith,
the right
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to deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine), all without liability except to account for
property actually received by it, but the Collateral Agent shall have no duty to
the Pledgor to exercise (and, without the consent of the Collateral Agent, the
Pledgor shall not exercise) any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Collateral Agent hereunder shall not be conditioned
or contingent upon the pursuit by the Collateral Agent of any right or remedy
against the Pledgor or the Issuer against any other Person which may be or
become liable in respect of all or any part of the Obligations or against any
collateral security therefor, guarantee therefor or right of offset with respect
thereto. The Collateral Agent shall not be liable for any failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Collateral Agent be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Pledgor or any other
Person or to take any other action whatsoever with regard to the Collateral or
any part thereof.
9. Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent may exercise, in addition to all other rights and remedies
granted in this Pledge Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the UCC and under similar laws in effect in other relevant
jurisdictions. Without limiting the generality of the foregoing, the Collateral
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, any Issuer or any other Person (all and each
of which demands, defenses, advertisements and notices are, to the extent
permitted by law, hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at a public or private sale
or sales, in the over-the-counter market, at any exchange, broker's board or
office of the Collateral Agent or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Collateral
Agent shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is, to the extent permitted by
law, hereby waived or released. The Collateral Agent shall apply any Proceeds
from time to time held by it and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all costs
and expenses of every kind incurred in respect thereof or incidental to the care
or safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Collateral Agent hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel to the Collateral Agent,
to the payment in whole or in
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part of the Obligations, in such order as the Collateral Agent may elect, and
only after such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(l)(c) of the UCC, need the Collateral Agent account for the
surplus, if any, to the Pledgor. To the extent permitted by applicable law, the
Pledgor waives all claims, damages and demands they may acquire against the
Collateral Agent arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Pledgor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Collateral Agent to collect such
deficiency.
10. Registration Rights. (a) If the Collateral Agent shall determine to
exercise its right to sell any or all of the Pledged Stock pursuant to paragraph
9 hereof, and if in the opinion of the Collateral Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the Pledgor will use its best efforts to cause the Issuer to
(i) execute and deliver, and cause the directors and officers of the Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Collateral Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Collateral Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor agrees to use
its best efforts to cause the Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Collateral
Agent shall designate and to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of Section
11(a) of the Securities Act.
(b) Upon the occurrence of an Event of Default, the Pledgor hereby
consents, and agrees to cause the issuer of any Pledged Stock to consent, to the
disclosure by the Collateral Agent to the public generally and/or to any
prospective purchaser of the Pledged Stock of any information relating to the
Pledged Stock, whether confidential or not.
(c) The Pledgor further agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this paragraph 10 valid and
binding and in compliance with any and all other applicable requirements of law.
The Pledgor further agrees that a breach of any of the covenants contained in
this paragraph 10 will cause irreparable injury to the Collateral Agent, that
the Collateral Agent has no adequate remedy at law in respect of such breach
and, as a consequence, that
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each and every covenant contained in this paragraph 10 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred under the Indenture.
11. Limitation on Duties Regarding Collateral. The Collateral Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
securities and property for its own account. Neither the Collateral Agent nor
any of its directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
12. Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are irrevocable and are powers coupled
with an interest.
13. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. Paragraph Headings. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or to be taken into consideration in the interpretation
hereof.
15. No Waiver; Cumulative Remedies. The Collateral Agent shall not by any
act (except by a written instrument pursuant to paragraph 16 hereof) be deemed
to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Collateral Agent, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Collateral Agent would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
16. Waivers and Amendments; Successors and Assigns. None of the terms or
provisions of this Pledge Agreement may be amended, supplemented or otherwise
modified except by a written instrument executed by the Pledgor and the
Collateral Agent, provided that any
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provision of this Pledge Agreement may be waived by the Collateral Agent in a
letter or agreement executed by the Collateral Agent or by telecopy from the
Collateral Agent. This Pledge Agreement shall be binding upon the successors and
assigns of the Pledgor and shall inure to the benefit of the Collateral Agent
and its respective successors and assigns.
17. Termination of Security Interest; Release of Collateral. (a) Upon the
repayment in full of all Obligations, the security interest granted in the
Collateral pursuant to this Pledge Agreement shall terminate and all rights to
the Collateral shall revert to the Pledgor.
(b) Upon any such termination of the security interest granted in the
Collateral pursuant to this Agreement, the Collateral Agent will, at the expense
of the Pledgor, execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence the termination of the Security Interest
and deliver to the Pledgor all Collateral so released then in its possession.
18. Notices. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide overnight
delivery service (a) if to the Pledgor, addressed to it at its address listed
next to its name on the signature pages hereof, or at such other address as the
Pledgor shall have specified to the Collateral Agent in writing and (b) if to
the Collateral Agent, addressed to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
19. Notices and Other Communications in Respect of Collateral. The Pledgor
shall deliver promptly to the Collateral Agent copies of all notices or other
communications received by the Pledgor in respect of the Collateral. Until the
occurrence of an Event of Default, the Collateral Agent shall deliver promptly
to the Pledgor all notices or other communications received by the Collateral
Agent or its nominee in respect of the Collateral. After the occurrence of an
Event of Default, the Pledgor waives all rights to receive any notices or
communications received by the Collateral Agent or its nominee in respect of the
Collateral.
20. Irrevocable Authorization and Instruction to Issuer. The Pledgor hereby
authorizes and instructs the Issuer to comply with any instruction received by
it from the Collateral Agent in writing that (a) states that an Event of Default
has occurred and (b) is otherwise in accordance with the terms of this Pledge
Agreement, without any or other further instructions from the Pledgor, and the
Pledgor agrees that the Issuer shall be fully protected in so complying.
21. Integration. This Pledge Agreement represents the agreement of the
Pledgor and the Collateral Agent with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
Collateral Agent relative to the subject matter hereof not expressly set forth
or referred to herein or in the Purchase Agreement.
22. GOVERNING LAW. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PLEDGOR UNDER THIS PLEDGE AGREEMENT SHALL BE
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GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION AND THE EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, IN RESPECT
OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
23. Copy Received. The Pledgor hereby acknowledges receipt of a copy of
this Pledge Agreement.
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IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement to be
duly executed and delivered as of the date first above written.
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ COMFORCE CORPORATION
Lake Success, New York 11042
Attention: Chief Financial
By_________________________
Officers Name:
Title:
Accepted and Agreed:
THE BANK OF NEW YORK
as Collateral Agent
By________________________
Name:
Title:
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ACKNOWLEDGEMENT AND CONSENT
The Issuer referred to in the foregoing Pledge Agreement hereby
acknowledges receipt of a copy thereof and agrees to be bound thereby and to
comply with the terms thereof, insofar as such terms are applicable to it. The
Issuer agrees to notify the Collateral Agent promptly in writing of the
occurrence of any of the events described in paragraph 6(a) of the Pledge
Agreement. The Issuer further agrees that the terms of paragraph 10(c) of the
Pledge Agreement shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it under or pursuant to or arising out of
paragraph 10 of the Pledge Agreement.
COMFORCE OPERATING, INC.
By_________________________
Name:
Title:
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