Ex 10.4

COLLATERAL ASSIGNMENT OF MEMBERSHIP INTEREST

     THIS COLLATERAL ASSIGNMENT OF MEMBERSHIP INTEREST (the “Agreement”) is made
as of the 31st day of March, 2004, by and between TALX CORPORATION, a Missouri
corporation (the “Assignor”), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association, as Administrative Agent (“Agent”).

WITNESSETH:

     WHEREAS, Assignor obtained an Aggregate Commitment in the principal amount
of up to Forty Million and 00/100 Dollars ($40,000,000.00) pursuant to that
certain Loan Agreement dated March 27, 2002 entered into by the Assignor, Agent,
and Southwest Bank of St. Louis (“Southwest”) (the “Initial Loan Agreement”), as
amended by that First Amendment to Loan Agreement dated July 29, 2002 among
Assignor, Agent and Southwest (the “First Amendment”), as further amended by
that Second Amendment to Loan Agreement dated January 27, 2003 among Assignor,
Agent, and Southwest (the “Second Amendment”), as further amended by that Third
Amendment to Loan Agreement dated June 30, 2003 among Assignor, Agent and
Southwest (the “Third Amendment”).

     WHEREAS, in order to refinance the indebtedness outstanding under the
Initial Loan Agreement, Assignor, Agent, Southwest and the Lender named therein
(hereto collectively the “Lenders”) are entering into that certain Amended and
Restated Loan Agreement of even date herewith increasing the Aggregate
Commitment to an amount up to Eighty Three Million and 00/100 Dollars
($83,000,000.00)(the “Amended and Restated Loan Agreement”) (collectively, the
Initial Loan Agreement as so amended by the First Amendment, Second Amendment,
Third Amendment, and the Amended and Restated Loan Agreement and as may be
amended, restated, and modified from time to time, is referred to herein as the
“Loan Agreement”), pursuant to which loans made to Assignor thereunder (each a
“Loan” and collectively “Loans”) are evidenced by certain Revolving Notes and
Term Notes dated even date therewith in the aggregate amount of up to Eighty
Three Million and 00/100 Dollars ($83,000,000.00) and which are all due and
payable at the times and pursuant to the terms and conditions of the Loan
Agreement (collectively, the Revolving Notes and Term Notes as each may be
amended, restated or modified from time to time, are referred to herein as the
“Notes”). The term “Loan Documents” and all other capitalized terms used herein
and not defined herein have the meanings given to them in the Loan Agreement;

     WHEREAS, Assignor and Lenders acknowledge that portions of the Loans are
being used to finance the purchase of certain assets by TALX Employer Services,
LLC, a Missouri limited liability company (“TES”);

     WHEREAS, Assignor has agreed to grant to Agent a security interest in and
to collaterally assign to Agent, all of its right, title and ownership interest
in TES;

     WHEREAS, Lenders refuse to make the Loans unless Assignor executes this
Agreement.

 

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     NOW, THEREFORE, to induce the Agent to make the Loans to the Assignor and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Assignor hereby jointly and severally agree as follows:

     1. Grant of Security Interest; Collateral Assignment. To secure the
complete and timely satisfaction of all liabilities, indebtedness and
obligations of Assignor to Lenders under the Notes, the Loan Agreement, this
Agreement, and any other Loan Documents (collectively, the “Obligations”),
Assignor hereby, jointly and severally, grants to Agent a continuing security
interest in all of Assignor’s present and future right, title and ownership
interest in and to TES and all present and future rights to receive payments and
other distributions from TES, whether they are paid in cash, or in kind or mixed
or howsoever evidenced and all other interests arising under or with respect to
TES (the “LLC Interest”). Until the occurrence of an Event of Default, Assignor,
or any one of them, shall have the right to collect any amount or thing assigned
pursuant to this Agreement payable to Assignor, or any one of them, by TES. Upon
the occurrence of an Event of Default and expiration of the applicable cure
period, however, Assignor authorizes Agent, at its option, to collect any amount
or thing assigned by this Agreement and upon notification to TES, all such
payments shall be made directly to Agent. Assignor authorizes Agent to endorse
and receipt for any such payments and to apply same to the Obligations.

     2. Further Assurances. Assignor agrees that, until all of the Obligations
shall have been satisfied in full and the Notes have been satisfied in
accordance with their terms, they will not enter into any agreement which is
inconsistent with Assignor’s obligations under this Agreement, without Agent’s
prior written consent. Assignor further agrees that at any time and from time to
time, at the expense of Assignor, Assignor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Agent may reasonably request, in order to
perfect and protect the security interest and collateral assignment granted or
purported to be granted hereby or to enable Agent to exercise its rights and
remedies hereunder.

     3. Event of Default. The term “Event of Default” has the meaning set forth
in the Loan Agreement and the occurrence and continuance of any event or the
existence of any condition which is specified as an Event of Default under the
Loan Agreement shall constitute an Event of Default hereunder.

     4. Representations, Warranties and Covenants of Assignor. Assignor
represents, covenants and warrants to Agent that:

     (a) Assignor has furnished Agent with true and correct copies of the
articles of organization and operating agreement of TES together with all
amendments thereto;

     (b) This Agreement and the assignment of the LLC Interest given herein does
not violate the terms of TES’s articles of organization and operating agreement
or any Material Agreement to which TES or Assignor is a party and have been
authorized by the members of TES;

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     (c) Unless an Event of Default shall have occurred, Assignor shall be
entitled to exercise (but only in a manner consistent with the terms hereof) the
voting, consent and other rights and remedies of Assignor with respect to TES,
provided, however, that no action shall be taken or failed to be taken by
Assignor which could reasonably be expected to (i) directly or indirectly
authorize or permit the dissolution, liquidation or sale of TES or the sale,
lease, assignment, transfer or other disposition of any of the assets of TES;
(ii) have the result of materially and adversely affecting any of the rights of
Agent under this Agreement or the Loan Documents; (iii) violate the terms of
this Agreement or the Loan Documents; (iv) have the effect of impairing the
validity or priority of the security interests created hereunder in favor of
Agent in any manner whatsoever; or (v) cause an Event of Default.
Notwithstanding anything herein to the contrary, in no event shall Agent have
any of the obligations or liabilities of Assignor with respect to TES by virtue
of this Agreement or the exercise of its rights hereunder, and Assignor hereby
covenants and agrees to hold harmless Agent from and against any and all
liability, loss or damage which Agent may suffer by reason of its security
interest in the LLC Interest, except to the extent cause by Agent’s gross
negligence or willful misconduct. If Agent becomes a substituted member of TES
in place of Assignor, Agent shall not be liable for any of the obligations or
liabilities of Assignor with respect to TES unless expressly agreed to in
writing by Agent;

     (d) Assignor has not previously and will not further assign, transfer or
encumber the interests hereby assigned to Agent and any such purported
assignment shall be void and of no effect;

     (e) Upon the occurrence of an Event of Default, Assignor authorizes Agent,
at its option, to collect any amount or thing assigned by this Agreement and
upon notification to TES, all such payments shall be made directly to Agent.
Assignor authorizes Agent to endorse and receipt for any such payments and to
apply same to the Obligations and, in furtherance thereof, Assignor appoints and
designates Agent as Assignor’s irrevocable attorney-in-fact to endorse and
receipt for checks and to collect any and all amounts and things assigned
hereby; (f) Assignor has the unqualified right to enter into this Agreement and
perform its terms;

     (g) Assignor is the sole member in good standing of TES;

     (h) Except for the assignment granted by this Agreement and except for any
liens permitted by the Loan Documents, the LLC Interest is not subject to any
lien, pledge or encumbrance; and

     (i) Assignor shall not, without the prior written consent of Agent, amend
or modify TES’s operating agreement or articles of organization, except to the
extent such change could not reasonably be expected to adversely affect the
Agent or the Lenders.

     5. Default and Remedies. If any Event of Default shall have occurred, Agent
shall have, in addition to all other rights and remedies given it by this
Agreement, those provided in

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the Loan Documents and those allowed at law or in equity and the rights and
remedies of a secured party under the Uniform Commercial Code. In the event
Agent reasonably believes an Event of Default has occurred, Agent shall have the
right to receive all distributions and payments from TES that otherwise would be
made to Assignor and shall immediately have the right to exercise any and all
right, title and interest of Assignor in and to the LLC Interest, including the
right to vote and to participate in the management of TES. Upon the occurrence
of any Event of Default, Agent shall have the right to sell, assign or deliver
the LLC Interest in a commercially reasonable manner, upon ten (10) days written
notice to TES and without demand or adjustment. Agent shall apply the proceeds
of any sale of the LLC Interest first toward any costs or expenses incurred by
Agent in exercising its rights hereunder and then towards satisfaction of the
Obligations. Assignor hereby waives any claims which may arise by reason of the
fact that the price Agent receives for sale of the LLC Interest is below market
value or insufficient. If the LLC Interest is sold pursuant to this Agreement
and a sufficient sum is not realized to pay in full the Obligations, Assignor
hereby covenants to pay Agent the resulting deficiency.

     6. Termination of Agreement. At such time as Assignor shall completely
satisfy all of the Obligations and the Notes are satisfied in accordance with
their terms, this Agreement shall terminate and Agent shall execute and deliver
to Assignor, at Assignor’s expense, all releases, assignments and other
instruments as may be necessary or proper to re-vest in Assignor full title to
the LLC Interest, subject to any disposition thereof which may have been made by
Agent pursuant hereto.

     7. Expenses. Any and all reasonable fees, costs and out-of-pocket expenses,
of whatever kind or nature, including, without limitation, attorneys’ fees and
legal expenses, incurred by Agent from and after the date hereof in connection
with the payment or discharge of any taxes, counsel fees, maintenance fees,
encumbrances or otherwise protecting, maintaining or preserving the LLC
Interest, or in defending or prosecuting any actions or proceedings arising out
of or related to this Agreement or the LLC Interest, shall, to the extent
permitted by applicable law, be borne and paid by Assignor on demand by Agent
and until so paid shall be added to the principal amount of the Obligations and
shall bear interest at the interest rate then applicable under the Loan
Documents. Assignor shall indemnify, defend and hold Agent harmless from and
against any losses costs, expenses, damages or liabilities of any kind
whatsoever arising or accruing as a result of Agent’s enforcement or attempted
enforcement of this Agreement or any of the Loan Documents.

     8. Financing Statements. Assignor hereby agrees to execute and authorize
Agent to file UCC-1 financing statements, or any other document or instrument
reasonably necessary or desirable in order to evidence and perfect the
assignment and security interest granted under this Agreement.

     9 Agent May Act. If Assignor fails to comply with any of its obligations
hereunder, Agent may do so in Assignor’s name or in Agent’s name to the extent
permitted by applicable law, but at Assignor’s expense, and Assignor hereby
agrees to reimburse Agent in full for all reasonable expenses, including,
without limitation, reasonable attorneys’ fees, incurred by Agent in protecting,
defending or maintaining the value of the LLC Interest.

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     10 Severability. The provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.

     11 Rights Cumulative. All of Agent’s rights and remedies with respect to
Assignor, whether established hereby or by the Loan Documents or by law, shall
be cumulative and may be exercised singularly or concurrently. To the maximum
extent permitted by applicable laws (which matters shall survive termination,
repayment in full of, and/or release of the liens and security interests of
Agent arising under the Loan Documents), Assignor hereby waives protest of all
commercial paper at any time held by Agent on which Assignor is any way liable
and notice and opportunity to be heard, before exercise by Agent of the remedies
of self-help, setoff, or of other summary procedures permitted by any applicable
laws or by any agreement with Assignor and, except where required hereby or by
any applicable laws, notice of any other action taken by Agent and Assignor
hereby releases Agent and its officers, attorneys, agents and employees from all
claims for loss or damage caused by any act or omission on the part of any of
them, except willful misconduct or gross negligence.

     12 Modification. This Agreement is subject to modification only by a
writing signed by all of the parties.

     13 Inurement. The benefits and burdens of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties; provided however, that the foregoing provision shall not invalidate or
otherwise modify the restrictions imposed on Assignor hereunder with respect to
transferring any part of or interest in the Assignor.

     14 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto to be effective shall be in writing and shall
be personally delivered, mailed by certified or registered mail, return receipt
requested, sent prepaid by reliable overnight courier or sent by facsimile
transmission. Unless otherwise expressly provided herein, notices shall be
deemed to have been validly given when delivered, or, in the case of mailing,
two (2) business days after deposit in the mail in the continental United
States, postage prepaid; or, in the case of reliable overnight courier, on the
business day after the courier accepts delivery of such item for next business
day delivery; or, in the case of facsimile transmission, when sent against
confirmation of receipt prior to 5:00 p.m. local time at the recipient’s office,
in each case addressed as follows:

         

  If to Agent:   LaSalle Bank National Association

      One Metropolitan Square

      211 N. Broadway, Suite 4050

      St. Louis, Missouri 63102

      Attn: Tom Harmon
 
       

  With a Copy to:   Blackwell Sanders Peper Martin LLP

      720 Olive Street, 24th Floor

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      St. Louis, Missouri 63101

      Attn: John P. McNearney, Esq
 
       

  If to Assignor:   TALX Corporation

      1850 Borman Court

      St. Louis, Missouri 63146

      Attn: William Canfield
 
       

  With a Copy to:   Bryan Cave

      One Metropolitan Square

      211 N. Broadway, Suite 3600

      St. Louis, Missouri 63102

      Attn: Karen W. Fries, Esq.

or to such other address or telecopy number as each party may designate for
itself by like notice given in accordance with this Section.

     15 Governing Law. The validity and interpretation of this Agreement and the
rights and obligations of the parties shall be governed and construed in
accordance with the internal laws of the State of Illinois.

[signatures on following page]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

         

ASSIGNOR:
 
       

TALX CORPORATION, a Missouri Corporation
 
       

  By:   /s/ L. Keith Graves

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  Name:  L. Keith Graves

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  Title:  CFO

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

         

  AGENT:
 
       

  LASALLE BANK NATIONAL ASSOCIATION, as
Administrative Agent and a Lender
 
       

  By:   /s/ Tom Harmon

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  Print Name:   Tom Harmon

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  Title: RVP

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