<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
PREFERRED EMPLOYERS HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK, $.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of class of securities)
739908-101
- --------------------------------------------------------------------------------
(CUSIP number)
FERNANDO ALONSO, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
- --------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
DECEMBER 27, 1999
- --------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e) 13d-1(f) or 13d-1(g), check the
following box [ ].
NOTE. Schedules filed in paper format shall include a signal original and
five copies of the Schedule, including all exhibits. SEE Rule 13d-7(b)
for other parties to whom copies are to be sent.
(continued on following page)
(Page 1 of 23 Pages)
<PAGE> 2
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 2 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Mel Harris
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 1,538,236
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 476,470
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 1,538,236
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 476,470
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,014,706
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
57.9%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
2
<PAGE> 3
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 3 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Peter E. Kilissanly
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
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(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 102,677
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 500
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 102,677
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 500
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
103,177
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
3
<PAGE> 4
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 4 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
William R. Dresback
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 50,000
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 50,000
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 50,000
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 50,000
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,000
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
4
<PAGE> 5
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 5 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jose M. Menendez
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 9,000
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 9,000
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 9,000
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 9,000
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,000
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
5
<PAGE> 6
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 6 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Nancy Ryan
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 25,000
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 25,000
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 25,000
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 25,000
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
43,000
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.2%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
6
<PAGE> 7
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 7 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jack D. Burstein
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 36,250
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 36,250
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 36,250
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 36,250
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
36,250
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
7
<PAGE> 8
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 8 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Stuart J. Gordon
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 11,250
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 11,250
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 11,250
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 11,250
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,250
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
8
<PAGE> 9
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 9 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Alexander M. Haig, Jr.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 0
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 0
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 0
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 0
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
9
<PAGE> 10
CUSIP NO. 739908-101 SCHEDULE 13D PAGE 10 OF 23 PAGES
--------------------- -------- --------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Maxwell M. Rabb
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ X ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS
SC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
---------------------------------------------------------------------
(7) SOLE VOTING POWER 11,250
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 11,250
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 11,250
PERSON WITH
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER 11,250
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,250
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
---------------------------------------------------------------------
10
<PAGE> 11
This statement on Schedule 13D (the "Statement") is filed on behalf of
Mr. Mel Harris, Mr. Peter E. Kilissanly, Mr. William R. Dresback, Mr. Jose M.
Menendez, Ms. Nancy Ryan, Mr. Jack D. Burstein, Mr. Stuart J. Gordon, General
Alexander M. Haig, Jr. and Ambassador Maxwell M. Rabb. The above-referenced
persons are sometimes individually referred to herein as a "Reporting Person"
and collectively referred to herein as "Reporting Persons." Although the
Reporting Persons may be deemed to be acting together in connection with the
acquisition and ownership of Common Stock, par value $.01 per share (the "Common
Stock"), of the Company, nothing contained in this Statement shall be construed
as an admission by a Reporting Person that he, she or it is the beneficial owner
of any other Reporting Person's shares of Common Stock. Each Reporting Person
expressly disclaims the beneficial ownership of the shares of Common Stock
beneficially owned by any other Reporting Person. Although the Reporting Persons
may act jointly in certain instances, they have no agreement to do so.
1. SECURITY AND ISSUER.
This Statement relates to the Common Stock of the Company. The
executive offices of the Company are located at 10800 Biscayne Boulevard, 10th
Floor, Miami, Florida 33161-7487.
2. IDENTITY AND BACKGROUND.
a. MEL HARRIS
2(a) Name: Mel Harris ("Mr. Harris").
2(b) Residence:
2(c)(i) Present Principal Employment: Chairman of the Board and
Chief Executive Officer of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Mr. Harris has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Mr. Harris has not, during the past five years, been a party
to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
2(f) Mr. Harris is a citizen of the United States of America.
b. PETER E. KILISSANLY
2(a) Name: Peter E. Kilissanly ("Mr. Kilissanly").
2(b) Residence:
2(c)(i) Present Principal Employment: President, Chief Operating
Officer and Director of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Mr. Kilissanly has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Mr. Kilissanly has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
2(f) Mr. Kilissanly is a citizen of the United States of America.
11
<PAGE> 12
c. WILLIAM R. DRESBACK
2(a) Name: William R. Dresback ("Mr. Dresback").
2(b) Residence:
2(c)(i) Present Principal Employment: Chief Financial Officer and
Senior Vice President of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Mr. Dresback has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Mr. Dresback has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
2(f) Mr. Dresback is a citizen of the United States of America.
12
<PAGE> 13
d. JOSE M. MENENDEZ
2(a) Name: Jose M. Menendez ("Mr. Menendez").
2(b) Residence:
2(c)(i) Present Principal Employment: Vice President, General
Counsel and Assistant Secretary of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Mr. Menendez has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Mr. Menendez has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
2(f) Mr. Menendez is a citizen of the United States of America.
13
<PAGE> 14
e. NANCY RYAN
2(a) Name: Nancy Ryan ("Ms. Ryan").
2(b) Residence:
2(c)(i) Present Principal Employment: Secretary and Vice President
of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Ms. Ryan has not, during the past five years, been convicted
in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
2(e) Ms. Ryan has not, during the past five years, been a party
to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
2(f) Ms. Ryan is a citizen of the United States of America.
14
<PAGE> 15
f. JACK D. BURSTEIN
2(a) Name: Jack D. Burstein ("Mr. Burstein").
2(b) Residence:
2(c)(i) Present Principal Employment: Director of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Mr. Burstein has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Mr. Burstein has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
2(f) Mr. Burstein is a citizen of the United States of America.
16
<PAGE> 16
g. STUART J. GORDON
2(a) Name: Stuart J. Gordon ("Mr. Gordon").
2(b) Residence:
2(c)(i) Present Principal Employment: Director of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Mr. Gordon has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Mr. Gordon has not, during the past five years, been a party
to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
2(f) Mr. Gordon is a citizen of the United States of America.
17
<PAGE> 17
h. ALEXANDER M. HAIG, JR.
2(a) Name: Alexander M. Haig, Jr. ("General Haig").
2(b) Residence:
2(c)(i) Present Principal Employment: Director of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) General Haig has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) General Haig has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
2(f) General Haig is a citizen of the United States of America.
18
<PAGE> 18
i. MAXWELL M. RABB
2(a) Name: Maxwell M. Rabb ("Ambassador Rabb").
2(b) Residence:
2(c)(i) Present Principal Employment: Director of the Company.
2(c)(ii) Principal Business and Address of Company: 10800 Biscayne
Boulevard, Miami, Florida 33161.
2(d) Ambassador Rabb has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2(e) Ambassador Rabb has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
2(f) Ambassador Rabb is a citizen of the United States of
America.
18
<PAGE> 19
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This Statement relates to the Company's offer to purchase all of its
issued and outstanding shares of Common Stock at a price of $5.00 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in an Offer to Purchase, dated September 17, 1999, and
in a related Letter of Transmittal, dated September 17, 1999 (the "Offer to
Purchase"). On November 4, 1999, the Company acquired 3,209,692 outstanding
shares of Common Stock -- or approximately 81.56% of the Common Stock owned by
persons other than the Reporting Persons. The amount of funds used to acquire
the 3,209,692 outstanding shares was $16,048,460. The source of funds for
acquiring the foregoing shares of Common Stock was the Company's working
capital. The consummation of the Offer to Purchase was financed through a $7.5
million credit facility from City National Bank of Florida ("City National"),
pursuant to a Loan and Security Agreement, dated October 12, 1999, among the
Company, City National and Preferred Healthcare Staffing, Inc., a Delaware
corporation and the Company's wholly-owned subsidiary.
4. PURPOSE OF TRANSACTION.
The Company made the Offer to Purchase to provide stockholders who
wished to sell their shares the opportunity to do so at a fair price and at a
premium over recent market prices. The Company also believed that its purchase
of shares pursuant to the Offer to Purchase represents an attractive long-term
investment that will benefit the Company and the other Reporting Persons (who
did not participate in the Offer to Purchase) and the stockholders who elected
to not tender their shares pursuant to the Offer to Purchase. In addition, the
Offer to Purchase enabled stockholders to sell a portion of their shares while
retaining a continuing equity interest in the Company. Finally, the Offer to
Purchase provided stockholders who were considering a sale of all or a portion
of their shares the opportunity to sell those shares for cash without the usual
transaction costs associated with open-market sales.
None of the Reporting Persons has any present plans or intent to effect
any of the matters described in Item 4(a)-(j).
5. INTEREST IN SECURITIES OF ISSUER.
(a) As of the close of business on November 4, 1999, the Reporting
Persons owned the following shares of Common Stock, representing the approximate
percentage of the total issued and outstanding shares of Common Stock of the
Company indicated below:
19
<PAGE> 20
PERCENTAGE OF ISSUED AND
NUMBER OF SHARES OF OUTSTANDING SHARES
NAME COMMON STOCK OF COMMON STOCK
---- -------------------- ------------------------
Mel Harris 2,014,706 57.9%
Peter E. Kilissanly 103,177 3.0%
William R. Dresback 50,000 1.4%
Jose M. Menendez 9,000 0.3%
Nancy Ryan 43,000 1.2%
Jack D. Burstein 36,250 1.0%
Stuart J. Gordon 11,250 0.3%
Alexander M. Haig, Jr. 0 0.0%
Maxwell M. Rabb 11,250 0.3%
(b) Mr. Harris has the sole power to vote or direct the vote of
1,538,236 shares of Common Stock and share power to vote or direct the vote of
476,470 shares of Common Stock. Mr. Kilissanly has the sole power to vote or
direct the vote of 102,777 shares of Common Stock and share power to vote or
direct the vote of 400 shares of Common Stock. Messrs. Dresback, Menendez,
Burstein, Gordon, Haig, Rabb and Ms. Ryan each has the sole power to vote or
direct the vote, and the sole power to dispose or direct the disposition of, all
of the shares of Common Stock beneficially owned by him or her (as the case may
be).
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
None.
7. MATERIAL TO BE FILED AS EXHIBITS.
(1) Loan and Security Agreement, dated October 12, 1999, among the
Company, City National Bank of Florida and Preferred
Healthcare Staffing, Inc.
20
<PAGE> 21
SIGNATURE
After due inquiry and to the best of his, her or its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 27, 1999
PREFERRED EMPLOYERS HOLDINGS, INC.
By: /s/ Mel Harris
----------------------------------------------
Name: Mel Harris
Title: Chairman of the Board of Directors and
Chief Executive Officer
/s/ Mel Harris
--------------------------------------------------
Mel Harris
/s/ Peter E. Kilissanly
--------------------------------------------------
Peter E. Kilissanly
/s/ William R. Dresback
--------------------------------------------------
William R. Dresback
/s/ Jose Menendez
--------------------------------------------------
Jose Menendez
/s/ Nancy Ryan
--------------------------------------------------
Nancy Ryan
/s/ Jack D. Burstein
--------------------------------------------------
Jack D. Burstein
/s/ Stuart J. Gordon
--------------------------------------------------
Stuart J. Gordon
/s/ Alexander M. Haig, Jr.
--------------------------------------------------
Alexander M. Haig, Jr.
/s/ Maxwell M. Rabb
--------------------------------------------------
Maxwell M. Rabb
21
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION SEQUENTIAL PAGE NO.
----------- ----------- -------------------
<S> <C> <C>
(1) Loan and Security Agreement, dated October 12, 1999, among the 23
Company, City National Bank of Florida and Preferred
Healthcare Staffing, Inc.
</TABLE>
22
<PAGE> 1
Exhibit 1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement"), dated the 12th day of
October, 1999, and executed at Miami, Florida, between PREFERRED EMPLOYERS
HOLDINGS, INC., a Delaware corporation, 10800 Biscayne Boulevard, Miami,
Florida, (the "Company", "Borrower" or "Debtor"), and CITY NATIONAL BANK OF
FLORIDA, a national banking association, 25 West Flagler Street, Miami, Florida
33131 (the "Bank" or "Lender");
WITNESSETH:
WHEREAS, Lender has simultaneously herewith extended credit to Company
under Line of Credit Promissory Note of even date herewith, in the original
principal sum of $7,500,000.00 ("the Note"); and,
WHEREAS, this Loan and Security Agreement shall apply to the manner and
conditions on which disbursements are to be made under the Note and other
matters specifically set forth herein;
NOW, THEREFORE, in consideration of the loan or extensions of credit
heretofore, now or hereafter made to or for the benefit of the Company by the
Bank, the parties agree as follows:
1. RECITALS. The foregoing recitals are true and correct.
2. DEFINITIONS. GENERAL TERMS. Unless the context otherwise requires,
when used herein, the following terms shall have the following meanings, which
meanings shall be equally applicable to both the singular and plural forms of
such terms:
"BUSINESS DAYS" shall mean days on which the Bank is open for
normal business.
"COLLATERAL" OR "COLLATERAL SECURITY" shall have the meaning
set forth in Paragraph 4 hereof.
"INDEBTEDNESS" shall mean, collectively, all of the Company's
presently existing or hereafter created or assumed obligations for borrowed
money; notes payable and drafts accepted representing extensions of credit;
obligations representing the deferred purchase price of property indebtedness,
whether or not assumed, secured by Liens on, or payable out of the proceeds or
production from, property now or hereafter owned or acquired by the Company.
"LIEN" shall mean any security interest, mortgage, pledge,
lien, claim, counterclaim, set-off, charge, encumbrance, title retention
agreement or analogous instrument, in, of or on any of the Company's assets or
properties, now owned or hereafter acquired.
<PAGE> 2
"MATURITY DATE" shall mean October 10th, 2000.
"PERSON" shall mean, as the case may be, any corporation,
natural person, firm, joint venture, partnership, trust, unincorporated
organization and government, or any department or agency of any government.
"RELATED PARTY" shall mean and refer to any entity whereby
there is common or affiliated ownership of a material portion of the Borrower's
capital stock and the stock or partnership interest of said related party.
"SUBSIDIARY" shall mean any corporation of which more than
fifty (50%) percent of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned by the Company.
"UNMATURED EVENT OF DEFAULT" shall mean any condition, event
or act which, with notice or lapse of time, or both, as the case may be, would
constitute an Event of Default.
3. DESCRIPTION OF THE LOAN. The Loan ("Loan") is evidenced by the Note.
The Borrower intends to use the proceeds of the Loan to repurchase certain of
the outstanding common stock and/or the 7% subordinated Convertible Notes of the
Borrower.
Subject to the terms and conditions hereof, Borrower shall,
with respect to the Loan:
a. Borrower agrees to pay all taxes and assessments, and all
recording, documentary fees, and registration taxes.
b. All interest shall be payable monthly in arrears. All
interest shall be computed on the basis of a 360-day year and shall be charged
for the actual number of days within the period for which interest is being
charged.
c. If any payment to be made by Borrower under the Loan shall
become due on a Saturday, Sunday or business holiday under the laws of the State
of Florida, the due date of such payment shall be extended to the next
succeeding business day, and the period of such extension shall be included in
computing any interest in respect of such payment.
d. The Note may be prepaid, at any time, in whole or in part,
without premium or penalty.
2
<PAGE> 3
Borrower agrees that it shall be solely responsible for any
taxes, fees, penalties or assessments, including reasonable attorneys fees,
which may now or hereafter be imposed by the State of Florida or any
governmental agency having jurisdiction thereof as a result of the execution and
delivery of the Note outside of the State of Florida and any extensions of the
maturity date of the Note pursuant to the terms of this Agreement and such sums
shall, if not paid by Borrower, automatically be added to the principal due
under the Note and shall be secured by the collateral described herein.
4. SECURITY INTEREST. For value received and as security for the Note
(the "Loan"), the Borrower with full recourse to Borrower and pursuant to and
upon all of the representations, warranties, covenants and agreements contained
in this Loan and Security Agreement or otherwise made in writing in connection
herewith, hereby acknowledges all security agreements executed simultaneously to
secure repayment of the Loan to Bank and does hereby further pledge, assign,
transfer to and grant Lender a continuing first lien security interest in the
following property (collectively called "Collateral") together with any
additional shares of PHS stock acquired by or in the possession of Borrower:
All of the outstanding and issued shares of the capital stock
of Preferred Healthcare Staffing, Inc., a Delaware corporation
evidenced by certificate Number 1 (the "PHS Stock").
With respect to the PHS Stock, the Borrower hereby represents
and warrants as follows:
a. The PHS Stock does not serve as collateral or security for
any other indebtedness or obligation except the indebtedness evidenced by the
Note and this Agreement.
b. Borrower has done no act to impair or encumber the PHS
Stock and the security therefor or any other collateral tendered to Lender and
Lender shall have quiet possession of the same, free from all liens, claims, or
encumbrances whatsoever.
c. Borrower owns the PHS Stock, legally and equitably, free
and clear of all liens and encumbrances and Borrower will defend the PHS Stock
against all claims and demands of all persons at any time claiming any title or
interest in the PHS Stock.
d. That the making, execution, delivery and performance of
this Agreement: (i) is not and will not be in violation of any law or any
regulation promulgated by any governmental agency or body, including without
limitation, the Federal Securities Act of 1933, as amended, the Florida
Securities Act, as amended, the regulations promulgated under those statutes;
(ii) does not require the approval or consent of any governmental agency or
body; and (iii) will not conflict with or result in any breach of any term,
condition or provision of, or constitute a default under any instrument to which
Borrower is a party or by which Borrower may be bound or affected or constitute
(with or without the giving of notice or the passage of time or both) a default
under any such instrument, or result in the acceleration of any indebtedness, or
result in the breach of any
3
<PAGE> 4
regulation, order, writ, injunction or decree of any court or any commission,
board or other administrative agency entered in any proceeding to which Borrower
is a party or to which either may be bound or affected.
e. Borrower shall deliver to Lender, in assignable form, any
additional shares of PHS Stock acquired by Borrower on account of or with
respect to its ownership of the PHS Stock.
Lender agrees, for so long as there is no existing uncured
Event of Default, that Borrower shall have the right to vote the shares of PHS
Stock, but in no event in any manner which would jeopardize the security
interest granted to the Lender under this Agreement.
5. EVIDENCE OF AND SECURITY FOR THE LOAN ("LOAN DOCUMENTS"). Borrower
with respect to Paragraph 4, by execution of this Agreement hereby pledges,
assigns and transfers to Lender a continuing first security interest in the said
collateral described therein to Bank, as security for the prompt and full
payment, when due, of the Loan.
Borrower acknowledges that all security interests and all
documents, instruments and agreements evidencing such interest, now or
heretofore granted by Borrower to Bank to secure the Loan, are and shall
continue to be in full force and effect to secure the Loan evidenced by the
Note, and terms, conditions, covenants and agreements set forth in this Loan and
Security Agreement, and such other security instruments and documents as may be
required by Bank, including, but not limited to, those mentioned in this Loan
and Security Agreement.
6. RELEASE OF COLLATERAL. Notwithstanding the amount of the outstanding
balance due on the Note, Lender shall not be required to release any of the
collateral described herein until all sums due Lender under the Note have been
paid in full.
7. COMMITMENT FEE. Borrower shall pay a commitment fee in the sum of
$30,000.00 which shall be considered as earned upon payment. In addition,
Borrower shall pay a fee equal to one (1%) percent of each advance made under
this Loan, in excess of $3,000,000.00 ("Subsequent Advance"), which Lender is
authorized to deduct from each Subsequent Advance.
8. CONDITIONS PRECEDENT TO EFFECTIVENESS OF LOAN AGREEMENT. As
conditions precedent to the effectiveness of this Loan and Security Agreement,
Borrower shall furnish evidence to Lender that the following has occurred or
been prepared:
a. Borrower shall have executed and delivered to Lender this
Loan and Security Agreement, the Note, and all other Loan Documents, and
security instruments, each in form and substance satisfactory to Lender.
b. Maintain insurance in such amounts and against such risks
as shall be consistent with prudent business practices.
4
<PAGE> 5
c. Acceptable evidence shall have been furnished to Lender
that Borrower and its subsidiary Preferred Healthcare Staffing, Inc., a Delaware
corporation ("PHS, Inc.") are in good standing with the State of Delaware and
are authorized to do business in the State of Florida.
d. PHS, Inc. has executed a Hypothecation-Security Agreement
and UCC-1 financing statement granting Lender a first lien security interest in
all accounts receivable .
9. INTENTIONALLY DELETED.
10. USE OF AND LIMITATION ON AVAILABILITY OF LOAN PROCEEDS.
a. Advances under the Note shall be limited to payment of the
outstanding balance of principal and interest due on the Promissory Note from
PHS, Inc. in favor of Lender in the original principal sum of $3,000,000.00 and
solely for the payment for the repurchase of outstanding shares of the common
stock and/or the 7% subordinated Convertigle Notes of Borrower.
b. Provided there is available undisbursed funds, all advances
above $3,000,000.00 shall be in minimum amounts of $1,000,000.00.
c. Notwithstanding anything to the contrary contained herein,
or in any of the documents executed in closing on the Loan, upon the expiration
of six months from the effective date of the Note, no advances of principal
shall be made to Borrower, and the Note shall automatically cease as a Line of
Credit and shall be considered as a Term Note, payable in the manner set forth
therein.
d. In the event Borrower shall close on a loan, the proceeds
of which are to finance or refinance the purchase of all of the outstanding
common stock of Borrower and to pay off the Borrower's Subordinated Convertible
Notes, which contains the right to convert to common stock, then the entire
outstanding principal balance of the Note, together with accrued interest, shall
be immediately due and payable.
11. NO DEFENSES, SET-OFFS OR COUNTERCLAIMS. Borrower affirmatively sets
forth that it has have no defenses, set-offs, or counterclaims against Lender in
connection with the Note.
12. FINANCIAL STATEMENTS. Borrower shall provide Lender with the
following financial information:
a. Annual audited consolidated financial statements prepared
in accordance with Generally Accepted Accounting Principles, within 90 days of
Borrower's fiscal year end.
5
<PAGE> 6
b. Quarterly, unaudited, consolidated financial statements
within 45 days of Borrower's fiscal quarter end, certified as true and correct
by Borrower's chief financial officer.
c. Quarterly, commencing with the fourth quarter of 1999,
aging reports for PHS, Inc.'s accounts receivable within 30 days of each quarter
end.
13. INSPECTION OF BOOKS AND ASSETS. Borrower shall allow any
representative of Lender to visit and inspect any of its properties, to examine
its and PHS, Inc.'s books of record and account and to discuss the affairs,
finances and accounts with the respective officers, all at such reasonable times
with advance notice and as often as Lender may reasonably request, and, in each
case, cause each subsidiary so to do.
14. DEFAULTS; LITIGATION. Promptly give written notice to Lender of (a)
the occurrence of any Default or Event of Default, (b) all actions, proceedings
or claims, of which Borrower may have notice, which may be commenced or asserted
against Borrower or any subsidiary including PHS, Inc. after the date hereof
once the aggregate amount involved for all actions, proceedings and claims is at
least $200,000.00 in excess of the amount of any insurance applicable thereto,
and thereafter, all new actions, proceedings and claims whenever the aggregate
amount involved for all actions, proceedings and claims is at least $200,000.00
(in excess of applicable insurance) in excess of the amount involved at the time
of the last notice hereunder, and (c) any dispute which may exist between
Borrower or any subsidiary and any governmental regulatory body, which may
substantially adversely affect the normal business operations of Borrower or any
subsidiary or any of their respective properties and assets.
15. NEGATIVE COVENANTS. Borrower covenants and agrees that so long as
this Agreement is in effect and until the Note, together with interest and all
other obligations incurred hereunder are paid in full, Borrower and PHS, Inc.
will not:
a. LIENS. Contract, create, incur, assume, or suffer to exist
any mortgage, pledge, lien or other charge or encumbrance of any kind (including
the charge upon property purchased under conditional sale or other title
retention agreements) in excess of $250,000 (exclusive of employment agreements
and all leases) annually commencing from the date of execution of this Agreement
(exclusive of employment agreements and all leases), or grant any security
interest in (all of the foregoing "Liens"), any of its property or assets
whether now owned or hereafter acquired.
b. OTHER INDEBTEDNESS. Contract, create, incur, assume, be or
become contingently liable, or suffer to exist, any indebtedness for borrowed
money, in excess of $250,000.00 annually commencing from the date of execution
of this Agreement, except (i) indebtedness incurred pursuant to this Agreement,
(ii) indebtedness existing on the effective date of this Agreement to the extent
disclosed in writing to Lender prior to its execution of this Agreement.
c. ACCOUNTS RECEIVABLE, ETC. Sell, discount, transfer, assign
or otherwise dispose of any of its accounts or notes receivable at less than
face value
6
<PAGE> 7
thereof unless in each case the purpose is to accomplish collection of
delinquent accounts in the ordinary course of business, and except for
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
d. SALE OF CONTROLLING INTEREST. Borrower shall not, without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, sell, transfer, assign, pledge or otherwise convey a controlling
interest in PHS, Inc. during the term of this Agreement.
e. RESTRICTION ON PAYMENT OF DIVIDENDS. Borrower shall not,
during the term of this Agreement, pay dividends to any of its stockholders nor
shall it make any distributions or repay all or any portion, including accrued
interest, of any loans from its stockholders (except for the 7% subordinated
Convertible Notes).
16. JURISDICTION. Borrower irrevocably agrees, that subject to Lender's
sole and absolute election, all actions or proceedings in any way arising out of
this Agreement, shall be litigated in courts having situs within Miami-Dade
County, State of Florida. Borrower hereby consents and submits to the
jurisdiction of any local, state or federal courts, located within said county
and state. Borrower waives any objection to venue of any actions instituted
hereunder and consents to the granting of such legal or equitable relief as is
deemed appropriate by the court.
17. EVENTS OF DEFAULT. Upon the occurrence of any of the following
events (hereinafter referred to as an "Event of Default") which are not cured by
Borrower within thirty (30) business days after delivery of a notice of default,
unless otherwise provided below and except for subparagraph (a), which shall be
ten (10) business days:
a. Borrower shall fail to make any payment of principal and/or
interest on the Note when the same shall become due and payable.
b. An Event of Default as defined in any other Loan Document
shall occur.
c. Borrower and/or PHS, Inc. shall permit, cause or suffer a
transfer of title to or encumber, or permit to be further encumbered, the assets
specifically described as being now owned and held by Borrower or PHS, Inc. in
which Lender has been granted a perfected security interest without Lender's
consent in writing.
d. Borrower shall fail to perform any other material term or
condition of this Agreement.
e. The filing by or against Borrower or PHS, Inc. of a
petition in bankruptcy or under any rehabilitative provision of the Bankruptcy
Code, or the insolvency of Borrower or PHS, Inc., or the making by Borrower or
PHS, Inc. of an assignment for the benefit of creditors, or the appointment of a
receiver or trustee for Borrower, shall constitute an Event of Default hereunder
which shall authorize Lender, at its option, to
7
<PAGE> 8
immediately accelerate maturity of all indebtednesses secured hereby, provided
that if such bankruptcy petition or receivership is involuntary, Borrower or
PHS, Inc. shall have a period of sixty (60) days in which to finally dismiss
same before Lender may exercise any of the hereinafter specified remedies in the
event of default.
f. Borrower shall fail to perform any material covenant or
term or condition of this Agreement, or any material representation or warranty
of Borrower herein or in any other loan documentation with Lender found to be
inaccurate, untrue or breached, or shall fail to timely perform all terms and
conditions for disbursement of the Loan.
g. The replacement, removal or resignation of Mel Harris as
Chief Executive Officer of Borrower or if Mel Harris, for any reason, transfers
his interest in any of the capital stock of Borrower subsequent to the date
hereof.
i. In the event the Borrower's earnings for any quarterly
period, commencing with the 1999 fourth quarter, as reflected in the financial
statements submitted to Lender pursuant to the terms of this Agreement, before
(a) interest expenses on all of its obligations (b) taxes (c) depreciation and
(d) amortization falls below the sum of$1,000,000.
The foregoing shall constitute "Events of Default" hereunder.
18. REMEDIES. Upon the happening of any Event of Default and in the
event Borrower shall have failed to cure such default in the applicable cure
time period provided herein, Lender, at its option, may:
a. Declare immediately due and payable all indebtednesses,
with interest, all monies advanced hereunder and accordingly accelerate payment
of the Note and, at Lender's option commence foreclosure of its security
interests, or take any other action permitted thereby, or by law,
notwithstanding anything to the contrary in the terms of payment stated herein;
and,
b. Proceed against Borrower to enforce any or all Loan
Documents, and the PHS Documents in any manner, in whole or in part and without
regard to marshalling thereof and sell any collateral securing the Loan at
public or private sale in any manner permitted by law; and,
c. The remedies herein provided for shall be in addition to,
and not in substitution for, the rights and remedies which would otherwise be
vested in Lender in law or equity or under the Note and any other Loan
Documents, all of which rights and remedies are specifically reserved by Lender,
and the failure by Lender to exercise the remedies herein provided shall not
preclude the resort to any other remedy or remedies, nor shall the exercise of
the remedies herein provided prevent the subsequent or concurrent resort to any
other remedy or remedies which by law or equity shall be vested in Lender for
the recovery of damages or otherwise in the event of a breach of any of the
undertakings of Borrower hereunder. No delay or omission by Lender in exercising
any
8
<PAGE> 9
right or remedy accruing upon the happening of an Event of Default shall impair
any such right or remedy or shall be construed as a waiver of any such default;
and every right and remedy hereby conferred upon Lender may be exercised from
time to time and as often as shall be deemed expedient by Lender. No waiver of
any Event of Default shall extend to or affect any other Event of Default.
d. The Bank is hereby irrevocably appointed the attorney in
fact of Borrower, which appointment is coupled with an interest, with full power
of substitution, to, in the name of Borrower after an Event of Default, (a)
receive and collect all distributions, profits, proceeds and payments in respect
of the collateral or any part thereof and to give full discharge for the same
and in connection with the foregoing to endorse all instruments made payable to
Borrower, (b) perform all acts and make and deliver all endorsements, notices,
instruments of assignments, and transfer releases, financing statements, and all
other writings whatsoever which the Bank deems appropriate to perfect and
maintain the Bank's security and rights in the collateral, (c) sell, assign and
transfer any and all of the collateral in the course of pursuing Bank's remedies
under this Paragraph, after default hereunder, (d) correct any scrivener's
errors or omissions whatsoever and (e) notify any obligor to make all further
payments to Bank or to Bank's designee; but if so requested by Bank, by any
purchaser of the collateral, or by any other party, Borrower shall ratify and
confirm the acts of Bank (and any substitute of the Bank) as Borrower's attorney
in fact and shall execute and deliver to Bank or Bank's designee any and all
endorsements, notices, instruments of assignments, transfers, releases,
financing statements, and other writings whatsoever that Bank or such purchaser
may request.
19. BORROWER'S ASSIGNMENT. This Loan and Security Agreement may not be
assigned by Borrower without the prior written consent of Lender, which consent
may be withheld in the Lender's sole and absolute discretion, and any attempt to
make such assignment without such consent shall be void and at the option of
Lender, be deemed a default hereunder.
20. LENDER'S ASSIGNMENT. This Agreement, the Loan and any documents
evidencing or securing the Loan, may be placed, assigned and/or serviced by
Lender and/or its successors or assigns, and in connection with any of the
foregoing Lender and/or its successors or assigns, may receive servicing,
brokerage and other fees. Any such placement, assignment or servicing shall be
at Lender's sole option and Lender and/or its successors or assigns shall have
no obligation to disclose to Borrower the receipt or contemplated receipt of any
such fees, nor shall Borrower have any claim or right to same.
Lender shall have the right to assign the Loan to an affiliate
of Lender or to a responsible institutional Lender, and any such assignee shall
have the same rights and privileges as Lender does.
21. DECLARATION OF NO SET-OFF. In the event Lender shall sell and
assign the Note and other Loan Documents, Borrower will, at the request of
Lender, execute and deliver to the purchaser thereof a Declaration of No
Set-Off, or if set-offs do exist, specifying the same, and shall otherwise
assist in every way in such assignment.
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<PAGE> 10
22. INDEMNIFICATION. Borrower agrees to protect, indemnify, defend and
save harmless, Lender and its directors, officers, agents and employees from and
against any and all liability, expense or damage of any kind or nature and from
any suits, claims, or demands, including reasonable legal fees and expenses on
account of any matter or thing, whether in suit or not, arising out of this
Agreement, or in connection therewith, unless said suit, claim or damage is
caused by negligence or willful malfeasance of Lender. This obligation shall
survive the closing of the Loan and the repayment thereof.
23. NOTICES. All notices requests and demands to be made hereunder to
the parties hereto shall be in writing and deemed to have been given or made
when sent by the United States Postal Service to the addresses set forth on Page
1 above, and as to Lender, to the attention of Commercial Loan Department. Such
notices request and demand shall be by registered or certified mail, return
receipt requested, or by telegram or telegraph or may be personally delivered to
Borrower or to a responsible person in the Commercial Loan Department of Lender.
24. LENDER DETERMINATION OF FACTS. Lender shall at all times be free to
independently establish to its satisfaction the existence or nonexistence of any
facts, the existence or nonexistence of which is a condition of this Agreement.
25. INCORPORATION OF PREAMBLE, RECITAL AND EXHIBITS. The preamble,
recital and exhibits hereto are hereby incorporated into this Agreement.
26. TITLES AND HEADINGS. The titles and headings of sections of this
Agreement are intended for convenience only, and shall not in any way affect the
meaning or construction of any provision of this Agreement.
27. CHANGES, WAIVERS, DISCHARGE AND MODIFICATIONS IN WRITING. No
provision of this Agreement may be changed, waived, discharged or terminated
except by an instrument in writing signed by the party against whom enforcement
of the change, waiver, discharge or termination is sought. Each and every
covenant and condition for the benefit of Lender contained in this Agreement may
be waived by Lender; provided, however, that any waiver by Lender of any such
covenant or condition shall be in writing and a waiver only with respect to the
instance for which such waiver is granted, and shall not be deemed to be a
waiver by Lender of Borrower's obligation to thereafter perform each other or
the same covenant or condition of Lender's right to enforce such performance.
28. DEFINITIONS INCLUDE AMENDMENTS. Definitions contained in this
Agreement which identify documents, including, but not limited to, the Loan
Documents, shall be deemed to include all amendments and supplements to such
documents to the date hereof and all future amendments and supplements thereto
entered into from time to time to satisfy the requirements of this Agreement or
otherwise with the consent of Lender. Reference to this Agreement contained in
any of the foregoing documents shall be deemed to include all amendments and
supplements to this Agreement.
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<PAGE> 11
29. LENDER NOT PARTNER OF BORROWER. Notwithstanding anything to the
contrary herein contained or implied, Lender, by this Agreement or by any action
pursuant hereto, shall not be deemed a partner of or joint venturer with
Borrower, and Borrower hereby indemnifies and agrees to hold Lender harmless
(including the payment of reasonable attorneys' fees) from any and all claims or
damages resulting from such a construction of the parties' relationship. The
requirements herein, and the restrictions imposed in this Agreement, are for the
sole protection and benefit of Lender, and not any third party, specifically but
not limited to contractors, suppliers and customers of Borrower. No such third
parties shall have any right to seek recourse against Lender hereunder or
otherwise, to require compliance with the terms and conditions hereof.
30. COSTS AND ATTORNEYS' FEES. All reasonable costs, including
reasonable attorneys' fees, paid or incurred by Lender in the enforcement or
defense of this Agreement, including proceedings in appellate courts, shall be
paid by Borrower.
31. SUCCESSORS AND ASSIGNS. Subject to the restrictions on Borrower's
right to transfer contained herein, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
32. ENTIRE AGREEMENT. No charge or modification of this Agreement shall
be valid unless the same is in writing and signed by the parties hereto. This
Agreement and the Notes and the other Loan Documents contain the entire
agreement between the parties hereto and there are no promises, agreements,
conditions, undertakings, warranties and representations, either written or
oral, express or implied, between the parties hereto other than as set forth
herein or executed concurrently herewith and therein set forth. It is expressly
understood and agreed that the parties hereto intend this Agreement to be an
integration of all prior and contemporaneous promises, agreements, conditions,
undertakings, warranties and representations between the parties hereto. Each
and every one of the obligations, conditions and undertakings therein of
Borrower shall continue and not cease until the Loan, together with all
interest, fees, costs and other amounts due Lender pursuant hereto and thereto
shall have been paid in full and until all obligations of Borrower, and
Guarantors shall have been discharged.
33. TIME. Time is of the essence as to all matters provided for in this
Agreement. In the event of any inconsistency between the applicable time periods
or dates contained in this Agreement and those contained in any other Loan
Document entered into between Borrower and Lender concurrently herewith, the
time periods and dates set forth herein shall control.
34. CONSENT OF PHS, INC. PHS, Inc. for the sole purpose of being bound
by all of the terms conditions and covenants of this Agreement which require
performance of on the part of PHS, Inc., and to affirm the representations
attributed to it, joins in the execution of this Agreement. PHS, Inc., however,
assumes no liability for the performance of any other terms and conditions
hereof.
35. BORROWER, LENDER AND PHS, INC. HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHT THEY MAY
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HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION (INCLUDING BUT NOT LIMITED
TO, ANY CLAIMS, CROSS CLAIMS OR THIRD PARTY CLAIMS ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE NOTE, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREIN. BORROWER AND PHS, INC. HEREBY CERTIFY THAT NO
REPRESENTATIVE OR AGENT OF THE LENDER NOR THE LENDER'S COUNSEL HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
BORROWER AND PHS, INC. ACKNOWLEDGE THAT THE LENDER HAS BEEN INDUCED TO ENTER
INTO THIS LOAN BY, INTER ALIA, THE PROVISIONS OF THIS PARAGRAPH.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
Signed, sealed and delivered CITY NATIONAL BANK OF FLORIDA
in the presence of: a national banking corporation
By: /s/ Steve Capellan
- ----------------------- ----------------------------
Steve Capellan
- ----------------------- Assistant Vice President
PREFERRED EMPLOYERS HOLDINGS, INC.
a Delaware corporation
By: /s/ William R. Dresback
- ----------------------- ----------------------------
William R. Dresback
- ----------------------- Senior Vice President and
Chief Financial Officer
PREFERRED HEALTHCARE STAFFING, INC.
a Delaware corporation
By: /s/ William R. Dresback
- ----------------------- ----------------------------
William R. Dresback
- ----------------------- Vice President
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