<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.)*
Digital Solutions, Inc.
--------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.001 per share
--------------------------------------------------------------
(Title of Class of Securities)
253876106
--------------------------------------------------------------
(CUSIP Number)
Donald Kappauf
300 Atrium Drive, Somerset, New Jersey 08873
(732) 748-1700
--------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 25, 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 signed original and five
copies of the schedule, including all exhibits. See ss.240. 13d-7(b) for other
parties to whom copies are to be sent.
- ----------------------
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
NOTES).
Page 1 of 12 Pages
<PAGE> 2
- --------------------- -----------------------------------
CUSIP NO. 253876106 Page 2 of 12
- --------------------- -----------------------------------
===============================================================================
(1) NAMES OF REPORTING PERSON: KIRK A. SCOGGINS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITY ONLY)
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES CITIZEN
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 4,008,453
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH -0-
REPORTING --------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
3,286,931
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
-0-
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,008,453
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.5%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
===============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
- --------------------- -----------------------------------
CUSIP NO. 253876106 Page 3 of 12
- --------------------- -----------------------------------
===============================================================================
(1) NAMES OF REPORTING PERSON: WARREN M. CASON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES CITIZEN
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 2,220,654
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH -0-
REPORTING --------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
2,220,654
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
-0-
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,220,654
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ X ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.0%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
===============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
- --------------------- -----------------------------------
CUSIP NO. 253876106 Page 4 of 12
- --------------------- -----------------------------------
===============================================================================
(1) NAMES OF REPORTING PERSON: DOROTHY C. CASON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES CITIZEN
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 2,004,227
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH -0-
REPORTING --------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
160,338
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
-0-
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,004,227
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ X ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.3%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
===============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
- --------------------- -----------------------------------
CUSIP NO. 253876106 Page 5 of 12
- --------------------- -----------------------------------
===============================================================================
(1) NAMES OF REPORTING PERSON: WARREN M. CASON, JR., AS TRUSTEE OF THE
DOROTHY C. CASON 1997 THREE YEAR GRANTOR
RETAINED ANNUITY TRUST, DATED JULY 1, 1997
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
FLORIDA
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF -0-
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH -0-
REPORTING --------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
1,843,889
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,843,887
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ X ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.7%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
OO
===============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
- --------------------- -----------------------------------
CUSIP NO. 253876106 Page 6 of 12
- --------------------- -----------------------------------
===============================================================================
(1) NAMES OF REPORTING PERSON: MELISSA C. SCOGGINS, AS TRUSTEE OF THE
ALLAN SCOGGINS 1997 THREE YEAR GRANTOR
RETAINED ANNUITY TRUST, DATED JULY 7, 1997
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
FLORIDA
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF -0-
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH -0-
REPORTING --------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
721,522
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
-0-
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
721,522
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ X ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.6%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
OO
===============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 7
ITEM 1. SECURITY AND ISSUER. This Schedule relates to the Common Stock, $.001
par value (the "Common Stock") of Digital Solutions, Inc., a New Jersey
corporation (the "Issuer") whose principal executive offices are located at 300
Atrium Drive, Somerset, New Jersey 08873.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2.(a) This Schedule is being filed by Kirk A. Scoggins,
Warren M. Cason and Dorothy C. Cason (individually
referred to as a "Reporting Person" and jointly as
the "Reporting Group")
Item 2.(b) The address for each member of the Reporting Group is
as follows:
<TABLE>
<S> <C>
Kirk A. Scoggins 1211 N. Westshore Blvd, Suite 700
Tampa, FL 33601
Warren M. Cason 400 N. Ashley Drive, Suite 2300
Tampa, FL 33602
Dorothy C. Cason c/o Warren M. Cason
400 N. Ashley Drive, Suite 2300
Tampa, FL 33602
Warren M. Cason, Jr., c/o Warren M. Cason
as trustee of the 400 N. Ashley Drive, Suite 2300
Dorothy C. Cason 1997 Tampa, FL 33602
Three Year Grantor
Annuity Trust, dated
July 1, 1997
Melissa C. Scoggins, c/o Kirk A. Scoggins
as trustee of the 1211 N. Westshore Boulevard, Suite 700
Kirk Allan Scoggins Tampa, FL 33601
1997 Three Year Grantor
Retained Annuity Trust,
dated July 1, 1997
</TABLE>
Item 2.(c) The principal occupation of each Reporting Person is
as follows:
(a) Kirk A. Scoggins is President of the
Professional Employer Organization division
of the Issuer at 1211 N. Westshore
Boulevard, Suite 700, Tampa FL 33609
(b) Warren M. Cason is a partner in the law firm
of Holland & Knight LLP at 400 N. Ashley
Drive, Suite 2300, Tampa FL 33602
(c) Dorothy C. Cason is not employed.
(d) Melissa C. Scoggins is not employed.
(e) Warren M. Cason, Jr. is an officer with the
Tampa Police Department at 411 N. Franklin
Street, Tampa, Florida 33602.
Item 2.(d) During the last five years no member of the
Reporting Group has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
Page 7 of 12 Pages
<PAGE> 8
Item 2.(e) During the last five years no member of the
Reporting Group has been a party to a civil
proceeding of a judicial or administrative body of
competent jurisdiction and therefore was not and is
not 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 as a result of any such
proceeding.
Item 2.(f) Each Reporting Person is a citizen of the United
States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Common Stock held by the Reporting Group was acquired as a result
of the merger (the "Merger") between TeamStaff, Inc., TeamStaff II,
Inc., TeamStaff III, Inc., TeamStaff IV, Inc., TeamStaff V, Inc., The
TeamStaff Companies, Inc., TeamStaff Holding Company, Inc., Employer
Support Services, Inc., TeamStaff U.S.A., Inc., and TeamStaff Insurance
Services, Inc. (collectively referred to as the "TeamStaff Companies")
and certain subsidiaries of the Issuer, pursuant to two separate
agreements titled Agreement and Plan of Merger, each dated as of
October 29, 1998, and amended as of January 21, 1999 (collectively, as
amended, the "Merger Agreements"). Pursuant to the Merger Agreements,
members of the Reporting Group received 8,233,334 shares of Common
Stock (the "Merger Shares") in exchange for shares they held in the
Teamstaff Companies.
ITEM 4. PURPOSE OF TRANSACTION.
Each member of the Reporting Group holds the Common Stock received in
the Merger for investment purposes.
At this time, no member of the Reporting Group has any specific plan or
proposal to acquire or dispose of the Common Stock. Consistent with his
or her investment purpose, each Reporting Person at any time and from
time to time may acquire additional shares of Common Stock or dispose
of any or all of the Reporting Person's Common Stock depending upon an
ongoing evaluation of the investment in the Common Stock, prevailing
market conditions, other investment opportunities, liquidity
requirements of the Reporting Person and/or other investment
considerations. No Reporting Person has made a determination regarding
a maximum or minimum number of shares of Common Stock which it may hold
at any point in time.
Except as set forth above none of the Reporting Persons has any present
plans or proposals which would relate to or result in:
(a) the acquisition by the Reporting Group of additional
securities of the Issuer, or the disposition of securities of
the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of
its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board; other then the election of Kirk Scoggins as
President of the Professional Employer Organization division
and to the board of directors, as set forth in the Merger
Agreements;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
Page 8 of 12 Pages
<PAGE> 9
(f) any other material change in the Issuer's business or
corporate structure;
(g) changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g) (4)
of the Securities Exchange Act of 1934; or
(j) any action similar to any of those enumerated in (a) through
(i) above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5.(a) Amount beneficially owned/Percentage of Class
(i) Kirk A. Scoggins beneficially owns 4,008,453
shares of Common Stock, or 14.5% of the 27,590,167 shares outstanding
(consisting of 19,356,833 shares outstanding as of January 11, 1999 (as set
forth in the Issuer's Annual Report on Form 10-K, filed on January 12, 1999 (the
"Form 10-K") plus the issued Merger Shares). Of the 4,008,453 shares of Common
Stock beneficially owned by Mr. Scoggins, 3,286,931 shares (11.9%) are owned
directly by him and 721,522 shares of Common Stock (2.6%) are held in the Kirk
Allan Scoggins 1997 Three Year Grantor Retained Annuity Trust dated July 1, 1997
("Scoggins GRAT"), of which his wife, Melissa C. Scoggins, is the Trustee. Mr.
Scoggins is the Grantor and beneficiary of the Scoggins GRAT, and retains sole
voting power over the shares of Common Stock held in the Scoggins GRAT.
(ii) Warren M. Cason beneficially owns 2,220,654
shares of Common Stock, or 8.0% of the 27,590,167 shares outstanding (consisting
of 19,356,833 shares of Common Stock outstanding as of January 11, 1999 (as set
forth in the Form 10-K) plus the issued Merger Shares). All of the 2,220,654
shares are held directly by Mr. Cason. These shares do not include 160,338
shares of Common Stock (0.6%) held by his wife, Dorothy C. Cason, and 1,843,889
shares of Common Stock (6.7%) held by the Dorothy C. Cason 1997 Three Year
Grantor Retained Annuity Trust dated July 1, 1997 (the "Cason GRAT"), of which
his wife is the Grantor and beneficiary, and retains sole voting power over the
shares of Common Stock held in the Cason GRAT. Warren M. Cason disclaims
beneficial ownership of the shares of Common Stock held by Mrs. Cason and the
Cason GRAT.
(iii) Dorothy C. Cason beneficially owns 2,004,227
shares of Common Stock, or 7.3% of the 27,590,167 shares outstanding (consisting
of 19,356,833 shares of Common Stock outstanding as of January 11, 1999 (as set
forth in the Form 10-K) plus the issued Merger Shares). Of the 2,004,227 shares
held, 160,338 shares of Common Stock (0.6%) are held directly by Mrs. Cason, and
1,843,889 shares of Common Stock (6.7%) are held by the Cason GRAT of which Mrs.
Cason is the Grantor and beneficiary, and retains sole voting power over the
shares of Common Stock held in the Cason GRAT. None of the 2,220,654 shares of
Common Stock (8.0%) held directly by her husband, Warren M. Cason, are included
in the 2,004,227 shares held by Mrs. Cason. Mrs. Cason disclaims beneficial
ownership of the shares of Common Stock held by Mr. Cason.
(iv) Warren M. Cason, Jr., as trustee of the
Cason GRAT, beneficially owns 1,843,889 shares of Common Stock, or 6.7% of the
27,590,167 shares outstanding (consisting of 19,356,833 shares of Common Stock
outstanding as of January 11, 1999 (as set forth in the Form 10-K) plus the
issued Merger Shares). The trustee of the Cason GRAT retains sole dispositive
power over the shares of Common Stock held in the Cason GRAT.
Page 9 of 12 Pages
<PAGE> 10
(v) Melissa C. Scoggins, as trustee of the
Scoggins GRAT, beneficially owns 721,522 shares of Common Stock, or 2.6% of the
27.590,167 shares outstanding (consisting of 19,356,833 shares of Common stock
outstanding as of January 11, 1999 (as set forth in the Form 10-K) plus the
issued Merger Shares). The trustee of the Scoggins GRAT retains sole dispositive
power over the shares of Common stock held in the Scoggins GRAT.
Item 5.(b) Number of shares of which each Reporting Person has:
(i) sole power to vote or direct vote:
-4,008,453 shares with respect to Kirk
Scoggins
-2,220,654 shares with respect to Warren M.
Cason
-2,004,227 shares with respect to Dorothy C.
Cason
(ii) shared power to vote or direct vote: None
(iii) sole power to dispose or direct disposal of:
-3,286,931 shares with respect to Kirk
Scoggins
-2,220,654 shares with respect to Warren M.
Cason
-160,338 shares with respect to Dorothy C.
Cason
-1,843,889 shares with respect to the
trustee of the Cason GRAT
-721,522 shares with respect to the trustee
of the Scoggins GRAT
(iv) shared power to dispose or direct disposal
of: None
Item 5.(c)
Not applicable.
Item 5.(d)
Not applicable.
Item 5.(e)
Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Warren M. Cason and Dorothy C. Cason are husband and wife.
Mr. and Mrs. Cason are the parents of Kirk Scoggins's wife, Melissa C.
Scoggins, and Warren M. Cason, Jr. Melissa C. Scoggins is the trustee
of the Scoggins GRAT and Warren M. Cason, Jr. is the trustee of the
Cason GRAT.
As President of the Professional Employer Organization,
division of the Issuer, Mr. Scoggins is eligible to participate in the Issuer's
Senior Management Incentive Plan (the "Plan"). Pursuant to Mr. Scoggin's
employment agreement with the Issuer, the form of which is attached as Exhibit
2, Mr. Scoggins was granted options to purchase 100,000 shares of the Issuer's
Common Stock under the Plan, of which 50,000 will vest on January 25, 2000 and
the remaining 50,000 will vest on January 25, 2001. In connection with the
Merger, Mr. Scoggins and the Issuer agreed that debt owed by Mr. Scoggins to the
TeamStaff Companies in the amount of $135,000 shall be forgiven over a period of
two years, with one-half being forgiven on the first anniversary of the closing
of the Merger and the remaining one-half being forgiven on the second
anniversary of the closing of the Merger, provided Mr. Scoggins is then employed
by the Issuer.
Page 10 of 12 Pages
<PAGE> 11
The Reporting Persons have filed this Schedule 13D to report
the consummation of the Merger, pursuant to which the members of the
Reporting Group have entered into a Voting Agreement (the "Voting
Agreement"), the form of which is attached as Exhibit 3, whereby each
Reporting Person has agreed to vote their shares of Common Stock for
the nominees for the Board of Directors of the Issuer, in accordance
with the terms and upon the conditions set forth in the Voting
Agreement. As a result of their agreement to act together for the
purpose of voting the shares of Common Stock held by the Reporting
Group, each Reporting Person is deemed to have acquired beneficial
ownership, for purposes of Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended, as of the date of the consummation of
the Merger, of all shares of Common Stock beneficially owned by each
Reporting Person. Accordingly, each of the Reporting Persons has filed
this Schedule 13D to report the "acquisition" of beneficial ownership
of more than five percent of the equity securities of the Issuer to
which this Schedule 13D relates. However, each Reporting Person
disclaims beneficial ownership of the Common Stock held by each other
Reporting Person except to the extent that the Reporting Person has a
pecuniary interest therein.
Additionally, the Issuer and the Reporting Persons have
entered into a Registration Rights Agreement (the "Registration Rights
Agreement"), the form of which is attached as Exhibit 4. Pursuant to
the terms of the Registration Rights Agreement, the Reporting Persons
have automatic registration rights under which the Issuer must use its
best efforts to file a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), to cause the registration
under the Securities Act of: (i) 33-1/3% of the Merger Shares as soon
as possible following the first anniversary of the Registration Rights
Agreement; (ii) 33-1/3% of the Merger Shares as soon as possible
following the second anniversary; and (iii) 33-1/3% of the Merger
Shares as soon as possible following the third anniversary of the
Registration Rights Agreement. All expenses of any registration
relating to the shares of Common Stock as provided in the Registration
Rights Agreement (other than underwriting discounts and commissions and
fees and expenses of counsel for the Reporting Person) are to be borne
by the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Joint Filing Agreement, dated February 5, 1999, between Kirk
A. Scoggins, Warren M. Cason, and Dorothy C. Cason.
2. Form of Employment Agreement
3. Form of Voting Agreement
4. Form of Registration Rights Agreement
Page 11 of 12 Pages
<PAGE> 12
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 5, 1999.
/s/ Kirk A. Scoggins
-----------------------------------------
Kirk A. Scoggins
/s/ Warren M. Cason
-----------------------------------------
Warren M. Cason
/s/ Dorothy C. Cason
-----------------------------------------
Dorothy C. Cason
/s/ Melissa C. Scoggins
-----------------------------------------
Melissa C. Scoggins, as Trustee of the
Kirk Allan Scoggins 1997 Three Year
Grantor Retained Annuity Trust, dated
7/1/97
/s/ Warren M. Cason, Jr.
-----------------------------------------
Warren M. Cason, Jr., as Trustee of the
Dorothy C. Cason 1997 Three Year Grantor
Retained Annuity Trust, dated 7/1/97
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
Page 12 of 12 Pages
<PAGE> 1
EXHIBIT 1
AGREEMENT
RESPECTING JOINT FILING OF SCHEDULE 13D
The undersigned hereby agree to jointly prepare and file with
regulatory authorities a Schedule 13D reporting each of the undersigned's
ownership of shares of common stock of Digital Solutions, Inc., a New Jersey
corporation, and hereby affirm that such Schedule 13D is being filed on behalf
of each of the undersigned.
IN WITNESS THEREOF this Agreement may be executed in one or more
counterparts, each of which shall deemed an original for all purposes and all
of which together shall constitute one and the same Agreement, and this
Agreement may be effected by a written facsimile signature of each party.
Dated February 5, 1999.
/s/ Kirk A. Scoggins
-------------------------------------------
Kirk A. Scoggins
/s/ Warren M. Cason
-------------------------------------------
Warren M. Cason
/s/ Dorothy C. Cason
-------------------------------------------
Dorothy C. Cason
/s/ Melissa C. Scoggins
-------------------------------------------
Melissa C. Scoggins, as Trustee of the Kirk
Allan Scoggins 1997 Three Year Grantor
Retained Annuity Trust, dated 7/1/97
/s/ Warren M. Cason, Jr.
-------------------------------------------
Warren M. Cason, Jr., as Trustee of the
Dorothy C. Cason 1997 Three Year Grantor
Retained Annuity Trust, dated 7/1/97
<PAGE> 1
EXHIBIT 2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the ___ day of December, 1998, by and between
Kirk Scoggins, residing at 1901 Brookline Avenue, Tampa, Florida 33629
(hereinafter referred to as the "Employee") and DIGITAL SOLUTIONS, INC., a New
Jersey corporation with principal offices located at 300 Atrium Drive,
Somerset, New Jersey 08873 (hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, the Company and its subsidiaries are engaged in the business
of providing Human Resource Administrative Services; and
WHEREAS, the Company desires to employ the Employee for the purpose of
securing for the Company the experience, ability and services of the Employee;
and
WHEREAS, the Employee desires to be employed with the Company,
pursuant to the terms and conditions herein set forth, superseding all prior
agreements between the Company, its subsidiaries and/or predecessors and
Employee;
NOW, THEREFORE, it is mutually agreed by and between the parties
hereto as follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby employs and agrees to continue the employment of the Employee,
and the Employee hereby accepts such continued employment in his capacity as
President of the Company's Professional Employer Organization ("PEO").
ARTICLE II
DUTIES
1. The Employee shall, during the term of his employment with the
Company, and subject to the direction and control of the Company's CEO, perform
such duties and functions as he may be called upon to perform by the Company's
CEO during the term of this Agreement.
2. The Employee agrees to devote full business time and his best
efforts in the performance of his duties for the Company and any subsidiary
corporation of the Company.
<PAGE> 2
3. The Employee shall perform, in conjunction with the Company's
Executive Management, to the best of his ability the following services and
duties for the Company and its subsidiary corporations (by way of example, and
not by way of limitation):
a. Those duties attendant to the position with the Company for which
he is hired;
b. Establish and implement current and long range objectives, plans,
and policies, subject to the approval of the CEO and Board of Directors;
c. Financial planning for the PEO Division;
d. Managerial oversight of the Company's PEO business;
e. Ensure that all Company's PEO activities and operations are carried
out in compliance with local, state and federal regulations and laws governing
business operations;
f. Work with the CEO on business expansion of the PEO Company,
including acquisitions, joint ventures, and other opportunities; and
g. Promotion of the relationships of the Company and its subsidiaries
with their respective employees, customers, suppliers and others in the
business community.
h. Employee shall be based in the Pinellas and Hillsborough, Florida
counties area and shall undertake such travel, within or outside the United
States, as is or may be reasonably necessary in the interests of the Company.
ARTICLE III
COMPENSATION
1. Commencing the date hereof and during the term hereof, Employee
shall be compensated initially at the rate of $175,000 per annum, subject to
such increases to be determined on each 12-month anniversary during the term of
this Agreement (the "Base Salary"), which shall be paid to Employee as in
accordance with the Company's regular payroll periods.
2. Employee shall be entitled to receive a bonus (the "Bonus") in
accordance with the Company's Senior Management Incentive Program to be
determined within 30 days of commencement of this Agreement and thereafter
within 30 days of the beginning of each fiscal year.
3. The Company shall deduct from Employee's compensation all federal,
state, and local taxes which it may now or may hereafter be required to deduct.
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<PAGE> 3
ARTICLE IV
BENEFITS
1. During the term hereof, the Company shall provide Employee with
group health care and insurance benefits as generally made available to the
Company's senior management; provide such other insurance benefits obtained by
the Company and made generally available to the Company's senior management
(the Company will reimburse the Employee to the extent his health and welfare
benefits are reduced from those in effect at the TeamStaff Companies at the
time of the acquisition by the Company); reimburse the Employee, upon
presentation of appropriate vouchers, for all reasonable business expenses
incurred by the Employee on behalf of the Company upon presentation of suitable
documentation; and pay to Employee the sum of $800 per month as and for an
automobile allowance.
2. In the event the Company wishes to obtain Key Man life insurance on
the life of Employee, Employee agrees to cooperate with the Company in
completing any applications necessary to obtain such insurance and promptly
submit to such physical examinations and furnish such information as any
proposed insurance carrier may request.
3. For each year of the term hereof, Employee shall be initially
entitled to five (5) weeks paid vacation.
ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the termination of
his employment hereunder, except when acting on behalf of and with the
authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
marketing, computerized payroll, accounting and information business, personnel
and/or employee leasing business of the Company and its subsidiaries, including
information relating to any customer of the Company or pool of temporary
employees, or any other nonpublic business information of the Company and/or
its subsidiaries learned as a consequence of Employee's employment with the
Company (collectively referred to as the "Proprietary Information"). For the
purposes of this Agreement, trade secrets and confidential information shall
mean information disclosed to the Employee or known by him as a consequence of
his employment by the Company, whether or
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<PAGE> 4
not pursuant to this Agreement, and not generally known in the industry. The
Employee acknowledges that trade secrets and other items of confidential
information, as they may exist from time to time, are valuable and unique
assets of the Company, and that disclosure of any such information would cause
substantial injury to the Company.
ARTICLE VI
RESTRICTIVE COVENANT
1. In the event of the voluntary termination of employment with the
Company prior to the expiration of the term hereof, or Employee's discharge in
accordance with Article VIII, or the expiration of the term hereof without
renewal, Employee agrees that he will not, for a period of two (2) years
following such termination (or expiration, as the case may be) directly or
indirectly enter into or become associated with or engage in any other business
(whether as a partner, officer, director, shareholder, employee, consultant, or
otherwise), which business is located in the States of Florida, New Jersey, New
York, and Texas or any other state the Company is operating in and is involved
in the professional employer organization business, or is otherwise engaged in
the same or similar business as the Company shall be engaged and is in direct
competition with the Company, or which the Company is in the process of
developing, during the tenure of Employee's employment by the Company.
Notwithstanding the foregoing, the ownership by Employee of less than 5 percent
of the shares of any publicly held corporation shall not violate the provisions
of this Article VI.
2. In furtherance of the foregoing, Employee shall not during the
aforesaid period of non-competition, directly or indirectly, in connection with
any computerized payroll, employee leasing, or permanent or temporary personnel
business, or any business similar to the business in which the Company was
engaged, or in the process of developing during Employee's tenure with the
Company, solicit any customer or employee of the Company who was a customer or
employee of the Company during the tenure of his employment.
3. If any court shall hold that the duration of non-competition or any
other restriction contained in this Article is unenforceable, it is our
intention that same shall not thereby be terminated but shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or
unenforceable or, in the alternative, such judicially substituted term may be
substituted therefor.
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<PAGE> 5
ARTICLE VII
TERM
1. This Agreement shall be for a term of two (2) years commencing
January 1, 1999 and terminating on December 31, 2000 unless sooner terminated
as provided for herein (the "Expiration Date").
2. Unless this Agreement is earlier terminated pursuant to the terms
hereof, the Company agrees to notify Employee in writing whether it intends to
negotiate a renewal of this Agreement by notice six (6) months prior to the
Expiration Date. In the event the Company fails to so notify the Employee, the
term of this Agreement shall be extended for an additional one (1) year.
ARTICLE VIII
DISABILITY DURING TERM
In the event Employee becomes totally disabled so that he is unable or
prevented from performing any one or all of his usual duties hereunder for a
period of four (4) consecutive months, and the Company elects to terminate this
agreement in accordance with Article IX, paragraph (B) then, and in that event,
Employee shall receive his Base Salary as provided under Article III of this
Agreement for a period of twelve (12) months commencing from the date of such
total disability. The obligation of the Company to make the aforesaid payments
shall be modified and reduced and the Company shall receive a credit for all
disability insurance payments which Employee may receive from insurance
policies provided by the Company.
ARTICLE IX
TERMINATION
The Company may terminate this Agreement:
a. Upon the death of Employee during the term hereof, except that the
Employee's legal representatives, successors, assigns, and heirs shall have
those rights and interests as otherwise provided in this Agreement, including
the right to receive accrued but unpaid incentive compensation and special
bonus compensation on a pro rata basis.
b. Subject to the terms of Article VIII, upon written notice from the
Company to the Employee, if Employee becomes totally disabled and as a result
of such total disability, has been
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<PAGE> 6
prevented from and unable to perform all of his duties hereunder for a
consecutive period of four (4) months.
c. Upon written notice from the Company to the Employee, at any time
for "Cause." For purposes of this Agreement, "Cause" shall be defined as:
willful disobedience by the Employee of a material and lawful instruction of
the CEO or the Board of Directors of the Company; conviction of the Employee of
any misdemeanor involving fraud or embezzlement or similar crime, or any
felony, excluding traffic-related offenses; breach by the Employee of any
material provision of this Agreement; or conduct amounting to fraud,
dishonesty, negligence, willful misconduct, recurring insubordination,
inattention to or unsatisfactory performance of duties which adversely affects
operations of the Company, or excessive absences from work, provided that the
Company shall not have the right to terminate the employment of Employee
pursuant to the foregoing clauses (a) and (b) above unless written notice
specifying such breach shall have been given to the Employee and, in the case
of breach which is capable of being cured, the Employee shall have failed to
cure such breach within thirty (30) days after his receipt of such notice.
d. In the event the Company demotes, substantially reduces the duties
of or reduces the salary or benefits of the employee, the employee may elect to
treat this Agreement as terminated for "good reason." In the event of
termination of this Agreement for good reason, the employee shall be entitled
to payment of the greater of all salary, benefits and stock grants or options
due for the remaining term of the Agreement or the severance payments as
defined in Article VII(c) herein, in addition to any rights or remedies
available to the employee at law or in equity.
e. In the event of the termination of this Agreement and the discharge
of Employee by the Company in breach and violation of this Agreement, Employee
shall not be obligated to mitigate damages by seeking or obtaining alternate
employment.
ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written
prior to the effective date of this Agreement.
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ARTICLE XI
STOCK OPTIONS
As an inducement to Employee to enter into this Agreement the Company
hereby grants to Employee options to purchase shares of the Company's Common
Stock, $.001 par value, upon and subject to the following conditions:
(a) Subject to the terms and conditions of the Company's Senior
Management Incentive Plan (the "Plan"), and the terms and conditions set forth
in the Stock Option Certificate which are incorporated herein by reference, the
Employee is hereby granted options to purchase 100,000 shares of the Company's
Common Stock of which options to purchase 50,000 shares shall be vested on the
second anniversary hereof. The option shall contain such other terms and
conditions as set forth in the stock option agreement. The exercise price of
the options shall be the closing market price of the Common Stock on the date
hereof. The foregoing options shall be qualified as incentive stock options to
the maximum as allowed by law. The Options provided for herein are not
transferable by Employee and shall be exercised only by Employee, or by his
legal representative or executor, as provided in the Plan. Such Option shall
terminate as provided in the Plan.
ARTICLE XII
ARBITRATION AND INDEMNIFICATION
Any dispute arising out of the interpretation, application, and/or
performance of this Agreement with the sole exception of any claim, breach, or
violation arising under Articles V or VI hereof shall be settled through final
and binding arbitration before a single arbitrator in the State of Florida in
accordance with the Rules of the American Arbitration Association. The
arbitrator shall be selected by the Association and shall be an attorney-at-law
experienced in the field of corporate law. Any judgment upon any arbitration
award may be entered in any court, federal or state, having competent
jurisdiction of the parties.
The Company hereby agrees to indemnify, defend, and hold harmless the
Employee for any and all claims arising from or related to his employment by
the Company at any time asserted, at any place asserted, and to the fullest
extent permitted by law. The Company shall maintain such insurance as is
necessary and reasonable to protect the Employee from any and all
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<PAGE> 8
claims arising from or in connection with his employment by the Company,
provided such insurance can be obtained without unreasonable effort and
expense.
ARTICLE XIII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE XIV
NOTICE
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person, with written acknowledgment received, or
mailed by certified mail, return receipt requested, as follows:
IF TO THE COMPANY: Digital Solutions, Inc.
300 Atrium Drive
Somerset, NJ 08873
IF TO THE EMPLOYEE: Kirk Scoggins
901 Brookline Avenue
Tampa, FL 33629
or to any such other address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph. Notice shall be effective
three (3) days after delivery or mailing.
ARTICLE XV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
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<PAGE> 9
ARTICLE XVI
WAIVER
The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.
ARTICLE XVII
GOVERNING LAW
This Agreement has been negotiated and executed in the State of
Florida shall govern its construction and validity.
ARTICLE XVIII
JURISDICTION
Any or all actions or proceedings which may be brought by the Company
or Employee under this Agreement shall be brought in courts having a situs
within the State of Florida, and Employee and the Company each hereby consent
to the jurisdiction of any local, state, or federal court located within the
State of Florida.
ARTICLE XIX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto. No change, addition, or amendment shall be made hereto, except by
written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and affixed their hands and seals the day and year first above written.
(Corporate Seal) DIGITAL SOLUTIONS, INC.
By:
----------------------------------
Donald W. Kappauf
President & CEO
----------------------------------
Kirk Scoggins
<PAGE> 1
EXHIBIT 3
FORM OF VOTING AGREEMENT
The Board of Directors
Digital Solutions, Inc.
300 Atrium Drive
Somerset, New Jersey 08873
Gentlemen:
Reference is made to that certain Plan and Agreement of Merger and
Reorganization, dated as of October 29, 1998 ("Merger Agreement") by and among
the undersigned, Digital Solutions, Inc. ("Digital"), the Merger Corporations
and the TeamStaff Entities. All terms not defined herein shall have the
meanings ascribed to them in the Merger Agreement.
It is a condition to closing the transactions contemplated by the
Merger Agreement, specifically, pursuant to Sections 2(d)(iv)(B), 7(a)(xviii)
and 7(b)(xiv) of the Merger Agreement, that the undersigned deliver this voting
agreement to Digital. The undersigned acknowledges that he, she or it has
received certain consideration from Digital pursuant to the Merger Agreement
and this voting agreement is coupled with an interest.
The undersigned hereby agrees that for a period of two years from the
date hereof, the undersigned shall vote all Digital Shares beneficially owned
by the undersigned (determined in accordance with Section 13 of the Securities
and Exchange Act of 1934, as amended and any rules promulgated thereunder) in
favor of all management nominees to the Digital Board of Directors at any and
all special or annual meetings of shareholders of Digital and in any written
consent delivered by the undersigned to Digital or any third party. In the
event that any Digital Shares owned by the undersigned are transferred in a
private transaction or by the laws of descent, the shares so transferred shall
continue to be subject to this voting agreement. Notwithstanding the foregoing,
this voting agreement shall not be binding upon Digital Shares that are sold by
the undersigned either pursuant to a registration statement or Rule 144
promulgated by the SEC.
<PAGE> 2
The undersigned hereby acknowledges and agrees that the share
certificates owned by the undersigned shall bear a legend as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
AGREEMENT IN FAVOR OF DIGITAL SOLUTIONS, INC. A COPY OF THE VOTING
AGREEMENT IS RETAINED AT THE OFFICES OF DIGITAL SOLUTIONS, INC. NO
TRANSFER, PLEDGE OR SALE OF THE SALES SHALL BE ALLOWED EXCEPT IN
ACCORDANCE WITH THE VOTING AGREEMENT. THE VOTING AGREEMENT EXPIRES ON
__________, 2000.
IN WITNESS WHEREOF, the undesigned has duly executed this voting
agreement this ___ day of December, 1998.
-----------------------------
<PAGE> 1
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of the 25th day of January, 1999, between the
person whose name and address appears on the signature page hereto
(individually, a "Holder" or, collectively with each of the holders, the
"Holders") and Digital Solutions, Inc., a New Jersey corporation having its
principal executive office at 300 Atrium Drive, Somerset, New Jersey 08873 (the
"Company"). Terms that are not otherwise defined in this Agreement shall have
the meaning given them in the Plan and Agreement of Merger and Reorganization
dated as of October 29, 1998 (the "Merger Agreement") by and among the Company,
the TeamStaff Entities and the Holders.
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders have received from the Company shares ("Shares") of the
Company's common stock, par value $.001 per share (the "Common Stock"),
pursuant to the terms of the Merger Agreement; and
WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the Shares.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registrable Securities. As used herein the term "Registrable
Security" means each of the Shares owned by the Holders as set forth on Exhibit
A annexed hereto; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Securities Act of 1933, as amended (the "Act") and disposed of
pursuant thereto, (ii) registration under the Act is no longer required for the
immediate public distribution of such security, or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Section 1.
2. Automatic Registration. (a) The Company shall use its best
efforts to file a registration statement covering thirty three and one-third
percent (33-1/3%) of the Registrable Securities (registration of 500,000 of
such shares shall be designated by Kirk Scoggins and the remainder by Warren
Cason) (the "Initial Registration Statement") with the Securities and Exchange
Commission (the "SEC") under the Act as soon as practicable following the first
anniversary of this Agreement (the "First Required Filing Date"). The Company
shall use its best efforts to cause such Initial Registration Statement to
become effective under the Act as soon as practicable thereafter and shall
maintain the effectiveness of the Initial Registration Statement until the
earlier of (i) the date that all of the Registrable Securities have been sold
or (ii) the date that all of the Holders thereof receive an opinion of counsel
to the Company that the Registrable Securities may be sold under the provisions
of Rule 144(k) promulgated under
<PAGE> 2
the Act (or any successor provision), so as to permit the public offer and sale
of the Registrable Securities.
(b) In addition to the First Registration Statement, the Company
shall use its best efforts to file a registration statement covering an
additional thirty three and one-third percent (33-1/3%) of the Registrable
Securities (registration of 1,872,223 of such shares shall be designated by
Warren Cason and the remainder by Kirk Scoggins) (the "Second Registration
Statement") with the Securities and Exchange Commission (the "SEC") under the
Act as soon as practicable following the second anniversary of this Agreement
(the "Second Required Filing Date"). The Company shall use its best efforts to
cause such Second Registration Statement to become effective under the Act as
soon as practicable thereafter and shall maintain the effectiveness of the
Second Registration Statement until the earlier of (i) the date that all of the
Registrable Securities have been sold or (ii) the date that all of the Holders
thereof receive an opinion of counsel to the Company that the Registrable
Securities may be sold under the provisions of Rule 144(k) promulgated under
the Act (or any successor provision), so as to permit the public offer and sale
of the Registrable Securities.
(c) In addition to the Initial Registration Statement and the
Second Registration Statement, the Company shall use its best efforts to file a
registration statement covering the remaining thirty three and one-third
percent (33-1/3%) of the Registrable Securities owned by each Holder (the
"Final Registration Statement") with the SEC under the Act as soon as
practicable following the date which is three years from the date of Closing
(as defined in the Merger Agreement) (the "Final Required Filing Date"). The
Company shall use its best efforts to cause such Final Registration Statement
to become effective under the Act as soon as practicable thereafter and shall
maintain the effectiveness of the Final Registration Statement until the
earlier of (i) the date that all of the Registrable Securities have been sold
or (ii) the date that all of the holders thereof receive an opinion of counsel
to the Company that the Registrable Securities may be sold under the provisions
of Rule 144(k) promulgated under the Act (or any successor provision), so as to
permit the public offer and sale of the Registrable Securities.
(d) Notwithstanding the provision under Section 2(a), 2(b) or
2(c) hereof, if, at the time of the First Required Filing Date, the Second
Required Filing Date or the Final Required Filing Date, as the case may be, the
Company is negotiating a merger, consolidation, acquisition or sale of all or
substantially all of its assets or a similar transaction and in the written
opinion of counsel to the Company, the Initial Registration Statement, the
Second Registration Statement or the Final Registration Statement, as the case
may be, would be required to include information concerning such transactions
or the parties thereto that is not available at the time, the Company shall
promptly so advise the Holders of the Registrable Securities and, at the
Company's election, to be set forth in such notice ("Notice of Postponement"),
the filing of either the Initial Registration Statement, the Second
Registration Statement or the Final Registration Statement, as the case may be,
may be postponed for a period not to exceed the lesser of (i) the date such
information becomes available to the Company or (ii) ninety (90) days from the
First Required Filing Date, the Second Required Filing Date or the Final
Required Filing Date, as the case may be (the "Postponement Period"); provided,
however, that the Company shall not be permitted to give any such Notice of
Postponement and to so postpone the filing of the registration statement more
than once.
<PAGE> 3
3. Covenants of the Company With Respect to Registration. The
Company covenants and agrees as follows:
(a) In connection with any registration under Article 2 hereof,
the Company shall use its best efforts to cause the Initial Registration
Statement, the Second Registration Statement or the Final Registration
Statement, as the case may be, to become effective as promptly as possible and
prevent the SEC from issuing a stop order suspending the effectiveness of the
Initial Registration Statement, the Second Registration Statement or the Final
Registration Statement, as the case may be, or, if any stop order shall be
issued by the SEC in connection therewith, to use its best efforts to obtain
the removal of such order. Following the effective date of the Initial
Registration Statement, the Second Registration Statement or the Final
Registration Statement, as the case may be, the Company shall, upon the request
of the Holder, forthwith supply such reasonable number of copies of the
applicable registration statement, preliminary prospectus and prospectus
meeting the requirements of the Act, and other documents necessary or
incidental to the public offering of the Registrable Securities, as shall be
reasonably requested by the Holder to permit the Holder to make a public
distribution of the Holder's Registrable Securities. The obligations of the
Company hereunder with respect to the Holder's Registrable Securities are
subject to the Holder's furnishing to the Company such appropriate information
concerning the Holder, the Holder's Registrable Securities and the terms of the
Holder's offering of such Registrable Securities as the Company may reasonably
request in writing.
(b) The Company shall pay all costs, fees and expenses in
connection with all registration statements filed pursuant to Article 2 hereof,
including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses; provided, however, that the
Holder shall be solely responsible for the fees of any counsel retained by the
Holder in connection with such registration and any transfer taxes or
underwriting discounts, commissions or fees applicable to the Registrable
Securities sold by the Holder pursuant thereto.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as are reasonably requested by the Holders of such
securities, provided that the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
(d) During the period when a prospectus is required to be
delivered under the Act, promptly file all documents required to be filed by it
with the SEC pursuant to Section 13(a), 13(c), or 14 of the Securities and
Exchange Act of 1934, as amended;
(e) Promptly notify the Holders in writing of the following: (i)
the date when the registration statement or any post-effective amendment to it
becomes effective, and the date when any amendment to the registration
statement or supplement to a prospectus is filed with the SEC; (ii) the
issuance by the SEC of the stop order suspending the effectiveness of the
registration statement or the initial proceedings for that purpose; (iii) the
suspension of
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<PAGE> 4
qualification of any Shares for sale in any jurisdiction or the initiation of
any proceedings for that purpose; and (iv) the Company's intention to file an
amendment to the registration statement, or a supplement to any prospectus,
that differs from the prospectus on file when the registration statement became
effective and including documents deemed to be incorporated by reference into a
prospectus.
4. Additional Terms.
(a) The Company shall indemnify and hold harmless the Holder and
each underwriter, within the meaning of the Act, who may purchase from or sell
for the Holder, any Registrable Securities, from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the either
registration statement filed pursuant to Article 2 of this Agreement, any other
registration statement filed by the Company under the Act with respect to the
registration of the Registrable Securities, any post-effective amendment to
such registration statements, or any prospectus included therein or caused by
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission based upon information furnished or required to be furnished in
writing to the Company by the Holder or underwriter expressly for use therein,
which indemnification shall include each person, if any, who controls either
the Holder or underwriter within the meaning of the Securities Act and each
officer, director, employee and agent of the Holder and underwriter; provided,
however, that the indemnification in this Section 4(a) with respect to any
prospectus shall not inure to the benefit of the Holder or underwriter (or to
the benefit of any person controlling the Holder or underwriter) on account of
any such loss, claim, damage or liability arising from the sale of Registrable
Securities by the Holder or underwriter, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to the Holder or underwriter by the Company prior to the subject sale
and the subsequent prospectus was not delivered or sent by the Holder or
underwriter to the purchaser prior to such sale; and provided further, that the
Company shall not be obligated to so indemnify the Holder or any such
underwriter or other person referred to above unless the Holder or underwriter
or other person, as the case may be, shall at the same time indemnify the
Company, its directors, each officer signing the applicable registration
statement and each person, if any, who controls the Company within the meaning
of the Act, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained in the
applicable registration statement, any registration statement or any prospectus
required to be filed or furnished by reason of this Agreement or caused by any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission based upon information furnished in writing to the Company by the
Holder or underwriter expressly for use therein.
(b) If for any reason the indemnification provided for in the
preceding section is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any
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<PAGE> 5
loss, claim, damage, liability or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of
the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.
(c) Neither the filing of a registration statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by
the Holder shall impose upon the Holder any obligation to sell the Holder's
Registrable Securities.
(d) The Holder, upon receipt of notice from the Company that an
event has occurred which requires a post- effective amendment to the
registration statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of Registrable Securities until the Holder
receives a copy of a supplemented or amended prospectus from the Company, which
the Company shall provide as soon as practicable after such notice.
(e) If the Company fails to keep the registration statement
referred to in Article 2 above continuously effective during the requisite
period, then the Company shall promptly use its best efforts to update the
registration statement or file a new registration statement covering the
Registrable Securities remaining unsold, subject to the terms and provisions
hereof.
5. Governing Law. The Registrable Securities will be, if and
when issued, delivered in New York. This Agreement shall be deemed to have been
made and delivered in the State of New York and shall be governed as to
validity, interpretation, construction, effect and in all other respects by the
internal substantive laws of the State of New Jersey, without giving effect to
the choice of law rules thereof.
6. Amendment. This Agreement may only be amended by a written
instrument executed by the Company and the Holder.
7. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties, oral and
written, with respect to the subject matter hereof.
8. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
9. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed (i) duly given if (and
then delivered three business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient or (ii) duly given if (and then delivered one business day after) it
is sent
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<PAGE> 6
by overnight courier and addressed to the intended recipient. All notices shall
be sent to the addresses as set forth below:
<TABLE>
<S> <C>
If to the Sellers: Copy to:
Warren M. Cason Holland & Knight LLP
c/o Holland & Knight LLP 400 North Ashley Drive
400 North Ashley Drive Suite 2300
Suite 2300 Tampa, Florida 33602
Tampa, Florida 336 (Attn: Robert J. Grammig, Esq.)
Kirk A. Scoggins
1211 North Westshore Boulevard
Suite 806
Tampa, Florida 33607
If to Digital: Copy to:
Digital Solutions, Inc. Goldstein & DiGioia LLP
300 Atrium Drive 369 Lexington Avenue, 18th Fl
Somerset, NJ 08873 New York, NY 10017
Attn: Donald Kappauf Attn: Brian C. Daughney, Esq.
</TABLE>
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
10. Binding Effect; Benefits. The Holder may not assign his or
her rights hereunder. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective heirs, legal
representatives and successors. Nothing herein contained, express or implied,
is intended to confer upon any person other than the parties hereto and their
respective heirs, legal representatives and successors, any rights or remedies
under or by reason of this Agreement.
11. Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
12. Severability. Any provision of this Agreement which is held
by a court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without
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<PAGE> 7
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
- -----------------------------------------
WARREN M. CASON, Holder
- -----------------------------------------
DOROTHY C. CASON, Holder
- -----------------------------------------
KIRK A. SCOGGINS, Holder
- -----------------------------------------
MELISSA C. SCOGGINS, as Trustee
of the Kirk Allan Scoggins 1997
Three Year Grantor Retained Annuity
Trust, dated 7/1/97, Holder
- -----------------------------------------
WARREN M. CASON, JR., as Trustee
of the Dorothy C. Cason 1997
Three Year Grantor Retained Annuity
Trust, dated 7/1/97, Holder
DIGITAL SOLUTIONS, INC.
By:
--------------------------------------
Name:
Title:
7
