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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 7, 2000
TEAMSTAFF, INC.
(Exact name of Registrant as specified in charter)
New Jersey 0-18492 22-1899798
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
300 Atrium Drive, Somerset, N.J. 08873
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (732) 748-1700
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 7, 2000 TeamStaff, Inc. ( "TeamStaff" or the
"Company") entered into a definitive Asset Purchase Agreement to acquire
substantially all of the assets of the professional employer organization
("PEO") business of Outsource International, Inc. ("Outsource") which had
operated under the tradename "Synadyne". The assets were acquired through one of
TeamStaff's wholly-owned subsidiaries, of which Outsource had indirectly held a
20% ownership interest. The 20% ownership interest was subsequently purchased by
TeamStaff. The transaction was effective as of August 8, 2000.
TeamStaff acquired the tradename "Synadyne" as part of the transaction,
as well as all of the customer contracts of the PEO business.
Under the terms of the Asset Purchase Agreement, TeamStaff paid an
aggregate purchase price of $3,500,000. The agreement also provides for an
additional potential payment in one year of up to $1,250,000 provided that the
former clients of Outsource have at least 9,500 worksite employees as of March
31, 2001. In the event there are less than 9,500 employees, the amount of the
earnout will be reduced by a pre-determined formula.
Based upon pre-acquisition figures provided by Outsource, management
believes that the combined businesses will have over 20,000 worksite employees,
an increase from 11,000 pre-acquisition employees of TeamStaff. Management
further believes that the post-acquisition TeamStaff will have annualized
revenues of over $500 million, ranking it as one of the top ten PEOs nationwide.
PEOs provide outsourcing of human resource, payroll, benefits, and workers'
compensation protection to small and medium sized businesses.
Pursuant to the terms of the Asset Purchase Agreement, Outsource,
subject an initial "basket" of $50,000, has agreed to indemnify TeamStaff up to
the purchase price for claims for breaches of representations and warranties.
In connection with the acquisition, TeamStaff received an increase in
its present lending facility with FINOVA Capital Corporation in order to fund
the acquisition and necessary working capital. The facility is comprised of (i)
a three year term loan in the principal amount of $4,000,000, with a five year
amortization and a balloon payment at the end of three years and (ii) an
increase in the revolving line of credit from $2.5 million to $3.5 million. The
term loan bears an interest rate of prime plus 3 percent and the revolving loan
bears an interest rate of prime plus 1 percent. The term loan may be prepaid at
any time without penalty. Annual success fees of $500,000 are earned as of each
anniversary date of the loan commencing as of April 2000.
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ITEM 5. OTHER EVENTS
TeamStaff held its Annual Meeting of shareholders on April 13, 2000. As
of the record date of March 7, 2000, there were 27,932,513 shares outstanding
and eligible to vote at the Annual Meeting. At the Annual Meeting shareholders
approved the following actions:
1. Election Of Directors.
Shareholders were requested to vote on the election of two Class 3
directors
Nominee Name Votes Against Votes in Favor % in Favor
Kirk Scoggins 145,339 25,554,907 99%
Martin J. Delaney 153,939 25,546,307 99%
2. Adoption of 2000 Employee Stock Option Plan
Shareholders were requested to approve adoption of the 2000 Employees
Stock Option Plan to provide for the grant of options to purchase up to
6,000,000 shares of the Corporation's common stock.
Votes Cast in Favor % In Favor Votes Against Votes Abstaining
(of shares voted)
15,307,440 89% 1,749,275 460,406
3. Adoption of 200 Non-Executive Director Stock Option Plan.
Shareholders were requested to approve adoption of the 2000
Non-Executive Director Stock Option Plan to provide for the issuance of options
to purchase Common Stock to non-employee directors.
Votes Cast in Favor % in Favor Votes Against Votes Abstaining
(of shares voted)
15,420,070 90% 1,707,012 390,039
4. Reverse Stock Split
Shareholders were requested to approve a proposal to grant the Board of
Directors the authority to amend the Articles of Incorporation of the
Corporation to effect a reverse stock split of the Corporation's Common Stock in
the range of from 1:3 to 1:3.5 of the Corporation's common
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stock, $.001 par value per share.
Votes Cast in Favor % in Favor Votes Against Votes Abstaining
(of shares voted)
23,937,603 93% 1,637,431 125.212
The Board of Directors originally approved the reverse split, along
with the other proposals, on January 20 , 2000, for submission to the
Shareholders at the Annual Meeting held on April 13, 2000. The March 8, 2000
proxy statement for the Annual Meeting cited two principal reasons for the
reverse split: increasing the stock price to make the Company's common stock a
more attractive investment and qualifying for the Nasdaq National Market System.
At the time of the proxy statement, management of the Company believed that,
with the completion of certain contemplated restructurings, the Company would
meet all of the initial listing criteria of the Nasdaq National Market System,
provided the reverse split caused the Common Stock to trade above $5.00, as
required for initial listing.
After the March 8, 2000 proxy statement was mailed, the Company became
aware of an opportunity to purchase the professional employer organization
business of Outsource International, Inc.. The Company was advised that
Outsource had immediate cash needs and accordingly the Company believed it could
negotiate a favorable purchase price provided it was able to close the
transaction on an expedited basis and pay the purchase price in cash. Under the
terms of the letter of intent for the transaction, Outsource required that the
transaction be closed on or about March 31, 2000, subsequently extended to April
10, 2000. On April 10, 2000, three days prior to the Shareholders meeting and
after most of the Company's Shareholders had returned their proxies, the Company
announced the completion of the acquisition of the assets of Synadyne. The
purchase price of $3,500,000 was paid in cash which was funded by an increase in
the Company's lending facilities.
The Company believes the acquisition of the Synadyne assets will
significantly enhance the Company's financial performance in the future;
however, the acquisition resulted in an increase in intangible assets which
currently prevents the Company from complying with the net tangible assets
listing requirements of the Nasdaq National Market System. Among other criteria,
companies such as TeamStaff applying for listing on the National Market System
which have a market capitalization of less than $75,000,000 (or revenues and
total assets of less than $75,00,0000) are required to have net tangible assets
of at least $6,000,000. Even taking into consideration certain planned
restructurings, the Company's net tangible assets may not equal or exceed
$6,000,000. Although the Board of Directors still believes the reverse split is
in the best interests of the Company and strongly urges its adoption, the Board
has decided to resubmit the proposal to the Shareholders so that Shareholders
will be able to make an informed decision based on current information. The
Board has determined that the 1:3.5 ratio is appropriate for the split and
therefore has not requested authority for a range for the split. The Company
anticipates holding a Special Meeting of
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Shareholders in May, 2000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(a)(b) Financial Statements of Businesses Acquired and Pro Forma Financial
Information
The financial statements of the Synadyne division of Outsource
International, Inc. and the pro forma financial information required in
accordance with Form 8K will be filed within 60 days of the filing of this Form
8K.
(c) Exhibits. The exhibits designated with an asterisk (*) are filed herewith.
All other exhibits have been previously filed with the Commission and, pursuant
to 17 C.F.R. Secs. 20l.24 and 240.12b-32, are incorporated by reference to the
document referenced in brackets following the descriptions of such exhibits.
3.1* Form of Asset Purchase Agreement dated as of April 7, 2000 by
and between TeamStaff Inc., Teamstaf V, Inc., Outsource
International, Inc.and Synadyne I, Inc., Synadyne II, Inc.,
Synadyne III, Inc., Synadyne IV, Inc., Synadyne V, Inc.,
Guardian Employer East LLC and Guardian Employer West LLC.
10.1* First Amendment to the Amended and Restated Schedule to the
Amended and Restated Loan and Security Agreement among
TeamStaff, Inc. and its Subsidiaries as Co-Borrowers and
FINOVA Capital Corporation dated April 7, 2000.
10.2* Second Amended and Restated Secured Promissory Note A dated
April 7, 2000 in the principal amount of $1,541,659 payable to
FINOVA Capital Corporation.
10.3* Amended and Restated Secured Promissory Note B dated April 7,
2000 in the principal amount of $1,899,996 payable to FINOVA
Capital Corporation.
10.4* Secured Promissory Note C dated April 7, 2000 in the principal
amount of $4,000,000 payable to FINOVA Capital Corporation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: April 19, 2000 TEAMSTAFF, INC.
(Registrant)
By: DONALD T. KELLY
-----------------------
Donald T. Kelly
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
----------- -------------------------------------------------------------
3.1* Form of Asset Purchase Agreement dated as of April 7, 2000 by
and between TeamStaff Inc., Teamstaf V, Inc., Outsource
International, Inc.and Synadyne I, Inc., Synadyne II, Inc.,
Synadyne III, Inc., Synadyne IV, Inc., Synadyne V, Inc.,
Guardian Employer East LLC and Guardian Employer West LLC.
10.1* First Amendment to the Amended and Restated Schedule to the
Amended and Restated Loan and Security Agreement among
TeamStaff, Inc. and its Subsidiaries as Co-Borrowers and
FINOVA Capital Corporation dated April 7, 2000.
10.2* Second Amended and Restated Secured Promissory Note A dated
April 7, 2000 in the principal amount of $1,541,659 payable to
FINOVA Capital Corporation.
10.3* Amended and Restated Secured Promissory Note B dated April 7,
2000 in the principal amount of $1,899,996 payable to FINOVA
Capital Corporation.
10.4* Secured Promissory Note C dated April 7, 2000 in the principal
amount of $4,000,000 payable to FINOVA Capital Corporation.
- ---------------------------
* Filed Herewith.
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Exhibit 3.1
ASSET PURCHASE AGREEMENT
by and between
TEAMSTAFF, INC.,
TEAMSTAFF V, INC.
and
OUTSOURCE INTERNATIONAL, INC.
and
SYNADYNE I, INC., SYNADYNE II, INC., SYNADYNE III, INC.,
SYNADYNE IV, INC., SYNADYNE V, INC.,
GUARDIAN EMPLOYER EAST LLC AND
GUARDIAN EMPLOYER WEST LLC
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<TABLE>
<CAPTION>
EXHIBITS AND SCHEDULES
EXHIBITS
<S> <C>
Exhibit A Bill of Sale, Assignment and Assumption Agreement
Exhibit B Sellers' Audited Operational Financial Statements for
the fiscal years ended December 31, 1997 and December
31, 1998 and Unaudited Operational Statements of
Income for 12 months ended December 31, 1999
Exhibit C List of States where the Sellers conduct business
Exhibit D Form of Non Solicitation Agreement
Exhibit E Synadyne Retention/Severance Policy
Exhibit F Non-Disturbance Agreement of Fleet Bank
Exhibit G Shared Services Agreement
Exhibit H Client Services Agreement
Exhibit I Sub Lease for Delray Beach Premises
Exhibit J Sub Lease for Deerfield Beach Premises
</TABLE>
SCHEDULES
<TABLE>
<CAPTION>
Number Title
<S> <C>
2.1(a) Accounts
2.1(c) Fixed Assets
2.2(a) Customer Deposits
2.3 Accounts Receivable
2.4(b) Assumed Liabilities
2.5(A) Assignable Listed Investments
2.5(B) NonAssignable Listed Instruments
5.1(a) Other Names
5.7 Listed Instruments/Accounts Contracts
5.8 Exceptions to Claims/Litigation
5.9 Insurance Policies
5.11 Employee Benefit Plan
5.12 Liens
5.13 Current Accounts
5.14 Competitive Interests
5.15 Liens/Material Changes
</TABLE>
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ASSET PURCHASE AGREEMENT
AGREEMENT made as of the 7th day of April, 2000 by and between
TEAMSTAFF V, INC., a Florida corporation, maintaining a place of business at
1211 N. Westshore Blvd., Tampa, Florida; TEAMSTAFF, INC., a New Jersey
corporation, with offices located at 300 Atrium Drive, Somerset, New Jersey
08873 ("TeamStaff"); OUTSOURCE INTERNATIONAL, INC., a Florida corporation
maintaining its principal place of business at 1144 East Newport Center Drive,
Deerfield Beach, FL 33442 (hereinafter referred to as "OII") and Synadyne I,
Inc., a Florida corporation with its principal place of business at 1144 East
Newport Center Drive, Deerfield Beach, FL 33442 ("Synadyne I"), Synadyne II,
Inc., a Florida corporation with its principal place of business at 1144 East
Newport Center Drive, Deerfield Beach, FL 33442 ("Synadyne II"), Synadyne III,
Inc., a Florida corporation with its principal place of business at 1144 East
Newport Center Drive, Deerfield Beach, FL 33442 ("Synadyne III"), Synadyne IV,
Inc., a Florida corporation with its principal place of business at 1144 East
Newport Center Drive, Deerfield Beach, FL 33442 ("Synadyne IV"), Synadyne V,
Inc., a Florida corporation with its principal place of business at 1144 East
Newport Center Drive, Deerfield Beach, FL 33442 ("Synadyne V"), Guardian
Employer East LLC, a Delaware limited liability corporation with its principal
place of business at 1144 East Newport Center Drive, Deerfield Beach, FL 33442
("Guardian East") and Guardian Employer West LLC, a Delaware limited liability
corporation with its principal place of business at 1144 East Newport Center
Drive, Deerfield Beach, FL 33442 ("Guardian West").
W I T N E S S E T H :
WHEREAS, TeamStaff is engaged in the business of providing professional
employee related services; and
WHEREAS, the Sellers are engaged in the business of operating a
professional employer business in the states set forth in Exhibit C annexed
hereto; and
WHEREAS, TeamStaff is the legal and beneficial owner of 80% of the
outstanding shares of Purchaser and ADCT, Inc., a wholly owned subsidiary of
OII, is the legal and beneficial owner of 20% of the outstanding shares of
Purchaser; and
WHEREAS, Purchaser and Sellers are affiliates of each other; and
WHEREAS, Purchaser is desirous of acquiring from Sellers certain of the
assets of the Sellers used in connection with Sellers' professional employer
organization business ("PEO") subject to the terms and conditions of this
Agreement; and
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WHEREAS, Sellers are desirous of selling these assets to Purchaser
subject to the terms of this Agreement:
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants and agreements contained herein, the parties agree as follows:
SECTION ONE: DEFINITIONS
The following definitions have the indicated meanings for the purposes
of this Agreement:
AAA: American Arbitration Association.
Account: Each party to whom Sellers have provided PEO services since
the dates of Sellers' incorporation and the right to do business with such
party.
Accounts Receivable: All accounts receivable of the Sellers outstanding
on the Effective Date and as set forth on Schedule 2.3.
Acquired Assets: The property of Sellers' PEO business described in
Section Two hereof, which is being sold to Purchaser pursuant to the terms of
this Agreement.
Assumed Liabilities: Those liabilities of Sellers to be assumed by
Purchaser and as set forth on Schedule 2.4(b).
Closing Date: April 7, 2000 or such other date as may be agreed upon by
the parties in writing.
COBRA: Consolidated Omnibus Budget Reconciliation Act of 1985.
Code: The Internal Revenue Code of 1986, as amended.
Current Accounts: Each PEO client of Sellers who is receiving PEO
services, including payroll, from Sellers as of the Effective Date.
Earnout Payment: The payments, if any, of up to a maximum of $1,250,000
payable by Purchaser to OII pursuant to Section 3.2 hereof.
Effective Date: April 8, 2000 at 12:01 a.m. or such other time as may
be agreed upon by the parties.
Employee Benefit Plan: An Employee Welfare Benefit Plan, an Employee
Pension Benefit Plan, a Multi-Employer Plan and any other plan, program or
arrangement providing retirement, deferred compensation, severance pay, bonuses,
stock options, stock purchase or any other form of retirement or deferred
benefit, sponsored or maintained by an employer.
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Employee Pension Benefit Plan: Any plan, fund or program sponsored by
an employer or an employee organization which provides retirement income to
employees for periods extending to the termination of employment or beyond as
described in Section 3(2) of ERISA.
Employee Welfare Benefit Plan: Any plan, fund or program sponsored by
an employer or an employee organization which provides to its employees certain
benefits listed under Section 3(1) of ERISA.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Financial Statements: The audited operational financial statements of
Sellers for the fiscal years ended December 31, 1997 and December 31, 1998 and
the unaudited operational statements of income for the 12 months ended December
31, 1999.
Intellectual Property: (a) All trademarks, service marks, logos,
tradenames and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith and all applications, registrations and renewals in connection
therewith; (b) all copyrights and applications, registrations and renewals in
connection therewith; (c) all trade secrets and confidential business
information; and (d) all other proprietary rights.
GAAP: Generally Accepted Accounting Principles.
Knowledge: Means actual knowledge.
Liabilities: Sellers' liabilities, debts and obligations of any kind or
nature whether accrued, absolute, contingent or unliquidated, known or unknown,
and whether due or to become due including any liability under any Employee
Benefit Plan or Multi-Employer Plan.
Listed Instruments: The agreements, contracts and instruments with the
Current Accounts set forth in Schedule 5.7.
Material: Shall mean any claim, loss event, fact or circumstance which
individually would result in damages, or might result in damages of $15,000
individually and $25,000 in the aggregate.
Material Adverse Effect: Any event, circumstance change or effect that
is, or could reasonably be expected to be, materially adverse to the condition
(financial or otherwise) of the Acquired Assets.
Modular Furniture: All office furniture and cubicles used by Sellers in
the operation of their PEO business.
Multi-Employer Plan: A plan to which more than one (1) employer is
required to contribute and which is maintained pursuant to one (1) or more
collective bargaining agreements
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between one (1) or more unions and more than one (1) employer as described in
Section 3(37) of ERISA.
Non-Solicitation Agreements: The agreements between TeamStaff,
Purchaser and the persons whose names appear in Section 7(a)(viii) hereof,
substantially in the form of Exhibit D annexed hereto.
OII: Outsource International, Inc., a Florida corporation and the sole
shareholder of Sellers.
Permits: All licenses, permits, exemptions, business certificates,
orders and approvals from any federal, state, local and foreign governmental or
regulatory agency or body.
Purchase Price: The sum of $3,500,000 payable in accordance with
Section Three hereof.
Purchaser: TeamStaff V, Inc., a subsidiary of TeamStaff and any
affiliate or related party of TeamStaff or TeamStaff V, Inc. to which any of the
Acquired Assets or Listed Instruments are transferred or conveyed.
Purchaser's Legal Counsel: Goldstein & DiGioia, LLP.
Section: Sections of this Agreement.
Sellers: Synadyne I, Inc., a Florida corporation with its principal
place of business at 1144 East Newport Center Drive, Deerfield Beach, FL 33442,
Synadyne II, Inc., a Florida corporation with its principal place of business at
1144 East Newport Center Drive, Deerfield Beach, FL 33442, Synadyne III, Inc., a
Florida corporation with its principal place of business at 1144 East Newport
Center Drive, Deerfield Beach, FL 33442, Synadyne IV, Inc., a Florida
corporation with its principal place of business at 1144 East Newport Center
Drive, Deerfield Beach, FL 33442 Synadyne V, Inc., a Florida corporation with
its principal place of business at 1144 East Newport Center Drive, Deerfield
Beach, FL 33442, Guardian Employer East LLC, a Delaware limited liability
corporation with its principal place of business at 1144 East Newport Center
Drive, Deerfield Beach, FL 33442 and Guardian Employer West LLC, a Delaware
limited liability corporation with its principal place of business at 1144 East
Newport Center Drive, Deerfield Beach, FL 33442.
Sellers' Legal Counsel: Akerman, Senterfitt & Eidson, P.A.
TeamStaff: TeamStaff, Inc., a New Jersey corporation and the owner of
80% of the capital stock of Purchaser.
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SECTION TWO: SALE AND PURCHASE OF ASSETS
2.1 SALE AND PURCHASE OF ASSETS
Each of the Sellers hereby sells, transfers, assigns and delivers to
Purchaser and Purchaser hereby purchases, acquires and accepts from Sellers,
free and clear of all liens and encumbrances, as of the Effective Date all of
Sellers' right, title and interest in and to the assets of Sellers set forth
below:
(a) All Accounts of the Sellers' PEO business listed on Schedule
2.1(a) hereof (including the right to do business with such Accounts and all
contracts related to such Accounts) including all Current Accounts and customer
lists, files, historical information, and fee schedules relating to such
Accounts and Current Accounts;
(b) The tradename "Synadyne" and all uses thereof including,
without limitation, the Internet domain name Synadyne.com;
(c) Certain desktop computers not subject to operating or capital
leases specifically listed in Schedule 2.1(c) and used in the daily conduct of
Sellers' PEO business operations; and
(d) Sellers' catalogs, brochures, marketing, advertising and
public relations materials; provided, however, Purchaser shall acquire only the
Intellectual Property rights which OII or Sellers may have in connection with
such catalogs, brochures, marketing, advertising and public relations materials
("Marketing Materials"). (collectively the "Acquired Assets").
2.2 CUSTOMER DEPOSITS
Schedule 2.2(a) sets forth the name of each Current Account with the
amount of customer deposit being held by Sellers and/or OII with respect to such
Current Accounts. Sellers shall deliver all customer deposits relating to the
Current Accounts constituting part of the Acquired Assets to Purchaser. Delivery
of such customer deposits shall be made by offset of the total gross amount of
such deposits against the Purchase Price. Within 10 days of the Closing Date,
the
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Purchaser shall deliver to each Current Account listed on Schedule 2.2(a) a
letter, in form and substance satisfactory to the Sellers, advising such Current
Account that: (i) the Purchaser has acquired the PEO business of Sellers and
that customer deposits have been transferred to the Purchaser in connection
therewith; and (ii) neither OII nor the Sellers have any liability to the
Current Account with respect to such deposits. If any Current Account is
terminated by TeamStaff in the first 90 days after Closing, and such Current
Account has a deposit remaining after TeamStaff or Purchaser has satisfied their
accounts receivable due from such Current Account, and Sellers or OII have an
outstanding Accounts Receivable with respect to such Current Account, then the
remaining balance of such customer deposit shall immediately be returned to OII.
2.3 ACCOUNTS RECEIVABLES
(a) Within five (5) days of the Closing, Sellers shall deliver
Schedule 2.3 to Purchaser which shall set forth the name of each Current Account
and the amount of any Account Receivable owed by the Current Account to the
Sellers as of the Effective Date. All outstanding Accounts Receivable owed to
Sellers by any Accounts as of the Effective Date shall remain the property of
the Sellers.
(b) Following the Closing Date, the Sellers and the Purchaser
shall assist each other in good faith to collect all Accounts Receivable. Each
of the parties hereto acknowledge and understand that pursuant to the terms of
the Shared Services Agreement, personnel of the Sellers and OII shall be
providing services to Purchaser with respect to the Accounts Receivable. Mary
O'Brien, an employee of Sellers, shall devote 50% of her time to assist
Purchaser after the Closing Date with respect to client services, including
collection of Accounts Receivable. Purchaser, pursuant to the Shared Services
Agreement, shall pay 50% of Ms. O'Brien's compensation. Each of the Purchaser,
OII and the Sellers agree that OII and Sellers, will, with respect to Sellers'
Accounts Receivable set forth in Schedule 2.3 perform all collection efforts
with respect to Sellers' Accounts Receivable. The Sellers, OII, Purchaser and
TeamStaff shall include in all mailings to Accounts a notice instructing the
Current Account to specify the invoice being paid by the Current Account. If a
payment is received by OII, Sellers, Purchaser or TeamStaff, and the payment
does not explicitly state the invoice being paid, then the payment shall be
applied to an invoice only upon notification in writing from the Current Account
which has remitted the payment, indicating
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to which invoice of the Current Account the payment should be credited. Any such
notification shall be documented in the "client notes section" of the
"Masterpack Systems".
2.4 EXCLUDED ASSETS AND ASSUMED LIABILITIES
(a) Expressly excluded from the Acquired Assets are any assets of
Sellers not expressly listed in Section 2.1.
(b) Neither Purchaser nor TeamStaff will assume nor be liable for
any Liabilities of OII or the Sellers other than those Liabilities listed in
Schedule 2.4(b) hereof, which list also includes the name and a description of
each Employee Benefit Plan of the Sellers being assumed by Purchaser (the
"Assumed Liabilities"). Without limiting the foregoing, in no event shall
TeamStaff or Purchaser be liable for employee compensation, including any
residual liability arising from any insurance policies which provide coverage
for any of Sellers' clients or worksite employees for any coverage period prior
to the Effective Date, severance benefits and other remuneration up to the date
of payroll or related taxes, or social security payments, payable by OII or
Sellers up to the Effective Date, and OII and the Sellers shall indemnify and
hold TeamStaff and the Purchaser harmless from any and all such liability.
Notwithstanding anything herein to the contrary, for payroll periods beginning
prior to the Effective Date and ending after the Effective Date, Teamstaff or
Purchaser will be liable for all employee payroll due with regard to such
period.
2.5 LIST OF ACCOUNTS
Schedule 2.5(A) sets forth those Listed Instruments which are
assignable to an affiliate of the Sellers or OII without the consent of the
other party or parties thereto. This Agreement shall serve as an assignment and
transfer of all rights and obligations of the Sellers (but excluding all
Liabilities existing prior to the Effective Date) under all of the Listed
Instruments set forth on Schedule 2.5(A). Schedule 2.5(B) sets forth those
Listed Instruments which are nonassignable without the consent of the other
party or parties thereto. Neither Sellers nor OII make any representation or
warranty with respect to the assignability of any Listed Instrument or the
validity of the assignment contemplated hereunder. Neither Sellers nor OII shall
be liable to Purchaser
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for any claims, losses, damages, costs or expenses arising out of the
nonassignability of any Listed Instruments.
2.6 ACCESS TO RECORDS
Purchaser shall maintain, for a period of one year following the
Closing Date, in good order all records, files and other historical information
related to the Acquired Assets and Assumed Liabilities transferred to Purchaser
pursuant to this Agreement (the "Records") and upon reasonable request, provide
copies of such Records and reasonable assistance to Sellers at Sellers' expense
and grant Sellers and OII access to such Records during normal business hours.
2.7 EMPLOYEES OF SELLERS
(a) As of the Effective Date, Purchaser intends to offer
employment to all employees of Sellers (the "Employees"), other than Robert
Lefcort, Raymond Dile, John Leavitt and David Andersen on an at-will basis.
Sellers shall cooperate in good faith with Purchaser to solicit the Employees to
agree to be employed by Purchaser. In the event that Purchaser terminates any
Employee within 30 days of the Closing Date, OII shall pay severance to the
first 15 persons so terminated in accordance with Sellers' severance policies
attached as Exhibit E annexed hereto. Teamstaff shall provide the same severance
and outplacement services to all other Employees who are terminated by Purchaser
within such 30 day period. Purchaser shall process and pay all such severance
payments payable by OII under this Section 2.7, which payments will be prepaid
in advance by OII.
(b) Sellers will retain employment of Ms. Mary O'Brien after the
Effective Date for a period of 90 days. Neither Teamstaff nor Purchaser shall
solicit Ms. O'Brien for employment during such 90 day period. During the period
of the Shared Services Agreement, or such shorter term as determined by
Purchaser, Ms. O'Brien will devote 50% of her time with representatives of
Purchaser providing training to such persons regarding the collection of the
Purchaser's accounts receivable. In the event that neither Teamstaff nor
Purchaser offer employment to Ms. O'Brien upon termination of the 90 day period,
then OII and Sellers shall bear all responsibility for any severance payments to
Ms. O'Brien. In the event that Teamstaff or Purchaser employs Ms. O'Brien within
30 days following the end of the 90 day period, Teamstaff and Purchaser shall
reimburse Sellers or OII for any severance payments made to Ms. O'Brien
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(c) Sellers shall remain liable and bear all responsibility for
all obligations or payments due to employees for all unused or accrued vacation,
personal or sick time and earned but unpaid commissions for all time periods
prior to the Effective Date.
SECTION THREE: PURCHASE PRICE; EARNOUT PAYMENT
3.1 PURCHASE PRICE
Subject to the terms and conditions of this Agreement, on the Closing
Date Purchaser shall pay OII in consideration of and in full payment for the
sale, transfer and assignment of the Acquired Assets and assumption of the
Assumed Liabilities, the sum of $3,500,000 in cash (the "Purchase Price") by
wire transfer of immediately available funds.
3.2 EARNOUT PAYMENT
(a) Purchaser or TeamStaff shall pay to OII an additional payment
of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the "Earnout
Payment"), by wire transfer of immediately available funds, payable on April 30,
2001, subject to the following conditions:
(i) On October 15, 2000, Purchaser shall provide to OII a written
report that lists the Current Accounts (who are listed on the Final Current
Accounts List (as defined below) (for purposes of this Section 3.2 referred to
as "Synadyne Customers") who are customers of Purchaser as of September 30,
2000, and the number of employees subject to a contract with Purchaser at any
Synadyne Customer as of September 30, 2000 (the "September 30, 2000 Employees").
On April 15, 2001, Purchaser shall provide to OII a written report that lists
the Synadyne Customers, and the number of employees subject to a contract with
Purchaser and being paid a salary at a Synadyne Customer as of March 31, 2001
(the "March 31, 2001 Employees"). For purposes of calculating the number of
September 30, 2000 Employees and March 31, 2001 Employees, all Allstate agent
accounts, whether independent or not at the time of this Agreement, shall
constitute one Synadyne Customer. For purposes of calculating the number of
September 30, 2000 Employees and March 31, 2001 Employees, all employees subject
to a contract with Purchaser and being paid a salary at an Allstate agent office
shall be included. It is understood that the total number of employees in the
Allstate Account on September 30, 2000 or March 31, 2001 will not exceed the
number of employees in the Allstate Account as of the Closing Date.
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(ii) If the aggregate number of March 31, 2001 Employees is less
than 9500, the following calculations shall determine the amount of the Earnout
Payment that Purchaser shall pay to OII on April 30, 2001: (A) subtract the
number of March 31, 2001 Employees from 9500 (the "March 31, 2001 Amount"); (B)
multiply the March 31, 2001 Difference by $500.00 (the "Reduction Amount"); (C)
subtract the Reduction Amount from $1,250,000 (the "Subtotal"); (D) subtract the
number of March 31, 2001 Employees from the number of September 30, 2000
Employees, and, (x) if the difference is a number more than zero, multiply the
difference by $187.50 (the "Credit Amount") or (y) if the difference between the
number of March 31, 2001 Employees and the number of September 30, 2000
Employees is less than zero, the Credit Amount shall be zero; and (E) add the
Credit Amount to the Subtotal (the "Earn-out Amount"). Purchaser shall pay the
Earn-out Amount to OII on or before April 30, 2001. By way of example, if the
aggregate number of March 31, 2001 Employees is 9300, the March 31, 2001 Amount
would be 200, and the Reduction Amount would be $100,000 (200 times $500), and
the Subtotal would be $1,150,000. Assume also that on September 30, 2000 there
were 9400 employees. As a result, the Credit Amount would be 100 (9400-9300)
times $187.50, or $18,750. The Earn-out Amount to be paid to OII would be
$1,168,750 ($1,150,000 + $18,750).
(iii) If the aggregate number of March 31, 2001 Employees is 9500 or
greater, Purchaser shall pay to OII on April 30, 2001 the sum of $1,250,000.
(iv) After receipt of the reports from Purchaser on October 15,
2000 and April 15, 2001, respectively, OII shall have the right for 90 days
thereafter to inspect the records of Purchaser for the purpose of verifying the
number of employees and Synadyne Customers stated in the reports.
3.3 ESCROW OF FUNDS FOR PAYMENT OF UNEMPLOYMENT TAXES.
Immediately at Closing, OII and the Sellers shall place into escrow with OII's
counsel an aggregate of $192,000 which shall be held by such counsel until such
date as payment of state unemployment taxes ("SUTA") are due on April 30, 2000.
OII's counsel shall agree in writing not to release such funds except to pay
such SUTA taxes. Any remaining funds will be transferred to OII immediately
thereafter
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SECTION FOUR: CLOSING
4.1 CLOSING
The closing of the purchase and sale of the Acquired Assets provided
herein and the assumption of the Assumed Liabilities (the "Closing") will be
held at or before April 7, 2000, or at such other place, day and time as Seller
and Purchaser may mutually agree. The date of the Closing is herein referred to
as the "Closing Date."
4.2 TERMINATION
Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and abandoned at any time after the date of this
Agreement but not later than the Closing:
(a) by the mutual consent of Sellers and Purchaser; or
(b) by either party any time after April 7, 2000 if, by that date,
the Closing has not taken place; provided, however, no party to this agreement
shall have the right to terminate if the Closing shall not have occurred by
April 7, 2000 as a result of their respective actions or inactions; or
(c) by Purchaser if any condition provided in Section 7(a) hereof
has not been satisfied or waived on or before the Closing Date; or
(d) by the Sellers or OII if any condition provided in Section
7(b) hereof has not been satisfied or waived on or before the Closing Date.
4.3 EFFECTIVE DATE
Except as otherwise set forth herein, the transactions contemplated
hereby shall be deemed to have been effected as of April 8, 2000, at 12:01 a.m.
or such other time and place as the parties may mutually agree.
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SECTION FIVE: REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers and OII, jointly and severally, hereby makes the
representations and warranties contained in this Section Five to Purchaser and
TeamStaff for the purpose of inducing Purchaser and TeamStaff to enter into and
consummate this Agreement.
5.1 ORGANIZATION AND BUSINESS OPERATION
Each Seller is a corporation or limited liability company, as the case
may be, duly organized, validly existing and in good standing under the laws of
the state of its formation with full corporate authority to own, lease and/or
operate the Acquired Assets. Each Seller is, and has been at all times material
to the transactions contemplated by this Agreement, qualified or licensed to do
business as a PEO in all jurisdictions where the conduct of its PEO business or
the ownership of the Acquired Assets requires it to be so qualified or licensed.
Except as disclosed on Schedule 5.1(a), Sellers have only transacted business
under its respective corporate name or the tradename Synadyne and has not
transacted business under any other assumed or fictitious name.
5.2 AUTHORITY: NO CONFLICTING INSTRUMENTS
Each Seller and OII has full corporate power and authority to enter
into and consummate this Agreement and the other agreements contemplated by this
Agreement. All corporate action on behalf of Sellers and OII necessary to
authorize the execution and delivery of this Agreement, and the consummation and
performance by OII and Sellers of the transactions contemplated by this
Agreement, have been taken; and this Agreement constitutes a valid and binding
obligation of Sellers and OII, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency or other similar laws relating to or
affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether enforcement is at equity or at law).
The execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, (A) will not violate or conflict with (i) any
term or provision of OII's or each Seller's Articles of Incorporation or
By-Laws, or Certificate of Formation, as the case may be; (ii) any law,
regulation or order of the United States or any state or any agency or political
subdivision thereof, (iii) any decree or order of any court or other
governmental entity, and (B)
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will not result in a violation or breach of, or constitute a default under, or
permit acceleration of, or give any other party the right to terminate, any
material permit or agreement to which Sellers or OII are a party and to which
any of the Acquired Assets are subject other than the Listed Instruments and
those agreements and policies set forth on Schedule 5.2.
5.3 FINANCIAL STATEMENTS
The audited Financial Statements of Sellers for the fiscal years year
ended December 31, 1997 and December 31, 1998 have been delivered to Purchaser
by Sellers and are accurate and complete in all material respects and prepared
by Sellers in accordance with GAAP consistently applied from year to year. The
unaudited operational statements of income for the 12 months ended December 31,
1999 have been prepared by the Sellers and OII and are accurate and complete in
all material respects and prepared by Sellers in accordance with GAAP.
5.4 TAX RETURNS
Seller has filed with the appropriate federal, state, local and foreign
authorities all payroll tax returns required by law, regulation, or otherwise to
be filed by it for all taxable periods ending on or prior to the Effective Date
for which returns have become due. Sellers have paid all payroll taxes,
penalties and interest which were due and payable or may become due for or
during all taxable periods ending on or prior to the date hereof including all
employee withholding taxes and employee benefits of any kind or nature
(regardless of the amount shown due on any tax return). Except as set forth on
Schedule 5.4, none of Sellers' payroll tax returns, to Sellers' Knowledge, have
ever been audited by the IRS or any state agency. No Seller has executed and
filed with the IRS or any other taxing authority any agreement extending the
period for assessment or collection of any payroll taxes for which it may be
directly or indirectly liable. Except as set forth on Schedule 5.4, no Seller is
a party to any pending action, proceeding or audit by any governmental authority
for assessment or collection of payroll taxes for which it may be directly or
indirectly liable, and no claim for assessment or collection of payroll taxes
for which it may be directly or indirectly liable has been asserted or to
Seller's Knowledge threatened against it. Sellers have delivered to TeamStaff a
true and correct copy of each federal and state payroll tax return filed by
Sellers since January 1, 1998.
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5.5 WARRANTIES
There are no claims or notices, written or oral, and Sellers have no
Knowledge that any service rendered by Sellers to any Current Account breached
any representation or warranty, express or implied, made by Sellers; failed to
meet any specification with respect to such service which was furnished by
Seller; or was otherwise improper or grossly negligently provided, except where
any such breach, failure or negligence would not have a Material Adverse Effect.
5.6 PERMITS; COMPLIANCE WITH LAW
(a) Sellers have maintained all PEO Permits in connection with the
operation of its PEO business in such jurisdiction where such PEO Permits may be
required and where the Acquired Assets may be located, except where the failure
to maintain would not have a Material Adverse Effect on the Acquired Assets.
Each Seller is in material compliance with all federal, state, local and foreign
laws, ordinances, codes, regulations, orders, requirements, standards and
procedures which are applicable to its business including all minimum wage, fair
employment, disability benefit, health and all other employee related laws.
(b) Except as set forth on Schedule 5.6(b), no Seller has, since
its incorporation or formation, as the case may be, entered into a Memorandum of
Understanding, Consent Decree or similar instrument with any governmental agency
or has been the subject of any investigation or legal proceeding, involving or
affecting the Acquired Assets which had or could have a Material Adverse Effect.
(c) No Seller, nor to its Knowledge after reasonable
investigation, any of its respective officers, directors, employees or agents,
on behalf of or for the benefit of each Seller, directly or indirectly, have:
(i) offered or paid any amount to, or made any financial arrangement with, any
of the Current Accounts in order to promote business from such Current Accounts,
other than standard pricing or discount arrangements consistent with proper
business practices; (ii) given, or agreed to give, or is aware that there has
been made, or that there is an agreement to make, any gift or gratuitous payment
of any kind, nature or description (whether in money, property or services) to
any Current Account or supplier, source of financing, landlord, sub-tenant,
licensee or anyone else; or (iii) made, or has agreed to make, any payments to
any person with the intention or understanding that any part of such payment was
to be used directly or indirectly for
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the benefit of any Current Account or employee, supplier or landlord of such
Seller, or for any purpose other than that reflected in the documents supporting
the payments.
5.7 CONTRACTS
(a) Schedule 5.7(a) sets forth all of the Listed Instruments
relating to Current Accounts to be assigned to, the Purchaser in accordance with
this Agreement to which Seller is a party or by which Seller is or may be bound.
(b) A true and correct copy of each Listed Instrument has been
furnished by Seller to Purchaser. Except as set forth in Schedule 5.7(b), Seller
has not given or received notice, and Seller has no Knowledge, that there exists
(i) any Material default or event of default under any Listed Instrument or (ii)
any event or condition which, with notice or lapse of time or both, would
constitute an event of default under any of the Listed Instruments by Seller or
by any other party to any Listed Instrument, which could have a Material Adverse
Effect on the Acquired Assets.
5.8 CLAIMS AND LITIGATION
There are no actions, suits, claims (other than routine claims for
employee benefits which are fully insured) or any legal, administrative or
arbitration proceedings or investigations, of any kind or nature, pending,
existing or, to the Knowledge of Sellers, threatened, relating to the Acquired
Assets, and to Sellers' Knowledge there is no state of facts or the occurrence
of any event which will form the basis of any such action, suit, claim,
proceeding or investigation, except as set forth on Schedule 5.8. There are no
outstanding orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal relating to the Acquired Assets which would have
a Material Adverse Effect on the Acquired Assets. There is no suit, action,
investigation, claim or administrative proceeding which has been brought or, to
Sellers' Knowledge, is threatened by any governmental entity or any third party
which (i) questions the validity or legality of the purchase or sale of the
Acquired Assets or this Agreement or (ii) seeks to enjoin the consummation of
the transactions set forth in this Agreement.
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5.9 INSURANCE
(a) Schedule 5.9 sets forth all policies and binders of workers'
compensation and group health, dental and vision insurance policies held by
Sellers, specifying the insurer and the policy number. Except for required
deductibles, none of which are Material except those set forth on Schedule 5.9,
all such insurance policies and binders, if any, are in such amounts, and to
Seller's Knowledge after reasonable investigation, fully insure against any such
claims, losses and risks listed on Schedule 5.8 and for which coverage is
provided under such policies and such insurance policies are in full force and
effect as of the Effective Date. Sellers are not in Material default with
respect to any material provision contained in any such insurance policy and
Sellers have not received notice of cancellation or non-renewal of any such
policy of insurance.
(b) Each Seller has continuously maintained in effect since the
commencement of its professional employer services business, without lapse or
suspension, insurance policies which have provided its employees with workmen's
compensation insurance or similar occupational accident coverage insurance. All
Sellers' workers' compensation insurance policies in effect as of the Closing
Date are set forth on Schedule 5.9.
(c) All claims of any kind or nature accrued or made by Seller's
employees or others as of the Effective Date are fully insured under policies of
workers compensation and employee related insurance (except for applicable
deductables) which have been maintained by Sellers as indicated in Schedule 5.9.
5.10 EMPLOYEES
Sellers have provided TeamStaff with a list of each of its regular or
"in-house" employees together with such employee's current salary and the date
such employee was first employed by Sellers.
5.11 EMPLOYEE BENEFIT PLANS
Schedule 5.11 lists each Employee Benefit Plan currently maintained or
sponsored by Sellers. Neither Sellers nor any Affiliate (as defined below) has
at any time established, maintained, sponsored or made any contributions to any
Multi-Employer Plan. Each of the Employee Benefit Plans providing health
benefits has at all times been operated in material
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compliance with the health care continuation provisions of ERISA, the Code,
COBRA and state health care continuation laws. All open claims filed by
employees under any Employee Benefit Plan, which accrued prior to the Effective
Date, are the responsibility and obligation of Seller, regardless of whether
such claims are filed prior to or after the Effective Date. For purposes of this
Section 5.11, the term "Affiliate" shall include all persons under common
control with Seller within the meaning of Sections 4001(a)(14) or (b)(1) of
ERISA or any regulation promulgated thereunder, or Sections 414(b), (c) or (m)
of the Code, as amended, or any regulations promulgated thereunder.
Sellers and OII represent and warrant that all payments or
contributions owed by them with respect to Employee Benefit Plans which were due
on or prior to March 31, 2000 have been paid in full.
5.12 ASSETS FREE AND CLEAR
Sellers own all of the Acquired Assets free and clear of all liens,
security interests, encumbrances, equities, claims, agreements and obligations
of any kind or nature, except as set forth on Schedule 5.12. On the Closing
Date, Sellers and OII shall deliver the Acquired Assets free and clear of all
liens, encumbrances, equities, claims, agreements and obligations of any kind or
nature.
5.13 STATUS OF CURRENT ACCOUNTS
Schedule 5.13 is a list of all of Sellers' Current Accounts. Within
five (5) days after the Effective Date, Sellers shall furnish Purchaser with a
list of all of Sellers Current Accounts as of the Effective Date (the "Final
Current Account List"). Sellers have not received written or oral notice, of the
intention on the part of any Current Account to terminate or curtail its
business relationship with Sellers.
5.14 COMPETITIVE INTERESTS
Other than as disclosed on Schedule 5.14 annexed hereto, to (a)
Sellers' Knowledge after reasonable investigation, none of the officers or
directors of Sellers or OII and (b) Sellers' Knowledge, none of the employees of
Sellers or OII, are (i) directors, officers, partners,
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consultants, agents or employees or own, directly or indirectly, or have any
interest in any corporation, firm, association or other business entity or
organization, (ii) are in the PEO business, or (iii) are a competitor, lessor,
lessee, customer, supplier, sales representative or distributor of any Seller,
or (iv) has an interest in any Leasehold, Permit, or any confidential
information which any Seller is using or the use of which is necessary or
desirable for the conduct of any Seller's business.
5.15 ACTIONS OF SELLER
Since December 31, 1998 and except as disclosed to Purchaser in
Schedule 5.15, Sellers have not (i) mortgaged, pledged or subjected to lien,
charge, or any other encumbrance, any of the Acquired Assets, except for liens
held by Fleet National Bank, as agent; (ii) waived any rights of value related
to the Acquired Assets; (iii) entered into any material transaction with respect
to the Acquired Assets; (iv) had any material adverse change in the condition,
financial or otherwise, of the Acquired Assets, Assumed Liabilities, or Listed
Instruments.
5.16 RESTRICTIVE COVENANTS
Schedule 5.16 sets forth a list of officers, directors, founders,
promoters or key employees of Sellers who are employed by OII's PEO business
immediately preceding the Effective Date who are bound by a restrictive covenant
or non-competition agreement.
5.17 NO MISLEADING STATEMENTS
Neither this Agreement, nor the Financial Statements, nor any Schedule,
instrument or certificate executed or delivered by or on behalf of Seller
pursuant to this Agreement, or in connection with the consummation of the
transactions contemplated herein, contains to Sellers' Knowledge, any untrue
statement of a material fact.
5.18 RIGHTS TO SYNADYNE NAME
The Sellers and/or OII have, to their Knowledge, all Intellectual
Property rights in the tradename "Synadyne" and to their Knowledge, the use of
such name does not infringe upon or
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violate any Intellectual Property rights of any other person. Neither the
Sellers nor OII have written notice of any claim of infringement in connection
with their use of the Synadyne name. With respect to the Marketing Materials of
the Sellers, neither Sellers nor OII make any representation or warranty as to
the Intellectual Property rights they may have therein, other than with respect
to the Synadyne name.
SECTION SIX: REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and TeamStaff, jointly and severally, hereby represent and
warrant to Sellers and OII for the purpose of inducing Sellers and OII to enter
into and consummate this Agreement and the transactions contemplated herein
that:
6.1 PURCHASER'S ORGANIZATION AND STANDING.
Each of Purchaser and TeamStaff are duly organized, validly existing
and in good standing under the laws of the state of their incorporation, with
full corporate authority to conduct its business and to own and operate its
assets and properties, as presently conducted. Each of TeamStaff and Purchaser
is duly qualified to do business, and is in good standing, in each jurisdiction
where the character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary, except where such failure to
so qualify would not have a material adverse effect on its business.
6.2 AUTHORITY; NO CONFLICTING INSTRUMENTS
Neither the execution and delivery of this Agreement by Purchaser or
TeamStaff, nor the consummation of the transactions contemplated by this
Agreement, shall violate any provision of the Certificate of Incorporation or
By-Laws of either Purchaser or TeamStaff or violate, conflict with, result in a
breach or termination of, constitute a default under, or accelerate the
performance required by, any instrument to which either of them or by which
either of their respective properties may be bound, or result in the creation of
a material lien, charge or incumbrance on any of their respective assets or
properties which would adversely affect the ability of either of them to
consummate the transactions contemplated by this Agreement.
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Neither TeamStaff nor Purchaser is in violation of their respective
Certificates of Incorporation, By-laws or other governing documents, nor are
either of them in default in the performance of any material obligation,
agreement or condition contained in any license, material contract, indenture,
mortgage, deed of trust, lease or loan agreement or in any bond, debenture, note
or any other evidence of indebtedness to which it is a party or by which it is
bound.
6.3 AUTHORITY FOR AGREEMENT
Each of Purchaser and TeamStaff has full corporate power and authority
(other than approval by the Board of Directors of TeamStaff which approval must
be obtained prior to Closing) to execute and deliver this Agreement and to
perform and consummate the transactions contemplated by this Agreement. Other
than approval by the Board of Directors of TeamStaff, which approval must be
obtained prior to Closing, all corporate proceedings required to be taken by or
on behalf of Purchaser and/or TeamStaff to authorize each of them to enter into
and carry out this Agreement and to perform and consummate the transactions
contemplated herein, have been duly and properly taken. This Agreement has been
duly executed and delivered by each of Purchaser and TeamStaff and is valid and
binding upon them in accordance with its terms, subject to applicable
bankruptcy, insolvency or other similar laws relating to or affecting the
enforcement of creditors' rights generally and to general principles of equity
(regardless of whether enforcement is at equity or at law).
6.4 NO MISLEADING STATEMENTS
Neither this Agreement, nor any certificate, Schedule, instrument or
other agreement delivered or executed by or on behalf of Purchaser or TeamStaff
pursuant to this Agreement, or in connection with the consummation of the
transactions contemplated herein, contains any untrue statement of a material
fact.
6.5 LITIGATION
There is no claim, suit, action or proceeding pending or, to the best
knowledge of TeamStaff or Purchaser, threatened against or affecting either
TeamStaff or Purchaser or any of their respective subsidiaries which is likely
to Materially and adversely affect the business,
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properties or financial condition of either of TeamStaff or Purchaser and their
respective subsidiaries taken as a whole. There is no suit, action,
investigation or claim of any kind or nature, brought or threatened by any
governmental entity or any third party with respect to Purchaser or TeamStaff
which questions the validity or legality of the purchase or sale of the Assets
or this Agreement or seeks to enjoin the consummation of the transactions set
forth in this Agreement.
6.6 NO VIOLATION
Neither TeamStaff nor Purchaser is in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject nor
has either one of them failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of its property or to the
conduct of its business, which violation or failure to obtain is likely to have
any Material Adverse Effect on the condition (financial or otherwise),
properties, results of operations or net worth of either TeamStaff or Purchaser.
6.7 CONSENTS
No consent, approval, authorization or order of, or filing or
registration with, any court, governmental agency or body is required in
connection with the execution, delivery and performance of this Agreement by
either TeamStaff or Purchaser, except for a notice filing required by the State
of Florida with respect to the transfer of 20% of the capital stock of Purchaser
to ADCT, Inc.
SECTION SEVEN: CONDITIONS TO OBLIGATIONS OF PURCHASER
(a) The obligations of Purchaser and TeamStaff to consummate the
transactions contemplated herein are subject to the satisfaction on the Closing
Date of the following conditions by Sellers and the delivery by Sellers to
Purchaser and TeamStaff of the indicated documents.
(i) Legal Opinion
A legal opinion from Sellers' Counsel, dated the Closing Date,
in form and substance satisfactory to Purchaser.
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(ii) Certificate of Good Standing
A Certificate of Good Standing dated within ten (10) days
prior to the Effective Date from the Secretary of State of the state of
incorporation or formation as applicable certifying that each Seller has filed
all required reports, paid all required fees and taxes, and is, as of such date
in good standing and authorized to transact business as a domestic corporation.
(iii) Bill of Sale, Assignment and Assumption Agreement
A Bill of Sale, Assignment and Assumption Agreement between
Sellers and Purchaser in the form satisfactory to Purchaser; (a) conveying the
Acquired Assets to Purchaser free and clear of all liens and encumbrances; and
(b) assigning the Listed Instruments and the Assumed Liabilities set forth on
Schedule 2.4(b) to Purchaser, to the extent permitted therein.
(iv) Certificate of Secretary
A Certificate of the Secretary of the Sellers certifying that
annexed thereto are a true and correct copy of the Sellers': (i) Articles of
Incorporation as amended; (ii) By-Laws as amended; and (iii) resolutions of the
Board of Directors and Shareholders of each Seller and OII authorizing and
approving the execution and delivery of this Agreement and the transaction
contemplated hereby.
(v) Financial Statements. The Agreement shall also be
subject to receipt of the Financial Statements.
(vi) Shared Services Agreement. The parties shall have
executed a Shared Services Agreement in form and substance satisfactory to
TeamStaff and substantially in the form annexed hereto as Exhibit G.
(vii) Client Service Agreement. The parties shall have
executed a Client Service Agreement in form and substance satisfactory to
TeamStaff and substantially in the form annexed hereto as Exhibit H.
(viii) Sub Lease Agreements. The parties shall have executed
a Sub-lease Agreement with respect to the premises located at 1690 South
Congress Avenue, Delray Beach, Florida, and a Stub Period Lease with respect to
the premises located at 1144 East Newport Center Drive, Deerfield Beach Florida,
both in form and substance satisfactory to TeamStaff and substantially in the
form of Exhibit I and J, respectively.
(ix) Assignment of Employee Benefit Plans.
The Sellers' and TeamStaff shall have executed and delivered
any and all such documents in order to effectuate the transfer of the Sellers'
Employee Benefit Plans listed on Schedule 2.4(b) to Purchaser.
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(x) Receipt of Necessary Approvals and Consents.
TeamStaff and the Purchaser shall have received the approval
of (A) any and all necessary governmental authorities (but not including
governmental approval with respect to PEO licenses), (B) its Board of Directors
and (C) and its lenders to the transactions contemplated hereby.
(xi) Release of Liens.
TeamStaff and the Purchaser shall have received in form and
substance satisfactory to them, evidence of release of all liens, security
interests, and encumbrances with respect to the Acquired Assets.
(xii) Consent Agreement from OII Lenders; Consent of
Landlord to Sublease
TeamStaff and the Purchaser shall have received written
evidence, (A) from Fleet National Bank consenting to the transactions
contemplated herein and allowing Teamstaff's access to the systems of OII used
in the delivery of services under the Shared Services Agreement , substantially
in form and substance attached as Exhibit F and (B) from the landlord for the
premises of OII located at 1690 South Congress Avenue, Delray Beach, Florida
stating that it has consented to the Sublease Agreement.
(xiii) Non-Solicitation Agreements. TeamStaff shall have
received Non-Solicitation Agreements from Robert LefCort, Raymond Dile and David
Anderson.
(xiv) Evidence of Payment of all Employee Plan Obligations.
Sellers and OII shall provide written evidence or assurance,
reasonably satisfactory to Teamstaff, that all payments with respect to Employee
Benefit Plans which were due on or prior to March 31, 2000 have been paid.
(b) The obligations of Sellers to sell the Acquired Assets
pursuant to this Agreement are subject to the satisfaction on or prior to
Closing Date of the following conditions by Purchaser and/or TeamStaff and the
delivery by Purchaser and/or TeamStaff of the indicated documents.
(i) Legal Opinion
A legal opinion from Purchaser's Legal Counsel, in form and
substance satisfactory to Sellers.
(ii) Certificate of Secretary
A Certificate of the Secretary of Purchaser certifying that
annexed thereto are a true and correct copy of: Purchaser's (i) Articles of
Incorporation, as amended; (ii) By-laws, as amended and (iii) resolutions of
Purchaser's Board of Directors unanimously authorizing the
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execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(iii) Certificate of TeamStaff Secretary
A Certificate of the Secretary of TeamStaff certifying that
attached thereto is a true and correct copy of the resolutions of TeamStaff's
Board of Directors authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
(iv) TeamStaff's Good Standing Certificate
One or more Certificates of the Secretary of State (or other
authorized public official) of TeamStaff's jurisdiction of incorporation
certifying as of a date within ten (10) days prior to the Effective Date that
TeamStaff has filed all required reports, paid all required fees and taxes, and
is, as of such date, in good standing and authorized to transact business as a
domestic corporation.
(vi) Purchaser's Good Standing Certificate
A Certificate of Good Standing dated within ten (10) days
prior to the Effective Date from the Secretary of State of the State of Florida
evidencing the good standing of Purchaser.
(vii) Purchaser's Consideration
Purchaser shall have delivered the Purchase Price to OII by
wire transfer of immediately available funds to an account designated by OII and
as otherwise set forth in Section Three hereof.
(viii) Bill of Sale, Assignment and Assumption Agreement
The Bill of Sale, Assignment and Assumption Agreement shall
have been executed by Purchaser.
(ix) Shared Services Agreement. The parties shall have
executed the Shared Services Agreement in form and substance satisfactory to
Sellers and substantially in the form annexed hereto as Exhibit G.
(x) Client Service Agreement. The parties shall have
executed the Client Service Agreement in form and substance satisfactory to
Sellers and substantially in the form annexed hereto as Exhibit H.
(xi) Sub Lease Agreements. The parties shall have executed
a Sub-lease Agreement with respect to the premises located at 1690 South
Congress Avenue, Delray Beach, Florida, and a Stub Period Lease with respect to
the premises located at 1144 East Newport Center Drive, Deerfield Beach Florida,
both in form and substance satisfactory to OII and substantially in the form of
Exhibit I and J, respectively.
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(xii) Receipt of Necessary Approvals and Consents.
OII and Sellers shall have received the approval of (A) any
and all necessary governmental authorities (but not including governmental
approval with respect to PEO licenses), (B) their respective Board of Directors
and (C) and its lenders to the transactions contemplated hereby.
SECTION EIGHT: INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLER AND OII
OII and Sellers shall, jointly and severally, indemnify and hold
harmless Purchaser and TeamStaff from and against any and all claims, causes of
action, suits, judgments, taxes, losses, damages, deficiencies, obligations,
costs and expenses (including, without limitation, interest, penalties,
reasonable attorneys' fees and costs) arising out of or otherwise in respect of:
(i) any misrepresentation, inaccuracy in or breach of any representation,
warranty, covenant or agreement of Sellers or OII contained in this Agreement
which is specifically intended to survive the Closing; (ii) any transaction by
Sellers or OII, including but not limited to, any sale, lease, service or the
conduct of Sellers' PEO business prior to the Effective Date; (iii) any matter
whatsoever relating to the operation, maintenance, conduct and control of or
otherwise relating in any manner to the Acquired Assets or Sellers' PEO
business, including, without limitation, all Employee Benefit Plans or
employment matters, federal, state and local income and employee related taxes
and workers' compensation claims prior to the Effective Date; and (iv) any
Liabilities other than Assumed Liabilities. Notwithstanding the foregoing,
neither the Sellers nor OII shall have any liability to Purchaser for any
claims, losses, damages, costs or expenses arising out of the nonassignability
of any Listed Instrument.
Purchaser agrees, within 30 days after its receipt of notice of any
claim covered hereby, to notify Seller of such claim, or of any claim as to
which Purchaser asserts a right to indemnification. If any claim for
indemnification by Purchaser arises out of a claim for monetary damages, Seller
may, upon written notice to Purchaser, undertake to conduct any proceedings or
negotiations in connection therewith that are necessary to defend Purchaser and
to take all other steps to settle or defeat any such claims, and to employ
counsel to contest any such claims; provided, however, that Seller shall
reasonably consider the advice of Purchaser as to the defense of such claims.
Purchaser shall have the right to participate at its own expense in such
defense,
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but the control of such litigation or settlement shall remain with Seller.
Purchaser shall provide all reasonable cooperation in connection with any such
defense. Counsel and auditor fees, filings fees and court fees in all
proceedings, contests or lawsuits with respect to such claim or asserted
liability shall be borne by Sellers and OII. If any such claim is made hereunder
and neither Sellers nor OII elect not to undertake the defense thereof by
written notice to Purchaser, Purchaser shall be entitled to control such
litigation and settlement and shall be entitled to indemnity with respect
thereto. The indemnification undertaken by Sellers and OII is and shall be
absolute, unconditional and irrevocable and shall not be subject to any right of
setoff, counterclaim or defense.
8.2 INDEMNIFICATION BY PURCHASER
Purchaser and TeamStaff shall indemnify and hold Sellers and OII
harmless from and against any and all claims, causes of action, suits,
judgments, taxes, losses, damages, deficiencies, obligations, costs and expenses
(including, without limitation, interest, penalties, reasonable attorneys' fees
and costs) arising out of or otherwise in respect of (i) any misrepresentation,
inaccuracy in or breach of any representation, warranty, covenant or agreement
of Purchaser or TeamStaff contained in this Agreement which is specifically
intended to survive the Closing; (ii) any transaction by Purchaser, including
but not limited to, any sale, lease, repair, service or the conduct of business
occurring after the Effective Date; (iii) any matter whatsoever relating to the
operation, maintenance, conduct and control of or otherwise relating in any
manner to the Acquired Assets or Purchaser's business, including all Employee
Benefit Plans or employment matters after the Effective Date; and (iv) any
Assumed Liabilities.
Sellers and OII agree, within 30 days after its receipt of notice of
any claim covered hereby, to notify Purchaser of such claim, or of any claim as
to which Sellers or OII assert a right to indemnification. If any claim for
indemnification by Sellers or OII arises out of a claim for monetary damages,
Purchaser may, upon written notice to Sellers and OII, undertake to conduct any
proceedings or negotiations in connection therewith that are necessary to defend
Sellers and OII and to take all other steps to settle or defeat any such claims,
and to employ counsel to contest any such claims; provided, however, that
Purchaser shall reasonably consider the advice of Sellers and OII as to the
defense of such claims. Sellers and OII shall have the right to participate at
their own expense in such defense, but the control of such litigation or
settlement shall remain with Purchaser. Sellers and OII shall provide all
reasonable cooperation in connection with any such defense. Counsel and auditor
fees, filings fees and court fees in all proceedings, contests or
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lawsuits with respect to such claim or asserted liability shall be borne by
Purchaser. If any such claim is made hereunder and Purchaser does not elect to
undertake the defense thereof by written notice to Sellers and OII, Sellers and
OII shall be entitled to control such litigation and settlement and shall be
entitled to indemnity with respect thereto. The indemnification undertaken by
Purchaser is and shall be absolute, unconditional and irrevocable and shall not
be subject to any right of setoff, counterclaim or defense, except as provided
in Section 8.3 below.
8.3 LIABILITY THRESHOLD AND CAP
Purchaser covenants with Sellers and OII that it shall not make any
claim against Sellers or OII (nor shall Sellers or OII be liable to Purchaser
for any claim) pursuant to Section 8.1 until the aggregate amount of any such
claimed losses, liabilities, damages, costs and expenses exceeds $50,000 (the
"Threshold"); provided, however, Sellers and OII shall be liable with respect to
all claims, losses, damages, costs and expenses relating to payroll and other
employee related taxes and workers compensation claims prior to the Effective
Date without giving effect to the Threshold. Thereafter, Purchaser and TeamStaff
may claim for losses, liabilities, damages, costs and expenses up to an
aggregate amount equal to the Purchase Price. Solely with respect to claims for
indemnification by TeamStaff resulting from: (i) commencement by third parties
of judicial proceedings; (ii) administrative or governmental proceedings; (iii)
notices of assessment received by TeamStaff for failure to pay taxes; or (iv)
notices received by TeamStaff from any governmental or regulatory agency
alleging failure to pay workers compensation, TeamStaff shall have the right to
withhold or offset all Earnout Payments in an amount equal to any claim for
liability hereunder.
8.4 TERMINATION
The indemnification provisions provided by Sellers to Purchaser and by
Purchaser to Sellers pursuant to this Section shall terminate and be of no
further force and effect on the date which is 18 months from the Closing Date
with respect to all claims for indemnification, except with respect to Employee
related payroll taxes for which the period shall be three (3) year from the
Closing Date and except in all cases with respect to any bona fide claims of
which the indemnifying party has received notice prior to the relevant time
period which have not been resolved.
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8.5 PAYMENT TERMS OF INDEMNIFICATION
Any payment required to be made by either party under this Section 8
shall be made within 30 days of the date that such payment is determined to be
due and owing, unless, as result of judicial or governmental order or under the
terms of any settlement which may have been entered into in accordance with this
Section 8, such payment is required to be made earlier.
SECTION NINE: RESTRICTIVE COVENANTS.
9.1 SELLER'S COVENANT.
Each Seller and OII covenants and agrees for a period of three (3)
years, commencing on the Effective Date, not to directly or indirectly, as a
proprietor, partner, stockholder, director, officer, joint venturer, investor,
lender or in any other capacity, own, engage, conduct, manage, operate,
participate in and be associated with or be connected in any manner whatsoever
with any person, firm, partnership, joint venture, corporation or other entity
that competes with Purchaser's Employee leasing businesses; provided, however,
that this noncompetition covenant shall not apply to (i) payrolling services
provided by OII or Sellers in connection with OII's temporary staffing operation
or (ii) shares of capital stock owned by any such person in any public
corporation, traded on a national or regional exchange or reported by the
National Association of Security Dealers, Inc., if such person does not own more
than 3% of the issued and outstanding capital stock of such public corporation.
9.2 ENFORCEABILITY
It is the desire and intent of the parties hereto that the provisions
of this covenant be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, to the extent any provision hereof is deemed unenforceable by
virtue of its scope in terms of area or length of time, but may be enforceable
with limitations thereon, the parties agree that the same shall, nevertheless,
be enforceable to the fullest extent permissible under the laws and public
policies applied in such jurisdiction in which enforcement is sought.
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SECTION TEN: ARBITRATION
Any controversy, claim, or dispute arising out of or relating to this
Agreement, or any breach thereof, including without limitation any dispute
concerning the scope of this arbitration clause, shall be settled by arbitration
in Miami-Dade County, Florida before three (3) arbitrators of the AAA in
accordance with the Commercial Arbitration Rules of the AAA as supplemented
herein, and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. Pending final award, arbitrator
compensation and expenses shall be advanced equally by both parties.
The final award may grant such other, further, and different relief as
authorized by the AAA Commercial Arbitration Rules, but may not include punitive
damages. Notwithstanding the foregoing, the Parties may bring any action seeking
injunctive relief and ancillary damages to enforce the provisions of Section Ten
and any party to this Agreement may implead or assert a cross-claim against any
other party to this Agreement in connection with any action or lawsuit brought
by a third party against any of the parties to this Agreement. Notwithstanding
the foregoing, the parties may mutually agree to submit any controversy, claim
or dispute arising out of or relating to this Agreement to mediation before a
mutually acceptable mediator.
SECTION ELEVEN: SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations, warranties and covenants contained in this
Agreement and in any instrument or certificate delivered pursuant to, or
provided for in, this Agreement shall survive the consummation of the
transactions contemplated by this Agreement for a period of 18 months. Each
party to this Agreement shall be deemed to have relied upon each and every
representation, warranty and covenant of the other party, regardless of any
investigation made at any time by the party relying on such representation,
warranty and covenant.
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SECTION TWELVE: MISCELLANEOUS
12.1 BROKERAGE
Sellers represents and warrants to Purchaser that Sellers has dealt
only with or retained only Raymond James Financial as its broker or finder for
or on account of this Agreement. Purchaser represents and warrants to Sellers
that it has not dealt with or retained any broker or finder or paid or agreed to
pay any commission or fee to any broker or finder for or on account of this
Agreement.
12.2 EXPENSES
Sellers agrees to pay all of the costs and expenses incurred by it in
connection with this Agreement or in consummating the transactions contemplated
herein; including, without limitation, the fees, disbursements and expenses of
its attorneys, accountants and advisors. Purchaser agrees to pay all of the
costs and expenses incurred by it in connection with this Agreement or in
consummating the transactions contemplated herein.
12.3 FURTHER ASSURANCES
If at any time after the date hereof any further assignments, transfers
or assurances are reasonably necessary or desirable to carry out the provisions
of this Agreement, the parties to this Agreement shall execute and deliver any
and all bills of sale, instruments of conveyance, assignments, transfers, powers
of attorney and assurances of law, and do all things reasonably necessary or
proper to such end and otherwise to carry out the provisions and intent of this
Agreement.
12.4 NOTICES
All notices and other communications permitted or required under this
Agreement shall be in writing and shall be sufficiently given if and when hand
delivered to the persons set forth below, or if sent by registered or certified
mail, postage prepaid, return receipt requested, or by telegram, addressed as
set forth below or to such other person or persons and/or at such other
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address or addresses as shall be furnished in writing by any party to the others
or by personal delivery thereof. Any such notice or communication which is
mailed or telegraphed shall be deemed to have been given as of the date received
or delivery was attempted, as evidenced by the return receipt with respect to a
letter or the official notation of time and date of delivery of a telegram.
To TeamStaff and Purchaser: 300 Atrium Drive
Somerset NJ 08873
Attention: Mr. Donald Kappauf
Copy to: Goldstein & DiGioia, LLP
369 Lexington Avenue
New York, NY 10017
Attention: Brian Daughney, Esq.
To Seller: 1144 East Newport Center Drive
Deerfield Beach, FL 33442
Attention: Gary Meier and Joe Wasch
Copy to: Akerman, Senterfitt & Eidson, P.A.
350 E. Las Olas Boulevard Suite 1600
Fort Lauderdale, FL 33301
Attention: Donn Beloff, Esq.
12.5 SECTION HEADINGS
The section headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
12.6 SEVERABILITY
The invalidity or unenforceability of any particular provision, or part
of any provision of this Agreement, shall not affect its other provisions or
parts, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions or parts were omitted.
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12.7 COUNTERPARTS
This Agreement may be executed in two or more counterparts and by
facsimile, each of which shall be deemed an original and all of such
counterparts together shall be deemed to be one and the same instrument.
12.8 SCHEDULES
All Schedules referred to in this Agreement are annexed to and made
parts of this Agreement and incorporated herein.
12.9 ENTIRE AGREEMENT, AMENDMENTS; BINDING EFFECT
This Agreement, (i) together with the Schedules and other agreements it
expressly contemplates, constitutes the entire agreement between the parties to
it with respect to the transactions contemplated by this Agreement and
supersedes all their prior agreements and understandings, (ii) may not be
modified or discharged, nor may any of its terms be waived, except by an
instrument in writing, signed by the party or parties to be charged, and (iii)
shall bind and inure to the benefit of the parties and their respective heirs,
executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended, or will be construed, to give any
person, firm, corporation or other entity, other than the parties to this
Agreement and their respective heirs, executors, administrators, successors and
assigns, any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any of its provisions.
12.10 GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
12.11 ASSIGNMENT
No assignment or delegation of any rights or obligations hereunder
shall be made by any party hereto without the consent of the other parties.
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12.12 WAIVERS
The failure of any party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. No waiver of any nature, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or of any breach or a waiver
of any other condition or of any breach of any other term, covenant,
representation or warranty of this Agreement.
SECTION THIRTEEN: POST CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing.
13.1. FURTHER ACTIONS REQUIRED TO EFFECT AGREEMENT.
In case at any time after the Closing any further action is necessary
to carry out the purposes of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request, all at the sole cost
and expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 10 hereof). The Sellers acknowledge and
agree that from and after the Closing, TeamStaff shall be entitled to possession
of all documents, books, records (including tax records), agreements, and
financial data of any sort relating to the Acquired Assets; provided, however,
that, after Closing, TeamStaff shall provide the Sellers with reasonable access
to and the right to copy such documents, books, records (including tax records),
agreements, and financial data.
13.2. COOPERATION WITH RESPECT TO LITIGATION.
In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving any of
the Acquired Assets, each
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of the other Parties will cooperate with him or it and his or its counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 hereof).
13.3. MAINTENANCE OF BUSINESS RELATIONSHIPS.
Neither the Sellers nor OII will take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of any of the Sellers from maintaining the
same business relationships with TeamStaff and the Purchaser after the Closing
as it maintained with the Sellers prior to the Closing. Each of the Sellers and
OII will refer all customer inquiries relating to the Sellers' PEO business to
TeamStaff and the Purchaser from and after the Effective Date.
13.4. POST CLOSING DELIVERY OF FINANCIAL STATEMENTS
OII shall provide to Purchaser, as soon as possible after the Closing
Date, but in no event later than 45 days after the Closing Date, audited,
operational financial statements of Sellers' PEO business for the year ended
December 31, 1999, prepared in accordance with Regulation S-X of the rules and
regulations of the Securities and Exchange Commission and GAAP consistent with
past practice. The Sellers' Financial Statements for the fiscal years ending
December 31, 1997 and December 31, 1998 shall be re-issued in accordance with
Regulation S-X of the rules and regulations of the Securities and Exchange
Commission and GAAP consistent with past practice and delivered by Sellers as
soon as possible following the Closing.
13.5. UTILIZATION OF SELLERS' EQUIPMENT
In the event that following the Closing Date, the Purchaser or
TeamStaff deem it necessary to utilize any leased equipment used prior to the
Closing Date by the Sellers in connection with the Acquired Assets, TeamStaff
shall have the option to use such leased equipment subject to payment to OII of
its costs to lease such equipment. Leased Equipment shall exclude all Modular
Furniture and PC computers. OII shall not assess or collect a fee or costs from
Purchaser or TeamStaff for Modular
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Furniture or PC computers that Purchaser or TeamStaff used while a tenant under
the Sublease Agreement for 1690 South Congress Avenue, Delray Beach, Florida.
13.6. REPURCHASE OF INTERESTS IN TEAMSTAFF V, INC.
Immediately following the Effective Date, OII (or its affiliate) shall
tender to Teamstaff, and Teamstaff shall purchase, the 20% ownership of
TeamStaff V, Inc. owned by OII (or its affiliate) for a purchase price of $200.
13.7 TRANSFER OF PEO PAYROLL EXPERIENCE RATINGS
To the extent permitted by law: (a) in those states where OII maintains
a temporary employee staffing business, Sellers and OII will cooperate with
Purchaser to transfer in whole or in part their PEO unemployment experience, and
(b) in those states where OII does not maintain a temporary employee staffing
business, OII and Sellers will cooperate with Purchaser to transfer to Purchaser
their unemployment experience rate. The parties shall cooperate in good faith to
complete any and all necessary filings in order to effectuate the obligations
under this Section 13.7, including the filing of notices to governmental
agencies to obtain credits. The parties agree that OII and the Sellers shall not
make any filings with respect to state unemployment taxes for the second quarter
commencing April 1, 2000 to the extent that transfers under this section are
permissible and Teamstaff and the Purchasers shall indemnify and hold harmless
OII and the Sellers from any Liability related to such filings made by it. OII
and the Sellers shall pay to Teamstaff the actual state unemployment tax
withheld for the period up to Effective Date.
13.8 REIMBURSEMENT OF FEES AND EXPENSES.
The parties agree that except as otherwise provided herein or in the
Shared Services Agreement (a) Teamstaff and the Purchaser shall reimburse
Sellers or OII for any fees or expenses relating to the operation or use of the
Acquired Assets or the conduct of Purchaser's PEO business after the Effective
Date which are paid by OII or Sellers on behalf of Teamstaff or Purchaser,
within 10 days of receipt by Teamstaff or Purchaser of adequate documentation
relating to such fees and expenses and (b) Sellers or OII shall reimburse
Purchaser or Teamstaff for any fees or expenses relating to the operation or use
of the Acquired Assets or the conduct of Sellers' PEO business prior to the
Effective Date which are paid by Teamstaff or Purchaser on behalf of OII or
Sellers, within 10 days of receipt by OI or Sellers
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of adequate documentation relating to such fees and expenses. Each party shall
be provided reasonable time to reconcile any such amounts claimed to be due and
owing.
13.9 POST CLOSING EMPLOYEE TRANSFER DOCUMENTATION
All parties to this Agreement shall cooperate in good faith and use
their best efforts to timely and properly file any and all employee related tax
and payroll related filings, certificates or documents as may required in
connection with the transactions contemplated herein.
13.10 COBRA CONTINUATION.
Purchaser shall assume the liability and obligation of the Sellers to
provide any continuation of group health coverage required under Internal
Revenue Code ("Code") Section 4980B or ERISA Section 601 through 608 ("Cobra
Coverage") with respect to any employee employed by the Purchaser on and after
the Effective Date or "qualified beneficiary" (as defined in Code Section 4980B)
of such Employee who undergoes a "qualifying event" (as defined in Code Section
49ipB) on, prior to or after the Effective Date. In addition, Purchaser shall be
responsible for all liabilities and obligations with respect to Cobra Coverage
in regard to former employees of Sellers (including qualified beneficiaries of
such former employees) regardless of whether the qualifying events with respect
to such individuals occurred on, before or after the Effective Date.
Notwithstanding the foregoing, nothing contained in this Section 13.10 shall be
construed or interpreted as to: (i) provide that TeamStaff or Purchase have any
liability for any event, claim, losses or damages arising prior to the Effective
Date, or (ii) amend or alter the indemnification provisions under Section 8.1
hereof.
13.11 PUBLIC ANNOUNCEMENTS.
Each party shall cooperate with the other, if necessary, with respect
to the making of any public announcement or communication relating to this
Agreement and the transactions contemplated hereunder. Except as may be required
by applicable law, no party may issue any press releases or other public
communication relating to this Agreement or the transactions contemplated
hereunder without the prior written consent of the other parties. In the event
any such press release or other public communication shall be required by
applicable law, each party shall first consult in good faith with the other
party with respect to form and substance of such release or communication.
13.12. 401K PLAN FORFEITURES.
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No party to this Agreement shall take any action to obtain for their
possession any forfeitures existing under the Sellers' 401k plans, it being
understood and agreed by all parties hereto that all forfeitures (net of any
administrative fees) are the property of the employer customer who employed the
forfeiting employee.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto on the date first above written.
<TABLE>
<S> <C>
TEAMSTAFF, INC. TEAMSTAFF V, INC.
By:____________________ By:_____________________
Name: Name:
Title: Title:
OUTSOURCE INTERNATIONAL, INC. GUARDIAN EMPLOYER WEST LLC
By:____________________ By:_______________________________
Name: Name:
Title: Title:
SYNADYNE I, INC. SYNADYNE II, INC.
By:____________________ By:______________________
Name: Name:
Title: Title:
SYNADYNE III, INC. SYNADYNE IV, INC.
By:_____________________ By:_______________________
Name: Name:
Title: Title:
SYNADYNE V, INC. GUARDIAN EMPLOYER EAST LLC
By:______________________ By:_______________________
Name: Name:
Title: Title:
</TABLE>
37
<PAGE> 1
Exhibit 10.1
FIRST AMENDMENT TO THE
AMENDED AND RESTATED SCHEDULE TO THE
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AGREEMENT is entered into as of April __, 2000 by and among
Teamstaff, Inc., Teamstaff Solutions, Inc., DSI Staff Connxions Northeast, Inc.,
DSI Staff Connxions Southwest, Inc., Teamstaff Rx, Inc., Teamstaff VI, Inc.,
Teamstaff I, Inc., Teamstaff II, Inc., Teamstaff III, Inc., Teamstaff IV, Inc.,
Teamstaff V, Inc., Teamstaff IX, Inc., Teamstaff Insurance Services, Inc.,
Teamstaff VII, Inc., and Employer Support Services, Inc., having the addresses
as set forth in the Schedule (as hereinafter defined) (collectively, "Borrower")
and FINOVA Capital Corporation, whose address is 355 South Grand Avenue, Los
Angeles, California 90071 ("FINOVA").
RECITALS
Whereas, the Borrower and FINOVA entered into an "Amended And Restated
Loan And Security Agreement" dated January 25, 1999 (as same is being and may be
further modified or extended, the "Loan Agreement"); and
Whereas, in addition to and as part of the Loan Agreement, the Borrower
and FINOVA entered into an "Amended And Restated Schedule To Amended And
Restated Loan And Security Agreement" dated January 25, 1999 (as same is being
and may be further modified or extended, the "Schedule"); and
Whereas, Borrower and FINOVA have agreed to modify the terms of the
Loan Agreement and the Schedule as set forth in this agreement ("Agreement").
Now, therefore, in consideration of FINOVA's continued extension of
credit and the agreements contained herein, the parties agree as follows:
AGREEMENT
1) ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most recent
statement of account sent to Borrower with respect to the Obligations
is correct.
2) MODIFICATIONS. The Schedule be and hereby is modified as follows:
(A) The following definition is hereby added to the Section of the
Schedule entitled "Definitions (Section 1)":
"Loan Year" shall mean each individual year during the life of
this credit facility, with the first Loan Year commencing on
the Closing Date and ending one year thereafter, and with the
subsequent Loan Years commencing on each anniversary of the
Closing Date and ending one year thereafter.
(B) The Total Facility set forth in the Section of the Schedule
entitled "Total Facility (Section 2.1)" be and hereby is amended to be
$12,500,000.00.
(C) The "Revolving Credit Loans" Subsection contained within the
Section of the Schedule entitled "Loans (Section 2.2)" be and hereby is
amended to read as follows:
REVOLVING CREDIT LOANS: A revolving line of credit,
terminating upon the expiration of the Initial Term (or, if
applicable, at the expiration of the last Renewal Term, if
any) consisting of loans against Borrower's Eligible
Receivables ("REVOLVING CREDIT Loans") in an aggregate
outstanding principal amount not to exceed the lesser of (a)
or (b) below:
(a) THREE MILLION FIVE HUNDRED THOUSAND
DOLLARS($3,500,000.00) (the "REVOLVING
CREDIT LIMIT"), less the aggregate undrawn
face amount of all Letters of Credit issued
under Section 2.4 of this Agreement; less
any Loan Reserves, or
(b) the sum of an amount equal to (i) 85% of
the aggregate net amount of Eligible
Receivables of all Borrowers, less (ii) the
aggregate undrawn face amount of all Letters
of Credit issued under Section 2.4 of this
Agreement; less any Loan Reserves. ----
(D) Subparagraph "3." of the "Term Loans" Subsection contained
within the Section of the Schedule entitled "Loans (Section 2.2)", is
deleted, and is replaced with new Subparagraph 3, to read as follows:
<PAGE> 2
3. TERM LOAN C
A term loan ("TERM LOAN C") in the original principal amount of
Four Million Dollars ($4,000,000.00); provided, that Term Loan C
shall be on such terms as are set forth on the separate promissory
note of the Borrowers in the form attached hereto as Exhibit
2.2(c).
(E) Subparagraph "(ii)" of the "Term Interest Rate" Subsection
contained within the Section of the Schedule entitled
"Interest And Fees (Section 2.6)", is deleted, and is replaced
by new Subparagraph (ii), to read as follows:
(ii) Term Loan C: Three percent (3%) in excess of the
Prime Rate.
(F) Subparagraph "3." of the "Success Fee" Subsection contained
within the Section of the Schedule entitled "Interest And Fees
(Section 2.6)", is deleted, and is replaced by new
Subparagraph 3, to read as follows:
3. TERM LOAN C.
$1,500,000.00, of which $500,000.00 shall be deemed fully earned
as of the beginning of each Loan Year and shall be payable at the
earlier of (a) the end of each such Loan Year or (b) the
prepayment of Term Loan C.
(G) The "Debt to Net Worth" Subsection of the Section of the
Schedule entitled "Financial Covenants (Section 6.1.13)" be
and hereby is amended to read as follows:
Debt to Net Worth. DSI and its subsidiaries shall maintain a
ratio of Indebtedness For Borrowed Money to Net Worth of not
greater than the ratio set forth for such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C> <C>
March 1, 2000 - February 28, 2001 1.0 to 1.0
March 1, 2001 - February 28, 2002 0.71 to 1.0
March 1, 2002 and thereafter 0.5 to 1.0
</TABLE>
(H) The "Debt Service Coverage Ratio" Subsection of the Section of
the Schedule entitled "Financial Covenants (Section 6.1.13)"
be and hereby is amended to read as follows:
Debt Service Coverage Ratio: As of the last day of each fiscal
quarter ending on each December 31, March 31, June 30, and
September 30, the ratio of Operating Cash Flow/Actual for the
consecutive 12-month period ending as of such last day to
Total Contractual Debt Service for such 12-month period must
be not less than the ratio set forth below for such period:
<TABLE>
<CAPTION>
Measurement Date Ratio
---------------- -----
<S> <C> <C>
June 30, 2000 1.4 to 1.0
September 30, 2000 1.4 to 1.0
December 31, 2000 1.5 to 1.0
March 31, 2001 1.5 to 1.0
June 30, 2001 1.5 to 1.0
September 30, 2001 1.5 to 1.0
December 31, 2001 and thereafter 1.6 to 1.0
</TABLE>
provided however, that, all such determinations shall be made
on a consolidated basis.
(I) The "Capital Expenditures" Subsection of the Section of the
Schedule entitled "Negative Covenants (Section 6.2)" be and
hereby is amended to read as follows:
Capital Expenditures: No Borrower shall make or incur any
Capital Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by the Borrowers
in any fiscal year would exceed $500,000.00.
(J) The "Indebtedness " Subsection of the Section of the Schedule
entitled "Negative Covenants (Section 6.2)" be and hereby is
amended to read as follows:
Indebtedness: Borrower shall not create, incur, assume or
permit to exist any Indebtedness for Borrowed Money (including
Indebtedness For Borrowed Money in connection with Capital
Lease) in excess of $500,000.00 other that the Indebtedness
permitted by Section 6.2.11.
<PAGE> 3
(K) The Promissory Notes previously attached to the Schedule as
Exhibits 2.2(a), 2.2(b) and 2.2(c) are deleted and replaced by
the Second Amended And Restated Secured Promissory Note A, the
Amended And Restated Secured Promissory Note B, and the
Secured Promissory Note C annexed hereto, which are now deemed
to be Exhibits 2.2(a), 2.2(b) and 2.2(c) to the Schedule,
respectively.
(L) "Loan Reserves" shall include an incrementally increasing
reserve commencing on May 15, 2000 in the amount of $100,000,
and increasing by $100,000 monthly on the last day of each
month thereafter through April 30, 2001. Such a reserve shall
be eliminated upon satisfactory proof to FINOVA that Borrower
has paid Outsource International, Inc., Synadyne I, Inc.,
Synadyne II, Inc., Synadyne III, Inc., Synadyne IV, Inc.,
Synadyne V, Inc., Guardian Employer East, LLC, and Guardian
Employer West, LLC all sums due to them pursuant to the Asset
Purchase Agreement dated on or about the date hereof.
3) ACKNOWLEDGMENTS. Borrower acknowledges and represent that:
(A) The Term Loan C which was initially referenced in the Schedule
has been repaid in full and terminated prior to the date
hereof, and is replaced with a new Term Loan C.
(B) the Loan Agreement, the Schedule, and other Loan Documents, as
amended hereby, are in full force and effect without any
defense, claim, counterclaim, right or claim of set-off;
(C) after giving effect to this Agreement, no Default or Event of
Default under the Loan Documents has occurred;
(D) no default by FINOVA in the performance of its duties under
the Loan Agreement, the Schedule, or the other Loan Documents
has occurred;
(E) all representations and warranties contained herein and in the
other Loan Documents are true and correct as of this date;
(F) Borrower has taken all necessary action to authorize the
execution and delivery of this Agreement; and
(G) this Agreement is a modification of an existing obligation and
is not a novation.
4) COLLATERAL. Borrower acknowledges and confirms that there have been no
changes in the ownership of any collateral pledged and/or mortgaged to
secure the Obligations (the "Collateral") since the Collateral was
originally pledged and/or mortgaged; that FINOVA has existing, valid
first priority security interests and liens in the Collateral; and that
such security interests and liens shall secure the Borrower's
Obligations to FINOVA, including those due under and/or as a result of
the Term Loan C Note, and all future modifications, extensions,
renewals and/or replacements thereof, hereof, or of the Loan Documents.
5) PRECONDITIONS. As a precondition to the effectiveness of any of the
modifications contained herein, the Borrower agrees to:
(A) provide FINOVA with a resolution, in form and substance
acceptable to FINOVA, which approves the transaction
contemplated hereby.
(B) execute and deliver the Second Amended And Restated Secured
Promissory Note A, the Amended And Restated Secured Promissory
Note B, The Secured Promissory Note C, and the Request for
Disbursement.
(C) Cause the execution and delivery of the Reaffirmation of
Support Agreement by Donald T. Kelly.
(D) Cause the execution and delivery of the Opinion Letter of
Goldstein & DiGioia, LLP, counsel to the Borrowers, in form
and substance satisfactory to FINOVA.
(E) Cause the execution and delivery of the Certificate of Chief
Financial Officer of Digital Solutions, Inc.
(F) provide all documentation required by the Closing Agenda dated
on or about the date hereof, prepared by counsel for FINOVA in
connection with this transaction.
(G) provide proof of $1,500,000.00 in excess availability after
giving effect to the transactions contemplated hereby and/or
conducted concurrently herein.
(H) pay FINOVA a closing fee of $50,000.00.
<PAGE> 4
(I) pay all fees and costs incurred by FINOVA in entering into
this Agreement and the other documents executed in connection
herewith.
6) MISCELLANEOUS. This Agreement shall be construed in accordance with and
governed by the laws of the applicable state as originally provided in
the Loan Documents, without reference to that state's conflicts of law
principles. This Agreement and the other Loan Documents constitute the
sole agreement of the parties with respect to the subject matter
thereof and supersede all oral negotiations and prior writings with
respect to the subject matter thereof. No amendment of this Agreement,
and no waiver of any one or more of the provisions hereof shall be
effective unless set forth in writing and signed by the parties hereto.
The illegality, unenforceability or inconsistency of any provision of
this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this
Agreement or the other Loan Documents. This Agreement and the other
Loan Documents are intended to be consistent. However, in the event of
any inconsistencies among this Agreement and any of the Loan Documents,
the terms of this Agreement, then the Loan Agreement and Schedule,
shall control. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed an original, but all such
counterparts shall together constitute one and the same agreement.
Terms used in this Agreement which are capitalized and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Loan Documents.
7) DEFINITIONS. The terms used herein and not otherwise defined or
modified herein shall have the meanings ascribed to them in the Loan
Agreement. The terms used herein and not otherwise defined or modified
herein or defined in the Loan Agreement shall have the meanings
ascribed to them by the Uniform Commercial Code as enacted in New
Jersey.
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the
day and year first above written.
ATTEST: TEAMSTAFF, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, President
ATTEST: TEAMSTAFF SOLUTIONS, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, President
ATTEST: DSI STAFF CONNXIONS NORTHEAST, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, President
ATTEST: DSI STAFF CONNXIONS SOUTHWEST, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, President
<PAGE> 5
ATTEST: TEAMSTAFF RX, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, President
ATTEST: TEAMSTAFF VI, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF I, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF II, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF III, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF IV, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF V, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF IX, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
<PAGE> 6
ATTEST: TEAMSTAFF INSURANCE SERVICES, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: TEAMSTAFF VIII, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
ATTEST: EMPLOYER SUPPORT SERVICES, INC.
______________________________ BY:___________________________________
C. Donald Kelly, Secretary Donald Kappauf, Chairman
FINOVA CAPITAL CORPORATION
BY:___________________________________
Ilene Gerber, Vice President
<PAGE> 7
GUARANTOR'S RATIFICATION
Each of the undersigned Guarantors hereby reaffirms their continuing
obligations under the terms of their Continuing Corporate Guaranty agreements
dated as of April 28, 1998, and acknowledge that (i) they have read this First
Amendment To The Amended And Restated Schedule To The Amended And Restated Loan
And Security Agreement, (ii) the Obligations and advances described herein are
secured by their guaranty agreements, and (iii) they make such reaffirmation
with full knowledge of the terms hereof including without limitation the
increased obligations of the Borrower to FINOVA.
ATTEST: DSI INSURANCE SERVICES, INC.
____________________________ By:_________________________________
_______________, Secretary _______________, President
<PAGE> 1
Exhibit 10.2
SECOND AMENDED AND RESTATED SECURED PROMISSORY NOTE A
$1,541,659.00 Phoenix, Arizona
April , 2000
FOR VALUE RECEIVED, TEAMSTAFF, INC., a New Jersey Corporation,
TEAMSTAFF SOLUTIONS, INC., a New York Corporation, DSI STAFF CONNXIONS
NORTHEAST, INC., a New Jersey Corporation, DSI STAFF CONNXIONS SOUTHWEST, INC.,
a Texas Corporation, TEAMSTAFF RX, INC., a Texas Corporation, TEAMSTAFF VI,
INC., a Florida Corporation, TEAMSTAFF I, INC., a Florida Corporation, TEAMSTAFF
II, INC., a Florida Corporation, TEAMSTAFF III, INC., a Florida Corporation,
TEAMSTAFF IV, INC., a Florida Corporation, TEAMSTAFF V, INC., a Florida
Corporation, TEAMSTAFF IX, INC., a Florida Corporation, TEAMSTAFF INSURANCE
SERVICES, INC., a Florida Corporation, TEAMSTAFF VIII, INC., and EMPLOYER
SUPPORT SERVICES, INC., a Florida Corporation (collectively, "Borrower"),
promises to pay to the order of FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"), at its offices at 355 South Grand Avenue, Suite 2400,
Los Angeles, California 90071, or at such other place or places as FINOVA may
from time to time designate in writing, the principal sum of One Million Five
Hundred Forty-one Thousand Six Hundred Fifty Nine Dollars ($1,541,659.00), plus
interest in the manner and upon the terms and conditions set forth below. This
Second Amended and Restated Secured Promissory Note ("Note") is made pursuant to
that certain Amended And Restated Loan and Security Agreement dated January 25,
1999, as amended, between the FINOVA and Borrower (the "Loan Agreement"), the
provisions of which are incorporated herein by this reference. Capitalized terms
herein, unless otherwise noted, shall have the meaning set forth in the Loan
Agreement. This Note represents the outstanding principal balance of the Amended
And Restated Secured Promissory Note A dated January 25, 1999 in the original
amount of $2,166,664.00 and is being entered into to restate certain terms
thereof not as evidence of a new indebtedness, and is not a novation.
1.0 SCHEDULE OF PAYMENTS; RATE AND PAYMENT OF INTEREST; PREPAYMENT.
1.1 The amounts due under this Note shall be payable as
follows:
a. Thirty-six (36) equal successive monthly installments of
principal of Forty-One Thousand Six Hundred Sixty-Seven and 00/100 Dollars
($41,667.00) each on the first day of each month, beginning May 1, 2000, and
continuing through and including April 1, 2003; and
b. A final installment equal to the then unpaid principal
balance hereof on April 30, 2003; and
c. With each of the foregoing payments accompanied by payment
of accrued interest on the principal balance from time to time remaining unpaid,
payable monthly on the first day of each and every month, beginning May 1, 2000.
<PAGE> 2
1.2 Prepayment may be made under this Note in whole but not in
part, subject to, in the case of prepayment in whole, the Termination Fee and
Success Fee set forth in the Loan Agreement, provided that such prepayment is
preceded by not less than five (5) business days prior written notice to FINOVA
and accompanied by all accrued by unpaid interest and the full amount of the
applicable Termination Fee, if any, and Success Fee. Notwithstanding anything
herein to the contrary, in the event is terminated by Borrower, by FINOVA or by
any other person at any time, or the Revolving Credit Loans facility is
otherwise terminated for any reason, then the entire unpaid principal balance of
this Note, together with all accrued and unpaid interest hereon and the full
amount of the applicable Termination Fee and Success Fee, shall become
immediately due and payable in full on the effective date of such termination,
without presentment, notice or demand of any kind.
1.3 Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed, and shall be at the rate of three
percentage (3%) points above the Prime Rate (as hereinafter defined), computed
on the basis of a 360-day year; provided, however, upon the occurrence and
during the continuance of an event of default (as hereinafter defined), interest
shall accrue on the outstanding principal balance of this Note at a default rate
(the "Default Rate") of five (5) percentage points above the Prime Rate, and
shall be payable on demand. "Prime Rate" means, for any day, the rate of
interest per annum (over a year of 360 days) announced by Citibank, N.A. (the
"Bank"), from time to time, as its "base rate" (or any successor thereto) in
effect on such day. The Prime Rate is not necessarily the lowest rate charged by
the Bank. The applicable rate of interest assessed hereunder will be increased
or decreased from time to time hereafter in an amount equal to any increase or
decrease hereafter made by the Bank in the Prime Rate. A change in the Prime
Rate shall be effective on the first day following such change.
2.0 EVENTS OF DEFAULTS; REMEDIES.
2.1 Upon the occurrence of any Event of Default under and as
defined in the Loan Agreement, in addition to FINOVA's right to charge interest
on the Obligations at the Default Rate: (a) at the option of FINOVA, the entire
unpaid amount of all of the Obligations, including without limitation the
Termination Fee, shall become immediately due and payable without demand, notice
or legal process of any kind; (b) FINOVA may, at its option, without demand,
notice or legal process of any kind, exercise any and all rights and remedies
granted to it by the Loan Agreement or by any other agreement now or hereafter
existing between FINOVA and Borrower or between FINOVA and any guarantor of part
or all of Borrower's liabilities to FINOVA; and (c) FINOVA may at its option
exercise from time to time any other rights and remedies available to it under
the Uniform Commercial Code or other law of the State of Arizona.
2.2 The remedies of FINOVA as provided herein and in the Loan
Agreement shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of FINOVA. No act of omission
or commission of FINOVA, including specifically any failure to exercise any
right, remedy or recourse, shall be deemed to be a waiver or release of the
same, such waiver or release to be effected only through a written document
-2-
<PAGE> 3
executed by FINOVA and then only to the extent specifically recited therein. A
waiver or release with reference to any one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to a subsequent event.
3.0 GENERAL PROVISIONS.
3.1 Borrower warrants and represents to FINOVA that Borrower
has used and will continue to use the loans and advances represented by this
Note solely for proper business purposes, and consistent with all applicable
laws and statutes.
3.2 This Note is secured by the Collateral described in the
Loan Agreement.
3.3 Borrower waives presentment, demand and protest, notice of
protest, notice of presentment and all other notices and demands in connection
with the enforcement of FINOVA's rights hereunder, except as specifically
provided and called for by this Note, and hereby consents to, and waives notice
of, the release, addition, or substitution, with or without consideration, of
any collateral or of any person liable for payment of this Note. Any failure of
FINOVA to exercise any right available hereunder or otherwise shall not be
construed as a waiver of the right to exercise the same or as a waiver of any
other right at any other time.
3.4 If this Note is not paid when due or upon the occurrence
of an Event of Default, Borrower further promises to pay all costs of
collection, foreclosure fees, attorneys fees and expert witness fees incurred by
FINOVA, whether or not suit is filed hereon, and the fees, costs and expenses as
provided in the Loan Agreement.
3.5 The contracted for rate of interest of the loan
contemplated hereby, without limitation, shall consist of the following: (i) the
interest rate set forth on the Schedule, calculated and applied to the principal
balance of this Note in accordance with the provisions of this Note: (ii)
interest after an Event of Default, calculated and applied to the amounts due
under this Note in accordance with the provisions hereof; and (iii) all
Additional Sums (as herein defined), if any. Borrower agrees to pay an effective
contracted for rate of interest which is the sum of the above-referenced
elements. All examination fees, attorneys fees, expert witness fees, letter of
credit fees, collateral monitoring fees, closing fees, facility fees,
Termination Fees, Minimum Interest Charges, other charges, goods, things in
action or any other sums or things of value paid or payable by Borrower
(collectively, the "Additional Sums"), whether pursuant to this Note, the Loan
Agreement or any other documents or instruments in any way pertaining to this
lending transaction, or otherwise with respect to this lending transaction, that
under any applicable law may be deemed to be interest with respect to this
lending transaction, for the purpose of any applicable law that may limit the
maximum amount of interest to be charged with respect to this lending
transaction, shall be payable by Borrower as, and shall be deemed to be,
additional interest and for such purposes only, the agreed upon and "contracted
for rate of interest" of this lending transaction shall be deemed to be
increased by the rate of interest resulting from the inclusion of the Additional
Sums.
3.6 It is the intent of the parties to comply with the usury
law of the State of Arizona (the "Applicable Usury Law"). Accordingly, it is
agreed that notwithstanding any
-3-
<PAGE> 4
provisions to the contrary in this Note, or in any of the documents securing
payment hereof or otherwise relating hereto, in no event shall this Note or such
documents require the payment or permit the collection of interest in excess of
the maximum Interest Rate, then in any such event (1) the provisions of the
paragraph shall govern and control, (2) neither Borrower nor any other person or
entity now or hereafter liable for the payment hereof shall be obligated to pay
the amount of such interest to the extent that it is in excess of the Maximum
Interest Rate, (3) any such excess which may have been collected shall be either
applied as a credit against the then unpaid principal amount hereof or refunded
to Borrower, at FINOVA's option, and (4) the effective rate of interest shall be
automatically reduced to the Maximum Interest Rate. It is further agreed,
without limiting the generality of the foregoing, that to the extent permitted
by the Applicable Usury Law; (x) all calculations of interest which are made for
the purpose of determining whether such rate would exceed the Maximum Interest
Rate shall be made by amortizing, prorating, allocating and spreading during the
period of the full stated term of the loan evidenced hereby, all interest at any
time contracted for, charged or received from Borrower or otherwise in
connection with such loan; and (y) in the event that the effective rate of
interest on the loan should at any time exceed the Maximum Interest Rate, such
excess interest that would otherwise have been collected had there been no
ceiling imposed by the Applicable Usury Law shall be paid to FINOVA from time to
time, if and when the effective interest rate on the loan otherwise fall below
the Maximum Interest Rate, until the entire amount of interest which would
otherwise have been collected had there been no ceiling imposed by the
Applicable Usury Law has been paid in full. Borrower further agrees that should
the Maximum Interest Rate be increased at any time hereafter because of a change
in the Applicable Usury Law, then to the extent not prohibited by the Applicable
Usury Law, such increases shall apply to all indebtedness evidenced hereby
regardless of when incurred; but, again to the extent not prohibited by the
Applicable Usury Law, should the maximum Interest Rate be decreased because of a
change in the Applicable Usury Law, such decreases shall not apply to the
indebtedness evidenced hereby regardless of when incurred.
3.7 FINOVA may at any time transfer this Note and FINOVA's
rights in any or all collateral securing this Note, and FINOVA thereafter shall
be relieved from all liability with respect to such collateral arising after the
date of such transfer.
3.8 This Note shall be binding upon Borrower and its legal
representatives, successors and assigns. Wherever possible, each provision of
this Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Note shall be prohibited by or
invalid under such law, such provision shall be severable, and be ineffective to
the extent of such prohibition or invalidity, without invalidating the remaining
provision of this Note.
THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY FINOVA IN
PHOENIX, ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
ARIZONA, AS THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT
LIMITATION, THE UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. BORROWER
-4-
<PAGE> 5
HEREBY (i) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN MARICOPA COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO
BORROWER AT THE ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME
SHALL HAVE BEEN POSTED TO BORROWER'S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST FINOVA OR ANY OF FINOVA'S DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS
NOTE IN ANY COURT OTHER THAN ONE LOCATED IN MARICOPA COUNTY, ARIZONA; AND (vi)
IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR
IN CONNECTION WITH THIS NOTE. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR IMPAIR
FINOVA'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR FINOVA'S
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION.
TEAMSTAFF, INC., a New Jersey Corporation
Fed. Tax ID #22-1899798
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 300 Atrium Drive, Somerset, New Jersey 08773
-5-
<PAGE> 6
TEAMSTAFF SOLUTIONS, INC., a New Jersey Corporation
Fed. Tax ID #:13-2878077
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 245 Fifth Avenue, Suite 1003, New York, New York 10016
DSI STAFF CONNXIONS NORTHEAST, INC., a New Jersey Corporation
Fed. Tax ID #: 22-3405060
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 300 Atrium Drive, Somerset, New Jersey 08773
TEAMSTAFF RX, INC., a Texas Corporation
Fed. Tax ID #: 76-0451040
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 2 Northpoint Drive, Suite 110, Houston, Texas 77060
DSI STAFF CONNXIONS-SOUTHWEST, INC., a Texas Corporation
Fed. Tax ID #: 76-0422152
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 2 Northpoint Drive, Suite 110, Houston, Texas 77060
-6-
<PAGE> 7
TEAMSTAFF VI, INC., a Florida corporation
Fed. Tax ID #: 59-2988438
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF I, INC., A Florida corporation
Fed. Tax ID #: 59-3067619
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, II, INC., a Florida corporation
Fed. Tax ID #: 59-3277121
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, III, INC., a Florida corporation
Fed. Tax ID #: 59-3277124
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 8
TEAMSTAFF, IV, INC., a Florida corporation
Fed. Tax ID #: 59-3277126
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF V, INC., a Florida corporation
Fed. Tax ID #: 59-3277127
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF IX, INC., a Florida corporation
Fed. Tax ID #: 59-2988440
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF INSURANCE SERVICES, INC., a Florida corporation
Fed. Tax ID #: 59-2988436
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 9
TEAMSTAFF VIII, INC., a Florida corporation
Fed. Tax ID #: 59-3236075
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
EMPLOYER SUPPORT SERVICES, INC., a Florida corporation
Fed. Tax ID #: 59-2988443
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 1
Exhibit 10.3
AMENDED AND RESTATED SECURED PROMISSORY NOTE B
$1,899,996.00 Phoenix, Arizona
April , 2000
FOR VALUE RECEIVED, TEAMSTAFF, INC., a New Jersey Corporation,
TEAMSTAFF SOLUTIONS, INC., a New York Corporation, DSI STAFF CONNXIONS
NORTHEAST, INC., a New Jersey Corporation, DSI STAFF CONNXIONS SOUTHWEST, INC.,
a Texas Corporation, TEAMSTAFF RX, INC., a Texas Corporation, TEAMSTAFF VI,
INC., a Florida Corporation, TEAMSTAFF I, INC., a Florida Corporation, TEAMSTAFF
II, INC., a Florida Corporation, TEAMSTAFF III, INC., a Florida Corporation,
TEAMSTAFF IV, INC., a Florida Corporation, TEAMSTAFF V, INC., a Florida
Corporation, TEAMSTAFF IX, INC., a Florida Corporation, TEAMSTAFF INSURANCE
SERVICES, INC., a Florida Corporation, TEAMSTAFF VIII, INC., and EMPLOYER
SUPPORT SERVICES, INC., a Florida Corporation (collectively, "Borrower"),
promises to pay to the order of FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"), at its offices at 355 South Grand Avenue, Suite 2400,
Los Angeles, California 90071, or at such other place or places as FINOVA may
from time to time designate in writing, the principal sum of One Million Eight
Hundred Ninety-nine Thousand Nine Hundred Ninety-six Dollars ($1,899,996.00),
plus interest in the manner and upon the terms and conditions set forth below.
This Amended and Restated Secured Promissory Note ("Note") is made pursuant to
that certain Amended And Restated Loan and Security Agreement dated January 25,
1999, as amended, between the FINOVA and Borrower (the "Loan Agreement"), the
provisions of which are incorporated herein by this reference. Capitalized terms
herein, unless otherwise noted, shall have the meaning set forth in the Loan
Agreement. This Note represents the outstanding principal balance of the Secured
Promissory Note B dated January 25, 1999 in the original amount of $2,500,000.00
and is being entered into to restate certain terms thereof not as evidence of a
new indebtedness, and is not a novation.
1.0 SCHEDULE OF PAYMENTS; RATE AND PAYMENT OF INTEREST; PREPAYMENT.
1.1 The amounts due under this Note shall be payable as
follows:
a. ten (10) equal successive monthly installments of principal
of Fifty Thousand and 00/100 Dollars ($50,000.00) each on the first day of each
month, beginning May 1, 2000, and continuing through and including February 1,
2001;
b. twenty four (24) equal successive monthly installments of
principal of Fifty Eight Thousand Three Hundred Thirty Three and 00/100 Dollars
($58,333.00) each on the first day of each month, beginning March 1, 2001, and
continuing through and including February 1, 2003;
c. A final installment equal to the then unpaid principal
balance hereof on March 1, 2003; and
<PAGE> 2
d. With each of the foregoing payments accompanied by payment
of accrued interest on the principal balance from time to time remaining unpaid,
payable monthly on the first day of each and every month, beginning May 1, 2000.
1.2 Prepayment may be made under this Note in whole but not in
part, subject to, in the case of prepayment in whole, the Termination Fee and
Success Fee set forth in the Loan Agreement, provided that such prepayment is
preceded by not less than five (5) business days prior written notice to FINOVA
and accompanied by all accrued by unpaid interest and the full amount of the
applicable Termination Fee, if any, and Success Fee. Notwithstanding anything
herein to the contrary, in the event is terminated by Borrower, by FINOVA or by
any other person at any time, or the Revolving Credit Loans facility is
otherwise terminated for any reason, then the entire unpaid principal balance of
this Note, together with all accrued and unpaid interest hereon and the full
amount of the applicable Termination Fee and Success Fee, shall become
immediately due and payable in full on the effective date of such termination,
without presentment, notice or demand of any kind.
1.3 Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed, and shall be at the rate of three
percentage (3%) points above the Prime Rate (as hereinafter defined), computed
on the basis of a 360-day year; provided, however, upon the occurrence and
during the continuance of an event of default (as hereinafter defined), interest
shall accrue on the outstanding principal balance of this Note at a default rate
(the "Default Rate") of five (5) percentage points above the Prime Rate, and
shall be payable on demand. "Prime Rate" means, for any day, the rate of
interest per annum (over a year of 360 days) announced by Citibank, N.A. (the
"Bank"), from time to time, as its "base rate" (or any successor thereto) in
effect on such day. The Prime Rate is not necessarily the lowest rate charged by
the Bank. The applicable rate of interest assessed hereunder will be increased
or decreased from time to time hereafter in an amount equal to any increase or
decrease hereafter made by the Bank in the Prime Rate. A change in the Prime
Rate shall be effective on the first day following such change.
2.0 EVENTS OF DEFAULTS; REMEDIES.
2.1 Upon the occurrence of any Event of Default under and as
defined in the Loan Agreement, in addition to FINOVA's right to charge interest
on the Obligations at the Default Rate: (a) at the option of FINOVA, the entire
unpaid amount of all of the Obligations, including without limitation the
Termination Fee, shall become immediately due and payable without demand, notice
or legal process of any kind; (b) FINOVA may, at its option, without demand,
notice or legal process of any kind, exercise any and all rights and remedies
granted to it by the Loan Agreement or by any other agreement now or hereafter
existing between FINOVA and Borrower or between FINOVA and any guarantor of part
or all of Borrower's liabilities to FINOVA; and (c) FINOVA may at its option
exercise from time to time any other rights and remedies available to it under
the Uniform Commercial Code or other law of the State of Arizona.
-2-
<PAGE> 3
2.2 The remedies of FINOVA as provided herein and in the Loan
Agreement shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of FINOVA. No act of omission
or commission of FINOVA, including specifically any failure to exercise any
right, remedy or recourse, shall be deemed to be a waiver or release of the
same, such waiver or release to be effected only through a written document
executed by FINOVA and then only to the extent specifically recited therein. A
waiver or release with reference to any one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to a subsequent event.
3.0 GENERAL PROVISIONS.
3.1 Borrower warrants and represents to FINOVA that Borrower
has used and will continue to use the loans and advances represented by this
Note solely for proper business purposes, and consistent with all applicable
laws and statutes.
3.2 This Note is secured by the Collateral described in the
Loan Agreement.
3.3 Borrower waives presentment, demand and protest, notice of
protest, notice of presentment and all other notices and demands in connection
with the enforcement of FINOVA's rights hereunder, except as specifically
provided and called for by this Note, and hereby consents to, and waives notice
of, the release, addition, or substitution, with or without consideration, of
any collateral or of any person liable for payment of this Note. Any failure of
FINOVA to exercise any right available hereunder or otherwise shall not be
construed as a waiver of the right to exercise the same or as a waiver of any
other right at any other time.
3.4 If this Note is not paid when due or upon the occurrence
of an Event of Default, Borrower further promises to pay all costs of
collection, foreclosure fees, attorneys fees and expert witness fees incurred by
FINOVA, whether or not suit is filed hereon, and the fees, costs and expenses as
provided in the Loan Agreement.
3.5 The contracted for rate of interest of the loan
contemplated hereby, without limitation, shall consist of the following: (i) the
interest rate set forth on the Schedule, calculated and applied to the principal
balance of this Note in accordance with the provisions of this Note: (ii)
interest after an Event of Default, calculated and applied to the amounts due
under this Note in accordance with the provisions hereof; and (iii) all
Additional Sums (as herein defined), if any. Borrower agrees to pay an effective
contracted for rate of interest which is the sum of the above-referenced
elements. All examination fees, attorneys fees, expert witness fees, letter of
credit fees, collateral monitoring fees, closing fees, facility fees,
Termination Fees, Minimum Interest Charges, other charges, goods, things in
action or any other sums or things of value paid or payable by Borrower
(collectively, the "Additional Sums"), whether pursuant to this Note, the Loan
Agreement or any other documents or instruments in any way pertaining to this
lending transaction, or otherwise with respect to this lending transaction, that
under any applicable law may be deemed to be interest with respect to this
lending transaction, for the purpose of any applicable law that may limit the
maximum amount of interest to be charged with respect to this lending
transaction, shall be payable by Borrower as, and shall be deemed to be,
additional interest and for such purposes only, the agreed upon and "contracted
for rate of
-3-
<PAGE> 4
interest" of this lending transaction shall be deemed to be increased by the
rate of interest resulting from the inclusion of the Additional Sums.
3.6 It is the intent of the parties to comply with the usury
law of the State of Arizona (the "Applicable Usury Law"). Accordingly, it is
agreed that notwithstanding any provisions to the contrary in this Note, or in
any of the documents securing payment hereof or otherwise relating hereto, in no
event shall this Note or such documents require the payment or permit the
collection of interest in excess of the maximum Interest Rate, then in any such
event (1) the provisions of the paragraph shall govern and control, (2) neither
Borrower nor any other person or entity now or hereafter liable for the payment
hereof shall be obligated to pay the amount of such interest to the extent that
it is in excess of the Maximum Interest Rate, (3) any such excess which may have
been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, at FINOVA's option, and (4) the
effective rate of interest shall be automatically reduced to the Maximum
Interest Rate. It is further agreed, without limiting the generality of the
foregoing, that to the extent permitted by the Applicable Usury Law; (x) all
calculations of interest which are made for the purpose of determining whether
such rate would exceed the Maximum Interest Rate shall be made by amortizing,
prorating, allocating and spreading during the period of the full stated term of
the loan evidenced hereby, all interest at any time contracted for, charged or
received from Borrower or otherwise in connection with such loan; and (y) in the
event that the effective rate of interest on the loan should at any time exceed
the Maximum Interest Rate, such excess interest that would otherwise have been
collected had there been no ceiling imposed by the Applicable Usury Law shall be
paid to FINOVA from time to time, if and when the effective interest rate on the
loan otherwise fall below the Maximum Interest Rate, until the entire amount of
interest which would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full. Borrower further
agrees that should the Maximum Interest Rate be increased at any time hereafter
because of a change in the Applicable Usury Law, then to the extent not
prohibited by the Applicable Usury Law, such increases shall apply to all
indebtedness evidenced hereby regardless of when incurred; but, again to the
extent not prohibited by the Applicable Usury Law, should the maximum Interest
Rate be decreased because of a change in the Applicable Usury Law, such
decreases shall not apply to the indebtedness evidenced hereby regardless of
when incurred.
3.7 FINOVA may at any time transfer this Note and FINOVA's
rights in any or all collateral securing this Note, and FINOVA thereafter shall
be relieved from all liability with respect to such collateral arising after the
date of such transfer.
3.8 This Note shall be binding upon Borrower and its legal
representatives, successors and assigns. Wherever possible, each provision of
this Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Note shall be prohibited by or
invalid under such law, such provision shall be severable, and be ineffective to
the extent of such prohibition or invalidity, without invalidating the remaining
provision of this Note.
-4-
<PAGE> 5
THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY FINOVA IN
PHOENIX, ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
ARIZONA, AS THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT
LIMITATION, THE UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. BORROWER HEREBY
(i) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN MARICOPA COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO
BORROWER AT THE ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME
SHALL HAVE BEEN POSTED TO BORROWER'S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST FINOVA OR ANY OF FINOVA'S DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS
NOTE IN ANY COURT OTHER THAN ONE LOCATED IN MARICOPA COUNTY, ARIZONA; AND (vi)
IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR
IN CONNECTION WITH THIS NOTE. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR IMPAIR
FINOVA'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR FINOVA'S
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION.
TEAMSTAFF, INC., a New Jersey Corporation
Fed. Tax ID #22-1899798
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 300 Atrium Drive, Somerset, New Jersey 08773
-5-
<PAGE> 6
TEAMSTAFF SOLUTIONS, INC., a New Jersey Corporation
Fed. Tax ID #:13-2878077
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 245 Fifth Avenue, Suite 1003, New York, New York 10016
DSI STAFF CONNXIONS NORTHEAST, INC., a New Jersey Corporation
Fed. Tax ID #: 22-3405060
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 300 Atrium Drive, Somerset, New Jersey 08773
TEAMSTAFF RX, INC., a Texas Corporation
Fed. Tax ID #: 76-0451040
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 2 Northpoint Drive, Suite 110, Houston, Texas 77060
DSI STAFF CONNXIONS-SOUTHWEST, INC., a Texas Corporation
Fed. Tax ID #: 76-0422152
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 2 Northpoint Drive, Suite 110, Houston, Texas 77060
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<PAGE> 7
TEAMSTAFF VI, INC., a Florida corporation
Fed. Tax ID #: 59-2988438
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF I, INC., A Florida corporation
Fed. Tax ID #: 59-3067619
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, II, INC., a Florida corporation
Fed. Tax ID #: 59-3277121
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, III, INC., a Florida corporation
Fed. Tax ID #: 59-3277124
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 8
TEAMSTAFF, IV, INC., a Florida corporation
Fed. Tax ID #: 59-3277126
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF V, INC., a Florida corporation
Fed. Tax ID #: 59-3277127
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF IX, INC., a Florida corporation
Fed. Tax ID #: 59-2988440
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF INSURANCE SERVICES, INC., a Florida corporation
Fed. Tax ID #: 59-2988436
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
-8-
<PAGE> 9
TEAMSTAFF VIII, INC., a Florida corporation
Fed. Tax ID #: 59-3236075
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
EMPLOYER SUPPORT SERVICES, INC., a Florida corporation
Fed. Tax ID #: 59-2988443
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 1
Exhibit 10.4
SECURED PROMISSORY NOTE C
$4,000,000.00 Phoenix, Arizona
April __, 2000
FOR VALUE RECEIVED, TEAMSTAFF, INC., a New Jersey Corporation,
TEAMSTAFF SOLUTIONS, INC., a New York Corporation, DSI STAFF CONNXIONS
NORTHEAST, INC., a New Jersey Corporation, DSI STAFF CONNXIONS SOUTHWEST, INC.,
a Texas Corporation, TEAMSTAFF RX, INC., a Texas Corporation, TEAMSTAFF VI,
INC., a Florida Corporation, TEAMSTAFF I, INC., a Florida Corporation, TEAMSTAFF
II, INC., a Florida Corporation, TEAMSTAFF III, INC., a Florida Corporation,
TEAMSTAFF IV, INC., a Florida Corporation, TEAMSTAFF V, INC., a Florida
Corporation, TEAMSTAFF IX, INC., a Florida Corporation, TEAMSTAFF INSURANCE
SERVICES, INC., a Florida Corporation, TEAMSTAFF VIII, INC., and EMPLOYER
SUPPORT SERVICES, INC., a Florida Corporation (collectively, "Borrower"),
promises to pay to the order of FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"), at its offices at 355 South Grand Avenue, Suite 2400,
Los Angeles, California 90071, or at such other place or places as FINOVA may
from time to time designate in writing, the principal sum of FOUR MILLION
Dollars ($4,000,000.00), plus interest in the manner and upon the terms and
conditions set forth below. This Secured Promissory Note ("Note") is made
pursuant to that certain Amended And Restated Loan and Security Agreement dated
January 25, 1999, as amended, between the FINOVA and Borrower (the "Loan
Agreement"), the provisions of which are incorporated herein by this reference.
Capitalized terms herein, unless otherwise noted, shall have the meaning set
forth in the Loan Agreement.
1.0 SCHEDULE OF PAYMENTS; RATE AND PAYMENT OF INTEREST; PREPAYMENT.
1.1 The amounts due under this Note shall be payable as
follows:
a. Thirty-one (31) equal successive monthly installments of
principal of Sixty-Six Thousand, Six Hundred Sixty Seven Dollars ($66,667.00)
each on the first day of each month, beginning November 1, 2000, and continuing
through and including April 1, 2003; and
b. A final installment equal to the then unpaid principal
balance hereof on April 30, 2003; and
c. Successive monthly installments of accrued interest on the
principal balance from time to time remaining unpaid, payable monthly on the
first day of each and every month, beginning May 1, 2000, with a final
installment equal to all outstanding and unpaid accrued interest on April 30,
2003.
1.2 Prepayment may be made under this Note in whole but not in
part, subject to, in the case of prepayment in whole, and Success Fee set forth
in the Loan Agreement, provided that such prepayment is preceded by not less
than five (5) business days prior written
<PAGE> 2
notice to FINOVA and accompanied by all accrued by unpaid interest and the
earned Success Fee. Notwithstanding anything herein to the contrary, in the
event is terminated by Borrower, by FINOVA or by any other person at any time,
or the Revolving Credit Loans facility is otherwise terminated for any reason,
then the entire unpaid principal balance of this Note, together with all accrued
and unpaid interest hereon and the full amount of the applicable Success Fee,
shall become immediately due and payable in full on the effective date of such
termination, without presentment, notice or demand of any kind.
1.3 Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed, and shall be at the rate of three
percentage (3%) points above the Prime Rate (as hereinafter defined), computed
on the basis of a 360-day year; provided, however, upon the occurrence and
during the continuance of an event of default (as hereinafter defined), interest
shall accrue on the outstanding principal balance of this Note at a default rate
(the "Default Rate") of five (5) percentage points above the Prime Rate, and
shall be payable on demand. "Prime Rate" means, for any day, the rate of
interest per annum (over a year of 360 days) announced by Citibank, N.A. (the
"Bank"), from time to time, as its "base rate" (or any successor thereto) in
effect on such day. The Prime Rate is not necessarily the lowest rate charged by
the Bank. The applicable rate of interest assessed hereunder will be increased
or decreased from time to time hereafter in an amount equal to any increase or
decrease hereafter made by the Bank in the Prime Rate. A change in the Prime
Rate shall be effective on the first day following such change.
2.0 EVENTS OF DEFAULTS; REMEDIES.
2.1 Upon the occurrence of any Event of Default under and as
defined in the Loan Agreement, in addition to FINOVA's right to charge interest
on the Obligations at the Default Rate: (a) at the option of FINOVA, the entire
unpaid amount of all of the Obligations, shall become immediately due and
payable without demand, notice or legal process of any kind; (b) FINOVA may, at
its option, without demand, notice or legal process of any kind, exercise any
and all rights and remedies granted to it by the Loan Agreement or by any other
agreement now or hereafter existing between FINOVA and Borrower or between
FINOVA and any guarantor of part or all of Borrower's liabilities to FINOVA; and
(c) FINOVA may at its option exercise from time to time any other rights and
remedies available to it under the Uniform Commercial Code or other law of the
State of Arizona.
2.2 The remedies of FINOVA as provided herein and in the Loan
Agreement shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of FINOVA. No act of omission
or commission of FINOVA, including specifically any failure to exercise any
right, remedy or recourse, shall be deemed to be a waiver or release of the
same, such waiver or release to be effected only through a written document
executed by FINOVA and then only to the extent specifically recited therein. A
waiver or release with reference to any one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to a subsequent event.
-2-
<PAGE> 3
3.0 GENERAL PROVISIONS.
3.1 Borrower warrants and represents to FINOVA that Borrower
has used and will continue to use the loans and advances represented by this
Note solely for proper business purposes, and consistent with all applicable
laws and statutes.
3.2 This Note is secured by the Collateral described in the
Loan Agreement.
3.3 Borrower waives presentment, demand and protest, notice of
protest, notice of presentment and all other notices and demands in connection
with the enforcement of FINOVA's rights hereunder, except as specifically
provided and called for by this Note, and hereby consents to, and waives notice
of, the release, addition, or substitution, with or without consideration, of
any collateral or of any person liable for payment of this Note. Any failure of
FINOVA to exercise any right available hereunder or otherwise shall not be
construed as a waiver of the right to exercise the same or as a waiver of any
other right at any other time.
3.4 If this Note is not paid when due or upon the occurrence
of an Event of Default, Borrower further promises to pay all costs of
collection, foreclosure fees, attorneys fees and expert witness fees incurred by
FINOVA, whether or not suit is filed hereon, and the fees, costs and expenses as
provided in the Loan Agreement.
3.5 The contracted for rate of interest of the loan
contemplated hereby, without limitation, shall consist of the following: (i) the
interest rate set forth on the Schedule, calculated and applied to the principal
balance of this Note in accordance with the provisions of this Note: (ii)
interest after an Event of Default, calculated and applied to the amounts due
under this Note in accordance with the provisions hereof; and (iii) all
Additional Sums (as herein defined), if any. Borrower agrees to pay an effective
contracted for rate of interest which is the sum of the above-referenced
elements. All examination fees, attorneys fees, expert witness fees, letter of
credit fees, collateral monitoring fees, closing fees, facility fees, Minimum
Interest Charges, other charges, goods, things in action or any other sums or
things of value paid or payable by Borrower (collectively, the "Additional
Sums"), whether pursuant to this Note, the Loan Agreement or any other documents
or instruments in any way pertaining to this lending transaction, or otherwise
with respect to this lending transaction, that under any applicable law may be
deemed to be interest with respect to this lending transaction, for the purpose
of any applicable law that may limit the maximum amount of interest to be
charged with respect to this lending transaction, shall be payable by Borrower
as, and shall be deemed to be, additional interest and for such purposes only,
the agreed upon and "contracted for rate of interest" of this lending
transaction shall be deemed to be increased by the rate of interest resulting
from the inclusion of the Additional Sums.
3.6 It is the intent of the parties to comply with the usury
law of the State of Arizona (the "Applicable Usury Law"). Accordingly, it is
agreed that notwithstanding any provisions to the contrary in this Note, or in
any of the documents securing payment hereof or otherwise relating hereto, in no
event shall this Note or such documents require the payment or permit the
collection of interest in excess of the maximum Interest Rate, then in any such
event (1) the provisions of the paragraph shall govern and control, (2) neither
Borrower nor any other
-3-
<PAGE> 4
person or entity now or hereafter liable for the payment hereof shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the Maximum Interest Rate, (3) any such excess which may have been collected
shall be either applied as a credit against the then unpaid principal amount
hereof or refunded to Borrower, at FINOVA's option, and (4) the effective rate
of interest shall be automatically reduced to the Maximum Interest Rate. It is
further agreed, without limiting the generality of the foregoing, that to the
extent permitted by the Applicable Usury Law; (x) all calculations of interest
which are made for the purpose of determining whether such rate would exceed the
Maximum Interest Rate shall be made by amortizing, prorating, allocating and
spreading during the period of the full stated term of the loan evidenced
hereby, all interest at any time contracted for, charged or received from
Borrower or otherwise in connection with such loan; and (y) in the event that
the effective rate of interest on the loan should at any time exceed the Maximum
Interest Rate, such excess interest that would otherwise have been collected had
there been no ceiling imposed by the Applicable Usury Law shall be paid to
FINOVA from time to time, if and when the effective interest rate on the loan
otherwise fall below the Maximum Interest Rate, until the entire amount of
interest which would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full. Borrower further
agrees that should the Maximum Interest Rate be increased at any time hereafter
because of a change in the Applicable Usury Law, then to the extent not
prohibited by the Applicable Usury Law, such increases shall apply to all
indebtedness evidenced hereby regardless of when incurred; but, again to the
extent not prohibited by the Applicable Usury Law, should the maximum Interest
Rate be decreased because of a change in the Applicable Usury Law, such
decreases shall not apply to the indebtedness evidenced hereby regardless of
when incurred.
3.7 FINOVA may at any time transfer this Note and FINOVA's
rights in any or all collateral securing this Note, and FINOVA thereafter shall
be relieved from all liability with respect to such collateral arising after the
date of such transfer.
3.8 This Note shall be binding upon Borrower and its legal
representatives, successors and assigns. Wherever possible, each provision of
this Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Note shall be prohibited by or
invalid under such law, such provision shall be severable, and be ineffective to
the extent of such prohibition or invalidity, without invalidating the remaining
provision of this Note.
THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY FINOVA IN
PHOENIX, ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
ARIZONA, AS THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT
LIMITATION, THE UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. BORROWER HEREBY
(i) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN MARICOPA COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL
SERVICE OF ANY
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<PAGE> 5
AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO BORROWER AT THE
ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED TO BORROWER'S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST FINOVA
OR ANY OF FINOVA'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS NOTE IN ANY COURT OTHER
THAN ONE LOCATED IN MARICOPA COUNTY, ARIZONA; AND (vi) IRREVOCABLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS
NOTE. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR IMPAIR FINOVA'S RIGHT TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR FINOVA'S RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION.
TEAMSTAFF, INC., a New Jersey Corporation
Fed. Tax ID #22-1899798
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 300 Atrium Drive, Somerset, New Jersey 08773
TEAMSTAFF SOLUTIONS, INC., a New Jersey Corporation
Fed. Tax ID #:13-2878077
By: _________________________________
Name: Donald W. President
Title: Chairman
Address: 245 Fifth Avenue, Suite 1003, New York, New York 10016
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<PAGE> 6
DSI STAFF CONNXIONS NORTHEAST, INC., a New Jersey Corporation
Fed. Tax ID #: 22-3405060
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 300 Atrium Drive, Somerset, New Jersey 08773
TEAMSTAFF RX, INC., a Texas Corporation
Fed. Tax ID #: 76-0451040
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 2 Northpoint Drive, Suite 110, Houston, Texas 77060
DSI STAFF CONNXIONS-SOUTHWEST, INC., a Texas Corporation
Fed. Tax ID #: 76-0422152
By: _________________________________
Name: Donald W. Kappauf
Title: President
Address: 2 Northpoint Drive, Suite 110, Houston, Texas 77060
TEAMSTAFF VI, INC., a Florida corporation
Fed. Tax ID #: 59-2988438
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 7
TEAMSTAFF I, INC., A Florida corporation
Fed. Tax ID #: 59-3067619
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, II, INC., a Florida corporation
Fed. Tax ID #: 59-3277121
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, III, INC., a Florida corporation
Fed. Tax ID #: 59-3277124
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF, IV, INC., a Florida corporation
Fed. Tax ID #: 59-3277126
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF V, INC., a Florida corporation
Fed. Tax ID #: 59-3277127
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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<PAGE> 8
TEAMSTAFF IX, INC., a Florida corporation
Fed. Tax ID #: 59-2988440
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF INSURANCE SERVICES, INC., a Florida corporation
Fed. Tax ID #: 59-2988436
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
TEAMSTAFF VIII, INC., a Florida corporation
Fed. Tax ID #: 59-3236075
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
EMPLOYER SUPPORT SERVICES, INC., a Florida corporation
Fed. Tax ID #: 59-2988443
By: _________________________________
Name: Donald W. Kappauf
Title: Chairman
Address: 1211 N. Westshore Blvd., Suite 806, Tampa, FL 33607
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