AGREEMENT AND PLAN
OF
MERGER
BY AND
AMONG
TEAMSTAFF, INC.,
TEAMSUB, INC.
AND
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
Dated as of March 6, 2001
TABLE OF CONTENTS
Page
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1. DEFINITIONS..............................................................................................1
2. BASIC TRANSACTION........................................................................................7
2.1 THE MERGER......................................................................................7
2.2 EFFECTIVE TIME..................................................................................7
2.3 EFFECT OF THE MERGER............................................................................8
2.4 ARTICLES OF INCORPORATION.......................................................................8
2.5 BYLAWS..........................................................................................8
2.6 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION AND TEAMSTAFF...................................8
2.7 CONVERSION OF BRIGHTLANE CAPITAL STOCK, EXCHANGE RATIO..........................................9
2.8 ADJUSTMENT IN NUMBER OF TEAMSTAFF SHARES AS MERGER CONSIDERATION...............................11
2.9 CANCELLATION OF BRIGHTLANE CAPITAL STOCK.......................................................11
2.10 CONVERSION OF TEAMSUB STOCK....................................................................11
2.11 CONVERSIONS OF ALL BRIGHTLANE STOCK OPTIONS AND WARRANTS.......................................11
2.12 ADJUSTMENTS TO BRIGHTLANE EXCHANGE RATIOS......................................................11
2.13 NO FRACTIONAL SHARES...........................................................................12
2.14 EXCHANGE PROCEDURES FOR BRIGHTLANE SHARES. SURRENDER OF BRIGHTLANE CERTIFICATES................12
2.15 FURTHER OWNERSHIP RIGHTS IN BRIGHTLANE STOCK...................................................13
2.16 LOST, STOLEN OR DESTROYED CERTIFICATES.........................................................13
2.17 TAX CONSEQUENCES...............................................................................14
2.18 FURTHER ASSURANCES.............................................................................14
2.19 THE CLOSING....................................................................................14
2.20 DELIVERIES AT THE CLOSING......................................................................14
3. REPRESENTATIONS AND WARRANTIES BY TEAMSTAFF AND TEAMSUB.................................................14
3.1 ORGANIZATION AND QUALIFICATION OF TEAMSTAFF AND TEAMSUB........................................15
3.2 SUBSIDIARIES...................................................................................15
3.3 AUTHORIZATION OF TRANSACTION...................................................................15
3.4 REQUIRED VOTE..................................................................................16
3.5 NONCONTRAVENTION...............................................................................16
3.6 APPROVALS......................................................................................16
3.7 CAPITALIZATION OF TEAMSTAFF AND TEAMSUB........................................................16
3.8 TITLE TO ASSETS................................................................................17
3.9 SEC DOCUMENTS: FINANCIAL STATEMENTS............................................................17
3.10 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.............................................18
3.11 NO MATERIAL ADVERSE CHANGES....................................................................18
3.12 ABSENCE OF UNDISCLOSED LIABILITIES.............................................................19
3.13 COMPLIANCE.....................................................................................19
3.14 LITIGATION. ...................................................................................20
3.15 TAX MATTERS....................................................................................20
3.16 EMPLOYEES......................................................................................21
3.17 EMPLOYEE BENEFITS..............................................................................21
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3.18 CONTRACTS......................................................................................22
3.19 ENVIRONMENT, HEALTH, AND SAFETY................................................................24
3.20 REAL PROPERTY INTERESTS........................................................................24
3.21 INTELLECTUAL PROPERTY..........................................................................25
3.22 TANGIBLE ASSETS................................................................................27
3.23 NOTES AND ACCOUNTS RECEIVABLE..................................................................27
3.24 POWERS OF ATTORNEY.............................................................................27
3.25 BROKERS' FEES..................................................................................27
3.26 GUARANTEES.....................................................................................27
3.27 INVESTMENT.....................................................................................27
3.28 TRANSACTIONS WITH AFFILIATES...................................................................27
3.29 INSURANCE......................................................................................27
3.30 DISCLOSURE.....................................................................................28
4. REPRESENTATIONS AND WARRANTIES CONCERNING BRIGHTLANE....................................................28
4.1 ORGANIZATION AND QUALIFICATION OF BRIGHTLANE...................................................28
4.2 SUBSIDIARIES...................................................................................29
4.3 AUTHORIZATION OF TRANSACTION...................................................................29
4.4 REQUIRED VOTE..................................................................................29
4.5 NONCONTRAVENTION..............................................................................29
4.6 APPROVALS......................................................................................29
4.7 CAPITALIZATION.................................................................................30
4.8 TITLE TO ASSETS................................................................................30
4.9 FINANCIAL STATEMENTS...........................................................................30
4.10 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS.......................................31
4.11 EVENTS SUBSEQUENT TO BRIGHTLANE MOST RECENT FINANCIAL STATEMENTS...............................31
4.12 ABSENCE OF UNDISCLOSED LIABILITIES.............................................................33
4.13 COMPLIANCE.....................................................................................33
4.14 LITIGATION.....................................................................................34
4.15 TAX MATTERS....................................................................................34
4.16 EMPLOYEES......................................................................................35
4.17 EMPLOYEE BENEFITS..............................................................................36
4.18 CONTRACTS......................................................................................37
4.19 ENVIRONMENT, HEALTH, AND SAFETY................................................................38
4.20 REAL PROPERTY INTERESTS........................................................................39
4.21 INTELLECTUAL PROPERTY..........................................................................40
4.22 TANGIBLE ASSETS................................................................................42
4.23 NOTES AND ACCOUNTS RECEIVABLE..................................................................42
4.24 POWERS OF ATTORNEY.............................................................................42
4.25 BROKERS' FEES..................................................................................42
4.26 GUARANTEES.....................................................................................42
4.27 INVESTMENT. Intentionally omitted.............................................................42
4.28 INSURANCE......................................................................................42
4.29 CERTAIN BUSINESS RELATIONSHIPS WITH BRIGHTLANE................................................43
4.30 DISCLOSURE.....................................................................................43
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5. PRE-CLOSING COVENANTS...................................................................................43
5.1 GENERAL........................................................................................43
5.2 NOTICES AND CONSENTS...........................................................................44
5.3 OPERATION OF BUSINESSES........................................................................44
5.4 PRESERVATION OF BUSINESS.......................................................................46
5.5 FULL ACCESS....................................................................................46
5.6 NOTICE OF DEVELOPMENTS.........................................................................46
5.7 PREPARATION OF JOINT PROXY STATEMENT/PROSPECTUS & SHAREHOLDERS' MEETINGS.......................46
5.8 CONTINUING DUE DILIGENCE AND DISCLOSURE SCHEDULE DELIVERY......................................51
6. POST-CLOSING COVENANTS..................................................................................51
6.1 GENERAL........................................................................................51
6.2 LITIGATION SUPPORT.............................................................................52
6.3 TRANSITION.....................................................................................52
6.4 CONFIDENTIALITY................................................................................52
6.5 COVENANT NOT TO COMPETE........................................................................53
6.6 INDEMNIFICATION; DIRECTORS AND OFFICER INSURANCE...............................................53
6.7 CONTINUITY OF BUSINESS ENTERPRISE..............................................................54
6.8 CONTINUITY OF INTEREST.........................................................................54
6.9 SUBSTANTIALLY ALL REQUIREMENT..................................................................54
6.10 RESALE REGISTRATION STATEMENT..................................................................55
7. CERTAIN AGREEMENTS......................................................................................56
7.1 MARKETING AGREEMENT............................................................................56
7.2 LOCKUP AGREEMENTS..............................................................................56
7.3 RELEASES BY BRIGHTLANE SHAREHOLDERS............................................................56
8. CONDITIONS TO OBLIGATION TO CLOSE.......................................................................56
8.1 CONDITIONS TO OBLIGATION OF TEAMSTAFF..........................................................56
8.2 CONDITIONS TO OBLIGATION OF BRIGHTLANE.........................................................57
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.................................................................58
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................59
9.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF TEAMSTAFF............................................59
9.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BRIGHTLANE SHAREHOLDERS..........................59
9.4 MATTERS INVOLVING THIRD PARTIES................................................................59
9.5 DETERMINATION OF ADVERSE CONSEQUENCES..........................................................61
9.6 ESCROW OF SHARES BY BRIGHTLANE SHAREHOLDERS....................................................61
9.7 TEAMSTAFF ESCROW SHARES........................................................................62
9.8 DETERMINATION/RESOLUTION OF CLAIMS............................................................64
10. TERMINATION.............................................................................................65
10.1 TERMINATION OF AGREEMENT.......................................................................65
10.2 EFFECT OF TERMINATION..........................................................................66
10.3 TERMINATION FEE................................................................................66
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11. MISCELLANEOUS...........................................................................................66
11.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS........................................................66
11.2 NO THIRD-PARTY BENEFICIARIES...................................................................66
11.3 ENTIRE AGREEMENT...............................................................................67
11.4 SUCCESSION AND ASSIGNMENT......................................................................67
11.5 COUNTERPARTS...................................................................................67
11.6 HEADINGS.......................................................................................67
11.7 NOTICES........................................................................................67
11.8 GOVERNING LAW/SUBMISSION TO JURISDICTION/ARBITRATION...........................................68
11.9 AMENDMENTS AND WAIVERS.........................................................................68
11.10 SEVERABILITY...................................................................................68
11.11 EXPENSES.......................................................................................68
11.12 CONSTRUCTION...................................................................................68
11.13 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES..............................................68
11.14 SPECIFIC PERFORMANCE...........................................................................69
EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A Form of Certificate of Merger
Exhibit B BrightLane Financial Statements
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Opinion of Counsel to BrightLane
Exhibit E Form of Opinion of Counsel to TeamStaff
Exhibit F Form of BrightLane Shareholder and TeamStaff Shareholder
Voting Agreement
Exhibit G Form of Cross Marketing Agreement between TeamStaff and
First Union Corporation
Exhibit H Form of General Release to be Delivered by BrightLane Shareholders
Exhibit I Form of Escrow Agreement for Holdback Shares and TeamStaff
Escrow Shares
Schedules:
TeamStaff Disclosure Schedule Exceptions to Representations and Warranties Concerning
TeamStaff, TeamSub and Subsidiaries
BrightLane Disclosure Schedule Exceptions to Representations and Warranties Concerning
BrightLane
Schedule 6.5 Persons to Deliver Non-Compete Agreements
Schedule 7.2 Persons to Deliver Lock Up Agreements
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Schedule 7.3 Persons to Deliver General Releases
Schedule 9.6 Allocation of Holdback Shares among BrightLane Shareholders
AGREEMENT AND
PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into
as of March 6, 2001 by and among TeamStaff, Inc., a New Jersey corporation
with its principal address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
("TeamStaff"), TeamSub, Inc. a Georgia corporation and a direct wholly-owned
subsidiary of TeamStaff with its principal address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("TeamSub" or the "Merger Corporation") and
▇▇▇▇▇▇▇▇▇▇.▇▇▇ , Inc. a Georgia corporation with its principal address at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("BrightLane"). TeamStaff,
TeamSub and BrightLane are referred to individually as a "Party" and
collectively in this Agreement as the "Parties."
WITNESSETH
WHEREAS, TeamSub is a wholly-owned subsidiary of TeamStaff which was
formed to merge with and into BrightLane;
WHEREAS, the Boards of Directors of TeamStaff, TeamSub and
BrightLane have each approved the Merger (as defined in Section 2.1) of
TeamSub with and into BrightLane, in accordance with the Official Code of
Georgia Annotated ("OCGA") and subject to the conditions set forth herein,
which will result in, among other things, BrightLane becoming a wholly owned
Subsidiary of TeamStaff, and have approved and declared this Agreement
advisable and in the best interests of their respective shareholders;
WHEREAS, it is the intention of the Parties that the Merger
contemplated herein qualify as a Tax free reorganization within the meaning
of Sections 368 (a)(1)(A) and (a)(2)(E) of the Code (as defined below).
NOW THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS
"ADDITIONAL HOLDBACK SHARES" means any shares to TeamStaff Common
Stock issuable to BrightLane shareholders by way of dividend or distribution
on the Holdback Shares.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and expenses.
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"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Code Sec. 1504 or any similar group defined under a similar provision of
state, local or foreign law.
"APPROVALS" means any and all consents, orders, permits or licenses
of governmental or self regulatory agencies, departments or bureaus.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BLUE SKY LAWS" means the securities laws and regulations of the
various states.
"BRIGHTLANE" has the meaning set forth in the preface above.
"BRIGHTLANE BALANCE SHEET" has the meaning set forth in Section 4.9
below.
"BRIGHTLANE CAPITAL STOCK" means all outstanding shares of Common
Stock, preferred stock, options, warrants or other convertible securities of
BrightLane.
"BRIGHTLANE CLOSING FINANCIAL STATEMENTS" has the meaning set forth
in Section 8.1(j) below.
"BRIGHTLANE DISCLOSURE SCHEDULE" has the meaning set forth in the
preface to Section 4 below.
"BRIGHTLANE FINANCIAL STATEMENTS" has the meaning set forth in
Section 4.9 below.
"BRIGHTLANE MATERIAL ADVERSE CHANGE" means, (i) as reflected on the
BrightLane Closing Financial Statements accounts payable and accrued expenses
in excess of $600,000; or (ii) BrightLane's cash, restricted cash and cash
equivalents as set forth on the BrightLane Closing Financial Statements (the
"BrightLane Closing Cash Amount") of less than an amount (the "Target
BrightLane Closing Cash Amount") equal to $16,500,000, minus: (A) any amounts
paid as fees or expenses incurred after February 1, 2001 related to the
transactions contemplated herein provided that such fees and expenses do not
exceed the limitations set forth in Section 11.11 below, (B) any amounts made
as a loan to TeamStaff, or (C) any amounts made as loans to holders of
BrightLane options or warrants as contemplated in Section 2.11 hereof.
"BRIGHTLANE MATERIAL ADVERSE EFFECT" means any event on or with
respect to BrightLane which is materially adverse to the condition (financial
or otherwise), of the properties, assets (including intangible assets),
Liabilities, business, results of operations or prospects of BrightLane. With
respect to a financial event, material adverse effect shall mean any event
which has an effect of $50,000 or more.
"BRIGHTLANE MOST RECENT BALANCE SHEET" means the balance sheet
contained within the BrightLane Recent Financial Statements.
"BRIGHTLANE MOST RECENT FISCAL MONTH END" has the meaning set forth
in Section 4.9 below.
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"BRIGHTLANE MOST RECENT FISCAL YEAR END" has the meaning set forth
in Section 4.9 below.
"BRIGHTLANE PLAN" has the meaning set forth in Section 4.17 below.
"BRIGHTLANE SHAREHOLDERS" means the holders of all of the
outstanding BrightLane Capital Stock.
"BRIGHTLANE SHAREHOLDERS MEETING" means the meeting of BrightLane
Shareholders called by the BrightLane Board of Directors to approve the
Merger.
"BRIGHTLANE SHARES" means the issued and outstanding shares of the
Common Stock of BrightLane.
"CLOSING" has the meaning set forth in Section 2.19 below.
"CLOSING DATE" has the meaning set forth in Section 2.19 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
operations, businesses and affairs of the particular Party, as the context
may require, that is not already generally available to the public. Without
limiting the foregoing, "Confidential Information" shall include marketing
and sales information, customer and account lists and pricing information,
internal forecasts and projections and employee information.
"CONSENT" means all consents, approvals or authorizations of third
parties required in connection with the valid execution, delivery or
performance of this Agreement or the Related Agreements, or the consummation
of the Mergers or any of the transactions contemplated hereby or thereby.
"EFFECTIVE TIME" has the meaning set forth in Section 2.2 below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan
or material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments
(and all agencies thereof) concerning pollution or
3
protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGREEMENT" has the meaning set forth in Section 9 below.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec.
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FAIR MARKET VALUE" means, with respect to Holdback Shares or
TeamStaff Escrow Shares to be released from escrow in satisfaction of
indemnification claims pursuant to Section 9 hereof, the average closing
price of the TeamStaff Common Stock on the Nasdaq Small Cap Market (or the
primary market on which such shares then trade) for the 10 trading days
ending on the third business day prior to the Closing Date.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3(21).
"FOREIGN COMPETITION LAWS" means any law or regulation regarding
anti-trust or anti-competition of any Governmental Authority of any foreign
jurisdiction.
"FORM S-4 REGISTRATION STATEMENT" has the meaning set forth in
Section 5.7(a) hereof.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any agency, public or regulatory
authority, instrumentality, department, commission, court, ministry, tribunal
or board of any government, whether foreign or domestic and whether national,
federal, tribal, provincial, state, regional, local or municipal.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"HOLDBACK AGENT" has the meaning set forth in Section 9 below.
"HOLDBACK FUND" means the Holdback Shares and Additional Shares held
by the Holdback Agent pursuant to Section 9 below.
"HOLDBACK SHARES" has the meaning set forth in Section 9.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9.4 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.4 below.
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"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations- in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, 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, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing
plans and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"JOINT PROXY STATEMENT/PROSPECTUS" has the meaning set forth in
Section 5.7(a) hereof.
"KNOWLEDGE" means an individual will be deemed to have "knowledge"
of a particular fact or other matter if such individual is actually aware of
such fact or other matter, or a prudent individual given his position with
the Company could be expected to discover or otherwise become aware of such
fact or other matter after reasonable investigation. Where the reference is
to the "knowledge" of a corporation, partnership or similar entity, knowledge
shall mean after reasonable investigation by the officers and directors and
employees with responsibility for the subject matter of the entity.
"LAW" means statutes, common laws, rules, ordinances, regulations,
codes, licensing requirements, orders, judgments, injunctions, decrees,
licenses, agreements, settlements, governmental guidelines or
interpretations, permits, rules and by-laws of a Governmental Authority.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MERGER" has the meaning set forth in Section 2.1 below.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.7
below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"OCGA" has the meaning set forth in the preface above.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"PEO" means professional employer services.
"PEO FORM CONTRACT" shall have the meaning set forth in Section 3.18.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"RELATED AGREEMENTS" means all documents, agreements, certificates
or instruments required to be executed by any party pursuant to this
Agreement.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments
under capital lease arrangements, and (d) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of money.
"SHAREHOLDERS' AGENT" has the meaning set forth in Section 9.6 below.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec.
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TEAMSTAFF'S AGENT" has the meaning set forth in Section 9.7 hereof.
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"TEAMSTAFF COMMON STOCK" means the Common Stock of TeamStaff, par
value $.01 per share.
"TEAMSTAFF CORPORATE EMPLOYEES" means all employees of TeamStaff who
are not worksite employees of TeamStaff PEO customers.
"TEAMSTAFF DISCLOSURE SCHEDULE" has the meaning set forth in the
preface to Section 3 below.
"TEAMSTAFF ESCROW SHARES" has the meaning set forth in Section 9.7
below.
"TEAMSTAFF MATERIAL ADVERSE EFFECT" means any event on or with
respect to any entity which, is materially adverse to the condition
(financial or otherwise), of the properties, assets (including intangible
assets), Liabilities, business, results of operations or prospects of
TeamStaff. With respect to a financial event, material adverse effect shall
mean any event which has an effect of $150,000 or more.
"TEAMSTAFF MOST RECENT BALANCE SHEET" means the balance sheet
contained within the TeamStaff Most Recent Financial Statements.
"TEAMSTAFF MOST RECENT FISCAL YEAR END" has the meaning set forth in
Section 3.9 below.
"TEAMSTAFF FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.9 below.
"TEAMSTAFF PREFERRED SHARES" has the meaning set forth in Section
3.7 below.
"TEAMSTAFF SEC DOCUMENTS" has the meaning set forth in Section 3.9
below.
"TEAMSTAFF SHAREHOLDERS' MEETING" means the meeting of TeamStaff
shareholders called by the TeamStaff Board of Directors to approve the Merger.
"TEAMSUB" has the meaning set forth in the preface above.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9.4 below.
"THRESHOLD" has the meaning set forth in Section 9.9 below.
2. BASIC TRANSACTION
2.1 THE MERGER. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and the OCGA, (a) TeamSub shall
merge with and into BrightLane, and the separate corporate existence of
TeamSub shall thereupon cease, and (b) BrightLane shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed under the OCGA as
a wholly owned subsidiary of TeamStaff.
2.2 EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, to the extent permitted hereunder, waiver of the conditions
set forth in Section 8, the parties hereto shall execute and file a
certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Georgia, in such form as required by and executed in
accordance with the relevant provisions of the OCGA, and make such other
filings and take such other actions as may be required by Law. The
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BrightLane Merger shall become effective at such date and time as the
Certificate of Merger is duly filed with the Georgia Secretary of State or at
such later date and time as may be specified in the Certificate of Merger
(the date and time the Merger becomes effective being the "Effective Time").
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and in the applicable
provisions of the OCGA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the assets, property, rights,
privileges, immunities, powers and franchises of BrightLane and TeamSub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
BrightLane and TeamSub shall become the debts, liabilities and duties of the
Surviving Corporation.
2.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Surviving Corporation shall be amended and restated at and as of the
Effective Time to be and read as the Articles of Incorporation of TeamSub
immediately prior to the Effective Time (except that the name of the
Surviving Corporation will remain unchanged).
2.5 BYLAWS. The Bylaws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time to be and read as the
Bylaws of TeamSub immediately prior to the Effective Time (except that the
name of the Surviving Corporation will remain unchanged).
2.6 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION AND
TEAMSTAFF.
(i) The directors and officers of the Surviving Corporation
at and as of the Effective Time shall be as follows:
Name Title
---- -----
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Chief Executive Officer, Director
▇▇▇▇▇▇ ▇▇▇▇▇ Chief Financial Officer and Secretary, Director
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ President
D. ▇▇▇▇ ▇▇▇▇▇▇ Chief Operating Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Assistant Secretary
(ii) Effective at the Closing the Board of Directors of
TeamStaff shall consist of a total of nine persons, and be comprised as
follows: (A) TeamStaff shall designate four persons; (B) BrightLane shall
designate one persons; (C) First Union Private Capital, Inc. (or its
affiliates) shall designate two persons and (D) Nationwide Financial, Inc.
shall designate one person and (E) the parties will mutually agree upon a
ninth member (who shall be a Class 1 member). TeamStaff's Board of Directors
shall continue to be classified into three classes (with each class
containing at least one TeamStaff designee on the one hand, and one designee
of either BrightLane, First Union or Nationwide on the other hand), and all
such directors shall continue to serve in accordance with the Bylaws and
Articles of Incorporation of TeamStaff until their successors are duly
elected and qualified. Class I directors shall serve for an initial period
8
of one year, Class II directors shall serve for an initial period of two
years and Class III directors shall serve for an initial period of three
years. In the event that any nominee of TeamStaff, BrightLane, Nationwide or
First Union, as the case may be, is unable or determines not to complete his
initial term, then a replacement nominee of TeamStaff, BrightLane, First
Union or Nationwide as the case may be, shall fill such vacancy, subject to
approval of the Board of Directors nominating committee, which approval shall
not be unreasonably withheld.
(iii) Effective at the Closing, the directors and
officers of TeamStaff (other than the ninth member of the Board of
Directors) shall be:
Name Title Class
---- ----- -----
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Chairman of the Board Class 3
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Vice Chairman Class 3
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ President and Chief Executive Class 3
Officer, Director
▇▇▇▇▇▇ ▇▇▇▇▇ Chief Financial Officer, Vice
President and Secretary
First Union 2nd Designee Director Class 2
▇▇▇▇▇ ▇▇▇▇▇▇▇ Director Class 2
▇▇▇▇▇ ▇▇▇▇▇▇ Director Class 1
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Director Class 2
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Director Class 1
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Assistant Secretary
(iv) At Closing, the Board of Directors shall have in
place resolutions authorizing payment of compensation in the amount of
$2,500.00 per month to the Chairman of the Board and to the Vice-Chairman of
the Board, and $1,500.00 per meeting to the remaining members of the Board of
Directors. In addition, each Board member (other than the committee chairman)
shall receive a fee of $600.00 for each meeting of any committee on which
such member serves, each committee chairman shall receive $1,000 per meeting
and each Board member shall receive a fee of $1,000.00 for any other meeting
with TeamStaff executives which are not meetings of a committee or the full
Board of Directors, but for which the Chairman or Chief Executive Officer has
requested the Board member attend to assist in, or provide advice upon, the
business of the Company.
2.7 CONVERSION OF BRIGHTLANE CAPITAL STOCK, EXCHANGE RATIO.
Subject to the provisions of this Section 2, at the Effective Time, by virtue
of the Merger and without any action on the part of the
9
parties hereto or the holders of the following securities, and after giving
effect to the exercise or conversion of all options and warrants to acquire
BrightLane Common Stock as set forth in clause 2.11 below:
(i) the shares of BrightLane's Common Stock
issued and outstanding immediately prior to the Effective Time
will be converted automatically into the right to receive an
aggregate of 1,601,731 fully paid and nonassessable shares of
TeamStaff Common Stock, and each share of BrightLane's Common
Stock that is outstanding immediately prior to the Effective
Time will be converted automatically into the right to receive
that number of shares of TeamStaff Common Stock determined by
dividing the aggregate number of shares of TeamStaff Common
Stock issuable pursuant to this subsection 2.7(i) by the total
number of shares of BrightLane's Common Stock that are issued
outstanding immediately prior to the Effective Time (the
"Common Stock Exchange Ratio");
(ii) the shares of BrightLane's Series A
Preferred Stock issued and outstanding immediately prior to
the Effective Time will be converted automatically into the
right to receive an aggregate of 874,295 fully paid and
nonassessable shares of TeamStaff Common Stock (the "Series A
Exchange Ratio"), and each share of BrightLane's Series A
Preferred Stock that is outstanding immediately prior to the
Effective Time will be converted automatically into the right
to receive that number of shares of TeamStaff Common Stock
determined by dividing the aggregate number of shares of
TeamStaff Common Stock issuable pursuant to this subsection
2.7(ii) by the total number of shares of BrightLane's Series A
Stock that are issued outstanding immediately prior to the
Effective Time (the "Series A Preferred Stock Exchange
Ratio");
(iii) the shares of BrightLane's Series B
Preferred Stock issued and outstanding immediately prior to
the Effective Time will be converted automatically into the
right to receive an aggregate of 3,334,117 fully paid and
nonassessable shares of TeamStaff Common Stock (the "Series B
Exchange Ratio"), and each share of BrightLane's Series B
Preferred Stock that is outstanding immediately prior to the
Effective Time will be converted automatically into the right
to receive that number of shares of TeamStaff Common Stock
determined by dividing the aggregate number of shares of
TeamStaff Common Stock issuable pursuant to this subsection
2.7(iii) by the total number of shares of BrightLane's Series
B Stock that are issued outstanding immediately prior to the
Effective Time (the "Series B Preferred Stock Exchange
Ratio");
(iv) the shares of BrightLane's Series C
Preferred Stock issued and outstanding immediately prior to
the Effective Time will be converted automatically into the
right to receive an aggregate of 2,256,488 fully paid and
nonassessable shares of TeamStaff Common Stock (the "Series C
Exchange Ratio"), and each share of BrightLane's Series C
Preferred Stock that is outstanding immediately prior to the
Effective Time will be converted automatically into the right
to receive that number of shares of TeamStaff Common Stock
determined by dividing the aggregate number of
10
shares of TeamStaff Common Stock issuable pursuant to this
subsection 2.7(iv) by the total number of shares of
BrightLane's Series C Stock that are issued outstanding
immediately prior to the Effective Time (the "Series C
Preferred Stock Exchange Ratio");
(v) each share of BrightLane Stock issued and
outstanding immediately prior to the Effective Time shall
automatically cease to be outstanding and shall be canceled
and retired and shall cease to exist, and each holder of a
certificate representing any such BrightLane Stock shall cease
to have any rights with respect thereto, except the right to
receive the Merger Consideration and any cash in lieu of
fractional shares of TeamStaff Common Stock to be issued or
paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.13 hereof, without
interest.
(vi) At the Effective Time, the aggregate number of shares of
TeamStaff Common Stock to be issued to all holders of
BrightLane Capital Stock in exchange for all of BrightLane
Capital Stock shall equal 8,066,631 shares of TeamStaff Common
Stock (the "Merger Consideration") less any fractional shares
redeemed pursuant to Section 2.13 below, and subject to
adjustments in accordance with the terms of Section 2.12
below.
2.8 ADJUSTMENT IN NUMBER OF TEAMSTAFF SHARES AS MERGER
CONSIDERATION. In the event that the BrightLane Closing Financial Statements
evidence a BrightLane Material Adverse Change, and TeamStaff waives the
condition to close set forth in Section 8.1(a) then the parties may mutually
agree to decrease the number of TeamStaff Shares to be delivered as Merger
Consideration by one TeamStaff Share for every $4.00 by which (i)
BrightLane's accounts payable or accrued expenses are greater than an
aggregate of $600,000 as set forth on the BrightLane Closing Financial
Statements or (ii) the BrightLane Closing Cash is less than the Target
BrightLane Closing Cash Amount.
2.9 CANCELLATION OF BRIGHTLANE CAPITAL STOCK. Each share of
BrightLane Capital Stock, if any, owned by TeamStaff, or TeamSub, in each
case immediately prior to the Effective Time, shall be canceled and
extinguished without any conversion thereof and no payment or distribution
shall be made with respect thereto.
2.10 CONVERSION OF TEAMSUB STOCK. Each share of TeamSub Common
Stock issued and outstanding immediately prior to the Effective Time shall be
automatically converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation and shall thereafter
constitute all of the issued and outstanding capital stock of the Surviving
Corporation. Each stock certificate of TeamSub evidencing ownership of any
shares of TeamSub Common Stock shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
2.11 CONVERSIONS OF ALL BRIGHTLANE STOCK OPTIONS AND WARRANTS.
All options and warrants to acquire BrightLane Capital
Stock that are outstanding effective immediately prior to the Effective Time
shall be terminated pursuant to the terms thereof or exercised. In order to
provide inducement to the holder thereof to exercise such option or warrant,
11
BrightLane may make a recourse loan to a holder of an option or warrant that
elects to exercise prior to the Effective Time in an amount determined by
BrightLane, subject to approval of TeamStaff not to be unreasonably withheld,
to estimate such exerciser's estimated state and federal income Tax Liability
resulting from such exercise.
2.12 ADJUSTMENTS TO BRIGHTLANE EXCHANGE RATIOS. Without limiting
any other provision of this Agreement, the Exchange Ratios shall be adjusted
to reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into
BrightLane Capital Stock), reorganization, recapitalization or other like
change with respect to TeamStaff Common Stock or BrightLane Capital Stock
occurring after the date hereof and prior to the Effective Time.
2.13 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of TeamStaff Common Stock shall be issued in connection
with the Merger, and such fractional interests will not entitle the owner
thereof to any rights of a stockholder of TeamStaff. In lieu of the issuance
of fractional shares, each holder of shares of BrightLane Stock who would
otherwise be entitled to a fraction of a share of TeamStaff Common Stock
(after aggregating all fractional shares of TeamStaff Common Stock to have
been otherwise received by such holder) shall receive from TeamStaff an
amount of cash (rounded down to the nearest whole cent and without interest)
equal to the product of such fractional part of a share of TeamStaff Common
Stock multiplied by the average closing price per share of TeamStaff Common
Stock (rounded to the nearest cent) on the Nasdaq Small Cap Market ("Nasdaq")
(as reported in The Wall Street Journal, or, if not reported therein, any
other authoritative source selected by TeamStaff) for the 10 trading days
ending on the third trading day immediately prior to (and excluding the date
of) the Effective Time.
2.14 EXCHANGE PROCEDURES FOR BRIGHTLANE SHARES. SURRENDER OF
BRIGHTLANE CERTIFICATES
(i) When and as needed, TeamStaff shall make
available to Continental Stock Transfer and Trust Company
(the "Exchange Agent") for exchange in accordance with this
Section 2, through such reasonable procedures as TeamStaff
may adopt, sufficient shares of TeamStaff Common Stock to
be exchanged hereunder.
(ii) Promptly after the Effective Time, the TeamStaff
shall cause the Exchange Agent to mail a letter of
transmittal to each BrightLane holder of record of a
certificate or certificates (the "BrightLane Certificates")
of BrightLane Capital Stock that immediately prior to the
Effective Time represented outstanding shares of BrightLane
Capital Stock to be exchanged hereunder. The letter of
transmittal shall specify that delivery shall be effected,
and risk of loss and title to BrightLane Certificates shall
pass, only upon delivery of BrightLane Certificates to the
Exchange Agent and shall be in such form and have such
other provisions as TeamStaff may reasonably specify,
including instructions for effecting the surrender of
BrightLane Certificates in exchange for certificates
representing shares of TeamStaff Common Stock. Upon
surrender of a BrightLane Certificate to the Exchange
Agent, together with such letter of transmittal, duly
completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such
BrightLane Certificate shall be entitled to receive in
exchange therefor a certificate representing the number of
whole shares of TeamStaff Common Stock and payment in
12
lieu of fractional shares which such holder has the right to
receive after giving effect to any required Tax withholdings,
and BrightLane Certificate so surrendered shall forthwith be
canceled. At any time following the first anniversary of the
Effective Time, all or any number of shares of TeamStaff
Common Stock (and any or all cash payable in lieu of
fractional shares of TeamStaff Common Stock) deposited with or
made available to the Exchange Agent pursuant hereto, which
remain undistributed to the holders of BrightLane
Certificates, shall be delivered to TeamStaff upon demand, and
thereafter such holders of unexchanged BrightLane Certificates
shall be entitled to look only to TeamStaff (subject to
abandoned property, escheat or other similar Laws) only as
general creditors thereof with respect to the shares of
TeamStaff Common Stock for payment upon due surrender of their
BrightLane Certificates.
(iii) No dividends or other distributions declared or
made after the Effective Time with respect to shares of
TeamStaff Common Stock with a record date after the
Effective Time will be paid to the holder of any
unsurrendered BrightLane Certificate with respect to the
whole shares of BrightLane Capital Stock represented
thereby and no cash payment in lieu of fractional shares of
TeamStaff Common Stock shall be paid to any such holder
until the holder of record surrenders such BrightLane
Certificate. Subject to the effect of applicable Laws,
following surrender of any such BrightLane Certificate,
there shall be paid to the record holder of the
certificates representing whole shares of TeamStaff Common
Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of any cash payable in
lieu of fractional shares of TeamStaff Common Stock to
which the holder is entitled pursuant hereto and the amount
of dividends or other distributions with a record date
after the Effective Time and payable between the Effective
Time and the time of such surrender with respect to such
whole shares of TeamStaff Common Stock.
(iv) If any certificate for shares of TeamStaff Common
Stock is to be issued in a name other than the name in
which BrightLane Certificate surrendered in exchange
therefor is registered, it will be a condition of the
issuance thereof that (i) BrightLane Certificate so
surrendered will be properly endorsed and otherwise in
proper form for transfer and accompanied by all other
documents required to evidence and effect such transfer and
(ii) either (x) that the Person requesting such exchange
will have paid any transfer or other Taxes required by
reason of the issuance of a certificate for shares of
TeamStaff Common Stock in a name other than the name of the
registered holder of BrightLane Certificate surrendered or
(y) established to the satisfaction of TeamStaff , or any
agent designated by TeamStaff , that such Tax has been paid
or is not applicable.
(v) Notwithstanding anything to the contrary in this
Agreement, none of the Exchange Agent, TeamStaff,
BrightLane or TeamSub shall be liable to a holder of a
Certificate for any TeamStaff Common Stock (and any cash
payable for fractional shares of TeamStaff Common Stock or
any other amount due, if any) that was properly delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
13
(vi) TeamStaff or the Exchange Agent will be entitled
to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of
BrightLane Stock such amounts as TeamStaff (or any
Affiliate thereof) or the Exchange Agent shall determine in
good faith they are required to deduct and withhold with
respect to the making of such payment under the Code, or
any provision of federal, state, local or foreign Tax Law.
To the extent that amounts are so withheld by TeamStaff or
the Exchange Agent, such withheld amounts will be treated
for all purposes of this Agreement as having been paid to
the holder of BrightLane Stock in respect of whom such
deduction and withholding were made by TeamStaff.
2.15 FURTHER OWNERSHIP RIGHTS IN BRIGHTLANE STOCK. All shares of
TeamStaff Common Stock issued upon the surrender for exchange of BrightLane
Capital Stock in accordance with the terms of this Section 2 (including any
cash paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such BrightLane Capital Stock. At
the Effective Time, the stock transfer books of BrightLane shall be closed,
and thereafter there shall be no further registration of transfers of shares
of BrightLane Capital Stock on the records of the Surviving Corporation. From
and after the Effective Time, the holders of BrightLane Certificates
evidencing ownership of shares of BrightLane Capital Stock outstanding shall
cease to have any rights with respect to such shares of BrightLane Capital
Stock except as otherwise provided for herein. If, after the Effective Time,
BrightLane Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Section 2.
2.16 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
BrightLane Certificates shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
BrightLane Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of TeamStaff Common Stock and cash for fractional
shares, if any; provided, however, that TeamStaff may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to deliver a bond in such sum as it
may reasonably direct as indemnity against any claim that may be made against
TeamStaff or the Exchange Agent with respect to BrightLane Certificates
alleged to have been lost, stolen or destroyed.
2.17 TAX CONSEQUENCES. For federal income Tax purposes, the
parties intend that the Merger be treated as a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and that this
Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368 of the Code. Accordingly, unless otherwise required
by Law, no Party shall take any action that reasonably could be expected to
jeopardize the treatment of the Merger as a reorganization within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and the parties shall
not take any position on any Tax Return (as defined herein) or in any
proceeding relating to the Tax consequences of the Merger inconsistent with
this Section.
2.18 FURTHER ASSURANCES. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (i) to vest, perfect or confirm, of record of otherwise,
in the Surviving Corporation its right, title or interest in, to or under any
of the rights, privileges, powers, franchises, properties or assets of either
BrightLane or TeamSub or (ii) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their
14
designees shall be authorized to execute and deliver, in the name and on
behalf of either BrightLane or TeamSub, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of BrightLane or
TeamSub, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its rights, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of
BrightLane or TeamSub, as applicable, and otherwise to carry out the purposes
of this Agreement.
2.19 THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in New York, New York,
commencing at 9:00 a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as TeamStaff and BrightLane may mutually determine (the
"CLOSING DATE").
2.20 DELIVERIES AT THE CLOSING. At the Closing, (i) BrightLane
will deliver to TeamStaff the various certificates, instruments, and
documents referred to in Section 8.1 below, (ii) TeamStaff will deliver to
BrightLane the various certificates, instruments, and documents referred to
in Section 8.2 below, (iii) BrightLane and TeamSub will file with the
Secretary of State of Georgia Certificate of Merger substantially in the form
attached hereto as Exhibit A ( the "CERTIFICATE OF MERGER").
3. REPRESENTATIONS AND WARRANTIES BY TEAMSTAFF AND TEAMSUB.
TeamStaff and TeamSub each jointly and severally represent and
warrant to BrightLane that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 3), except as set forth in disclosure schedule to be delivered to
BrightLane by TeamStaff within 5 business days of the date hereof and
initialed by the Parties ("TeamStaff Disclosure Schedule"). Nothing in the
TeamStaff Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
TeamStaff Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The
TeamStaff Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3.
3.1 ORGANIZATION AND QUALIFICATION OF TEAMSTAFF AND TEAMSUB.
Each of TeamStaff and TeamSub is a corporation duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. TeamStaff has all the requisite corporate power and authority,
and, except as set forth on Section 3.1 of the TeamStaff Disclosure Schedule,
is in possession of all Approvals necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so qualified, existing and in good standing or to
have such power, authority and Approvals could not, individually or in the
aggregate, reasonably be expected to have a TeamStaff Material Adverse
Effect. TeamStaff is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for
such failures to be so duly qualified or licensed and in good standing that
could not reasonably be expected to have a TeamStaff Material Adverse Effect.
TeamSub is a newly-
15
formed single purpose entity which have been formed solely for the purposes
of the Merger and have not carried on, and prior to the closing will not
carry on, any business or engaged in any activities other than those
reasonably related to the Merger.
3.2 SUBSIDIARIES. The TeamStaff Disclosure Schedule sets
forth, as of the date hereof, a true and complete list of all of TeamStaff's
directly and indirectly owned Subsidiaries, together with the jurisdiction of
incorporation or organization of each Subsidiary and the percentage of each
Subsidiary's outstanding capital stock or other equity or other interest
owned by TeamStaff or another Subsidiary of TeamStaff. Each TeamStaff
Subsidiary is a legal entity, duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of incorporation or
organization and has all the requisite power and authority, and is in
possession of all Approvals necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to possess such Approvals could not, individually or in the
aggregate, reasonably be expected to have a TeamStaff Material Adverse
Effect. Each TeamStaff Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary,
except where the failure to be so qualified could not, individually or in the
aggregate, reasonably be expected to have a TeamStaff Material Adverse
Effect. TeamStaff owns no other equity investments in any other entity.
3.3 AUTHORIZATION OF TRANSACTION. Each of TeamStaff and TeamSub
has full power and authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its obligations
hereunder, except for the approval of the shareholders of TeamStaff which
approval shall be a condition to Closing. This Agreement constitutes the
valid and legally binding obligation of each of TeamStaff and TeamSub,
enforceable in accordance with its terms and conditions. Neither TeamStaff
nor TeamSub need give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated by this Agreement other
than notice and filings pursuant to (i) the rules of the Nasdaq SmallCap
Stock Market, (ii) the filing of the Certificate of Merger with the Secretary
of State of Georgia and (iii) the filing with the SEC of the Joint Proxy
Statement/Prospectus (as defined in Section 5.7 hereof) and (iv) the
TeamStaff financing agreements with FINOVA Capital Corporation.
3.4 REQUIRED VOTE. As of the date hereof and as of the
Effective Time, the Board of Directors of TeamStaff has, at a meeting duly
called and held, by a unanimous vote of the members present, approved and
declared advisable this Agreement and each Related Agreement to which
TeamStaff is or is to become a party. Not later than thirty (30) days
following the date hereof, the TeamStaff Board of Directors shall meet for
the purpose of considering the transactions contemplated hereby and whether
such are advisable, fair to and in the best interests of the holders of
TeamStaff Common Stock, and whether to recommend approval of the Merger.
Assuming the TeamStaff Board of Directors approves the terms of this
Agreement as fair to and in the best interests of the TeamStaff shareholders,
except as allowed under Section 5.7 hereof the Board of Directors shall not
thereafter withdraw, rescind or modify such approval, determination, and
resolutions. The affirmative vote of a majority of all outstanding shares of
TeamStaff Common Stock is the only vote of the holders of any class or series
of capital stock of TeamStaff necessary to approve and authorize the Merger.
As of February 25, 2001, the holders of the TeamStaff Common Stock that are
intended to be parties to the TeamStaff Voting Agreement own (beneficially
and of record) and have the right to vote, in the aggregate, approximately
2,591,301 shares of TeamStaff Common Stock.
16
3.5 NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which TeamStaff or TeamSub
is subject or any provision of its charter or bylaws or (B) other than
TeamStaff's financing agreements with FINOVA Capital Corporation, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which TeamStaff or
TeamSub are a party or by which they are bound or to which any of their
respective assets are subject .
3.6 APPROVALS. The execution and delivery by TeamStaff and
TeamSub of this Agreement and Related Agreements to which it is or is
required to become a Party do not, and the performance by TeamStaff, and
TeamSub of this Agreement and any such Related Agreement shall not, require
TeamStaff or TeamSub to obtain the Approval of, observe any waiting period
imposed by, or make any filing with or notification to, any Governmental
Authority, domestic or foreign, except for (i) compliance with applicable
requirements of the Securities Act, the Exchange Act or Blue Sky Laws, (ii)
the filing of the Certificate of Merger in accordance with the OCGA, (iii)
the filing of a listing application or other documents as required by NASDAQ
or (iv) where the failure to obtain such Approvals, or to make such filings
or notifications, would not individually or in the aggregate, reasonably be
expected to have a TeamStaff Material Adverse Effect, or (v) those persons
listed on Schedule 3.6 to the TeamStaff Disclosure Schedule.
3.7 CAPITALIZATION OF TEAMSTAFF AND TEAMSUB. The entire
authorized capital stock of TeamStaff consists of 40,000,000 shares of
TeamStaff Common Stock $.01 par value per share and 5,000,000 shares of
preferred stock, par value $.01 per share (the "TeamStaff Preferred Shares").
As of March 1, 2001 there were:
(i) 8,044,600 shares of TeamStaff Common Stock issued and outstanding;
(ii) no TeamStaff Preferred Shares issued and outstanding;
(iii) 451,875 shares of TeamStaff Common Stock duly reserved for future
issuance pursuant to outstanding options;
(iv) 226,280 shares of TeamStaff Common Stock duly reserved for future
issuance pursuant to outstanding warrants; and
(v) 35,400 shares of TeamStaff Common Stock held in the treasury of
TeamStaff.
The entire authorized capital stock of TeamSub consists of 10,000
shares of common stock. All outstanding shares of TeamStaff and TeamSub have
been duly authorized and validly issued and are fully paid and nonassessable.
Except for options and the warrants described above, there are no other
options, warrants, calls, rights, commitments, or agreements of any character
to which TeamStaff is bound, obligating TeamStaff to issue, deliver, sell,
repurchase or redeem or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of TeamStaff or obligating
TeamStaff to
17
grant, extend or enter into any such option, warrant, call, right, commitment
or agreement. The shares of Common Stock of TeamStaff to be issued pursuant
to the Merger ("TeamStaff Shares") will be duly authorized, validly issued,
fully paid and nonassessable.
3.8 TITLE TO ASSETS. Except as set forth on Section 3.8 of the
TeamStaff Disclosure Schedule, TeamStaff has good and marketable title to, or
a valid leasehold interest in, the properties and assets used by it, located
on their premises, or shown on the TeamStaff Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests.
3.9 SEC DOCUMENTS: FINANCIAL STATEMENTS. (i) TeamStaff has
furnished to BrightLane a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to
Rule 424 (b) of the Securities Act), definitive proxy statement, and other
filing filed with the SEC by TeamStaff since January 1, 1998, and prior to
the Effective Time, TeamStaff will have furnished the Sellers with true and
complete copies of any additional documents filed with the SEC by TeamStaff
after the date hereof and prior to the Effective Time (collectively, the
"TeamStaff SEC Documents"). In addition, TeamStaff has made available to
BrightLane all exhibits to the TeamStaff SEC Documents filed prior to the
date of this Agreement and will promptly make available to BrightLane all
exhibits to any additional TeamStaff SEC Documents filed prior to the
Effective Time.
(ii) All documents required to be filed as exhibits to the
TeamStaff SEC Documents have been so filed, and all material contracts so
filed as exhibits are in full force and effect except those which have
expired in accordance with their terms and neither TeamStaff nor any of its
Subsidiaries is in material default under such material contracts except
where such default would not have a TeamStaff Material Adverse Effect upon
TeamStaff. As of their respective filing dates, the TeamStaff SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act and the Securities Act and none of the TeamStaff SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were
made, not misleading, except to the extent corrected by a subsequently filed
TeamStaff SEC Document prior to the Closing Date. The audited consolidated
balance sheets ("TeamStaff Balance Sheet") and statements of income and cash
flow of TeamStaff as of and for the fiscal year ended September 30, 2000
("TeamStaff Most Recent Fiscal Year End"), including the notes thereto,
included in the TeamStaff SEC Documents (the "TeamStaff Audited Financial
Statements") were complete and correct in all material respects as of their
respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto as of their respective dates, and
have been prepared in accordance with GAAP applied on a basis consistent
throughout the periods indicated and consistent with each other (except as
may be indicated in the notes thereto). The unaudited consolidated balance
sheets and statements of income and cash flows of TeamStaff as of and for the
quarter ended December 31, 2000 ("TeamStaff Most Recent Financial
Statements"), including the notes thereto, were included in the TeamStaff's
SEC Documents, were prepared in accordance with GAAP, and present fairly the
financial condition of TeamStaff as of such date and the results of
operations of TeamStaff for such period. The TeamStaff Financial Statements
fairly present the consolidated financial condition and operating results of
TeamStaff and its Subsidiaries at the dates and during the periods indicated
therein. There has been no change in TeamStaff's accounting policies except
as described in the notes to the TeamStaff Financial Statements. The
TeamStaff Audited Financial Statements and TeamStaff Most Recent Financial
Statements together are referred to herein as the "TeamStaff Financial
Statements."
18
3.10 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. None of
the information supplied or to be supplied by TeamStaff for inclusion or
incorporation by reference in the S-4 Registration Statement shall, at the
time such document is filed, at the time amended or supplemented, or at the
time the Registration Statement is declared effective by the SEC, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied by TeamStaff for inclusion in
the Joint Proxy Statement/Prospectus shall, on the date the Joint Proxy
Statement/Prospectus is first mailed to BrightLane's Shareholders or
TeamStaff's shareholders, at the time of the BrightLane Shareholders' Meeting
or the TeamStaff Shareholders' Meeting or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not false
or misleading or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the BrightLane
Shareholders' Meeting or the TeamStaff Shareholders' Meeting which has become
false or misleading. The Joint Proxy Statement/Prospectus will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations of the SEC thereunder. Notwithstanding the foregoing,
TeamStaff makes no representation, warranty or covenant with respect to any
information supplied by BrightLane which is contained in the Registration
Statement or Joint Proxy Statement/Prospectus.
3.11 NO MATERIAL ADVERSE CHANGES. Since October 1, 2000,
TeamStaff has conducted its business in the ordinary course consistent with
past practice and there has not occurred, except as may be described in the
TeamStaff SEC Documents or Section 3.11 of the TeamStaff Disclosure Schedule:
(i) any change, event, condition (whether or not covered by insurance) that
has resulted in, or might reasonably be expected to result in, a TeamStaff
Material Adverse Effect; (ii) any acquisition, sale or transfer of any
material asset of TeamStaff or any of its Subsidiaries other than in the
Ordinary Course of Business and consistent with past practice; (iii) any
change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by TeamStaff or any
revaluation by TeamStaff of any of its assets; (iv) any declaration, setting
aside, or payment of a dividend or other distribution with respect to the
TeamStaff Common Stock or any direct or indirect redemption, purchase or
other acquisition by TeamStaff of any of its shares of capital stock; (v) any
material contract entered into by TeamStaff, other than in the Ordinary
Course of Business and as provided to BrightLane or any material amendment or
termination of, or default under, any material contract to which TeamStaff is
a party or by which it is bound; (vi) any amendment or change to TeamStaff's
Certificate of Incorporation or Bylaws; or (vii) any negotiation or agreement
by TeamStaff or any of its Subsidiaries to do any of the things described in
the preceding clauses (i) through (vi) (other than negotiations with
BrightLane and its representatives regarding the transactions contemplated by
this Agreement).
3.12 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of
TeamStaff, except as disclosed on Schedule 3.12 of the TeamStaff Disclosure
Schedule, TeamStaff has no Liabilities (and to its Knowledge there is no
Basis for any present or future action, suit, proceeding, hearing,
litigation, charge, complaint, claim or demand giving rise to any Liability)
other than (i) those set forth or adequately provided for in the TeamStaff
SEC Documents or TeamStaff Financial Statements, (ii) Liabilities incurred in
the Ordinary Course of Business after the Most Recent TeamStaff Financial
Statements, or (iii) except with respect to TeamStaff's worker's compensation
policies, Liabilities outside the Ordinary Course of Business, which may not
exceed $150,000 individually or $300,000 in the aggregate.
19
3.13 COMPLIANCE.
(i) To its Knowledge, TeamStaff has complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply, except where such non-compliance has not and would not have a
TeamStaff Material Adverse Effect. TeamStaff holds all licenses and
permits, required to be held by it under the laws all jurisdictions in
which it operates in order to operate its business as currently
operated and TeamStaff has not received any notice, written or
otherwise, of the initiation of proceedings to revoke any such license
or permit, except where such failure to hold any such licenses or
permits would not have a TeamStaff Material Adverse Effect. Section
3.13 of the TeamStaff Disclosure Schedule sets forth the names of those
states in which TeamStaff operates.
(ii) TeamStaff has not, since its incorporation, 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, which could have a TeamStaff
Material Adverse Effect.
(iii) Neither TeamStaff nor any of its respective officers,
directors, employees or agents, has directly or indirectly: (A) offered
or paid any amount to, or made any financial arrangement with, any of
the accounts in order to promote business from such accounts, other
than standard pricing or discount arrangements consistent with proper
business practices; (B) 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 (C)
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 the benefit of any current account or
employee, supplier or landlord of such current account, or for any
purpose other than that reflected in the documents supporting the
payments.
(iv) TeamStaff and each of its Subsidiaries are in compliance
with, and are not in default or violation of, (A) the Certificate of
Incorporation and Bylaws of TeamStaff or the equivalent organizational
documents of such Subsidiary, (B) any Law or Order or by which any of
their respective assets or properties are bound or affected and (C) the
terms of all notes, bonds, mortgages, indentures, Contracts, permits,
franchises and other instruments or obligations to which any of them
are a party or by which any of them or any of their respective assets
or properties are bound or affected, except, in the case of clauses (B)
and (C), for any such failures of compliance, defaults and violations
which could not, individually or in the aggregate, reasonably be
expected to have a TeamStaff Material Adverse Effect. TeamStaff and its
Subsidiaries are in compliance with the terms of all Approvals, except
where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have a TeamStaff Material Adverse
Effect. Except as set forth in the TeamStaff Disclosure Schedule or as
could not, individually or in the aggregate, reasonably be expected to
have a TeamStaff Material
20
Adverse Effect, neither TeamStaff nor any of its Subsidiaries has
received notice of any revocation or modification of any Approval of
any federal, state, local or foreign Governmental Authority that is
material TeamStaff or any of its Subsidiaries.
3.14 LITIGATION. Except as set forth on Schedule 3.14 of the
TeamStaff Disclosure Schedule or with respect to employee related claims
incurred by TeamStaff in the Ordinary Course of Business, there is no private
or governmental action, suit, proceeding, claim, arbitration or investigation
pending before any agency, court or tribunal, foreign or domestic, or, to the
Knowledge of TeamStaff or any of its Subsidiaries, threatened against
TeamStaff or any of its Subsidiaries or any of their respective properties or
any of their respective officers or directors (in their capacities as such)
that, individually or in the aggregate, could reasonably be expected to
result in a TeamStaff Material Adverse Effect. Except as set forth on
Schedule 3.14 of the TeamStaff Disclosure Schedule, there is no judgment,
decree or order against TeamStaff or any of its Subsidiaries or, to the
Knowledge of TeamStaff or any of its Subsidiaries, any of their respective
directors or officers (in their capacities as such) that could prevent,
enjoin or materially alter or delay any of the transactions contemplated by
this Agreement, or that could reasonably be expected to result in a TeamStaff
Material Adverse Effect.
3.15 TAX MATTERS. Except as set forth in Section 3.15 of the
TeamStaff Disclosure Schedule:
(i) Except where there would be no TeamStaff Material
Adverse Effect, all material Tax Returns required to be filed by or on behalf
of TeamStaff, each of its Subsidiaries, and each affiliated, combined,
consolidated or unitary group of which TeamStaff or any of its Subsidiaries
is a member have been timely filed, and all such Tax Returns are true,
complete and correct in all material respects.
(ii) Except where there would be no TeamStaff Material
Adverse Effect, all material Taxes payable by or with respect to TeamStaff
and each of its Subsidiaries (whether or not shown on any Tax Return) have
been timely paid when due, and adequate reserves (other than a reserve for
deferred Taxes established to reflect timing differences between book and Tax
treatment) in accordance with GAAP are provided on the respective TeamStaff's
Balance Sheet for any material Taxes not yet due. All assessments for
material Taxes due and owing by or with respect to TeamStaff and each of its
Subsidiaries with respect to completed and settled examinations or concluded
litigation have been paid. Neither TeamStaff nor any of its Subsidiaries has
incurred a Tax Liability from the date of the TeamStaff Most Recent Financial
Statements other than a Tax Liability in the Ordinary Course of Business.
(iii) Except where there would be no TeamStaff Material
Adverse Effect, no action, suit, proceeding, investigation, claim or audit
has formally commenced and no written notice has been given that such audit
or other proceeding is pending or, to TeamStaff's Knowledge, threatened with
respect to TeamStaff or any of its Subsidiaries or any group of corporations
of which any of TeamStaff and its Subsidiaries has been a member in respect
of any Taxes, and all deficiencies proposed as a result of such actions,
suits, proceedings, investigations, claims or audits have been paid, reserved
against or settled.
3.16 EMPLOYEES. To the Knowledge of TeamStaff, no executive, key
employee, or group of employees has any plans to terminate employment with
TeamStaff. TeamStaff is not a party to or bound by any collective bargaining
agreement, nor has experienced any strikes, grievances, claims of unfair
21
labor practices, or other collective bargaining disputes. TeamStaff, to its
knowledge, has not, and has not received notice from any governmental agency
charging or alleging that is has, committed any unfair labor practice.
TeamStaff has no Knowledge of any organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
TeamStaff.
3.17 EMPLOYEE BENEFITS
(i) Section 3.17 of the TeamStaff Disclosure Schedule lists
each Employee Benefit Plan that TeamStaff sponsors for the benefit of,
or to which TeamStaff contributes as a plan sponsor, for the benefit of
the TeamStaff Corporate Employees (collectively, the "TeamStaff Plan"),
and except as set forth on Section 3.17 of the TeamStaff Disclosure
Schedule:
(A) Each TeamStaff Plan (and each related trust,
insurance contract, or fund) complies in form and in operation
in all material respects with the applicable requirements of
ERISA, the Code, and other applicable Laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such Employee Benefit Plan.
The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code Sec. 4980B have been met with respect to each such
TeamStaff Plan that is an Employee Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such TeamStaff Plan which
is an Employee Pension Benefit Plan and all contributions for
any period ending on or before the Closing Date which are not
yet due have been paid to each TeamStaff Plan or accrued in
accordance with GAAP. All premiums or other payments for all
periods ending on or before the Closing Date have been paid
with respect to each such TeamStaff Plan which is an Employee
Welfare Benefit Plan.
(D) Each TeamStaff Plan which is an Employee Pension
Benefit Plan has received, within the last two years, a
favorable determination letter from the Internal Revenue
Service to the effect that it meets the requirements of Code
Sec. 401 (a).
(E) TeamStaff does not currently sponsor or
contribute to, or has ever sponsored or contributed to, any
Employee Benefit Plan that is subject to Title IV of ERISA.
(F) TeamStaff has made available for inspection by
BrightLane correct and complete copies of the plan documents
and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements
which implement each TeamStaff Plan.
(ii) No Prohibited Transactions have occurred with respect to
any TeamStaff Plan and no Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in
22
connection with the administration or investment of the assets of any
TeamStaff Plan. No action, suit, proceeding, hearing or investigation
with respect to the administration or the investment of the assets of
any TeamStaff Plan (other than routine claims for benefits) is pending
or, to the Knowledge of TeamStaff, threatened. No officer, director or
employee with responsibility for ERISA matters has any Knowledge of any
Basis for any such action, suit, proceeding, hearing or investigation.
(A) No such TeamStaff Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) has
been completely or partially terminated or been the subject of
a Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge
of TeamStaff threatened.
(B) To TeamStaff's knowledge, there have been no
Prohibited Transactions with respect to any such TeamStaff
Plan. No Fiduciary has any Liability for breach of fiduciary
duty or any other failure to act or comply in connection with
the administration or investment of the assets of any such
TeamStaff Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the
investment of the assets of any such TeamStaff Plan (other
than routine claims for benefits) is pending or to the
Knowledge of TeamStaff, threatened.
(C) TeamStaff has not incurred, nor has TeamStaff (or
any officer with responsibility for ERISA matters) any
Knowledge of any circumstances that might reasonably be
expected to result in TeamStaff incurring, any Liability to
the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or
under the Code with respect to any such TeamStaff Plan which
is an Employee Pension Benefit Plan.
(iii) TeamStaff has never contributed to, or ever has been
required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(iv) TeamStaff does not maintain or ever has maintained or
contributes, ever has contributed, or ever has been required to
contribute to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Sec. 4980B).
3.18 CONTRACTS. (i) Section 3.18 of the TeamStaff Disclosure
Schedule lists the following contracts and other agreements to which
TeamStaff is a party:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $50,000 per annum;
23
(b) other than contracts for PEO services entered into in the
Ordinary Course of Business, any agreement (or group of related
agreements) for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a
loss to any of TeamStaff in excess of $50,000, or involve consideration
in excess of $50,000;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$50,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(e) any agreement concerning confidentiality or
noncompetition, other than agreements arising in the Ordinary Course of
Business in contracts with PEO clients, employees, vendors or licensors
of software products;
(f) any agreement with any of TeamStaff shareholders and their
Affiliates;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(h) any collective bargaining agreement;
(j) other than a contract for PEO Services in the Ordinary
Course of Business, any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(k) any agreement under which it has advanced or loaned in
excess of $5,000 to any of its directors, officers or employees;
(l) any agreement under which the consequences of a default or
termination could have a TeamStaff Material Adverse Effect; or
(m) other than a contract for PEO Services in the Ordinary
Course of Business, any other agreement (or group of related
agreements) the performance of which involves consideration in excess
of $50,000.
(ii) TeamStaff has delivered to BrightLane a correct and
complete copy of each written agreement listed in Section 3.18 of the
TeamStaff Disclosure Schedule (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement referred to in
Section 3.18 of the TeamStaff Disclosure Schedule. With respect to each such
agreement and except for matters which would not have a Material Adverse
Effect on TeamStaff taken as a whole: (A) as regards TeamStaff the agreement
is legal, valid, binding, enforceable, and in full force and effect; (B) as
regards TeamStaff the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) to the Knowledge of
24
TeamStaff, no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) to
the Knowledge of TeamStaff, no party has repudiated any provision of the
agreement.
(iii) Section 3.18 (iii) of the TeamStaff Disclosure Schedule
sets forth the standard form contract used by TeamStaff in its PEO business
("PEO Form Contract") for its PEO customers.
3.19 ENVIRONMENT, HEALTH, AND SAFETY
(i) To the Knowledge of TeamStaff, TeamStaff and its
respective predecessors and Affiliates has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, TeamStaff and its
respective predecessors and Affiliates has obtained and been in compliance
with all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(ii) To the Knowledge of TeamStaff, TeamStaff has no
Liability (and TeamStaff, and its predecessors and Affiliates has not handled
or disposed of any substance, arranged for the disposal of any substance,
exposed any employee or other individual to any substance or condition, or
owned or operated any property or facility in any manner that could form the
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of TeamStaff
giving rise to any Liability) for damage to any site, location, or body of
water (surface or subsurface), for any illness of, or personal injury to, any
employee or other individual, or for any reason under any Environmental,
Health, and Safety Law.
(iii) To TeamStaff's Knowledge, all properties and
equipment used in the business of TeamStaff, and their respective
predecessors and Affiliates, have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
3.20 REAL PROPERTY INTERESTS. Section 3.20 of the TeamStaff
Disclosure Schedule lists and describes briefly all real property leased or
subleased to any of TeamStaff or its Subsidiaries. TeamStaff has made
available for inspection by BrightLane correct and complete copies of the
leases and subleases listed in the TeamStaff Disclosure Schedule (as amended
to date). With respect to each lease and sublease listed in the TeamStaff
Disclosure Schedule, except for matters that do not have a TeamStaff Material
Adverse Effect:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
25
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in material
breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a material breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v) there are no material disputes, oral agreements,
or forbearance programs in effect as to the lease or sublease;
(vi) TeamStaff has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of
said facilities; and
3.21 INTELLECTUAL PROPERTY
(i) TeamStaff owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of TeamStaff as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by any of TeamStaff immediately prior to
the Closing hereunder will be owned or available for use by such TeamStaff on
identical terms and conditions immediately subsequent to the Closing
hereunder, except as set forth on Section 3.21 of the TeamStaff Disclosure
Schedule. TeamStaff has taken all reasonably necessary action to maintain and
protect each item of Intellectual Property that it owns or uses.
(ii) Except as set forth in Section 3.21 of the TeamStaff
Disclosure Schedule, TeamStaff has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and neither TeamStaff nor the directors and
officers (and employees with responsibility for Intellectual Property
matters) of TeamStaff has ever received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that TeamStaff must license or refrain from
using any Intellectual Property rights of any third party). To the Knowledge
of TeamStaff and the directors and officers (and employees with
responsibility for Intellectual Property matters) of TeamStaff, except as set
forth in Section 3.21 of the TeamStaff Disclosure Schedule no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of TeamStaff.
(iii) Section 3.21 of the TeamStaff Disclosure Schedule
identifies each patent or registration which has been issued to TeamStaff
with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which TeamStaff has made
with respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which
26
TeamStaff has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). TeamStaff has made
available for inspection by BrightLane correct and complete copies of all
such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and have made available to TeamStaff correct
and complete copies of all other written documentation evidencing ownership
and prosecution (if applicable) of each such item. The TeamStaff Disclosure
Schedule also identifies each trade name or unregistered trademark used by
TeamStaff in connection with any of its businesses. With respect to each item
of Intellectual Property required to be identified in the TeamStaff
Disclosure Schedule, except for matters which would not have a TeamStaff
Material Adverse Effect:
(A) TeamStaff possesses all right, title,
and interest in and to the item, free and clear of any
Security Interest, license, or other restriction;
(B) The item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(C) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of TeamStaff is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) TeamStaff has never agreed to indemnify
any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 3.21 of the TeamStaff Disclosure Schedule
identifies each material item of Intellectual Property that any third party
owns and that TeamStaff uses pursuant to license, sublicense, agreement, or
permission. TeamStaff has made available for inspection by BrightLane correct
and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in the TeamStaff Disclosure Schedule,
except for matters which would not have a TeamStaff Material Adverse Effect:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event
has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
27
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are materially true and correct with respect
to the underlying license;
(F) the underlying item of Intellectual
Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of TeamStaff and the directors and
officers (and employees with responsibility for Intellectual
Property matters) of TeamStaff, is threatened which challenges
the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(H) TeamStaff has not granted any sublicense
or similar right with respect to the license, sublicense,
agreement, or permission.
(v) To the Knowledge of TeamStaff, the use by TeamStaff and
its Subsidiaries of their respective Intellectual Property does not interfere
with, infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continue
operation of its business as presently conducted.
3.22 TANGIBLE ASSETS. Except as set forth on the TeamStaff
Disclosure Schedule, TeamStaff owns or leases all buildings, equipment, and
other tangible assets necessary for the conduct of its businesses as
presently conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear),
and is suitable for the purposes for which it presently is used with such
exceptions as would not have a TeamStaff Material Adverse Effect.
3.23 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of TeamStaff are reflected properly on their books and records,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and to the Knowledge of TeamStaff will be collected in
accordance with their terms at their recorded amounts subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with GAAP.
3.24 POWERS OF ATTORNEY. The TeamStaff Disclosure Schedule sets
forth outstanding powers of attorney executed on behalf of TeamStaff.
3.25 BROKERS' FEES. TeamStaff has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which BrightLane could
become liable or obligated other than fees payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc., for which fees TeamStaff shall bear sole responsibility.
3.26 GUARANTEES. Other than in respect to its obligations under
its credit facilities with FINOVA Capital Corporation, TeamStaff is not a
guarantor or otherwise is liable for any Liability or obligation (including
indebtedness) of any other Person.
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3.27 INVESTMENT. TeamStaff is not acquiring BrightLane Shares
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act
3.28 TRANSACTIONS WITH AFFILIATES. Except as disclosed in the
TeamStaff SEC Filings filed prior to the date of this Agreement, or as
disclosed in the TeamStaff Disclosure Schedule, since October 1, 2000 there
have been no transactions, agreements, arrangements or understandings between
TeamStaff and its affiliates that would be required to be disclosed under the
Item 404 of Regulation S-K under the Securities Act.
3.29 INSURANCE. Section 3.29 of the TeamStaff Disclosure
Schedule contains each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond
and surety arrangements) to which TeamStaff has been a party, a named
insured, or otherwise the beneficiary of coverage since January 1, 2000.
(i) With respect to each such insurance policy and except for
matters which would not have a Material Adverse Effect on TeamStaff
taken as a whole: (A) the policy is legal, valid, binding, enforceable,
and in full force and effect; (B) the policy will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby; (C) none of TeamStaff or any other party to the policy is in
material breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under
the policy; and (D) no party to the policy has repudiated any provision
thereof. TeamStaff has been covered during the past three (3) years by
insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period.
(ii) TeamStaff has continuously maintained in effect since
January 1, 1996, without lapse or suspension, insurance policies which
have provided its employees with worker's compensation insurance or
similar occupational accident coverage insurance.
(iii) To TeamStaff's Knowledge, all claims of any kind or
nature accrued or made by TeamStaff's employees or others as of the
Closing Date which could have a TeamStaff Material Adverse Effect are
fully insured under policies of workers' compensation and employee
related insurance (except for applicable deductibles) which have been
maintained by TeamStaff as indicated in 3.29 of the TeamStaff
Disclosure Schedule.
3.30 DISCLOSURE. The representations and warranties contained in
this Section 3 do not contain any untrue statement of a material fact or fail
to state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES CONCERNING BRIGHTLANE
BrightLane represents and warrants to TeamStaff and TeamSub that the
statements contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 4), except as set forth in
the disclosure schedule to be
29
delivered by BrightLane to TeamStaff within 5 business days of the date
hereof and initialed by the Parties (the "BrightLane Disclosure Schedule").
Nothing in the BrightLane Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, however,
unless the BrightLane Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable
detail. The BrightLane Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 4.
4.1 ORGANIZATION AND QUALIFICATION OF BRIGHTLANE. BrightLane is
a corporation duly organized, validly existing, and in good standing (or with
active status) under the laws of the jurisdiction of its incorporation.
BrightLane is duly authorized to conduct business and is in good standing
under the Laws of each jurisdiction where such qualification is required.
BrightLane has full corporate power and authority and all licenses, permits,
and authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it. Section 4.1 of the BrightLane Disclosure
Schedule lists the directors and officers of each of BrightLane. BrightLane
has delivered to TeamStaff correct and complete copies of the charter and
bylaws of BrightLane (as amended to date). The minute books (containing the
records of meetings of the shareholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of BrightLane are correct and complete in all material
respects. BrightLane is not in default under or in violation of any provision
of its charter or bylaws.
4.2 SUBSIDIARIES. BrightLane has no Subsidiaries.
4.3 AUTHORIZATION OF TRANSACTION. BrightLane has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder, except for
the approval of the shareholders and Board of Directors of BrightLane which
approvals shall be a condition to Closing. This Agreement constitutes the
valid and legally binding obligation of BrightLane, enforceable in accordance
with its terms and conditions. BrightLane is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement other than notice and filings
pursuant to (i) the filing of the Certificate of Merger with the Secretary of
State of Georgia and (ii) the filing with the SEC of the Joint Proxy
Statement/Prospectus.
4.4 REQUIRED VOTE. As of the date hereof, the Board of
Directors of BrightLane has, at a meeting duly called and held, by a
unanimous vote of the members present, authorized BrightLane's executive
officers to negotiate and execute this Agreement and each Related Agreement
to which BrightLane is a party as of the date hereof. Not later than thirty
(30) days following the date hereof, the BrightLane Board of Directors shall
meet for the purpose of considering the transactions contemplated hereby and
whether such are advisable, fair to and in the best interests of the holders
of BrightLane Capital Stock entitled to vote thereon, and whether to
recommend approval of Merger. Assuming the BrightLane Board of Directors
approves the terms of this Agreement as fair to and in the best interests of
the BrightLane Shareholders, the Board of Directors shall not thereafter
withdraw, rescind or modify such approval, determination, and resolutions.
The affirmative vote of a majority of all outstanding shares of BrightLane
Common Stock and each series of BrightLane's preferred stock are the only
vote of the holders of any class or series of BrightLane capital stock
necessary to approve and authorize the Merger. As of February 28, 2001, the
holders of BrightLane Capital Stock that are intended to be parties to the
BrightLane Voting Agreement own (beneficially and of record) and have the
right to vote, in the
30
aggregate, approximately 2,747,576 shares of BrightLane Common Stock,
1,717,385 shares of BrightLane's Series B Preferred Stock and 536,682 shares
of BrightLane's Series C Preferred Stock.
4.5 NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which BrightLane is subject
or any provision of the charter or bylaws of BrightLane or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which BrightLane is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
4.6 APPROVALS. The execution and delivery by BrightLane of this
Agreement the Related Agreements to which it is a party or any instrument
required by this Agreement to be executed and delivered by BrightLane at the
Closing do not, and the performance by BrightLane of this Agreement and any
such Related Agreement or instrument shall not, require BrightLane to (A)
obtain the Approval of, observe any waiting period imposed by, or make any
filing with or notification to, any Governmental Authority, domestic or
foreign, except for the filing of the Certificate of Merger in accordance
with the OCGA, where the failure to obtain such Approvals, or to make such
filings or notifications, would not individually or in the aggregate,
reasonably be expected to have a BrightLane Material Adverse Effect or (B)
obtain the consent from any other person other than those persons listed on
Schedule 4.6 to the BrightLane Disclosure Schedule.
4.7 CAPITALIZATION. As of the date hereof, the authorized
capital stock of BrightLane consists of 250,000,000 shares of common stock,
no par value and 10,000,000 share of preferred stock, no par value. As of
March 1, 2001:
(i) 4,841,392 shares of BrightLane Common Stock were
issued and outstanding;
(ii) 38,390 shares of BrightLane Series A Preferred
Stock were issued or outstanding;
(iii) 1,717,385 shares of Series B Preferred Stock
were issued and outstanding;
(iv) 536,682 shares of Series C Preferred Stock were
issued and outstanding;
(v) 2,588,400 shares of BrightLane Common Stock duly
reserved for future issuance pursuant to outstanding options;
and
(vi) no shares of BrightLane Common Stock duly
reserved for future issuance pursuant to outstanding warrants.
No shares of BrightLane Common Stock are held in the treasury
of BrightLane;
All of the issued and outstanding shares of BrightLane Capital Stock
have been duly authorized,
31
are validly issued, fully paid, and nonassessable, and are held of record by
the respective BrightLane Shareholders as set forth on Section 4.7 of the
BrightLane Disclosure Schedule. Other than as contemplated in Section 2.11
hereof or as set forth on Section 4.7 of the BrightLane Disclosure Schedule,
there are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or commitments that could require BrightLane to issue, sell, or otherwise
cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to any capital stock of
BrightLane. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of BrightLane,
except as set forth on Section 4.7 of the BrightLane Disclosure Schedule. No
classes of capital stock or other securities of BrightLane (including without
limitation, bonds, debentures, notes or indebtedness) other than BrightLane
Common Stock and the BrightLane Series A Preferred Shares, Series B Shares
and Series C Preferred Shares has a right to vote on the transactions
contemplated herein.
4.8 TITLE TO ASSETS. Except as set forth on Section 4.8 of the
BrightLane Disclosure Schedule, BrightLane has good and marketable title to,
or a valid leasehold interest in, the properties and assets used by them,
located on their premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests.
4.9 FINANCIAL STATEMENTS. In Section 4.9 of the BrightLane
Disclosure Schedules are the following financial statements (collectively the
"BrightLane Financial Statements"): (i) unaudited consolidated balance sheets
and statements of income, changes in shareholders' equity, and cash flow as
of and for the fiscal year ended December 31, 2000 (the "BrightLane Most
Recent Fiscal Year End"); and (ii) unaudited consolidated and balance sheets
and statements of income and cash flow (the "BrightLane Most Recent Financial
Statements") as of and for the month ended January 31, 2001 (the "BrightLane
Most Recent Fiscal Month End") which audited and unaudited financials shall
be delivered as soon as possible within the 20 day due diligence period set
forth in Section 5.8 hereof. The BrightLane Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of BrightLane as of such dates and the results of
operations of BrightLane for such periods, are correct and complete in all
material respects, and are consistent with the books and records of
BrightLane.
4.10 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS.
None of the information supplied or to be supplied by BrightLane for
inclusion or incorporation by reference in (i) the Form S-4 Registration
Statement (as defined in Section 5) will, at the time the Form S-4
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii)
the Joint Proxy Statement/Prospectus will, at the date of mailing to
stockholders and at the times of the meetings of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Joint Proxy Statement/Prospectus
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC thereunder, except that
no representation or warranty is made by BrightLane with respect to
statements made or incorporated by reference therein based on information
supplied by TeamStaff for inclusion or incorporation by reference in the
Joint Proxy Statement/Prospectus.
32
4.11 EVENTS SUBSEQUENT TO BRIGHTLANE MOST RECENT FINANCIAL
STATEMENTS. Since BrightLane Most Recent Fiscal Month End, there has not been
any adverse change in the business, financial condition, operations, results
of operations, or future prospects of BrightLane. Without limiting the
generality of the foregoing, since that date:
(i) BrightLane has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible;
(ii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not entered into any agreement,
contract (including, without limitation, employment agreements), lease,
or license (or series of related agreements, contracts, leases, and
licenses) but in no event exceeding $50,000 in consideration or
liabilities outside the Ordinary Course of Business;
(iii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, no party (including BrightLane) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $50,000 to which BrightLane is a party or
by which any of them is bound;
(iv) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule. BrightLane has not imposed any Security Interest
upon any of its assets, tangible or intangible;
(v) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not made any capital expenditure
(or series of related capital expenditures);
(vi) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions);
(vii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation;
(viii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not delayed or postponed the
payment of accounts payable and other Liabilities;
(ix) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not canceled, compromised, waived,
or released any right or claim (or series of related rights and claims)
involving more than $25,000 singly or $50,000 in the aggregate;
(x) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not granted any license or
sublicense of any rights under or with respect to any Intellectual
Property;
(xi) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, there has
33
been no change made or authorized in the charter or bylaws of
BrightLane or any of its Subsidiaries;
(xii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(xiii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock or made any distribution of any kind
to its shareholders;
(xiv) BrightLane has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property;
(xv) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not made any loan to, or entered
into any other transaction with, any of its directors, officers, and
employees.
(xvi) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not granted any increase in the
compensation of any of its directors, officers, and employees;
(xviii) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(xix) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, BrightLane has not made any other change in
employment terms for any of its directors, officers, and employees;
(xx) BrightLane has not made or pledged to make any charitable
or political contribution in excess of an aggregate of $5,000;
(xxi) Except as set forth on Section 4.11 of the BrightLane
Disclosure Schedule, there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business; and
(xxii) BrightLane has not committed to any of the foregoing.
34
4.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Section 4.12 of the BrightLane Disclosure Schedule, BrightLane has, to its
Knowledge, no Liability (and, to its Knowledge, there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against it giving rise to any Liability), other
than: (i) Liabilities set forth or adequately provided for in the BrightLane
Most Recent Financial Statements or (ii) Liabilities which have arisen after the
BrightLane Most Recent Financial Statements in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law) but in no event in excess of $50,000 individually or $300,000
in the aggregate or (iii) expenditures outside the Ordinary Course of Business,
which may not exceed $50,000 individually or $300,000 in the aggregate.
4.13 COMPLIANCE
(i) To its Knowledge, BrightLane has complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) except where such non-compliance has not and would
not have a BrightLane Material Adverse Effect on its business or
operations, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. BrightLane holds
all licenses and permits, required to be held by it under the laws all
jurisdictions in which it operates in order to operate its business as
currently operated and BrightLane has not received any notice, written
or otherwise, of the initiation of proceedings to revoke any such
license or permit, except where such failure to hold any such licenses
or permits would not have a BrightLane Material Adverse Effect. Section
4.13 of the BrightLane Disclosure Schedule sets forth the names of
those states in which BrightLane operates.
(ii) BrightLane has not, since its incorporation, 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, which could have a material adverse
effect on its business or operations.
(iii) Neither BrightLane nor any of respective officers,
directors, employees or agents, has directly or indirectly: (a) offered
or paid any amount to, or made any financial arrangement with, any of
the accounts in order to promote business from such accounts, other
than standard pricing or discount arrangements consistent with proper
business practices; (b) 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 (c)
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 the benefit of any current account or
employee, supplier or landlord of such current account, or for any
purpose other than that reflected in the documents supporting the
payments.
(iv) BrightLane is in compliance with, and are not in default
or violation of, (a) its
35
Certificate of Incorporation and Bylaws, (b) any Law or Order or by
which any of its assets or properties are bound or affected and (c)
the terms of all notes, bonds, mortgages, indentures, Contracts,
permits, franchises and other instruments or obligations to which it
is a party or by which it is or any of its assets or properties are
bound or affected, except, in the case of clauses (b) and (c), for any
such failures of compliance, defaults and violations which could not,
individually or in the aggregate, reasonably be expected to have a
BrightLane Material Adverse Effect. BrightLane is in compliance with
the terms of all Approvals, except where the failure to so comply could
not, individually or in the aggregate, reasonably be expected to have a
BrightLane Material Adverse Effect. Except as set forth in the
BrightLane Disclosure Schedule or as could not, individually or in the
aggregate, reasonably be expected to have a BrightLane Material Adverse
Effect, BrightLane has not received notice of any revocation or
modification of any Approval of any federal, state, local or foreign
Governmental Authority that is material to BrightLane.
4.14 LITIGATION. Except as set forth on Section 4.14 of the
BrightLane Disclosure Schedule, there is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the Knowledge of
BrightLane, threatened against BrightLane or any of its properties or any of
its officers or directors (in their capacities as such) that, individually or
in the aggregate, could reasonably be expected to have a BrightLane Material
Adverse Change. Except as set forth on Schedule 4.14 of the BrightLane
Disclosure Schedule, there is no judgment, decree or order against BrightLane
or, to the Knowledge of BrightLane, any of its directors or officers (in
their capacities as such) that could prevent, enjoin or materially alter or
delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to result in a BrightLane Material Adverse Change.
4.15 TAX MATTERS. Except as set forth on Section 4.15 of the
BrightLane Disclosure Schedule:
(i) BrightLane has filed all Tax Returns that it was required
to file , and has paid all Taxes shown on such Tax Returns as owing,
except where the failure to file Tax Returns or to pay Taxes would not
have a Material Adverse Effect. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by BrightLane
(whether or not shown on any Tax Return) have been paid. BrightLane
currently is not the beneficiary of any extension of time within which
to file any Tax Return. No claim has been made within the last three
(3) years by an authority in a jurisdiction where BrightLane does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of
BrightLane that arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) BrightLane has withheld and paid all Taxes required to
have been withheld (including payroll and related taxes) and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder, or other third party.
(iii) Except as set forth on Section 4.15(iii) of the
BrightLane Disclosure Schedule, there is no dispute or claim concerning
any Tax Liability of BrightLane either (A) claimed or raised by any
authority in writing or (B) as to which BrightLane and the directors or
officers (and employees responsible for Tax matters) of BrightLane has
Knowledge based upon personal contact with any agent of such authority.
Section 4.15 of the BrightLane Disclosure Schedule
36
lists all federal, state, local, and foreign income Tax Returns filed
with respect to BrightLane for taxable periods ended on or after
December 31, 1999, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of
audit. BrightLane has delivered to TeamStaff correct and complete
copies of all federal and state income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by BrightLane since December 31, 1999.
(iv) BrightLane has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(v) BrightLane has not filed a consent under Code Sec. 341(f)
concerning collapsible corporations. BrightLane has not made any
payments, is not obligated to make any payments, or is not a party to
any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Sec. 280G.
BrightLane has not been, and is not, a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during
the applicable period specified in Code Sec. 897(c)(1)(A)(ii).
BrightLane has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Sec.
6662. BrightLane is not a party to any Tax allocation or sharing
agreement. BrightLane (A) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group
consisting of only BrightLane) (B) has no Liability for the Taxes of
any Person (other than any of BrightLane) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.
(vi) The unpaid Taxes of BrightLane (A) did not, as of the
Most Recent Fiscal Month End, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) and
(B) do not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with GAAP.
4.16 EMPLOYEES. To the Knowledge of the directors and officers
(and employees with responsibility for employment matters) of BrightLane, no
executive, key employee, or group of employees has any plans to terminate
employment with BrightLane. BrightLane is not a party to or bound by any
collective bargaining agreement, nor has experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes.
BrightLane has not committed any unfair labor practice. None of the directors
and officers (and employees with responsibility for human resource matters)
has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
BrightLane.
4.17 EMPLOYEE BENEFITS
(i) Section 4.17 of the BrightLane Disclosure Schedule lists
each Employee Benefit Plan that BrightLane sponsors for the benefit of or to
which BrightLane contributes on behalf as a Plan Sponsor, for the benefit of
the employees of BrightLane (individually, a "BrightLane Plan" and
collectively, the "BrightLane Plans"), and except as set forth on Section
4.17 of the BrightLane Disclosure Schedule:
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(a) Each BrightLane Plan (and each related trust,
insurance contract, or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable Laws.
(b) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such Employee Benefit Plan.
The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code Sec. 4980B have been met with respect to each such
TeamStaff Plan that is an Employee Welfare Benefit Plan.
(c) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such BrightLane Plan
which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each BrightLane
Plan or accrued in accordance with GAAP. All premiums or other
payments for all periods ending on or before the Closing Date
have been paid with respect to each such BrightLane Plan which
is an Employee Welfare Benefit Plan.
(d) Each BrightLane Plan which is an Employee Pension
Benefit Plan has received, within the last two years, a
favorable determination letter from the Internal Revenue
Service to the effect that it meets the requirements of Code
Sec. 401 (a).
(e) BrightLane does not currently sponsor or
contribute to, or has ever sponsored or contributed to, any
Employee Benefit Plan that is subject to Title IV of ERISA.
(f) BrightLane has delivered to TeamStaff correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
BrightLane Plan.
(ii) No Prohibited Transactions have occurred with respect to
any BrightLane Plan and no Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any BrightLane Plan. No action,
suit, proceeding, hearing or investigation with respect to the administration
or the investment of the assets of any BrightLane Plan (other than routine
claims for benefits) is pending or, to the Knowledge of BrightLane,
threatened. No officer, director or employee with responsibility for ERISA
matters has any Knowledge of any Basis for any such action, suit, proceeding,
hearing or investigation.
(a) No such BrightLane Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) has
been completely or partially terminated or been the subject of
a Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge
of BrightLane threatened.
38
(b) There have been no Prohibited Transactions with
respect to any such BrightLane Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or
investment of the assets of any such BrightLane Plan. No
action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such BrightLane Plan (other than routine claims for
benefits) is pending or to the Knowledge of BrightLane,
threatened.
(c) BrightLane has not incurred, nor has BrightLane
(or any officer with responsibility for ERISA matters) any
Knowledge of any circumstances that might reasonably be
expected to result in BrightLane incurring, any Liability to
the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or
under the Code with respect to any such BrightLane Plan which
is an Employee Pension Benefit Plan.
(iii) BrightLane has never contributed to, or ever has been required
to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) BrightLane does not maintain or ever has maintained or
contributes, ever has contributed, or ever has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Sec. 4980B).
4.18 CONTRACTS. Section 4.18 of the BrightLane Disclosure
Schedule lists the following contracts and other agreements to which
BrightLane is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $50,000 per annum;
(ii) any agreement (or group of related agreements) for the
furnishing or receipt of services, the performance of which will extend
over a period of more than one year, result in a loss to any of
BrightLane in excess of $50,000, or involve consideration in excess of
$50,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$50,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with BrightLane Shareholders and their
Affiliates;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred
39
compensation, severance, or other plan or arrangement for the benefit
of its current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
(xi) any agreement under which the consequences of a default
or termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of
BrightLane; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $50,000.
BrightLane has delivered to TeamStaff a correct and complete copy of each
written agreement listed in Section 4.18 of the BrightLane Disclosure
Schedule (as amended to date) and a written summary setting forth the terms
and conditions of each oral agreement referred to in Section 4.18 of the
BrightLane Disclosure Schedule. With respect to each such agreement and
except for matters which would not have a Material Adverse Effect on
BrightLane taken as a whole: (A) as regards BrightLane the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B) as
regards BrightLane the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) to the Knowledge of
BrightLane, no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) to
the Knowledge of BrightLane, no party has repudiated any provision of the
agreement.
4.19 ENVIRONMENT, HEALTH, AND SAFETY.
(i) To the Knowledge of BrightLane, BrightLane and its
respective predecessors and Affiliates has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, BrightLane and its
respective predecessors and Affiliates has obtained and been in compliance
with all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(ii) To the Knowledge of BrightLane, BrightLane has no Liability
(and BrightLane, and its predecessors and Affiliates has not handled or
disposed of any substance, arranged for the disposal of
40
any substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of
BrightLane giving rise to any Liability) for damage to any site, location, or
body of water (surface or subsurface), for any illness of, or personal injury
to, any employee or other individual, or for any reason under any
Environmental, Health, and Safety Law.
(iii) To the Knowledge of BrightLane, all properties and equipment
used in the business of BrightLane, and their respective predecessors and
Affiliates, have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
4.20 REAL PROPERTY INTERESTS. Section 4.20 of the BrightLane
Disclosure Schedule lists and describes briefly all real property leased or
subleased to BrightLane. BrightLane has delivered to TeamStaff correct and
complete copies of the leases and subleases listed on Section 4.20 of the
BrightLane Disclosure Schedule (as amended to date). With respect to each
lease and sublease listed in Section 4.20 of the BrightLane Disclosure
Schedule, except for matters that do not have a BrightLane Material Adverse
Effect:
(i) as regards BrightLane the lease or sublease is legal,
valid, binding, enforceable, and in full force and effect;
(ii) as regards BrightLane the lease or sublease will continue
to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions
contemplated hereby;
(iii) no party to the lease or sublease is in material breach
or default, and no event has occurred which, with notice or lapse of
time, would constitute a material breach or default or permit
termination, modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) as regards BrightLane with respect to each sublease, the
representations and warranties set forth in subsections (i) through (v)
above are true and correct with respect to the underlying lease;
(vii) BrightLane has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold
or subleasehold;
(viii) to BrightLane's Knowledge, all facilities leased or
subleased thereunder have received all approvals of governmental
authorities (including licenses and permits) required in connection
with the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
41
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities; and
(x) to BrightLane's Knowledge, the owner of the facility
leased or subleased has good and marketable title to the parcel of real
property, free and clear of any Security Interest, easement, covenant,
or other restriction, except for installments of special easements not
yet delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy, or value,
or the marketability of title, of the property subject thereto.
4.21 INTELLECTUAL PROPERTY
(i) BrightLane owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of BrightLane as
presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by BrightLane immediately
prior to the Closing hereunder will be owned or available for use by
such TeamStaff on identical terms and conditions immediately subsequent
to the Closing hereunder, except as set forth on Section 4.21.
BrightLane has taken all reasonably necessary action to maintain and
protect each item of Intellectual Property that it owns or uses.
(ii) Except as set forth in Section 4.21 of the BrightLane
Disclosure Schedule, BrightLane has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and neither BrightLane
nor the directors and officers (and employees with responsibility for
Intellectual Property matters) of BrightLane has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including
any claim that BrightLane must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of
BrightLane and the directors and officers (and employees with
responsibility for Intellectual Property matters) of BrightLane, except
as set forth in Section 4.21 of the BrightLane Disclosure Schedule no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
BrightLane.
(iii) Section 4.21 of the BrightLane Disclosure Schedule
identifies each patent or registration which has been issued to
BrightLane with respect to any of its Intellectual Property, identifies
each pending patent application or application for registration which
BrightLane has made with respect to any of its Intellectual Property,
and identifies each license, agreement, or other permission which
BrightLane has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). BrightLane has
delivered to TeamStaff correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date) and have made available to TeamStaff correct and
complete copies of all other written documentation evidencing ownership
and prosecution (if applicable) of each such item. Section 4.21(c) of
BrightLane Disclosure Schedule also identifies each trade name or
unregistered trademark used by BrightLane in connection with any of its
businesses. With respect to each item of Intellectual Property required
to be identified in Section 4.21(c) of BrightLane Disclosure Schedule,
except for matters which would not have a BrightLane Material Adverse
Effect:
42
(A) BrightLane possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(B) The item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of BrightLane is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) BrightLane has never agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 4.21(iv) of BrightLane Disclosure Schedule
identifies each item of Intellectual Property that any third party owns
and that BrightLane uses pursuant to license, sublicense, agreement, or
permission. BrightLane have delivered to TeamStaff correct and complete
copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of Intellectual
Property required to be identified in Section 4.21(i) of the BrightLane
Disclosure Schedule, except for matters which would not have a
BrightLane Material Adverse Effect:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and
in full force and effect;
(B) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the
Closing;
(C) no party to the license, sublicense, agreement,
or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the license, sublicense, agreement,
or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are materially true and correct with respect
to the underlying license;
(F) the underlying item of Intellectual Property is
not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of BrightLane and the directors and
officers (and employees with responsibility for Intellectual
Property
43
matters) of BrightLane, is threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(H) BrightLane has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(v) To the Knowledge of BrightLane, the use by BrightLane of
its respective Intellectual Property does not interfere with, infringe
upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the
continue operation of its business as presently conducted.
4.22 TANGIBLE ASSETS. Except as set forth on Section 4.22 of the
BrightLane Disclosure Schedule, BrightLane owns or leases all buildings,
equipment, and other tangible assets necessary for the conduct of their
businesses as presently conducted. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it
presently is used with such exceptions as would not have a BrightLane
Material Adverse Effect.
4.23 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of BrightLane are reflected properly on their books and records,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and to the Knowledge of BrightLane will be collected in
accordance with their terms at their recorded amounts subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with GAAP.
4.24 POWERS OF ATTORNEY. Section 4.24 of the BrightLane
Disclosure Schedule sets forth outstanding powers of attorney executed on
behalf of BrightLane.
4.25 BROKERS' FEES. BrightLane has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement, and there are no other fees
or commissions, except for the fees payable to The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company,
Inc., for a fairness opinion for which fees BrightLane shall bear sole
responsibility.
4.26 GUARANTEES. BrightLane is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any other
Person.
4.27 INVESTMENT. Intentionally omitted.
4.28 INSURANCE. Section 4.28 of the BrightLane Disclosure
Schedule contains each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond
and surety arrangements) to which BrightLane has been a party, a named
insured, or otherwise the beneficiary of coverage at any time since its
inception.
(i) With respect to each such insurance policy and except for
matters which would not have a BrightLane Material Adverse Effect: (A)
the policy is legal, valid, binding, enforceable, and in full force and
effect; (B) the policy will continue to be legal, valid, binding,
44
enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) neither
BrightLane nor any other party to the policy is in material breach or
default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D)
no party to the policy has repudiated any provision thereof. BrightLane
has been covered during the past three (3) years by insurance in scope
and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period.
(ii) BrightLane has continuously maintained in effect since
the commencement of its business, without lapse or suspension,
insurance policies which have provided its employees with worker's
compensation insurance or similar occupational accident coverage
insurance.
(iii) To BrightLane's Knowledge, all claims of any kind or
nature accrued or made by BrightLane's employees or others as of the
Closing Date which could have a BrightLane Material Adverse Effect are
fully insured under policies of workers' compensation and employee
related insurance (except for applicable deductibles) which have been
maintained by BrightLane as indicated in Section 4.28 of the BrightLane
Disclosure Schedule.
(iv) BrightLane has never maintained any loss sensitive
insurance program, including, without limitation, any retrospectively
rated or minimum premium or self-insured insurance programs.
4.29 CERTAIN BUSINESS RELATIONSHIPS WITH BRIGHTLANE. Except as
set forth on Section 4.29 of the BrightLane Disclosure Schedule, none of
BrightLane Shareholders or their Affiliates has been involved in any business
arrangement or relationship with BrightLane within the past 12 months, and
BrightLane Shareholders or their Affiliates owns any asset, tangible or
intangible, which is used in the business of BrightLane.
4.30 DISCLOSURE. The representations and warranties contained in
this Section 4 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
5.1 GENERAL
(a) Each of the Parties will use his or its commercially reasonable
efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of
the closing conditions set forth in Section 8 below).
(b) BrightLane and TeamStaff shall cooperate with one another:
(i) in connection with the preparation of the Form S-4
Registration Statement and
45
the Joint Proxy Statement/Prospectus;
(ii) in determining whether any action by or in respect of,
or filing with, any Governmental Authority or other third party, is required,
or any Approvals or Consents are required to be obtained from parties in
connection with the consummation of the transactions contemplated hereby;
(iii) in seeking any Approvals or making any filings,
including furnishing information required in connection therewith or with the
Registration Statement or the Joint Proxy Statement/Prospectus, and seeking
timely to obtain any such Approvals, or making any filings;
(iv) in connection with the registration and listing with
Nasdaq of the TeamStaff Shares.
(v) in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents regarding any real
property transfer or gains, sales, use, transfer, value-added, stock transfer
and stamp taxes, any transfer, recording, registration and other fees or any
similar taxes which become payable in connection with the transaction
contemplated by this Agreement (the "Conveyance Taxes"), that are required or
permitted to be filed on or before the Effective Time.
5.2 NOTICES AND CONSENTS. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to
obtain, any Consents and Approvals in connection with the matters referred to
in Sections 3.6 and 4.6 above. Without limiting the generality of the
foregoing, TeamStaff will file the Joint Proxy Statement/Prospectus and Form
S-4 Registration Statement pursuant to the rules and regulations of the SEC
and BrightLane shall provide to TeamStaff all required financial statements
and other information regarding BrightLane for inclusion therewith.
5.3 OPERATION OF BUSINESSES. Except as contemplated by this
Agreement, neither BrightLane nor TeamStaff will engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, neither
BrightLane nor TeamStaff will:
(a) amend or otherwise change their respective Certificates or
Articles of Incorporation or bylaws or equivalent organizational document or
alter through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any Party;
(b) except as contemplated under Section 2.10 herein, issue,
grant, sell, transfer, deliver, pledge, promise, dispose of or encumber, or
authorize the issuance, grant, sale, transfer, deliverance, pledge, promise,
disposition or encumbrance of, any shares of capital stock of any class
(common or preferred), or any options (other than stock options under the
stock option plans granted to employees consistent with past practice in
order to continue employee recruitment and retention as mutually and
reasonably determined by TeamStaff and BrightLane) warrants, convertible or
exchangeable securities or other rights of any kind to acquire any shares of
capital stock or any other ownership interest (except for the issuance of
Common Stock issuable pursuant to the exercise of outstanding options or
warrants); adopt, ratify or effectuate a shareholders' rights plan or
agreement; or redeem, purchase or otherwise acquire, directly or indirectly,
any capital stock;
46
(c) except as contemplated under Section 2.10 herein, declare,
set aside or pay any dividend or other distribution (whether in cash, stock
or property or any combination thereof) in respect of any of its capital
stock; split, combine or reclassify any of its capital stock, or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for, shares of its capital stock; or amend the terms of,
repurchase, redeem or otherwise acquire, or permit any Subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its Subsidiaries; or propose to do any of the foregoing;
(d) sell, transfer, deliver, lease, license, sublicense,
mortgage, pledge, encumber or otherwise dispose of (in whole or in part), or
create, incur, assume or subject any Lien on, any of the assets (including
any Intellectual Property), except for the sale of goods, licenses of
Intellectual Property involving annual revenue, payments or liabilities of
less than $100,000 or having a term of less than one year, and dispositions
of other immaterial assets, in any case, in the Ordinary Course of Business
and in a manner consistent with past practice;
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization (other than the Merger);
(f) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) or organize any corporation, limited liability company,
partnership, joint venture, trust or other entity or any business
organization or division thereof; incur any indebtedness for borrowed money
or issue any debt securities or any warrants or rights to acquire any debt
security or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any Person, or, except as
contemplated under Section 2.10 herein, or make any loans, advances or enter
into any financial commitments; or authorize or make any capital expenditures
which are, in the aggregate, in excess of $100,000, other than as
contemplated herein; provided, however, TeamStaff may make loans to its
officers or directors solely to allow such officers or directors to exercise
outstanding stock options;
(g) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of
accounts payable and collection of accounts receivable) unless required by a
change in Law or GAAP used by it;
(h) revalue in any material respect any of its assets,
including without limitation writing down the value of inventory or writing
off notes or accounts receivable, other than in the ordinary course of
business;
(i) (1) other than in the Ordinary Course of Business, enter
into any agreement that if entered into prior to the date hereof would be a
material contract; (2) modify, amend in any material respect, transfer or
terminate any Material Contracts or waive, release or assign any rights or
claims thereto or thereunder; (3) enter into or extend any lease with respect
to Real Property with any third party; (4) modify, amend or transfer in any
way or terminate any material contracts, standstill or confidentiality
agreement with any third party, or waive, release or assign any rights or
claims thereto or thereunder; or (5) other than as contemplated by the Cross
Marketing Agreement between TeamStaff and First Union Corporation, enter
into, modify or amend any Contract to provide exclusive rights or obligations;
47
(j) make any material Tax election other than an election in
the ordinary course of business consistent with the past practices of
BrightLane or settle or compromise any federal, state, local or foreign
income tax Liability or agree to an extension of a statute of limitations;
(k) fail to file any Tax Returns when due (or, alternatively,
fail to file for available extensions) or fail to cause Tax Returns when
filed to be complete and accurate in all material respects;
(l) fail to pay any Taxes or other material debts when due;
(m) pay, discharge, satisfy or settle any material Litigation
or waive, assign or release any material rights or claims;
(n) other than employment agreements to be entered into by
TeamStaff at Closing with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, engage in, enter
into or amend any Contract, transaction, indebtedness or other arrangement
with, directly or indirectly, any director, officer, stockholder or other
Affiliate, except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses;
(o) fail to maintain in full force and effect all programs of
self-insurance and insurance, as the case may be, currently in effect;
(p) fail to make in a timely manner any filings required to be
made with the SEC required under the Securities Act or the Exchange Act or
the rules or regulations promulgated thereunder; or
(q) authorize, recommend, propose or announce an intention to
do any of the foregoing, or agree or enter into or amend any Contract or
arrangement to do any of the foregoing.
5.4 PRESERVATION OF BUSINESS. Each Party will keep its business
and properties substantially intact, including its present operations,
physical facilities, working conditions, and relationships with worksite
employers, lessors, licensors, suppliers, customers and employees.
5.5 FULL ACCESS. Each party will permit representatives of the
other parties to have full access at all reasonable times, and in a manner so
as not to interfere with the normal business operations of BrightLane or
TeamStaff, to all premises, properties, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to BrightLane or
TeamStaff.
5.6 NOTICE OF DEVELOPMENTS. The Parties shall notify the other
Parties in writing of any development causing a breach of any of the
representations and warranties contained in this Agreement. Unless the Party
receiving such notice objects to such development and exercises that right
within the period of 10 business days, the written notice pursuant to this
Section 5.6 will be deemed to have amended the applicable disclosure
schedule, to have qualified the representations and warranties contained in
this Agreement, and to have cured any misrepresentation or breach of warranty
that otherwise might have existed under this Agreement by reason of the
development.
5.7 PREPARATION OF JOINT PROXY STATEMENT/PROSPECTUS &
SHAREHOLDERS' MEETINGS.
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(a) (i) As promptly as reasonably practicable following the
date hereof, TeamStaff and BrightLane shall cooperate in preparing and shall
cause to be filed with the SEC mutually acceptable proxy materials in
accordance with SEC rules and regulations (including, without limitation,
delivery by each Party of financial statements in accordance with Regulation
S-X) which shall constitute the proxy statement/prospectus relating to the
matters to be submitted to the BrightLane at the BrightLane Shareholders
Meeting and to the TeamStaff stockholders at the TeamStaff Shareholders
Meeting (such joint proxy statement/prospectus, and any amendments or
supplements thereto, the "Joint Proxy Statement/Prospectus") and TeamStaff
shall prepare and file with the SEC a registration statement on Form S-4
("Form S-4 Registration Statement) (of which the Joint Proxy
Statement/Prospectus shall be a part) with respect to the issuance of
TeamStaff Common Stock in the Merger (such Form S-4, and any amendments or
supplements thereto, the "Form S-4"). TeamStaff shall use its reasonable best
efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC and
the Form S-4 Registration Statement declared effective by the SEC and to keep
the Form S-4 Registration Statement effective as long as is necessary to
consummate the Merger and the transactions contemplated thereby. TeamStaff
shall, as promptly as practicable after receipt thereof, provide BrightLane
with copies of any written comments and advise BrightLane of any oral
comments with respect to the Joint Proxy Statement/Prospectus or Form S-4
Registration Statement received from the SEC. Each party shall cooperate and
provide the other party with a reasonable opportunity to review and comment
on any amendment or supplement to the TeamStaff Joint Proxy
Statement/Prospectus and the Form S-4 Registration Statement prior to filing
such with the SEC, and TeamStaff will provide BrightLane with a copy of all
such filings made with the SEC. Notwithstanding any other provision herein to
the contrary, no amendment or supplement (including by incorporation by
reference) to the Joint Proxy Statement/Prospectus or the Form S-4
Registration Statement shall be made without the approval of each party,
which approval shall not be unreasonably withheld or delayed; provided that
with respect to documents filed by a party which are incorporated by
reference in the Form S-4 Registration Statement or Joint Proxy
Statement/Prospectus, this right of approval shall apply only with respect to
information relating to the other party or its business, financial condition
or results of operations. TeamStaff shall use its reasonable best efforts to
take any action required to be taken under any applicable state securities
laws in connection with the Merger and each party shall furnish all
information concerning it and the holders of its capital stock as may be
reasonably requested in connection with any such action. TeamStaff will
advise BrightLane promptly after it receives notice thereof, of the time when
the Form S-4 Registration Statement has become effective, the issuance of any
stop order, the suspension of the qualification of the TeamStaff Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the Form S-4. If at any time prior to the Effective
Time any information relating to either of the parties, or their respective
affiliates, officers or directors, should be discovered by either party which
should be set forth in an amendment or supplement to any of the Form S-4
Registration Statement or the Joint Proxy Statement/Prospectus so that such
documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and,
to the extent required by law, rules or regulations, an appropriate amendment
or supplement describing such information shall be promptly filed with the
SEC and disseminated to the stockholders of BrightLane and TeamStaff.
(ii) LETTER OF BRIGHTLANE'S ACCOUNTANTS. BrightLane shall use
its reasonable best efforts to cause to be delivered to TeamStaff a
letter of Deloitte & Touche LLP, dated a date
49
within two business days before the date of the Joint Proxy/
Registration Statement, and addressed to TeamStaff, in form and
substance reasonably satisfactory to TeamStaff and customary in scope
and substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements on
Form S-4.
(iii) LETTER OF TEAMSTAFF'S ACCOUNTANTS. TeamStaff shall use
its reasonable best efforts to cause to be delivered to BrightLane a
letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, dated a date within two business days
before the date of the Joint Proxy/Registration Statement, and
addressed to TeamStaff, in form and substance reasonably satisfactory
to TeamStaff and customary in scope and substance for "cold comfort"
letters delivered by independent public accountants in connection with
registration statements on Form S-4.
(iv) RECEIPT OF INVESTMENT BANKING FAIRNESS OPINION.
Notwithstanding anything in this Section 5.7 to the contrary, neither
TeamStaff nor BrightLane shall be required to file the Joint Proxy
Statement/Prospectus with the SEC prior to the date that each receives
a fairness opinion, in form and substance satisfactory to it from their
respective investment bankers, regarding the fairness of the
transaction to the shareholder of the respective party.
(b) Subject to receipt by BrightLane of a fairness opinion from
its investment banker as to the fairness from a financial point of view of
the Merger Consideration and adoption by the BrightLane Board of Directors of
resolutions approving the Merger as fair to and in the best interests of the
BrightLane Shareholders, BrightLane shall duly take all lawful action to
call, give notice of, convene and hold a meeting of its stockholders as
promptly as practicable following the date upon which the Form S-4
Registration Statement becomes effective (the "BrightLane Stockholders
Meeting") for the purpose of recommending to, and obtaining the approval of,
the BrightLane Shareholders in accordance with the OGCA and its Articles of
Incorporation ("Required BrightLane Vote") with respect to the transactions
contemplated by this Agreement and shall use all reasonable best efforts to
solicit the adoption of this Agreement by the Required BrightLane Vote and
the Board of Directors of BrightLane shall recommend adoption of this
Agreement by the stockholders of BrightLane (the "BrightLane
Recommendation"). Following delivery of the Joint Proxy Statement/Prospectus,
the Board of Directors of BrightLane shall not (x) withdraw, modify or
qualify (or propose to withdraw, modify or qualify) such recommendation in
any manner adverse to TeamStaff or (y) take any other action or make any
other statement in connection with the BrightLane Stockholders Meeting
inconsistent with such recommendation. This Agreement shall be submitted to
all of the holders of BrightLane Capital Stock entitled to vote at the
BrightLane Stockholders Meeting for the purpose of adopting this Agreement.
(c) Subject to receipt by TeamStaff of a fairness opinion from
its investment banker as to the fairness from a financial point of view of
the Merger, TeamStaff shall duly take all lawful action to call, give notice
of, convene and hold a meeting of its stockholders as promptly as practicable
following the date upon which the Form S-4 Registration Statement becomes
effective (the "TeamStaff Stockholders Meeting") for the purpose of
recommending to, obtaining the approval of, its shareholders in accordance
with the New Jersey Business Corporation Act ("NJBCA") and its Certificate of
Incorporation ("Required TeamStaff Vote") with respect to the transactions
contemplated by this Agreement. Unless it is permitted to make a Change in
TeamStaff Recommendation (as defined below) pursuant to Section (g),
following delivery of the Joint Proxy Statement/Prospectus, the Board of
Directors of TeamStaff shall use all reasonable best efforts to solicit the
adoption of this Agreement by
50
the Required TeamStaff Vote; and the Board of Directors of TeamStaff shall
recommend adoption of this Agreement by the stockholders of TeamStaff (the
"TeamStaff Recommendation") and shall not (x) withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to BrightLane
such recommendation or (y) take any other action or make any other statement
in connection with the TeamStaff Stockholders Meeting inconsistent with such
recommendation (a "Change in TeamStaff Recommendation"), except as and to the
extent expressly permitted by Section (g).
(d) Subject to receipt by TeamStaff of a fairness opinion from
its investment banker as to the fairness from a financial point of view of
the Merger Consideration, and approval by the TeamStaff Board of Directors of
resolutions approving the Merger as fair to and in the best interests of the
TeamStaff shareholders, the Board of Directors of TeamStaff shall recommend
that TeamStaff's shareholders approve the Merger and the issuance of shares
of TeamStaff Common Stock in connection with the Merger at the TeamStaff
Shareholders' Meeting; (ii) the Joint Proxy Statement/Prospectus shall
include a statement to the effect that the Board of Directors of TeamStaff
has recommended that TeamStaff's shareholders approve the Merger and the
issuance of shares at the TeamStaff Shareholders' Meeting; and (iii) subject
to receipt by TeamStaff of a Superior Proposal, as defined in clause (g)
below, neither the Board of Directors of TeamStaff nor any committee thereof
shall withdraw, amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to BrightLane, the recommendation of the Board of
Directors of TeamStaff that TeamStaff's shareholders approve such issuance of
shares.
(e) BrightLane and TeamStaff shall each use their commercially
reasonable efforts to cause the BrightLane Stockholders Meeting and the
TeamStaff Stockholders Meeting to be held on the same date.
(f) Each of BrightLane and TeamStaff shall use their reasonable
best efforts to cause the persons and entities set forth on Schedule 5.7(f)
to execute agreements in the form of Exhibit F annexed hereto pursuant to
which such persons shall agree to vote all shares of capital stock of
BrightLane or TeamStaff, as the case may be, in favor of the Merger and the
transactions contemplated herein.
(g) (i) Each of TeamStaff and BrightLane agrees that neither it
nor any of its Subsidiaries nor any of the officers and directors of it or
its Subsidiaries shall, and that it shall use its commercially reasonable
efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
(A) initiate, solicit, encourage or knowingly facilitate any inquiries or the
making of any proposal or offer with respect to, or a transaction to effect,
a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving it or any of its Subsidiaries or any purchase or sale
of 20% or more of the consolidated assets (including, without limitation,
stock of its Subsidiaries) of it and its Subsidiaries, taken as a whole, or
any purchase or sale of, or tender or exchange offer for, its voting
securities that, if consummated, would result in any person (or the
stockholders of such person) beneficially owning securities representing 20%
or more of its total voting power (or of the surviving parent entity in such
transaction) or any of its Subsidiaries (any such proposal, offer or
transaction (other than a proposal or offer made by the other party to this
Agreement or an affiliate thereof) being hereinafter referred to as an
"Acquisition Proposal"), (B) have any discussions with or provide any
confidential information or data to any person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal,
or
51
knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal, (C) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal or (D) approve or recommend,
or propose to approve or recommend, or execute or enter into, any letter of
intent, agreement in principle, merger agreement, asset purchase or share
exchange agreement, option agreement or other similar agreement related to
any Acquisition Proposal or propose or agree to do any of the foregoing.
(ii) Notwithstanding anything in this Agreement to the contrary,
TeamStaff and its respective Board of Directors shall be permitted to (A) to
the extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal, (B) effect a
Change in TeamStaff Recommendation (a "Change in Recommendation"), or (C)
engage in any discussions or negotiations with, or provide any confidential
information or data to, any person in response to an unsolicited bona fide
written Acquisition Proposal by any such person first made after the date of
this Agreement, if and only to the extent that, in any such case referred to
in clause (B) or (C):
(1) TeamStaff's meeting to vote on the adoption of this
Agreement shall not have occurred,
(2) TeamStaff has complied in all material respects with this
Section 5.7,
(3) TeamStaff's Board of Directors, after consultation with
outside counsel, determines in good faith that failure to take such
action would likely be inconsistent with its fiduciary duties under
applicable law,
(4) in the case only of clause (B) above, (I) TeamStaff has
received an unsolicited bona fide written Acquisition Proposal from a
third party and its Board of Directors concludes in good faith that
such Acquisition Proposal constitutes a Superior Proposal (as defined
below) (after giving effect to all of the concessions which may be
offered by the other party to this Agreement pursuant to clause (III)
below), (II) TeamStaff has notified BrightLane at least five business
days in advance of its intention to effect a Change in Recommendation,
specifying the material terms and conditions of such Superior Proposal
and furnishing to the other party to this Agreement a copy of any
relevant proposed transaction agreements with the party making such
Superior Proposal and any other material documents received by it or
its representatives, and (III) prior to effecting such a Change in
Recommendation, TeamStaff has, and has caused its financial and legal
advisors to, negotiate with BrightLane in good faith to make such
adjustments in the terms and conditions of this Agreement such that
such Acquisition Proposal would no longer constitute a Superior
Proposal, (v) in the case only of clause (C) above, its Board of
Directors concludes in good faith that there is a reasonable likelihood
that such Acquisition Proposal constitutes or is reasonably likely to
result in a Superior Proposal, and prior to providing any information
or data to any person in connection with an Acquisition Proposal by any
such person, its Board of Directors receives from such person an
executed confidentiality agreement having provisions that are no less
favorable to the party providing such information than those contained
in the confidentiality agreement in effect between TeamStaff and
BrightLane, and
(5) TeamStaff notifies BrightLane as promptly as practicable
(and in any event within 24 hours of providing any confidential
information or data to any person or entering into discussions or
negotiations with any person), of such inquiries, proposals or offers
received by, any such
52
information requested from, or any such discussions or negotiations
sought to be initiated or continued with, it or any of its
representatives indicating, in connection with such notice, the
identity of such person and the material terms and conditions of any
inquiries, proposals or offers (including a copy thereof if in writing
and any related available documentation or correspondence). TeamStaff
and BrightLane agrees that it will promptly keep the other party
informed of the status and terms of any such proposals or offers and
the status and terms of any such discussions or negotiations.
(iii) Each of TeamStaff and BrightLane agrees that (A) it will, and
will cause its officers, directors and representatives to, immediately cease
and cause to be terminated any activities, discussions or negotiations
existing as of the date of this Agreement with any parties conducted
heretofore with respect to any Acquisition Proposal, (B) it will immediately
cease and cause its Subsidiaries, and its and their officers, directors,
agents, representatives and advisors, to cease any and all existing
activities, discussions or negotiations with any third parties conducted
heretofore with respect to any Acquisition Proposal, and (C) it will not
release any third party from, or waive any provisions of, any confidentiality
or standstill agreement to which it or any of its Subsidiaries is a party
with respect to any Acquisition Proposal. Each of TeamStaff and BrightLane
agrees that it will use reasonable best efforts to promptly inform its
respective directors, officers, key employees, agents and representatives of
the obligations undertaken in this Section 5.7
(iv) Nothing in this Section 5.7 shall (x) permit either party to
terminate this Agreement or (y) affect any other obligation of the parties
under this Agreement. Neither party shall submit to the vote of its
stockholders any Acquisition Proposal other than the Merger.
(v) For purposes of this Agreement, "Superior Proposal" means a bona
fide written Acquisition Proposal which the Board of Directors of TeamStaff
concludes in good faith, after consultation with its financial advisors and
legal advisors, taking into account all legal, financial, regulatory and
other aspects of the proposal and the person making the proposal (including
any termination fees, expense reimbursement provisions and conditions to
consummation) (A) is more favorable to the stockholders of TeamStaff from a
financial point of view, than the transactions contemplated by this Agreement
and (B) is fully financed or a substantial probability exists that it can be
fully financed and otherwise reasonably capable of being completed on the
terms proposed; provided that, for purposes of the definition of "Superior
Proposal," the term Acquisition Proposal shall have the meaning assigned to
such term in Section 5.7(g)(i), except that the reference to "20% or more" in
the definition of "Acquisition Proposal" shall be deemed to be a reference to
"a majority" and "Acquisition Proposal" shall only be deemed to refer to a
transaction involving the acquisition of the right to vote a majority of the
voting securities of TeamStaff.
(vi) Any public disclosure (other than a "stop, look and listen" or
similar communication of the type contemplated by Rule 14-9(f) under the
Exchange Act) made pursuant to clause (A) of Section 5.7(g)(ii) shall be
deemed to be a Change in Recommendation unless the Board of Directors of the
party making such disclosure expressly reaffirms the TeamStaff Recommendation
or BrightLane Recommendation, as the case may be.
5.8 CONTINUING DUE DILIGENCE AND DISCLOSURE SCHEDULE DELIVERY
53
(i) Both BrightLane and TeamStaff shall have the period
commencing on the date of this Agreement and ending on the Deadline Date
twenty (20) business days after signing to continue and complete their due
diligence review of each other. Each Party shall cooperative in good faith
with such continuing investigation. If at any time either BrightLane or
TeamStaff shall determine, in good faith that they are not satisfied with the
results of their due diligence for any reason, they may, but are not required
to, of their election immediately give notice ("Diligence Notice") to
terminate the Merger and this Agreement pursuant to Section 10 without
further obligation or liability to the other. If neither party gives a
Diligence Notice on or before the Deadline Date, then no party may thereafter
terminate the Merger or this Agreement pursuant to this Section 5.8.
(ii) For the period commencing on the date of this Agreement and
ending on the Deadline Date twenty (20) business days after signing, both
BrightLane and TeamStaff shall exercise commercially reasonable efforts to
seek and obtain fairness opinions with respect to the transactions
contemplated by this Agreement. In the event that a Party is unable to obtain
such fairness opinions on or before the Deadline Date, or in the event that
the Board of Directors of such Party (after consideration of such fairness
opinion) shall determine not to recommend approval of the Merger by such
Party's shareholders, then such Party may, by notice to the other Party
pursuant to Section 10, terminate the Merger and this Agreement without
further obligation or liability to the other.
(iii) Each of BrightLane and TeamStaff shall deliver their
respective Disclosure Schedule to the other party within 5 business days of
the date hereof and the Parties shall use their reasonable best efforts to
deliver the TeamStaff Voting Agreements and BrightLane Voting Agreements
within 20 days of the date hereof.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
6.1 GENERAL. 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 9
below). BrightLane acknowledges and agrees that from and after the Closing,
TeamStaff will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating
to BrightLane; provided, however, that after Closing, TeamStaff shall provide
the BrightLane Shareholders with reasonable access to and the right to copy
such documents, books, records (including Tax records), agreements, and
financia1 data where the BrightLane Shareholders have a legitimate purpose,
including without limitation, in the event of an Internal Revenue Service
audit.
6.2 LITIGATION SUPPORT. 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 BrightLane, each 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
54
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 9 below).
6.3 TRANSITION. BrightLane will exercise reasonably commercial
efforts to assure that none of the BrightLane Shareholders 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
BrightLane from maintaining the same business relationships with BrightLane
after the Closing as it maintained with BrightLane prior to the Closing.
BrightLane will refer all customer inquiries relating to the businesses of
BrightLane to TeamStaff or the Surviving Corporation from and after the
Closing.
6.4 CONFIDENTIALITY. (i) BrightLane, its officers, directors
and employees will treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information except in
connection with this Agreement, and deliver promptly to TeamStaff or destroy,
at the request and option of TeamStaff, all tangible embodiments (and all
copies) of the Confidential Information which are in his or its possession.
In the event that BrightLane, its officers, directors and employees is
requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, such person will notify TeamStaff promptly of the request or
requirement so that TeamStaff may seek an appropriate protective order or
waive compliance with the provisions of this Section 6.4. If, in the absence
of a protective order or the receipt of a waiver hereunder, any of such
persons, on the advice of counsel, are compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, such person
may disclose the Confidential Information to the tribunal; provided, however,
that the disclosing person shall use his or its reasonable best efforts to
obtain, at the reasonable request of TeamStaff, (and at the expense of
TeamStaff) an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as TeamStaff shall designate. The foregoing provisions shall not
apply to any Confidential Information which is generally available to the
public immediately prior to the time of disclosure.
(ii) TeamStaff and its Subsidiaries will treat and hold as such all
of the Confidential Information regarding BrightLane, refrain from using any
of the Confidential Information except in connection with this Agreement, and
deliver promptly to BrightLane or destroy, at the request and option of
BrightLane, all tangible embodiments (and all copies) of the Confidential
Information which are in its possession. In the event that TeamStaff or any
its Subsidiaries is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, that TeamStaff will notify BrightLane promptly of the request or
requirement so that BrightLane may seek an appropriate protective order or
waive compliance with the provisions of this Section 6.4(ii). If, in the
absence of a protective order or the receipt of a waiver hereunder, TeamStaff
or any of its Subsidiaries is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable
for contempt, that TeamStaff and its Subsidiaries may disclose the
Confidential Information to the tribunal; provided, however, TeamStaff and
its Subsidiaries shall use their reasonable best efforts to obtain, at the
reasonable request of BrightLane, (and at the expense of BrightLane) an order
or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as
BrightLane shall designate. The foregoing provisions shall not apply to any
55
Confidential Information which is generally available to the public
immediately prior to the time of disclosure.
6.5 COVENANT NOT TO COMPETE. At Closing, BrightLane shall
deliver to TeamStaff written agreements from the persons set forth on
Schedule 6.5 annexed hereto whereby each such person agrees that for a period
of two years such persons shall not engage directly or indirectly in the
businesses conducted by BrightLane or TeamStaff as of the Closing Date;
provided, however, that no owner of 1% of the outstanding stock of any
publicly held entity shall be deemed to engage in such business solely by
reason of such stock ownership. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6.5 is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be appealed.
6.6 INDEMNIFICATION; DIRECTORS AND OFFICER INSURANCE.
(i) From and after the Effective Time, TeamStaff will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
BrightLane pursuant to any indemnification agreements between BrightLane and
its directors and officers as of the Effective Time (the "Indemnified
Parties") and any indemnification or expense advancement provisions under
BrightLane's Articles of Incorporation or bylaws as in effect on the date
hereof. The Articles of Incorporation and bylaws of the Surviving Corporation
will contain provisions with respect to exculpation and indemnification and
expense advancement that are at least as favorable to the Indemnified Parties
as those contained in the Articles of Incorporation and bylaws of BrightLane
as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of six years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who, immediately prior to the Effective Time, were directors,
officers, employees or agents of BrightLane, unless such modification is
required by Law.
(ii) TeamStaff shall use its commercially reasonable efforts to
cause to be maintained for a period of six (6) years from the Effective Time
BrightLane's current directors and officers insurance policy (the
"BrightLane's D&O Insurance") to the extent that it provides coverage for
events occurring prior to the Effective Time for all Persons who are
directors and officers of BrightLane on the date of this Agreement, so long
as the annual premium therefor would not be in excess of 150% of the last
annual premium paid prior to the date of this Agreement (such amount, the
"Maximum Premium"). If TeamStaff is unable to obtain such policy, then upon
request by any Person who is a current BrightLane officer or director,
BrightLane shall use its commercially reasonable efforts to extend coverage
under BrightLane's D&O Insurance by obtaining a six-year "tail" policy
(provided, that the lump sum payment to purchase such coverage does not
exceed three times the Maximum Premium) and such "tail" policy shall satisfy
TeamStaff's obligations under this Section 6.6(ii). TeamStaff's obligations
under this Section 6.6 shall also be satisfied if TeamStaff's directors and
officers insurance provides (or is amended to provide) substantially similar
coverage and coverage levels for events occurring prior to the Effective Time
for Persons who are directors and officers of BrightLane on the date of this
Agreement. If
56
BrightLane's existing directors and officers insurance expires, is terminated
or canceled during such six-year period or a "tail" policy cannot be
purchased on the terms set forth above and TeamStaff cannot or determines not
to satisfy its obligations under this Section 6.6 pursuant to the preceding
sentence, TeamStaff shall use its commercially reasonable efforts to cause to
be obtained as much directors and officers insurance as can be obtained for
the remainder of such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous than
BrightLane's D&O Insurance.
(iii) The provisions of this Section 6.6 are intended to be for
the benefit of, and shall be enforceable by, each Person entitled to the
benefits hereof and the heirs and representatives of such Person.
6.7 CONTINUITY OF BUSINESS ENTERPRISE. TeamStaff will continue
at least one significant historic business line of BrightLane, or use at
least a significant portion of BrightLane's historic business assets in a
business, in each case within the meaning of Reg. Section 1,368-1(d), except
that TeamStaff may transfer BrightLane's historic business assets (i) to a
corporation that is a member of TeamStaff's "qualified group," within the
meaning of Reg. Section 1.368-1(d)(4)(ii), or (ii) to a partnership if (A)
one or more members of TeamStaff's "qualified group" have active and
substantial management functions as a partner with respect to BrightLane's
historic business or (B) members of TeamStaff's "qualified group" in the
aggregate own an interest in the partnership representing a significant
interest in BrightLane's historic business, in each case within the meaning
of Reg. Section 1.368-1(d)(r)(ii).
6.8 CONTINUITY OF INTEREST. Within the meaning of Reg. Section
1.368-1(e), neither TeamStaff nor, to TeamStaff's knowledge, any person
"related" to TeamStaff, is obligated nor has any plan or intention to
acquire, either before or after the Merger, any BrightLane Capital Stock
other than as provided in this Agreement.
6.9 SUBSTANTIALLY ALL REQUIREMENT. Following the Merger, to the
Knowledge of TeamStaff, BrightLane will hold at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the
gross assets that were held by BrightLane immediately prior to the Effective
Time, and at least 90% of the fair market value of the net assets and at
least 70% of the fair market value of the gross assets that were held by
TeamSub immediately prior to the Effective Time. Insofar as this
representation is dependent upon actions of BrightLane prior to the Merger,
TeamStaff and TeamSub have assumed that BrightLane will take no action prior
to the Merger that will cause BrightLane not to hold at least 90% of the fair
market value of its net assets and at least 70% of the fair market value of
its gross assets immediately prior to the Effective Time. For purposes of
this paragraph, cash or other property paid by BrightLane or TeamSub to
shareholders, or used by BrightLane or TeamSub to pay reorganization
expenses, or distributed by BrightLane or Team Sub with respect to or in
redemption of its outstanding stock, other than regular dividends paid in the
ordinary course and other than cash or other property transferred by
TeamStaff to TeamSub in pursuance of the plan of Merger immediately
preceding, or in contemplation of, the Merger are included as assets held by
BrightLane and TeamSub immediately prior to the Effective Time. Additionally,
TeamStaff has not participated in any plan of BrightLane to effect (i) any
distribution with respect to any BrightLane stock (other than regular
dividend distributions made in the ordinary course), or (ii) any redemption
or acquisition of any BrightLane stock (other than in the Merger).
57
6.10 RESALE REGISTRATION STATEMENT. Within 30 days of the
Closing TeamStaff shall, at its cost and expense, prepare a registration
statement on Form S-3 (or Form S-1 if TeamStaff is not then eligible to file
on Form S-3) to be filed with the SEC in connection with the resale by the
BrightLane Shareholders of the TeamStaff Shares received by the BrightLane
Shareholders pursuant to the terms of the Merger (the "Resale Registration
Statement") in accordance with the Securities Act. TeamStaff shall use
reasonable commercial efforts to respond promptly to any comments, if any,
made by the SEC with respect to the Resale Registration Statement and to
cause the Resale Registration Statement to be declared effective under the
Securities Act as promptly as practicable after the filing thereof with the
SEC, but in no event later than the date the SEC declares that either (x) it
will not review and has no comments to the Resale Registration Statement or
(y) it has no further comments to the Resale Registration Statement. If the
Resale Registration Agreement is declared effective under the Securities Act,
then TeamStaff shall use reasonable best efforts to prepare and file such
amendments and supplements to the Resale Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the
Resale Registration Statement effective for a period of three years from the
Closing Date.
7. CERTAIN AGREEMENTS
7.1 MARKETING AGREEMENT. At or prior to Closing, TeamStaff and
First Union Corporation shall enter into a Cross Marketing Agreement
substantially in the form attached hereto as Exhibit G.
7.2 LOCKUP AGREEMENTS. At or prior to Closing, BrightLane shall
cause to be delivered to TeamStaff a written agreement, in form and substance
reasonably satisfactory to TeamStaff, whereby (i) each holder of BrightLane
Capital Stock who (i) owns 1% or more of the BrightLane Common Stock (as
determined on a fully diluted basis and who does not exercise appraisal
rights in connection with the Merger, and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, First Union
Private Capital and Nationwide Financial Inc. shall agree not to sell,
transfer, pledge, encumber or hypothecate (such event being deemed a
"Transfer") any TeamStaff Shares as follows: (A) each person converting or
exercising options or warrants into BrightLane Common Stock pursuant to
Section 2.10 hereof shall agree not to sell transfer any TeamStaff Shares for
period of two years from the Closing Date and (B) all other BrightLane
Shareholders shall agree not to Transfer any TeamStaff Shares, except that
50% of such TeamStaff shares may be Transferred commencing on the 1st
anniversary of the Closing Date and the remaining 50% of such TeamStaff
Shares may be transferred commencing on the 2nd anniversary date of the
Closing Date.
7.3 RELEASES BY BRIGHTLANE SHAREHOLDERS. Within 20 days of the
date hereof, BrightLane shall cause to be delivered from the BrightLane
Shareholders whose names appear on Schedule 7.3 annexed hereto to TeamStaff,
a general release in the form of Exhibit H.
8. CONDITIONS TO OBLIGATION TO CLOSE
8.1 CONDITIONS TO OBLIGATION OF TEAMSTAFF. The obligation of
TeamStaff and TeamSub to consummate the transactions to be performed by them
in connection with the Closing is subject to satisfaction of the following
conditions:
(a) BrightLane's representations and warranties set forth in
Section 4 above shall be true and correct in all respects as of the date of
this Agreement and as of the Closing Date, except as affected by
58
the transactions contemplated hereby and except as has not resulted in or
will not constitute a BrightLane Material Adverse Effect.
(b) BrightLane shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(c) BrightLane shall have procured all of the third party
Approvals and Consents specified in Sections 4.6 and 5.2 above;
(d) no action, suit, or proceeding shall be pending or to
BrightLane's Knowledge, threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of TeamStaff to own BrightLane
Capital Stock and to control BrightLane, or (D) affect adversely the right of
BrightLane to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(e) BrightLane shall have delivered to TeamStaff a certificate
to the effect that each of the conditions specified above in Section
8.1(a)-(d) is satisfied in all respects;
(f) TeamStaff and First Union Corporation shall have entered
into a Cross Marketing Agreement substantially in the form annexed hereto as
Exhibit G;
(g) TeamStaff shall have received from counsel to BrightLane an
opinion in form and substance as set forth in Exhibit G attached hereto,
addressed to TeamStaff, and dated as of the Closing Date;
(h) TeamStaff shall have received properly executed
non-competition agreements from the persons required to deliver such
agreements as listed on Schedule 6.5.
(i) TeamStaff shall have received the approval of its
shareholders for the transactions contemplated herein in accordance with the
Business Corporation Act of New Jersey and the rules of the Nasdaq Stock
Market;
(j) At least 5 business days prior to Closing, TeamStaff shall
have received financial statements from BrightLane, prepared in accordance
with GAAP, for the fiscal month ending within 30 days of the Closing, which
financial statements ("BrightLane Closing Financial Statements") shall not
evidence or indicate a BrightLane Material Adverse Change.
(k) TeamStaff shall have received certified resolutions of the
BrightLane Shareholders approving the Merger and evidence satisfactory to
TeamStaff that holders of not more than 230,000 shares of BrightLane Common
Stock and that no shares of Series B Preferred Stock or Series C Preferred
Stock have exercised any appraisal rights under the OCGA or rights to demand
any liquidation payments under the terms of any preferred stock.
59
(l) The Joint Proxy Statement/Prospectus on Form S-4
Registration Statement shall have been declared effective by the SEC in
accordance with the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect and no proceeding
for that purpose shall have been instituted, or to the Knowledge of
TeamStaff, threatened, by the SEC or any state regulatory authority
(m) BrightLane shall have delivered the Lock-Up Agreements from
the holders of BrightLane Capital Stock and are required to deliver a lock-up
pursuant to Section 7.2 hereof.
(n) TeamStaff shall have received a general release from the
persons required to deliver such releases as provided in Section 7.3 hereof.
TeamStaff may waive any condition specified in this Section 8.1 if it
executes a writing so stating at or prior to the Closing.
8.2 CONDITIONS TO OBLIGATION OF BRIGHTLANE. The obligation of
BrightLane to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) TeamStaff's and TeamSub's representations and warranties
set forth in Section 3 above shall be true and correct in all respects as of
the date of this Agreement and as of the Closing Date, except as affected by
the transactions contemplated hereby and except as has not resulted in or
will not constitute a TeamStaff Material Adverse Effect;
(b) TeamStaff and TeamSub shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(c) TeamStaff and TeamSub shall have procured all of the third
party Approvals and Consents specified in Sections 3.6 and 5.2 above.
(d) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated by
this Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(e) TeamStaff shall have delivered to BrightLane a certificate
to the effect that each of the conditions specified above in Section
8.2(a)-(d) is satisfied in all respects;
(f) BrightLane shall have received from counsel to TeamStaff
and TeamSub an opinion in form and substance as set forth in Exhibit E
attached hereto dated as of the Closing Date;
(g) The Joint Proxy Statement/Prospectus on Form S-4
Registration Statement shall have been declared effective by the SEC in
accordance with the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect and no proceeding
for that purpose shall
60
have been instituted, or to the knowledge of TeamStaff, threatened, by the
SEC or any state regulatory authority
(h) The TeamStaff Shareholders have entered into a voting
agreement substantially in the form annexed hereto as Exhibit F;
(i) The market value of the shares of TeamStaff Common Stock
issued and outstanding immediately prior to consummation of the Merger must
be not less than $22.0 million, as determined by reference to the average
closing price of the TeamStaff Common Stock for the 10 trading days ending
two days prior to Closing.
(j) The officers and Board of Directors of TeamStaff and the
Surviving Corporation described in Section 2.6 hereof shall have been
appointed and/or elected to their respective positions as required by Section
2.6 hereof with such appointment or election effective immediately after the
Closing.
(k) BrightLane shall have received the approval of its
shareholders for the transactions contemplated hereby in accordance with the
OCGA.
BrightLane may waive any condition specified in this Section 8.2 if it
executes a writing so stating at or prior to the Closing.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement
shall survive the Closing hereunder (unless the non-breaching party had
received from the breaching party written notice of any misrepresentation or
breach of warranty prior to the time of Closing and expressly waived in
writing such breach or misrepresentation) and continue in full force and
effect until a period of ONE YEAR from the Closing Date ("Survival Period").
9.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF TEAMSTAFF. In the
event that BrightLane breaches (or in the event any third party alleges facts
that are ultimately proven or conceded to represent a BrightLane breach) any
of its representations, warranties, and covenants contained herein and, if
there is an applicable Survival Period pursuant to Section 9.1 above,
provided that TeamStaff makes a written claim for indemnification against
BrightLane pursuant to Section 9.8 below within the Survival Period, then
SUBJECT TO THE INDEMNIFICATION THRESHOLD PROVIDED IN SECTION 9.9 BELOW the
BrightLane Shareholders agree to indemnify TeamStaff from and against the
entirety of any Adverse Consequences that TeamStaff may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences TeamStaff,, may suffer after the end of any applicable Survival
Period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach. Any liability incurred by the BrightLane Shareholders
pursuant to the terms of this Section 9.2 shall be limited to, and paid by,
the BrightLane Shareholders to TeamStaff by return and cancellation of the
Holdback Shares in accordance with Section 9.6 hereof. The BrightLane
Shareholders shall have no liability beyond the value of the TeamStaff Shares
held in escrow pursuant to Section 9.6 below.
9.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BRIGHTLANE
SHAREHOLDERS. In the event TeamStaff breaches (or in the event any third
party alleges facts that are ultimately proven or conceded to
61
represent a TeamStaff breach) any of its representations, warranties, and
covenants contained herein, and, if there is an applicable Survival Period
pursuant to Section 9.8 above, provided that BrightLane makes a written claim
for indemnification against TeamStaff pursuant to Section 9.7 below within
the Survival Period, then, SUBJECT TO THE INDEMNIFICATION THRESHOLD PROVIDED
IN SECTION 9.9 BELOW, TeamStaff agrees to indemnify the BrightLane
Shareholders from and against the entirety of any Adverse Consequences, that
the BrightLane shareholders may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the BrightLane
Shareholders may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by
the breach. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN
ORDER FOR THE BRIGHTLANE SHAREHOLDERS TO INITIATE A CLAIM AND PROVE THEY HAVE
SUFFERED ADVERSE CONSEQUENCES ALLOWING INDEMNIFICATION UNDER THIS AGREEMENT,
THE BRIGHTLANE SHAREHOLDERS MUST PROVE THAT (I) THE TEAMSTAFF SHARES HAVE
DECREASED IN FAIR MARKET VALUE FROM THE DATE OF THE CLOSING AND (II) THE
DECREASE IN VALUE MUST BE THE DIRECT CONSEQUENCE OF THE ALLEGED BREACH OF A
REPRESENTATION OR WARRANTY BY TEAMSTAFF. Any Liability incurred by TeamStaff
pursuant to the terms of this Section 9.7 shall be limited to, and paid by,
TeamStaff by release to the BrightLane Shareholders (pro rata in accordance
with their receipt of the Merger Consideration) of the TeamStaff Escrow
Shares in accordance with Section 9.6 hereof.
9.4 MATTERS INVOLVING THIRD PARTIES
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 9, then the
Indemnified Party shall promptly (and in any event within ten business
days after receiving notice of the Third Party Claim) notify each
Indemnifying Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
15 days (or earlier in the event the underlying Third Party claim
requires action) after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the
62
Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 9.4(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not
to be withheld unreasonably) and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 9.4(ii)
above fail to be complied with, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 9,
subject to the limitations set forth in this Section 9.
(v) Notwithstanding anything to the contrary contained in this
Section 9, TeamStaff shall have the right to settle and pay any Third
Party Claim if, in the determination of its Board of Directors and
counsel, evidenced by written notice to the BrightLane Representative,
settlement of the Third Party claim is in the best interests of
TeamStaff.
9.5 DETERMINATION OF ADVERSE CONSEQUENCES. All claims for
indemnification payments under this Section 9 shall be made in good faith and
although a claim may be made hereunder, no payments shall be made for the
benefit of the Indemnified Party until the Indemnified Party has incurred
actual out-of pocket expenses; provided, however, in the event TeamStaff has
made a claim for indemnification prior to the termination of any applicable
Survival Period, no shares held in escrow shall be released from the escrow
provided in Section 9 herein until such time as the claim has been resolved
and the amount of the claim has been liquidated.
9.6 ESCROW OF SHARES BY BRIGHTLANE SHAREHOLDERS. As the sole
source for the payment of the indemnification obligations of the BrightLane
Shareholders under this Section 9, BrightLane authorizes TeamStaff to
withhold, and TeamStaff shall withhold, from the delivery of the TeamStaff
Shares to the BrightLane Shareholders, for delivery into escrow, pursuant to
an Escrow Agreement in the form of Exhibit I annexed hereto, that number of
TeamStaff Shares (the "Holdback Shares") for each BrightLane Shareholder as
set forth on Schedule 9.6 annexed hereto.
(i) HOLDBACK SHARES. The Holdback Shares shall equal an
aggregate of 150,000 TeamStaff Shares, which TeamStaff Shares will be
withheld at the Closing. Such Holdback
63
Shares shall be withheld from the BrightLane Shareholders pro-rata
in proportion to the total number BrightLane Shares held by each as
set forth on Schedule 9.6. The Holdback Shares shall be registered in
the name of the Shareholders' Agent, and shall be held by Continental
Stock Transfer & Trust Company (for purposes of this Section 9, the
"HOLDBACK AGENT"), and shall constitute the holdback fund (the
"HOLDBACK FUND") and to be governed by the terms set forth herein. In
the event TeamStaff issues any Additional Holdback Shares, such
Additional Holdback Shares will be issued in the name of the
Shareholders' Agent and held by the Holdback Agent in the same manner
as the Holdback Shares delivered at the Closing. Once released from
the Holdback Fund, TeamStaff Shares shall cease to be Holdback Shares.
(ii) PAYMENT OF DIVIDENDS; VOTING. Except for Additional
Holdback Shares, which shall be treated as Holdback Shares pursuant to
this Section 9, any cash dividends, dividends payable in securities, or
other distributions of any kind made in respect of the Holdback Shares
will be delivered to the Shareholders' Agent on behalf of and for the
benefit of the BrightLane Shareholders and promptly remitted to the
BrightLane Shareholders. The BrightLane Shareholders shall be entitled
to designate, through the Shareholders' Agent, how the Holdback Shares
will be voted on any matters to come before the shareholders of
TeamStaff, with each BrightLane Shareholder being entitled to direct
the voting of its or his pro rata share of such Holdback Shares.
(iii) DISTRIBUTION OF HOLDBACK SHARES. At the times provided
for in Section 9.6(v), the Holdback Shares shall be released to the
BrightLane Shareholders pro rata in proportion to the number of
TeamStaff Shares received in the Merger by each unless the
Shareholders' Agent shall have instructed the Holdback Agent otherwise
in writing, in which case the Holdback Agent shall be entitled to rely
upon such instructions. TeamStaff will take such action as may be
necessary to cause such certificates to be issued in the names of the
appropriate persons. Certificates representing Holdback Shares so
issued that are subject to resale restrictions under applicable
securities laws will bear a legend to that effect. No fractional shares
shall be released and delivered from the Holdback Fund to the
BrightLane Shareholders.
(iv) ASSIGNABILITY. No Holdback Shares or any beneficial
interest therein may be pledged, sold, assigned or transferred,
including by operation of law, by any BrightLane Shareholder or be
taken or reached by any legal or equitable process in satisfaction of
any debt or other liability of any such shareholder, prior to the
delivery to such BrightLane Shareholder of its or his pro rata portion
of the Holdback Fund by the Holdback Agent as provided herein.
(v) RELEASE FROM HOLDBACK FUND. Within three (3) business days
following expiration of the Survival Period (the "Release Date"), the
Holdback Shares will be released from the Holdback Fund to the
BrightLane Shareholders less the number of Holdback Shares, if any,
with a Fair Market Value equal to the amount of Adverse Consequences
set forth in any Indemnification Notice from TeamStaff with respect to
any pending but unresolved claim for indemnification. Any Holdback
Shares retained in the Holdback Fund as a result of the immediately
preceding sentence shall be released to the BrightLane Shareholders or
TeamStaff, as appropriate, promptly upon resolution of the related
claim for indemnification in accordance with the provisions of this
Section 9.
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(vi) BRIGHTLANE SHAREHOLDERS' AGENT.
(A) T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be constituted and
appointed jointly as the Shareholders' Agent for and on behalf of
BrightLane and the BrightLane Shareholders to give and receive notices
and communications, to vote all Holdback Shares and Additional Holdback
Shares, to authorize delivery to TeamStaff of TeamStaff Shares from the
Holdback Fund in satisfaction of indemnification claims by TeamStaff,
to object to such deliveries, negotiate, enter into settlements and
compromises of, and comply with orders of courts with respect to such
claims, and to take all actions necessary or appropriate in the
judgment of the Shareholders' Agent for the accomplishment of the
foregoing. Such agency may be changed by from time to time upon not
less than 10 days' prior written notice, executed by the Shareholders'
Agent, to TeamStaff. No bond shall be required of the Shareholders'
Agent, and the Shareholders' Agent shall receive no compensation for
his services. Notices or communications to or from the Shareholders'
Agent shall constitute notice to or from BrightLane and each of the
BrightLane Shareholders.
(B) The Shareholders' Agent shall not be liable for any act
done or omitted hereunder as Shareholder' Agent while acting in good
faith and in the exercise of reasonable judgment and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence
of such good faith. The BrightLane Shareholders shall severally
indemnify the Shareholders' Agent and hold him harmless against any
loss, liability, or expense incurred without gross negligence or bad
faith on the part of the Shareholders' Agent and arising out of or in
connection with the acceptance or administration of his duties
hereunder.
(C) A decision, act, consent or instruction of the
Shareholders' Agent shall constitute a decision of all BrightLane
Shareholders for whom TeamStaff Shares otherwise issuable to them are
deposited in the Holdback Fund and shall be final, binding, and
conclusive upon each such BrightLane Shareholder, and TeamStaff may
rely upon any decision, act, consent, or instruction of the
Shareholders' Agent as being the decision, act, consent or instruction
of each and every such BrightLane Shareholder.
9.7 TEAMSTAFF ESCROW SHARES. As the sole source for the payment
of the indemnification obligations of TeamStaff under this Section 9,
TeamStaff will be required to deliver into escrow, pursuant to an Escrow
Agreement in the form of Exhibit I annexed hereto, (the "TeamStaff Escrow")
with the Holdback Agent, 150,000 shares of TeamStaff Common Stock (the
"TeamStaff Escrow Shares"), which shall constitute newly issued and
outstanding shares of TeamStaff Common Stock, and shall be in addition to the
TeamStaff Shares issued as the Merger Consideration.
(i) PAYMENT OF DIVIDENDS; VOTING ON
TEAMSTAFF ESCROW SHARES. No dividends or distributions shall
accrue with respect to the TeamStaff Escrow Shares and there
shall be no voting with respect thereto until the TeamStaff
Escrow Shares have been released from the TeamStaff escrow to
the BrightLane shareholders.
(ii) DISTRIBUTION OF TEAMSTAFF ESCROW SHARES. At the
times provided for in Section 9.7(v), the TeamStaff Escrow
Shares shall be released to the BrightLane Shareholders pro
rata in proportion to the number of TeamStaff Shares received
in the
65
Merger by each unless the Shareholders' Agent shall have
instructed the Holdback Agent otherwise in writing, in which
case the Holdback Agent shall be entitled to rely upon such
instructions, or to TeamStaff for cancellation. TeamStaff will
take such action as may be necessary to cause such
certificates to be issued in the names of the appropriate
persons in the event the TeamStaff Escrow shares must be
released to BrightLane Shareholders. Certificates representing
TeamStaff Escrow Shares so issued that are subject to resale
restrictions under applicable securities laws will bear a
legend to that effect. No fractional shares shall be released
and delivered from the TeamStaff Escrow to the BrightLane
Shareholders.
(iii) ASSIGNABILITY. No TeamStaff Escrow Shares or
any beneficial interest therein may be pledged, sold, assigned
or transferred, including by operation of law, by any
BrightLane Shareholder or be taken or reached by any legal or
equitable process in satisfaction of any debt or other
liability of any such shareholder, prior to the delivery to
such BrightLane Shareholder of its or his pro rata portion of
the TeamStaff Escrow Shares by the Holdback Agent as provided
herein.
(iv) RELEASE FROM HOLDBACK FUND. TeamStaff Escrow
Shares will be released to TeamStaff, subject to any
outstanding claims of the BrightLane Shareholders, on the
Release Date less the number of TeamStaff Escrow Shares, if
any, with a Fair Market Value equal to the amount of Adverse
Consequences set forth in any Indemnification Notice from the
Shareholder's Agent with respect to any pending but unresolved
claim for indemnification. Any TeamStaff Shares retained in
the TeamStaff Escrow as a result of the immediately preceding
sentence shall be released to the BrightLane Shareholders or
TeamStaff, as appropriate, promptly upon resolution of the
related claim for indemnification in accordance with the
provisions of this Section 9.
(v) TEAMSTAFF AGENT.
(A) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be constituted and appointed as
TeamStaff's Agent for and on behalf of TeamStaff to give and receive
notices and communications, to authorize delivery of TeamStaff Escrow
Shares in satisfaction of indemnification claims by BrightLane, to
object to such deliveries, negotiate, enter into settlements and
compromises of, and comply with orders of courts with respect to claims
of the BrightLane Shareholders, and to take all actions necessary or
appropriate in the judgment of TeamStaff's Agent for the accomplishment
of the foregoing. Such agency may be changed by from time to time upon
not less than 10 days' prior written notice, executed by TeamStaff's
Agent, to the Shareholders' Agent. No bond shall be required of
TeamStaff's Agent, and TeamStaff's Agent shall receive no compensation
for his services. Notices or communications to or from TeamStaff's
Agent shall constitute notice to or from TeamStaff.
(B) TeamStaff's Agent shall not be liable for any act done or
omitted hereunder as TeamStaff's Agent while acting in good faith and
in the exercise of reasonable judgment and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of such
good faith. TeamStaff shall severally indemnify TeamStaff's Agent and
hold him harmless against any loss, liability, or expense incurred
without gross negligence or bad faith on the part of the
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TeamStaff and arising out of or in connection with the acceptance or
administration of his duties hereunder.
(C) ACTIONS OF THE TEAMSTAFF'S AGENT. A decision, act, consent
or instruction of TeamStaff's Agent shall constitute a decision of
TeamStaff for whom TeamStaff Escrow Shares deposited in the TeamStaff
Escrow and shall be final, binding, and conclusive upon TeamStaff, and
the Shareholders' Agent may rely upon any decision, act, consent, or
instruction of TeamStaff's Agent as being the decision, act, consent or
instruction of TeamStaff.
9.8 DETERMINATION/RESOLUTION OF CLAIMS.
(i) If an Indemnified Party wishes to make a claim
for indemnification against another Party (the "INDEMNIFYING
PARTY"), such Indemnified Party shall deliver a notice to the
Indemnifying Party (an "Indemnification Notice") on or before
the Release Date. Such Indemnification Notice shall contain
the amount of Adverse Consequences for which the Indemnified
Party is seeking indemnification and shall set forth the
reasons therefore in reasonable detail.
(ii) If TeamStaff asserts a claim upon the Holdback
Fund by delivering an Indemnification Notice to the
Shareholders' Agent and the Holdback Agent on or before the
end of the Survival Period, the Holdback Agent shall retain in
the Holdback Fund TeamStaff Shares having a Fair Market Value
equal to such claimed Adverse Consequences.
(iii) If the Shareholders' Agent asserts a
claim upon the TeamStaff Escrow Shares Fund by delivering an
Indemnification Notice to TeamStaff's Representative and the
Holdback Agent and on or before the end of the Survival
Period, the Holdback Agent shall retain TeamStaff Escrow
Shares having a Fair Market Value equal to such claimed
Adverse Consequences.
(iv) Unless the Shareholders' Agent shall
notify TeamStaff's Representative and the Holdback Agent or
TeamStaff's Representative shall notify the Shareholder's
Agent and the Holdback Agent, as the case may be, in writing
within 15 days after receipt of an Indemnification Notice that
such party objects to any claim for indemnification set forth
therein, which notice shall include a reasonable explanation
of the basis for such objection, then such indemnification
claim shall be deemed to be accepted by such party. If the
Shareholders' Agent shall timely notify TeamStaff's
Representative and the Holdback Agent, or TeamStaff's
Representative shall timely notify the Shareholders' Agent and
the Holdback Agent, as the case may be, in writing that it
objects to any claim for indemnification made in such an
Indemnification Notice, TeamStaff or the Shareholders' Agent,
as the case may be, shall have 15 days from receipt of such
notice to respond in a written statement to such objection. If
after such 15-day period there remains a dispute as to any
indemnification claims set forth in such Indemnification
Notice, the Shareholders' Agent and TeamStaff's Representative
shall attempt in good faith for 60 days to agree upon the
rights of the respective parties with respect to each of such
claims. If the Shareholders' Agent and TeamStaff should so
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agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties. The Holdback Agent shall
be entitled to rely on any such memorandum and distribute
TeamStaff Shares from the Holdback Fund in accordance with the
terms thereof. In the event that the parties are unable to
agree upon resolution of the claims in accordance with the
foregoing, then the disputed claims shall be submitted to
arbitration in accordance with Section 11 hereof. Upon final
resolution of any claim, shares of TeamStaff Common Stock held
in escrow pursuant to this Section 9 shall be deemed to have a
Fair Market Value equal to the average closing price of the
TeamStaff Common Stock on the Nasdaq SmallCap Market over the
10 trading days prior to the Closing Date.
9.9 INDEMNIFICATION THRESHOLD. Notwithstanding anything to the
contrary contained herein, no Person or Party shall have any obligation to
indemnify the TeamStaff or BrightLane Shareholders, as the case may be, from
and against any Adverse Consequences caused proximately by the breach of any
representation or warranty of TeamStaff or BrightLane hereunder, as the case
may be, until TeamStaff or the BrightLane Shareholders, as the case may be,
has suffered Adverse Consequences by reason of all such breaches (or alleged
breaches) in excess of a $300,000 aggregate threshold (the "Threshold") and
such indemnification shall be made only to the extent of any excess over the
Threshold.
9.10 OTHER INDEMNIFICATION PROVISIONS. No officer or director of
BrightLane shall make any claim for indemnification against any of TeamStaff
and its Subsidiaries by reason of the fact that he or it was a director,
officer, employee, or agent of BrightLane or was serving at the request of
BrightLane as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or otherwise and
whether such claim is pursuant to any statute, charter document, bylaw,
agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by TeamStaff pursuant to this Agreement.
10. TERMINATION
10.1 TERMINATION OF AGREEMENT. This Agreement may be terminated as
provided below:
(a) TeamStaff and BrightLane may terminate this Agreement by
mutual written consent at any time prior to the Closing.
(b) Either Party may terminate this Agreement for the reasons
and within the time periods specified in Section 5.8 above below.
(c) TeamStaff may terminate this Agreement by giving written
notice to BrightLane at any time prior to the Closing (A) in the event
BrightLane has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, TeamStaff
has notified BrightLane of the breach, and the breach has continued
without cure for a period of the earlier of (I) 20 days after the
notice of breach or (II) the Closing Date or (B) if the Closing shall
not have occurred on or before July 30, 2001, by reason of the failure
of any condition precedent under Section 8.1 hereof (unless the failure
results primarily from TeamStaff itself breaching any representation,
warranty, or covenant contained in this Agreement) or (C) in
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the event that holders of more than 230,000 shares of BrightLane Common
Stock exercise appraisal or dissenters' rights under the OCGA or (D)
in the event that BrightLane Closing Financial Statements reflect a
BrightLane Material Adverse Change.
(d) BrightLane may terminate this Agreement by giving written
notice to TeamStaff at any time prior to the Closing (A) in the event
TeamStaff has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
BrightLane has notified TeamStaff of the breach, and the breach has
continued without cure for a period of the earlier to occur of (I) 20
days after the notice of breach or (II) the Closing Date or (B) if the
Closing shall not have occurred on or before July 30, 2001, by reason
of the failure of any condition precedent under Section 8.2 hereof
(unless the failure results primarily from BrightLane themselves
breaching any representation, warranty, or covenant contained in this
Agreement) or (C) in the event that the market capitalization of
TeamStaff, as determined with reference to the average closing price of
its Common Stock for the 20 trading days ending two days prior to the
proposed Closing, does not equal or exceed $22,000,000.
(e) TeamStaff may terminate this Agreement in the event that
it does not obtain approval of its shareholders for the transactions
contemplated herein prior to July 30, 2001; provided, however,
TeamStaff shall use reasonable good faith efforts to obtain such
approval prior to such date.
(f) BrightLane may terminate this Agreement in the event that
it does not obtain approval of the holders of each class of BrightLane
Capital Stock for the transactions contemplated herein prior to July
30, 2001; provided, however, BrightLane shall use reasonable good faith
efforts to obtain such approval prior to such date.
10.2 .EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 10.1 above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party (except as provided in Section 10.3 below).
10.3 TERMINATION FEE. Solely in the event that the Merger is not
consummated following a TeamStaff Change in Recommendation in accordance with
Section 5.7 hereof, then in such event TeamStaff shall, within 5 business
days of termination of this Agreement, pay to BrightLane a fee of $1,000,000
(the "Termination Fee"). The parties hereto agree that the Termination Fee is
not a penalty, but rather is liquidated damages in a reasonable amount that
will compensate BrightLane for the costs incurred, efforts expanded and
opportunities foregone while negotiating this Agreement and in reliance on
this Agreement and the expectation of the consummation of the transactions
contemplated hereby, which amount would otherwise be impossible to calculate
with precision.
11. MISCELLANEOUS
11.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Neither BrightLane
nor TeamStaff shall issue any press release or make any public announcement
relating to the subject matter of this Agreement prior to the Closing without
the prior written approval of TeamStaff. TeamStaff may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in
which case TeamStaff will use its reasonable best efforts to advise
BrightLane prior to making the disclosure).
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11.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties, their
respective successors and permitted assigns and the BrightLane Shareholders.
11.3 ENTIRE AGREEMENT. This Agreement and all Related Agreements
together constitute the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
11.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of his or its rights, interests, or obligations hereunder
without the prior written approval of TeamStaff and BrightLane; provided,
however, that, except with respect to the obligation to issue and deliver the
TeamStaff Shares and file the Joint Proxy Statement/Prospectus, TeamStaff may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates, and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases TeamStaff nonetheless
shall remain responsible for the performance of all of its obligations
hereunder) including without limitation, the obligation to issue the
TeamStaff shares, which obligation may not be assigned or delegated;
provided, that no such assignment may be made if it would cause a breach of
Section 2.17 hereof.
11.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
11.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed (i) duly given if
(and then delivered three business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient or (ii) duly given if it is sent by overnight courier
and addressed to the intended recipient. All notices shall be sent to the
addresses as set forth below:
If to BrightLane:
Copy to:
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
Suite 200 1600 Atlanta Financial Center
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attn: ▇▇▇ ▇. ▇▇▇▇▇▇ III, Esq.
If to TeamStaff:
Copy to:
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TeamStaff, Inc.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
369 Lexington Avenue, 18th Fl
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger
service, facsimile transmission, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received by
the intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
11.8 GOVERNING LAW/SUBMISSION TO JURISDICTION/ARBITRATION. (i)
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to any choice or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
(ii) All disputes under this Agreement and all agreements delivered
in connection herewith shall be submitted to binding arbitration before the
American Arbitration Association ("AAA") in accordance with the Commercial
Arbitration Rules of the AAA. The arbitration shall be held in New York, New
York before three (3) arbitrators of the AAA, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Each Party shall have the right to choose one arbitrator, with the
third arbitrator being chosen by the mutual agreement of the Parties hereto.
Pending a 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. The final award may include instructions to
the Holdback Agent to deliver TeamStaff Escrow Shares or Holdback Shares to
the appropriate Party.
11.9 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed
by TeamStaff and BrightLane. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
11.10 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
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11.11 EXPENSES. Each Party shall bear its own costs and expenses
(including legal fees and accounting fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, in no event shall BrightLane's fees and
expenses related to this Agreement and the transactions contemplated herein
(including, without limitation, legal and accounting fees and investment
banking fees for a fairness opinion payable to The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Corporation and severance and restructuring costs) exceed the sum of $800,000
after the date of Most Recent Financial Statements. In the event such fees
exceed such amount, TeamStaff shall be entitled to indemnification pursuant
to Section 9 hereof.
11.12 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including without
limitation. The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party
has breached any representation, warranty, or covenant contained herein in
any respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative
levels of specificity) which the Party has not breached shall not detract
from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
11.13 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Appendices, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
[remainder of page intentionally left blank - signature page follows]
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11.14 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, except as
provided herein, each of the Parties agrees that the other Parties shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and
the matter in addition to any other remedy to which they may be entitled, at
law or in equity.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first above written.
TEAMSTAFF, INC.
By:______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
TEAMSUB, INC.
By:_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
By:_________________________________
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chairman
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