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EX. 10.27
Mr. Donald W. Kappauf
President and Chief Executive Officer
Teamstaff Inc.
300 Atrium Drive
Somerset, New Jersey 08873
Re: Engagement for Investment Banking Services
Dear Mr. Kappauf:
We are pleased to set forth the terms of the retention of Donald & Co.
Securities Inc. ("Donald") by Teamstaff Inc. (the "Company") pursuant to which
Donald will serve as the Investment Bankers to the Company and provide the
services as set forth below.
1. Services:
(a) General and Other Services:
1) Overall Strategic Planning (Short and Long Term Strategies).
2) Capital requirements studies.
3) Investor relations coordination.
4) Advisors to Management and the Board of Directors.
5) Search for Strategic Partners.
(b) Assist in Merger and Acquisition Transactions:
1) Strategic Acquisition Planning.
2) Identify target acquisitions.
3) Work with management in the due diligence process.
4) Work with legal counsel on transaction structures and
issues.
5) Work with Company's accountants on financial/accounting
matters relating to transaction.
2. Fees:
(a) For Services provided in paragraphs 1(a) and (b) above the Company
shall issue warrants for the purchase of Three Hundred and Fifty Thousand
(350,000) shares of its common stock to Donald & Co. (the "Warrants"). The
Warrants shall be exercisable for a period of three (3) years from the date of
issuance, at a price equal to One Hundred and Ten (110%) Percent of the median
of closing bid and asked prices for the common stock of the Company on the date
of issuance. Donald shall have the right to transfer Fifty Thousand (50,000) of
the Warrants to Raymond Skiptunis. The Warrants shall be issued and delivered
to Donald & Co. within seven (7) business days of the execution of this
Agreement by the Company. Donald shall be granted a continuing right for a
period of three (3) years from the date of issuance of the Warrants, to
"piggyback" the shares of common stock of the Company underlying the Warrants
in any appropriate registration statement by which the Company registers its
securities. Donald
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Mr. David W. Kappauf
May 25, 2000
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warrants and represents its understanding that the Warrants and the shares of
common stock for which they are exercisable shall be subject to any reverse
split of outstanding common stock undertaken by the Company following the date
of this Agreement.
(b) In the event that Donald serves as a Placement Agent for the Company:
upon completion of any financing, whereby Donald acted as Placement Agent, the
Company agrees to pay or cause to be paid to Donald a success fee to be
negotiated at the time of the financing.
(c) For Services provided as Mergers and Acquisitions Advisors:
1) The Company shall pay a fee to Donald equal to: three (3)%
percent of the total consideration paid for any acquisition
commenced during the term of this Agreement for which Donald
participated in the identification of the merger or
acquisition candidate, or joint venture or other business
combination candidate (the "Acquisition Candidate"). For
completed transactions in which Donald did not participate in
the identification of the Acquisition Candidate, however
structured and negotiated the transaction, then said fee
shall be reduced to one (1%) percent of the total
consideration paid; provided, however, that Donald shall not
be entitled to a fee with respect to transactions in which
Raymond James serves as the Company's advisor. Said fee shall
be exclusive of any other fees due to Donald pursuant to
paragraphs 2.(a) and (b) above.
2) Such fees shall be earned if Donald participates in the
consummating of a transaction within twelve (12) months from
the date Donald last provided services relative to the
Company.
3. Expenses:
The Company shall reimburse Donald within fifteen (15) days of invoice
for any and all out-of-pocket expenses that directly relate to the
services as described herein. Any expenses greater than $500 shall
require previous verbal approval by the Company.
4. Indemnification
The Company agrees to indemnify and hold harmless Donald, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls Donald within the meaning of Section l5 of the Act or Section
20(a) of the Securities Exchange Act of l934, as amended (the "Exchange Act"),
against any and all losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements (and any and all
actions, suits, proceedings and investigations in respect thereof and any and
all legal and other costs, expenses and disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise), including,
without limitation, the costs, expenses and disbursements, as and when
incurred, of investigating, preparing or defending any such action, suit,
proceeding or investigation (whether or not in connection with litigation in
which Donald is a party), directly or indirectly, caused by, relating to, based
upon, arising out of, or in connection with Donald's acting for the Company.
Any conduct by Donald which is grossly negligent or which constitutes
intentional misconduct is specifically excluded from this provision. Donald
agrees to
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Mr. David W. Kappauf
May 25, 2000
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indemnify and hold harmless the Company, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls the
Company on the same terms and conditions expressed in this Section against any
and all losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements arising out conduct by Donald
that is determined to be grossly negligent or constituting intentional
misconduct.
If any action, suit, proceeding or investigation is commenced, as to
which Donald proposes to demand indemnification, it shall notify the Company
with reasonable promptness, and the Company shall have the right to assume the
defense of such action (provided, however, that any failure by Donald to notify
the Company shall not relieve the Company from its obligations hereunder
unless, and to the extent, such failure compromises or prevents the Company's
defense of such action, suit, proceeding or investigation). Donald shall have
the right to retain counsel of its own choice to represent it, but the fees and
expenses of such counsel shall be at its expense unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such action or the Company shall not have promptly employed
counsel reasonably satisfactory to Donald to have charge of the defense of such
action or Donald shall have reasonably concluded that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall
be borne by the Company. Any such counsel of Donald shall, to the extent
consistent with its professional responsibilities, cooperate with the Company
and any counsel designated by the Company. The Company shall be liable for any
settlement of any claim against Donald made with the Company's written consent,
which consent shall not be unreasonably withheld. The Company shall not,
without the prior written consent of Donald, settle or compromise any claim, or
permit a default or consent to the entry of any judgment in respect thereof,
unless such settlement, compromise or consent includes, as a unconditional term
thereof, the giving by the claimant to Donald of an unconditional release from
all liability in respect of such claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case,
even though the express provisions hereof provide for indemnification in such
case, then the Company, on the one hand, and Donald, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, Donald, on the other hand, and also the relative
fault of the Company, on the one hand, and Donald, on the other hand, in
connection with the statements, acts or omissions which resulted in such
losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses or disbursements and the relevant equitable
considerations shall also be considered. No person found liable for a
fraudulent misrepresentation shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation.
The Company will promptly reimburse Donald and any other person
indemnified hereunder for all reasonable legal and other expenses, as incurred,
in connection with investigating, defending, or otherwise handling such loss,
claim, damage, liability, fine, judgment, settlement, action, investigation or
proceeding. Neither termination nor completion of the engagement of Donald
referred to above shall affect these indemnification provisions which shall
remain operative and in full force and effect and this
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Mr. David W. Kappauf
May 25, 2000
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paragraph shall survive the termination of this Agreement.
5. Termination:
Either party may terminate this agreement: (i) for cause at any time;
(ii) for any reason effective forty-five (45) days after written notice
of termination, provided, however, that (A) in no event shall the Company
have the right to terminate this Agreement, other than for cause, prior
to eighteen (18) months and (B) in no event shall Donald have the right
to terminate this Agreement, other than for cause, prior to twelve (12)
months. Notwithstanding termination, the Company's obligation shall
continue as to all unpaid fees, and unreimbursed expenses still owing
hereunder.
6. Governing Law:
This Agreement shall be governed by and construed under the laws of the
State of New York.
If this letter is consistent with our understanding, please sign both
copies of this letter and return one copy to me. It is a great pleasure to be
working with you.
DONALD & CO. SECURITIES INC.
By:
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Stephen A. Blum, President
ACCEPTED AND AGREED TO:
TEAMSTAFF INC.
By:
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Donald W. Kappauf, President and
Chief Executive Officer
Date:
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