AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of
March 28, 2008 between BUSINESS ALLIANCE CAPITAL COMPANY, a division of
Sovereign Bank, a federal savings bank (BACC), with an office located at 214
Carnegie Center, Suite 302, Princeton, New Jersey 08540 and TEAMSTAFF INC., a
New Jersey corporation (“TSI”), TEAMSTAFF RX, INC., a Texas corporation (“RX”),
and TEAMSTAFF GOVERNMENT SOLUTIONS, INC., a Georgia corporation (“TSG”) formerly
known as RS Staffing Services, Inc. (TSI, RX, and TGS hereinafter sometimes
individually Borrower and collectively Borrowers), with their chief executive
office located at 1 Executive Drive, Suite 130, Somerset, New Jersey 08873.

RECITALS

A. Borrower has heretofore obtained an Eight Million Dollar ($8,000,000.00)
revolving credit facility from PNC Bank, National Association (“PNC”) currently
evidenced by an Amended, Restated and Substituted Promissory Note in the
principal sum of Eight Million Dollars ($8,000,000.00) dated February 13, 2006
(the “PNC Note”), and secured by a security interest in the accounts receivable
and inventory and other assets of Borrower pursuant to a Revolving Credit and
Security Agreement dated June 8, 2005, as amended from time to time (the “PNC
Loan Agreement”) and other loan documents, including, but not limited to the
documents by Borrower identified on Exhibit A annexed hereto (the “PNC Loan
Documents”).

B. Borrower has requested that BACC acquire by assignment from PNC all right
title and interest of PNC under the PNC Note, the PNC Loan Agreement, and the
other PNC Loan Documents.

C. Borrower has also requested that BACC restructure the credit facility
acquired from PNC into a Three Million Dollar ($3,000,000.00) three (3) year
revolving credit facility, and to amend and restate the PNC Loan Agreement so as
to set forth the terms and conditions of said restructured revolving credit
facility.

NOW THEREFORE, in consideration of these premises, the parties adopt the
foregoing recitals and agree the PNC Loan Agreement is amended and restated as
so amended, to read as follows:

1. DEFINITIONS AND CONSTRUCTION

1.1 Terms. As used in this Agreement, the following terms shall have the
following meanings:

Accounts means, in addition to the definition of accounts in the Code, all
presently existing and hereafter arising accounts receivable, contract rights,
health-care-insurance receivables, and all other forms of obligations owing to
Borrower arising out of the sale, lease, license or assignment of goods or other
property, or the rendition of services by Borrower, whether or not earned by
performance, all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower’s
Books relating to any of the foregoing.

Advances means all loans, advances and other financial accommodations by BACC to
or on account of the Borrower, including those under this Agreement.

Agreement means collectively this Amended and Restated Loan and Security
Agreement, any concurrent or subsequent rider to this Loan and Security
Agreement, and any extensions, supplements, amendments, addenda or modifications
to or in connection with this Loan and Security Agreement or any such rider.

Authorized Officer means any officer or other representative of Borrower
authorized in a writing delivered from time to time to BACC to transact business
with BACC.

BACC means Business Alliance Capital Company, a division of Sovereign Bank, its
successors and assigns.

 

 

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BACC Expenses means all of the following:  costs and expenses (whether taxes,
assessments, insurance premiums or otherwise) required to be paid by Borrower
under any of the Loan Documents which are paid or advanced by BACC; filing,
recording, publication, appraisal and search fees paid or incurred by BACC in
connection with BACC’s transactions with Borrower; costs and expenses incurred
by BACC in the disbursement or collection of funds to or from Borrower or its
account debtors; charges resulting from the dishonor of checks; costs and
expenses incurred by BACC to correct any default or enforce any provision of the
Loan Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated; and costs and expenses incurred by BACC in enforcing or defending
the Loan Documents or otherwise exercising its rights and remedies upon the
existence of an Event of Default, including, but not limited to, costs and
expenses incurred in connection with any proceeding, suit, enforcement of
judgment, or appeal; and BACC’s reasonable attorneys’ fees and expenses,
including allocated fees of in-house counsel, incurred in advising, structuring,
drafting, reviewing, administering, amending, modifying, terminating, enforcing,
defending, or otherwise representing BACC concerning the Loan Documents or the
Obligations.

Borrower’s Books means all of Borrower’s books and records including all of the
following: ledgers; records indicating, summarizing, or evidencing Borrower’s
assets or liabilities, or the Collateral; all information relating to Borrower’s
business operations or financial condition; and all computer programs, disk or
tape files, printouts, runs, or other computer prepared information, and the
facilities containing such information.

Business Day means any day which is not a Saturday, Sunday, or other day on
which banks in the State of New Jersey are authorized or required to close.

Change of Control means (a) the occurrence of any event (whether in one or more
transactions) which results in a transfer of control of any Borrower or (b) any
merger or consolidation of or with any Borrower or sale of all or substantially
all of the property or assets of any Borrower. For purposes of this definition,
“control of any Borrower” shall mean the power, direct or indirect (x) to vote
50% or more of the equity interests having ordinary voting power for the
election of directors (or the individuals performing similar functions) of any
Borrower or (y) to direct or cause the direction of the management and policies
of any Borrower by contract or otherwise.

Chattel Paper shall have the same meaning ascribed to such term in the Code.

Code means the New Jersey Uniform Commercial Code, as amended or revised from
time to time.

Collateral means all assets of the Borrower, whether now owned or existing, or
hereafter acquired or arising, and wherever located, including, without
limitation, all of the following assets, properties and interests in property of
Borrower,: all Accounts; all Equipment; all Commercial Tort Claims, all General
Intangibles; all Chattel Paper; all Inventory; all Negotiable Collateral; all
Investment Property, all Financial Assets, all Letter of Credit Rights, all
Supporting Obligations, all Deposit Accounts, all money or any assets of
Borrower which hereafter come into the possession, custody, or control of BACC;
all proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all tangible or intangible property resulting from the sale, lease,
license or other disposition of the foregoing, or any portion thereof or
interest therein, and all proceeds thereof, and any other assets of Borrower or
any Guarantor which may be subject to a lien in favor of BACC as security for
the Obligations.

Commercial Tort Claims shall have the meaning ascribed to such term in the Code.

Daily Balance means the amount of the Obligations owed at the end of a given
day.

Debt Service Coverage Ratio means at any date the ratio of (A) the net of (1)
EBITDA minus (2) all distributions, cash taxes, and unfunded capital
expenditures during the number of months used in determining EBITDA divided by
(B) the sum of (1) current portion of debt and capital lease obligations that
should be paid during the subject number of months, plus (2) all interest
expense for the subject number of months.

 

 

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Deposit Account shall have the meaning ascribed to such term in the Code.

Documents shall have the meaning ascribed to such term in the Code.

EBITDA means any at date the sum of (A) net after tax income for applicable
number of months ending on said date, excluding any extraordinary and
nonoperating income for said number of months, plus (B) any interest, income
taxes, depreciation, depletion, amortization, and other non-cash charges for
such number of months to the extent they were deducted from gross income to
calculate net income, plus, but without duplication (C) any extraordinary and
nonoperating cash received during said number of months.

Eligible Accounts means those Accounts created by Borrower in the ordinary
course of business, which are and at all times shall continue to be acceptable
to BACC in all respects; provided, however, that standards of eligibility may be
fixed and revised from time to time by BACC in BACC’s exclusive judgment. In
deterrnining such acceptability and standards of eligibility, BACC may, but need
not, rely on agings, reports and schedules of Accounts furnished by Borrower,
but reliance by BACC thereon from time to time shall not be deemed to limit
BACC’s right to revise standards of eligibility at any time as to both
Borrower’s present and future Accounts. In general, an Account shall not be
deemed eligible unless: (1) the Account debtor on such Account is and at all
times continues to be acceptable to BACC, and up to credit limits acceptable to
BACC, and (2) such Account complies in all respects with the representations,
covenants and warranties hereinafter set forth. Except in BACC’s sole
discretion, Eligible Accounts shall not include any of the following (a)
Accounts which the Account debtor has failed to pay within ninety (90) days of
invoice date, and all Accounts owed by any Account debtor that has failed to pay
twenty-five percent (25%) or more of its Accounts owed to Borrower within ninety
(90) days of invoice date; (b) Accounts with respect to which goods are sold on
a bill and hold basis or placed on consignment or for a guaranteed sale, or
which contain other terms by reason of which payment by the Account debtor may
be conditional; (c) Accounts with respect to which the Account debtor is not a
resident of the United States unless the Account is supported by foreign credit
insurance or a letter of credit, in both instances satisfactory to and assigned
to BACC; (d) Accounts with respect to which the Account debtor is the United
States or any department, agency or instrumentality of the United States, any
State of the United States or any city, town, municipality or division thereof
(each such Account a “Government Contract Account”) unless all notices/filings
have been made and acknowledged under the Federal Assignment of Claims Act or
comparable state or other statute; (e) Accounts with respect to which the
Account debtor is an officer, employee or agent of, or subsidiary of, related
to, affiliated with or has common shareholders, officers or directors with
Borrower; (f) Accounts with respect to which Borrower is or may become liable to
the Account debtor for goods sold or services rendered by the Account debtor to
Borrower or otherwise; (g) Accounts with respect to an Account debtor whose
total obligations to Borrower exceed fifteen percent (15%) of all Eligible
Accounts or such other percentage as BACC may, from time to time, agree to in
writing as to a particular Account debtor (the applicable percentage the
“Concentration Percentage”), to the extent such obligations exceed the
applicable Concentration Percentage; (h) Accounts with respect to which the
Account debtor disputes liability or makes any claim with respect thereto, or is
subject to any insolvency proceeding, or becomes insolvent, fails or goes out of
business; (i) the Account arises out of a contract or purchase order for which a
surety bond was issued on behalf of Borrower; (j) Accounts in which BACC does
not have first priority and exclusive perfected security interest; (k) Accounts
where the Account Debtor is in a jurisdiction for which Borrower is required to
file a notice of business activities or similar report and Borrower has not
filed such report within the time period required by applicable law; (1) any
Account as to which an invoice has not been issued to the Account debtor; or (m)
any Account which represents a progress billing on a contract which has not been
fully completed by Borrower, or (n) Accounts representing permanent placement of
personal.

Eligible Unnoticed Government Contract Account means an Account which would be
an Eligible Account except that it is an Unnoticed Government Contract Account.

Equipment means in addition to the definition of equipment in the Code, all of
Borrower’s present and hereafter acquired equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, motor vehicles, rolling stock,
processors, tools, pans, dies, jigs, goods (other than consumer goods or farm
products) and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located.

 

 

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ERISA means the Employee Retirement Income Security Act of 1974, as amended, and
the regulations thereunder.

ERISA Affiliate means each trade or business (whether or not incorporated and
whether or not foreign) which is or may hereafter become a member of a group of
which Borrower is a member and which is treated as a single employer under ERISA
Section 4001(b)(1), or IRC Section 414.

Event of Default means the events specified in Section 8, below.

Financial Assets shall have the meaning ascribed to such term in the Code.

Future Eligible Government Contract Account means an Account which would be an
Eligible Account except that it is an Unnoticed Government Contract Account and
the contract under which said Account is generated was awarded to Borrower after
the date of this Agreement and less than ninety (90) days have elapsed from the
date of the award of said contract, provided that any invoices issued by
Borrower for any such Account have a remittance address to a lockbox/blocked
account established by BACC.

General Intangibles means in addition to the definition of general intangibles
in the Code, all of Borrower’s present and future general intangibles and other
personal property (including choses or things in action, goodwill, patents,
trade names; trademarks, service marks, copyrights, blueprints, drawings,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, infringement claims, computer programs, computer discs, computer
tapes, Borrower’s Books, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims) other than goods
and Accounts.

Government Contract Account shall have the meaning ascribed to said term in the
definition of Eligible Accounts.

Guarantor means each person or entity which guarantees the Obligations or issues
a validity guaranty relating to the Collateral or pledges any assets to BACC as
additional security for the Obligations.

Insolvency Proceeding means any proceeding commenced by or against any person or
entity under any provision of the federal Bankruptcy Code, as amended, or under
any other state or federal insolvency law, including assignments for the benefit
of creditors, formal or informal moratoria, compositions, or extensions
generally with its creditors.

Instruments shall have the meaning ascribed to such term in the Code.

Inventory means, in addition to the definition of inventory in the Code, all
present and future inventory in which Borrower has any interest, including goods
held for sale or lease or to be furnished under a contract of service,
Borrower’s present and future raw materials, work in process, finished goods,
tangible property, stock in trade, wares, and materials used in or consumed in
Borrower’s business, goods which have been returned to, repossessed by, or
stopped in transit by Borrower, packing and shipping materials, wherever
located, any documents of title representing any of the above, and Borrower’s
Books relating to any of the foregoing.

Investment Property shall have the meaning ascribed to such term in the Code.

IRC means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

Letter of Credit Rights shall have the meaning ascribed to such term in the
Code.

Loan Documents means, collectively, this Agreement, any Note or Notes, any
security agreements, pledge agreements, mortgages, deeds of trust or other
encumbrances or agreements which secure the Obligations, and any other agreement
entered into between Borrower and BACC or by Borrower or a Guarantor in favor of
BACC relating to or in connection with this Agreement or the Obligations, as
each of same may be amended, modified, renewed, extended or substituted from
time to time.

 

 

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Multiemployer Plan means a multiemployer plan as defined in ERISA Sections 3(37)
or 4001(a)(3) or IRC Section 414(f).

Negotiable Collateral means all of Borrower’s present and future letters of
credit, notes, drafts, Instruments, Documents, leases, and Chattel Paper.

Note means any promissory note made by Borrower to the order of BACC
concurrently herewith or at any time hereafter.

Obligations means all loans, Advances, debts, liabilities (including all
interest and amounts charged to the Obligations pursuant to any agreement
authorizing BACC to charge the Obligations), obligations, lease payments,
guaranties, covenants, and duties owing by Borrower to BACC of any kind and
description (whether pursuant to or evidenced by the Loan Documents or by any
other agreement between BACC and Borrower, and irrespective of whether for the
payment of money), whether made or incurred prior to, on, or after the
Termination Date, direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, including all obligations under swap
agreements, as defined hi 11 USC §101, between Borrower and Sovereign Bank,
whenever executed, and further including any debt, liability or obligation owing
from Borrower to others which BACC may obtain by assignment or otherwise, and
all interest thereon and all BACC Expenses.

Payroll Reserve Amount means an amount determined by BACC from time to time as
anticipated to be equal to the average payroll of Borrower for temporary
staffing employees for each payroll payment period, excluding any one time
non-recurring retroactive pay increases, said Payroll Reserve Amount initially
being in the amount of Seven Hundred Thousand Dollars ($700,000.00).

Plan means any plan described in ERISA Section 3(2) maintained for employees of
Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

Prime Rate means that rate designated by Sovereign Bank, or any successor
thereof, from time to time as its prime rate, which shall not necessarily
constitute its lowest available rate.

Revolving Credit Facility means the revolving credit facility provided for in
Section 2.1 hereof.

Subordinated Indebtedness means any indebtedness of any Borrower to a third
party which indebtedness is subordinated to the Obligations of Borrower to BACC
including, without limitation the indebtedness of Borrower to Roger Staggs and
E. Barry Durham arising from the purchase by TSI of the capital stock of RS
Staffing Services, Inc.

Supporting Obligation shall have the same meaning ascribed to such term in the
Code.

Tax Reserve Amount means an amount determined by BACC from time to time as
anticipated to be equal to the amount Borrower may need to pay to the Internal
Revenue Service and/or Social Security Administration on account of the matters
set forth on Exhibit 5.18 annexed hereto, said Tax Reserve Amount initially
being in the amount of One Million Eight Hundred Forty Thousand Dollars
($1,840,000.00).

Term means the period from the date of the execution and delivery by BACC of
this Agreement through and including the later of (a) the Termination Date and
(b) the payment and performance in fall of the Obligations.

Termination Date means (a) March 31, 2011 (the period through such date the
“Initial Term”), unless such date is extended pursuant to Section 3.1 hereof,
and if so extended on one or more occasions the last date of the last such
extension, or (b) if earlier terminated by BACC pursuant to Section 9.1 hereof,
the date of such termination.

Unnoticed Government Contract Account means an Account which is a Government
Contract Account, and as to which the required notices/filings have not been
made and acknowledged.

 

 

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1.2 Construction. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural. The words hereof, herein, hereby, hereunder, and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, subsection, clause and exhibit
references are to this Agreement unless otherwise specified. Words importing a
particular gender mean and include every other gender.

1.3 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles (GAAP)
as in effect from time to time. When used herein, the term financial statements
shall include the notes and schedules thereto.

1.4 Exhibits. All of the exhibits, addenda or riders attached to this Agreement
shall be deemed incorporated herein by reference.

1.5 Code. Any terms used in this Agreement which are defined in the Code shall
be construed and defined as set forth in the Code, unless otherwise defined
herein.

2. ADVANCES AND TERMS OF PAYMENT

2.1 Revolving Advances; Advance Limit. Upon the request of Borrower, made at any
time from and after the date hereof until the Termination Date, and so long as
no Event of Default has occurred, BACC may, in its sole and absolute discretion,
make Advances in an amount up to (a) eighty five percent (85%) of the aggregate
outstanding amount of Eligible Accounts, plus (b) the lesser of (i) seventy
percent (70%) of the aggregate outstanding amount of Future Eligible Unnoticed
Government Contract Accounts or (ii) Five Hundred Thousand Dollars
($500,000.00), plus (c) the lesser of (i) seventy percent (70%) of the aggregate
outstanding amount of Eligible Unnoticed Government Contract Accounts, or (ii)
One Hundred Thousand Dollars ($100,000.00) minus (d) the Payroll Reserve Amount
hi effect from time to time, and further minus (c) the Tax Reserve Amount in
effect from time to time; provided, however, that in no event shall the
aggregate amount of the outstanding Advances under the Revolving Credit Facility
be greater than, at any time, the amount of Three Million Dollars
($3,000,000.00) or such other Dollar amount as BACC and Borrower may agree to in
writing from time to time (said dollar limit the Advance Limit). Borrower may
from time to time apply to BACC for an increase in the Advance Limit based upon
Borrower’s projection of a need for an increase in the Advance Limit because of
additional contracts awarded or anticipated may be awarded to Borrower and/or
proposed acquisitions by Borrower and/or other factors, and with Borrower
acknowledging that any increase in the Advance Limit shall be in the sole and
absolute discretion of BACC and on such terms and conditions as BACC may
require. BACC may create additional reserves against, or reduce its advance
percentage based on Eligible Accounts without declaring an Event of Default if
it determines, in its good faith discretion, that such reserves or reduction is
necessary, including, without limitation, to protect its interest in the
Collateral and/or against diminution in the value of any Collateral, and/or to
insure the prospect of payment or performance by Borrower of its Obligations to
BACC are not impaired. The outstanding balance, if any, of the loans acquired by
BACC from PNC shall be deemed to be Advances under this Section 2.1.

2.2 Overadvances. All Advances shall be added to and be deemed part of the
Obligations when made. If, at any time and for any reason, the aggregate amount
of the outstanding Advances under the Revolving Credit Facility exceeds the
dollar or percentage limitations contained in Section 2.1 (an Overadvance) then
Borrower shall, upon demand by BACC, immediately pay to BACC, in cash, the
amount of such Overadvance. Without affecting Borrower’s obligation to
immediately repay to BACC the amount of each Overadvance, Borrower shall pay
BACC a fee (the Overadvance Fee) in an amount to be agreed upon between BACC and
Borrower, but not less than $500.00 per occurrence of an Overadvance, plus
interest on the Overadvance amount at the Default Rate set forth below.

2.3 Authorization to Make Advances. BACC is hereby authorized to make the
Advances based upon telephonic or other instructions received from anyone
purporting to be an Authorized Officer, or, at the discretion of BACC, if such
Advances are necessary to satisfy any Obligations. All requests for Advances
shall specify the date on which such Advance is to be made (which day shall be a
Business Day) and the amount of such

 

 

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Advance. Requests received after 12:00 p.m. Eastern time on any day shall be
deemed to have been made as of the opening of business on the immediately
following Business Day. All Advances made under this Agreement shall be
conclusively presumed to have been made to, at the request of, and for the
benefit of Borrower when deposited to the credit of Borrower or otherwise
disbursed in accordance with the instructions of Borrower or in accordance with
the terms and conditions of this Agreement. Unless otherwise requested by
Borrower, all Advances shall be made by a wire transfer to the deposit account
of Borrower designated on schedule 2.3 annexed hereto, or such other account as
Borrower shall notify BACC in writing. Borrower shall pay to BACC a funds
transfer fee of $25.00 for each Advance. Said fees shall be payable on the first
day of each month of the Term for all Advances made during the preceding month.

2.4 Interest.

A. Except where specified to the contrary in the Loan Documents interest shall
accrue on the Daily Balance of the Obligations at the per annum rate of one
quarter percentage point (.25%) above the Prime Rate in effect from time to
time, but not less than five and one half percent (5.5%). The Obligations shall,
at the option of BACC, from and after the occurrence of an Event of Default, and
without constituting a waiver of any such Event of Default, and if the
Obligations are not paid in full by the Termination Date, and without waiving
the maturity of the Obligations on the Termination Date, bear interest at the
per annum rate of four and one quarter percentage points (4.25%) above the Prime
Rate (the “Default Rate”). All interest payable under the Loan Documents shall
be computed on the basis of a three hundred sixty (360) day year for the actual
number of days elapsed on the Daily Balance. Interest as provided for herein
shall continue to accrue until the Obligations are paid in full.

B. The interest rate payable by Borrower under the terms of this Agreement shall
be adjusted in accordance with any change in the Prime Rate from time to time on
the date of any such change. All interest payable by Borrower shall be due and
payable on the first day of each calendar month during the Term. BACC may, at
its option, add such interest and all BACC Expenses to the Obligations, and such
amount shall thereafter accrue interest at the rate then applicable under this
Agreement. Notwithstanding anything to the contrary contained in the Loan
Documents, the minimum monthly interest payable by Borrower on the Advances
shall be calculated on a minimum Daily Balance of Two Hundred Fifty Thousand
Dollars ($250,000.00) through September 30, 2008, and Five Hundred Thousand
Dollars ($500,000.00) thereafter.

C. In no event shall interest on the Obligations exceed the highest lawful rate
in effect from time to time. It is not the intention of the parties hereto to
make an agreement which violates any applicable state or federal usury laws. In
no event shall Borrower pay or BACC accept or charge any interest which,
together with any other charges upon the principal or any portion thereof,
exceeds the maximum lawful rate of interest allowable under any applicable state
or federal usury laws. Should any provision of this Agreement or any existing or
future Notes or Loan Documents between the parties be construed to require the
payment of interest or any other fees or charges which could be construed as
interest which, together with any other charges upon the principal or any
portion thereof and any other fees or charges which could be construed as
interest, exceeds the maximum lawful rate of interest, then any such excess
shall be applied to the remaining principal balance of the Obligations, if any,
and the remainder refunded to Borrower.

D. Notwithstanding the foregoing, for purposes of this Agreement, it is the
intention of Borrower and BACC that “interest” shall mean, and be limited to,
any payment to BACC which compensates it for extending credit to Borrower, for
making available to Borrower a revolving credit facility during the term of this
Agreement and for any default or breach by Borrower of a condition upon which
credit was extended. Borrower and BACC agree that, for the sole purpose of
calculating the “interest” paid by Borrower to BACC, it is the intention of
Borrower and BACC that interest shall mean and include, and be expressly limited
to, any interest accrued on the aggregate outstanding balance of the Obligations
during the term hereof pursuant to Sections 2.4(A) and 2.4(B); and any
Overadvance Fee, Facility Fee, and late fees charged to Borrower during the term
hereof. Borrower and BACC further agree that it is their intention that the
following fees shall not constitute “interest”: any servicing Fees, any
Examination Fees, any attorney fees incurred by BACC, any premiums or
commissions attributable to insurance guaranteeing repayment, finders’ fees,
credit report fees, appraisal fees or fees for document preparation or
notarization. To the extent, however, that New Jersey law excludes from the
calculation of “interest” any fees defined herein as interest, or includes as
interest any fees or other sums which are intended not to constitute interest
New Jersey law shall supersede and prevail and all such interest shall be
subject to paragraph 2.4(C) above.

 

 

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2.5 Collection of Accounts. BACC or a BACC designee may, at any time, with or
without notice to Borrower, notify customers or Account debtors or other
obligors that the Accounts or other Collateral have been assigned to BACC, and
that BACC has a security interest in them and collect the Accounts and other
Collateral directly, and add the collection costs and expenses to the
Obligations, but, unless and until BACC does so or gives Borrower other written
instructions, Borrower shall notify all Account debtors and other obligors to
remit payments on Accounts and other Collateral to a lockbox to be designated by
BACC, and with payments to be made by wire transfer, ACH or other electronic
means, to an account designated by BACC. All such payments remitted to the
lockbox or made by wire transfer, ACH or other electronic means, shall be
credited to a deposit account of BACC and into which account remittances from
account debtors or obligors of other clients of BACC may be credited. If,
notwithstanding any notices that may be sent to Account debtors, Borrower
obtains payment on any Account or other Collateral, including, without
limitation, collections under credit card sales, Borrower shall receive all such
payments on Accounts and other Collateral and other proceeds, including cash, in
trust for BACC and immediately deliver said payments to BACC in their original
form as received from the Account debtor or other obligor, together with any
necessary endorsements.

2.6 Crediting Payments. The receipt of any item of payment by BACC shall, for
the sole purpose of determining availability under the revolving credit facility
provided for herein, subject to final payment of such item, be provisionally
applied to reduce the Obligations on the date of receipt of such item by BACC,
but the receipt of such an item of payment shall for all other purposes in
determining the Daily Balance, including without limitation for the purpose of
calculation of interest on the Obligations, not be deemed to have been paid to
BACC until one (1) Business Day after the date of BACC’s actual receipt of such
item of payment. Notwithstanding anything to the contrary contained herein,
payments received by BACC after 11:00 a.m. Eastern time shall be deemed to have
been received by BACC as of the opening of business on the immediately following
Business Day.

2.7 Facility Fee. In consideration of BACC’s entering into this Agreement,
Borrower shall pay BACC an annual facility fee (the Facility Fee). The initial
Facility Fee shall be one half percent (.5%) of the Advance Limit which Facility
Fee shall be payable contemporaneous with the execution hereof. On each annual
anniversary of the date hereof Borrower shall pay to BACC a Facility Fee of four
tenths percent (.4%) of the Advance Limit plus the then outstanding principal
balance of any term loans and Advances other than under the Revolving Credit
Facility. The Facility Fee shall be deemed to have been fully earned upon the
execution hereof for the entire Initial Term.

2.8 Unused Line Fee. Commencing on the first Business Day of the first month
hereafter, and on the first Business Day of each month thereafter, Borrower
shall pay BACC an unused line fee (the Unused Line Fee) in an amount equal to
thirty eight one hundredths percent (.38%) on a per annum basis of the
difference between the average Daily Balance of the Advances under the Revolving
Credit Facility during the month and the Advance Limit. Borrower shall also pay
to BACC on the Termination Date an Unused Line Fee equal to thirty eight one
hundredths percent (.38%) on a per annum basis of the difference between the
average Daily Balance of the Advances under the Revolving Credit Facility and
the Advance Limit during the time period from the date after the end of the last
month for which an Unused Line Fee was paid, and the Termination Date.

2.9 Field Examination Fee. Borrower shall pay BACC a fee (the Field Examination
Fee) in an amount equal to Eight Hundred Fifty Dollars ($850.00) per day per
examiner, plus out-of-pocket expenses for each examination of Borrower’s Books
or the other Collateral performed by BACC or its designee, provided that so long
as no Event of Default exists, nor any event which with the giving of notice or
passage of time or both would become an Event of Default, and provided further
Borrower has not made a request for Advances beyond the lending parameters set
forth in Section 2.1 hereof or other requests outside of the ordinary course of
business, Borrower shall not be obligated to pay for more than four (4) such
examinations during each year of the Term.

2.10 Late Reporting Fee. Borrower shall pay to BACC a fee in an amount equal to
Fifty Dollars ($50.00) per document per day for each Business Day any report,
financial statement or schedule required by this Agreement to be delivered to
BACC, is past due, and such report, etc., is not furnished to BACC with in three
(3) Business Days after notice by BACC to Borrower that such report, etc. is
past due, in which event the late reporting fee may be assessed retroactively to
the date the report, etc. was due.

 

 

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2.11 Monthly Statements. BACC may render monthly statements to Borrower of all
Obligations, including statements of all principal, interest and BACC Expenses,
and Borrower shall have fully and irrevocably waived all objections to such
statements and the contents thereof unless, within thirty (30) days after
receipt, Borrower shall deliver to BACC, by registered, certified or overnight
mail as set forth in Section 12 hereof, written objection to such statement
specifying the error or errors, if any, contained therein.

3. TERM

3.1 Term and Renewal Date. This Agreement shall become effective upon execution
by BACC and continue in full force through the Initial Term and from year to
year thereafter (a “Renewal Term”) if BACC, at its option, in writing agrees to
extend the Term for one (1) year from the then Termination Date, provided that
Borrower has not exercised its termination right in accordance with this Section
3.1. Borrower may terminate the Term on the then Termination Date by giving BACC
at least sixty (60) days prior written notice by registered or certified mail,
return receipt requested. In addition, BACC shall have the right to terminate
this Agreement immediately at any time upon the occurrence of an Event of
Default. No such termination shall relieve or discharge Borrower of its duties,
Obligations and covenants hereunder until all Obligations have been paid and
performed in full, and BACC’s continuing security interest in the Collateral
shall remain in effect until the Obligations have been fully and irrevocably
paid and satisfied in cash or cash equivalent. On the Termination Date of this
Agreement, the Obligations shall be immediately due and payable in full.
Expressly in addition to all rights and remedies available to BACC, if the term
of this Agreement is not renewed and the Obligations are not paid in full by the
Termination Date, then Borrower shall also pay to BACC, as part of the
Obligations, a fee of two percent (2%) of the Advance Limit plus the then
outstanding principal balance of any term loans and Advances other than under
the revolving credit facility provided for in Section 2.1 hereof

3.2 Termination Fee. If the Term is terminated by BACC upon the occurrence of an
Event of Default, or is terminated by Borrower except as provided in Section
3.1, in view of the impracticability and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of BACC’s lost profits as a result thereof, in addition to payment
of all principal, interest, fees, expenses and other Obligations, Borrower shall
pay BACC upon the effective date of such termination a fee in an amount equal
to: (a) three percent (3%) of the Advance Limit plus the then outstanding
principal balance of any term loans or Advances other than under the Revolving
Credit Facility, if such termination occurs on or prior to the first (1st)
anniversary of the commencement date of the Initial Term; (b) two percent (2%)
of the Advance Limit plus the then outstanding principal balance of any term
loans or Advances other than under the Revolving Credit Facility if such
termination occurs after the first (1st) anniversary of the commencement date of
the Initial Term and on or prior to the second (2nd) anniversary of the
commencement date of the Initial Term, or (c) one percent (1%) of the Advance
Limit plus the then outstanding principal balance of any term loans or Advances
other than under the Revolving Credit Facility if such termination occurs after
the second (2nd) anniversary of the commencement date of the Initial Term and on
or prior to the then Termination Date. Such fee shall be presumed to be the
amount of damages sustained by BACC as the result of termination and Borrower
acknowledges that it is reasonable under the circumstances currently existing.
The fee provided for in this Section 3.2 shall be deemed included in the
Obligations.

4. CREATION OF CONTINUING SECURITY INTEREST

4.1 Grant of Continuing Security Interest. Borrower hereby grants to BACC a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of the Obligations and in
order to secure prompt performance by Borrower of each and all of its covenants
and Obligations under the Loan Documents and otherwise. BACC’s continuing
security interest in the Collateral shall attach to all Collateral without
further act on the part of BACC or Borrower.

4.2 Negotiable Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, Borrower shall notify BACC
and upon the request of BACC, immediately endorse and assign such Negotiable
Collateral to BACC and deliver physical possession of such Negotiable Collateral
to BACC.

 

 

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4.3 Delivery of Additional Documentation Required. Borrower shall execute and
deliver to BACC concurrently with Borrower’s execution and delivery of this
Agreement and at any time thereafter at the request of BACC, all security
agreements, chattel mortgages, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices
(including, without limitation, notices of assignment under the Federal
Assignment of Claims Act), schedules of accounts, letters of authority, and all
other documents that BACC may request, in form satisfactory to BACC, to perfect
and maintain perfected BACC’s continuing security interests in the Collateral
and in order to fully consummate all of the transactions contemplated under the
Loan Documents, and Borrower hereby authorizes BACC to file and/or record such
financing statements and other documents as BACC deems necessary to perfect and
maintain BACC’s continuing security interest in the Collateral, and agrees any
such financing statement may contain an “all asset” or “all property”
description of the Collateral, and Borrower hereby ratifies any such financing
statement or other document heretofore filed by BACC.

4.4 Power of Attorney. Borrower hereby irrevocably makes, constitutes and
appoints BACC (and any person designated by BACC) as Borrower’s true and lawful
attorney-in-fact with power to sign the name of Borrower on any of the above
described documents or on any other similar documents to be executed, recorded
or filed in order to perfect or continue perfected BACC’s continuing security
interest in the Collateral. In addition, Borrower hereby appoints BACC (and any
person designated by BACC) as Borrower’s attorney-in-fact with power to: (a)
sign Borrower’s name on verifications of Accounts and other Collateral, and on
notices to Account debtors; (b) send requests for verification of Accounts and
other Collateral; (c) endorse Borrower’s name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
BACC’s possession; (d) upon the occurrence of an Event of Default and BACC’s
exercise of its right to accelerate the maturity of the Obligations, notify the
post office authorities to change the address for delivery of Borrower’s mail to
an address designated by BACC, to receive and open all mail addressed to
Borrower, and to retain all mail relating to the Collateral and forward all
other mail to Borrower; (e) upon the occurrence of an Event of Default and
BACC’s exercise of its right to accelerate the maturity of the Obligations make,
settle and adjust all claims under Borrower’s policies of insurance, endorse the
name of Borrower on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and make all determinations and
decisions with respect to such policies of insurance. The appointment of BACC as
Borrower’s attorney-in-fact and each and every one of BACC’s rights and powers,
being coupled with an interest, is irrevocable so long as any Accounts in which
BACC has a continuing security interest remain unpaid and until all of the
Obligations have been fully repaid and performed.

4.5 Right To Inspect. BACC shall have the right at any time or times hereafter
during Borrower’s usual business hours, or during the usual business hours of
any third party having control over Borrower’s Books, to inspect Borrower’s
Books in order to verify the amount or condition of, or any other matter
relating to, the Collateral or Borrower’s financial condition. BACC also shall
have the right at any time or times hereafter during Borrower’s usual business
hours to inspect, examine and appraise the Inventory, the Equipment and other
Collateral and to check and test the same as to quality, quantity, value and
condition.

5. REPRESENTATIONS AND WARRANTIES AND COVENANTS

Borrower represents and warrants to BACC, and covenants, the following and
acknowledges:

5.1 No Prior Encumbrances; Security Interests. Borrower has good and marketable
title to the Collateral, free and clear of liens, claims, security interests or
encumbrances, except for the security interests to be satisfied from the
proceeds of the first Advances hereunder, the continuing security interests
granted to BACC by Borrower, and those disclosed on Schedule 5.1 annexed hereto.
Other than those expressly permitted by this Agreement, Borrower will not create
or permit to be created any security interest, lien, pledge, mortgage or
encumbrance on any Collateral or any of its other assets.

5.2 Bona Fide Accounts. All Accounts represent bona fide sales or leases of
goods and/or services for which Borrower has an unconditional right to payment
and as to which the goods have been delivered to the customer and/or the
services rendered, as applicable. None of the Accounts are subject to any rights
of offset, counterclaim, cancellation or contractual rights of return.

 

 

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5.3 [this section intentionally left blank].

5.4 Location of Inventory and Equipment. The Inventory, if any, and Equipment is
not now and shall not at any time or times hereafter be stored with a bailee,
warehouseman, processor, or similar party. Borrower shall keep the Inventory and
Equipment only at its address set forth on the first page hereof and at the
locations set forth in the perfection certificate annexed hereto. If any of the
Inventory and Equipment is located at a premises not owned by Borrower, Borrower
shall cause the landlord of such premises, or other party having an interest in
said premises, to execute and deliver to BACC a landlord waiver and
subordination, or similar agreement, satisfactory in form and substance to BACC.

5.5 [this section intentionally left blank].

5.6 Retail Accounts. No Accounts arise from the sale of goods or rendition of
services for personal, family or household purposes.

5.7 Relocation of Chief Executive Office. The chief executive office of Borrower
and the location of all books and records of Borrower relating to the Collateral
is at the address indicated on the first page of this Agreement and Borrower
will not, without thirty (30) days’ prior written notice to BACC and compliance
with Section 4.3 hereof, relocate such office.

5.8 Due Incorporation and Qualification. Borrower is, and shall at all times
hereafter, be a corporation duly organized and existing under the laws of the
state of its incorporation as set forth on the first page hereof, and Borrower
is, and shall at all times hereafter be, qualified and licensed to do business
and is in good standing in any state in which the conduct of its business or its
ownership of assets requires that it be so qualified. Borrower’s organizational
identification number as issued by the state in which it is incorporated is set
forth in the perfection certificate annexed hereto.

5.9 Actual and Fictitious Name. Borrower’s exact name is set forth on the first
page hereof and except as set forth in the Perfection Certificates annexed
hereto or on Exhibit 5.9 annexed hereto, Borrower has not changed its name
within the last five (5) years. Borrower is conducting its business under the
trade or fictitious name(s) set forth in the perfection certificate annexed
hereto, and no others. Borrower has complied with the fictitious name laws of
all jurisdictions in which compliance is required in connection with its use of
such name(s).

5.10 Permits and Licenses. Borrower holds all licenses, permits, franchises,
approvals and consents required for the conduct of its business and the
ownership and operation of its assets.

5.11 Due Authorization. Borrower has the right and power and is duly authorized
to enter into the Loan Documents to which it is a party.

5.12 Compliance with Articles; Bylaws. The execution by Borrower of the Loan
Documents to which it is a party does not constitute a breach of any provision
contained in Borrower’s Certificate or Articles of Incorporation or its Bylaws,
nor does it constitute an event of default under any material agreement to which
Borrower is now or may hereafter become a party.

5.13 Litigation. Except as disclosed on Exhibit 5.13 annexed hereto there are no
actions, proceedings or claims pending by or against Borrower, whether or not
before any court or administrative agency and Borrower has no knowledge or
notice of any pending, threatened or imminent litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving
Borrower, except for ongoing collection matters in which Borrower is the
plaintiff. If any such actions, proceedings or claims presently exist or arise
during the Term, Borrower shall promptly notify BACC in writing and shall, from
time to time, notify BACC of all material events relating thereto.

 

 

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5.14 Accuracy of Information and No Material Adverse Change in Financial
Statements. All information furnished by Borrower to BACC, and all statements
made by Borrower to BACC, including, without limitation, information set forth
in any loan application, client profile, and in the annexed perfection
certificate, are true, accurate and complete in all respects and do not contain
any misstatement of fact or omit to state any facts necessary to make the
statements or information contained therein not misleading. All financial
statements relating to Borrower which have been or may hereafter be delivered to
BACC (i) have been prepared in accordance with GAAP; (ii) fairly present
Borrower’s financial condition as of the date thereof and Borrower’s results of
operations for the period then ended; and (iii) disclose all contingent
obligations of Borrower. In addition no material adverse change in the financial
condition of Borrower has occurred since the date of the most recent of such
financial statements.

5.15 Solvency. Borrower is now, and shall be at all times through the Term,
solvent and able to pay its debts (including trade debts) as they mature.

5.16 ERISA. Neither Borrower or any ERISA Affiliate, nor any Plan is or has been
in violation of any of the provisions of ERISA, any of the qualification
requirements of IRC Section 401 (a), or any of the published interpretations
thereof. No lien upon the assets of Borrower has arisen with respect to any
Plan. No prohibited transaction within the meaning of ERISA Section 406 or IRC
Section 4975(c) has occurred with respect to any Plan. Neither Borrower nor any
ERISA Affiliate has incurred any withdrawal liability with respect to any
Multiemployer Plan. Borrower and each ERISA Affiliate have made all
contributions required to be made by them to any Plan or Multiemployer Plan when
due. There is no accumulated funding deficiency in any Plan, whether or not
waived.

5.17 Environmental Laws and Hazardous Materials. Borrower has complied, and at
all times through the Term will comply, with all Environmental Laws. Borrower
has not and will not cause or permit any Hazardous Materials to be located,
incorporated, generated, stored, manufactured, transported to or from, released,
disposed of, or used at, upon, under, or within any premises at which Borrower
conducts its business, or in connection with Borrower’s business. To the best of
Borrower’s knowledge, no prior owner or operator of any premises at which
Borrower conducts its business has caused or permitted any of the above to occur
at, upon, under, or within any of the premises. Borrower will not permit any
lien to be filed against the Collateral or any part thereof under any
Environmental Law, and will promptly notify BACC of any proceeding, inquiry or
claim relating to any alleged violation of any Environmental Law, or any alleged
loss, damage or injury resulting from any Hazardous Material. BACC shall have
the right to join and participate in, as a party if it so elects, any legal or
administrative proceeding initiated with respect to any Hazardous Material or in
connection with any Environmental Law. “Hazardous Material” includes without
limitation any substance, material, emission, or waste which is or hereafter
becomes regulated or classified as a hazardous substance, hazardous material,
toxic substance or solid waste under any Environmental Law, asbestos, petroleum
products, urea formaldehyde, polychlorinated biphenyls (PCBs), radon, and any
other hazardous or toxic substance, material, emission or waste. Environmental
Law means the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, the
Hazardous Materials Transportation Act, the Toxic Substances Control Act, the
regulations pertaining to such statutes, and any other safety, health or
environmental statutes, laws, regulations or ordinances of the United States or
of any state, county or municipality in which Borrower conducts its business or
the Collateral is located.

5.18 Tax Compliance. Borrower has filed all tax returns required to be filed by
it and has paid all taxes due and payable on said returns and on any assessment
made against it or its assets. Except as disclosed on Exhibit 5.18 amiexed
hereto there is no claim from any taxing authority that any taxes are owing by
Borrower. Borrower shall promptly notify BACC, in writing, of all material
developments with regard to the tax claims identified on Exhibit 5.18, and at
least once every month a report from Borrower’s consultants, Ernst and Young,
Inc. as to the status of said claims.

5.19 Reliance by BACC; Cumulative. Each warranty, representation and agreement
contained in this Agreement shall be automatically deemed repeated by Borrower
with each request for an Advance and shall be conclusively presumed to have been
relied on by BACC regardless of any investigation made or information possessed
by BACC. The warranties, representations and agreements set forth herein shall
be cumulative and in addition to any and all other warranties, representations
and agreements which Borrower shall now or hereafter give, or cause to be given,
to BACC.

 

 

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5.20 Use of Proceeds. The proceeds of the initial Advance will be used by
Borrower for the purposes set forth on Schedule 5.20 annexed hereto. Absent
BACC’s written consent to the contrary the proceeds of Advances after the
initial Advance will be used by Borrower solely for working capital purposes for
the conduct of business consistent with the present nature of the business of
Borrower.

5.21 Motor Vehicles and Intellectual Property. The perfection certificate
annexed hereto identifies all motor vehicles, patents, patent applications,
copyrights, trademarks, trade-names and other intellectual property, registered
or unregistered, owned by Borrower. Borrower will promptly notify BACC of all
motor vehicles or intellectual property hereafter owned by Borrower, and the
status of all patent applications and the issuance of patents, and all
copyrights registrations, and in accordance with Section 4.3 hereof, will
cooperate with BACC in taking all actions required by BACC to have a perfected
security interest or lien on such motor vehicles and intellectual property.

5.22 Commercial Tort Claims. Borrower does not, as of the date hereof, have any
Commercial Tort Claims against any third parties. If Borrower does hereafter
have any such Commercial Tort Claims Borrower shall furnish BACC with prompt
written notice thereof, and in accordance with Article 4 hereof, execute and
deliver such supplemental documents and cooperate with BACC in tacking all
action required by BACC to have a perfected security interest or lien on such
Commercial Tort Claims.

5.23 Subsidiaries. Attached to the attached perfection certificate of TSI is a
schedule of all subsidiaries of TSI as of the date hereof. Borrower represents
that all of said entities, other than RX and RS, are inactive entities, and have
only minimal, if any, assets. Borrower covenants each of said entities, other
than RX and RS, will remain inactive and Borrower will not transfer or assign
any of Borrower’s assets, customers, or business to said entities.

6. AFFIRMATIVE COVENANTS

Borrower covenants and acknowledges that during the Term Borrower shall comply
with all of the following:

6.1 Collateral and Other Reports. Borrower shall at least once every week and
each time it requests an Advance under the Revolving Credit Facility furnish to
BACC a borrowing base report satisfactory in form and substance to BACC, and
report to BACC all sales and Accounts arising since its most recent report to
BACC and shall execute and deliver to BACC, no later than the fifteenth (15th)
day of each month during the Term, a detailed aging of the Accounts, a
reconciliation statement and a summary aging, by vendor, of all accounts payable
of Borrower and any book overdraft. Borrower shall also furnish to BACC within
two (2) Business Days following the payroll period pay date with respect to each
of Borrower’s payroll periods a payroll summary in form satisfactory to BACC,
including, without limitation, gross payroll and payroll tax liability for said
payroll period, Borrower shall further deliver to BACC, as BACC may from time to
time require, collection reports, sales journals, invoices, original delivery
receipts, customers’ purchase orders, shipping instructions, bills of lading and
other documentation respecting shipment arrangements, and other matters
requested by BACC. Absent such a request by BACC, copies of all such
documentation shall be held by Borrower as custodian for BACC. Borrower shall at
all times provide BACC with all current “passwords” or similar access
requirements relative to all computer systems available to Borrower with its
Account debtors so as to enable BACC to have access to said computer systems so
as to verify the status of Accounts owing to Borrower from said Account debtors.

6.2 Returns. Returns, credits, and allowances, if any, as between Borrower and
any Account debtors, shall be permitted on the same basis and in accordance with
the usual customary practices of Borrower as they exist at the date of the
execution and delivery of this Agreement. If at any time prior to the occurrence
of an Event of Default any Account debtor returns any Inventory to Borrower, or
asserts it is entitled to a credit, Borrower shall promptly determine the reason
for such return or credit, and, if Borrower accepts such return or agrees a
credit is owing, issue a credit memorandum (with a copy to be sent to BACC) in
the appropriate amount to such Account debtor. Borrower shall promptly notify
BACC of all returns, and assertions of credits, and recoveries and of all
disputes and claims.

 

 

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6.3 Government Contracts. Borrower shall promptly notify BACC of all contracts
hereafter entered into or awarded to Borrower, and shall comply with its
obligations under Section 4.3 hereof with respect to said contracts, including,
without limitation, the execution, delivery and transmittal to all required
parties of assignments and notices of assignment to BACC of said contracts as
required under the Federal Assignment of Claims Act or other applicable laws,
rules and regulations.

6.4 Financial Statements, Reports, Certificates. Borrower shall deliver to BACC:
(a) as soon as available, but in any event within thirty (30) days after the end
of each month during the Term, a preliminary balance sheet and preliminary
profit and loss statement prepared by Borrower covering Borrower’s operations
during such period; and (b) as soon as available, but in any event within forty
five (45) days after the end of each fiscal quarter during the Term, a balance
sheet and profit and loss statement prepared by Borrower covering Borrower’s
operations during such quarter, and (c) as soon as available, but in any event
within ninety (90) days after the end of each of Borrower’s fiscal years,
financial statements of Borrower for each such fiscal period, audited on an
unqualified basis by independent certified public accountants acceptable to
BACC. Such financial statements shall include a balance sheet and profit and
loss statement, and the accountants’ management letter, if any, and shall be
prepared in accordance with GAAP. Together with the financial statements as of
the end of each fiscal quarter Borrower shall deliver to BACC a compliance
certificate, in form satisfactory to BACC, setting forth the calculation of the
Debt Service Coverage Ratio as of the end of such fiscal quarter. To extent the
financial statements of Borrower are prepared on a consolidated or combined
basis, they shall include consolidating/combining schedules as applicable.
Together with the above, Borrower shall also deliver Borrower’s Form 10-Qs,
10-Ks or 8-Ks, if any, as soon as the same become available, and any other
report reasonably requested by BACC relating to the Collateral and the financial
condition of Borrower and a certificate signed by its chief financial officer to
the effect that all reports, statements or computer prepared information of any
kind or nature delivered or caused to be delivered to BACC under this Section
6.4 fairly present its financial condition and that there exists on the date of
delivery of such certificate to BACC no condition or event which constitutes an
Event of Default.

6.5 Tax Returns, Receipts. Borrower shall deliver to BACC copies of each of its
future federal income tax returns, and any amendments thereto, within thirty
(30) days of the filing thereof. Borrower further shall promptly deliver to
BACC, upon request, satisfactory evidence of Borrower’s payment of all
withholding and other taxes required to be paid by it.

6.6 Guarantor Reports. Borrower agrees to cause each Guarantor to deliver to
BACC (a) its annual financial statements as soon as available and in any event
within ninety (90) days of each fiscal year end, and (b) copies of all federal
and state income tax returns as soon as the same are available and in any event
no later than thirty (30) days after the same are required to be filed by law.

6.7 Title to Equipment. Upon BACC’s request, Borrower shall immediately deliver
to BACC, properly endorsed, any and all evidences of ownership of, certificates
of title, or applications for title to any items of Equipment.

6.8 Maintenance of Equipment. Borrower shall keep and maintain the Equipment in
good operating condition and repair, and shall make all necessary replacements
thereto so that its value and operating efficiency shall at all times be
maintained and preserved. Borrower shall not permit any item of Equipment to
become a fixture to real estate or an accession to other property, and the
Equipment is now and shall at all times remain Borrower’s personal property.

6.9 Taxes. All Federal, state and local assessments and taxes, whether real,
personal or otherwise, due or payable by, or imposed, levied or assessed against
Borrower or any of its assets or in connection with Borrower’s business shall
hereafter be paid in full, before they become delinquent or before the
expiration of any extension period. Borrower shall make due and timely payment
or deposit of all federal, state and local taxes, assessments or contributions
required of it by law, and will furnish to BACC, on demand, appropriate evidence
of the payment or deposit thereof.

 

 

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6.10 Insurance. Borrower, at its expense, shall keep and maintain insurance to
protect the Collateral against all risk of loss covered under a Special property
form (If any of the tangible Collateral is located in a flood zone, Borrower
must also have flood insurance. Borrowers with Collateral in California must
also insure against the peril of earthquakes.) The coverage shall be written on
a replacement cost basis. The property limit(s) shall be no less than those
necessary to satisfy the coinsurance requirement contained in the insurance
policy. The Borrower, at its expense, shall keep and maintain Business Income
Coverage. The Business Income Coverage shall insure against loss covered under a
Special policy form. The limit must contemplate a benefit period of no less than
twelve months and meet the minimum limit needed to satisfy the coinsurance
requirement contained in the policy. The Business Income coverage can be written
on an agreed amount basis, or with a coinsurance percentage from 80% to 100%.
All policies of insurance covering business personal property and business
income shall contain a Lender’s Loss Payable endorsement in a form satisfactory
to BACC. All policies insuring real property on which BACC has a mortgage or
other lien shall contain a Mortgage endorsement in form satisfactory to BACC.
Either, or both, form(s) shall contain a waiver of warranties. All proceeds
payable under such policies shall be payable to BACC and applied to the
Obligations. Borrower shall cause to be delivered to BACC a properly executed
Evidence of Property Insurance form along with a copy of the Lender’s Loss
Payable and/or Mortgage endorsement(s) as applicable, in advance of the loan
closing date and thereafter at least thirty (30) days prior to the expiration
date(s) of the policy(ies). All Mortgage and Lender’s Loss Payable endorsements
shall contain the following address for notification purposes, or such other
address as BACC may, from time to time, notify Borrower:

Business Alliance Capital Company

214 Carnegie Center, Suite 302

Princeton, New Jersey 08540

Attn: Operations Department

Borrower, at its expense, shall keep and maintain Commercial General Liability
Coverage insuring against all risks relating to or arising from Borrower’s
ownership and use of the Collateral and its other assets, its products, and its
operations. BACC, its directors, officers and employees shall be named as
additional insureds for Commercial General Liability on Borrower’s policy.
Borrower shall cause to be delivered to BACC a properly executed Certificate of
Insurance, containing the required additional insured wording, before the loan
closing and thereafter at least thirty (30) days prior the expiration date of
the policy. Along with the Certificate of Insurance, Borrower shall also deliver
a copy of the General Liability endorsement whereby BACC, et. al., are added to
the policy as additional insureds.

All required policies shall be in such form, with such companies and in such
amounts as may be satisfactory to BACC. All policies shall contain a 30 day
notice for cancellation or non-renewal. BACC reserves the right to change
insurance specifications at any time.

6.11 BACC Expenses. Borrower shall immediately and without demand reimburse BACC
for all BACC Expenses and Borrower hereby authorizes the payment of such BACC
Expenses.

6.12 Compliance With Law. Borrower shall comply, in all material respects, with
the requirements of all applicable laws, rules, regulations and orders of
governmental authorities relating to Borrower and the conduct of its business.

6.13 Accounting System. Borrower at all times hereafter shall maintain a
standard and modem system of accounting in accordance with GAAP with ledger and
account cards or computer tapes, disks, printouts and records pertaining to the
Collateral containing such information as may from time to time be requested by
BACC.

7. NEGATIVE COVENANTS

Borrower covenants and acknowledges that during the Term Borrower shall not
undertake any of the following without the prior written consent of BACC:

7.1 Extraordinary Transactions and Disposal of Assets. (A) Enter into any
transaction not in the ordinary and usual course of its business as conducted on
the date hereof, including but not

 

 

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limited to the sale, lease, disposal, movement, relocation or transfer, whether
by sale or otherwise, of any its assets other than sales of Inventory in the
ordinary and usual course of its business as presently conducted; (B) incur (i)
any indebtedness for borrowed money or purchase money indebtedness, or (ii) any
other indebtedness outside the ordinary and usual course of its business as
conducted on the date hereof, except for renewals or extensions of existing
debts permitted by BACC; (C) make any advance or loan to any third party; or (D)
grant a lien on any of its assets except (i) in favor of BACC, or (ii) the
continuing security interests, if any, set forth on Schedule 5.1.

7.2 Change Name, etc. Change its name, business structure, jurisdiction of
incorporation or formation as applicable, or identity, or add any new fictitious
name without providing BACC with not less than ten (10) days prior written
notice thereof and complying with Borrower’s obligations under Section 4.3
hereof.

7.3 Merge, Acquire. Merge, acquire, or consolidate with or into any other
business organization without the prior written consent of BACC, and if BACC
gives such consent, on terms and conditions determined by BACC.

7.4 Guaranty. Guaranty or otherwise become in any way liable with respect to the
obligations of any third party, except by endorsement of instruments or items of
payment for deposit to the account of Borrower for negotiation and delivery to
BACC.

7.5 Restructure. Make any change in its financial structure or business
operations.

7.6 Prepayments. Prepay any existing indebtedness owing to any third party other
than trade payables.

7.7 [this section intentionally left blank].

7.8 Compensation. Pay total cash compensation, including salaries, withdrawals,
fees, bonuses, commissions, drawing accounts, management fees or other payments,
whether direct or indirect, in money or otherwise, (but specifically excluding
there from any stock or option awards or any cash paid with respect to taxes
attributable to such stock or option awards) during any fiscal year to its CEO
and CFO in an aggregate amount in excess of one hundred ten percent (110%) of
the total cash compensation paid in the prior fiscal year, provided that for the
fiscal year ending September 30, 2008 the total cash compensation for said CEO
and CFO may be up to the amounts set forth on Exhibit 7.8 annexed hereto.

7.9 Loans and Advances. Make any loans, advances or extensions of credit to any
officer, director, executive employee or shareholder of Borrower (or any
relative of any of the foregoing), or to any entity which is a subsidiary of,
related to, affiliated with or has common shareholders, officers or directors
with Borrower.

7.10 Capital Expenditures. Make any plant or fixed capital expenditure, or any
commitment therefor, or purchase or lease any real or personal assets or
replacement Equipment in excess of One Hundred Thousand Dollars ($100,000.00)
for any individual transaction or where the aggregate amount of such
transactions in any fiscal year exceeds Five Hundred Thousand Dollars
($500,000.00).

7.11 [this section intentionally left blank].

7.12 Distributions. Make any distribution or declare or pay any dividends (in
cash or in stock) on, or purchase, acquire, redeem or retire any of its capital
stock, of any class, whether now or hereafter outstanding.

7.13 Accounting Methods. Modify or change its method of accounting or enter
into, modify or terminate any agreement presently existing or at any time
hereafter entered into with any third party for the preparation or storage of
Borrower’s records of Accounts and financial condition without said party
agreeing to provide BACC with information regarding the Collateral or Borrower’s
financial condition. Borrower waives the right to assert a confidential
relationship, if any, it may have with any such third party in connection with
any information requested by BACC hereunder, and agrees that BACC may contact
any such party directly in order to obtain such information.

 

 

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7.14 Business Suspension. Suspend or go out of business.

7.15 Financial Covenants.

Debt Service Coverage Ratio. Allow its Debt Service Coverage Ratio, calculated
as of the end of each fiscal quarter, to be less than 1.05 to 1.0.

Compliance with the aforesaid Debt Service Coverage Ratio shall be tested first
for the six (6) month period ending March 31, 2008, and thereafter at the end of
each fiscal quarter for the number of fiscal quarters from and including October
1, 2007 until the number of months in such testing period is twelve (12) months,
and thereafter, it shall be tested on a rolling twelve (12) month basis.
Notwithstanding the foregoing, if Borrower proposes to make a payment on account
of any Subordinated Indebtedness Borrower shall furnish to BACC at least five
(5) Business Days prior written notice thereof, and a compliance certificate
showing the Debt Service Coverage Ratio of Borrower for the twelve (12) months
ending as of the most recent month end, and compliance with the Debt Service
Coverage Ratio shall be tested for the twelve (12) months endings as of the
recent month end.

8. EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall constitute an
Event of Default by Borrower hereunder:

8.1 Failure to Pay. Borrower’s failure to pay when due and payable, or when
declared due and payable, any portion of the Obligations (whether principal,
interest, taxes, BACC Expenses, or otherwise);

8.2 Failure to Perform. Borrower’s or a Guarantor’s failure to perform, keep or
observe any term, provision, condition, representation, warranty, covenant or
agreement contained in this Agreement, in any of the Loan Documents or in any
other present or future agreement between Borrower, and/or a Guarantor and BACC;

8.3 Misrepresentation. Any misstatement or misrepresentation now or hereafter
exists in any warranty, representation, statement, aging or report made to BACC
by, Borrower and/or a Guarantor or any officer, employee, agent or director
thereof, or if any such warranty, representation, statement, aging or report is
withdrawn by such person;

8.4 Material Adverse Change. There is a material adverse change in Borrower’s,
or a Guarantor’s, business or financial condition;

8.5 Material Impairment. There is a material impairment of the prospect of
repayment of the Obligations or a material impairment of BACC’s continuing
security interests in the Collateral;

8.6 Levy or Attachment. Any material portion of Borrower’s assets is attached,
seized, subjected to a writ or distress warrant or is levied upon, or comes into
the possession of any judicial officer or assignee;

8.7 Insolvency by Borrower or Guarantor. An Insolvency Proceeding is commenced
by Borrower or by a Guarantor;

8.8 Insolvency Against Borrower or Guarantor. An Insolvency Proceeding is
commenced against Borrower or a Guarantor;

8.9 Injunction Against Borrower. Borrower is enjoined, restrained or in any way
prevented by court order from continuing to conduct all or any material part of
its business;

 

 

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8.10 Government Action or Lien.

A. A notice of lien, levy or assessment is filed of record with respect to any
of Borrower’s or a Guarantor’s assets by the United States Government, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, or any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a lien, whether choate or
otherwise, upon any of Borrower’s or a Guarantor’s assets and the same is not
paid on the payment date thereof;

B. The indictment or threatened indictment of any Borrower under any criminal
statute, or commencement of criminal or civil proceeding against any Borrower,
including, without limitation, any such proceeding in which the penalties or
remedies sought or available include forfeiture of any of the property of
Borrower which BACC believes may have a material adverse effect on the
Collateral or Borrower’s business.

8.11 Judgment. A judgment is entered against Borrower or a Guarantor;

8.12 Default to Third Party. There is a default in any material agreement to
which Borrower or a Guarantor is a party or by which binds Borrower or a
Guarantor or any of their assets;

8.13 Subordinated Debt Payments. Borrower makes any payment on account of any
Subordinated Indebtedness, except to the extent such payment is made in
compliance with the terms of the this Agreement and is allowed under any
subordination agreement entered into in favor of BACC;

8.14 Termination of Guarantor. A Guarantor dies or terminates its guaranty;

8.15 Change in Management. If Borrower fails to have an active chief executive
officer acceptable to BACC, Borrowers’ current chief executive officer, Rick J.
Filippelli being acceptable to BACC.

8.16 ERISA Violation. A prohibited transaction within the meaning of ERISA
Section 406 or IRC Section 1975(c) shall occur with respect to a Plan which
could have a material adverse effect on the financial condition of Borrower; any
lien upon the assets of Borrower in connection with any Plan shall arise;
Borrower or any ERISA Affiliate shall completely or partially withdraw from a
Multiemployer Plan and such withdrawal could, in the opinion of BACC, have a
material adverse effect on the financial condition of Borrower. Borrower or any
of its ERISA Affiliates shall fail to make full payment when due of all amounts
which Borrower or any of its ERISA Affiliates may be required to pay to any Plan
or any Multiemployer Plan as one or more contributions thereto; Borrower or any
of its ERISA Affiliates creates or permits the creation of any accumulated
funding deficiency, whether or not waived; the voluntary or involuntary
termination of any Plan which termination could, in the opinion of BACC, have a
material adverse effect on the financial condition of Borrower or Borrower shall
fail to notify BACC promptly and in any event within ten (10) days of the
occurrence of an event which constitutes an Event of Default under this clause
or would constitute an Event of Default upon the exercise of BACC’s judgment; or

8.17 Loss of License, etc. If any license, permit, distributor, franchise or
similar agreement, necessary for the continued operation of Borrower’s ordinary
course of business is revoked, suspended or terminated.

8.18 Other Agreements with BACC or Bank. A default under any other obligation by
Borrower in favor of BACC or Sovereign Bank, including obligations under any
“swap agreement” (as defined in 11 USC §101) our under any instrument securing
or evidencing such obligation, whether or not such obligation is otherwise
secured, which default is not cured within any applicable grace or cure period.

 

 

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8.19 Change of Control. Any Change of Control shall occur.

Notwithstanding anything contained in this Agreement to the contrary, BACC shall
refrain from exercising its rights and remedies and an Event of Default shall
not be deemed to have occurred by reason of the occurrence of any of the events
set forth in Sections 8.6, 8.8, 8.10 or 8.11 hereof if, within ten (10) days
from the date thereof, the same is released, discharged, dismissed, bonded
against or satisfied; provided, however, BACC shall not be obligated to make
Advances to Borrower during such periods.

9. BACC’S RIGHTS AND REMEDIES

9.1 Rights and Remedies. Upon the occurrence of an Event of Default, BACC may,
at its election, without notice of such election and without demand, do any one
or more of the following:

(a) Declare all Obligations, whether evidenced by the Loan Documents or
otherwise, immediately due and payable in full:

(b) Cease advancing money or extending credit to or for the benefit of Borrower
under the Loan Documents or under any other agreement between Borrower and BACC;

(c) Terminate this Agreement as to any future liability or obligation of BACC,
but without affecting BACC’s rights and security interest in the Collateral and
without affecting the Obligations;

(d) Settle or adjust disputes and claims directly with Account debtors for
amounts and upon terms which BACC considers advisable and, in such cases, BACC
will credit the Obligations with the net amounts received by BACC in payment of
such disputed Accounts, after deducting all BACC Expenses;

(e) Cause Borrower to hold all returned Inventory in trust for BACC, segregate
all returned Inventory from all other property of Borrower or in Borrower’s
possession and conspicuously label said returned Inventory as the property of
BACC;

(f) Without notice to or demand upon Borrower or a Guarantor, make such payments
and do such acts as BACC considers necessary or reasonable to protect its
security interest in the Collateral. Borrower shall assemble the Collateral if
BACC so requires and deliver or make the Collateral available to BACC at a place
designated by BACC. Borrower authorizes BACC to enter any premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest or compromise any encumbrance, charge
or lien on the Collateral which in BACC’s determination appears to be prior or
superior to its security interest or lien, and to pay all expenses incurred in
connection therewith;

(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
lease, license or other disposition, advertise for sale, lease, license or other
disposition, and sell, lease, license or otherwise dispose (in the manner
provided for herein or in the Code) the Collateral. BACC is hereby granted a
license or other right to use, without charge, Borrower’s labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any asset of a similar nature,
pertaining to the Collateral, in completing the production of, advertising for
sale, lease, license or other disposition, and sale, lease, license or other
disposition of the Collateral. Borrower’s rights under all licenses and all
franchise agreements shall inure to BACC’s benefit;

(h) Sell, lease, license or otherwise dispose of the Collateral at either a
public or private proceeding, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower’s premises) as BACC determines is commercially reasonable. It is not
necessary that the Collateral be present at any such sale;

(i) BACC shall give notice of the disposition of the Collateral as follows:

(1) To Borrower and all other parties entitled to receive a notice of
disposition under the Code a written request for notice, a notice in writing of
the time and place of public sale or other disposition or, if the sale or other
disposition is a private sale or some other disposition other than a public sale
is to be made, then the time on or after which the private sale or other
disposition is to be made;

 

 

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(2) The notice hereunder shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12 hereof, at least ten (10)
calendar days before the date fixed for the sale or other disposition, or at
least ten (10) calendar days before the date on or after which the private sale
or other disposition is to be made, unless the Collateral is perishable or
threatens to decline speedily in value. Notice to persons other than Borrower
claiming an interest in the Collateral shall be sent to such addresses as is
required or authorized under the Code;

(j) BACC may credit bid and purchase at any public sale:

(k) Any deficiency that exists after disposition of the Collateral, as provided
herein, shall be immediately paid by Borrower. Any excess will be remitted
without interest by BACC to the party or parties legally entitled to such
excess; and

(l) In addition to the foregoing, BACC shall have all rights and remedies
provided by law (including those set forth in the Code) and any rights and
remedies contained in any Loan Documents and all such rights and remedies shall
be cumulative.

9.2 No Waiver. No delay on the part of BACC in exercising any right, power or
privilege under any Loan Document shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege under such Loan
Documents or otherwise, preclude other or further exercise of any such right,
power or privilege.

10. TAXES AND EXPENSES REGARDING THE COLLATERAL.

If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums or otherwise) due to third persons or entities, or fails to make any
deposits or furnish any required proof of payment or deposit, or fails to
perform any of Borrower’s other covenants under any of the Loan Documents, then
in its discretion and without prior notice to Borrower, BACC may do any or all
of the following: (a) make any payment which Borrower has failed to pay or any
part thereof; (b) set up such reserves in Borrower’s loan account as BACC deems
necessary to protect BACC from the exposure created by such failure; (c) obtain
and maintain insurance policies of the type described in Section 6.10 hereof and
take any action with respect to such policies as BACC deems prudent; or (d) take
any other action deemed necessary to preserve and protect its interests and
rights under the Loan Documents. Any payments made by BACC shall not constitute:
(a) an agreement by BACC to make similar payments in the future or (b) a waiver
by BACC of any Event of Default. BACC need not inquire as to, or contest the
validity of, any such expense, tax, security interest, encumbrance or lien and
the receipt of notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.

11. WAIVERS

11.1 Demand, Protest. Borrower waives demand, protest, notice of protest, notice
of default or dishonor, notice of payment and nonpayment, notice of any default,
notice of intention to accelerate, notice of acceleration, and notice of
nonpayment at maturity and acknowledges that BACC may compromise, settle or
release, without notice to Borrower, any Collateral and/or guaranties at any
time held by BACC. Borrower hereby consents to any extensions of time of payment
or partial payment at, before or after the Termination Date.

11.2 No Marshaling. Borrower, on its own behalf and on behalf of its successors
and assigns hereby expressly waives all rights, if any, to require a marshaling
of assets by BACC or to require that BACC first resort to some portion(s) of the
Collateral before foreclosing upon, selling or otherwise realizing on any other
portion thereof.

 

 

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11.3 BACC’s Non-Liability for Inventory or Equipment or for Protection of
Rights. So long as BACC complies with its obligations, if any, under Section
9-207 of the Code, BACC shall not in any way or manner be liable or responsible
for: (a) the safekeeping of the Inventory or Equipment; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency or other person whomsoever. All risk of
loss, damage or destruction of the Inventory or Equipment shall be borne by
Borrower. BACC shall have no obligation to protect any rights of Borrower
against any person obligated on any Collateral

11.4 Limitation of Damages. In any action or other proceeding against BACC under
this Agreement or relating to the transactions between BACC and Borrower,
Borrower waives the right to seek any consequential or punitive damages.

12. NOTICES

Unless otherwise provided herein, all consents, waivers, notices or demands by
any party relating to the Loan Documents shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be telecopied (followed up by a
mailing), personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or by receipted overnight delivery service to
Borrower or to BACC, as the case may be, at their addresses set forth below

 

If to Borrower:

Teamstaff Inc.
1 Executive Drive, Suite 130
Somerset, NJ 08873
Attn: Rick J. Filippelli, CEO
Fax #: (866) 415-3534

With a copy of any
Notice of default to:

Becker & Poliakoff, LLP
45 Broadway, 11th Floor
New York, NY 10006
Attn: Victor J. DiGioia, Esq.
Fax # (212) 557-0295

If to BACC:

Business Alliance Capital Company
214 Carnegie Center, Suite 302
Princeton, New Jersey 08540
Attn: General Counsel
Fax # (609) 514-1137

Any party may change the address at which it is to receive notices hereunder by
notice in writing in the foregoing manner given to the other. All notices or
demands sent in accordance with this Section 12 shall be deemed received on the
earlier of the date of actual receipt or five (5) calendar days after the
deposit thereof in the mail or on the date telecommunicated if telecopied.

13. DESTRUCTION OF BORROWER’S DOCUMENTS

All documents, schedules, invoices, agings or other papers delivered to BACC may
be destroyed or otherwise disposed of by BACC four (4) months after they are
delivered to or received by BACC, unless Borrower requests, in writing, the
return of the said documents, schedules, invoices or other papers and makes
arrangements, at Borrower’s expense, for their return.

14. GENERAL PROVISIONS

14.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrower and executed and delivered by BACC.

 

 

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14.2 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that Borrower may not assign this Agreement or any rights hereunder and
any prohibited assignment shall be absolutely void. No consent to an assignment
by BACC shall release Borrower from its Obligations. Without notice to or the
consent of Borrower, BACC may assign this Agreement and its rights and duties
hereunder and BACC reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in BACC’s rights and
benefits hereunder. In connection therewith, BACC may disclose all documents and
information which BACC now or hereafter may have relating to Borrower or Bo
rrower’s business. Borrower hereby consents to, and authorizes BACC to, prepare
and distribute a “tombstone”, to issue a press release, or otherwise disseminate
information to newspapers, trade journals, and other sources, describing the
nature of, and closing of the credit facilities provided for herein, which may
include Borrower’s name as well as other general information about Borrower and
the credit facilities, but only after Borrower has notified BACC that Borrower
has made all filings required by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended, relating to disclosure of the
credit facilities provided for herein, have been satisfied. Borrower and BACC do
not intend any of the benefits of the Loan Documents to inure to any third
party, and no third party shall be a third party beneficiary hereof or thereof.

14.3 Section Headings. Headings and numbers have been set forth herein for
convenience only.

14.4 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against BACC or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each party and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of the parties hereto.

14.5 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of such provision.

14.6 Amendments in Writing. This Agreement cannot be changed or terminated
orally. This Agreement supersedes all prior agreements, understandings and
negotiations, if any, all of which are merged into this Agreement. THIS
AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN,
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

14.7 Counterparts and Facsimile Signatures. This Agreement may be executed in
any number of counterparts each of which, when executed and delivered, shall be
deemed to be an original and all of which, when taken together, shall constitute
but one and the same Agreement. Any signature to a Loan Document delivered by a
party via telecopy transmission or other electronic means shall be deemed to be
an original signature.

14.8 Indemnification. BORROWER HEREBY INDEMNIFIES, PROTECTS, DEFENDS AND SAVES
HARMLESS BACC AND ANY MEMBER, OFFICER, DIRECTOR, OFFICIAL, AGENT, EMPLOYEE AND
ATTORNEY OF BACC, AND THEIR RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE “INDEMNIFIED PARTIES”), FROM AND AGAINST ANY AND ALL LOSSES,
DAMAGES, EXPENSES OR LIABILITIES OF ANY KIND OR NATURE AND FROM ANY SUITS,
CLAIMS OR DEMANDS, INCLUDING REASONABLE COUNSEL FEES INCURRED IN INVESTIGATING
OR DEFENDING SUCH CLAIM, SUFFERED BY ANY OF THEM AND CAUSED BY, RELATING TO,
ARISING OUT OF, RESULTING FROM, OR IN ANY WAY CONNECTED WITH THE LOAN DOCUMENTS
AND THE TRANSACTIONS CONTEMPLATED THEREIN OR THE COLLATERAL (UNLESS CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTIES)
INCLUDING, WITHOUT LIMITATION: (A) LOSSES, DAMAGES, EXPENSES OR LIABILITIES
SUSTAINED BY BACC IN CONNECTION WITH ANY ENVIRONMENTAL CLEANUP OR OTHER REMEDY
REQUIRED OR MANDATED BY ANY ENVIRONMENTAL LAW; (B) ANY UNTRUE STATEMENT OF A
MATERIAL FACT CONTAINED IN INFORMATION SUBMITTED TO BACC BY BORROWER OR A
GUARANTOR OR THE OMISSION

 

 

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OF ANY MATERIAL FACT NECESSARY TO BE STATED THEREIN IN ORDER TO MAKE SUCH
STATEMENT NOT MISLEADING OR INCOMPLETE; (C) THE FAILURE OF BORROWER OR A
GUARANTOR TO PERFORM ANY OBLIGATIONS REQUIRED TO BE PERFORMED BY BORROWER OR A
GUARANTOR UNDER THE LOAN DOCUMENTS; AND (D) THE OWNERSHIP, CONSTRUCTION,
OCCUPANCY, OPERATIONS, USE AND MAINTENANCE OF ANY OF BORROWER’S OR A GUARANTOR’S
ASSETS. THE PROVISIONS OF THIS PARAGRAPH 14.8 SHALL SURVIVE TERMINATION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.

14.9. Joint and Several Obligations; Dealings with Multiple Borrowers. If more
than one person or entity is named as Borrower hereunder, all Obligations,
representations, warranties, covenants and indemnities set forth in the Loan
Documents to which such person or entity is a party shall be joint and several.
BACC shall have the right to deal with any individual of any Borrower with
regard to all matters concerning the rights and obligations of BACC and Borrower
hereunder and pursuant to applicable law with regard to the transactions
contemplated under the Loan Documents. All actions or inactions of the officers,
managers, members and/or agents of any Borrower with regard to the transactions
contemplated under the Loan Documents shall be deemed with full authority and
binding upon all Borrowers hereunder. Each Borrower hereby appoints each other
Borrower as its true and lawful attorney-in-fact, with full right and power, for
purposes of exercising all rights of such person hereunder and under applicable
law with regard to the transactions contemplated under the Loan Documents. The
foregoing is a material inducement to the agreement of BACC to enter into this
Agreement and to consummate the transactions contemplated hereby. The Borrowers
represents they are operated as part of one consolidated business entity and are
directly dependent upon each other for an in connection with their respective
business activities financial resources. Each Borrower will receive a direct
economic and financial benefit from the Obligations incurred under this
Agreement and the incurrence of such Obligations is in the best interests of
each Borrower.

14.10. Setoff Borrower hereby grants to BACC, a lien, security interest and
right of setoff as security for all Obligations to BACC, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Sovereign Bank, or any entity under the
control of Sovereign Bank, or its parent entities, or in transit to any of them.
At any time, without demand or notice, BACC may setoff the same or any part
thereof and apply the same to the Obligations of Borrower, even though unmatured
and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE BACC TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

15. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

THE VALIDITY OF THE LOAN DOCUMENTS, THEIR CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW JERSEY, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THE LOAN DOCUMENTS
SHALL BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF
MERCER, STATE OF NEW JERSEY, THE FEDERAL COURTS WHOSE VENUE INCLUDES THE STATE
OF NEW JERSEY, OR AT THE SOLE OPTION OF BACC, IN ANY OTHER COURT IN WHICH BACC
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER AND BACC EACH WAIVES, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY
PROCEEDING UNDER THE LOAN DOCUMENTS OR RELATING TO THE DEALINGS OF BORROWER AND
BACC AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF “FORUM NON
CONVENIENS” OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 15.

 

 

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16. NO ORAL AGREEMENTS. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER
HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS.

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-24-

 

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Borrower and BACC have executed and delivered this Agreement at BACC’s place of
business in Princeton, New Jersey as of the date first above written.

 

BORROWER HEREBY

 

 

ACKNOWLEDGES AND AGREES

 

 

THAT THIS AGREEMENT CONTAINS

 

TEAMSTAFF INC.

CERTAIN INDEMNIFICATION

 

a New Jersey corporation

PROVISIONS (INCLUDING, WITHOUT

 

 

LIMITATION, THOSE CONTAINED IN

 

 

SECTION 14.8 OF THIS AGREEMENT)

 

Signed by: 

/s/ Rick J. Filippelli

WHICH, IN CERTAIN

 

Print Name: Rick J. Filippelli

CIRCUMSTANCES, COULD INCLUDE

 

Title/Capacity: President

AN INDEMNIFICATION BY

 

 

 

BORROWER OF BACC FROM

 

 

 

CLAIMS OR LOSSES ARISING AS A

 

 

 

RESULT OF BACC’S OWN

 

 

 

NEGLIGENCE.

 

 

 

 

 

 

TEAMSTAFF RX, INC.

 

 

a Texas corporation

 

 

 

 

 

 

 

 

Signed by: 

/s/ Rick J. Filippelli

 

 

Print Name: Rick J. Filippelli

 

 

Title/Capacity: President

 

 

 

TEAMSTAFF GOVERNMENT SOLUTIONS, INC.

 

 

a Georgia corporation

 

 

 

 

 

 

 

 

Signed by: 

/s/ Rick J. Filippelli

 

 

Print Name: Rick J. Filippelli

 

 

Title/Capacity: President

 

 

 

BUSINESS ALLIANCE CAPITAL COMPANY

 

 

Division of Sovereign Bank, a federal savings bank

 

 

 

 

 

 

 

 

Signed by: 

/s/ William F. Seibold

 

 

Print Name:  William F. Seibold

 

 

Title/Capacity:  SR. V.P

 

 

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