E-1
Exhibit No. 1
Headway Corporate Resources, Inc.
Form 8-K dated December 31, 1997
File No. 0-23170
STOCK PURCHASE AGREEMENT
AMONG
HEADWAY CORPORATE RESOURCES, INC.
AND
INTERBANK COMMUNICATIONS, INC.
December 24, 1997
CONTENTS
Page
1. Definitions 1
2. Purchase and Sale of Furash Shares 3
(a) Basic Transaction 3
(b) Consideration 4
(c) The Closing 4
(d) Deliveries at the Closing 4
3. Representations and Warranties Concerning the Transaction4
(a) Representations and Warranties of the Seller 4
(b) Representations and Warranties of the Buyer 5
4. Representations and Warranties Concerning Furash 6
(a) Organization, Qualification, and Corporate Power 6
(b) Capitalization 6
(c) Noncontravention 6
(d) Brokers' Fees 7
(e) Title to Assets 7
(f) Subsidiaries 7
(g) Financial Statements 7
(h) Events Subsequent to Most Recent Fiscal Year End 7
(i) Undisclosed Liabilities 9
(j) Legal Compliance 9
(k) Tax Matters 9
(l) Real Property 10
(m) Intellectual Property 10
(n) Tangible Assets 10
(o) Inventory 11
(p) Contracts 11
(q) Notes and Accounts Receivable 12
(r) Powers of Attorney 12
(s) Insurance 12
(t) Litigation 13
(u) Employees 13
(v) Employee Benefits 13
(w) Guaranties 14
(x) Certain Business Relationships With Furash 14
(y) Disclosure 14
5. Pre-Closing Covenants 14
(a) General 14
(b) Notices and Consents 14
(c) Operation of Business 14
(d) Preservation of Business 14
(e) Full Access 14
(f) Notice of Developments 15
6. Post-Closing Covenants 15
(a) General 15
(b) Litigation Support 15
(c) Transition 15
(d) Covenant Not to Compete 15
(e) Financial Statements 16
(f) Buyer Stock 16
(g) Contributions 16
7. Conditions to Obligation to Close 17
(a) Conditions to Obligation of the Buyer 17
(b) Conditions to Obligation of the Seller 17
8. Remedies for Breaches of This Agreement 19
(a) Survival of Representations and Warranties 19
(b) Indemnification Provisions for Benefit of the Buyer19
(c) Indemnification Provisions for Benefit of the Seller19
(d) Matters Involving Third Parties 19
(e) Determination of Adverse Consequences 20
(f) Arbitration 20
(g) Exclusive Remedy 21
9. Tax Matters 21
(a) Tax Sharing Agreements 21
(b) Taxes of Other Persons 21
(c) Returns for Periods Through the Closing Date 21
(d) Audits 21
(e) Carrybacks 22
(f) Retention of Carryovers 22
(g) Post-Closing Elections 22
(h) Section 338(h)(10) Election 22
(I) Certain Taxes 22
10. Termination 22
(a) Termination of Agreement 22
(b) Effect of Termination 23
11. Miscellaneous 23
(a) Representation of Parties 23
(b) Press Releases and Public Announcements 23
(c) No Third-Party Beneficiaries 24
(d) Entire Agreement 24
(e) Succession and Assignment 24
(f) Counterparts 24
(g) Headings 24
(h) Notices 24
(i) Governing Law 25
(j) Amendments and Waivers 25
(k) Severability 25
(l) Expenses 25
(m) Construction 25
(n) Incorporation of Exhibits, Annexes, and Schedules 25
Exhibit A Buyer Series A Preferred Stock Terms
Exhibit B Forms of Side Agreements
Annex I Exceptions to the Seller's Representations and
Warranties Concerning the Transaction
Annex II Exceptions to the Buyer's Representations and
Warranties Concerning the Transaction
Disclosure Schedule Exceptions to Representations and
Warranties Concerning Furash
Annex III Reserve Funds Schedule
STOCK PURCHASE AGREEMENT
Agreement entered into as of December 24, 1997, by and among
HEADWAY CORPORATE RESOURCES, INC., a Delaware corporation (the
"Seller"), and INTERBANK COMMUNICATIONS, INC., a Delaware
corporation (the "Buyer"). The Seller and Buyer are referred to
collectively herein as the "Parties."
The Seller owns all of the outstanding capital stock of
FURASH & COMPANY, INC., a Maryland corporation ("Furash").
This Agreement contemplates a transaction in which the Buyer
will purchase from the Seller, and the Seller will sell to the
Buyer, all of the outstanding capital stock of Furash in return
for shares of the Series A Preferred Stock of Buyer.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained, the
Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in
Regulation D promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and
reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"Affiliated Group" means any affiliated group within the
meaning of Code 1504(a).
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any specified
consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Stock" has the meaning set forth in 2(b) below.
"Closing" has the meaning set forth in 2(c) below.
"Closing Date" has the meaning set forth in 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning
the business and affairs of Furash that is not already generally
available to the public.
"Disclosure Schedule" has the meaning set forth in 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified
defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan within the meaning
set forth in ERISA 3(37)), (d) Employee Welfare Benefit Plan
within the meaning set forth in ERISA 3(1), or (e) or material
fringe benefit or other retirement, bonus, or incentive plan or
program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA 3(2).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Financial Statement" has the meaning set forth in 4(g)
below.
"Furash" has the meaning set forth in the preface above.
"Furash Share" means any share of the Common Stock, par
value $0.10 per share, of Furash.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Income Tax" means any federal, state, local, or foreign
income tax, including any interest, penalty, or addition thereto,
whether disputed or not.
"Income Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to
Income Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Indemnified Party" has the meaning set forth in 8(d)
below.
"Indemnifying Party" has the meaning set forth in 8(d)
below.
"Intellectual Property" means (a) all trademarks, service
marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith, (b) all trade secrets and confidential
business information (including ideas, know-how, compositions,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (c) all other
proprietary rights, and (d) all copies and tangible embodiments
thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in 4(g) below.
"Most Recent Fiscal Quarter End" has the meaning set forth
in 4(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in
4(g) below.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture,
an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Securities Act" means the Securities Act of 1933, as
amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for taxes
not yet due and payable (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Third Party Claim" has the meaning set forth in 8(d)
below.
2. Purchase and Sale of Furash Shares.
(a) Basic Transaction. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from
the Seller, and the Seller agrees to sell to the Buyer, all of
its Furash Shares for the consideration specified below in this
2.
(b) Consideration. The Buyer agrees to deliver to the Seller
at the Closing 1,500 shares of the Buyer's Series A Preferred
Stock, with the rights, privileges, and preferences set forth on
Exhibit A attached hereto (the "Buyer Stock"), as full payment
for the Furash Shares.
(c) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of the Seller in New York, New York, commencing at
11:00 a.m. local time on December 31, 1997, or such other date as
the Buyer and the Seller may mutually determine (the "Closing
Date").
(d) Deliveries at the Closing. At the Closing, (i) the
Seller will deliver to the Buyer the various certificates,
instruments, and documents referred to in 7(a) below, (ii) the
Buyer will deliver to the Seller the various certificates,
instruments, and documents referred to in 7(b) below, (iii) the
Seller will deliver to the Buyer stock certificates representing
all of its Furash Shares, endorsed in blank or accompanied by
duly executed assignment documents, and (iv) the Buyer will
deliver to the Seller the consideration specified in 2(b) above.
3. Representations and Warranties Concerning the
Transaction.
(a) Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements
contained in this 3(a) are correct and complete as of the date
of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
3(a)) with respect to itself, except as set forth in Annex I
attached hereto.
(i) Organization of Seller. The Seller is duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Seller has full
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its
terms and conditions. The Seller need not give any notice
to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated
by this Agreement.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate any provision
of the Seller's charter or bylaws or, to its Knowledge, any
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the
Seller is subject, or conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any person the right to accelerate, terminate,
modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Seller has no liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could
become liable or obligated.
(v) Investment. The Seller (A) understands that the
Buyer Stock has not been, and will not be, registered under
the Securities Act, or under any state securities laws, and
is being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public
offering, (B) is acquiring the Buyer Stock solely for its
own account for investment purposes, and not with a view to
the distribution thereof, (C) is a sophisticated investor
with knowledge and experience in business and financial
matters, (D) has received certain information concerning the
Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and
the risks inherent in holding the Buyer Stock, (E) is able
to bear the economic risk and lack of liquidity inherent in
holding the Buyer Stock, and (F) is an Accredited Investor.
(vi) Furash Shares. The Seller holds of record and owns
beneficially all of the issued and outstanding Furash
Shares, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and
state securities laws), taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities,
claims, and demands. The Seller is not a party to any
option, warrant, purchase right, or other contract or
commitment that could require the Seller to sell, transfer,
or otherwise dispose of any capital stock of Furash (other
than this Agreement). The Seller is not a party to any
voting trust, proxy, or other agreement or understanding
with respect to the voting of any capital stock of Furash.
(b) Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller that the statements
contained in this 3(b) are correct and complete as of the date
of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
3(b)), except as set forth in Annex II attached hereto.
(i) Organization of the Buyer. The Buyer is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
(ii) Authorization of Transaction. The Buyer has full
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its
terms and conditions. The Buyer need not give any notice to,
make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate any provision
of the Buyer's charter or bylaws or, to its Knowledge, any
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer
is subject, or conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any person the right to accelerate, terminate,
modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Buyer has no liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller could
become liable or obligated.
(v) Investment. The Buyer is not acquiring Furash
Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities
Act.
4. Representations and Warranties Concerning Furash. The
Seller represents and warrants to the Buyer that the statements
contained in this 4 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this 4),
except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof and initialed by the
Parties (the "Disclosure Schedule"). The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this 4.
(a) Organization, Qualification, and Corporate Power. Furash
is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
Furash is duly authorized to conduct business and is in good
standing under the laws of the District of Columbia. Furash has
full corporate power and authority to carry on the business in
which it is engaged and to own and use the properties owned and
used by it. 4(a) of the Disclosure Schedule lists the directors
and officers of Furash.
(b) Capitalization. The entire authorized capital stock of
Furash consists of 500,000 Furash Shares, of which 1,020 Furash
Shares are issued and outstanding. All of the issued and
outstanding Furash Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by
the Seller. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that
could require Furash to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Furash. There
are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of
Furash.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) to the Knowledge of Seller, violate
any statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Furash is subject, or any
provision of the charter or bylaws of Furash or (ii) conflict
with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or
other arrangement to which Furash is a party or by which it is
bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets),
except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to
give notice, or Security Interest would not have a material
adverse effect on the business, financial condition, operations,
results of operations, or future prospects of Furash or on the
ability of the Parties to consummate the transactions
contemplated by this Agreement. Furash does not need to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated
by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would
not have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects
of Furash or on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Furash has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. Furash has good and marketable title
to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most Recent
Balance Sheet or acquired after the date thereof, free and clear
of all Security Interests, except for properties and assets
disposed of in the Ordinary Course of Business since the date of
the Most Recent Balance Sheet.
(f) Subsidiaries. Furash has no Subsidiaries.
(g) Financial Statements. 4(g) of the Disclosure Schedules
includes the following financial statements (collectively the
"Financial Statements"): (i) unaudited balance sheet as of
December 31, 1996, and unaudited statements of income for the
fiscal years ended December 31, 1996 and 1995 (the "Most Recent
Fiscal Year End") for Furash; and (ii) unaudited balance sheet as
of September 30, 1997, and unaudited statement of income (the
"Most Recent Financial Statements") as of and for the nine months
ended September 30, 1997 (the "Most Recent Fiscal Quarter End")
for Furash. The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial
condition of Furash as of such dates and the results of
operations of Furash for such periods; provided, however, that
the Financial Statements lack footnotes and other presentation
items and the Most Recent Financial Statements are subject to
normal year-end adjustments (which will not be material
individually or in the aggregate).
(h) Events Subsequent to Most Recent Fiscal Year End. Since
the Most Recent Fiscal Year End, there has not been any material
adverse change in the business, financial condition, operations,
results of operations, or future prospects of Furash. Without
limiting the generality of the foregoing, since that date:
(i) Furash has not sold, leased, transferred, or
assigned any material assets, tangible or intangible,
outside the Ordinary Course of Business;
(ii) Furash has not entered into any material
agreement, contract, lease, or license outside the Ordinary
Course of Business;
(iii) no Person has accelerated, terminated, made
material modifications to, or canceled any material
agreement, contract, lease, or license to which Furash is a
party or by which it is bound;
(iv) Furash has not imposed any Security Interest upon
any of its assets, tangible or intangible;
(v) Furash has not made any material capital
expenditures outside the Ordinary Course of Business;
(vi) Furash has not made any material capital
investment in, or any material loan to, any other Person
outside the Ordinary Course of Business;
(vii) Furash has not created, incurred, assumed, or
guaranteed more than $50,000 in aggregate indebtedness for
borrowed money and capitalized lease obligations;
(viii) Furash has not granted any license or sublicense
of any material rights under or with respect to any
Intellectual Property;
(ix) there has been no change made or authorized in the
charter or bylaws of Furash;
(x) Furash has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital
stock;
(xi) Furash has not declared, set aside, or paid any
dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xii) Furash has not experienced any material damage,
destruction, or loss (whether or not covered by insurance)
to its property;
(xiii) Furash has not made any loan to, or entered into
any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xiv) Furash has not entered into any employment
contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
(xv) Furash has not granted any increase in the base
compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xvi) Furash has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any
such action with respect to any other Employee Benefit
Plan);
(xvii) Furash has not made any other material change in
employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business; and
(xviii) Furash has not committed to any of the
foregoing.
(i) Undisclosed Liabilities. Furash does not have any
material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or
to become due, including any liability for taxes), except for (i)
liabilities set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) and (ii) liabilities
which have arisen after the Most Recent Fiscal Quarter End in the
Ordinary Course of Business.
(j) Legal Compliance. Furash has, to the Knowledge of
Seller, complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply, except
where the failure to comply would not have a material adverse
effect on the business, financial condition, operations, results
of operations, or future prospects of Furash.
(k) Tax Matters.
(i) Furash has filed all Tax Returns that it was
required to file, and has paid all Taxes shown thereon as
owing, except where the failure to file Tax Returns or to
pay Taxes would not have a material adverse effect on the
financial condition of Furash.
(ii) 4(k) of the Disclosure Schedule lists all
federal, state, local, and foreign Income Tax Returns filed
with respect to Furash for taxable periods ended on or after
December 31, 1995, indicates those Income Tax Returns that
have been audited, and indicates those Income Tax Returns
that currently are the subject of audit. The Seller has
delivered to the Buyer correct and complete copies of all
federal Income Tax Returns, examination reports, and
statements of deficiencies assessed against, or agreed to
by, Furash since December 31, 1995. Furash has not waived
any statute of limitations in respect of Income Taxes or
agreed to any extension of time with respect to an Income
Tax assessment or deficiency.
(iii) Furash is not a party to any Income Tax
allocation or sharing agreement.
(iv) Furash has not been a member of an Affiliated
Group filing a consolidated federal income Tax Return other
than a group the common parent of which is Seller. Said
Affiliated Group has filed all Tax Returns that it was
required to file, and has paid all Taxes shown thereon as
owing, except where the failure to file Tax Returns or to
pay Taxes would not have a material adverse effect on the
financial condition of Furash. Furash has no liability for
the Taxes of any Person other than itself under Reg. 1.1502-
6 (or any similar provision of state, local, or foreign
law).
(l) Real Property.
(i) 4(l)(i) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to
Furash. The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases listed in
4(l)(i) of the Disclosure Schedule (as amended to date).
With respect to each material lease and sublease listed in
4(l)(i) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect in
all material respects;
(B) no party to the lease or sublease is in
material breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a
material breach or default or permit termination,
modification, or acceleration thereunder;
(C) no party to the lease or sublease has
repudiated any material provision thereof;
(D) there are no material disputes, oral
agreements, or forbearance programs in effect as to the
lease or sublease;
(E) Furash has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold; and
(F) all facilities leased or subleased
thereunder have received all approvals of governmental
authorities (including material licenses and permits)
required in connection with the operation thereof, and
have been operated and maintained in accordance with
applicable laws, rules, and regulations in all material
respects.
(m) Intellectual Property. Furash has not interfered with,
infringed upon, misappropriated, or violated any material
Intellectual Property rights of third parties in any material
respect, and the Seller and the directors and officers of Furash
have not received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation,
or violation (including any claim that Furash must license or
refrain from using any Intellectual Property rights of any third
party). To the Knowledge of any of the Seller and the directors
and officers of Furash, no third party has interfered with,
infringed upon, misappropriated, or violated any material
Intellectual Property rights of Furash in any material respect.
(n) Tangible Assets. The furniture, equipment, and other
tangible assets that Furash owns and leases are free from
material defects (patent and latent), have been maintained in
accordance with normal industry practice, and are in good
operating condition and repair (subject to normal wear and tear).
(o) Inventory. Furash has no inventory.
(p) Contracts. 4(p) of the Disclosure Schedule lists the
following contracts and other agreements to which Furash is a
party:
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person
providing for lease payments in excess of $50,000 per annum;
(ii) any agreement (or group of related agreements) for
the purchase of supplies, products, or other personal
property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than
one year or involve consideration in excess of $50,000;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $50,000 or under which it has
imposed a Security Interest on any of its assets, tangible
or intangible;
(v) any material agreement concerning confidentiality
or noncompetition;
(vi) any material agreement with Seller and its
Affiliates (other than Furash);
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or
other material plan or arrangement for the benefit of its
current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis
providing annual compensation in excess of $50,000 or
providing material severance benefits;
(x) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a
default or termination could have a material adverse effect
on the business, financial condition, operations, results of
operations, or future prospects of Furash; or
(xii) any other agreement (or group of related
agreements) the performance of which involves consideration
in excess of $50,000.
The Seller has delivered to the Buyer a correct and complete copy
of each written agreement listed in 4(p) of the Disclosure
Schedule (as amended to date) and a written summary setting forth
the material terms and conditions of each oral agreement referred
to in 4(p) of the Disclosure Schedule. With respect to each such
agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all material
respects; (B) no party is in material breach or default, and no
event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination,
modification, or acceleration, under the agreement; and (C) no
party has repudiated any material provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts
receivable of Furash are reflected properly on their books and
records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected
in accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the
Most Recent Balance Sheet as adjusted for operations and
transactions through the Closing Date in accordance with the past
custom and practice of Furash.
(r) Powers of Attorney. To the Knowledge of the Seller and
the directors and officers of Furash, there are no material
outstanding powers of attorney executed on behalf of Furash.
(s) Insurance. 4(s) of the Disclosure Schedule sets forth
the following information with respect to each material insurance
policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety
arrangements) with respect to which Furash is a party, a named
insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage is on a claims made, occurrence, or other basis)
and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other material loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect
in all material respects; (B) neither Furash nor any other party
to the policy is in material breach or default (including with
respect to the payment of premiums or the giving of notices), and
no event has occurred which, with notice or the lapse of time,
would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and
(C) no party to the policy has repudiated any material provision
thereof.
(t) Litigation. 4(t) of the Disclosure Schedule sets forth
each instance in which Furash (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is
a party or, to the Knowledge of any of the Seller and the
directors and officers of Furash, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator.
(u) Employees. To the Knowledge of any of the Seller and the
directors and officers of Furash, no executive, key employee, or
significant group of employees plans to terminate employment with
Furash during the next 12 months. Furash is not a party to or
bound by any collective bargaining agreement, nor has it
experienced any strike or material grievance, claim of unfair
labor practices, or other collective bargaining dispute within
the past three years. Furash has not committed any material
unfair labor practice. None of the Seller and the directors and
officers of Furash has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor
union with respect to employees of Furash.
(v) Employee Benefits.
(i) 4(v) of the Disclosure Schedule lists each
Employee Benefit Plan that Furash maintains or to which
Furash contributes or has any obligation to contribute.
(A) To the Knowledge of Seller, each such
Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable
laws.
(B) All contributions (including all employer
contributions and employee salary reduction
contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(D) Each such Employee Benefit Plan which is
an Employee Pension Benefit Plan has received a
determination letter from the Internal Revenue Service
to the effect that it meets the requirements of Code
401(a).
(E) The Seller has delivered to the Buyer
correct and complete copies of the plan documents and
summary plan descriptions, the most recent
determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and
all related trust agreements, insurance contracts, and
other funding agreements which implement each such
Employee Benefit Plan.
(w) Guaranties. Except as set forth in 4(w) of the
Disclosure Schedules, Furash is not a guarantor or otherwise is
responsible for any liability or obligation (including
indebtedness) of any other Person.
(x) Certain Business Relationships With Furash. Except as
set forth in 4(x) of the Disclosure Schedules, the Seller and
its Affiliates have not been involved in any material business
arrangement or relationship with Furash within the past 12
months, and none of the Seller and its Affiliates owns any
material asset, tangible or intangible, which is used in the
business of Furash.
(y) Disclosure. The representations and warranties contained
in this 4 do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements and information contained in this 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and
the Closing.
(a) General. Each of the Parties will use his or its
reasonable best efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing
conditions set forth in 7 below).
(b) Notices and Consents. The Seller will cause Furash to
give any notices to third parties, and will cause Furash to use
its reasonable best efforts to obtain any third party consents,
that the Buyer reasonably may request in connection with the
matters referred to in 4(c) above. Each of the Parties will (and
the Seller will cause Furash to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to
in 3(a)(ii), 3(b)(ii), and 4(c) above.
(c) Operation of Business. The Seller will not cause or
permit Furash to engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the
Seller will not cause or permit Furash to (i) declare, set aside,
or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase, or otherwise acquire any of
its capital stock, or (ii) otherwise engage in any practice, take
any action, or enter into any transaction of the sort described
in 4(h) above.
(d) Preservation of Business. The Seller will cause Furash
to keep its business and properties substantially intact,
including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
(e) Full Access. Seller will permit, and the Seller will
cause Furash to permit, representatives of the Buyer to have full
access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of Furash, to all
premises, properties, personnel, books, records (including tax
records), contracts, and documents of or pertaining to Furash.
The Buyer will treat and hold as such any Confidential
Information it receives from the Seller and Furash in the course
of the reviews contemplated by this 5(e), will not use any of
the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason
whatsoever, will return to the Seller and Furash all tangible
embodiments (and all copies) of the Confidential Information
which are in its possession.
(f) Notice of Developments. The Seller will give prompt
written notice to the Buyer of any material adverse development
causing a breach of any of the representations and warranties in
4 above. Each Party will give prompt written notice to the other
of any material adverse development causing a breach of any of
his or its own representations and warranties in 3 above. No
disclosure by any Party pursuant to this 5(f), however, shall be
deemed to amend or supplement Annex I, Annex II, or the
Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
6. Post-Closing Covenants. The Parties agree as follows with
respect to the period following the Closing.
(a) General. In case at any time after the Closing any
further action is necessary to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request, all at
the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under 8
below). The Seller acknowledges and agrees that from and after
the Closing the Buyer will be entitled to possession of all
documents, books, records (including tax records), agreements,
and financial data of any sort relating to Furash.
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving Furash, the
other Party will cooperate with it and its counsel in the contest
or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be
necessary in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to
indemnification therefor under 8 below).
(c) Transition. Seller not will take any action that is
designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate
of Furash from maintaining the same business relationships with
Furash after the Closing as it maintained with Furash prior to
the Closing.
(d) Covenant Not to Compete. For a period of one year from
and after the Closing Date, the Seller will not engage directly
or indirectly in any business that Furash conducts as of the
Closing Date in any geographic area in which Furash conducts that
business as of the Closing Date; provided, however, that the
Seller's ownership of less than 5% of the outstanding stock of
any publicly-traded corporation shall not constitute being
engaged in the business of Furash for purposes hereof; and
provided further, that Seller shall not be deemed to be engaged
in the business of Furash on the basis of any ownership or stock
interest in Buyer or Furash. If the final judgment of a court of
competent jurisdiction declares that any term or provision of
this 6(d) is invalid or unenforceable, the Parties agree that
the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
(e) Financial Statements. As soon as practicable following
the Closing Date (but in any event no later than March 31, 1998),
Seller shall deliver to Buyer at Seller's expense an unaudited
balance sheet and an unaudited statement of income (excluding
notes thereto) of Furash for the calendar year ending December
31, 1997.
(f) Buyer Stock. The Buyer Stock will be imprinted with a
legend substantially in the following form:
The shares represented by this certificate were
originally issued on December 31, 1997, and has not been
registered under the Securities Act of 1933, as amended. The
transfer of the shares is subject to certain restrictions
set forth in the Purchase Agreement. The issuer of the
shares will furnish a copy of these provisions to the holder
hereof without charge upon written request.
Each holder desiring to transfer the Buyer Stock first must
furnish the Buyer with (i) a written opinion reasonably
satisfactory to the Buyer in form and substance from counsel
reasonably satisfactory to the Buyer by reason of experience to
the effect that the holder may transfer the Buyer Stock as
desired without registration under the Securities Act and (ii) a
written undertaking executed by the desired transferee reasonably
satisfactory to the Buyer in form and substance agreeing to be
bound by the restrictions on transfer contained herein.
(g) Contributions. Prior to the Closing the Seller will make
intercompany advances to Furash in the amount of $345,000 (the
"Reserve Funds") and, except as hereinafter provided, upon the
consummation of the transactions contemplated by this Agreement
on the Closing Date all Reserve Funds shall be canceled and
recorded by the Seller as capital contributions to Furash and
Furash shall have no obligation of repayment or liability in
respect thereof. The Reserve Funds represent cash contributed by
the Seller to Furash for the purpose of paying bonus compensation
to employees of Furash for services rendered in 1997, which will
not be paid until 1998. These funds will be held, paid, and,
under certain circumstances, returned to Seller as follows:
(i) By the Closing Date, Seller and Furash shall
establish an account at a financial institution selected by
the Seller and deposit in such account the Reserve Funds.
All interest that accrues on the Reserve Funds after the
Closing Date shall be the income of Furash, and Seller shall
have no interest in respect thereof. All disbursements of
the Reserve Funds from the account will require two
signatures, one a duly authorized person of Furash and the
other a duly authorized person of the Seller. The Reserve
funds shall be distributed in accordance with the terms set
forth on Annex III.
(ii) Notwithstanding any other provision in this
Agreement to the contrary, all distributions of the Reserve
Funds for bonus compensation attributable to 1997 made on or
before February 15, 1998, shall be allocated to Seller and
included in the consolidated Income Tax Return of Seller for
the tax period ending December 31, 1997, and neither Buyer
nor Furash shall claim any tax deduction with respect
thereto for tax periods commencing on or after January 1,
1998.
(iii) In the event any of the Reserve Funds allocated
for distribution by February 15, 1998, on Annex III are not
so distributed, said Reserve Funds shall be returned to the
Seller and treated as a return of capital, and Seller shall
have no further obligation to Buyer or Furash in respect
thereof. In the event any of the Reserve Funds allocated for
distribution by June 15, 1998, on Annex III are not so
distributed, said Reserve Funds shall be returned to the
Seller and treated as a return of capital, and Seller shall
have no further obligation to Buyer or Furash in respect
thereof.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
53(a) and 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(iii) Furash shall have procured all of the material
third party consents specified in 5(b) above.
(iv) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Buyer to own Furash Shares
and to control Furash, or (D) affect materially and
adversely the right of Furash to own its assets and to
operate its business (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in 7(a)(i)-(iv) is satisfied in all
respects;
(vi) the relevant parties shall have entered into side
agreements in form and substance as set forth in Exhibits B-
1 and B-2 attached hereto and the same shall be in full
force and effect;
(vii) the Buyer shall have received the resignations,
effective as of the Closing, of Gary S. Goldstein and Barry
S. Roseman as directors and officers of Furash; and
(viii) all actions to be taken by the Seller in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation
of the Seller to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of
the following conditions:
(i) the representations and warranties set forth in
3(b) above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation
(and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in 7(b)(i)-(iii) is satisfied in all
respects;
(v) the relevant parties shall have entered into side
agreements in form and substance as set forth in Exhibits B-
1 and B-2 and the same shall be in full force and effect;
and
(vi) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Seller.
The Seller may waive any condition specified in this 7(b) if it
executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained herein
shall survive the Closing hereunder (unless the damaged Party
knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and
effect for a period of one year thereafter.
(b) Indemnification Provisions for Benefit of the Buyer. In
the event the Seller breaches any of its representations,
warranties, and covenants contained herein and provided that the
Buyer makes a written claim for indemnification against the
Seller pursuant to 10(h) below within the survival period
specified in 8(a) above, then the Seller agrees to indemnify the
Buyer from and against the entirety of any Adverse Consequences
the Buyer may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by
the breach; provided, however, that (A) the Seller shall not have
any obligation to indemnify the Buyer from and against any
Adverse Consequences resulting from, arising out of, relating to,
in the nature of, or caused by the breach of any representation
or warranty of the Seller contained in 4 above until the Buyer
has suffered Adverse Consequences by reason of all such breaches
in excess of a $50,000 aggregate deductible (after which point
the Seller will be obligated only to indemnify the Buyer from and
against further such Adverse Consequences) and (B) there will be
a $500,000 aggregate ceiling on the obligation of the Seller to
indemnify the Buyer from and against Adverse Consequences
resulting from, arising out of, relating to, in the nature of, or
caused by breaches of the representations and warranties of the
Seller.
(c) Indemnification Provisions for Benefit of the Seller. In
the event the Buyer breaches any of its representations,
warranties, and covenants contained herein and provided that the
Seller makes a written claim for indemnification against the
Buyer pursuant to 10(h) below within the survival period
specified in 8(a) above, then the Buyer agrees to indemnify the
Seller from and against the entirety of any Adverse Consequences
the Seller may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller
may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying
Party") under this 8, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
assume the defense of the Third Party Claim with counsel of
his or its choice reasonably satisfactory to the Indemnified
Party at any time within 15 days after the Indemnified Party
has given notice of the Third Party Claim; provided,
however, that the Indemnifying Party must conduct the
defense of the Third Party Claim actively and diligently
thereafter in order to preserve its rights in this regard;
and provided further that the Indemnified Party may retain
separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim.
(iii) So long as the Indemnifying Party has assumed and
is conducting the defense of the Third Party Claim in
accordance with 8(d)(ii) above, (A) the Indemnifying Party
will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to
be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages by the
Indemnifying Party and does not impose an injunction or
other equitable relief upon the Indemnified Party and (B)
the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
(iv) In the event the Indemnifying Party does not
assume and conduct the defense of the Third Party Claim in
accordance with 8(d)(ii) above, however, (A) the
Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party
need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith) and (B) the
Indemnifying Party will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent
provided in this 8.
(e) Determination of Adverse Consequences. The Parties shall
make appropriate adjustments for tax consequences and insurance
coverage and take into account the time cost of money (using the
Applicable Rate as the discount rate) in determining Adverse
Consequences for purposes of this 8. All indemnification
payments under this 8 shall be deemed adjustments to the dollar
value of the consideration given and received for the Furash
Shares.
(f) Arbitration. Any controversy or claim arising out of or
relating to this Agreement shall be finally resolved by
arbitration pursuant to the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that this
Section shall not in any way affect the right of any Party to
seek injunctive relief specifically conferred by the terms of
this Agreement with respect to the non-disclosure of Confidential
Information. Any such arbitration shall take place in New York,
New York, before three arbitrators, one of which shall be
appointed by Buyer, one by Seller, and the third by the
arbitrators so appointed; provided, however, that the Parties may
by mutual agreement designate a single arbitrator. The Parties
further agree that (i) the arbitrators shall be empowered to
include arbitration costs and attorney fees in the award to the
prevailing party in such proceedings and (ii) the award in such
proceedings shall be final and binding on the Parties. The
arbitrators shall apply the law of the State of New York,
exclusive of conflict of laws principles, to any dispute.
Judgment on the arbitrators' award may be entered in any court
having the requisite jurisdiction. Nothing in this Agreement
shall require the arbitration of disputes between the Parties
that arise from actions, suits or proceedings instituted on Third
Party Claims. Each Party irrevocably submits to the jurisdiction
and venue of the arbitration described above and to the
jurisdiction and venue of the federal and state courts sitting in
New York County, New York, for the enforcement of any judgment on
the arbitrators' award, and waives any objection it may have with
respect to the jurisdiction of such arbitrations or courts or the
inconvenience of such forums or venues.
(g) Exclusive Remedy. The Buyer and the Seller acknowledge
and agree that the foregoing indemnification and arbitration
provisions in this 8 shall be the exclusive remedy of the Buyer
and the Seller with respect to Furash and the transactions
contemplated by this Agreement.
9. Tax Matters.
The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain tax
matters following the Closing Date:
(a) Tax Sharing Agreements. Any tax sharing agreement
between the Seller and Furash is terminated as of the Closing
Date and will have no further effect for any taxable year
(whether the current year, a future year, or a past year).
(b) Taxes of Other Persons. The Seller agrees to indemnify
the Buyer from and against any Adverse Consequences the Buyer may
suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of Furash for Taxes of any Person
other than Furash under Reg. 1.1502-6 (or any similar provision
of state, local or foreign law).
(c) Returns for Periods Through the Closing Date. The Seller
will include the income of Furash (including any deferred income
triggered into income by Reg. 1.1502-13 and Reg. 1.1502-14 and
any excess loss accounts taken into income under Reg. 1.1502-19)
on the Seller's consolidated federal income Tax Returns for all
periods through the Closing Date and pay any federal income Taxes
attributable to such income. Furash will furnish Tax information
to the Seller for inclusion in Seller's federal consolidated
income Tax Return for the period which includes the Closing Date
in accordance with Furash's past custom and practice. The income
of Furash will be apportioned to the period up to and including
the Closing Date and the period after the Closing Date by closing
the books of Furash as of the end of the Closing Date.
(d) Audits. The Seller will allow Furash and its counsel to
participate at its own expense in any audits of the Seller's
consolidated federal income Tax Returns to the extent that such
returns relate to Furash. Seller will not settle any such audit
in a manner which would adversely affect Furash after the Closing
Date unless such settlement would be reasonable in the case of a
Person that owned Furash both before and after the Closing Date.
(e) Carrybacks. Seller will immediately pay to the Buyer any
Tax refund (or reduction in Tax liability) resulting from a
carryback of a postacquisition Tax attribute of Furash into
Seller's consolidated Tax Return, when such refund or reduction
is realized by the Seller's group. Seller will cooperate with
Furash in obtaining such refunds (or reduction in Tax liability),
including through the filing of amended Tax Returns or refund
claims. The Buyer agrees to indemnify Seller for any Taxes
resulting from the disallowance of such postacquisition Tax
attribute on audit or otherwise.
(f) Retention of Carryovers. Seller may, in its sole
discretion, elect to retain all or part of the net operating loss
carryovers and capital loss carryovers of Furash under Reg.
1.1502-20(g). At Seller's request, the Buyer will cause Furash
to join with Seller in filing any necessary elections under Reg.
1.1502-20(g).]
(g) Post-Closing Elections. At Seller's request, the Buyer
will cause Furash to make or join with Seller in making any Tax
election if the making of such election does not have a material
adverse impact on the Buyer or Furash for any postacquisition Tax
period.
(h) Section 338(h)(10) Election. At the Seller's option and
upon its request, Buyer will join with the Seller in making an
election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local, or foreign tax law)
(collectively a "Section 338(h)(10) Election") with respect to
the purchase and sale of the stock of Furash hereunder. Seller
will pay any Tax attributable to the making of the Section
338(h)(10) Election and will indemnify the Buyer and Furash
against any Adverse Consequences arising out of any failure to
pay such Tax. Seller will also pay any state, local, or foreign
Tax (and indemnify the Buyer and Furash against any Adverse
Consequences arising out of any failure to pay such Tax)
attributable to an election under state, local, or foreign law
similar to the election available under Section 338(g) of the
Code (or which results from the making of an election under
Section 338(g) of the Code) with respect to the purchase and sale
of the stock of Furash hereunder.
(i) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with this
Agreement (including any New York State Gains Tax, New York City
Transfer Tax and any similar tax imposed in other states or
subdivisions), shall be paid by Seller when due, and Seller will,
at its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, Buyer will, and will cause its
affiliates to, join in the execution of any such Tax Returns and
other documentation.
10. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the
Closing (A) in the event the Seller has breached any
material representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has
notified the Seller of the breach, and the breach has
continued without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall not have
occurred on or before December 31, 1997, by reason of the
failure of any condition precedent under 7(a) hereof
(unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant
contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing
(A) in the event the Buyer has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller has notified
the Buyer of the breach, and the breach has continued
without cure for a period of 30 days after the notice of
breach or (B) if the Closing shall not have occurred on or
before December 31, l997, by reason of the failure of any
condition precedent under 7(b) hereof (unless the failure
results primarily from the Seller itself breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to 10(a) above, all rights and obligations of
the Parties hereunder shall terminate without any liability of
any Party to any other Party (except for any liability of any
Party then in breach); provided, however, that the
confidentiality provisions contained in 5(e) above shall survive
termination.
11. Miscellaneous.
(a) Representation of Parties. The Parties all acknowledge
that Mark E. Lehman of Lehman, Jensen & Donahue, L.C., prepared
this Agreement on behalf of and in the course of his
representation of Seller and that: (i) the Parties have been
advised by Mr. Lehman that a conflict exists among their
individual interests; (ii) the Parties have been advised by Mr.
Lehman to seek the advice of independent counsel; (iii) the
Parties have had the opportunity to seek the advice of
independent counsel; (iv) the Parties have received no
representations from Mr. Lehman about the tax consequences of
this Agreement; (v) the Parties have been advised by Mr. Lehman
that this Agreement may have tax consequences; (vi) the Parties
have been advised by Mr. Lehman to seek the advice of independent
tax counsel; (vii) the parties have had the opportunity to seek
the advice of independent tax counsel; and, (viii) in the event
any dispute arises under this Agreement, the firm of Lehman,
Jensen & Donahue, L.C., may not be able to represent either
Party.
(b) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing
without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written
or oral, to the extent they are related in any way to the subject
matter hereof.
(e) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Party; provided, however, that the Buyer may (i) assign
any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for
the performance of all of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(g) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
If to the Seller: Headway Corporate Resources,
Inc.
Attn: Barry S. Roseman, President
850 Third Avenue, 11th Floor
New York, NY 10022
If to the Buyer: InterBank Communications, Inc.
Attn: Simon A. Hershon, Chairman
1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
New York without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
(j) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Seller. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend
to any prior or subsequent default, misrepresentation, or breach
of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties and Furash will bear its
own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby. The Seller agrees that Furash has not borne
or will not bear any of the Seller's costs and expenses
(including any of its legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean
including without limitation.
(n) Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
This space left blank.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
HEADWAY CORPORATE RESOURCES, INC. INTERBANK COMMUNICATIONS, INC.
By: (Signature) By: (Signature)