E-30
Exhibit No. 1
Form 8-K
Headway Corporate Resources, Inc.
SEC File No. 0-23170
[Each of the schedules to this Agreement described in Sections 1,
6, and 15 are omitted, and will be provided supplementally to the
Commission on request.]
ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of March 23, 1998, among HEADWAY
CORPORATE RESOURCES, INC., a Delaware corporation ("Headway"),
CHENEY ASSOCIATES, L.L.C., a Delaware limited liability company
("Buyer"), and TIMOTHY CHENEY, an individual doing business under
the names Cheney Associates and Cheney Consulting Group
("Cheney").
W I T N E S S E T H:
WHEREAS, Buyer wishes to purchase, and Cheney wishes to
sell, the Acquired Assets and the Business (as such terms are
defined in Section 1.1), upon the terms and conditions set forth
below;
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale of the Acquired Assets.
1.1 Acquired Assets. Subject to the terms and
conditions of this Agreement, and in reliance on the
representations, warranties and agreements set forth herein, on
the Closing Date (as defined in Section 2), Cheney shall sell,
convey, transfer, assign and put Buyer into possession of, and
Buyer shall purchase from Cheney, effective as of the Closing
Date, all of Cheney's right, title and interest in and to all of
the assets used by Cheney in connection with the operation of his
business which consists of the placement or provision of
temporary, permanent, leased or payrolled (as defined in Section
1.3(e)) personnel, including, without limitation, self-
incorporated personnel (the "Business"), of every kind, tangible
and intangible, wherever located (excepting only those assets
specifically excluded in Section 1.2), and including, without
limitation:
(a) the office furniture, equipment, computers and
fixtures of Cheney pertaining to the Business listed in
Schedule 1.1.A;
(b) all computer software, programs and databases
owned by Cheney pertaining to the Business and Cheney's
interest, in connection with the Business, in any
transferable computer software licensed by Cheney or the
Business from others;
(c) all office supplies owned by Cheney pertaining to
the Business;
(d) the client agreements and arrangements of Cheney
pertaining to the Business set forth in Schedule 1.1.B;
(e) the equipment leases and other agreements,
contracts and instruments of Cheney pertaining to the
Business listed in Schedule 1.1.C;
(f) all rights of Cheney or the Business with respect
to any of the temporary, permanent, leased or payrolled
personnel, including, without limitation, self-incorporated
personnel, who are placed or provided by Cheney in
connection with the Business through corporations or other
entities of which he is a shareholder or other owner;
(g) all prepayments and deposits of Cheney pertaining
to the Business, including without limitation, security
deposits under leases set forth in Schedule 1.1.D;
(h) the names "Cheney Associates" and "Cheney
Consulting Group", all assumed names, logos, trademarks,
service marks, domain names, trade names and copyrights and
registrations and applications for registration of any of
them, and any other intellectual property rights of Cheney
pertaining to the Business, all of which are listed in
Schedule 1.1.E;
(i) originals or true copies of all books and records
of Cheney pertaining to the assets referred to in
subparagraphs (a) through (h) above, as appropriate,
including customer lists and credit files, and all those
pertaining to the employees of Cheney who are hired by Buyer
pursuant to Section 10.2;
(j) all permits, licenses, approvals and other
governmental authorizations relating to the Business which
are transferable to Buyer, all of which are listed in
Schedule 1.1.F;
(k) any other assets that are used by Cheney in
connection with the Business and that are not referred to in
Section 1.2, including, without limitation, telephone and
facsimile numbers, internet and e-mail addresses; and
(l) the goodwill pertaining to the Business;
all as the same exist on the date hereof and shall exist on the
Closing Date, subject only to changes occurring in the ordinary
course of business. All such assets as are described in
subparagraphs (a) through (l) above to be acquired are referred
to together as the "Acquired Assets". For purposes of this
Agreement, assets used by Cheney in connection with the Business
shall be deemed to be Cheney's regardless of whether they are
held in his name, in the name of Cheney Associates or Cheney
Consulting Group or the name of any affiliate of Cheney.
1.2 Excluded Assets. The following assets of Cheney
shall be retained by Cheney as his sole and exclusive property
and are excluded from the Acquired Assets: (a) the consideration
(including the Purchase Price, (as defined in Section 1.3(a)))
payable to Cheney by Buyer, (b) any cash, bank deposits,
certificates of deposit, marketable securities, notes, drafts,
checks or other cash equivalents or similar instruments owned by
Cheney pertaining to the Business, (c) accounts receivable of the
Business as of the Closing Date (the "Accounts Receivable") and
any amounts accrued by the Business for services rendered prior
to the Closing Date, but which have not been billed as of the
Closing Date (the "Accruals"), including, without limitation, the
proceeds of the Accounts Receivables and the Accruals, (d) all
claims and rights of Cheney or the Business to any federal, state
or local refunds, credits, rebates, claims, repayments or
benefits of Taxes (as defined in Section 6.12) pertaining to the
Business, (e) any loans receivable of Cheney or the Business, (f)
any refundable portions of paid insurance premiums and prepaid
federal, state or local income taxes pertaining to the Business,
(g) Cheney's interest in any life insurance policies (and the
proceeds thereof) maintained on the life of any employee of the
Business, (h) the books and records of the Business or Cheney
(with respect to the Business), (i) the tax records pertaining to
the Business and any books and records pertaining to the Business
which Cheney shall be required to retain pursuant to any
applicable law, rule or regulation (provided, that at Buyer's
request and expense, Cheney shall provide Buyer with copies of
any such record or document retained by Cheney and, similarly,
Buyer, at Cheney's request and expense, shall provide Cheney with
copies of any record or document transferred to Buyer hereunder),
(j) all records and correspondence relating to the foregoing
excluded assets and (k) any and all other assets of Cheney of
every kind, nature or description, tangible or intangible, known
or unknown, real or personal, not used or utilized by Cheney in
connection with or pertaining to the Business, including without
limitation, the assets set forth on Schedule 1.2.
1.3 Purchase Price.
(a) As consideration for the sale, conveyance,
transfer, assignment and delivery to Buyer of the Acquired
Assets, Buyer shall pay to Cheney a purchase price (the "Purchase
Price") determined as follows:
(i) $3,752,868 payable on the Closing Date (the "Down
Payment"); and
(ii) the Earnouts on the Earnout Payment Dates (as
defined in Sections 1.3(b) and (d), respectively).
All amounts payable by Buyer pursuant to Sections 1.3(a) and
1.3(b) shall be paid by wire transfer in immediately available
funds to an account or accounts designated by Cheney to Buyer not
later than two business days prior to the scheduled date of such
payment.
(b) The period from January 1, 1997 until December 31,
1998 shall be referred to as the "First Earnout Period", the
period from the Closing Date until December 31, 1999 shall be
referred to as the "Second Earnout Period", the period from the
Closing Date until December 31, 2000 shall be referred to as the
"Third Earnout Period", and each of such periods shall be
referred to as an "Earnout Period". Subject to Section 1.3(f),
Buyer shall pay to Cheney an amount for each of such Earnout
Periods (each, an "Earnout") as follows:
(i) On February 28, 1999, an amount equal to 80% of
the excess, if any, of that amount equal to (A) 5 times the
Average Annualized EBITA (as is defined in Section 1.3(c))
of the Buyer for the First Earnout Period over (B) the Down
Payment;
(ii) On February 28, 2000, an amount equal to 75% of
the excess, if any, of that amount equal to (A) 5 times the
Average Annualized EBITA of the Buyer for the Second Earnout
Period over (B) the sum of (I) the Down Payment plus (II)
the Earnout, if any, paid pursuant to clause (i) above; and
(iii) On March 31, 2001, an amount equal to the
excess, if any, of that amount equal to (A) 5 times the
Average Annualized EBITA of the Buyer for the Third Earnout
Period over (B) the sum of (I) the Down Payment, plus (II)
the Earnouts, if any, paid pursuant to clauses (i) and/or
(ii) above.
(c) For the purposes of this Agreement, (i) "EBITA"
means, for each Earnout Period, Net Income (as defined below)
without deductions for (A) interest expense, (B) provisions for
and/or payments of income taxes, and (C) amortization of goodwill
and other intangible assets resulting from Buyer's purchase of
the Acquired Assets and the Business, and (ii) "Average
Annualized EBITA" means the EBITA of the Business for the
applicable Earnout Period, divided by the number of months
comprising such Earnout Period, and multiplied by 12. During the
Earnout Periods, the operations of Buyer shall consist solely of
the conduct of the Business.
"Net Income" means the net income (or loss) of Buyer
for an Earnout Period determined by Buyer in accordance with
generally accepted accounting principles applied on a basis
consistent with (i) the Financial Statements (as defined in
Section 3.6) and (ii) the accounting treatment, practices and
principles elected, utilized and employed by Cheney for the
twelve-month period ended December 31, 1997, as set forth in
Schedule 1.3. Subject to the foregoing, the calculation of Net
Income shall take into account the following expenses to the
extent incurred in the ordinary course of the Business: (i)
wage, salary and commission expense of all temporary, payrolled
and full-time employees directly associated with the Business,
including, without limitation, salary and other compensation paid
to Cheney pursuant to the Employment Agreement (as defined in
Section 3.4); (ii) reasonable travel and entertainment expenses
approved by Cheney and incurred by employees directly associated
with the Business; (iii) bonuses paid to employees directly
associated with the Business and approved by Cheney; (iv) all
amounts attributable to FICA and any other federal, state and
local taxes on behalf of the employees directly associated with
the Business; (v) all unemployment insurance premiums, workers'
compensation premiums, medical and disability coverage and any
other benefits provided to the employees directly associated with
the Business; (vi) sales commissions directly attributable to the
Business; (vii) any fall-offs, rebates, discounts, offsets or
concessions granted by Buyer to clients of the Business; (viii)
Buyer's general and administrative expenses directly attributable
to the operation of the Business in the ordinary course; (ix)
depreciation in connection with the acquisition by Headway, Buyer
or any other subsidiary of Headway of computer and
telecommunications equipment for use in the Business consistent
with that used by the Headway group of companies; (x) any
expenses reasonably and necessarily incurred by Headway, Buyer or
any other subsidiary of Headway in connection with any technical
and financial support provided to the Business; (xi) any expenses
reasonably and necessarily incurred by Headway, Buyer or any
other subsidiary of Headway in connection with the transition of
the operation of the Business to Buyer as part of the Headway
group of companies, including, without limitation, expenses for
the installation and implementation at Buyer of the third party
accounting and operating software used by Headway; provided, that
any expenses allocated to the Business pursuant to clauses (ix),
(x) and (xi) above shall be mutually agreed upon by Headway and
Cheney prior to the incurrence thereof, and to the extent that
Headway and Cheney further agree that all or part of any such
allocation is incremental to the cost structure of the Business
as conducted by Cheney on the Closing Date, such incremental
amount shall be deducted from the Earnout, if any, for the
applicable Earnout Period and not from EBITA, Net Income or
Average Annualized EBITA for such Earnout Period. For the
purpose of determining Net Income, write-offs of bad debts and/or
any reserves established by Buyer for bad debts with respect to
its receivables during any Earnout Period shall be added to Net
Income to the extent deducted therefrom.
(d) Each of February 28, 1999, February 28, 2000 and
March 31, 2001 is referred to as an "Earnout Payment Date". If
any such day is not a business day, the Earnout Payment Date
shall be the next succeeding business day. Subject to the last
sentence of this Section 1.3(d), if, as of the close of business
on the day prior to any Earnout Payment Date, any account
receivable included as income in the calculation of Net Income
(with respect to the Earnout Period applicable to such Earnout
Payment Date) has not been fully collected, the uncollected
amount of such account receivable shall be deducted from Net
Income and EBITA and the Earnout shall be reduced accordingly.
To the extent that any such account receivable is deducted from
Net Income and EBITA, if such account receivable is thereafter
collected after the Earnout Payment Date, the Net Income and
EBITA for the applicable Earnout Period shall be adjusted by the
amount of such account receivable, net of any direct collection
costs and net of an interest charge for any account receivable
paid more than 90 days after the date of invoice (a "Restoration
Amount"), with the interest rate determined by reference to the
interest rate then in effect for Eurodollar Rate Loans under the
Credit Agreement, dated as of March 12, 1998, by and among
Headway, as Borrower, NationsBank, National Association, as Agent
and as Lender, and the lenders from time to time parties thereto,
and the Earnout shall be recalculated accordingly and the excess
of such recalculated Earnout over the amount of the Earnout
previously paid to Cheney shall be paid to Cheney; provided, that
with respect to the Earnout Payment Date for the Third Earnout
Period, Buyer shall be obligated to pay Cheney a Restoration
Amount with respect to any such account receivable only if such
account receivable is collected within 90 days of such Earnout
Payment Date (the "Final Restoration Date"). Any payments due to
Cheney pursuant to the provisions of the preceding sentence shall
be paid on the last business day of each month. Any such
accounts receivable remaining uncollected on the day following
the Final Restoration Date shall be deemed to be conveyed,
transferred and assigned to Cheney on such day, and Cheney shall
have the right to institute collection proceedings with respect
thereto and to keep any proceeds received therefrom. Cheney
shall notify Buyer of any such action not less than five days
before it is instituted.
(e) For the purposes of this Agreement, "payrolled"
personnel means (i) those employees of Headway, Buyer or Cheney
(in connection with the Business), as the case may be, who are
hired by Headway, Buyer or Cheney on behalf of a client and are
considered as full-time "permanent" employees of such client, but
whose compensation is paid by Headway, Buyer or Cheney or (ii)
those employees of Headway, Buyer or Cheney who are considered to
be payrolled employees under industry practice or understandings
prevailing at the time.
(f) In the event Buyer terminates Cheney's employment
under the Employment Agreement without cause ("cause" being
exclusively defined in Section 3.1 of the Employment Agreement)
and not as a result of Cheney's death or disability pursuant to
Section 3.3 of the Employment Agreement, and such determination
is so confirmed by arbitration pursuant to Section 8.1 of the
Employment Agreement, Headway shall determine the Average
Annualized EBITA of Buyer as of such termination date (as if such
termination date were the end of the applicable Earnout Period)
for the Earnout Period then in effect, such amount being referred
to as the "Base Annualized EBITA". For any Earnout Periods
occurring and/or any Earnouts payable after such termination
date, the Average Annualized EBITA of Buyer for the Earnout
Period to which such Earnout relates shall be the greater of (a)
Base Annualized EBITA or (b) the actual Annualized EBITA
determined with respect to such Earnout Period.
1.4 Assumption of Liabilities. As additional
consideration for the purchase of the Acquired Assets, Buyer
shall, on the Closing Date, assume and agree to pay, perform and
discharge in full the following debts, contracts, obligations and
liabilities of Cheney (the "Assumed Liabilities"), and no others,
as and when due, and to indemnify and hold Cheney harmless
therefrom:
(a) all obligations and liabilities of Cheney or the
Business arising on or after the Closing Date under the office
lease for the premises located at One Laurel Square, Hamden,
Connecticut; and
(b) all obligations or liabilities arising on or after
the Closing Date under the client agreements and arrangements set
forth in Schedule 1.1.B and the equipment leases and other
agreements, contracts and instruments set forth in Schedule
1.1.C.
1.5 Liabilities Not Assumed. Other than the
liabilities referred to in Section 1.4, Buyer shall not assume or
be deemed to have assumed any of the liabilities or obligations
of Cheney of any kind arising prior to, on, or after the Closing
Date, or of the Business arising prior to the Closing Date
(together, the "Unassumed Liabilities"), including, without
limitation:
(a) any liability claims with respect to the business
and affairs of Cheney or the Business or the acts and omissions
of current or former employees and agents of Cheney or the
Business;
(b) any obligation or liability of Cheney or the
Business to any current or former employee of Cheney or the
Business;
(c) any obligation or liability of Cheney or the
Business for federal, state, local or foreign income or other
taxes (including any related penalties, fines and interest),
including, without limitation, any and all taxes arising out of
the transactions contemplated hereby;
(d) any obligation or liability arising out of the
operation of the Business prior to the Closing Date, including
any rebates, discounts, offsets or concessions attributable to
amounts invoiced to the Business's clients prior to the Closing
Date;
(e) any claim, action, suit or proceeding against
Cheney or the Business for employment discrimination or sexual
harassment by any present or former employee (temporary or
permanent) or agent of Cheney or the Business;
(f) any obligation or liability of Cheney or the
Business arising out of any surrender charges incurred in
connection with the rollover to Buyer of any Benefit Plan (as
defined in Section 6.16(a)) of Cheney or the Business;
(g) any obligation or liability to the temporary,
payrolled, leased or full-time employees of Cheney or the
Business for salary, wages, bonuses or other compensation or
benefits, including any with respect to retirement plans, and
accrued vacation, sick and holiday time and pay incurred prior to
the Closing Date, including, without limitation, any liabilities
contemplated by Section 10.2 but excluding any liabilities set
forth in Schedule 1.7;
(h) any liabilities of Cheney or the Business with
respect to any pension, retirement, savings, profit-sharing or
other benefit plan;
(i) any obligation or liability which is inconsistent
with any representation or warranty of Cheney;
(j) any liability arising out of, and any expenses
relating to, any claim, action, dispute or litigation involving
Cheney or the Business;
(k) any liability of Cheney or the Business for fines,
penalties, damages or other amounts payable to any government or
governmental agency or instrumentality; and
(l) any obligation or liability of Cheney or the
Business for any expenses incurred in preparing or negotiating
this Agreement and consummating the transactions contemplated
hereunder.
Cheney agrees to discharge and indemnify, defend and hold
harmless Buyer and Headway and their respective officers,
directors, employees, agents and stockholders from all Unassumed
Liabilities, whether or not now known, liquidated or contingent,
including, without limitation, any that might otherwise be deemed
to have been assumed by Buyer by virtue of its purchase of the
Acquired Assets or otherwise by operation of law.
1.6 Allocation of Purchase Price. Buyer and Cheney
agree to report this transaction for United States federal income
tax purposes in accordance with a written allocation of Purchase
Price to be prepared, initialed and mutually agreed to by Cheney
and Buyer on or before the Closing Date.
1.7 Closing Date Adjustments. On or before the
Closing Date, Buyer and Cheney shall determine and agree on, as
of the Closing Date, (i) any amounts that Cheney or the Business
may have prepaid for equipment or office leases included in the
Acquired Assets in respect of periods beginning on or continuing
after the Closing Date, (ii) any amounts that Cheney or the
Business may have prepaid for sales, use or similar taxes,
license fees (exclusive of corporate franchise fees), insurance,
services or other expenses relating to the Acquired Assets in
respect of periods beginning on or continuing after the Closing
Date, (iii) the amount of any accrued bonuses and accrued
vacation, sick or holiday time or pay as of the Closing Date with
respect to temporary, payrolled, leased or full-time employees of
the Business retained by Buyer pursuant to Section 10.2, as set
forth in Schedule 1.7, and (iv) any amounts of the type described
in clauses (i) and (ii) in respect of periods prior to the
Closing Date which are expected to be billed after the Closing
Date. All amounts relating to periods ending prior to the
Closing Date shall be for the account of Cheney and all amounts
relating to periods beginning or continuing on or after the
Closing Date shall be for the account of Buyer. The respective
amounts shall be netted against each other on the Closing Date.
If the result of such netting is an amount owing to Cheney, Buyer
shall pay such amount to Cheney on the Closing Date. If the
result of such netting is an amount owing to Buyer, Cheney shall
pay such amount to Buyer on the Closing Date in the form of a
reduction of the Purchase Price and the Down Payment.
1.8 Collection of Accounts Receivable and Accrued
Payments.
(a) Within 15 days after the Closing Date, Buyer and
Cheney shall determine and agree on, as of the close of business
on the business day immediately preceding the Closing Date, the
amount of the Accruals. Promptly after the Closing Date, Buyer,
in coordination with Cheney, shall render invoices to the
Business's clients for the Accruals. Buyer shall remit to Cheney
all payments received by it on account of the Accruals and the
Accounts Receivable (collectively, the "Closing Date
Receivables") within 15 days after the end of each month in which
such payments are received. While Buyer shall use reasonable
efforts to collect the Closing Date Receivables commensurate with
the efforts it would use to collect its own accounts receivable,
Buyer shall not be required to institute litigation or other
collection proceedings in order to do so and, in any event, Buyer
shall have no liability to Cheney for any of the Closing Date
Receivables that are not collected. Cheney shall have the right
to institute collection proceedings with respect to any of the
Closing Date Receivables that are aged more than 120 days after
the date of the related invoice, but shall notify Buyer of any
such action not less than five business days before it is
instituted.
(b) Cheney shall promptly pay to Buyer, if and when
received, any amounts which are received by it after the Closing
Date in respect of any of the Acquired Assets or with respect to
any accounts receivable generated by Buyer with respect to
periods on or after the Closing Date. Similarly, if Buyer
receives after the Closing Date any payments with respect to any
of the Excluded Assets other than the Closing Date Receivables
(which shall be governed by Section 1.8(a)), Buyer shall promptly
pay such amounts to Cheney. Any amounts received pursuant to
this Section 1.8(b) shall be applied to the receivables
specifically identified by the client/payor. If no such
identification is provided, Buyer or Cheney, as the case may be,
shall inquire of client for written identification and apply the
amount received accordingly.
(c) Any sums received by Buyer or Cheney that are
required to be remitted to the other party pursuant to this
Section 1.8 shall, until so paid over, be deemed to be held in
trust on behalf of such other party.
1.9 Nonassignable Contracts. Nothing in this
Agreement shall be construed as an attempt to assign any contract
which is by law and/or its terms nonassignable without the
consent of any other party thereto unless and until such consent
is given.
2. Closing. The consummation of the purchase and
sale of the Acquired Assets shall take place at 9:00 a.m. on
March 23, 1998, at the offices of Christy & Viener, 620 Fifth
Avenue, New York, New York 10020 (the "Closing Date").
3. Conditions to the Obligations of Buyer. The
obligations of Buyer under Section 1 are subject to the
satisfaction, on or before the Closing Date, of the following
conditions:
3.1 Due Performance. Cheney shall have in all
material respects fully performed and complied with all
agreements and conditions required under this Agreement to be
performed or complied with by him on or prior to the Closing
Date.
3.2 Accuracy of Representations and Warranties. All
representations and warranties of Cheney set forth in Section 6
of this Agreement shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of
such date.
3.3 Certificate. Buyer shall have received a
certificate from Cheney to the effect set forth in Sections 3.1
and 3.2.
3.4 Employment Agreement. Buyer, Headway and Cheney
shall have entered into an Employment Agreement in a form
satisfactory to all such parties (the "Employment Agreement").
3.5 Related Instruments. Cheney shall have executed
and delivered to Buyer a General Bill of Sale in customary form
with respect to the Acquired Assets, as well as such other
instruments of assignment with respect to specific Acquired
Assets as Buyer shall reasonably request, all of which shall be
consistent with the terms and conditions of this Agreement.
3.6 Financial Statements. On or before February 15,
1998, Cheney shall have prepared and delivered to Buyer and
Headway reviewed financial statements with respect to the
Business as of and for the fiscal years ended December 31, 1997
and December 31, 1996 (the "Reviewed Financial Statements") and
unaudited financial statements with respect to the Business for
the fiscal year ended December 31, 1995 (collectively, the
"Unaudited Financial Statements"; the Reviewed Financial
Statements and the Unaudited Financial Statements being
collectively referred to as the "Financial Statements"). The
Financial Statements shall be prepared, at the expense of Cheney,
in accordance with generally accepted accounting principles
applied on a basis consistent throughout all periods presented
and on an accrual basis.
3.7 Legal Opinion. Buyer shall have received an
opinion of Martin J. Gersten, Esq., counsel for Cheney, dated
the Closing Date, reasonably satisfactory in form and substance
to counsel for Buyer and covering the matters set forth in
Sections 6.1, 6.2, 6.3, 6.4(a) and 6.6.
3.8 No Adverse Change. There shall have been no
material adverse change in the business, results of operations or
financial condition of the Business since December 31, 1996.
3.9 Consents and Governmental Approvals. Headway and
Buyer shall have received any material consents of third parties,
and any authorizations, orders, grants, consents, permits and
approvals of all relevant governmental authorities, required in
connection with the consummation of the transactions contemplated
under this Agreement, without the imposition of any materially
burdensome conditions or restrictions, which shall continue to be
in full force and effect on the Closing Date.
3.10 No Claims. No claim, action, suit, investigation
or proceeding shall be pending or threatened against any of the
parties which, if adversely determined, might (i) prevent or
hinder consummation of the transactions contemplated by this
Agreement, (ii) result in the payment of substantial damages by
Buyer or Headway as a result of the transactions contemplated
hereby or (iii) materially and adversely affect Cheney, the
Business or the business or assets of Buyer or Headway.
3.11 Budget. On or prior to the Closing Date, Cheney,
Buyer and Headway Corporate Staffing Services, Inc. ("HCSSI")
shall have agreed upon a written annual operating and capital
expenditure budget for Buyer for the first Earnout Period
pursuant to Section 10.1.
4. Conditions to the Obligations of Cheney. The
obligations of Cheney under Section 1 are subject to the
satisfaction, on or before the Closing Date, of the following
conditions:
4.1 Due Performance. Headway and Buyer shall have in
all material respects fully performed and complied with all
agreements and conditions required under this Agreement to be
performed or complied with by them on or prior to the Closing
Date.
4.2 Accuracy of Representations and Warranties. All
representations and warranties of Headway and Buyer set forth in
Section 7 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and
as of such date.
4.3 Certificate. Cheney shall have received a
certificate from each of Buyer and Headway to the effect set
forth in Sections 4.1 and 4.2.
4.4 Related Instruments. Buyer shall have executed
and delivered to Cheney a General Instrument of Assumption in
customary form with respect to the Assumed Liabilities, as well
as such other instruments of assumption with respect to specific
Assumed Liabilities as Cheney shall reasonably request, all of
which shall be consistent with the terms and conditions of this
Agreement.
4.5 Employment Agreement. Buyer, Headway and Cheney
shall have entered into the Employment Agreement.
4.6 Headway Guarantee. Headway shall have executed
and delivered to Cheney an unconditional Guarantee (of payment
and performance) of Buyer's obligations under this Agreement, in
such form as shall reasonably be acceptable to Cheney (the
"Guarantee").
4.7 Legal Opinion. Cheney shall have received an
opinion of Messrs. Christy & Viener, counsel for Buyer and
Headway, dated the Closing Date, reasonably satisfactory in form
and substance to counsel for Cheney and covering the matters set
forth in Sections 7.1 (exclusive of the last sentence thereof),
7.2, 7.3, 7.4 (a) and 7.6.
4.8 Corporate/Member Action. Cheney shall have
received copies, certified by (a) the Secretary of Buyer, of
resolutions of Buyer's members approving the execution of this
Agreement and the Employment Agreement and the consummation of
the transactions contemplated hereby and thereby, and (b) the
Secretary of Headway, of resolutions of Headway's Board of
Directors approving the execution of this Agreement, the
Employment Agreement and the Guarantee and the consummation of
the transactions contemplated hereby and thereby.
4.9 Consents and Governmental Approvals. Cheney shall
have received any material consents of third parties, and any
authorizations, orders, grants, consents, permits and approvals
of all relevant governmental authorities, required in connection
with the consummation of the transactions contemplated under this
Agreement, without the imposition of any materially burdensome
conditions or restrictions, which shall continue to be in full
force and effect on the Closing Date.
4.10 No Claims. No claim, action, suit, investigation
or proceeding shall be pending or threatened against any of the
parties which, if adversely determined, might (i) prevent or
hinder consummation of the transactions contemplated by this
Agreement, (ii) result in the payment of substantial damages by
Cheney as a result of the transactions contemplated hereby or
(iii) materially and adversely affect Cheney, the Business or the
business or assets of Buyer or Headway.
4.11 Budget. On or prior to the Closing Date, Cheney,
Buyer and HCSSI shall have agreed upon a written annual operating
and capital expenditure budget for Buyer for the first Earnout
Period pursuant to Section 10.1.
5. Waiver of Conditions. Each of the parties shall
have the right to waive, in writing and whole or in part, any of
the conditions to his or its performance set forth in this
Agreement and, on such waiver, the waiving party may proceed with
the consummation of the transactions contemplated herein, it
being understood that such waiver shall not constitute a waiver
of any right which such party may have by reason of the breach by
any other party of any representation, warranty or agreement
contained herein, or by reason of any misrepresentation made by
any such other party herein.
6. Representations and Warranties of Cheney. Cheney
represents and warrants to Buyer and Headway as follows:
6.1 Sole Proprietor. Cheney is a sole proprietor with
full power and authority to own, lease and operate the properties
used in connection with the Business and to carry on the Business
in the places and in the manner currently conducted or proposed
to be conducted.
6.2 Authority; Due Authorization. Cheney has all
requisite power and authority to execute and deliver this
Agreement and the Employment Agreement and to consummate the
transactions contemplated hereby and thereby. Cheney has taken
all action necessary for the execution and delivery by him of
this Agreement and the Employment Agreement and for the
consummation of the transactions contemplated hereby and thereby.
6.3 Valid Obligation. This Agreement and the
Employment Agreement, when executed and delivered by Cheney,
shall constitute his valid and binding obligation, in each case
enforceable in accordance with its terms, except as may be
limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
6.4 No Conflicts or Defaults. Except as set forth on
Schedule 6.4, the execution and delivery of this Agreement and
the Employment Agreement by Cheney, and the consummation of the
transactions contemplated hereby and thereby, do not and shall
not, with or without the giving of notice or the passage of time,
(a) materially violate or conflict with, or result in a material
breach of, or a material default or loss of rights under, any
agreement, lease, mortgage, instrument, permit or license to
which Cheney or the Business is a party, or to which Cheney or
the Business or any of the Acquired Assets are subject, or any
judgment, order, decree, law, rule or regulation to which Cheney
or the Business or any of the Acquired Assets are subject, (b)
result in the creation of, or give any party the right to create,
any lien, charge, encumbrance or any other right or adverse
interest on or with respect to any of the Acquired Assets or (c)
terminate or give any party the right to terminate, abandon or
refuse to perform any material agreement, arrangement or
commitment to which Cheney or the Business is a party or to which
any of the Acquired Assets or Cheney are subject.
6.5 Subsidiaries and Related Parties. The Business is
conducted entirely by and through Cheney. Except as set forth in
Schedule 6.5, neither Cheney nor any key employee of Cheney (with
respect to the Business) or the Business or any of their
respective affiliates or relatives has any direct or indirect
interest (other than an ownership interest of up to 5% of the
voting securities of any corporation, the securities of which are
publicly-traded) in any assets used in the Business or in any
corporation, partnership or other entity that (a) competes with
the Business, (b) sells or purchases products or services to or
from Cheney (in connection with the Business) or the Business,
(c) leases real or personal property to or from Cheney (in
connection with the Business) or the Business or (d) otherwise
does business with Cheney (in connection with the Business) or
the Business.
6.6 Authorizations. Except as set forth in Schedule
6.6, no authorization, approval, order, license, permit or
consent of, or filing or registration with, any court or
governmental authority, regulatory entity or official body, and
no consent of any other party, is required in connection with the
execution, delivery and performance of this Agreement and the
Employment Agreement by Cheney.
6.7 The Acquired Assets.
(a) Cheney has, and on the Closing Date shall have and
shall transfer to Buyer, good and marketable title to all of the
Acquired Assets, free and clear of all claims, liens, security
interests, charges, restrictions and other encumbrances except
(i) any created pursuant to this Agreement, (ii) any arising
under leases of real or personal property to which Cheney or the
Business is a party and which have been specifically disclosed to
Buyer, or (iii) mechanics' or other liens arising or incurred in
the ordinary course of business and which do not interfere
materially with the possession, ownership or use of any real or
personal property forming part of the Acquired Assets used by the
Business.
(b) Set forth in Schedule 6.7 is a list of all real
property leased by Cheney (in connection with the Business) or
the Business, with a brief description of the premises. Cheney
owns no real property used in connection with the Business.
(c) The office equipment, furniture, vehicles,
computers, computer software, office supplies and leasehold
improvements included in the Acquired Assets are, in all material
respects, in good operating condition and repair, reasonable wear
and tear excepted, and are satisfactory for the requirements of
the Business as presently conducted.
6.8 Client Agreements.
(a) Schedule 1.1.B sets forth a true and complete list
of all written and oral client agreements and arrangements to
which Cheney (in connection with the Business) or the Business is
party (the "Client Agreements"). Cheney has furnished Buyer with
a true copy of each Client Agreement or a written description of
any Client Agreement that has not been reduced to writing. The
Client Agreements constitute all of the contracts, agreements,
understandings and arrangements pursuant to which Cheney (in
connection with the Business) or the Business provide any
temporary, permanent, leased or payrolled employee services for
or with respect to the clients who are parties to such
agreements. Except as set forth in Schedule 6.8, (i) each Client
Agreement was entered into in the ordinary course of business of
the Business, (ii) is in full force and effect on the date of
this Agreement and is valid, binding and enforceable in
accordance with its terms, (iii) neither Cheney nor the Business
is in material breach or default under any of the Client
Agreements and neither has received any notice or claim of any
such breach or default from any party, (iv) to the best knowledge
and belief of Cheney, the relationship of Cheney or the Business
with the clients that are parties to the Client Agreements is
good and there has been no expression by any such clients to
Cheney of any intention to terminate or materially modify any of
such relationships, (v) Cheney does not have any knowledge of any
material breach or default under any of the Client Agreements by
any other party thereto, (vi) no event or action has occurred, is
pending or, to Cheney's best knowledge, is threatened, which,
after the giving of notice, passage of time or otherwise, could
constitute or result in any such material breach or default by
Cheney, the Business or any other party under any of the Client
Agreements and (vii) no material amount claimed to be payable to
Cheney or the Business under any of the Client Agreements is
being disputed by any client.
(b) Except as set forth in Schedule 6.8.A, (i) for his
or its services under each Client Agreement, Cheney or the
Business is entitled to receive the compensation provided under
such Client Agreement, without discount, offset or concessions of
any kind, and neither Cheney nor the Business has proposed or
agreed to offer or accept any discount, offset or concession and
(ii) to the best knowledge and belief of Cheney, the payment
history of the clients under the Client Agreements is good as
judged by industry standards. Set forth in Schedule 6.8.B is an
aging schedule for all of the Accounts Receivable and accounts
payable of the Business as of the Closing Date, which list is
accurate in all material respects.
(c) All of the accounts receivable reflected on the
books and records of Cheney (pertaining to the Business) or the
Business on Schedule 6.8.B are the result of bona fide
transactions in the ordinary course of business of the Business
and, to the best knowledge and belief of Cheney, are fully
collectible by Cheney or the Business, subject to no defenses,
counterclaims, set-offs or recoupments, except to the extent
appropriately reserved for on the books and records of Cheney
(pertaining to the Business) or the Business and except as
disclosed in Schedule 6.8.A.
6.9 Financial Statements.
(a) The Financial Statements have been and will be
prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout all periods
presented. Such statements are and will be correct and complete
in all material respects, are reconcilable to the books and
records of Cheney (pertaining to the Business) or the Business,
and present fairly the financial position of the Business as of
the dates, and the results of operations, cash flows and changes
in financial position of the Business for the periods, indicated,
except in the case of interim or unaudited financial statements,
for the omission of footnotes and for year-end review adjustments
which are not expected to be material.
(b) Except as set forth in Schedule 6.9, neither
Cheney nor the Business had any material liabilities or
obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise,
which are required to be reflected or reserved in a balance sheet
or the notes thereto under generally accepted accounting
principles, but which are not reflected in the Financial
Statements.
6.10 Other Agreements.
(a) Schedule 1.1.C sets forth a true and complete list
of the office leases, equipment leases and other agreements,
contracts and instruments included in the Acquired Assets other
than the Client Agreements (the "Other Agreements"). Together
with the Client Agreements, the Other Agreements constitute all
of the material contracts, agreements, understandings and
arrangements required for the operation of the Business, as
currently conducted by Cheney, or which have a material effect
thereon.
(b) Except as set forth in Schedule 6.10, (i) each
Other Agreement was entered into in the ordinary course of
business of the Business, is in full force and effect on the date
of this Agreement and is valid, binding and enforceable in
accordance with its terms, (ii) neither Cheney nor the Business
is in material breach or default under any of the Other
Agreements and Cheney has not received any written notice or
claim of any such breach or default from any party, (iii) Cheney
has no knowledge of any material breach or default under any of
the Other Agreements by any party thereto and (iv) no event or
action has occurred, is pending or, to Cheney's best knowledge,
is threatened, which, after the giving of notice, passage of time
or otherwise, could constitute or result in any such material
breach or default by Cheney, the Business or any other party
under any of the Other Agreements.
6.11 Intellectual Property. Schedule 1.1.E sets forth
a true and complete list of all trademarks, service marks, domain
name, trade names and copyrights, and United States or foreign
registrations and applications for registration of any of them,
and any other intellectual property rights, of the Business or
Cheney (in connection with the Business), all of which
intellectual property is included in the Acquired Assets. Cheney
or the Business owns or has legal right to use, pursuant to one
or more of the Other Agreements, all such intellectual property
without infringing on the rights or intellectual property of any
third party. No royalties or fees are payable by Cheney or the
Business to any party by reason of the use by Cheney or the
Business of any of such intellectual property. Cheney has not
received any claims that the products or services of the Business
have infringed the rights of others, and Cheney is not aware of
any infringement by others of the intellectual property used in
the Business.
6.12 Taxes. Except as set forth in Schedule 6.12,
Cheney (in connection with the Business) and/or the Business have
filed all federal, state, local and foreign returns and reports
which were required to be filed prior to the date hereof in
respect of all income, withholding, franchise, payroll, excise,
property, value-added, sales, use or other taxes, imposts, duties
or assessments (together with any related penalties, fines or
interest, the "Taxes"). Each such return and report is complete
and accurate in all material respects, and Cheney and/or the
Business has paid, or the Business established adequate reserves
for payment of, all Taxes (and any related penalties, fines and
interest) shown to be due on such returns or reports and any
assessments received with respect thereto. Except as set forth
in Schedule 6.12, Cheney has received no notice of any claims
pending or threatened for taxes for periods prior to the date
hereof, in excess of such reserves.
6.13 Permits; Compliance with Law. Except as set forth
in Schedule 6.13, the Business and/or Cheney hold all permits,
certificates, licenses, approvals and other authorizations of
governmental authorities as are materially necessary to the
conduct of the Business. The Business and/or Cheney are in
material compliance with the terms of each thereof and Cheney has
not received any notice or claim pertaining to the failure to
obtain, or the breach or violation of the terms of, any such
authorization. Cheney has not received any notice of any
proceeding or investigation likely to result in the suspension or
revocation of any such authorization. Cheney is conducting the
Business and the affairs of the Business in material compliance
with all applicable federal, state and local laws, ordinances,
rules, regulations and court or administrative orders and
decrees, including, without limitation, any respecting wage and
hour, withholding and unemployment compensation requirements.
6.14 Litigation. Except as set forth in Schedule 6.14,
there are no claims, actions, suits, proceedings, investigations
or criminal proceedings, at law or in equity, before any court,
tribunal, governmental authority or other forum (collectively,
"Proceedings") pending or, to Cheney's best knowledge,
threatened, against Cheney or the Business, which, if adversely
determined, would, singly or in the aggregate, have a material
adverse effect on Cheney, the Business or the Acquired Assets or
the ability of Cheney to perform his obligations under this
Agreement or which would challenge the validity or propriety of
the transactions contemplated in this Agreement. Schedule 6.14
contains a list of all Proceedings to which Cheney or the
Business is a party or to which Cheney, the Business or any of
the Acquired Assets are subject. There is no material
outstanding and unsatisfied judgment, order, writ, ruling,
injunction, stipulation or decree of any court, arbitrator or
governmental authority against or materially affecting Cheney,
the Business or any material portion of the Acquired Assets.
6.15 Ordinary Course; No Material Adverse Effect.
Except as set forth in Schedule 6.15 and for the transactions
contemplated in this Agreement, since December 31, 1996, Cheney
has conducted the Business and maintained the assets relating to
the Business substantially in the same manner as previously
conducted or maintained and solely in the ordinary course and,
since such date, there has not been any event that has or would,
with or without the giving of notice or the passage of time,
result in a material adverse effect on Cheney or the Business.
6.16 Employee Benefits and Relations.
(a) Except as set forth in Schedule 6.16, neither
Cheney (in connection with the Business) nor the Business
maintain or sponsor, or contributes or has any obligation or
liability to contribute to, any "employee pension benefit plan",
"employee welfare benefit plan" or "multi-employer plan" (as such
terms are defined in Sections 3(2), 3(1) and 4001(a)(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")). Set forth in Schedule 6.16 is a list of all bonus,
pension, profit-sharing, deferred compensation, retirement,
vacation, disability, death benefit, unemployment,
hospitalization, medical, dental, severance, or other plan,
agreement, arrangement or understanding providing benefits to any
current or former employee of Cheney (in connection with the
Business) or the Business or to which Cheney or the Business has
any liability or obligation (all such plans, agreements,
arrangements and understandings are referred to as "Benefit
Plans"). Cheney has delivered to Buyer and Headway true,
complete and correct copies of (i) each Benefit Plan and all
amendments thereto (or, in the case of any unwritten Benefit
Plans, descriptions thereof), (ii) annual reports on Form 5500
for the past three years (together with accompanying financial
statements) filed with the Internal Revenue Service or Department
of Labor, as applicable, with respect to each Benefit Plan (if
any such report was required), (iii) all summary plan
descriptions for each Benefit Plan for which such summary plan
description is required or otherwise available and (iv) each
trust agreement and group annuity contract relating to any
Benefit Plan. No Benefit Plan provides for post-retirement
medical or life insurance benefits unless the event giving rise
to the benefit entitlement occurs prior to the employee's
retirement (except as required by Title I, Part 6 of ERISA).
(b) Any accrued obligations of Cheney (with respect to
the Business) or the Business under all Benefit Plans that are
required to be reflected on the balance sheet with respect to the
Business in accordance with generally accepted accounting
principles are reflected thereon as of the dates indicated
thereon and on the books and records of Cheney (pertaining to the
Business) for all periods subsequent to the date of the Financial
Statements and through the date hereof. Cheney has provided
Buyer with copies of all such balance sheets, books and records.
(c) Except as set forth in Schedule 6.16, each Benefit
Plan and any related trust complies currently, and has complied
at all times in the past, both as to form and operation, in all
material respects with the terms of such Benefit Plan and with
the applicable provisions of ERISA, the Internal Revenue Code
(the "Code") and other applicable laws. All necessary government
approvals for each Benefit Plan have been obtained on a timely
basis.
(d) Except as set forth in Schedule 6.16, neither
Cheney nor the Business has any liability (contingent or
otherwise) with respect to any terminated Benefit Plan. Neither
Cheney nor the Business is a member of, or has any liability with
respect to, a controlled group of corporations or a trade or
business (whether or not incorporated) under common control
which, together with Cheney and/or the Business, is or was at any
time treated as a single employer under Section 414(b), (c), (m)
or (o) of the Code or Section 4001(b)(1) of ERISA.
(e) Neither Cheney nor the Business is a party to any
union or collective bargaining contract with respect to any of
the employees of Cheney (in connection with the Business) or the
Business and there has not been, nor has Cheney received written
notice threatening, any representational or organizational
activity, strike, slowdown, picketing or work stoppage by any
union or other group of employees of Cheney (in connection with
the Business) or the Business.
(f) Schedule 6.16.A sets forth (i) the name of each
employee and sales representative of Cheney (with respect to the
Business) or the Business (other than temporary or payrolled
personnel), together with the annual compensation rate for each
such person and (ii) each oral or written contract, commitment or
understanding between Cheney (with respect to the Business) or
the Business and any current or former sales person, employee or
agent employed or retained by Cheney (in connection with the
Business) or the Business or any associate or relative of such
persons (other than temporary or payrolled personnel).
6.17 Insurance. All of the insurable Acquired Assets
are, in the judgment of Cheney, adequately insured for the
benefit of Cheney and/or the Business against loss or damage by
theft, fire and all other hazards and risks of a character
usually insured against by persons operating similar properties
in the localities where such properties are located, under valid
and enforceable policies issued by insurance carriers of
substantial assets. A list of all of insurance policies of
Cheney (with respect to the Business) or the Business, indicating
carriers, coverage and applicable limits of liability, is set
forth in Schedule 6.17. All such policies of insurance are in
full force and effect on the date hereof, and shall remain in
full force and effect through the Closing Date in accordance with
their terms. Cheney has not received notice of termination of
any such policies.
6.18 Miscellaneous. All representations and warranties
of Cheney set forth in this Agreement and all information set
forth in the Schedules are true and complete in all material
respects and no such representation, warranty or information
contains any untrue statement of a material fact or, to the
knowledge of Cheney, omits to state any material fact necessary
in order to make such representation, warranty or information, in
light of the circumstances under which it is made, not false or
misleading. Any disclosure made pursuant to any of the
representations and warranties in this Section 6 shall be deemed
to have been made for purposes of any other such representations
and warranties.
7. Representations and Warranties of Buyer and
Headway. Buyer and Headway, jointly and severally, represent
and warrant to Cheney as follows:
7.1 Due Organization and Qualification. Buyer is a
limited liability company duly organized and validly existing
under the laws of the State of Delaware, with full power and
authority to own, lease and operate its properties and to carry
on its business in the places and in the manner currently
conducted or proposed to be conducted. Headway is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, with full corporate power and
authority to own, lease and operate its properties and to carry
on its business in the places and in the manner currently
conducted or proposed to be conducted. Each of Buyer and Headway
is qualified to do business and is in good standing as a foreign
limited liability company or foreign corporation in each
jurisdiction in which the nature of the activities conducted by
it or the character of the properties owned or leased by it makes
such qualification necessary and the failure to so qualify would
have a material adverse effect on its business.
7.2 Authority; Due Authorization. Headway has all
requisite corporate power and authority to execute and deliver
this Agreement, the Employment Agreement and the Guarantee and to
consummate the transactions contemplated hereby and thereby.
Headway has taken all corporate action necessary for the
execution and delivery by it of this Agreement, the Employment
Agreement and the Guarantee and for the consummation of the
transactions contemplated hereby and thereby. Buyer has all
requisite power and authority to execute and deliver this
Agreement and the Employment Agreement and to consummate the
transactions contemplated hereby and thereby. Buyer has taken
all member action necessary for the execution and delivery by it
of this Agreement and the Employment Agreement and for the
consummation of the transactions contemplated hereby and thereby.
7.3 Valid Obligation. This Agreement and the
Employment Agreement, when executed and delivered by each of
Buyer and Headway, and the Guarantee, when executed and delivered
by Headway, shall constitute their respective valid and binding
obligations, in each case enforceable in accordance with its
terms, except as may be limited by principles of equity or by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally.
7.4 No Conflicts or Defaults. The execution and
delivery of this Agreement and the Employment Agreement by each
of Buyer and Headway, and the Guarantee by Headway, and the
consummation of the transactions contemplated hereby and thereby,
do not and shall not (a) contravene the Certificate of Formation
or Limited Liability Company Agreement of Buyer or the
Certificate of Incorporation or the By-Laws of Headway or (b)
with or without the giving of notice or the passage of time,
materially violate or conflict with, or result in a material
breach of, or a material default or loss of rights under, any
agreement, lease, mortgage, instrument, permit or license to
which Buyer or Headway is a party or by which Buyer or Headway
are bound, or any judgment, order, decree, law, rule or
regulation to which Buyer or Headway are subject.
7.5 Copies of Charter Documents. Copies of the
Certificate of Formation and Limited Liability Company Agreement
of Buyer and the Certificate of Incorporation and By-Laws of
Headway, in each case as amended to the date hereof, have been
delivered to Cheney and are true and complete copies of such
documents as in effect on the date of this Agreement.
7.6 Authorizations. No authorization, approval,
order, license, permit or consent of, or filing or registration
with, any court or governmental authority, regulatory entity or
official body, and no consent of any other party, that has not
already been received or will be received as of the Closing Date,
is required in connection with the execution, delivery and
performance of this Agreement or the Employment Agreement by
Buyer and Headway, or the Guarantee by Headway.
7.7 Litigation. There are no Proceedings, pending or
threatened, against Buyer or Headway which, if adversely
determined, would, singly or in the aggregate, have a material
adverse effect on the ability of Buyer or Headway to perform
their respective obligations under this Agreement or which would
challenge the validity or propriety of the transactions
contemplated in this Agreement. There is no material outstanding
and unsatisfied judgment, order, writ, ruling, injunction,
stipulation or decree of any court, arbitrator or governmental
authority against or materially affecting Buyer or Headway or any
material portion of their respective assets.
7.8 Miscellaneous. All representations and warranties
of Buyer and Headway set forth in this Agreement were, as of the
date on which they were made or given, true and complete in all
material respects and no such representation, warranty or
information contains or contained any untrue statement of a
material fact or, to the knowledge of Buyer and Headway, omits or
omitted to state any material fact necessary in order to make
such representation or warranty, in light of the circumstances
under which it is or was made, not false or misleading. Any
disclosure made pursuant to any of the representations in this
Section 7 shall be deemed to have been made for purposes of any
other such representations.
8. Survival of Representations and Warranties. All
representations and warranties made by any party in this
Agreement or in any document or certificate delivered pursuant to
this Agreement shall survive the Closing and continue in effect
until December 31, 2001 (except that the representations and
warranties set forth in Sections 6.12 and 6.16 relating to Taxes
and Benefit Plans shall survive for a period equal to the statute
of limitations applicable to any claims and liabilities which may
result from a breach thereof) and shall not be affected or
diminished by any investigation made by or on behalf of any party
or by any notice of breach of, or failure to perform under, this
Agreement which is not effectively waived pursuant to Section 5,
subject, however, to the limitations on indemnification set forth
in Section 13.5.
9. Conduct of the Business Prior to Closing Date.
9.1 Preservation of Representations and Warranties.
Between the date of this Agreement and the Closing Date, Cheney
shall refrain from taking, without the prior written consent of
Buyer or Headway, any action which would render any of the
representations or warranties set forth in Section 6 materially
inaccurate as of the Closing Date. Cheney shall notify Buyer and
Headway promptly of the occurrence of any matter, event or change
in circumstances after the date hereof that would render any of
such representations and warranties inaccurate or which would
have been required pursuant to such representations or warranties
to be disclosed hereunder if it had occurred on or prior to the
date hereof.
9.2 Preserve Business. Between the date of this
Agreement and the Closing Date, Cheney shall preserve
substantially intact the Business, keep available the services of
the present key employees of the Business and preserve Cheney's
or the Business's present relationships with persons having
significant business relations in respect of the Business and
conduct the Business solely in the ordinary course. In this
regard and without limitation of the foregoing, Cheney shall not,
with respect to the Business, (A) make or grant any wage or
salary increases or bonuses other than pursuant to pre-existing
commitments or, with the prior written consent of Buyer, to
retain key employees, (B) terminate, amend or waive any
substantial rights under any Client Agreement or Other Agreement,
(C) sell, encumber or otherwise dispose of any of the Acquired
Assets or (D) enter into any material agreement, commitment or
understanding other than in the ordinary course of business.
9.3 Further Investigation.
(a) Between the date of this Agreement and the Closing
Date, Cheney shall provide Buyer, Headway and their respective
representatives with full access during normal business hours, on
reasonable prior notice, to the premises, personnel and files and
books and records of Cheney (pertaining to the Business) or the
Business and the Acquired Assets, and Cheney shall cause the
employees and representatives of the Business to furnish such
financial and operating data and other information with respect
to the Business and the Acquired Assets as Buyer or Headway shall
reasonably request; provided, however, that any such
investigation shall be conducted in such manner as not to
interfere unreasonably with the operation of the Business.
During such investigation, Buyer, Headway and their respective
representatives shall have the right to make copies of, or
excerpts from, such files, books and records as they may deem
advisable; provided, that all such information and material
secured by such parties in the course of such investigation shall
be deemed to be confidential and shall be used solely with
respect to the transactions herein described.
(b) If the purchase and sale contemplated in this
Agreement are not consummated, each of the parties shall (i)
return all written information and copies and summaries thereof
to the party from which such information originated and (ii)
maintain in confidence and not disclose to third parties any
information obtained from the other party which the other party
designated as confidential (or deemed to be confidential pursuant
to the provisions of Section 9.3(a)) or with respect to which the
circumstances of his or its disclosure reasonably indicated that
the other party treated it as confidential. The foregoing shall
not apply to any information that is or becomes part of public or
industry knowledge for reasons other than the acts or omissions
of the party to whom such information is disclosed in connection
with the transactions contemplated herein. The provisions of
this Section 9.3 shall survive the termination of this Agreement
for any reason.
9.4 Releases, Consents, Waivers and Filings. The
parties shall use their respective best efforts and cooperate
with each other to do all things reasonably necessary or
desirable to consummate in an expeditious manner the transactions
contemplated by this Agreement. In this regard, the parties
shall cooperate to obtain from all relevant third parties and
governmental authorities all consents, waivers, permits,
authorizations and licenses to or for, such transactions that may
be required under any agreement, lease, financing arrangement,
license, permit or other instrument or under any applicable law,
rule or regulation, and to obtain and file appropriate
registrations and transfers of Cheney's intellectual property.
9.5 No Solicitation. Cheney shall not, directly or
through any other party, negotiate or conclude an agreement with
any other party for the sale or other disposition of the
Business, or enter into any discussions with any other party for
such purposes or knowingly take any other action that might
materially prejudice the consummation of the transactions
contemplated herein, unless and until this Agreement is
terminated in accordance with Section 15.1.
10. Post-Closing Matters.
10.1 Operation of the Business During Earnout Periods.
On or prior to the Closing Date, and as a condition thereto,
Cheney, Buyer and HCSSI shall agree upon a written annual
operating and capital expenditure budget for the first Earnout
Period. For each of the second and third Earnout Periods, Buyer
and Cheney (as long as Cheney shall remain employed by Buyer
pursuant to the Employment Agreement) shall prepare and submit to
the HCSSI Board of Directors (the "HCSSI Board") annual operating
and capital expenditure budgets with respect to the Business, as
well as interim budget reports, at such times as the HCSSI Board
reasonably establishes, which budgets shall be approved in the
reasonable discretion of the HCSSI Board. Until such time as
Cheney and Buyer shall agree upon and submit any budget and the
HCSSI Board shall approve any such budget, Buyer shall operate
the Business consistent with the budget previously approved by
the HCSSI Board, or if none, the annual operating and capital
expenditure budgets utilized by Cheney for the operation of the
business for the calendar year ended 1997. After a budget is
approved by the HCSSI Board, Buyer's management shall be
authorized to act and to operate the Business in accordance with
such budget. Headway and HCSSI shall at all times have access to
the books and records of Buyer and to such other information
pertaining to its business as they request from time to time and
shall have the right at any time to audit the books of Buyer.
Cheney acknowledges that Buyer shall, in connection with the
operation of the Business, be required to implement the
accounting and operating systems and procedures of the Headway
group of companies.
10.2 The Employees. Buyer and Cheney shall, prior to
the Closing Date, agree upon which employees of Cheney (with
respect to the Business) or the Business Buyer wishes to employ.
Cheney shall permit Buyer to offer employment to such employees
prior to the Closing Date. Immediately prior to the Closing
Date, Cheney shall inform any employees to whom Buyer does not
offer employment, or who do not accept Buyer's offer of
employment if made, that they shall be relieved of their duties
with respect to the Business, effective on the Closing Date. All
liabilities and obligations associated with the termination of
employment by Cheney of any employees to whom Buyer does not
offer employment or who do not accept Buyer's offer of employment
under contract or applicable law or otherwise shall be the sole
responsibility of Cheney, and Cheney shall discharge and
indemnify, defend and hold harmless Buyer and Headway and their
respective officers, directors, employees, agents and
shareholders from all such obligations and liabilities.
10.3 Financial Statements. On or prior to 45 days
following the Closing Date, Cheney shall, at his expense, prepare
and deliver to Buyer and Headway unaudited financial statements
with respect to the Business as of and for the three-month
periods ended March 31, 1997, June 30, 1997 and September 30,
1997 and for period from January 1, 1998 through the Closing
Date, such financial statements to be prepared in accordance with
generally accepted accounting principles on a basis consistent
with the Financial Statements and on an accrual basis.
10.4 Insurance Matters. The parties shall cooperate to
preserve the existing insurance coverage of Cheney (with respect
to the Business) or the Business with respect to the Acquired
Assets through the Closing Date and to effect an appropriate
transition to Buyer's insurance, if requested, on the Closing
Date.
10.5 Further Assurances. Whenever reasonably requested
to do so by a party to this Agreement, on or after the Closing
Date, any other party shall do, execute, acknowledge and deliver
all such acts, bills of sale, assignments, confirmations,
consents and any and all such further instruments and documents,
in form reasonably satisfactory to the requesting party (and
consistent with the terms and conditions of this Agreement), as
shall be reasonably necessary or advisable to carry out the
intent of this Agreement, including, without limitation, to vest
in Buyer all of the right, title and interest of Cheney in and to
the Acquired Assets.
10.6 Authorization to Buyer. Without limiting in any
respect the right, title and interest in and to the Acquired
Assets to be acquired by Buyer hereunder, Cheney irrevocably
authorizes, effective upon the Closing Date, Buyer and its
successors and assigns, to demand and receive, from time to time,
any and all of the Acquired Assets, to give receipts and releases
for or in respect of the same, to collect, assert or enforce any
claim, right or title of any kind therein or thereto and, for
such purpose, from time to time, to institute and prosecute in
the name of Cheney or the Business (but only if Cheney consents
to the use of such name), or otherwise, any and all proceedings
at law, in equity or otherwise, which Buyer shall deem expedient
or desirable with respect to the Acquired Assets.
10.7 Correspondence. Cheney authorizes Buyer, on and
after the Closing Date, to receive and open mail addressed to
Cheney and to deal with the contents thereof in a responsible
manner; provided, that such mail relates to the Acquired Assets
or to the Business. Buyer shall promptly deliver to Cheney all
other mail addressed to Cheney which is received by Buyer.
Cheney shall have the right, at his request and expense, to
inspect any such mail addressed to it and retained by Buyer and
to make copies thereof.
10.8 Conditions of Operation. Subject to the
provisions of Section 10.1, during the period commencing on the
Closing Date and terminating on December 31, 2001:
(a) Buyer shall operate the Business in substantially
the same manner as it was conducted prior to the Closing Date;
(b) the prior written consent of Cheney shall be
required if Buyer enters into any transactions other than in the
ordinary course or inconsistent with the budgeting process set
forth in Section 10.1; and
(c) Headway shall provide Buyer with sufficient
working capital to operate the Business following the Closing
Date.
11. NonCompetition.
11.1 General. Cheney agrees, for a period from the
Closing Date until December 31, 2002 (or December 31, 2001, with
respect to Sections 11.1(b) and (d)) (the "Term") and provided
that Buyer and Headway are not in material default with respect
to any of their material obligations under this Agreement, the
Employment Agreement (the termination of Cheney without cause
thereunder being deemed a material default) or the Guarantee,
that he shall not, directly or indirectly:
(a) within a 75-mile radius from One Laurel Square,
Hamden, Connecticut, engage, for or on behalf of himself or any
person or entity other than Buyer or Headway, in the business of
the placement or provision of temporary, permanent, leased or
payrolled personnel (including self-incorporated personnel);
(b) solicit or attempt to solicit business for
services offered by Buyer or Headway from any parties who (i) are
clients of Cheney (in connection with the Business) or the
Business on the Closing Date or at any time during the 12 months
prior to the Closing Date or to whom Cheney (in connection with
the Business) or the Business has made or makes proposals for
services during the 12 months preceding the Closing Date or (ii)
are clients of Buyer or Headway during the Term; or to whom Buyer
makes proposals for services during the Term;
(c) within a 75-mile radius of One Laurel Square,
Hamden, Connecticut, otherwise divert or attempt to divert from
Buyer or Headway any business involving the placement or
provision of temporary, permanent, leased or payrolled personnel
(including self-incorporated personnel) of the type now or during
the Term conducted by Cheney (in connection with the Business) or
the Business, Buyer or Headway;
(d) solicit or attempt to solicit for any business
endeavor any employee (including any temporary, payrolled or
leased employee) of Buyer or Headway, including any employee of
the Cheney or the Business who is employed by Buyer after the
Closing Date; or
(e) render any services as a joint venturer, partner,
consultant or otherwise to, or have any interest as a
stockholder, partner, member, lender or otherwise in, any person
or entity which is engaged in activities which, if performed by
Cheney, would violate this Section 11.1.
The foregoing shall not prevent Cheney from purchasing or owning
(i) up to 5% of the voting securities of any corporation, the
securities of which are publicly-traded, or (ii) any interest in
any entity which is not also engaged in the business of the
placement or provision of temporary, permanent, leased or
payrolled personnel (including self-incorporated personnel).
Provided that Buyer and Headway are not in material default with
respect to any of their material obligations under this
Agreement, the Employment Agreement (the termination of Cheney
without cause thereunder being deemed a material default) or the
Guarantee, Cheney shall, during the Term, direct any business
opportunities in the temporary, permanent, leased or payrolled
personnel placement business that may come to his attention to
Buyer and Headway. References to Headway and Buyer in this
Section 11 shall also be deemed to refer to their respective
divisions and subsidiaries.
11.2 Injunctive Relief. Because Buyer and Headway
would not have an adequate remedy at law to protect their
businesses from any breach of the provisions of Section 11.1,
Buyer and Headway shall be entitled, in the event of such a
breach or threatened breach thereof by Cheney, to injunctive
relief, in addition to such other remedies and relief that would
be available to Buyer. In the event of such a breach, in
addition to any other remedies, Buyer and Headway shall be
entitled to receive from Cheney payment of, or reimbursement for,
their reasonable attorneys' fees and disbursements incurred in
successfully enforcing any such provision; provided, that Cheney
shall be entitled to receive from Buyer and Headway payment of,
or reimbursement for, his reasonable attorney's fees and
disbursements incurred in any proceeding commenced by Buyer and
Headway pursuant to the Section 11.2 in which Buyer and Headway
are not successful. The provisions of this Section 11 shall
survive the Closing Date.
12. Bulk Sales. Buyer waives compliance by Cheney
with the provisions of any applicable bulk sales law. Cheney
shall promptly pay or otherwise discharge all valid claims of his
creditors (as defined by the applicable bulk sales law) in
connection with the Business, as and when they become due and
payable.
13. Indemnification.
13.1 Obligations of Cheney. Cheney shall indemnify,
defend and hold harmless Buyer and Headway and their respective
officers, directors, employees, agents, shareholders, successors
and assigns from and against any Damages (as defined in Section
13.3) in connection with:
(a) any breach of any representation, warranty,
covenant or agreement of Cheney contained in this Agreement or
in any certificate, instrument or other agreement delivered by
him in connection with this Agreement;
(b) all Unassumed Liabilities and the operation of the
Business at any time prior to the Closing Date;
(c) the termination of the employment of any of
Cheney's (with respect to the Business) or the Business's
employees, as contemplated in Section 10.2; and
(d) any claim, action, suit or proceeding asserted or
instituted on the basis of any matter described in clauses (a),
(b) or (c) of this Section 13.1;
provided, however, that, except in connection with liabilities
under clauses (b), (c) or (d) above, the breach of the
representations and warranties set forth in Sections 6.12 and
6.16 relating to Taxes and Benefit Plans or the breach of the
provisions set forth in Section 11 relating to non-competition
(as to which the limitations of these provisos shall not apply),
no payment hereunder shall be required to be made by Cheney
unless and until the aggregate amount of any such losses,
damages, liabilities, costs and expenses exceeds $50,000 (and
then only in excess of such amount); provided, that in no event
shall Cheney be required to make payments hereunder in excess of
that portion of the Purchase Price as shall have been paid by
Buyer to Cheney.
13.2 Obligations of Buyer and Headway. Buyer and
Headway, jointly and severally, shall indemnify, defend and hold
harmless Cheney and his heirs, executors and assigns from and
against any Damages in connection with:
(a) any breach of any representation, warranty,
covenant or agreement of either Buyer or Headway (and their
respective successors and assigns) contained in this Agreement or
in any certificate, instrument or other agreement delivered by
either of them in connection with this Agreement;
(b) all Assumed Liabilities and the operation by Buyer
of the Business at any time on or after the Closing Date; and
(c) any claim, action, suit or proceeding asserted or
instituted on the basis of any matter described in clauses (a) or
(b) of this Section 13.2;
provided, however, that, except in connection with clause (b)
above, no payment hereunder shall be required to be made by Buyer
or Headway unless and until the aggregate amount of any such
losses, damages, liabilities, costs and expenses exceeds $50,000
(and then only in excess of such amount); provided, that in no
event shall Buyer and Headway be required to make payments
hereunder in excess of the Purchase Price.
13.3 Damages. For purposes of this Section 13,
"Damages" means any loss, liability, damage, cost or expense
suffered or incurred by a party in connection with the matters
described in Sections 13.1 or 13.2, as the case may be,
including, without limitation, assessments, fines, penalties,
judgments, settlements, costs, reasonable attorneys' fees and
reasonable disbursements and other reasonable out of pocket
expenses of the party incident to any matter as to which the
party is entitled to indemnification under such Sections, or
incident to any allegations or claims which, if true, would give
rise to Damages subject to indemnification hereunder, or incident
to the enforcement by the party of his or its rights and remedies
under this Section 13.
13.4 Proceedings. Any party seeking indemnification
pursuant to this Section 13 (the "Indemnified Party") shall give
the party from which indemnification is sought (the "Indemnifying
Party") prompt notice of any claim, allegation, action, suit or
proceeding which he or it believes might give rise to
indemnification under this Section 13, stating the nature and
extent of any such claim, allegation, suit or proceeding with
reasonable specificity, and the amount thereof, if known. Any
failure to give such notice shall not affect the indemnification
provided hereunder except to the extent that the Indemnifying
Party is actually prejudiced as a result of such failure. The
Indemnifying Party shall have the right to participate in, and,
with the consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed, to control, the defense
of any such claim, allegation, action, suit or proceeding, at the
Indemnifying Party's expense, and with counsel of his or its own
choosing reasonably acceptable to the Indemnified Party;
provided, however, that if Buyer and Headway are the Indemnified
Parties, they shall have the right to withhold such consent and
to retain control of such defense in the case of any claim,
action, suit or proceeding with respect to which an adverse
outcome could have a material adverse effect on Buyer or Headway,
with the expense of any counsel retained by Buyer and Headway in
any such instance to be at Buyer's and Headway's expense. No
settlement or compromise of any such claim, action, suit or
proceeding shall be made without the prior consent of the
Indemnified Party and the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed by either of them.
13.5 Limitations on Indemnification. Anything in
Article 13 to the contrary notwithstanding, no right to
indemnification may be asserted under this Section 13 after
December 31, 2001, except any such rights to indemnification
arising in connection with (a) any matter referred to in Sections
6.12 or 6.16, none of which shall be subject to any time
limitation other than any statutes of limitation applicable to
such matters, (b) any matter covered by Section 11 or (c) any
claim as to which the notice required by Section 13.4 has been
given on or prior to December 31, 2001.
13.6 Offset. It is agreed that, without limiting any
other rights of Buyer and Headway, they shall have the right to
set off against and deduct from any amounts payable to Cheney
pursuant to the provisions of Section 1.3 the amount of any
Damages for which they are entitled to indemnification under this
Section 13. In order to set off any such indemnity claim against
any amount payable to Cheney pursuant to Section 1.3, Buyer must,
in each instance, provide a certificate to Cheney setting forth
the claim in reasonable detail. If Cheney does not agree to
such claim in writing within 10 days after delivery of such
notice, Buyer agrees (a) to deposit into escrow, in an interest
bearing account, the amount of such claim, with Christy & Viener
as escrow agent, under a form of escrow agreement to be mutually
agreed by the parties, with the costs of such escrow arrangement
to be borne equally by the parties, and (b) to utilize the
arbitration procedures set forth in Section 14 to resolve such
claim.
14. Arbitration.
14.1 General. 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 14.1 shall not in any way affect the right of Buyer and
Headway to seek injunctive relief or any other remedies pursuant
to Section 11.2. Any such arbitration shall take place in New
York, New York, before three arbitrators, one of which shall be
appointed by Buyer or Headway, one by Cheney, 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 by third
parties.
14.2 Consent to Jurisdiction; Service of Process. Each
party irrevocably submits to the jurisdiction and venue of the
arbitration described in Section 14.1 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. Buyer and Headway appoint Messrs.
Christy & Viener, 620 Fifth Avenue, New York, New York 10020,
Attention: Laurence S. Markowitz, Esq., and Cheney appoints
Martin J. Gersten, Esq., as their respective attorneys-in-fact
and authorized agents solely to receive on their behalf, service
of any demands for, or any notice with respect to, arbitration
hereunder or any service of process. Service on either of such
attorneys-in-fact may be made by registered or certified mail or
by personal delivery, in any case return receipt requested, and
shall be effective as service on Buyer and Headway or Cheney, as
the case may be. Nothing herein shall be deemed to affect any
right to serve any such demand, notice or process in any other
manner permitted under applicable law.
15. Miscellaneous.
15.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date by the mutual written
consent of all the parties.
15.2 Entire Agreement; Amendments; No Waivers. This
Agreement, together with the Schedules, sets forth the entire
understanding of the parties with respect to its subject matter
and merges and supersedes all prior and contemporaneous
understandings of the parties with respect to its subject matter.
No provision of this Agreement may be waived or modified, in
whole or in part, except by a writing signed by each of the
parties. Failure of any party to enforce any provision of this
Agreement shall not be construed as a waiver of his or its rights
under such or any other provision. No waiver of any provision of
this Agreement in any instance shall be deemed to be a waiver of
the same or any other provision in any other instance.
15.3 Communications. All notices, consents and other
communications given under this Agreement shall be in writing and
shall be deemed to have been duly given (a) when delivered by
hand or by Federal Express or a similar overnight courier to, (b)
five days after being deposited in any United States post office
enclosed in a postage prepaid registered or certified mail
envelope (Return Receipt Requested) addressed to, or (c) when
successfully transmitted by facsimile (with a confirming copy of
such communication to be sent as provided in (a) or (b) above)
to, the party for whom intended, at the address or facsimile
number for such party set forth below, or to such other address
or facsimile number as may be furnished by such party by notice
in the manner provided herein; provided, however, that any notice
of change of address or facsimile number shall be effective only
on receipt.
If to Buyer or Headway: with a copy to:
Headway Corporate Resources, Inc. Christy & Viener
850 Third Avenue 620 Fifth Avenue
New York, New York 10022 New York, New York 10020
Attention: Barry S. Roseman, President Atten: Laurence S.
Markowitz, Esq.
Fax No.: (212) 508-3540 Fax No.: (212) 632-5555
If to Cheney: with a copy to:
Mr. Timothy Cheney Martin J. Gersten, Esq.
25 Lansdowne Avenue 14 Powder Horn Hill
Hamden, Connecticut 06517 Brookfield, Connecticut
06804
Fax No.: (203) 281-0109 Fax No.: (203) 740-8642
15.4 Successors and Assigns. This Agreement shall be
binding on, enforceable against and inure to the benefit of, the
parties and their respective heirs, executors, successors and
permitted assigns (whether by merger, consolidation, acquisition
or otherwise), and nothing herein is intended to confer any
right, remedy or benefit upon any other person. No party may
assign his or its rights or delegate his or its obligations under
this Agreement without the express written consent of all of the
other parties; provided, however, that Buyer may assign its
rights or delegate its obligations hereunder, either before or
after the Closing Date, to Headway or any other wholly-owned
subsidiary of Headway.
15.5 Expenses. Each of the parties shall bear and pay,
without any right of reimbursement from any other party, all
costs, expenses and fees incurred by him or it or on his or its
behalf incident to the preparation, execution and delivery of
this Agreement and the performance of such party's obligations
hereunder, whether or not the transactions contemplated in this
Agreement are consummated, including, without limitation, the
fees and disbursements of attorneys, accountants and consultants
employed by such party, and shall indemnify and hold harmless the
other parties from and against all such fees, costs and expenses.
15.6 Brokers and Finders. Except as set forth in
Schedule 15.6, each party represents to the others that no agent,
broker, investment banker, financial advisor or other person or
entity is or shall be entitled to any broker's or finder's fee or
other commission or similar fee in connection with the
transactions contemplated by this Agreement. Each party shall
indemnify and hold harmless the others from and against any
claim, liability or obligation with respect to any fees,
commissions or expenses asserted by any person or entity on the
basis of any act or statement alleged to have been committed or
made by such indemnifying party or any of his or its affiliates.
15.7 Public Announcements. No oral or written public
announcement or disclosure with respect to this Agreement and the
transactions contemplated herein prior to the Closing Date shall
be made by or on behalf of any party without the prior approval
of the other parties, except to the extent required by applicable
securities laws or the rules and regulations of any stock
exchange, by court order or as otherwise required by law.
15.8 Governing Law. This Agreement shall in all
respects be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and fully
to be performed in such state, without giving effect to conflicts
of law principles.
15.9 Severability and Savings Clause. If any provision
of this Agreement is held to be invalid or unenforceable by any
court or tribunal of competent jurisdiction, the remainder of
this Agreement shall not be affected thereby, and such provision
shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or
unenforceability. In this regard, the parties agree that the
provisions of Section 11, including, without limitation, the
scope of the territorial and time restrictions, are reasonable
and necessary to protect and preserve Buyer's legitimate
interests. If the provisions of Section 11 are held by a court
of competent jurisdiction to be in any respect unreasonable, then
such court may reduce the territory or time to which it pertains
or otherwise modify such provisions to the extent necessary to
render such provisions reasonable and enforceable.
15.10 Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
15.11 Construction. Headings used in this
Agreement are for convenience only and shall not be used in the
interpretation of this Agreement. References to Sections and
Schedules are to the sections and schedules of this Agreement.
As used herein, the singular includes the plural and the
masculine, feminine and neuter gender each includes the others
where the context so indicates.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
HEADWAY CORPORATE RESOURCES, INC. CHENEY ASSOCIATES, L.L.C.
By /s/Barry S. Roseman By /s/Barry S. Roseman
President Treasurer
/s/ TIMOTHY CHENEY