E-116
Exhibit No. 6
Form 8-K
Headway Corporate Resources, Inc.
SEC File No. 0-23170
_____________________________________
SECURITIES PURCHASE AGREEMENT
_____________________________________
INCREASING RATE SENIOR SUBORDINATED NOTES
DUE MARCH 12, 2006
AND
SERIES F CONVERTIBLE PREFERRED STOCK
OF
HEADWAY CORPORATE RESOURCES, INC.
Dated as of March 19, 1998
TABLE OF CONTENTS
Section Page
1. Definitions 1
2. Issuance, Purchase and Sale of the Securities. 8
2.1 Issuance of the Securities. 8
2.2 Sale and Purchase of the Securities 9
3. Closing of Sale of Securities 9
4. Deliveries at the Closing 9
4.1 Deliveries by the Company to the Purchasers on the
Closing Date 9
(a) Securities. 9
(b) Compliance Certificate. 9
(c) Opinion of Counsel 10
(d) Note Indenture 10
(e) Credit Facility. 10
(f) Registration Rights Agreement. 10
(h) Certificate of Designations. 10
(i) Bylaws Amendment. 11
(j) Board of Directors. 11
(k) Other Transaction Documents. 11
(l) Governmental and Third Party Permits, Consents,
Etc 11
(m) Information Memorandum 11
(n) Corporate Documents 11
(o) Waivers 12
(p) Payment of Closing Fees 12
(q) Payment of the Signing Fee and the Commitment Fee.
12
4.2 Deliveries by the Purchasers to the Company on the
Closing Date. 12
(a) Purchase Price. 12
(b) Compliance Certificate. 12
(c) Registration Rights Agreement. 13
5. Representations and Warranties. Etc. 13
5.1 Organization and Qualification; Authority 13
5.2 Subsidiaries; Other Holdings 13
5.3 Licenses 14
5.4 Corporate and Governmental Authorization; Contravention
14
5.5 Validity and Binding Effect 15
5.6 Capitalization 16
5.7 Litigation; Defaults 18
5.8 Outstanding Debt 18
5.9 No Material Adverse Change 18
5.10 Employee Programs 19
5.11 Private Offerings 20
5.12 Broker's or Finder's Commissions 21
5.13 Company SEC Documents; Information Memorandum 21
5.14 Financial Statements; No Undisclosed Liabilities;
Accounts Receivable 22
5.15 Foreign Assets Control Regulation. Etc 23
5.16 Federal Reserve Regulations and Other Matters 23
5.17 Investment Company Act 24
5.18 Public Utility Holding Company Act 24
5.19 Interstate Commerce Act 24
5.20 Environmental Regulation, Etc 24
5.21 Properties and Assets 25
5.22 Insurance 25
5.23 Employment Practices 26
5.24 Intellectual Property 26
5.25 Material Contracts and Obligations 27
5.26 Taxes 29
5.27 Transactions with Affiliates; Arm's-Length
Transactions; Conflicts of Interest 30
5.28 Limitation on Subsidiary Payment Restrictions 30
5.29 Notes 30
5.30 Solvency 30
5.31 RICO 31
5.32 Absence of Certain Practices 31
5.33 No Other Business 31
5.34 Minute Books 31
5.35 Regulatory Requirements; Cessation of Direct Investment
Program 31
6. Purchase for Investment; Source of Funds 32
7. Covenants of the Company 33
7.1 Use of Proceeds 33
7.2 The Company's Board of Directors 33
7.3 Publicly Available Information 34
7.4 Public Documents 34
7.5 Information Relating to the Purchasers 34
7.6 Notice Regarding Certain Corporate Actions 34
7.7 Access to Information 34
7.8 True Books and Records of the Company 35
7.9 Officer's Knowledge of Default 35
7.10 Suits or Other Proceedings. 35
7.11 Hedging Obligations. 35
7.12 Projections. Prepare all 35
8. Restrictions on Transfer 35
8.1 Restrictive Legends 35
8.2 Notice of the Proposed Transfer; Opinions of Counsel 36
9. Miscellaneous 37
9.1 Indemnification: Expenses Etc. 37
9.2 Survival of Representations and Warranties;
Severability 39
9.3 Amendment and Waiver 39
9.4 Notices, Etc 39
9.5 Successors and Assigns 39
9.6 Agreement and Action of the Purchasers 40
9.7 Descriptive Headings 40
9.8 Satisfaction Requirement 40
9.9 GOVERNING LAW 40
9.10 Service of Process 40
9.11 Counterparts 41
9.12 Disclosure to Other Persons 41
9.13 Acknowledgment by Purchasers 42
9.14 No Adverse Interpretation of Other Agreements 42
9.15 WAIVER OF JURY TRIAL 42
SCHEDULES
SCHEDULE 5.1 -- Jurisdictions in which the Company is
qualified
SCHEDULE 5.2 -- Subsidiaries; Jurisdictions in which the
Subsidiaries are qualified
SCHEDULE 5.4 -- Authorization and Approvals
SCHEDULE 5.6 -- Capitalization
SCHEDULE 5.7 -- Litigation; Defaults
SCHEDULE 5.8 -- Debt and Other Liabilities
SCHEDULE 5.9 -- Material Developments
SCHEDULE 5.10 -- Employee Programs
SCHEDULE 5.14 -- Undisclosed Liabilities
SCHEDULE 5.19 -- Environmental
SCHEDULE 5.21 -- Condemnation Proceedings and Liens
SCHEDULE 5.22 -- Insurance
SCHEDULE 5.23 -- Employment Practices
SCHEDULE 5.24 -- Patents and Trademarks
SCHEDULE 5.25 -- Material Contracts and Obligations
SCHEDULE 5.26 -- Taxes
SCHEDULE 5.27 -- Transactions with Affiliates
SCHEDULE 5.28 -- Subsidiary Payment Restrictions
SCHEDULE 5.35 -- Earnout Provisions
SCHEDULE 5.36 -- Existing Investments
EXHIBITS
EXHIBIT A -- Form of Certificate of
Designations, Preferences and Rights of the
Preferred Stock
EXHIBIT B -- Form of Opinion of Christy & Viener
EXHIBIT C -- Form of Note Indenture
EXHIBIT D -- Form of Amendment to the Company's Bylaws
EXHIBIT E -- Form of Registration Rights Agreement
EXHIBIT F -- Form of Guaranty Agreement
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") dated as of
March 19, 1998, among Headway Corporate Resources, Inc., a
Delaware corporation (the "Company"), and each purchaser
executing a signature page hereto or any subsequent holder of the
Securities (each a "Purchaser," and collectively the
"Purchasers").
W I T N E S S E T H:
WHEREAS, the Company desires to issue and sell to the
Purchasers, and the Purchasers desire to purchase from the
Company, (i) the Notes in the aggregate amount of up to
$10,000,000, and (ii) the Preferred Stock in the aggregate
liquidation preference of up to $20,000,000 (the Notes and the
Preferred Stock are herein collectively referred to as the
"Securities"), on the terms, and subject to the conditions, set
forth herein.
NOW THEREFORE, in consideration of these premises, the
mutual covenants and agreements set forth herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. For purposes hereof unless the context
otherwise requires, the following terms shall have the meanings
indicated. All accounting terms not otherwise defined herein,
shall have the respective meanings accorded to them under GAAP.
Unless the context otherwise requires, (i) references to a
"Schedule" or an "Exhibit" are to a Schedule or an Exhibit
attached to this Agreement, (ii) references to a "section" or a
"subdivision" are to a section or a subdivision of this
Agreement, or (iii) any of the following terms may be used in the
singular or the plural, depending on the reference:
"Acquisition Documents" means, collectively, (a) that
certain Asset Purchase Agreement dated as of March 31, 1997
between the Company, Headway Corporate Staffing Services of North
Carolina, Inc., Advanced Staffing Solutions, Inc., H. Wade
Gresham and Mark F. Herron, (b) that certain Asset Purchase
Agreement dated as of July 28, 1997 between the Company, ASA
Personnel Services, Inc., Administrative Sales Associates, Inc.,
Administrative Sales Associates Temporaries, Inc., Richard Brody
and Arnold Katz, (c) that certain Asset Purchase Agreement dated
as of September 29, 1997 between the Company, Irene Cohen Temps,
Inc., Quality Outsourcing, Inc., George J. Burt, Richard E. Gaudy
and Peter F. Notaro, (d) that certain Purchase Agreement dated as
of September 30, 1997 between the Company, Headway Corporate
Staffing Services of Connecticut, Inc., Electronic Data
Resources, L.L.C., EDR Associates, Inc., Maurice Dusel, James
Roberts and Michael Russell, (e) that certain Asset Purchase
Agreement, to be dated on or about March 23, 1998, among the
Company, Headway Corporate Staffing Services of North Carolina,
Inc., Select Staffing Services, Inc. and Jack Powell, (f) that
certain Asset Purchase Agreement, to be dated on or about March
23, 1998, among the Company, Cheney Associates, L.L.C. and
Timothy Cheney, an individual doing business under the names
Cheney Associates, Inc. and Cheney Consulting Group, (g) that
certain Stock Purchase Agreement, to be dated on or about March
23, 1998, among the Company, L&M Shore Family Holdings Limited
Partnership, Elder Investments Limited Partnership, Mark Shore
and Linda Elder, and (h) any other purchase agreement entered
into hereafter by the Company and/or any Subsidiaries relating to
the acquisition of any entity or any assets thereof.
"Affiliate" means, with respect to any specified
Person, any other Person who directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under
common control with, such specified Person. The term "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"Agreement" means this Agreement, as amended, modified
or supplemented from time to time, in accordance with the terms
hereof, together with any exhibits, schedules or other
attachments thereto.
"Business Day" has the meaning ascribed thereto in the
Note Indenture.
"Bylaws Amendment" means the Amendment to the Company's
by-laws, attached hereto as Exhibit D.
"Capital Stock" means, with respect to any Person, any
and all shares, interests, participations, rights in or other
equivalents (however designated and whether voting or non-voting)
of such Person's capital stock or any form of membership
interests, as applicable, whether outstanding on the Closing Date
or issued after the Closing Date and any and all rights, warrants
or options exercisable or exchangeable for or convertible into
such capital stock.
"Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Series F Convertible
Preferred Stock of the Company, attached hereto as Exhibit A.
"Change of Control" has the meaning ascribed thereto in
the Note Indenture.
"Charter Documents" has the meaning ascribed thereto in
Section 5.1 hereof.
"Closing" has the meaning ascribed thereto in Section 3
hereof.
"Closing Date" has the meaning ascribed thereto in
Section 3 hereof.
"Code" means the Internal Revenue Code of 1986, and the
rules and regulations thereunder, as amended from time to time.
"Commission" means the United States Securities and
Exchange Commission or any other federal agency at the time
administering the Securities Act.
"Commitment Fee" means (i) one (1) percent of the
principal amount of the Notes, plus (ii) one (1) percent of the
aggregate liquidation preference of the Preferred Stock, as
determined pursuant to the Certificate of Designation.
"Commitment Letter" means those certain commitment
letters between each Purchaser and the Company, each dated
January 27, 1998, with respect to the transactions contemplated
hereby.
"Common Stock" means the common stock, par value $.0001
per share, of the Company.
"Company" has the meaning ascribed thereto in the
introduction hereof.
"Contract" has the meaning ascribed thereto in Section
5.25 hereof.
"Credit Agreement" means the Credit Agreement, dated as
of March 19, 1998, entered into between the Company and
NationsBank, National Association, as agent, and the lenders
party thereto from time to time, providing for the Credit
Facility, as the same may at any time be amended, amended and
restated, supplemented or otherwise modified, including any
refinancing, refunding, replacement or extension thereof
permitted under the Note Indenture which provides for working
capital and other financing, whether by the same or any other
lender or group of lenders.
"Credit Facility" means the $75,000,000 revolving
credit facility, pursuant to the Credit Agreement.
"Current Affiliate" has the meaning ascribed thereto in
Section 5.10 hereof.
"Default" has the meaning ascribed thereto in the Note
Indenture.
"DGCL" shall mean the Delaware General Corporation Law
in effect as of the date hereof, as amended from time to time.
"Dilution Event" has the meaning ascribed thereto in
the Note Indenture.
"Domestic Subsidiary" has the meaning ascribed thereto
in the Note Indenture.
"Employee Program" has the meaning ascribed thereto in
Section 5.10 hereof.
"Employees" means officers, directors, consultants,
employees and all other persons who render services to the
Company.
"Environment" means soil, surface waters, groundwaters,
land, stream sediments, surface or subsurface strata and ambient
air.
"Environmental Law(s)" means and includes any Laws
relating to the regulation or protection of human health, safety
or the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the
environment (including ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata), or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security
Act of 1974, and the rules and regulations thereunder, as amended
from time to time.
"ERISA Plan" has the meaning ascribed thereto in
Section 5.10 hereof.
"Event of Default" has the meaning ascribed thereto in
the Note Indenture.
"Executive Officer" means the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief Financial
Officer, the Treasurer and any Senior Vice President of the
Company or any other person who, by whatever title, has control
over or responsibility for the management and operations of the
Company.
"Financial Statements" has the meaning ascribed thereto
in Section 5.14 hereof.
"GAAP" means generally accepted accounting principles
and practices set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting
Standards Board or in such other statements by such other entity
as may be approved by a significant segment of the accounting
profession that are applicable to the circumstances as of the
date of determination.
"GarMark" means GarMark Partners, L.P.
"Governmental Authority" means any governmental or
quasi-governmental authority including, without limitation, any
federal, state, territorial, county, municipal or other
governmental or quasi-governmental agency, board, branch, bureau,
commission, court, arbitration panel, department, authority, body
or other instrumentality or political unit or subdivision or
official thereof, whether domestic or foreign.
"Guaranty Agreement" means the Guaranty Agreement of
even date herewith, by and among the Company's Domestic
Subsidiaries and the Trustee, for the benefit of the Purchasers,
substantially in the form of Exhibit F hereto, as amended,
modified or supplemented from time to time in accordance with the
terms thereof, together with any exhibits, schedules or other
attachments thereto.
"Hazardous Materials" means and includes any
pollutants, hazardous or toxic materials, substances or wastes,
including: petroleum and petroleum products and derivatives;
asbestos; radon; polychlorinated bi-phenyls; urea-formaldehyde
foam insulation; explosives; radioactive materials; laboratory
wastes and medical wastes (including contaminated clothing, body
fluids, contaminated medical instruments and equipment,
catheters, used bandages, gauzes, needles or other sharp
instruments); and any chemicals, materials or substances
designated or regulated as hazardous or as toxic substances,
materials, or wastes, or otherwise regulated, under any
Environmental Law; hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant,
contaminant, or other human health or safety, as defined or
regulated under any Environmental Law.
"Hazardous Waste" means and includes any hazardous
waste as defined or regulated under any Environmental Law.
"Hedging Obligations" has the meaning ascribed thereto
in the Note Indenture.
"Information Memorandum" means that certain Information
Memorandum of the Company dated December 1, 1997, together with
all attachments, schedules and exhibits thereto, distributed in
connection with the purchase and sale of the Securities, and any
supplement or amendment thereto reviewed by each Purchaser prior
to the date of this Agreement.
"Initial Purchasers" means the Purchasers listed on the
signature pages hereto and each of their respective Affiliates.
"Illegal Transfer Notice" has the meaning ascribed
thereto in Section 8.2 hereof.
"Indemnified Party" or "Indemnified Parties" has the
meaning ascribed thereto in Section 9.1(a) hereof.
"Intellectual Property" has the meaning ascribed
thereto in Section 5.24(a) hereof.
"IRS" means the Internal Revenue Service or any
successor agency.
"Law" Any statute, ordinance, code, rule, regulation or
order enacted, adopted, promulgated, applied or followed by any
Governmental Authority.
"License" or "Licenses" has the meaning ascribed
thereto in Section 5.3 hereof.
"Lien" means any security agreement, financing
statement (whether or not filed) mortgage, lien (statutory or
otherwise), charge, pledge, hypothecation, conditional sales
agreement, adverse claim, title retention agreement or other
security interest, encumbrance, lien, charge, restrictive
agreement, mortgage, deed of trust, indenture, pledge, option,
limitation, exception to or other title defect in or on any
interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale, lease,
consignment, or bailment given for security purposes, trust
receipt or other title retention agreement with respect to any
Property or asset of such Person, whether direct, indirect,
accrued or contingent.
"Losses" has the meaning ascribed thereto in Sect on
9.1(a) hereof.
"Material Adverse Effect" has the meaning ascribed
thereto in Section 5.1 hereof.
"Moore" means Remington Investment Strategies L.P. and
Moore Global Investments, Ltd. or any of their Affiliates.
"Multiemployer Plan" has the meaning ascribed thereto
in Section 5.10 hereof.
``Notes" means the Increasing Rate Senior Subordinated
Notes of the Company, due March 19, 2006, issued pursuant to the
Note Indenture as amended, modified or supplemented from time to
time in accordance with the terms thereof and the Note Indenture.
"Note Indenture" means the Indenture of even date
herewith by and between the Company and the Trustee,
substantially in the form of Exhibit C hereto, as amended,
modified or supplemented from time to time in accordance with the
terms thereof, together with any exhibits, schedules or other
attachments thereto.
"Officers' Certificate" means a certificate executed on
behalf of the Company by (a) the Chairman of the Board of
Directors (if an officer) or the President or one of the Vice
Presidents of the Company and (b) the Treasurer or one of the
Assistant Treasurers or the Secretary or one of the Assistant
Secretaries of the Company.
"Option Plan" means any stock award or option plan,
grant of warrants, grant of rights (including grant of exercise,
exchange or conversion rights), agreement or arrangement,
undertaking or commitment of any kind, for Employees relating to
Capital Stock or other securities of the Company.
"Permitted Acquisitions" has the meaning ascribed
thereto in the Note Indenture.
"Permitted Investments" has the meaning ascribed
thereto in the Note Indenture.
"Permitted Liens" has the meaning ascribed thereto in
the Note Indenture.
"Person" means any individual, entity or group,
including, without limitation, individual, corporation, limited
liability company, limited or general partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, or government or any agency or political
subdivision thereof.
"Preferred Stock" means the Series F Convertible
Preferred Stock $0.0001 par value per share of the Company having
the terms outlined in the Certificate of Designations and an
aggregate liquidation preference of $20,000,000.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Public Document" has the meaning ascribed thereto in
Section 7.4 hereof.
"Purchasers" except as defined elsewhere in this
Agreement, shall be as defined in the introduction hereto.
"Registration Rights Agreement" means the Registration
Rights Agreement of even date herewith, by and among the Company
and the Purchasers, substantially in the form of Exhibit E
hereto, as amended, modified or supplemented from time to time in
accordance with the terms thereof, together with any exhibits,
schedules or other attachments thereto.
"Regulation D" means Regulation D under the Securities
Act.
"Regulation S" means Regulation S under the Securities
Act.
"Release" means any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing, or dumping into the Environment.
"Restricted Security" has the meaning ascribed thereto
in Section 8.2 hereof.
"Rule 144" means Rule 144 as promulgated by the
Commission under the Securities Act, and any successor rule or
regulation thereto.
"Rule 144A" means Rule 144A as promulgated by the
Commission under the Securities Act, and any successor rule or
regulation thereto.
"Securities" means, collectively, the Notes and the
Preferred Stock.
"Securities Act" means the Securities Act of 1933, and
the rules and regulations of the Commission promulgated
thereunder, as amended.
"Security Documents" has the meaning ascribed thereto
the Note Indenture.
"Signing Fee" means the aggregate amount of $50,000.
"Subsidiary" means with respect to any Person, any
corporation, association or other business entity of which
securities representing more than 50% of the combined voting
power of the total Voting Stock (or in the case of an association
or other business entity which is not a corporation, more than
50% of the equity interest) is at the time owned or controlled,
directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. When used
therein without reference to any Person, Subsidiary means a
Subsidiary of the Company.
"Swap Agreements" has the meaning ascribed thereto in
the Note Indenture.
"Taxes" has the meaning ascribed thereto in Section
5.26 thereof.
"Threat of Release" means a substantial likelihood of a
Release which requires action to prevent or mitigate damage to
the Environment which may result from such Release.
"Transaction Documents" means, collectively, this
Agreement, the Note Indenture, the Notes, the Registration Rights
Agreement, the Guaranty Agreement and the Credit Agreement and
any and all agreements, exhibits, schedules, certificates,
instruments and other documents contemplated thereby or executed
and delivered in connection therewith.
"Trustee" has the meaning ascribed thereto in the Notes
Indenture.
"Voting Stock" means any class or classes of Capital
Stock pursuant to which the holders thereof have the general
voting power under ordinary circumstances to vote for the
election of directors, managers or trustees of any Persons
(irrespective of whether or not at the time, stock of any class
or classes will have, or might have, voting power by the reason
of the happening of any contingency).
"Waivers" means the documents waiving the "change-in-
control" provisions contained in certain stock option agreements.
2. Issuance, Purchase and Sale of the Securities.
2.1 Issuance of the Securities.
(a) The Company has authorized the issuance and
sale of the Notes, in the aggregate principal amount of up to
$10,000,000 to be acquired by the Purchasers in accordance with
the terms of this Agreement. The Notes shall be issued pursuant
to and in accordance with the terms of the Note Indenture. Each
Note will be issued in the principal amount of $100,000 and
integral multiples of $1,000 in excess thereof, and will
otherwise be in the form of the Note attached to the Note
Indenture, with such changes thereto, if any, as may be approved
by the Purchasers and the Company.
(b) The Company has authorized the issuance and
sale of the Preferred Stock in the aggregate liquidation
preference of up to $20,000,000 to be acquired by the Purchasers
in accordance with the terms of this Agreement. The Preferred
Stock shall have the voting powers, dividend rights, liquidation
rights, designations, preference and relative, participating,
optional or other special rights, and the qualifications,
limitations and restrictions thereof, as are set forth in the
Certificate of Designations which shall be filed with the
Secretary of State of the State of Delaware on or before the
Closing Date.
2.2 Sale and Purchase of the Securities. Subject to
the terms and conditions of this Agreement and the Note
Indenture, contemporaneously with the execution hereof, the
Company will issue, sell and deliver to each Purchaser and each
Purchaser will purchase from the Company, (a) such principal
amount of Notes, and (b) such amount of the aggregate liquidation
preference of Preferred Stock, as is specified opposite such
Purchaser's name on the signature pages hereto. The purchase
price of the Securities shall be as set forth on the signature
page of each Purchaser and shall be payable by each Purchaser to
the Company in cash by wire transfer of immediately available
funds.
3. Closing of Sale of Securities. The purchase and
delivery of the Securities to be purchased by the Purchasers
hereunder shall take place at the offices of Christy & Viener,
620 Fifth Avenue, New York, New York 10020, at a closing (the
"Closing") on March 19, 1998 or at such other place or on such
other date as the Purchasers and the Company may agree upon (such
date on which the Closing shall have actually occurred, the
"Closing Date"). At the Closing, the Company will deliver or
cause to be delivered to each Purchaser the Securities to be
purchased by each such Purchaser pursuant hereto against payment
of the purchase price therefor. The Notes and the Preferred
Stock to be purchased by each Purchaser hereunder shall be, with
respect to each such Purchaser, in the form of a single Note and
a single Preferred Stock certificate, respectively (or such
greater number of Preferred Stock certificates as each Purchaser
may request no less than 48 hours prior to the Closing), in each
case dated the date of the Closing and registered in the
Purchaser's name or that of its nominee (provided to the Company
no less than 48 hours prior to the Closing). If at the Closing
the Company shall fail to tender to the Purchasers any of the
Securities to be purchased by them as provided in this Section 3,
or any of the items to be delivered pursuant to Section 4.1 shall
not have been delivered or such delivery has not been waived by
the Purchasers, the Purchasers shall, at their election, be
relieved of all further obligations, if any, under the Commitment
Letter or this Agreement, without thereby waiving any other
respective rights it may have by reason of such failure or such
non-fulfillment.
4. Deliveries at the Closing.
4.1 Deliveries by the Company to the Purchasers on the
Closing Date. At the Closing, the Company will deliver or cause
to be delivered to each Purchaser, against payment of the
purchase price as provided herein:
(a) Securities. The Securities, as provided in
Section 3 hereof;
(b) Compliance Certificate. An Officers'
Certificate, dated the date of the Closing, certifying that:
(i) the representations and warranties of
the Company and the Subsidiaries contained in this
Agreement, the other Transaction Documents, and those
otherwise made in writing by or on behalf of the
Company and the Subsidiaries, in connection with
transactions contemplated by this Agreement and the
other Transaction Documents are true and correct as of
the date hereof, after giving effect to the sale of the
Securities and the other transactions contemplated by
this Agreement and the other Transaction Documents,
except that any representations and warranties that
relate to a particular date or period shall be true and
correct as of such date or period; and
(ii) the Company and each of its
Subsidiaries have performed, satisfied and complied in
all material respects with all covenants, agreements
and conditions contained in, and required by, this
Agreement and the other Transaction Documents, to be
performed, satisfied or complied with prior to or at
the Closing, and at the time of the Closing after
giving effect to the sale of the Securities and the
other transactions contemplated by this Agreement and
the other Transaction Documents, no Default or Event of
Default has occurred and is continuing.
(c) Opinion of Counsel. A favorable opinion, from
Christy & Viener counsel for the Company, substantially in the
form set forth in Exhibit B, addressed to the Purchasers, dated
the Closing Date and otherwise satisfactory in substance and form
to the Purchasers, and their respective counsel;
(d) Note Indenture. Fully-executed original
counterparts of the Note Indenture, duly executed by the Company
and the Trustee and evidence that such Note Indenture is in full
force and effect and no term or condition thereof has been
amended, modified or waived;
(e) Credit Facility. Fully-executed counterparts
of the Credit Agreement, duly executed by the Company,
NationsBank, National Association, as agent, and the lenders
party thereto and evidence that (i) such Credit Agreement is in
full force and effect and no term or condition thereof has been
amended, modified or waived, and (ii) that all transactions with
respect to the Credit Facility have been consummated;
(f) Registration Rights Agreement. Fully-executed
original counterparts of the Registration Rights Agreement, duly
executed by the Company, and evidence that such Registration
Rights Agreement is in full force and effect and no term or
condition thereof has been amended, modified or waived;
(g) Guaranty Agreement. Fully-executed original
counterparts of the Guaranty Agreement, duly executed by each of
the Company's Domestic Subsidiaries, and evidence that such
Guaranty Agreement is in full force and effect and no term or
condition thereof has been amended, modified or waived;
(h) Certificate of Designations. Evidence of
filing with the Secretary of State of the State of Delaware of
the Certificate of Designations pursuant to Section 151 of the
DGCL with respect to the issuance and sale of the Preferred Stock
contemplated hereunder;
(i) Bylaws Amendment. Evidence of the adoption
of the Bylaws Amendment pursuant to Section 109 of the DGCL;
(j) Board of Directors. Evidence of the increase
of the size of the Company's Board of Directors and of each of
the Compensation Committee, Stock Incentive Plan Committee,
Finance Committee and Audit Committee by one (1), and of the
election of a person chosen by GarMark, to each of the vacancies
created by such increases, all as set forth in Section 7.2
hereof.
(k) Other Transaction Documents. Evidence that
other Transaction Documents and any other agreements and
documents contemplated thereby and in connection therewith have
been duly executed and delivered by all respective parties
thereto and are in full force and effect;
(l) Governmental and Third Party Permits,
Consents, Etc. Evidence that, except as set forth on Schedule
5.4, the Company and its Subsidiaries have duly applied for and
obtained all approvals, orders, licenses, consents and other
authorizations (collectively, the "Approvals") from each federal,
state and local government and governmental agency, department or
body, pursuant to any agreement to which the Company or any of
its Subsidiaries is a party, or to which any of them or any of
their assets is subject, that may be required in connection with
this Agreement, the other Transaction Documents or any other
agreements and documents contemplated thereby and in connection
therewith;
(m) Information Memorandum. Evidence that the
Information Memorandum has not been amended or supplemented
subsequent to the delivery thereof to the Purchasers;
(n) Corporate Documents.
(i) copies of the Company's and of each of
its Subsidiaries' certificate of incorporation or
formation, as the case may be, certified as of a recent
date by the Secretary of State of the jurisdiction of
incorporation or formation, as the case may be, of any
such entity;
(ii) a certificate of such Secretary of
State, dated as of a recent date, as to the good
standing of and payment of taxes by the Company and
each of its Subsidiaries which lists the Charter
Documents on file in the office of such Secretary of
State;
(iii) a certificate dated as of a recent
date as to the good standing of and payment of taxes by
the Company and each of its Subsidiaries issued by the
Secretary of State of each jurisdiction in which such
entity is qualified as a foreign corporation, except to
the extent that any failure to so qualify would not
have a Material Adverse Effect on the Company or any of
its Material Subsidiaries; and
(iv) A certificate, dated the Closing Date of
the Secretary of each of the Company and the
Subsidiaries, (i) certifying as true, complete and
correct its Charter Documents (as appropriate) and in
the case of the Company (x) resolutions of the
Company's Board of Directors relating to the adoption
of the Bylaws Amendment, (y) resolutions of the
Company's Board of Directors relating to the
transactions contemplated hereby, and (z) a certificate
of the Company's Stock Incentive Plan Committee
certifying that no "change-in-control" (as such term is
used in any option agreement or other award issued
pursuant to the Company's 1993 Stock Incentive Plan)
has occurred, or will occur upon the conversion of the
Preferred Stock, as a result of the transactions
contemplated hereby, (ii) as to the absence of
proceedings or other action for dissolution,
liquidation or reorganization of the Company, (iii) as
to the incumbency and specimen signatures of officers
who shall have executed instruments, agreements and
other documents in connection with the transactions
contemplated hereby, (iv) as to the effect that certain
agreements, instruments and other documents are in the
form approved in the resolutions referred to in clause
(i) above, and (v) covering such other matters, and
with such other attachments thereto, as Purchasers'
respective counsel may reasonably request at least one
Business Day before the Closing Date, which
certificates and attachments thereto shall be
satisfactory in form and substance to such Purchasers
and their respective counsel;
(o) Waivers. The Waivers relating to the stock
option agreements between the Company and each of Michael List
and Ronald Wendlinger in form and substance acceptable to the
Purchasers and each of their counsel, duly executed by each of
Michael List and Ronald Wendlinger;
(p) Payment of Closing Fees. The fees, expenses
and disbursements of each Purchaser's counsel reflected in
statements of such counsel rendered prior to or on the Closing
Date; and
(q) Payment of the Signing Fee and the Commitment
Fee. Each of the Signing Fee and the Commitment Fee, to the
extent not previously paid, in immediately available funds. The
Signing Fee shall be payable to GarMark. The Commitment Fee
shall be payable to each initial Purchaser in proportion to the
Securities purchased by such initial Purchaser pursuant to the
transactions contemplated hereby.
4.2 Deliveries by the Purchasers to the Company on the
Closing Date. At the Closing, each Purchaser will deliver or
cause to be delivered to the Company the following:
(a) Purchase Price. Such Purchaser's portion of
the Purchase Price, as provided herein;
(b) Compliance Certificate. An Officers'
Certificate, dated the date of the Closing, certifying that:
(i) the representations and warranties of
each Purchaser contained in this Agreement, the other
Transaction Documents, and those otherwise made in
writing by or on behalf of such Purchaser, in
connection with transactions contemplated by this
Agreement and the other Transaction Documents are true
and correct as of the date hereof, after giving effect
to the sale of the Securities and the other
transactions contemplated to be consummated at the
Closing by this Agreement and the other Transaction
Documents, except that any representations and
warranties that relate to a particular date or period
shall be true and correct as of such date or period;
(ii) such Purchaser has performed satisfied
and complied in all material respects with all
covenants, agreements and conditions contained in, and
required by, this Agreement and the other Transaction
Documents, required to be performed, satisfied or
complied with prior to or at the Closing; and
(c) Registration Rights Agreement. The
Registration Rights Agreement, duly executed by the Purchasers.
5. Representations and Warranties. Etc. In order to induce
the Purchasers to purchase the Securities, the Company represents
and warrants to the Purchasers that:
5.1 Organization and Qualification; Authority. The
Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, has
full corporate power and authority to own and lease its
Properties and carry on its business as presently conducted, is
duly qualified, registered or licensed as a foreign corporation
to do business and is in good standing in each jurisdiction in
which the ownership or leasing of its Properties or the character
of its present operations makes such qualification, registration
or licensing necessary, except where the failure to so qualify or
be in good standing would not have a material adverse effect on
the condition (financial or otherwise), assets, business or
results of operations of (a ``Material Adverse Effect") the
Company and its Subsidiaries on a consolidated basis. The Company
has heretofore delivered to each Purchaser's counsel complete and
correct copies of (i) the certificate of incorporation, articles
of organization or equivalent organizational document, and (ii)
the by-laws, operating agreement or equivalent document, of the
Company, each as amended to date and as presently in effect
(collectively, ``Charter Documents"). A list of all jurisdictions
in which the Company is qualified, registered or licensed to do
business as a foreign corporation is attached hereto as Schedule
5.1.
5.2 Subsidiaries; Other Holdings. Set forth on
Schedule 5.2 hereto are (i) the Company's Subsidiaries, and (ii)
the number and/or percentage of outstanding shares or other
equity interests (including options, warrants and other rights to
acquire any interest) of each class of Capital Stock or other
equity or ownership interests owned by the Company. Except as
set forth on Schedule 5.2, the Company does not own any Person or
Capital Stock or any other security of any Person, other than
Permitted Investments. Schedule 5.2 states as of the date hereof
(i) the organizational form of each Subsidiary, (ii) the
authorized and issued capitalizations of each Subsidiary, (iii)
the number of shares or other equity interests (including
options, warrants and other rights to acquire any interest) of
each class of Capital Stock or interest issued and outstanding of
each such Subsidiary, and (iv) the number and/or percentage of
outstanding shares or other equity interests (including options,
warrants and other rights to acquire any interest) of each class
of Capital Stock or other equity interests owned by any such
Subsidiary. Except as set forth on Schedule 5.2, no Subsidiary
owns any Person or Capital Stock or any other security of any
Person, other than Permitted Investments. Each Subsidiary is a
corporation or limited liability company, as the case may be,
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, as
the case may be, has full corporate power and authority to own
and lease its Properties, and carry on its business as presently
conducted, is duly qualified, registered or licensed as a foreign
corporation or limited liability company, as the case may be, to
do business and is in good standing in each jurisdiction in which
the ownership or leasing of its Properties or the character of
its present operations make such qualification, registration or
licensing necessary, except where the failure so to qualify or be
in good standing would not have a Material Adverse Effect on such
Subsidiary. A list of all jurisdictions in which each Subsidiary
is qualified, registered or licensed to do business as a foreign
corporation or limited liability company, as the case may be, is
attached hereto as Schedule 5.2. The Company owns, directly or
indirectly, all of the outstanding shares of Capital Stock of
each of its Subsidiaries free of any Liens (other than
restrictions generally applicable to securities under federal,
provincial or state securities laws and except as imposed by the
Security Documents), and said shares have been duly issued and
are fully paid and validly outstanding.
5.3 Licenses. The Company and its Subsidiaries hold
all material licenses, franchises, permits, consents,
registrations, certificates and other approvals (including,
without limitation, those relating to environmental matters,
public and worker health and safety, buildings, highways or
zoning) (individually, a "License" and collectively, "Licenses'')
required for the conduct of their business as now being
conducted, and is operating in substantial compliance therewith,
except where the failure to hold any such License or to operate
in compliance therewith would not have a Material Adverse Effect
on the Company and its Subsidiaries on a consolidated basis. The
Company and its Subsidiaries are in substantial compliance with
all Laws applicable to them, except in each case, where the
failure so to comply would not have a Material Adverse Effect on
the Company and its Subsidiaries on a consolidated basis or a
Material Adverse Effect on the ability of the Company or any of
its Subsidiaries to perform on a timely basis any obligation that
it has or will have under any Transaction Document to which it is
a party.
5.4 Corporate and Governmental Authorization;
Contravention. (a) Except as set forth on Schedule 5.4, the
execution, delivery and performance by the Company of the
Transaction Documents and all other instruments or agreements to
be executed in connection herewith or therewith, the issuance and
sale to the Purchasers of the Securities pursuant to this
Agreement, and the amendment to the Company's by-laws as
contemplated by the Bylaws Amendment (x) are within the Company's
corporate powers, having been duly authorized by all necessary
corporate action on the part of the Company, do not require any
License, authorization, approval, qualification or formal
exemption from, or other action by or in respect of, or filing of
a declaration (other than the filing of the Certificate of
Designations) or registration with, any court, Governmental
Authority, agency or official or other Person (except such as
have been obtained); (y) do not and will not (with or without the
giving or receipt of notice or the passage of time or both)
contravene or constitute a default under or violation of or give
rise to any right of termination, cancellation or acceleration
under (i) any provision of Law, (ii) the Charter Documents of the
Company or any of its Subsidiaries, (iii) any agreement or
Contract (or require the consent of any Person under any
agreement or Contract that has not been obtained) to which the
Company or any of its Subsidiaries is a party, or (iv) any
judgment, injunction, order, decree or other instrument binding
upon the Company, any of its Subsidiaries or any of their
respective Properties, except in the case of clauses (iii) and
(iv) above, where such contravention, default or violation would
not have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis; and (z) do not and will not
(with or without the giving or receipt of notice or the passage
of time or both) result in the creation or imposition of any Lien
on any Property of the Company or any of its Subsidiaries, other
than Permitted Liens or Liens contemplated by the Note Indenture
and the Security Documents.
(b) The execution, delivery and performance by
each of the Subsidiaries of the Transaction Documents to which it
is a party, and all other instruments or agreements to be
executed by such Subsidiary in connection therewith, (x) are
within such Subsidiary's powers, having been duly authorized by
all necessary action on the part of such Subsidiary, do not
require any License, qualification or formal exemption from, or
other action by or in respect of, or filing of a declaration or
registration with, any Governmental Authority or other Person
(except such as have been obtained); (y) do not and will not
(with or without the giving or receipt of notice or the passage
of time or both) contravene or constitute a default under or
violation of or give rise to any right of termination,
cancellation or acceleration under (i) any provision of Law, (ii)
the Charter Documents of such Subsidiary, (iii) any Contract (or
require the consent of any Person under any Contract that has not
been obtained) to which such Subsidiary is a party, or (iv) any
judgment, injunction, order, decree or other instrument binding
upon such Subsidiary or any of their respective Properties,
except, in the case of clauses (iii) and (iv) above, where such
contravention, default or violation would not have a Material
Adverse Effect on such Subsidiary; and (z) do not and will not
(with or without the giving or receipt of notice or the passage
of time or both) result in the creation or imposition of any Lien
on any Property of such Subsidiary, other than Permitted Liens or
Liens contemplated by the Note Indenture and the Security
Documents.
5.5 Validity and Binding Effect. Each of the
Transaction Documents has been duly executed and delivered by the
Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(b) Each of the Transaction Documents to which
any of the Subsidiaries is a party has been duly executed and
delivered by such Subsidiary and is a valid and binding agreement
of such Subsidiary, enforceable against such Subsidiary in
accordance with its terms.
5.6 Capitalization.
(a) The authorized Capital Stock of the Company
consists of 20,000,000 shares of common stock, $.0001 par value
("Common Stock"). As of the date hereof: (A) (i) 9,098,594
shares of the Company's Common Stock are issued and outstanding;
(ii) no shares of the Company's Common Stock are held by the
Company in its treasury; (iii) 1,827,712 shares of the Company's
Common Stock are reserved for issuance pursuant to the Company's
Option Plans; (iv) 200,000 shares of the Company's Common Stock
are reserved for issuance under options granted pursuant to
agreements with Strategic Growth International, Inc.; (v) 50,000
shares of the Company's Common Stock are reserved for issuance
under warrants granted pursuant to a Consulting Agreement with JW
Charles Financial; (vi) 128,461 shares of the Company's Common
Stock are reserved for issuance under warrants granted to
Tallwood; (vii) 240,000 shares of the Company's Common Stock are
reserved for issuance under warrants granted to The Tailwind
Fund; (viii) 120,000 shares of the Company's Common Stock are
reserved for issuance under warrants granted to Ehud Laska; (ix)
120,000 shares of the Company's Common Stock are reserved for
issuance under warrants granted to Ziad Abdelnaur; (x) 272,352
shares of the Company's Common Stock are reserved for issuance
under warrants granted to former holders of the Company's Series
D Convertible Preferred Stock; and (xi) up to $333,333 in shares
of the Company's Common Stock in each year of the Earnout under
that certain Asset Purchase Agreement, dated as of July 28, 1997,
between the Company, ASA Personnel Services, Inc., Administrative
Sales Associates, Inc., Richard Brody and Arnold Katz; (B)
575,000 shares of the Company's Common Stock are reserved for
issuance under the Company's Series E Convertible Preferred
Stock; and (C) 575,000 shares of the Company's Series E
Convertible Preferred Stock are reserved for issuance under
warrants granted to ING (U.S.) Capital Corporation. All of the
issued and outstanding shares of Capital Stock are fully paid and
non-assessable. The Company has made available to the Purchasers
complete and correct copies of the Option Plans, and all forms of
options and warrants listed above.
(b) Schedule 5.6 sets forth a complete, true and
accurate list of (i) the holders of record, including the amount
owned by each such holder, of all issued and outstanding
preferred stock of the Company, or (ii) all options, warrants and
other equity based derivatives (including stock appreciation
rights) of the Company outstanding as of the date of this
Agreement, including (w) the date of grant, (x) the exercise
price, (y) the expiration date, and (z) the holder, including the
number of securities owned by each holder, of each such
outstanding option and warrant of the Company.
(c) The Preferred Stock to be issued to the
Purchasers hereunder will have the voting powers, dividend
rights, liquidation rights, designations, preferences and
relative, participating, optional or other special rights, and
the qualifications, limitations and restrictions, as are set
forth in (i) the Certificate of Designations, the form of which
is attached hereto as Exhibit A, which will be filed with the
Secretary of State of the State of Delaware on or prior to the
Closing Date, and (ii) the Bylaws Amendment, the form of which is
attached hereto as Exhibit D, pursuant to which the by-laws of
the Company will be amended on or prior to the Closing Date. The
Company has duly reserved for issuance the shares of Common Stock
issuable upon conversion of the Preferred Stock. The Company has
duly reserved for issuance the shares of Common Stock issuable
upon conversion of the Preferred Stock. When paid for by, and
issued to, the Purchasers, the Preferred Stock will be duly and
validly issued, fully paid and non-assessable, and will be free
and clear of any and all Liens, and except as set forth in this
Agreement, the Certificate of Designations or applicable
securities Laws, will not be subject to any restriction on use,
voting or transfer; and the shares of Common Stock issuable to
the Purchasers upon conversion of the Preferred Stock, when
issued in accordance with the Certificate of Designations, will
be duly and validly issued, fully paid and non-assessable, and
will be free and clear of any and all Liens, and except as set
forth in this Agreement and the Certificate of Designations, will
not be subject to any restriction on use, voting or transfer.
The offer, sale and issuance of the Preferred Stock by the
Company to the Purchasers (and any shares of Common Stock
issuable on conversion thereof) are exempt from the registration
requirements of the Securities Act and state securities laws. On
the basis of the representations contained in Section 6 hereof,
the offer, sale and issuance of the Securities by the Company to
the Purchasers, and any shares of Common Stock issuable to the
Purchasers (or any transferee of any Purchaser; provided that
such transferee had executed a Transferee Letter of
Representation (with respect to the Notes, substantially in the
form attached as Exhibit C to the Note Indenture, and with
respect to the Preferred Stock, such Transferee Letter of
Representation in a form amended to apply to the Preferred Stock)
contemporaneously with, or prior to, such transfer) upon
conversion of the Preferred Stock, are exempt from the
registration requirements of the Securities Act and state
securities Laws. No further approval or authorization of the
stockholders or the directors of the Company, of any Governmental
Authority or any other Person is required for the issuance and
sale of the Preferred Stock or the shares of Common Stock
issuable on conversion thereof.
(d) Except as set forth above, no shares of
Capital Stock or other voting securities of the Company are
issued, reserved for issuance or outstanding. Except as set
forth in Schedule 5.6, (i) there are no outstanding options,
warrants, rights, exercise, exchange conversion rights,
agreements, arrangements, undertakings or commitments of any kind
(A) relating to the issuance, sale, purchase, redemption, voting
or transfer of any Capital Stock or other securities of the
Company, or (B) containing any "change-in-control" provisions,
(ii) there are no rights outstanding which permit or allow the
holder thereof to cause the Company to file a registration
statement or which permit or allow the holder thereof to include
securities of the Company in a registration statement filed by
the Company, and (iii) no events have occurred that would lower
the exercise price of, accelerate vesting of, or increase the
number of shares of the Company's Common Stock into which any
such securities can be exercised, exchanged or converted. There
are no preemptive or other similar rights with respect to any
Capital Stock of the Company. None of the outstanding Capital
Stock or other securities of the Company were issued in violation
of the Securities Act, or the securities or blue sky laws of any
state or other jurisdiction.
5.7 Litigation; Defaults. Except as set forth on
Schedule 5.23 hereto, there is no action, suit, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any of its
Subsidiaries, , any director, officer, agent, employee,
consultant or other Person acting on the behalf of the Company or
any of its Subsidiaries, or any properties of any of the
foregoing, before or by any Governmental Authority, which
(individually or in the aggregate) could reasonably be expected
to (i) have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis, or (ii) impair the ability
of the Company or any of its Subsidiaries to perform fully on a
timely basis any obligation which the Company or such Subsidiary
has or will have under any Transaction Document. Neither the
Company nor any of its Subsidiaries is in violation of, or in
default under (and there does not exist any event or condition
which, after notice or lapse of time or both, would constitute
such a default under), any term of its Charter Documents, or of
any term of any agreement, Contract, instrument, judgment,
decree, writ, determination, arbitration award, or Law
(including, without limitation, those relating to labor,
employment, occupational health and safety or similar matters)
applicable to the Company or any of its Subsidiaries or to which
the Company or any of its Subsidiaries is bound, or to any
properties of the Company or any of its Subsidiaries, except in
each case to the extent that such violations or defaults,
individually or in the aggregate, could not reasonably (a) affect
the validity or enforceability of any Transaction Document, (b)
have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis, or (c) impair the ability
of the Company or any of its Subsidiaries to perform fully on a
timely basis any obligation which the Company or any such
Subsidiary will have under any Transaction Document.
5.8 Outstanding Debt. Except as set forth in the
Financial Statements or on Schedule 5.8 hereto, at and as of the
Closing Date, neither the Company nor any of its Subsidiaries
has outstanding any debt for borrowed money, or obligations or
liabilities evidenced by bonds, debentures, notes or other
similar instruments or under capital leases other than the Credit
Facility and short-term debt incurred in the ordinary course of
business consistent with the Company's past practices. Schedule
5.8 contains a complete and accurate list of all material
guarantees, assumptions, purchase agreements and similar
agreements and arrangements whereby the Company or any of its
Subsidiaries is or may become directly or indirectly liable or
responsible for the indebtedness or other obligations of another
Person other than the Company or any of its Subsidiaries, except
for negotiable instruments endorsed for collection or deposit in
the ordinary course of its business, identifying, with respect to
each of the respective parties, amounts, terms and maturities.
5.9 No Material Adverse Change. Except as set forth on
Schedule 5.9, since December 31, 1997, there has been (i) no
material adverse change in the condition (financial or
otherwise), assets, business, projects or results of operations
of the Company or any of its Subsidiaries, (ii) no obligation or
liability (contingent or otherwise) incurred by the Company or
any of its Subsidiaries, other than obligations and liabilities
incurred in the ordinary course of business consistent with the
Company's past practices and no Lien placed on any of the
Properties of the Company or any of its Subsidiaries that remains
in existence on the date hereof, other than Permitted Liens and
liabilities and Liens described on Schedule 5.21 hereto, and
(iii) no acquisition or disposition of any material assets by the
Company or any of its Subsidiaries (or any contract or
arrangement therefor) or any other material transaction,
otherwise than for fair value, as determined in good faith by the
Company's Board of Directors, in the ordinary course of business.
5.10 Employee Programs. Schedule 5.10 sets forth a list
of every Employee Program maintained by the Company or any
Current Affiliate at any time during the six-year period ending
on the Closing Date or with respect to which a liability,
contingent or otherwise, of the Company or an Affiliate exists.
Each Employee Program (other than a Multiemployer Plan) which has
been maintained by the Company during the six-year period ending
on the Closing Date and which has been intended to qualify under
Section 401(a) or Section 501(c)(9) of the Code has received a
favorable determination or approval letter from the Internal
Revenue Service regarding its qualification under such section,
or the remedial amendment period under Section 401(b) of the Code
has not yet expired with respect to such Employee Program and, to
the knowledge of the Company, nothing has occurred that would
adversely affect such qualification from the date of such letter
or application (which was timely made) for a determination or
approval letter, and to the knowledge of the Company, no reason
exists why a favorable determination or approval shall not be
granted. Except as set forth on Schedule 5.10, the Company does
not know of any failure of any party to comply with any Laws
applicable with respect to the Employee Programs that have been
maintained by the Company or any Current Affiliate, and no such
failure will result from completion of the transactions
contemplated hereby. With respect to any Employee Program ever
maintained by the Company or an Affiliate, there has been no
"prohibited transaction," as defined in Section 406 of ERISA or
Code Section 4975, or breach of any duty under ERISA or other
applicable Law or any agreement which in any such case could
subject the Company to material liability either directly or
indirectly (including, without limitation, through any obligation
of indemnification or contribution) for any damages, penalties,
or taxes, or any other loss or expense. No litigation or
governmental administrative proceeding (or investigation) or
other proceeding (other than those relating to routine claims for
benefits) is pending or threatened with respect to any such
Employee Program (other than a Multiemployer Plan).
The Company and its Current Affiliates have not incurred any
liability under Title IV of ERISA which has not been paid in full
prior to the Closing. Neither the Company nor any of its Current
Affiliates is liable for any material "accumulated funding
deficiency" (whether or not waived) with respect to any Employee
Program ever maintained by the Company or any Affiliate and
subject to Code Section 412 or ERISA Section 302. With respect to
any Employee Program subject to Title IV of ERISA, there has been
no (and the transactions contemplated by this Agreement will not
result in any) (i) "reportable event," within the meaning of
ERISA Section 4043 or the regulations thereunder (for which the
notice requirement is not waived under 29 C.F.R. Part 2615) or
(ii) other event or condition which presents a material risk of
plan termination or any other event that may cause the Company or
any Current Affiliate to incur material liability, contingent or
otherwise, or have a material Lien imposed on its assets under
Title IV of ERISA. All payments and/or contributions required to
have been made by the Company and its Current Affiliates (under
the provisions of any agreements or other governing documents or
applicable Law) with respect to all Employee Programs subject to
Title IV of ERISA ever maintained by the Company or any
Affiliate, for all periods prior to the Closing, have been timely
made. Except as described on Schedule 5.10, no Employee Program
maintained by the Company or an Affiliate and subject to Title IV
of ERISA (other than a Multiemployer Plan) has any "unfunded
benefit liabilities" within the meaning of ERISA Section
4001(a)(18), as of the Closing Date. With respect to
Multiemployer Plans maintained by the Company or any Affiliate,
Schedule 5.10 states the aggregate amount of withdrawal liability
or other termination liability that would be incurred by the
Company or any Affiliate if there were a withdrawal from any such
plan as determined by the most recent withdrawal liability
calculation prepared by such plan. Except as disclosed on
Schedule 5.10, none of the Employee Programs which is a welfare
plan maintained by the Company or any Affiliate provides health
care or any other non-pension benefits to any employees after
their employment is terminated (other than as required by part 6
of subtitle B of title I of ERISA or comparable statutes or
regulations) or has ever promised to provide such post-
termination benefits.
For purposes of this section:
(i) "Employee Program" means (A) any employee
benefit plan within the meaning of Section 3(3) of ERISA and
employee benefit plans (such as foreign or excess benefit
plans) which are not subject to ERISA, and (B) any stock
option plans, bonus or incentive award plans, severance pay
policies or agreements, deferred compensation arrangements,
supplemental income arrangements, vacation plans, and all
other employee benefit plans, agreements, and arrangements
not described in (A) above, and (C) any trust used to fund
benefits under the foregoing maintained by the Company or
any Affiliate.
(ii) An entity is an "Affiliate" of the Company if
it would have ever been considered a single employer with
the Company under ERISA Section 4001(b) or part of the same
"controlled group" as the Company for purposes of ERISA
Section 302(d)(8)(C); an entity is a "Current Affiliate" if
it currently would be considered a single employer with the
Company under ERISA Section 4001(b) or part of the same
"controlled group" as the Company for purposes of ERISA
Section 302(d)(8)(C); and each reference to the Company
includes the Subsidiaries.
(iii) An entity "maintains'' an Employee
Program if such entity sponsors, contributes to, or provides
benefits under such Employee Program, or has any obligation
(by agreement or under applicable law) to contribute to or
provide benefits under such Employee Program, or if such
Employee Program provides benefits to or otherwise covers
employees of such entity (or, in respect of such employees,
their spouses, dependents, or beneficiaries).
(iv) "Multiemployer Plan" means a (pension or non-
pension) employee benefit plan to which more than one
employer contributes and which is maintained pursuant to one
or more collective bargaining agreements.
5.11 Private Offerings. No form of general solicitation
or general advertising including, but not limited to,
advertisements, articles, notices or other communications,
published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or
general advertising, was used by the Company or any of its
Subsidiaries or any of the Company's or such Subsidiary's
representatives, or, any other Person acting on behalf of the
Company or any of its Subsidiaries, in connection with the
offering of the Securities being purchased under this Agreement
or under any other Transaction Document. None of the Company,
any of its Subsidiaries or any Person acting on the Company's or
such Subsidiary's behalf has directly or indirectly offered the
Securities, or any part thereof or any other similar securities,
for sale to, or sold or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect
thereof with any Person or Persons other than the Purchasers and
other investors who the Company reasonably believed had such
knowledge and experience in financial and business matters that
they were capable of evaluating the merits and risks of
purchasing the Securities. The Company further represents to the
Purchasers that, assuming the accuracy of the representations of
the Purchasers as set forth in Section 6 hereof, none of the
Company, any of its Subsidiaries or any Person acting on the
Company's or such Subsidiary's behalf has taken or will take any
action which would subject the issue and sale of the Securities
being purchased hereunder or under any other Transaction Document
to the provisions of Section 5 of the Securities Act, except as
contemplated by the Registration Rights Agreement. The Company
has not sold the Securities to anyone other than the Purchasers
designated in this Agreement. No securities of the same class or
series as the Securities have been issued and sold by the Company
prior to the date hereof. Each Note and Preferred Stock
certificate shall bear substantially the same legend set forth in
Section 8.1 hereof, as applicable, for at least so long as such
restrictions apply.
5.12 Broker's or Finder's Commissions. In addition to
and not in limitation of any other rights hereunder, the Company
and the Subsidiaries will indemnify and hold harmless each
Purchaser from and against any and all claims, demands or
liabilities for broker's, finder's, placement agent's or other
similar fees or commissions and any and all liabilities with
respect to any taxes (including interest and penalties) payable
or incurred, or alleged to have been incurred, by the Company or
any of its Subsidiaries or any Person acting, or alleged to have
been acting, on the Company's or such Subsidiary's behalf, in
connection with this Agreement, the issuance or sale of the
Securities, or any other transaction contemplated by any of the
Transaction Documents (including, without limitation, the
Company's obligation to pay the transaction fee to NationsBanc
Montgomery Securities LLC).
5.13 Company SEC Documents; Information Memorandum.
(a) The Company has timely filed with the SEC,
and has heretofore made available to the Purchasers true and
complete copies of, each report, schedule, registration statement
and definitive proxy statement required to be filed by it under
the Exchange Act or the Securities Act (as such documents have
been amended since the time of their filing, collectively, the
"Company SEC Documents"). The Company SEC Documents, including
without limitation, any financial statements or schedules
included therein, at the time filed, (x) complied in all material
respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder, and (y) did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) None of this Agreement, each of the other
Transaction Documents and the Information Memorandum, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading.
(c) The historical financial and operating
information contained in the Information Memorandum has been
derived from the consolidated books and records of the Company
and its Subsidiaries based upon reasonable methods as to
allocations and calculations of such financial information.
(d) The financial projections concerning the
Company included in the Information Memorandum have been prepared
in good faith based upon reasonable assumptions.
(e) There is no material fact known to the
Company which the Company has not disclosed to the Purchasers, or
counsel to the Purchasers, in writing which has or, insofar as
the Company can reasonably foresee, may have or will have a
Material Adverse Effect on the Company to perform its obligations
under any of the Transaction Documents or in respect of the
Securities or any document contemplated hereby or thereby.
(f) The Company has provided the Purchasers with
complete and accurate information as to the Company, each of its
Subsidiaries and its affairs. No representation or warranty made
by the Company set forth herein, or in any schedule hereto, in
any supplement to any schedule, in the Note Indenture or in any
other Transaction Document, or in any certificate or other
document delivered or to be delivered in connection with the
transactions contemplated hereby or thereby, contains or will
contain any untrue statement of a material fact, or omits to
state any material fact, necessary in order to make the statement
therein, in light of the circumstances in which it was made, not
misleading.
5.14 Financial Statements; No Undisclosed Liabilities;
Accounts Receivable.
(a) The financial statements of the Company
included or incorporated by reference in the Company SEC
Documents (the "Company Financial Statements") comply, as of
their respective dates, as to form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto
with respect to audited statements or, in the case of the
unaudited statements, as permitted by Form 10-QSB of the SEC) and
fairly present in all material respects (subject, in the case of
the unaudited statements, to normal, recurring year-end audit
adjustments) the consolidated financial position of the Company
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of any unaudited interim
financial statements, to normal year-end audit adjustments, none
of which would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Company and its
consolidated Subsidiaries, taken as a whole). Since December 31,
1997, neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature, whether or
not accrued, absolute, contingent or otherwise, other than
liabilities (i) disclosed in Schedule 5.14 or in the Company SEC
Documents filed prior to the date of this Agreement (complete,
true and correct copies of all of which have been furnished to
the Purchasers), (ii) adequately provided for in the Company
Financial Statements or disclosed in any related notes thereto
(complete, true and correct copies of all of which have been
furnished to the Purchasers), (iii) not required under GAAP to be
reflected in the Company's financial statements or disclosed in
any related notes thereto, (iv) incurred in connection with this
Agreement, or (v) incurred after December 31, 1997 in the
ordinary course of business consistent with the Company's past
practices and which would not have a Material Adverse Effect on
the Company and its consolidated Subsidiaries, taken as a whole.
(b) All accounts receivable as shown on the
Company Financial Statements or on the accounting records of the
Company as of the date hereof are valid, genuine and subsisting,
have arisen in the ordinary course of business from customers
believed to be commercially responsible, and the reserves shown
on the Company Financial Statements are adequate and calculated
consistent with past practice and consistent with GAAP.
5.15 Foreign Assets Control Regulation. Etc. Neither
the issue and sale of the Securities by the Company nor its use
of the proceeds thereof as contemplated by this Agreement will
violate the Foreign Assets Control Regulations, the Transaction
Control Regulations, the Cuban Assets Control Regulations, the
Foreign Funds Control Regulations, the Iranian Assets Control
Regulations, the Nicaraguan Trade Control Regulations, the South
African Transactions Control Regulations, the Libyan Sanctions
Regulations, the Soviet Gold Coin Regulations, the Panamanian
Transactions Regulations, the Haitian Transactions Regulations,
or the Iraqi Sanctions Regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) or
Executive Orders 12722 and 12724 (transactions with Iraq).
5.16 Federal Reserve Regulations and Other Matters.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, use any of the proceeds from the sale of the
Securities for the purpose, whether immediate, incidental or
ultimate, of buying any "margin stock," or of maintaining,
reducing or retiring any indebtedness originally incurred to
purchase any stock that is currently a "margin stock," or for any
other purpose which might constitute the transactions
contemplated hereby a "purpose credit," in each case within the
meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System (12 C.F.R. 207 and 221, as amended,
respectively), or otherwise take or permit to be taken any action
which would involve a violation of such Regulation G or
Regulation U or of Regulations T or X of the Board of Governors
of the Federal Reserve System (12 C.F.R. 220 and 224, as amended,
respectively), or any other regulation of such Board. No
indebtedness that may be maintained, reduced or retired with the
proceeds from the sale of the Securities was incurred for the
purpose of purchasing or carrying any "margin stock" and neither
the Company nor any of its Subsidiaries own any such "margin
stock'' or have any present intention of acquiring, directly or
indirectly, any such "margin stock."
5.17 Investment Company Act. Neither the Company nor
any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
5.18 Public Utility Holding Company Act. Neither the
Company nor any of its Subsidiaries is a "holding company," or a
"subsidiary company'' of a "holding company" or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company" as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
5.19 Interstate Commerce Act. To the Company's
knowledge, neither the Company nor any of its Subsidiaries is,
nor will be, a "rail carrier," or a Person controlled by or
affiliated with a "rail carrier," within the meaning of Title 49,
U.S.C. Neither the Company nor any of its Subsidiaries is a
"carrier" or other Person to which 49 U.S.C. Section 11301(b)(1)
is applicable.
5.20 Environmental Regulation, Etc.
(a) Each of the Company and its Subsidiaries (i)
has no liability under any Environmental Law or common law cause
of action relating to or arising from environmental conditions
which could have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis and any property owned,
operated, leased, or used by the Company and its Subsidiaries and
any facilities and operations thereon comply with and will
continue to comply with all applicable Environmental Laws to the
extent that failure to comply could have a Material Adverse
Effect on the Company and its Subsidiaries on a consolidated
basis; (ii) has never entered into or been subject to any
judgment, consent decree, compliance order, or administrative
order with respect to any environmental or health and safety
matter or received any request for information, notice, demand
letter, administrative inquiry, or formal or informal complaint
or claim with respect to any environmental or health and safety
matter or the enforcement of any Environmental Law, and (iii) has
no reason to believe that any of the items enumerated in clause
(ii) of this paragraph will be forthcoming.
(b) (i) Each of the Company and its Subsidiaries
has never, and will never, generate, transport, use, store,
treat, dispose of, or manage any Hazardous Waste, other than in
accordance with applicable Environmental Laws, except where
failure to so comply with applicable Environmental Laws would not
have a Material Adverse Effect on the Company or any of its
Subsidiaries; (ii) the Company has not caused any Release or
Threat of Release of a Hazardous Material at any site presently
or formerly owned, operated, leased, or used by the Company or
any of its Subsidiaries; (iii) the Company and its Subsidiaries
have never had Hazardous Material transported from any site
presently or formerly owned, operated, leased, or used by the
Company or any of its Subsidiaries for treatment, storage, or
disposal at any other place, other than in accordance with
applicable Environmental Laws, except where failure to so comply
with applicable Environmental Laws would not have a Material
Adverse Effect on the Company or any of its Subsidiaries; (iv)
the Company and its Subsidiaries do, not presently own, operate,
or, to the best knowledge of the Company or any of its
Subsidiaries, lease, or use any site on which underground storage
tanks are or were located; (v) the Company and its Subsidiaries
have never placed underground tanks on any site owned, operated,
leased or used by the Company or any of its Subsidiaries; (vi)
the Company and its Subsidiaries have never removed underground
tanks from any site presently or formerly owned, operated, leased
or used by the Company or any of its Subsidiaries; and (vii) the
Company and its Subsidiaries have never had a Lien imposed by any
Governmental Authority on any property, facility, machinery, or
equipment owned, operated, leased, or used by the Company or any
of its Subsidiaries in connection with the presence of any
Hazardous Material.
5.21 Properties and Assets. The Company and its
Subsidiaries have good record and marketable fee title to all
real Property and all other Property and assets, whether tangible
or intangible, owned by them and reasonably necessary in the
conduct of business of the Company or such Subsidiaries. All of
the leases necessary in any material respect for the operation of
their respective properties and assets, under which the Company
or any of its Subsidiaries holds any Property or assets, real or
personal, are valid, subsisting and enforceable and afford
peaceful and undisturbed possession of the subject matter of the
lease, and no material default by the Company or any of its
Subsidiaries exists under any of the provisions thereof. All
buildings, machinery and equipment of the Company and its
Subsidiaries are in good repair and working order, except for
ordinary wear and tear. All material current and proposed uses
of such Property of the Company and its Subsidiaries as set forth
in the Company SEC Documents and the Information Memorandum are
permitted as of right and no such Law interferes with such
current or proposed uses. To the knowledge of the Company, there
is no pending or formally proposed change in any such Laws, which
would have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis. Except as set forth on
Schedule 5.21, no condemnation proceeding is pending or, to the
knowledge of the Company, threatened against the Company or any
of its Subsidiaries. All Property of the Company and its
Subsidiaries are free from all Liens except for (i) Liens which
would not have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis; (ii) Liens disclosed on
Schedule 5.21 hereto; and (iii) Permitted Liens. Except as set
forth on Schedule 5.21 hereto and except as entered into pursuant
to the Transaction Documents neither the Company nor any of its
Subsidiaries has signed any material financing statement, as
debtor or lessee, or any security agreement authorizing any
secured party thereunder to file any such financing statement.
5.22 Insurance. A list of all insurance policies and
fidelity bonds covering the assets, business, equipment,
Properties, operations, employees, officers and directors under
which the Company or any of its Subsidiaries may derive any
material benefit is set forth on Schedule 5.22 hereof. There is
no claim by the Company or any of its Subsidiaries pending under
any of such policies or bonds as to which coverage has been
questioned, reserved, denied or disputed by the underwriters of
such policies or bonds or their agents. All premiums due and
payable under all such policies and bonds have been paid, and the
Company and its Subsidiaries are otherwise in full compliance
with the terms and conditions of all such policies and bonds.
Except as set forth on Schedule 5.22, such policies of insurance
and bonds (or other policies and bonds providing substantially
similar insurance coverage) are and have been in full force and
effect for at least the last year or since the inception of the
Company or any of its Subsidiaries, as the case may be, and
remain in full force and effect. Such policies of insurance and
bonds are, to the best knowledge of the Company, of the type and
in amounts customarily carried by Persons conducting business
similar to that presently conducted by the Company and its
Subsidiaries. The Company knows of no threatened termination of
any such policies or bonds.
5.23 Employment Practices. Neither the Company nor any
of its Subsidiaries is a party to, or in the process of
negotiating, any collective bargaining or labor agreement or
union contract. There is no (i) charge, complaint or suit
pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries respecting employment,
hiring for employment, terminating from employment, employment
practices, employment discrimination, terms and conditions of
employment, safety, wrongful termination, or wages and hours,
except as set forth on Schedule 5.23 hereto, (ii) unfair labor
practice charge or complaint pending or, to the knowledge of the
Company, threatened against, or decision or order in effect and
binding on, the Company or any of its Subsidiaries before or of
the National Labor Relations Board, (iii) grievance or
arbitration proceeding arising out of or under collective
bargaining agreements pending or, to the knowledge of the
Company, threatened against the Company or any of its
Subsidiaries, (iv) strike, labor dispute, slow-down, work
stoppage or other interference with work pending or, to the
knowledge of the Company, threatened against the Company or any
of its Subsidiaries, or (v) to the knowledge of the Company,
union organizing activities or union representation question
threatened or existing with respect to any groups of employees of
the Company or any of its Subsidiaries.
5.24 Intellectual Property.
(a) The Company and its Subsidiaries have
exclusive ownership of, or exclusive licenses to use, all patent,
copyright, trade secret, trademark, or other proprietary rights
used, or to be used, in the business of the Company or any of its
Subsidiaries (collectively, "Intellectual Property"). There are
no claims or demands of any other Person pertaining to any of
such Intellectual Property and no proceedings have been
instituted, or are pending or, to the knowledge of the Company,
threatened, which challenge the rights of the Company or any of
its Subsidiaries in respect thereof. The Company and its
Subsidiaries have the right to use, free and clear of claims or
rights of other Persons, all customer lists, designs,
manufacturing or other processes, computer software (subject to
applicable licenses), systems, surveys, data compilations,
research results and other information required for or incident
to their products and business as presently conducted or
contemplated.
(b) All patents, patent applications, trademarks,
trademark applications and registrations and registered
copyrights that are owned by, or licensed to, the Company or any
of its Subsidiaries or used or to be used by the Company or any
of its Subsidiaries in their business as presently conducted, are
listed on Schedule 5.24. All of such patents, patent
applications, trademark registrations, trademark applications and
registered copyrights have been duly registered in, filed in, or
issued by, the United States Patent and Trademark Office, the
United States Register of Copyrights, or the corresponding
offices of other jurisdictions as identified on said Schedule,
and have been properly maintained and renewed in accordance with
all applicable provisions of Law in the United States and each
such jurisdiction.
(c) All material licenses or other agreements
under which the Company or any of its Subsidiaries is granted
rights in Intellectual Property are listed on Schedule 5.24.
Except as set forth on Schedule 5.24, all said licenses or other
agreements are in full force and effect and there is no default
by any party thereto.
(d) All material licenses or other agreements
under which the Company or any of its Subsidiaries has granted
rights to others in Intellectual Property owned or licensed by
the Company or any of its Subsidiaries are listed on Schedule
5.24. Except as set forth on Schedule 5.24, all of said licenses
or other agreements are in full force and effect, and there is no
default by any party thereto.
(e) To the best knowledge of the Company and each
of its Subsidiaries, the present business, activities, services
and products of the Company and each of its Subsidiaries do not
infringe any intellectual property of any other Person. No
proceeding, charging the Company or any of its Subsidiaries with
infringement of any adversely held Intellectual Property has been
filed or is, to the knowledge of the Company, threatened to be
filed. Neither the Company nor any of its Subsidiaries is making
unauthorized use of any confidential information or trade secrets
of any Person, including without limitation any former employer
of any past or present employee of the Company or any of its
Subsidiaries. Neither the Company or any of its Subsidiaries
nor, to the knowledge of the Company or any of its Subsidiaries,
any of its or any Subsidiary's employees have any agreements or
arrangements with any Persons other than the Company or any of
its Subsidiaries related to confidential information or trade
secrets of such Persons or restricting any such employee's
engagement in business activities of any nature.
5.25 Material Contracts and Obligations.
(a) Schedule 5.25 is a true, complete and
accurate list prepared by the Company, categorized by subject
matter, of the following contracts, agreements, commitments,
options, liens, licenses, mortgages, other security interests,
understandings or promises, whether written or oral ("Contract"),
to which the Company or any of its Subsidiaries are a party or by
which its or any of their properties or assets are bound:
(i) purchase or sale orders, and all
agreements to or with any one customer or supplier for
the sale of products or services of an amount or value
in excess of $500,000;
(ii) all employment contracts with any
officer, consultant, director or employee;
(iii) all plans, contracts or
arrangements providing for stock options or stock
purchases, bonuses, pensions, deferred compensation,
retirement payments, profit-sharing or the like;
(iv) all contracts for construction or for
the purchase of equipment, machinery and other items
except those having a value per item or require
aggregate payments of less than $75,000;
(v) all contracts relating to the rental or
use of equipment, other personal property or fixtures
(except personal property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $75,000 and with terms
of less than one year);
(vi) all license agreements, either as
licensor or licensee, except licenses for computer
software licensed in the ordinary course of business;
(vii) all joint venture contracts and
agreements involving a sharing of profits;
(viii) all franchise agreements;
(ix) all distributor, sales agency and other
similar agreements;
(x) all loan or guaranty agreements, credit
agreements, notes or other evidences of indebtedness,
indentures or instruments evidencing Liens or secured
transactions;
(xi) all real estate and easements and other
rights in real property, owned or leased by or to the
Company or any of its Subsidiaries; and
(xii) all other contracts, except those
which: (i) are cancelable on 30 days' or less notice
without any penalty or other financial obligation, or
(ii) if not so cancelable, involve annual aggregate
payments by or to the Company or to any of its
Subsidiaries of $75,000 or less.
Except as set forth in Schedule 5.25, (i) each Contract was
entered into in the ordinary course of the Company's or its
Subsidiary's, as applicable, 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) the Company or
any of its Subsidiaries, as applicable, is not in material breach
or default under any of the Contracts and has not received any
notice or claim of any such breach or default from any party,
(iv) to the best knowledge of the Company or any of its
Subsidiaries, the relationship of the Company or any of its
Subsidiaries, as applicable, with the parties to the Contracts is
good and there has been no expression of any intention to
terminate or materially modify any such relationships, (v) the
Company or any of its Subsidiaries has no knowledge of any
material breach or default under any Contract by any other party
thereto, (vi) no event or action has occurred, is pending or is
threatened, which, after the giving or receipt of notice, and/or
passage of time or otherwise, could constitute or result in any
such material breach or default by the Company or any of its
Subsidiaries, as applicable, or any other party under any of the
Contracts, and (vii) no material amount claimed to be payable to
the Company or any of its Subsidiaries, as applicable, under any
of the Contracts is being disputed by any party. Except as set
forth in Schedule 5.25, (i) for its services under any Contract,
the Company or its Subsidiary, as applicable, receives the
compensation provided under such Contract, without discount,
offset or concessions of any kind, and the Company or its
Subsidiary, as applicable, has not proposed or agreed to offer or
accept any discount, offset or concession, and (ii) the payment
history of the parties under the Contracts is good as judged by
industry standards. The Company has delivered to the Purchasers
true and complete copies or descriptions of the Contracts
required to be listed in Schedule 5.25.
(b) None of (i) the execution and delivery of
this Agreement or the other Transaction Documents, (ii) the
consummation of any of the transactions contemplated hereby or by
the other Transaction Documents, or (iii) compliance with the
terms and provisions hereof or thereof, will result in the
creation or imposition of any Lien, other than Permitted Liens,
upon any of the Property of the Company, or conflict in any way
with the provisions of or result in a breach of or termination of
or a default or acceleration of any obligation under, or except
as set forth on Schedule 5.25, require the consent of any person
pursuant to, any such Contract.
(c) There is no term or provision of any Contract
to which the Company is a party or by which it or any of its
properties are bound, or of any provision of any Law, judgment,
writ or decree, applicable to or binding upon the Company, any of
its Subsidiaries, or their
Properties, which have or can reasonably be expected to have a
Material Adverse Effect on the Company, any of its Subsidiaries
taken as a whole or any of their Properties.
5.26 Taxes. The Company and its Subsidiaries, and any
predecessors to the Company and any of its Subsidiaries, have
filed or obtained extensions of all federal, state, local and
foreign income, excise, franchise, real estate, sales and use and
other tax returns heretofore required by Law to be filed by it.
All material taxes, including, without limitation, all federal,
state, county, local, foreign or other income, Property, sales,
use, franchise, value added, employees' income withholding,
social security, unemployment and other taxes, of any nature
whatsoever which have become due or payable by the Company or any
of its Subsidiaries, or by any predecessors thereto, including
any fines or penalties with respect thereto or interest thereon,
whether disputed or not (collectively, "Taxes"), have been paid
in full or are adequately provided for in accordance with GAAP on
the financial statements of the applicable Person. All material
deposits, Taxes and other assessments and levies required by Law
to be made, withheld, collected or provided for by the Company or
any of its Subsidiaries, or any predecessors thereto, including
deposits with respect to Taxes constituting employees' income
withholding taxes, have been duly made, withheld, collected or
provided for and have been paid over to the proper federal, state
or local authority, or are held by the applicable Person for such
payment. No Liens arising from or in connection with Taxes have
been filed and are currently in effect against the Company or any
of its Subsidiaries, except for Liens for Taxes which are not yet
due. Except as set forth on Schedule 5.26 hereto, neither the
Company nor any of its Subsidiaries, nor any predecessor thereto,
has executed or filed with the IRS, or any other taxing
authority, any agreement or document extending, or having the
effect of extending, the period for assessment or collection of
any Taxes. The federal income tax returns of the Company and each
of its Subsidiaries, and any predecessor thereto, have been
examined by the IRS, or the statute of limitations with respect
to federal income taxes has expired, for all tax years up to and
including the fiscal year ended December 31, 1993 and, except as
set forth on Schedule 5.26, any deficiencies have been paid in
full or are being contested in good faith by appropriate action
and appropriate reserves therefor have been established on the
Company's or applicable Subsidiaries' books. Except as set forth
on Schedule 5.26, neither the Company nor any of its Subsidiaries
is a party to any tax sharing agreement or arrangement. Except as
set forth on Schedule 5.26, no audits or investigations are
pending or, to the knowledge of the Company, threatened with
respect to any tax returns or taxes of the Company or any of its
Subsidiaries, or any predecessor thereto.
5.27 Transactions with Affiliates; Arm's-Length
Transactions; Conflicts of Interest. Except as set forth on
Schedule 5.27, there are no material transactions, agreements or
understandings, existing or presently contemplated, between or
among the Company or any of its Subsidiaries, and their officers
or directors or stockholders or any of their Affiliates or
associates. All transactions by the Company and its Subsidiaries
have been conducted on an arm's-length basis. Neither the
elected officers of the Company or any of its Subsidiaries nor
the key employees of the Company or any of its Subsidiaries, or
their respective spouses, have (or had during the past three
fiscal years) any material direct or indirect ownership or profit
participation in outside business enterprises with which the
Company or any of its Subsidiaries had material purchases, sales
or business dealings.
5.28 Limitation on Subsidiary Payment Restrictions.
Except as set forth on Schedule 5.28 hereto or as provided in the
other Transaction Documents, neither the Company nor any of its
Subsidiaries is subject to any consensual restriction on the
ability of any such Subsidiary (i) to pay dividends or make any
other distribution on such Subsidiary's Capital Stock to, or pay
any indebtedness owing to, repurchase or redeem any of such
Subsidiary's Capital Stock from, the Company or any other
Subsidiary of the Company, (ii) to make any loans or advances to
the Company or any other Subsidiary of the Company, or (iii) to
transfer any of its Property to the Company or any other
Subsidiary of the Company.
5.29 Notes. The Notes have been duly authorized by the
Company for issuance, and when executed and delivered by the
Company to the Purchasers against payment therefor in accordance
with the provisions of the Note Indenture, will be duly executed,
issued and delivered, and will constitute valid and legally
binding obligations of the Company entitled to the benefits
provided by the Note Indenture and enforceable against the
Company in accordance with their terms. On the basis of the
representations contained in Section 6 hereof, the Indenture is
not required to be qualified under the Trust Indenture Act of
1940, as amended.
5.30 Solvency. After giving effect to the sale of the
Securities and the other transactions contemplated by the
Transaction Documents, the Company and its Subsidiaries on a
consolidated basis will be, and the Company and each Subsidiary
will be, Solvent (as defined below). "Solvent" means, with
respect to the Company or any Subsidiary, that as of the date of
determination (i) the then fair saleable value of the Property of
such entity is greater than the then total amount of liabilities
(including guaranties and other contingent liabilities) of such
entity, (ii) such entity has sufficient funds to pay such
entity's liability on such entity's existing debts as they become
absolute and matured, and (iii) such entity's Property is not an
unreasonably small capital.
5.31 RICO. To the best knowledge of the Company or any
Subsidiary, neither the Company nor any Subsidiary is engaged in
or has engaged in any course of conduct that could subject any of
their respective Properties to any liens, seizures or other
forfeiture under any criminal law, racketeer influenced and
corrupt organizations laws, civil or criminal or other similar
Laws.
5.32 Absence of Certain Practices. The Company, any
of its Subsidiaries, or any director, officer, agent, employee,
consultant or other Person acting on any of their behalf has not
given or agreed to give any gift or similar benefit of more than
nominal value to any customer, supplier or governmental employee
or official or any other Person who is or may be in a position to
help or hinder the Company or any of its Subsidiaries in
connection with any proposed transaction involving the Company or
any of its Subsidiaries. The Company, any of its Subsidiaries,
or any director, officer, agent, employee, consultant or other
Person acting on behalf of the Company or any of its Subsidiaries
has not (i) used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any
unlawful expenditures relating to political activity to, or on
behalf of, government officials or others; (ii) accepted or
received any unlawful contributions, payments, gifts or
expenditures; or (iii) has had any transaction or payment which
was not recorded in its accounting books and records or disclosed
on its financial statements.
5.33 No Other Business. The Company has not, and is not,
engaged in any material respect in any business other than (i)
executive search, (ii) temporary staffing, (iii) pay-rolling,
(iv) contract staffing, (v) outsourcing, (vi) human resources
management services, (vii) information systems and human
resources consulting services, and (viii) strategic advisory
services.
5.34 Minute Books. The minute books of the Company and each
of its Subsidiaries contain a complete, true and correct summary
of all meetings of, and/or corporate action approved by,
directors and stockholders since the time of such entity's
organization, and accurately reflect, in accordance with the law
of such entity's jurisdiction of organization, all transactions
and other corporate action referred to in such minutes.
5.35 Regulatory Requirements; Cessation of Direct Investment
Program. Notwithstanding anything else set forth herein to the
contrary, in the event of any reasonable determination in good
faith by NationsBank Corporation or any Affiliate thereof
("NationsBank"), that by reason of any existing or future Law
(whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) (collectively, a
"Regulatory Requirement"), NationsBanc Montgomery Securities LLC
or any successor holder affiliated with NationsBank ("NationsBanc
Montgomery") is effectively restricted or prohibited from holding
any of the Securities then held by NationsBanc Montgomery, the
Company shall use reasonable good faith efforts to take such
action as it may determine is reasonably necessary and
appropriate to permit NationsBanc Montgomery to transfer the
Securities to comply with such Regulatory Requirement. All such
actions shall be taken at the expense of NationsBanc Montgomery.
NationsBanc Montgomery shall give written notice to the Company
and the other Purchasers of any reasonable determination made by
it hereunder and of the transfer it believes may be necessary or
appropriate to permit it to comply with such Regulatory
Requirement.
Notwithstanding anything else set forth herein to the
contrary, in the event NationsBanc Montgomery or any successor or
other group of NationsBank or its directly or indirectly
whollyowned Subsidiaries engaging in substantially the same
business, cease making direct mezzanine equity investments and
make a determination to liquidate all of their private equity
positions that can be liquidated, as set forth in a
representation letter to the Company, then the Company shall
permit NationsBanc Montgomery to transfer its Securities, subject
to complying with applicable Laws. All such actions shall be
taken at the expense of NationsBanc Montgomery. NationsBanc
Montgomery shall give written notice to the Company and the other
Purchasers of any determination by it hereunder.
6. Purchase for Investment; Source of Funds.
(a) Each Purchaser represents for itself to the
Company that, (i) it is an accredited investor as defined in
Regulation D under the Securities Act, or (ii) by reason of its
business and financial experience, and the business and financial
experience of those persons, if any, retained by it to advise it
with respect to its investment in the Securities, such Purchaser
together with such advisers have such knowledge, sophistication
and experience in business and financial matters as to be capable
of evaluating the merits and risk of the prospective investment,
and that it is purchasing the Securities for its own account or
for one or more separate accounts maintained by it or for the
account of one or more institutional investors on whose behalf
such Purchaser has authority to make this representation for
investment and not with a view to the distribution thereof or
with any present intention of distributing or selling any of the
Securities except in compliance with the Securities Act and
except to one or more such institutional investors, provided that
the disposition of such Purchaser's or such investor's property
shall at all times be within its control. Each Purchaser
understands and agrees that the Company's offer and sale of the
Securities have not been registered under the Securities Act and
the Securities may be resold (which resale is not now
contemplated) only if registered pursuant to the provisions
thereunder or if an exemption from registration is available.
(b) Each Purchaser represents for itself to the
Company that in purchasing the Preferred Stock hereunder, it (i)
is acting individually, and not as part of a "group" (within the
meaning of Section 13(d) of the Exchange Act), and (ii) shall not
share with any other Purchaser any investment power or voting
power with respect to the Preferred Stock (or Common Stock
issuable upon conversion of such Preferred Stock.)
(c) Each Purchaser represents for itself to the
Company that it has full power and authority and has taken all
action necessary to authorize it to enter into and perform its
obligations under this Agreement and the other Transaction
Documents. This Agreement is the legal, valid and binding
obligation of each Purchaser, and is enforceable against each
Purchaser in accordance with its terms.
(d) Each Purchaser acknowledges for itself that it has
read the Information Memorandum and has received all the
information it has requested from the Company and, relying on the
truth, completeness and accuracy of such information, such
Purchaser believes such information is sufficient to make an
informed decision with respect to its purchase of the Securities.
7. Covenants of the Company. The Company covenants and
agrees that from the date hereof, unless the Purchasers, or the
holders of the Preferred Stock, as applicable, shall otherwise
consent in writing, it will:
7.1 Use of Proceeds. Use the net proceeds from the sale of
the Securities to (a) refinance existing indebtedness of the
Company as set forth in Section 5.8 hereof; (b) make Permitted
Acquisitions; and (c) general corporate purposes.
7.2 The Company's Board of Directors. On the Closing Date
grant (i) GarMark the right to designate one (1) voting Board of
Directors member, and each of GarMark and Moore the right to
designate one (1) non-voting Board of Directors observer, each of
whom will be given notice of, and permitted to attend, all
meetings of the Company's Board of Directors, and (ii) GarMark
the right to designate one (1) voting committee member, and each
of GarMark and Moore one (1) non-voting committee observer, to
each of the Company's Compensation Committee, Stock Incentive
Plan Committee, Finance Committee, Audit Committee, and any other
committee that is created or established after the date hereof,
each of whom will be given notice of, and permitted to attend,
all meetings of each such committee. On the Closing Date, the
Company, acting through its Board of Directors and in accordance
with its Charter Documents and applicable Law, shall (i) (A)
increase the size of its Board of Directors by one (1), (B) elect
the person referred to hereinabove (or such other person as may
be selected by GarMark) to the newly created directorship to hold
office until his successor is elected at a special or annual
meeting of the stockholders and (C) in connection with any such
subsequent election of directors, nominate, recommend and do all
other acts and things to cause (including, without limitation,
voting all shares for which the Company's management or Board of
Directors holds proxies (including undesignated proxies) unless
otherwise provided by the stockholders submitting such proxies)
the person referenced in the preceding clause (B) to be elected
to the Company's Board of Directors and (ii) increase the size of
each of the Compensation Committee, Stock Incentive Plan
Committee, Finance Committee, Audit Committee, and if any other
committee is created or established after the date hereof, of
such committee, by one (1), and cause the person referred to
hereinabove (or such other person as may be selected by GarMark)
to become a member thereof. In the event any director, or member
of a committee, elected pursuant to this Section 7.2 shall cease
to serve as a director or member, as applicable, for any reason,
the Company shall cause (subject to the provisions of its Charter
Documents and applicable Law) the vacancy resulting thereby to be
filled as promptly as practicable by a person selected by
GarMark. Notwithstanding any provision hereof, on the date, if
any, that any Initial Purchaser entitled to exercise the rights
provided in this Section 7.2 beneficially owns less than 25% of
the Common Stock that would be issuable to such Initial Purchaser
upon its conversion of the Preferred Stock acquired on the
Closing Date (assuming that the shares of the Preferred Stock
would be converted at a conversion price of $6.00 per share,
subject to the adjustments provided in the Certificate of
Designations with respect to conversion price and the number of
shares issuable upon conversion), then the Company's obligations
set forth in this Section 7.2 with respect to such Initial
Purchaser shall cease and be of no further effect.
7.3 Publicly Available Information. File the reports
required to be filed by it under the Securities Act and the
Exchange Act (or, if the Company is not required to file such
reports, it will, upon the request of any Purchaser, make
publicly available other information so long as necessary to
permit sales under Rule 144 or Rule 144A, as applicable, under
the Securities Act), and it will take such further action as any
Purchaser may request, all to the extent required from time to
time to enable such Purchaser to sell the Notes, the Preferred
Stock and shares of Common Stock issuable upon conversion thereof
without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 or Rule
144A under the Securities Act, as either such Rule may be amended
from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any
Purchaser, the Company will deliver to such Purchaser a written
statement as to whether it has complied with such requirements.
7.4 Public Documents. For so long as the Company has any
securities registered under the Exchange Act, upon the filing
with the Commission of any financial statements, proxy or
information statements, notices, regular or special reports or
registration statements (other than any registration statements
relating to employee benefit or dividend reinvestment plans), or
the issuance of any press release or other public announcement
(each a "Public Document"), the Company shall within five (5)
Business Days of such filing or issuance provide to each
Purchaser a copy of such Public Document.
7.5 Information Relating to the Purchasers. From the date
hereof, not release any information relating to any Purchaser, or
any of its Affiliates, without such Person's prior written
consent, unless otherwise required by applicable Law. In
addition, the Company shall, within a reasonable time before the
issuance of any press release or the making of any public
statement relating to any Purchaser or any of their affiliates,
consult in good faith with such Person regarding the contents
thereof.
7.6 Notice Regarding Certain Corporate Actions. If, at any
time, the Company decides to take certain corporate action,
including, but not limited to, any Dilution Event or Change of
Control, then the Company shall provide each holder of Preferred
Stock with written notice of such action at least 20 days prior
to the record date for such action, and if there is no record
date for such action, then such written notice shall be provided
at least 20 days prior to the effective date of such action;
provided, however, that any holder may elect not to receive such
notices upon the delivery of written notice to the Company
informing the Company of such election.
7.7 Access to Information. At any time permit, up to twice
annually with respect to each Purchaser, at the request upon
reasonable notice, by any Purchaser for access to during normal
business hours, and information regarding, the Company, any of
its Subsidiaries or their Properties, books, records and
personnel, the Company, at its expense, will promptly provide
such access or information to such Purchaser; provided however,
that following the occurrence and during the continuation of any
Default or any Event of Default, such access shall be unlimited
and shall continue to be at the expense of the Company. In
addition, each Purchaser shall be entitled to customary
inspection rights under the DGCL.
7.8 True Books and Records of the Company. Keep and
maintain, or cause to be kept and maintained, correct, true and
complete books of record and account in which full, complete,
true and correct entries will be made of all of its corporate and
financial dealings and transactions, and set up on its books such
reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims
and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements, all
in such manner and such form as are generally maintained by
public companies.
7.9 Officer's Knowledge of Default. Upon any Executive
Officer of the Company obtaining knowledge of the occurrence of
any Default or Event of Default under any Transaction Document,
promptly to notify the Purchasers of the nature thereof, the
period of existence thereof, and what action the Company proposes
to take with respect thereto.
7.10 Suits or Other Proceedings. Upon any Executive Officer
of the Company obtaining knowledge of any litigation or other
proceedings being instituted against the Company or any of its
Subsidiaries, or any attachment, levy, execution or other process
being instituted against any Property of the Company or any of
its Subsidiaries, any or all of which make a claim or claims in
an aggregate amount greater than $500,000 not otherwise covered
by insurance, promptly to deliver to the Purchasers written
notice thereof stating the nature and status of such litigation,
dispute, proceeding, levy, execution or other process.
7.11 Hedging Obligations. Not incur any Hedging
Obligations or enter into any agreements, arrangements,
undertakings, commitments, devices or instruments relating to
Hedging Obligations, except pursuant to Swap Agreements in an
aggregate notional amount not to exceed at any time the lower of
(i) $45,000,000, and (ii) 60% of the aggregate commitment under
the Credit Agreement, less any permanent reductions in such
commitment.
7.12 Projections. Prepare all financial projections
concerning the Company to be provided, or made available, to the
Purchasers, in good faith based upon reasonable assumptions.
8. Restrictions on Transfer.
8.1 Restrictive Legends. Except as otherwise permitted by
this Section 8, each Note and Preferred Stock certificate (or
Common Stock certificate issued on conversion thereof) issued
pursuant to this Agreement shall be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS
OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED,
EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH
ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii)
ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT,
PROVIDED THAT, IF REQUESTED BY THE COMPANY, AN OPINION OF
COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE IS
FURNISHED TO THE COMPANY THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
The Company shall maintain a copy of this Agreement and any
amendments thereto on file in its principal office, and will make
such copy available during normal business hours for inspection
to any party thereto or will provide such copy to any Purchaser
upon its request.
Whenever the legend requirement imposed by this Section 8.1
shall terminate, as hereinabove provided, the respective holders
of Securities for which such legend requirements have terminated
shall be entitled to receive from the Company, at the Company's
expense, new Notes or new Preferred Stock (or Common Stock)
certificates, as applicable, without such legend.
8.2 Notice of the Proposed Transfer; Opinions of Counsel.
Each Purchaser of each Note and Preferred Stock certificate (or
Common Stock certificate issued on conversion thereof) bearing
the restrictive legend set forth in Section 8.1 above
("Restricted Security"), agrees that prior to any transfer or
attempted transfer of such Restricted Security, to give to the
Company (a) written notice describing the manner or circumstances
of such transfer or proposed transfer, and (b) upon reasonable
request by the Company to such transferring holder, an opinion of
counsel, which is knowledgeable in securities law matters
(including in-house counsel), in form and substance reasonably
satisfactory to the Company, to the effect that the proposed
transfer of such Restricted Security may be effected without
registration of such Restricted Security under the Securities
Act. If for any reason the Company (after having been furnished
with the opinion required to be furnished pursuant to this
Section 8.2) shall fail to notify such holder within 2 days after
such holder shall have delivered such opinion to the Company
that, in its or its counsel's opinion, the transfer may not be
legally effective (the "Illegal Transfer Notice''), such holders
shall thereupon be entitled to transfer the Restricted Security
as proposed. If the holder of the Restricted Security delivers to
the Company an opinion of counsel (including in-house counsel or
regular counsel to such Purchaser or its investment adviser) in
form and substance reasonably satisfactory to the Company that
subsequent transfers of such Restricted Security will not require
registration under the Securities Act, or if the Company does not
provide such Purchaser with an Illegal Transfer Notice as set
forth above, the Company will promptly after such contemplated
transfer deliver new certificates for such Restricted Security
which do not bear the Securities Act legend set forth in Section
8.1 above. The restrictions imposed by this Section 8 upon the
transferability of any particular Restricted Security shall cease
and terminate (i) when such Restricted Security has been sold
pursuant to an effective registration statement under the
Securities Act, (ii) when such Restricted Security has been
transferred pursuant to Rule 144 or Rule 144A promulgated under
the Securities Act, or (iii) upon the date which is two (2) years
after the later of (A) the original issue date of the Restricted
Security, and (B) the last date on which the Company or any
Affiliate of the Company was the owner of the Restricted Security
(or any predecessor Restricted Security). The holder of any
Restricted Security as to which such restrictions shall have
terminated shall be entitled to receive from the Company a new
security of the same type but not bearing the restrictive
Securities Act legend set forth in Section 8.1 and not containing
any other reference to the restrictions imposed by this Section
8. Notwithstanding any of the foregoing, no opinion of counsel
will be required to be rendered pursuant to this Section 8.2 with
respect to the transfer of any Securities on which the
restrictive legend has been removed in accordance with this
Section 8.2. As used in this Section 8.2, the term "transfer''
encompasses any sale, transfer or other disposition of any
Securities referred to herein.
9. Miscellaneous.
9.1 Indemnification: Expenses Etc..
(a) In addition to any and all obligations of the
Company to indemnify the Purchasers hereunder or under the Note
Indenture or the other Transaction Documents, the Company agrees,
without limitation as to time, to indemnify and hold harmless
each Purchaser, its Affiliates and each of its and their
respective directors, officers, partners, principals, attorneys
and advisors (individually, an "Indemnified Party" and,
collectively the "Indemnified Parties") from and against any and
all losses, claims, damages, liabilities (or actions, suits or
proceedings, including any inquiry or investigation with respect
thereto), costs (including the reasonable costs of preparation
and attorneys' fees) and expenses (including reasonable expenses
of investigation) (collectively, "Losses") to which any
Indemnified Party may become subject, insofar as such Losses
arise out of, in any way relate to, or result from (i) any breach
of any warranty, or the inaccuracy of any representation, as the
case may be, made by the Company, or the failure of the Company
to fulfill any agreement or covenant contained in this Agreement,
the Note Indenture, the Certificate of Designations, or any other
Transaction Document, or (ii) in connection with any proceeding
against the Company or any Indemnified Party brought by any third
party arising out of or in connection with the Commitment Letter,
this Agreement or the other Transaction Documents or the
transactions contemplated hereby or thereby or any action taken
in connection herewith or therewith (or any other document or
instrument executed herewith or pursuant hereto or thereto),
whether or not any Indemnified Party is a formal party to any
such proceeding; provided, however, that the Company shall not
have any obligation under this indemnity provision for
liabilities determined in a judgment by a court of competent
jurisdiction to have resulted primarily from the gross negligence
or willful misconduct of any Indemnified Party. The Company
agrees promptly to reimburse any Indemnified Party for all such
Losses as they are incurred or suffered by such Indemnified
Party. The foregoing is not intended to indemnify or hold
harmless any Indemnified Party on account of losses arising from
the limitation in value of the Preferred Stock or Notes due to
market factors, business developments or any causes other than
the willful misconduct or bad faith of the Company or any of its
officers and directors.
Except as otherwise provided herein, the Company agrees (for
the benefit of each Purchaser) to pay, and to hold each Purchaser
harmless from and against, all costs and expenses (including,
without limitation, reasonable attorneys' fees, expenses and
disbursements), if any, in connection with the enforcement
against the Company of this Agreement or any other Transaction
Document or any other agreement or instrument furnished pursuant
hereto or thereto or in connection herewith or therewith in any
action in which any Purchaser attempting to enforce any of the
foregoing shall prevail or in any action in which any Purchaser
shall in good faith assert any provision of any of the foregoing
as a defense.
(b) If any Indemnified Party is entitled to
indemnification hereunder, such Indemnified Party shall give
prompt notice to the Company of any claim or of the commencement
of any proceeding against the Company or any Indemnified Party
brought by any third party with respect to which such Indemnified
Party seeks indemnification pursuant hereto; provided, however,
that the failure to so notify the Company shall not relieve the
Company from any obligation or liability except to the extent the
Company is prejudiced by such failure. The Company shall have the
right, exercisable by giving written notice to an Indemnified
Party promptly after the receipt of written notice from such
Indemnified Party of such claim or proceeding, to assume, at the
expense of the Company, the defense of any such claim or
proceeding with counsel reasonably satisfactory to such
Indemnified Party. The Indemnified Party or Parties will not be
subject to any liability for any settlement made without its or
their consent (but such consent will not be unreasonably
withheld). The Company shall not consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by claimant or plaintiff to
such Indemnified Party or Parties of a release, in form and
substance satisfactory to the Indemnified Party or Parties, from
all liability in respect of such claim, litigation or proceeding.
(c) In addition to any other obligations of the
Company to indemnify the Purchasers herein or pursuant to any of
the other Transaction Documents or any other agreements or
documents executed and delivered in connection therewith, the
Company will pay, and will hold each Purchaser harmless from
liability for the payment of all expenses arising in connection
with such transactions, including, without limitation: (a) all
document production and duplication charges and the reasonable
fees, charges and expenses of Purchaser's respective counsel in
connection with the transactions contemplated hereby (whether
arising before or after the Closing Date), and any subsequent
proposed modification of, or proposed consent under, this
Agreement, the Note Indenture or the Certificate of Designations,
whether or not such proposed modification shall be effected or
proposed consent granted; (b) the costs of obtaining a private
placement number from Standard & Poor's Corporation for the
Securities; (c) the costs and expenses, including reasonable
attorneys' fees, incurred by any Purchaser (x) in enforcing any
rights under this Agreement or in responding to any subpoena or
other legal process issued in connection with this Agreement or
the transactions contemplated hereby or thereby or by reason of
such Purchaser's having acquired any of the Securities, including
without limitation costs and expenses incurred by such Purchaser
in any bankruptcy or similar case or (y) in connection with the
redemption or conversion, as the case may be, of the Preferred
Stock or the redemption, retirement, or defeasance of the Notes;
(d) the cost of delivering to such Purchaser's principal office,
insured to its satisfaction, the Securities delivered to such
Purchaser hereunder and any Securities delivered to such
Purchaser upon any substitution of Securities pursuant to Section
2.06 and Section 2.07 of the Note Indenture and of such
Purchaser's delivering any Securities, insured to its
satisfaction, upon any such substitution; and (e) the reasonable
out-of-pocket expenses incurred by such Purchaser in connection
with such transactions and any such amendments or waivers.
9.2 Survival of Representations and Warranties;
Severability. All representations and warranties contained in
this Agreement or the Transaction Documents or made in writing by
or on behalf of the Company in connection with the transactions
contemplated by this Agreement or the Transaction Documents shall
survive, for a period of two years after the date hereof;
provided however the representations and warranties contained in
Section 5.2, 5.4, 5.5, 5.6, 5.10, 5.11, 5.20, 5.26, and 5.27
shall survive indefinitely; provided further, however that if
prior to the expiration of the survival period set forth
hereinabove, the Company shall have been notified of a claim for
indemnity hereunder and such claim shall not have been finally
resolved before the expiration of such survival period, then any
representation or warranty that is the basis for such claim shall
continue to survive and shall remain a basis for indemnity as to
such claim until such claim is finally resolved. Any provision of
this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provisions in any other
jurisdiction.
9.3 Amendment and Waiver. This Agreement may be amended,
modified or supplemented, and waivers or consents to departures
from the provisions hereof may be given, provided that the same
are in writing and signed by the Purchasers and the Company.
9.4 Notices, Etc. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement
shall be in writing and shall be delivered personally (with
written confirmation of receipt), sent by telecopier (with
written confirmation of receipt), mailed by registered or
certified mail, return receipt requested, or by a nationally
recognized overnight courier, postage prepaid, addressed, (a) if
to any Purchaser, at such address or telecopier number as is set
forth next to such Purchaser's name on the signature page hereto,
or as any such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any Security, at such
address or telecopier number as such other holder shall have
furnished to the Company in writing, or, until any such other
holder so furnishes to the Company an address or telecopier
number, then to and at the address or telecopier number of the
last holder of such Security who has furnished an address or
telecopier number, to the Company, or (c) if to the Company, at
850 Third Avenue, New York, New York 10022, telecopier no: (212)
508-3507, to the attention of Barry Roseman, President and Chief
Operating Officer, or at such other address or telecopier number,
or to the attention of such other officer, as the Company shall
have furnished to the Purchasers and each such shareholder in
writing. This Agreement and the other Transaction Documents and
all documents delivered in connection herewith or therewith
embody the entire agreement and understanding between the
Purchasers and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
9.5 Successors and Assigns. Whenever in this Agreement any
of the parties hereto are referred to, such reference shall be
deemed to include the successors and assigns of such party; and
all covenants, promises and agreements by or on behalf of the
respective parties which are contained in this Agreement shall
bind and inure to the benefit of the successors and assigns of
all other parties. The terms and provisions of this Agreement,
the Note Indenture and the other Transaction Documents shall
inure to the benefit of and shall be binding upon any assignee or
transferee of any Purchaser, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon any
such Purchaser shall automatically extend to and be vested in,
and become an obligation of, such transferee or assignee, all
subject to the terms and conditions hereof. In connection
therewith, such transferee or assignee may disclose all documents
and information which such transferee or assignee now or
hereafter may have relating to the Securities, this Agreement,
the Note Indenture, the Transaction Documents, the Company, any
other Persons referred to herein or any of the business of any of
the foregoing entities, subject to Section 9.12 hereof.
9.6 Agreement and Action of the Purchasers. Upon any
occasion requiring, permitting or referencing an act or an
approval, consent, waiver, election or other action on the part
of the holders of the Notes and/or the holders of the Preferred
Stock, as applicable, any such action shall be taken, or be
deemed to have been taken, upon (i) the affirmative vote of the
Initial Purchasers holding (A) at least 70% of the Notes and/or
the Preferred Stock, as applicable, or (B) two thirds of the
Notes and/or the Preferred Stock, as applicable, on and after the
date upon which Moore owns less than 100% of the Notes and/or the
Preferred Stock, as applicable, acquired by it on the date
hereof, or (ii) in the event that each of the Initial Purchasers,
other than GarMark, shall own less than 50% of the Notes and/or
the Preferred Stock, as applicable, owned by such Initial
Purchaser on the date hereof, the affirmative vote of the holders
of at least a majority of the Notes and/or the Preferred Stock,
as applicable.
9.7 Descriptive Headings. The headings in this Agreement
are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
9.8 Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken is by the
terms of this Agreement required to be satisfactory to the
Purchasers or to the holders of a specified portion of the
principal amount of any class of the Securities, the
determination of such satisfaction shall be made by the
Purchasers or such holders, as the case may be, in the sole and
exclusive judgment (exercised in good faith) of the Person or
Persons making such determination.
9.9 GOVERNING LAW. THIS AGREEMENT AND THE SECURITIES SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF
THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO ANY CHOICE-OF-LAW PRINCIPLES
THEREOF.
9.10 Service of Process. The Company (a) hereby irrevocably
submits itself to the jurisdiction of the state courts of the
State of New York and to the jurisdiction of the United States
District Court for the Southern District of New York for the
purpose of any suit, action or other proceeding arising out of or
based upon this Agreement, the Note Indenture, the Securities,
the other Transaction Documents or the subject matter hereof or
thereof brought by any Purchaser or their successors or assigns
and (b) hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the suit,
action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that
this Agreement or the subject matter hereof may not be enforced
in or by such court, and (c) hereby waives any offsets or
counterclaims in any such action suit or proceeding (other than
compulsory counterclaims). The Company hereby consents to service
of process by registered mail at the address to which notices are
to be given. The Company agrees that its submission to
jurisdiction and its consent to service of process by mail is
made for the express benefit of the Purchasers. Final judgment
against the Company in any such action, suit or proceeding shall
be conclusive and may be enforced in other jurisdictions (a) by
suit, action or proceeding on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness or liability of the Company therein
described or (b) in any other manner provided by or pursuant to
the laws of such other jurisdiction; provided, however, that any
Purchaser may at its option bring suit or institute other
judicial proceedings against the Company or any of the Company's
or its assets in any state or federal court of the United States
or in any country or place where the Company or such assets may
be found.
9.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one
such counterpart.
9.12 Disclosure to Other Persons. Each Purchaser agrees to
keep confidential any financial information delivered by the
Company pursuant to this Agreement (other than information that
is publicly available) and such other non-public proprietary
information delivered by the Company that is clearly designated
in writing to be confidential; provided, however, that nothing
herein shall prevent any Purchaser from disclosing such
information: (i) to any of the other Purchasers, or to any
prospective purchaser who agrees in writing to be bound by this
Section 9.12, (ii) to any Affiliate, director, officer,
principal, employee, agent, advisor and professional consultant
of any Purchaser, or of any prospective purchasers, in its
capacity as such or any actual purchaser, participant, assignee,
or transferee of such Purchaser's or prospective purchaser's
rights under any Securities or any part thereof that agrees in
writing to be bound by this Section 9.12, (iii) upon order of any
court or administrative agency having jurisdiction over such
party, (iv) upon the request or demand of any regulatory agency
or authority having jurisdiction over such party, (v) which has
been publicly disclosed, (vi) which has been obtained from any
Person that is not a party hereto or an Affiliate of any such
party, (vii) in connection with the exercise of any remedy
hereunder, (viii) to the certified public accountants for such
Purchaser or as required in summary financial or descriptive
business information disclosed by such Purchaser that is an
investment fund as part of its regular reports to its investors
or partners, (ix) as required by Law, (x) in connection with any
litigation to which such Purchaser or any of its Affiliates may
be a party, or (xi) as otherwise expressly contemplated by any
order, request or demand or to obtain confidential treatment for
any disclosure pursuant to (iii) or (iv) above, the Purchasers
will use reasonable efforts to inform the Company of any such
request for disclosure prior to disclosure. Nothing in this
Section 9.12 shall be construed to create to give rise to any
fiduciary duty on the part of Purchaser to the Company.
9.13 Acknowledgment by Purchasers. Each Purchaser
acknowledges that it is aware of the restrictions imposed by, and
agrees to comply with, all Laws regarding the use of material non-
public information, including without limitation, Laws
restricting trading in the Company's securities while in
possession of such information.
9.14 No Adverse Interpretation of Other Agreements. This
Agreement shall not be used to interpret another agreement,
indenture, loan or debt agreement of the Company or any
Subsidiary. Any such agreement, indenture, loan or debt agreement
shall not be used to interpret this Agreement.
9.15 WAIVER OF JURY TRIAL. THE COMPANY HEREBY WAIVES TRIAL
BY JURY IN ANY LITIGATION, SUIT OR PROCEEDING, IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT,
THE NOTE INDENTURE, THE SECURITIES, ANY OTHER TRANSACTION
DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO
THIS AGREEMENT, THE NOTE INDENTURE, THE SECURITIES OR ANY OTHER
TRANSACTION DOCUMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT, THEREOF, PROVIDED,
HOWEVER, THAT WITH RESPECT TO ANY COMPULSORY COUNTERCLAIM (I.E.,
A CLAIM BY THE COMPANY AGAINST ANY OF THE PURCHASERS WHICH IF NOT
BROUGHT IN SUCH ACTION WOULD RESULT IN THE COMPANY OR BEING
FOREVER BARRED FROM BRINGING SUCH CLAIM) THE COUNTERCLAIM IN ANY
SUCH LITIGATION.
SECURITIES PURCHASE AGREEMENT
(INCREASING RATE SENIOR SUBORDINATED NOTES AND
SERIES F CONVERTIBLE PREFERRED STOCK)
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
HEADWAY CORPORATE RESOURCES,
INC., a Delaware corporation
By: (Signature)
SECURITIES PURCHASE AGREEMENT FOR
INCREASING RATE SENIOR SUBORDINATED NOTES AND
SERIES F CONVERTIBLE PREFERRED STOCK
PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Aggregate Number and
date first written above: Purchase Price of
Securities
to be Purchased:
GARMARK PARTNERS, L.P. Aggregate principal Purchase
By: GarMark Associates, L.L.C. amount of Notes
Price: $6,666,667
its general partner to be Purchased:
$6,666,667
By: (Signature)
Address:
1325 Avenue of the Americas Aggregate Number of Purchase
26th Floor Shares of Series F Price:
$13,333,333
New York, NY 10019 Convertible Stock to
be Purchased: 666.67
Telephone: (212) 713-8500
Telecopy: (212) 713-8531
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, NY 10022
Att: Scott M. Zimmerman, Esq.
Telephone: (212) 758-9500
Telecopy: (212) 758-9526 Total Purchase Price:
$20,000,000
SECURITIES PURCHASE AGREEMENT FOR
INCREASING RATE SENIOR SUBORDINATED NOTES AND
SERIES F CONVERTIBLE PREFERRED STOCK
PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Aggregate Number and
date first written above: Purchase Price of Securities
to be Purchased:
MOORE GLOBAL INVESTMENTS, LTD. Aggregate principal Purchase
amount of Notes Price:
$2,050,000
to be Purchased:
$2,050,000
By: (Signature)
Address:
c/o Cited Fund Services (Bahamas), Aggregate Number of Purchase
Ltd. Shares of Series F Price:
$4,100,000
Bahamas Financial Center Convertible Stock to
Charlotte & Shirley Street be Purchased: 205
P.O. Box CB 13136
Nassau, Bahamas
Telephone: (242) 302-5918
Telecopy: (242) 356-0221
with a copy to:
Moore Capital Management, Inc.
Address:
1251 Avenue of the Americas
New York, NY 10020
Telephone: (212) 782-7532
Telecopy: (212) 382-9895 Total Purchase Price:
$6,150,000
SECURITIES PURCHASE AGREEMENT FOR
INCREASING RATE SENIOR SUBORDINATED NOTES AND
SERIES F CONVERTIBLE PREFERRED STOCK
PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Aggregate Number and
date first written above: Purchase Price of Securities
to be Purchased:
REMINGTON INVESTMENT STRATEGIES, Aggregate principal Purchase
L.P. amount of Notes Price:
$450,000
By: Moore Capital Advisors, LLP to be Purchased:
its general partner $450,000
By: (Signature)
Address:
1251 Avenue of the Americas Aggregate Number of Purchase
53rd Floor Shares of Series F Price:
$900,000
New York, New York 10020 Convertible Stock to
be Purchased: 45
Telephone: (212) 782-7532
Telecopy: (212) 382-9895
SECURITIES PURCHASE AGREEMENT FOR
INCREASING RATE SENIOR SUBORDINATED NOTES AND
SERIES F CONVERTIBLE PREFERRED STOCK
PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Aggregate Number and
date first written above: Purchase Price of Securities
to be Purchased:
NATIONSBANC MONTGOMERY Aggregate principal Purchase
SECURITIES LLC amount of Notes
Price: $833,333
to be Purchased:
$833,333
By: (Signature)
Address:
c/o NationsBanc Montgomery Aggregate Number of Purchase
Securities LLC Shares of Series F Price:
$1,666,667
600 Montgomery Street Convertible Stock to
San Francisco, CA 94111 be Purchased: 83.33
Telephone: (415) 627-2553
Telecopy: (415) 913-5552
Attn: Jack G. Levin