Exhibit D
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SECURITIES PURCHASE AGREEMENT
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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 Xxxxxxx & Xxxxxx
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. Xxxx Xxxxxxx and Xxxx X. Xxxxxx, (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., Xxxxxxx Xxxxx and Xxxxxx Xxxx, (c) that certain
Asset Purchase Agreement dated as of September 29, 1997 between the Company,
Xxxxx Xxxxx Temps, Inc., Quality Outsourcing, Inc., Xxxxxx X. Xxxx, Xxxxxxx X.
Xxxxx and Xxxxx X. Xxxxxx, (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., Xxxxxxx Xxxxx, Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx, (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 Xxxx Xxxxxx, (f) that certain Asset Purchase
Agreement, to be dated on or about March 23, 1998, among the Company, Xxxxxx
Associates, L.L.C. and Xxxxxxx Xxxxxx, an individual doing business under the
names Xxxxxx Associates, Inc. and Xxxxxx 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, Xxxx Xxxxx and Xxxxx Xxxxx, 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.
"Xxxxx" means Remington Investment Strategies L.P. and Xxxxx 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 Xxxxxxx & Xxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, 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 Xxxxxxx &
Xxxxxx 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
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 Xxxxxxx List and Xxxxxx Xxxxxxxxxx in form and
substance acceptable to the Purchasers and each of their counsel, duly executed
by each of Xxxxxxx List and Xxxxxx Xxxxxxxxxx;
(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 XX Xxxxxxx 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 Xxxx Xxxxx; (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., Xxxxxxx Xxxxx and Xxxxxx Xxxx; (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 Xxxxxxxxxx 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 Xxxxxxxxxx Securities LLC or any
successor holder affiliated with NationsBank ("NationsBanc Xxxxxxxxxx") is
effectively restricted or prohibited from holding any of the Securities then
held by NationsBanc Xxxxxxxxxx, the Company shall use reasonable good faith
efforts to take such action as it may determine is reasonably necessary and
appropriate to permit NationsBanc Xxxxxxxxxx to transfer the Securities to
comply with such Regulatory Requirement. All such actions shall be taken at the
expense of NationsBanc Xxxxxxxxxx. NationsBanc Xxxxxxxxxx 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 Xxxxxxxxxx or any successor or other group of NationsBank or
its directly or indirectly wholly-owned 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 Xxxxxxxxxx to transfer its Securities, subject
to complying with applicable Laws. All such actions shall be taken at the
expense of NationsBanc Xxxxxxxxxx. NationsBanc Xxxxxxxxxx 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 Xxxxx 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
Xxxxx 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 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, telecopier no: (000) 000-0000, to the attention of Xxxxx
Xxxxxxx, 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 Xxxxx 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
Associates, L.L.C. amount of Notes Price: $6,666,667
By: GarMark to be Purchased:
its general partner $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
Xxx Xxxx, XX 00000 Convertible Stock to
be Purchased: 666.67
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Att: Xxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 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:
XXXXX 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 Aggregate Number of Purchase
(Bahamas), Ltd. Shares of Series F Price: $4,100,000
Bahamas Financial Center Convertible Stock to
Charlotte & Xxxxxxx Street be Purchased: 205
X.X. Xxx XX 00000
Nassau, Bahamas
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Capital Management, Inc.
Address:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 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
to be Purchased:
By: Xxxxx Capital Advisors, LLP $450,000
its general partner
By: (Signature)
Address:
1251 Avenue of the Americas Aggregate Number of Purchase
53rd Floor Shares of Series F Price: $900,000
Xxx Xxxx, Xxx Xxxx 00000 Convertible Stock to
be Purchased: 45
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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 XXXXXXXXXX Aggregate principal Purchase
SECURITIES LLC amount of Notes Price: $833,333
to be Purchased:
$833,333
By: (Signature)
Address:
c/o NationsBanc Xxxxxxxxxx Aggregate Number of Purchase
Securities LLC Shares of Series F Price: $1,666,667
000 Xxxxxxxxxx Xxxxxx Convertible Stock to
Xxx Xxxxxxxxx, XX 00000 be Purchased: 83.33
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxx X. Xxxxx
