EXCHANGE AGREEMENT
AGREEMENT, dated as of September 7, 2001, is entered into by and among,
Headway Corporate Resources, Inc., a Delaware corporation (the "Corporation"),
Banc of America Securities, LLC ("Banc of America"), GarMark Partners, L.P.
("GarMark"), Xxxxx Global Investments, Ltd. ("Xxxxx") and Remington Investment
Strategies, L.P. ("Remington"; Banc of America, GarMark, Xxxxx and Remington
each being referred to as a "Stockholder" and collectively, as the
"Stockholders").
W I T N E S S E T H
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WHEREAS, the Stockholders own all of the issued and outstanding shares
of the Series F Convertible Preferred Stock of the Corporation (the "Series F
Stock");
WHEREAS, in accordance with Section 3(a) of the Limited Waiver and
Amendment, dated as of August 24, 2001 (the "Limited Waiver"), by and among the
Corporation, State Street Bank and Trust Company, N.A. and the Stockholders, the
Corporation has filed a Certificate of Designations, Preferences and Rights of
Series G Convertible Preferred Stock (the "Series G Stock") of the Corporation
(the "Series G Certificate of Designations") having terms and conditions
substantially similar to the Certificate of Designations, Preferences and Rights
of Series F Stock of the Corporation (the "Series F Certificate of
Designations"); and
WHEREAS, the Stockholders wish to exchange all of their shares of
Series F Stock for shares of Series G Stock, on a one for one basis.
NOW THEREFORE, the parties hereto agree as follows:
Section 1. The Exchange
(a) Subject to the terms and conditions set forth in this Agreement and
in reliance on the representations, warranties and covenants of the Corporation
and the Stockholders herein contained, each Stockholder shall convey, transfer,
assign and deliver to the Corporation all of its right, title and interest to
all shares of Series F Stock held by such Stockholder. The number of shares of
Series F Stock owned by each Stockholder on the date hereof and which shall be
transferred to Headway are as follows: Banc of America, 83.33 shares; GarMark,
666.67 shares; Xxxxx, 205 shares; and Remington, 45 shares. The Stockholders
shall transfer all of the shares of Series F Stock free and clear of all claims,
liens, security interests, charges, encumbrances, equities, adverse interests
and restrictions of any kind (collectively, "Liens"). On the date hereof, each
Stockholder shall deliver to the Corporation the certificate evidencing the
shares of Series F Stock to be transferred to the Corporation by such
Stockholder, duly endorsed in blank or accompanied by duly executed stock powers
in blank.
(b) On the date hereof, in exchange (the "Exchange") for the Series F
Stock transferred by each Stockholder pursuant to Section 1(a), the Corporation
shall deliver to each Stockholder the same number of shares of the Series G
Stock.
(c) For purposes of the Series G Certificate of Designations, it shall
be deemed that (x) dividends shall have begun to accrue on the Series G Stock as
of April 1, 2001 and (y) dividends were neither declared nor paid by the
Corporation for the quarter ended June 30, 2001. Each of the Stockholders
acknowledges that, after consummation of the Exchange, no dividends shall be due
and payable on the Series F Stock.
(d) Any Series F Stock Event of Default (as such term is defined in the
Series F Certificate of Designations), other than a Series F Stock Event of
Default waived pursuant to the Limited Waiver (as defined in the Series G
Certificate of Designations), that occurred prior to the Original Issue Date (as
defined in the Series G Certificate of Designations) shall be considered a
Series G Stock Event of Default.
(e) All references in the Securities Purchase Agreement, dated as of
March 19, 1998, by and among the Corporation and the holders of the Series F
Stock to the Series F Stock shall be deemed to be references to the Series G
Stock, and any obligations thereunder with respect to the Series F Stock (or the
holders thereof) shall be deemed to be references to the Series G Stock (or the
holders thereof).
Section 2. Representations and Warranties of the Corporation
The Corporation represents and warrants to each of the Stockholders as
follows:
(a) Power and Authority. The Corporation has all the requisite power
and authority to enter into this Agreement and to carry out the transactions
contemplated by this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement and the performance of the Corporation hereunder has been duly
authorized by all necessary action on the part of the Corporation.
(c) No Conflict. The execution and delivery of this Agreement and the
performance by the Corporation of the transactions contemplated hereby do not
and will not (i) violate any provision of any law or any governmental (including
any applicable stock exchange) rule or regulation applicable to the Corporation
(except for the requirement to obtain shareholder approval for certain changes
to the Conversion Price and an increase in the number of shares of Common Stock
authorized for issuance, as set forth in the Series G Stock Certificate of
Designations (the "Common Stockholder Approval")), the organizational documents
of the Corporation, or any order, judgment or decree of any court or other
agency of government (including any applicable stock exchange) binding on the
Corporation, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any material contract,
indenture, agreement or other instrument or document to which the Corporation is
a party or by which the properties or assets of the Corporation are bound, (iii)
result in or require the creation or imposition of any lien upon any of the
properties or assets of the Corporation, or (iv) except as disclosed above,
require any approval of stockholders or any approval or consent of any person
under any contract of the Corporation.
(d) Governmental Consents. The execution and delivery of this
Agreement, the Series G Stock and the Series G Certificate of Designations by
the Corporation and the
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performance by the Corporation of this Agreement and the transactions
contemplated by this Agreement does not and will not require any registration
with, consent or approval of, or notice to, with or by, any federal, state or
other governmental authority or regulatory body (including any applicable stock
exchange).
(e) Binding Obligation. This Agreement is the legally valid and binding
obligation of the Corporation enforceable against the Corporation in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors generally and
general principles of equity.
(f) Accuracy of Recitals. The Recitals to this Agreement are true and
correct in all respects on and as of the date hereof, and are incorporated
hereby as if fully set forth herein.
(g) Capitalization. As of the date hereof, the authorized capital stock
of the Corporation consists of 20,000,000 shares of Common Stock, and 5,000,000
shares of preferred stock, $0.0001 par value per share, of which 1,000 shares
have been designated as Series F Stock and 1,000 shares have been designated as
Series G Stock. Without giving effect to the transactions contemplated by this
Agreement, the issued and outstanding capital stock of the Corporation consists
of 10,914,627 shares of Common Stock and 1,000 shares of Series F Stock.
(h) The Shares. The shares of Series G Stock, when and as issued
pursuant to the terms of this Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, and free and clear of any Liens.
(i) Reserved Capital. The Corporation has duly reserved for issuance
the shares of Common Stock issuable on conversion of the Series G Stock;
provided, that there is insufficient authorized capital to permit the conversion
of the Series G Stock in connection with the reduction of the Conversion Price
pursuant to Section 6(b) of the Series G Certificate of Designations, and the
changes in said Conversion Price and the increase in the authorized capital of
the Corporation require approval of the holders of Common Stock of the
Corporation, which approval has not been obtained as of the date hereof. When
issued to the Stockholders, the Series G Stock will be duly and validly issued,
fully paid and non-assessable, and will be free and clear of any Liens, and,
except as set forth in this Agreement or the Series G Certificate of
Designations, or as provided under applicable securities laws, will not be
subject to any restriction on use, voting or transfer. Subject to the above
proviso, the shares of Common Stock issuable to the Stockholders on conversion
of the Series G Stock, when issued in accordance with the Series G Certificate
of Designations, will be duly and validly issued, fully paid and non-assessable,
and will be free and clear of any Liens, and except as set forth in this
Agreement or the Series G Certificate of Designations, or as provided under
applicable securities laws, will not be subject to any restriction on use,
voting or transfer.
Section 3. Representations and Warranties of the Stockholders
(a) Each Stockholder represents for itself to the Corporation that, (i)
it is an accredited investor as defined in Regulation D under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission promulgated
thereunder (the "Securities Act"), or (ii) by reason of its business and
financial experience, and the business and financial experience
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of those persons, if any, retained by it to advise it with respect to the
Exchange, such Stockholder 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 the
Exchange is 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
the Stockholder 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 Series G Stock except in compliance with the
Securities Act and except to one or more such institutional investors, provided
that the disposition of such Stockholder's or such investor's property shall at
all times be within its control. Each Stockholder understands and agrees that
the Exchange has not been registered under the Securities Act and the Series G
Stock may be resold only if registered pursuant to the provisions thereunder or
if an exemption from registration is available.
(b) Each Stockholder represents for itself to the Corporation that it
has full power and authority and has taken all action necessary to authorize it
to enter into and perform it obligations under this Agreement. This Agreement is
the legal, valid and binding obligation of each Stockholder, and is enforceable
against each Stockholder in accordance with its terms.
(c) Each Stockholder represents for itself to the Corporation that it
is the sole beneficial and record owner of the shares of Series F Stock
transferred by it pursuant to the terms of this Agreement, and owns such shares
free and clear of all Liens.
Section 4. Restrictions on Transfer
(a) Restrictive Legends. Except as otherwise permitted by this Section
4(a), each Series G 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
CORPORATION, AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE IS FURNISHED TO THE CORPORATION THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
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Whenever the legend requirement imposed by this Section 4(a) shall
terminate, as hereinabove provided, the respective holders of Series G Stock for
which such legend requirements have terminated shall be entitled to receive from
the Corporation, at the Corporation's expense, new Series G Stock (or Common
Stock) certificates, as applicable, without such legend.
(b) Notice of the Proposed Transfer; Opinions of Counsel. Each holder
of each Series G Stock certificate (or Common Stock certificate issued on
conversion thereof) bearing the restrictive legend set forth in Section 4(a) (a
"Restricted Security"), agrees that prior to any transfer or attempted transfer
of such Restricted Security, to give to the Corporation (x) written notice
describing the manner or circumstances of such transfer or proposed transfer,
and (y) upon reasonable request by the Corporation 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 Corporation, 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 Corporation (after having been
furnished with the opinion required to be furnished pursuant to this Section
4(b)) shall fail to notify such holder within 2 days after such holder shall
have delivered such opinion to the Corporation that, in its or its counsel's
opinion, the transfer may not be legally effective (the "Illegal Transfer
Notice"), such holder shall thereupon be entitled to transfer the Restricted
Security as proposed. If the holder of the Restricted Security delivers to the
Corporation 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 Corporation that subsequent transfers of such Restricted
Security will not require registration under the Securities Act, or if the
Corporation 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 4(a). The restrictions imposed by this Section 4
upon the transferability of a 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 (taking into
account any "tacking periods" allowed under the Act), and (B) the last date on
which the Corporation or any affiliate of the Corporation 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 Corporation a new security of the same type but not
bearing the restrictive Securities Act legend set forth in Section 4(a) and not
containing any other reference to the restrictions imposed by this Section 4.
Notwithstanding any of the foregoing, no opinion of counsel will be required to
be rendered pursuant to this Section 4(b) with respect to the transfer of any
shares of Series G Stock on which the restrictive legend has been removed in
accordance with this Section 4(b). As used in this Section 4(b), the term
"transfer" encompasses any sale, transfer or other disposition of any shares of
Series G Stock referred to herein.
(c) The Common Stock issuable upon conversion of the Series G Stock
shall be deemed to be registrable securities pursuant to that certain
Registration Rights Agreement between the Corporation and the investors named
therein, and the holders of the Series G Stock shall be included in the
definition of "Holders", as defined therein.
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Section 5. Common Stockholder Approval
The Corporation covenants and agrees to cause the Secretary of the
Corporation (as the Holder's designee) to vote any shares of Common Stock for
which the Secretary is granted a proxy pursuant to the Limited Waiver in favor
of the Common Stockholder Approval.
Section 6. Miscellaneous
(a) Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter, merges and
supersedes any prior or contemporaneous understandings with respect to its
subject matter, and shall not be modified or terminated except by a written
instrument executed by the Corporation and each of the Stockholders. Failure of
a party to enforce one or more of the provisions of this Agreement or to require
at any time performance of any of the obligations hereunder shall not be
construed to be a waiver of such provisions by such party nor to in any way
affect the validity of this Agreement or such party's right thereafter to
enforce any provision of this Agreement, nor to preclude such party from taking
any other action at any time which it would legally be entitled to take.
(b) Severability. If any provision of this Agreement is held to be
invalid or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
(c) Successors and Assigns. This Agreement shall inure to the benefit
of, be binding on and be enforceable by, the parties and their successors and
assigns.
(d) Construction; Counterparts. The headings contained in this
Agreement are for convenience only and shall in no way restrict or otherwise
affect the construction of the provisions hereof. References in this Agreement
to Sections are to the sections of this Agreement. This Agreement may be
executed in multiple counterparts, each of which shall be an original and all of
which together shall constitute one and the same instrument.
(e) Governing Law. This Agreement shall be governed by the laws of the
State of New York applicable to agreements made and fully to be performed in
such state, without giving effect to conflicts of law principles.
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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.
By:
--------------------------------
Name:
Title:
BANC OF AMERICA SECURITIES LLC GARMARK PARTNERS, L.P.
By: By:
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Name: Name:
Title: Title:
XXXXX GLOBAL INVESTMENTS, LTD. REMINGTON INVESTMENT STRATEGIES, L.P.
By: By:
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Name: Name:
Title: Title:
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