HEADWAY CORPORATE RESOURCES, INC.
SECOND LIMITED WAIVER
This SECOND LIMITED WAIVER (this "AGREEMENT") is dated as of
April 17, 2002, and effective as of March 31, 2002 (the "Effective Date"), and
is entered into by and among HEADWAY CORPORATE RESOURCES, INC., a Delaware
corporation (the "COMPANY"), State Street Bank and Trust Company, N.A., a
national banking association, as trustee (the "TRUSTEE"), and the holders listed
on the signature pages hereof (collectively, the "HOLDERS"), and is made with
reference to (i) that certain Indenture dated as of March 19, 1998, as amended
to the date hereof (the "INDENTURE"), by and between the Company and the
Trustee, (ii) the Increasing Rate Senior Subordinated Notes Due 2006 of the
Company issued pursuant to the Indenture (the "SUBORDINATED NOTES"), (iii) the
Company's Series G Convertible Preferred Stock, $0.0001 par value per share (the
"PREFERRED STOCK"), and (iv) the Certificate of Designations, Preferences and
Rights of the Preferred Stock, which amended the Company's Certificate of
Incorporation as of September 7, 2001 (the "CERTIFICATE OF DESIGNATIONS," and,
together with the Indenture, the Subordinated Notes, the Preferred Stock, the
Warrants (as defined below) and the Indenture, the "GOVERNING DOCUMENTS"). The
Holders are sometimes referred to herein as the "NOTEHOLDERS," in their capacity
as holders of the Subordinated Notes, and are sometimes referred to herein as
the "STOCKHOLDERS," in their capacity as holders of the Preferred Stock.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Indenture.
RECITALS
WHEREAS, the Holders own beneficially and of record, all of
the Subordinated Notes and the Preferred Stock;
WHEREAS, pursuant to the Indenture, the Trustee has been
appointed as the trustee for the Noteholders with respect to the Subordinated
Notes;
WHEREAS, the Company, the Trustee and the Holders are parties
to that certain Limited Waiver and Amendment dated as of August 24, 2001 (the
"FIRST LIMITED WAIVER");
WHEREAS, Series G Stock Events of Default (as defined in the
Certificate of Designations) have occurred as a result of events of default
under the Credit Agreement (the "CREDIT AGREEMENT DESIGNATED DEFAULTS");
WHEREAS, the Company has failed to comply with the covenants
contained in Section 6(a) of the First Limited Waiver; and such failures
constitute Events of Default under the Indenture and Series G Stock Events of
Default (the "FIRST LIMITED WAIVER DESIGNATED DEFAULTS" and, collectively with
the Credit Agreement Designated Defaults, the "DESIGNATED DEFAULTS");
WHEREAS, the Company has requested that the Holders waive
compliance with the provisions set forth in Section 1(a) hereof for the periods
described therein, and the Noteholders amend and restate the Indenture as more
particularly described herein, and the Holders have agreed to do so, but only on
the terms and conditions set forth herein; and
WHEREAS, following the execution of this Agreement, the
Company will seek the approval of the holders of the Common Stock to: (i) an
increase in the authorized number of shares of Common Stock to at least Eighty
Million (80,000,000); and (ii) any other matters for which the receipt of the
approval of the holders of the Common Stock would be necessary, appropriate or
desirable in order to effectuate the transactions contemplated hereby and by the
Governing Documents (collectively, the "COMMON STOCKHOLDER APPROVAL").
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. LIMITED WAIVER
(a) Subject to the terms and conditions set forth in this Agreement
and in reliance on the representations, warranties and covenants of the
Company herein contained, from and after the Effective Date, the
Noteholders, as to clauses (i), (ii), (iii) and (v) below, and the
Stockholders, as to clauses (iv) and (v) below, hereby waive:
(i) compliance with Section 4.21 of the Indenture (Net Worth) for
the period through and including the Recap Amendment Termination Date
(as defined below);
(ii) compliance with Section 4.24 of the Indenture (Certain
Consolidated Ratios) for the period through and including the Recap
Amendment Termination Date;
(iii) the payment in cash of any amounts with respect to
principal, interest (but not the accrual of interest, which such
accrued and unpaid interest shall also bear interest at the rate of
15.0% per annum), fees, redemption payments or other amounts payable
under the Indenture and the Subordinated Notes through and including
the Recap Amendment Termination Date;
(iv) the payment in cash of any amounts with respect to the
Preferred Stock, including dividends (but not the accrual of
dividends, which shall continue to accumulate with interest and be
added to the dividends payable for subsequent dividend accrual periods
pursuant to Section 4(a) of the Certificate of Designations), fees,
redemption payments or other amounts payable under the Certificate of
Designations through and including the Recap Amendment Termination
Date; provided,
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that notwithstanding anything to the contrary contained in this
subsection (iv), any failure to pay dividends with respect to the
Preferred Stock at any time prior to the Recap Amendment Termination
Date shall be deemed to constitute a "Dividend Payment Default" for
purposes of Section 11(c)(i) of the Certificate of Designations; and
(v) the Designated Defaults.
For purposes hereof, the "RECAP AMENDMENT TERMINATION DATE" shall be the
earliest of (i) June 30, 2003, or such earlier date on which the Senior
Indebtedness may mature; (ii) the date on which all amounts due under the Credit
Agreement shall have been paid in full in cash; (iii) the date after the date
hereof on which the Credit Agreement is amended or modified in a manner that (A)
increases the Base Rate, the Default Rate, the Applicable Margin (in each case,
as defined in the Credit Agreement as in effect on the date hereof) or any other
interest rate on the Senior Indebtedness, (B) decreases the PIK Amount (as
defined in the Credit Agreement as in effect on the date hereof), (C) increases
the amount of fees or other payments due to the Agent (as defined in the Credit
Agreement) or any Lender (as defined in the Credit Agreement) under the Credit
Agreement (other than increases made in connection with events of default under
the Credit Agreement that do not exceed, in the aggregate, 0.50% of the
outstanding Senior Indebtedness) or (D) in consideration of which, the Agent (as
defined in the Credit Agreement) or any Lender under the Credit Agreement is
issued any additional equity interest in the Company; and (iv) the acceleration
of any indebtedness under the Credit Agreement or the exercise of any rights or
remedies by any of the Lenders under the Credit Agreement.
Notwithstanding the foregoing, upon the occurrence of any other Event of Default
or Series G Stock Event of Default (including, without limitation, the failure
of the Company to comply with the provisions of Section 6 hereof) or at any time
the Trustee, the Noteholders or the Stockholders, as applicable, may hereafter
become aware of any other Event of Default or Series G Stock Event of Default
(whether heretofore or hereafter arising), as applicable, the limited waiver set
forth in Section 1(a) above shall be deemed null and void as of the date hereof
(other than the provisions of Section 1(a)(iii) and (iv) above) and of no
further force and effect (as if such limited waiver had never been given
effect), without any necessity of demand or notice to the Company or other
Person, and the Trustee, the Noteholders and the Stockholders may thereafter in
their sole and absolute discretion and notwithstanding any grace or cure periods
or other provisions to the contrary in the Indenture or the Certificate of
Designations, as applicable, take any enforcement action and exercise any or all
of their other rights, remedies and privileges under the Indenture or the
Certificate of Designations, as applicable, any other instrument or agreement
referred to therein, under applicable law or otherwise, with respect to any
Designated Defaults or any other Series G Stock Events of Default or Events of
Default.
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(b) Without limiting the generality of the provisions of Article IX of
the Indenture, the limited waiver set forth in Section 1(a)(i), (ii), (iii)
and (v) above shall be limited precisely as written and shall relate solely
to the non-compliance by the Company with the provisions of the Indenture
and/or the Subordinated Notes (as applicable) specifically set forth in
clauses (i), (ii),(iii) and (v) of Section 1(a) hereof for the periods
specifically referenced therein and nothing in this Agreement shall be
deemed to:
(i) constitute a waiver by the Trustee or the Noteholders with
respect to the payment of interest on the Subordinated Notes, and
compliance with Sections 4.21 and 4.24 of the Indenture, in any other
instance or any other term, provision or condition of the Indenture or
the Subordinated Notes; or
(ii) prejudice any right or remedy that the Trustee or any
Noteholder may now have or may have in the future under or in
connection with the Indenture, the Subordinated Notes, any other
instrument or agreement referred to therein or under applicable law.
(c) The limited waiver set forth in Section 1(a)(iv) and (v) above
shall be limited precisely as written and shall relate solely to the
default by the Company under the provisions of the Preferred Stock
specifically set forth in clauses (iv) and (v) of Section 1(a) hereof for
the periods specifically referenced therein and nothing in this Agreement
shall be deemed to:
(i) constitute a waiver by the Stockholders with respect to the
payment of dividends on the Preferred Stock, or the occurrence of any
other Series G Stock Event of Default, in any other instance or any
other terms, provision or condition of the Preferred Stock or the
Certificate of Designations; or
(ii) prejudice any right or remedy that the Stockholders may now
have or may have in the future under or in connection with the
Preferred Stock, the Certificate of Designations, any other instrument
or agreement referred to therein or under applicable law.
(d) The Noteholders reaffirm all of the terms of the Indenture,
including, without limitation, Sections 10.03 and 10.08, the Lenders'
rights under Section 10.02(a) of the Indenture to block any payments of any
kind or character with respect to any principal, interest, fee or other
amounts payable with respect to the Subordinated Notes which may be
exercised at any time or from time to time hereafter upon the Company's
default in payment, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of the Loans (as defined in the
Credit Agreement), interest thereon, fees or other Obligations (as defined
in the Credit Agreement) payable under the Loan Documents (as defined in
the Credit Agreement) and the Lenders' other rights, remedies and
privileges under Article X of the Indenture, notwithstanding any action
heretofore taken by
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the Lenders (including, without limitation, the issuance of a blockage
notice under the terms of the Indenture), subject however to the provisions
of Article X of the Indenture.
SECTION 2. AMENDMENTS TO GOVERNING DOCUMENTS
(a) Amendment to Subordinated Notes. Section 1 of each Subordinated
Note is hereby amended by deleting the provision added thereto by the First
Limited Waiver (which increased the interest rate payable on the
Subordinated Notes to 20% per annum under certain circumstances).
(b) Amendment to Warrants.
(i) Each of the warrants issued to the Holders pursuant to First
Limited Waiver exercisable, in the aggregate, for 1,000,000 shares of
the Company's common stock, par value $0.0001 per share ("COMMON
STOCK"), at an exercise price of $1.10 per share is hereby amended by
reducing the exercise price thereof from $1.10 to $0.25 per share.
(ii) Each of the warrants issued to the Holders pursuant to First
Limited Waiver exercisable, in the aggregate, for 850,000 shares of
Common Stock, at an exercise price of $3.05 per share is hereby
amended by reducing the exercise price thereof from $3.05 to $0.25 per
share.
(iii) Each of the Holders hereby acknowledges and agrees that the
issuance of the Common Stock Purchase Warrants to the Lenders pursuant
to the Amended and Restated Credit Agreement (defined below) does not
trigger adjustment of the aggregate number of shares of Common Stock
issuable upon exercise of the warrants referenced in this subparagraph
(b).
SECTION 3. CONDITIONS TO EFFECTIVENESS
The effectiveness of this Agreement is subject to the
satisfaction of all of the following conditions precedent:
(a) On or before the date hereof, the Company shall deliver to the
Trustee and each Holder the following, each, unless otherwise noted, dated
as of the Effective Date:
(i) A certificate of the Company, executed on behalf of the
Company by its secretary or any assistant secretary (or equivalent),
certifying as to (A) the absence of any amendments or other
modifications to the organizational documents of the Company since
September 7, 2001, (B) the organizational documents of the Company
being in full force and effect as of the date hereof, (C) the due
organization and good standing and valid existence of the Company as
an entity organized under the laws of the jurisdiction of its
organization, and the absence of any proceeding
5
for the dissolution or liquidation of the Company, (D) the truth of
the representations and warranties contained in this Agreement as
though made on and as of the date hereof and (E) after giving effect
to this Agreement, the absence of any event occurring and continuing
that constitutes a Default or an Event of Default (other than one
specifically waived herein);
(ii) A certificate of the Company, executed on its behalf by its
secretary or an assistant secretary (or equivalent), certifying: (A)
the names and true signatures of the officers of the Company
authorized to sign this Agreement and any other documents, agreements,
instruments or certificates to be delivered in connection herewith;
and (B) that copies of the resolutions of the board of directors of
the Company authorizing the execution, delivery and performance of,
this Agreement and any other documents, agreements, instruments or
certificates to be delivered in connection herewith and recommending
that holders of the Common Stock vote in favor of the Common
Stockholder Approval are attached to such certificate and are in full
force and effect without modification or amendment;
(iii) Copies of this Agreement and each other document,
agreement, instrument and certificate to be delivered in connection
herewith, in each case duly executed by the Company and with respect
to this Agreement, by each of the Stockholders, the Noteholders and
the Trustee;
(iv) Copies of the Amended and Restated Indenture, substantially
in the form attached hereto as Exhibit A, duly executed by the Company
and the Trustee;
(viii) A voting agreement, substantially in the form attached
hereto as Exhibit B, duly executed by each of the Stockholders, Xxxx
X. Xxxxxxxxx, Xxxxx X. Xxxxxxx, G. Xxxxx Xxxxxxxx, Xxxx X. Xxxxx,
Xxxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxx;
(ix) An opinion of counsel to the Company, in form and substance
acceptable to the Holders, as to the matters described in Section 4(a)
- 4(e) hereof and such other matters as may be reasonably requested by
the Holders; and
(x) A copy of the Amended and Restated Credit Agreement dated as
of March 31, 2002 by and among the Company, Bank of America, N.A., as
agent, Fleet National Bank, N.A., as co-agent, and the Lenders,
substantially in the form attached hereto as Exhibit C (the "AMENDED
AND RESTATED CREDIT AGREEMENT"), duly executed by each of the parties
thereto, together with all agreements, instruments or documents
executed or delivered in connection therewith.
6
(b) The Company shall have received all necessary consents required
from governmental authorities, stock exchange and self regulatory
organizations for the transactions contemplated hereby.
(c) On or before the date hereof, the Trustee and the Holders shall
have received, by wire transfer in immediately available funds,
reimbursement of all of their reasonable costs, fees and expenses
(including, without limitation, the attorneys' fees of Xxxxxxx Berlin
Shereff Xxxxxxxx, LLP and Xxxxx, Day, Xxxxxx & Xxxxx, counsel to GarMark
Partners, L.P., and of Xxxxxx, Xxxxxxx & Xxxxxxx, counsel to the Trustee)
in connection herewith and with the transactions and agreements
contemplated hereby.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Stockholders and the Noteholders to enter into this
Agreement, the Company represents and warrants to each of the Holders that the
following statements are true, correct and complete:
(a) Power and Authority. The Company has all the requisite corporate
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 Company hereunder has been duly
authorized by all necessary corporate action on the part of the Company.
(c) No Conflict. The execution and delivery of this Agreement by the
Company and the performance by the Company of this Agreement and the
consummation 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 Company or
any of its Subsidiaries, the organizational documents of the Company or any
of its Subsidiaries or any order, judgment or decree of any court or other
agency of government (including any applicable stock exchange) binding on
the Company or any of its Subsidiaries, (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 Company or any of its Subsidiaries is a
party or by which the properties or assets of the Company or its
Subsidiaries are bound, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries or (iv) require any approval of stockholders or
any approval or consent of any Person under any contract of the Company or
any of its Subsidiaries, except for the Common Stockholder Approval and
except as contemplated by the Amended and Restated Credit Agreement.
(d) Governmental Consents. The execution and delivery of this
Agreement by the Company and the performance by the Company of this
7
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 Company enforceable against the Company 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) Absence of Default. After giving effect to this Agreement, no
Default, Event of Default or Series G Event of Default exists.
(g) 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.
(h) Remaining Earnout Payments. The aggregate amount of the earnout
payments required to be made by the Company under that certain Stock
Purchase Agreement dated as of July 31, 1998 (as amended through the date
hereof, the "CARLYLE STOCK PURCHASE AGREEMENT"), by and among the Company,
Xxxxxxxx X. Xxxxxx, Xxx XxXxxx, Xxxx X. Xxxxx, Xxxxx X. Xxxxxx Trust, Xxx
Xxxxxxx and Xxxxx X. Xxxxxx, prior to giving effect to the Earnout
Restructuring Agreement (as defined below) is $1,920,000. The Company has
delivered to the Agent a true and correct copy of the fully executed
agreement (the "EARNOUT RESTRUCTURING AGREEMENT") with respect to the
Carlyle Stock Purchase Agreement providing that (i) the aggregate amount of
earnout payments required to be made by the Company pursuant to the Carlyle
Stock Purchase Agreement is $1,920,000 and (ii) that such amount began
repayment commencing in November 2001 with a payment of $800,000 and in
monthly principal payments thereafter not to exceed $100,000 per month.
Such agreement remains in full force and effect and has not been modified.
(i) Capitalization. As of the date hereof and without giving effect to
this Agreement, the authorized capital stock of the Company 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
the Preferred Stock pursuant to the Certificate of Designations. The
outstanding capital stock of the Company consists solely of 10,914,627
shares of Common Stock and 1,000 shares of Preferred Stock. Except for the
Preferred Stock, options to purchase 1,846,781 shares of Common Stock
issuable under the Company's employee stock option plan and the Warrants
issued pursuant to the First Limited Waiver (the "WARRANTS"), there are no
options, warrants, phantom stock, stock appreciation rights or other
securities that are convertible into capital stock of the Company. As of
each of January 1, 2002 and April 1, 2002, the book value of the Common
Stock was not more than $0.00 per share and, accordingly, pursuant to
Section 6(b) of the Certificate of Designations, as of January 2, 2002
8
and April 1, 2002 the Preferred Stock was convertible into Common
Stock at a per share Conversion Price of $2.75 and to $1.00,
respectively, subject to the receipt of shareholder approval of an
increase in the number of shares of Common Stock authorized for
issuance to permit the conversion in full of the Preferred Stock.
SECTION 5. ACKNOWLEDGMENT AND CONSENT
(a) The Company hereby ratifies and confirms that the terms,
provisions and conditions of the Indenture and the Subordinated Notes (as
each is amended hereby) remain in full force and effect and the Indenture
and the Subordinated Notes are enforceable in accordance with their
respective terms.
(b) The Company hereby ratifies and confirms that the terms,
provisions and conditions of the Certificate of Designations remain in full
force and effect and such Certificate of Designations is enforceable in
accordance with its terms.
(c) The Noteholders hereby acknowledge that, notwithstanding the
delivery of any information to the Trustee pursuant to Section 6(a) hereof,
the Trustee's obligations with respect to this Agreement shall be governed
by Article VII of the Indenture.
(d) The Noteholders hereby consent to the granting of registration
rights to the Lenders pursuant to the Registration Rights Agreement entered
into in connection with the Amended and Restated Credit Agreement.
SECTION 6. COVENANTS
(a) In order to induce the Holders to enter into this Agreement, the
Company hereby covenants and agrees that from the Effective Date through
the Recap Amendment Termination Date:
(i) Without the prior written consent of the Required Holders,
the Company shall not permit Consolidated EBITDA for the three-month
period ended June 30, 2002, or any three-month period ending
thereafter to be less than negative $100,000 as of the end of such
three-month period.
(ii) Without the prior written consent of the Required Holders,
the Company shall not permit Consolidated EBITDA for any period set
forth below to be less than the amount set forth opposite such period:
CONSOLIDATED EBITDA FOR SUCH
MEASURED PERIOD PERIOD MUST NOT BE LESS THAN
--------------- ----------------------------
Three months ended June 30, 2002 $450,000
9
Six months ended September 30, 2002 $1,575,000
Nine months ended December 31, 2002 $2,925,000
Twelve months ended March 31, 2002 $4,950,000
(iii) Without the prior written consent of the Required Holders,
the Company shall not permit Capital Expenditures for the portion of
the applicable Fiscal Year ending on the applicable date set forth
below to be greater than the amount set forth opposite such date:
MAXIMUM CONSOLIDATED YTD
YTD PERIOD ENDED: CAPITAL EXPENDITURES CANNOT EXCEED:
---------------- ----------------------------------
June 30, 2002 $976,800
September 30, 2002 $1,256,200
December 31, 2002 $1,394,800
March 31, 2003 $630,300
June 30, 2003 $882,200
(iv) Not later than the last Business Day of each Fiscal Year,
the Company shall deliver to the Trustee and each Holder a capital and
operating expense budget (the "BUDGET") and consolidated financial
projections prepared by management for the Company and its
Subsidiaries for the next Fiscal Year, prepared in accordance with
GAAP applied on a Consistent Basis including balance sheets, income
statements and statements of cash flows (to include separate forecasts
for Capital Expenditures by the Company and EBITDA by each direct
Subsidiary of the Company) and a reasonably detailed explanation of
any underlying assumptions with respect thereto, on a quarterly basis
for the current Fiscal Year and on an annual basis for the next
succeeding two years; provided, however, that if at any time during
such next Fiscal Year, management of the Company determines that the
financial projections no longer accurately reflect the projected
financial results for such Fiscal Year, as soon as practicable,
provide to the Trustee and each Holder revised consolidated forecasts
for such Fiscal Year.
(v) As soon as practicable and in any event within twenty (20)
days following the end of each Fiscal Month, the Company shall deliver
to the Trustee and each Holder an accounts receivable aging report in
form and detail substantially similar to that furnished to the Holders
prior to the Effective Date.
(vi) As soon as available, and in any event not later than the
tenth calendar day after the end of the month of June 2002 and each
month thereafter, the Company shall deliver to the Trustee and each
Holder, with respect to such preceding month, such financial
information and
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projections and reports described on Schedule 6(a)(vi) annexed hereto,
prepared in a manner and in a form satisfactory to the Required
Holders, together with such other information as may be reasonably
requested from time to time by the Trustee or the Required Holders (it
being understood and agreed that the delivery of any or all of such
financial information and projections shall not be deemed to be an
amendment or other modification of the Budget).
(vii) As soon as available, and in any event not later than the
last Business Day of each week after the date hereof, the Company
shall deliver to the Trustee and each Holder the financial reports
described on Schedule 6(a)(vii) annexed hereto, prepared in a manner
and in a form satisfactory to the Required Holders together with such
other information as may be reasonably requested from time to time by
the Trustee or the Required Holders (it being understood and agreed
that the delivery of any or all of such financial information and
projections shall not be deemed to be an amendment or other
modification of the Budget).
(viii) As soon as practical and in any event within 30 days after
the end of each calendar month, the Company shall deliver to the
Trustee and each Holder (i) consolidated and consolidating balance
sheets of the Company and its Subsidiaries as at the end of such
month, and the related consolidated and consolidating statements of
income and stockholders' equity and related consolidated statement of
cash flows for such month in each case setting forth in comparative
form consolidated figures from the consolidated statements of income
and stockholders' equity for the corresponding month of the preceding
Fiscal Year and accompanied by a certificate of an Authorized
Representative to the effect that such financial statements present
fairly the financial position of the Company and its Subsidiaries as
of the end of such month and the results of their operations and the
changes in their financial position for such month, in conformity with
the standards set forth in GAAP with respect to interim financial
statements, and (ii) a certificate of an Authorized Representative
containing computations for such month, and if such month is the last
month of a Fiscal Quarter, for such Fiscal Quarter comparable to that
required pursuant to Section 4.08(a)(ii) of the Indenture and
demonstrating compliance with Sections 6(a)(i),(ii) and (iii) hereof,
as applicable.
(ix) Promptly upon receipt, the Company shall deliver to the
Trustee and each Holder copies of all written proposals and summaries
of all oral proposals from time to time received regarding the
purchase of assets of Company or its Subsidiaries, or refinancing of
the Obligations (as defined in the Credit Agreement), and the Trustee
and the Holders shall have access to the personnel of the investment
bank or intermediary working for or on behalf of the Company to
discuss, among other things, the status of Company's efforts to sell
assets or refinance the Obligations.
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(x) Promptly, from time to time, the Company shall deliver or
cause to be delivered to the Trustee and each Holder such other
information regarding the Company's and any Subsidiary's operations,
business affairs and financial condition as the Trustee or such Holder
may reasonably request.
(xi) The Company shall permit, from time to time, any person
designated by the Trustee or any Holder to visit and inspect any of
the properties, corporate books and financial reports of the Company
or any Subsidiary and to discuss its affairs, finances and accounts
with its principal officers and independent certified public
accountants, and to audit controls and systems of the Company and the
Guarantors, all at reasonable times, and with reasonable prior notice
to the Company and at the expense of the Company; provided however,
following the occurrence and during the continuation of any Default or
Event of Default, such visits or inspections at the expense of the
Company shall be unlimited. The Company shall, and shall cause its
Subsidiaries to, cooperate with and give full and complete access and
make available to the Trustee and the Holders and their respective
representatives retained from time to time, on a daily basis, the
books and records of the Company and its Subsidiaries and other
information relating to the business or financial affairs of the
Company and its Subsidiaries (including, without limitation,
agreements and documents pertaining to any receivables or payables),
and the operating management of the Company and its Subsidiaries shall
meet, upon request, with the Trustee or any Holder and their
respective representatives to discuss, among other things, the
financial and operating performance and business plans of the Company
and its Subsidiaries. The Company shall, and shall cause its
Subsidiaries to, give full and complete access to such other
information as the Trustee or any Holder or their respective
representatives may reasonably request from time to time, and shall
cooperate and consult with, and provide to the Trustee and the Holders
and such representatives all such information. Without limiting the
generality of the foregoing, the Company shall, and shall cause its
Subsidiaries to, permit the Trustee, the Holders and any of their
respective auditors, examiners, consultants or other representatives
from time to time, in the sole discretion of the Trustee or the
Holders (which, in any event, may be at least once every 60 days), to
conduct audits and reviews, including, without limitation,
verification, inspection and examination of the accounts payable,
controls and systems of the Company and its Subsidiaries, at the sole
cost and expense of the Company and which costs and expenses shall be
deemed "Obligations" under the Indenture and shall be reimbursable on
demand.
(xii) The Company shall not make any Restricted Payment (as
defined in the Indenture).
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(xiii) As promptly as possible, the Company shall take all
actions reasonably necessary to obtain the Common Stockholder
Approval. The Company shall provide the Holders with at least ten (10)
Business Days prior written notice of the record date with respect to
the stockholder meeting at which the Common Stockholder Approval shall
be sought. The Company shall file with the SEC the proxy statement to
be distributed in connection with the Common Stockholder Approval (the
"PROXY STATEMENT") no later than May 15, 2002. The stockholder meeting
at which the Common Stockholder Approval shall be sought will be held
no later than July 15, 2002; provided, however, that the foregoing
deadline shall be extended by one day for each day that the period of
time during which the SEC reviews the Proxy Statement exceeds 30 days.
The Company shall deliver to the Holders, at least five (5) Business
Days prior to the filing thereof and no more than two (2) Business
Days after the filing thereof, copies of all filings made with the SEC
with respect to the Common Stockholder Approval and, no more than two
(2) Business Days after receipt thereof, copies of all correspondence
received by the Company with respect to such filings.
(xiv) Within five (5) days of the Recap Amendment Termination
Date, the Company shall pay to the Holders a restructuring fee in an
aggregate amount equal to the product of (a) 0.50% and (b) all amounts
then owing on the Subordinated Notes and the Preferred Stock,
including (without limitation) the principal and any accrued and
unpaid interest on the Subordinated Notes, and the aggregate
liquidation preference of, and any accrued and unpaid dividends, on
the Preferred Stock.
(xv) Without the prior written consent of the Required Holders,
the Company shall not enter into, with any executive officer of the
Company, any agreement, plan or other arrangement regarding
compensation that is less beneficial to the Company and its
stakeholders with respect to costs and benefits (taking into account
the timing and duration of such costs and benefits) than the
compensation package set forth on the summary of terms delivered by
the Company to the Holders contemporaneously with the execution of
this Agreement and further described in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2001, which is to be
filed with the SEC following the execution of this Agreement.
(xvi) Neither the Company nor any of its Subsidiaries shall
transfer cash or other assets (by means of loan, equity contribution
or otherwise) to its affiliated operations in Hong Kong, Tokyo,
Singapore or Sydney, Australia at any time after such operations
report EBITDA negative by $550,000 or more for any period after the
Effective Date.
13
(xvii) The Company shall deliver to the Trustee and each Holder,
within ten (10) days after the end of each calendar month, a
certificate of an Authorized Representative stating Eligible
Receivables (as defined in the Amended and Restated Credit Agreement)
of the Company as of the end of such preceding calendar month.
(b) In order to induce the other parties hereto to enter into this
Agreement, each Stockholder, severally and not jointly, hereby covenants
and agrees as follows:
(i) Prior to the record date with respect to the meeting at which
Common Stockholder Approval is sought, such Stockholder shall exercise
its Warrants in full through surrender of Preferred Stock,
Subordinated Notes and/or any in any other manner permitted under the
terms of the Warrants and will vote all shares of Common Stock owned
by it in favor of the Common Stockholder Approval.
(ii) Each Stockholder understands (based solely on
representations and warranties of the Company) that approximately
650,000 authorized and unissued shares of Common Stock are currently
unreserved and free of preemptive rights, and will be reserved by the
Company in order to facilitate the exercise, in part, of the warrants
granted to the Lenders pursuant to the Amended and Restated Credit
Agreement. The foregoing shall in no event be deemed to be a
representation or warranty by such Shareholder as to the facts set
forth above.
(iii) In connection with the execution of the Amended and
Restated Credit Agreement, 600,000 of the shares of Common Stock
reserved for issuance upon the conversion of the Preferred Stock have
been released from such reservation in order to be reserved by the
Company to facilitate the exercise, in part, of the warrants granted
to the Lenders pursuant to the Amended and Restated Credit Agreement
(the "Senior Lender Reserved Shares") and, until the Common
Stockholder Approval is obtained or the warrants issued to the Lenders
are otherwise no longer outstanding, no Stockholder shall convert
shares of Preferred Stock to the extent that such conversion would
require the issuance of any of the Senior Lender Reserved Shares. The
Senior Lender Reserved Shares are in addition to the approximately
650,000 shares referred to in Section 6(b)(ii) above.
SECTION 7. RELEASE
The Company, on behalf of itself, and each of its Subsidiaries
(collectively, the "RELEASORS") hereby releases, remises, acquits and forever
discharges the Trustee, each Stockholder, Noteholder and each of their
respective employees, agents, representatives, consultants, attorneys,
fiduciaries, servants, officers, directors, partners, predecessors, successors
and assigns, subsidiary corporations, parent corporations, related
14
corporate divisions, participants and assigns (all of the foregoing hereinafter
called the "RELEASED PARTIES"), from any and all actions and causes of action,
judgments, executions, suits, debts, claims, demands, liabilities, obligations,
setoffs, recoupments, counterclaims, defenses, damages and expenses of any and
every character, known or unknown, suspected or unsuspected, direct and/or
indirect, at law or in equity, of whatsoever kind or nature, whether heretofore
to hereafter arising, for or because of any matter or things done, omitted or
suffered to be done by any of the Released Parties prior to and including the
date of execution hereof, and in any way directly or indirectly arising out of
or in any way connected to this Agreement, the Indenture, the Preferred Stock or
the administration or enforcement of any of such documents (all of the foregoing
hereinafter called the "RELEASED MATTER"). Each Releasor acknowledges that the
agreements in this Section 7 are intended to be in full satisfaction of all or
any alleged injuries or damages suffered or incurred by such Releasor arising in
connection with the Released Matters and constitute a complete waiver of any
right of setoff or recoupment, counterclaim or defense of any nature whatsoever
which arose prior the Amendment Effective Date. Each Releasor represents and
warrants that it has no knowledge of any claim by it against the Released
Parties or of any facts, or acts or omissions of the Released Parties which on
the date hereof would be the basis of a claim by the Releasors against the
Released Parties which is not released hereby. Each Releasor represents and
warrants that it has not purported to transfer, assign, pledge or otherwise
convey any of its rights, title or interest in any Released Matter to any other
person or entity and that the foregoing constitutes a full and complete release
of all Released Matters. Releasors have granted this release freely, and
voluntarily and without duress.
SECTION 8. MISCELLANEOUS
(a) Effect on the Indenture and Certificate of Designations of the
Preferred Stock. Except as specifically set forth in Section 1(a), the
execution, delivery and performance of this Agreement shall not constitute
a waiver of any provision of, or operate as a waiver of any right, power or
remedy, or be construed as a consent, approval or authorization of the
Trustee or any Noteholder under, the Indenture or any Stockholder under the
Certificate of Designations. If the Company shall breach or otherwise be in
default of or in non-compliance with any covenant, agreement,
representation, warranty or other provision contained herein, such breach,
default or noncompliance shall be deemed an "Event of Default" for purposes
hereof and under the Indenture and the Certificate of Designations.
(b) Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
(c) Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose or be given any substantive
effect.
15
(d) Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUTH LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
(e) Waiver of Jury Trial and Consequential and Special Damages. (i)
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMNT AND
(ii) THE BOROWER WAIVES ANY CLAIM AGAINST THE TRUSTEE OR THE HOLDERS FOR
CONSEQUENTIAL OR SPECIAL DAMAGES RESPECTING THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPATED HEREUNDER. The scope of this waiver is intended to
be all encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common
law and statutory claims. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO
THIS SECTION 8(e)). In the event of litigation, this Agreement may be filed
as a written consent to a trial by the court.
(f) No Third Party Beneficiaries. No Person other than the parties
hereto and with respect to Section 7 hereof, the Released Parties, shall be
entitled to claim any right or benefit under this Agreement, including,
without limitation, the status of third party beneficiary of this Agreement
and nothing in this Agreement, express or implied, is intended to confer
upon any other Person any rights or remedies of any nature whatsoever under
or by reason of this Agreement.
(g) No Commitments for Additional Waivers; Legal Advice. The Company
acknowledges and affirms that, except as expressly set forth in Section
1(a), the Trustee and the Holders are not committing or offering any waiver
or any other accommodations of any nature whatsoever and the Company agrees
to conduct its affairs accordingly. Without limiting the generality of the
foregoing, the Company will not claim that any prior action or course of
conduct by the Trustee or any Holder constitutes an agreement or obligation
to continue such
16
action or course of conduct in the future. The Company acknowledges that
the Trustee and the Holders have no commitment to grant any other waiver or
accommodation to the Company.
The Company represents to the Holders that it has entered into this
Agreement freely and voluntarily, without coercion, duress, distress or
undue influence and that it has received legal advice from counsel of its
choice in connection with the negotiation, drafting, meaning and legal
significance of this Agreement and that it is satisfied with its legal
counsel and the advice received from it. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the
terms hereof or thereof shall be more strictly construed against any party
by reason of the rule of construction that a document is to be construed
more strictly against the party who itself or through its agent prepared
the same.
(h) Integration. This Agreement sets forth the entire understanding
and agreement of the parties hereto in relation to the subject matter
hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition,
representation or warranty, express or implied, not herein set forth shall
bind any party hereto, and not one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto
acknowledges that, except as in this Agreement otherwise expressly stated,
no representations, warranties or commitments, express or implied, have
been made by any party to the other. None of the terms or conditions of
this Agreement may be changed, modified, waived or canceled orally or
otherwise, except as provided in the Indenture.
(i) Survival. All representations, warranties, covenants, agreements,
undertakings and waivers of the Company contained herein shall survive and
be applicable until the payment in full in cash of all of the Obligations.
(j) Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
(k) Stockholders. Any reference herein to approval by, or notice from,
the Stockholders shall mean the approval of the Stockholders in the manner
contemplated by Section 11(a) of the Certificate of Designations.
(l) Further Assurances. Each party hereto shall perform such further
acts and execute such further documents as may be required to carry out the
intent and/or provisions of this Agreement and the Governing Documents.
17
IN WITNESS WHEREOF, the parties hereto have cause this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
HEADWAY CORPORATE RESOURCES, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
(Signature page to Headway Corporate Resources, Inc. Second Limited Waiver)
GARMARK PARTNERS, L.P. BANC OF AMERICA
SECURITIES LLC, SUCCESSOR IN INTEREST TO
NATIONSBANC XXXXXXXXXX SECURITIES, LLC
By: /s/ X. Xxxxxxx Bewkes By: /s/ illegible
---------------------------- ------------------------------
Name: X. Xxxxxxx Bewkes Name: illegible
Title: Managing Principal Title:
XXXXX GLOBAL INVESTMENT, LTD. REMINGTON INVESTMENT
STRATEGIES, L.P.
By: /s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------- ------------------------------
Name: Xxxxxxx Xxxxxxxxx Name: Xxxxxxx Xxxxxxxxx
Title: Director of Operations Title: Director of Operations
STATE STREET BANK AND TRUST
COMPANY, N.A., AS TRUSTEE
By: /s/ Xxxx X. Xxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
