SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
HEADWAY CORPORATE RESOURCES, INC.
(Name of Registrant as Specified in Its Charter)
Commission File Number: 0-23170
Not Applicable
(Name of Persons Filing Proxy Statement If Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:_______________________________
2) Aggregate number of securities to which transaction
applies:_____________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined): _______________
4) Proposed maximum aggregate value of transaction:_____
5) Total fee paid:___________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:______________________________
2) Form, Schedule or Registration Statement No.:________
3) Filing Party:________________________________________
4) Date Filed:__________________________________________
<PAGE>
HEADWAY CORPORATE RESOURCES, INC.
850 Third Avenue, 11th Floor
New York, New York 10022
ANNUAL MEETING OF STOCKHOLDERS
JUNE 18, 1998
PROXY STATEMENT AND NOTICE
SOLICITATION OF PROXIES
The enclosed proxy is being solicited by the Board of
Directors of Headway Corporate Resources, Inc., 850 Third Avenue,
11th Floor, New York, New York 10022, a Delaware corporation
("Headway" or the "Company"), for use at the Annual Meeting of
the Stockholders of Headway (the "Annual Meeting") to be held at
3:30 p.m., on June 18, 1998, at the principal office of the
Company listed above, and at any adjournment thereof. This Proxy
Statement, together with the Company's 1997 Annual Report, serves
as notice of the Annual Meeting, a description of the proposals
to be addressed at the Annual Meeting, and a source of
information on the Company and its management.
Stockholders may revoke their proxies by delivering a
written notice of revocation to the Secretary of the Company at
any time prior to the exercise thereof, by the execution of a
later-dated proxy by the same person who executed the prior proxy
with respect to the same shares, or by attendance at the Annual
Meeting and voting in person by the person who executed the prior
proxy.
The solicitation will be primarily by mail but may also
include telephone, telegraph, or oral communication by officers
or regular employees. Officers and employees will receive no
additional compensation in connection with the solicitation of
proxies. All costs of soliciting proxies will be borne by the
Company. The approximate mailing date of the proxy statement and
proxy to stockholders is May 14, 1998.
All proxies will be voted as specified. In the absence of
specific instructions, proxies will be voted FOR:
(1) the election of E. Garrett Bewkes, III and Ehud D.
Laska, as Class 2 Directors of Headway to serve for a term of
three years and until their successors are duly elected and
qualified;
(2) ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company for 1998; and
(3) approval of all other matters by the persons named in
the proxies in accordance with their judgment.
PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON THE PROXY.
STOCKHOLDERS RECEIVING MORE THAN ONE PROXY BECAUSE OF SHARES
REGISTERED IN DIFFERENT NAMES OR ADDRESSES MUST COMPLETE AND
RETURN EACH PROXY IN ORDER TO VOTE ALL SHARES TO WHICH ENTITLED.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
Record Date. Stockholders of record at the close of
business on April 27, 1998, are entitled to notice of and to vote
at the Annual Meeting or any adjournment thereof.
Shares Outstanding. As of April 27, 1998, a total of
9,762,578 shares of the Company's Common Stock (the "Common
Stock"), were outstanding and entitled to vote at the Annual
Meeting. As of the Record Date, the Company had one class of
preferred stock outstanding, Series F Convertible Preferred
Stock, which is not entitled to vote on any of the matters to be
voted upon by stockholders at the Annual Meeting.
Voting Rights and Procedures. Each outstanding share of
Common Stock is entitled to one vote on all matters submitted to
a vote of stockholders. The Company's Bylaws and Delaware law
require the presence, in person or by proxy, of a majority of the
outstanding shares entitled to vote to constitute a quorum to
convene the Annual Meeting. Shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a
broker or nominee which are represented at the meeting, but with
respect to which such broker or nominee is not empowered to vote
on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum.
Stockholder Proposals for the 1999 Annual Meeting.
Proposals from stockholders intended to be included in the
Company's proxy statement for the 1999 Annual Meeting must be
received by the Secretary of the Company on or before January 14,
1999 (not less than 120 days prior to the day in 1998 which
corresponds to the date on which this Proxy Statement is released
to stockholders), and may be omitted unless the submitting
stockholder meets certain requirements. It is suggested that the
proposal be submitted by certified mail, return-receipt
requested.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Company's Certificate of Incorporation and Bylaws
provide that the Board be divided into three classes to be
designated as Class 1, Class 2 and Class 3, each of which is to
be as nearly equal in number as possible. The Directors in each
Class serve for a term ending on the date of the third annual
meeting following the meeting at which the Directors of that
Class are elected. At the 1998 Annual Meeting, Directors of
Class 2, consisting of two persons, are up for election to serve
until the annual meeting of stockholders in the year 2001.
The Board of Directors has nominated for election as the
Class 2 Directors E. Garrett Bewkes, III and Ehud D. Laska, who
currently serve in those positions.
Set forth below under the caption "DIRECTORS AND EXECUTIVE
OFFICERS", is information on the age, presently held positions
with the Company, principal occupation now and for the past five
years, other directorships in public companies, and tenure of
service with the Company as a Director for each of the nominees.
Each Director is elected by vote of a plurality of the
shares of voting stock present and entitled to vote, in person or
by proxy, at the Annual Meeting. Abstentions or broker non-votes
as to the election of directors will not affect the election of
the candidates receiving the plurality of votes. Unless
instructed to the contrary, the shares represented by the proxies
will be voted FOR the election of the nominees named above as
directors. Although it is anticipated that each nominee will be
able to serve as a director, should any nominee become
unavailable to serve, the proxies will be voted for such other
person or persons as may be designated by the Company's Board of
Directors.
The Board Recommends a Vote "FOR" The Nominees
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The accounting firm of Ernst & Young LLP ("Ernst & Young")
has been approved by the Board, upon recommendation by the Audit
Committee, to serve as independent auditors of the Company for
1998, subject to approval by the stockholders by an affirmative
vote of a majority of the outstanding shares of the Company's
Common Stock represented at the Annual Meeting. Ernst & Young
served as independent auditors of the Company since 1996. The
Company has been advised that neither Ernst & Young nor any of
its members or associates has any relationship with the Company
or any of its affiliates, except in the firm's capacity as the
Company's independent auditors.
Representatives of Ernst & Young will be present at the
Annual Meeting of Stockholders, will be afforded an opportunity
to make a statement if they desire, and will be available to
respond to appropriate questions from stockholders.
The affirmative vote of a majority of the shares of Common
Stock represented at the Annual Meeting in person or by proxy is
required to approve the selection of Ernst & Young to serve as
independent auditors of the Company for 1998.
The Board of Directors Recommends a Vote "For" the Ratification
of the Appointment of Ernst & Young LLP.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth as of April 27, 1998, the
number and percentage of the outstanding shares of Common Stock
which, according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of the Company, (ii) each Named Executive Officer (as defined
below), (iii) all current directors and executive officers of the
Company as a group and (iv) each person who, to the knowledge of
the Company, is the beneficial owner of more than 5% of the
outstanding Common Stock. Except as otherwise indicated, the
persons named in the table have sole voting and dispositive power
with respect to all shares beneficially owned, subject to
community property laws where applicable.
Amount and Nature of
Beneficial Ownership
Principal Stockholders Options,
Common Warrants and Percent of
Shares Rights (1) Class (2)
Gary S. Goldstein (3) 1,752,005 171,666 19.4
850 Third Avenue
New York, NY 10022
Barry S. Roseman (3) 383,629 130,000 5.2
850 Third Avenue
New York, NY 10022
Edward E. Furash 599,232 -0- 6.1
2001 L Street, N.W.
Washington, DC 20036
GarMark Partners, L.P. (4) -0- 2,222,222 22.8
1325 Avenue of the Americas
26th Floor
New York, NY 10019
Moore Global Investments, Ltd. (5) -0- 833,333 7.9
Remington Investment Strategies, L.P.
c/o Moore Capital
1251 Avenue of the Americas
53rd Floor
New York, NY 10020
ING (U.S.) Capital Corporation 575,000 -0- 5.9
135 East 57th Street
New York, NY 10022
Officers, Directors and Nominees
G. Chris Andersen 49,965 5,000 0.6
1330 Avenue of the Americas
New York, NY 10019
E. Garrett Bewkes, III (4) -0- 10,000 0.1
1325 Avenue of the Americas
26th Floor
New York, NY 10019
Bruce R. Ellig 50,000 15,000 0.7
25 East End Avenue
New York, NY 10028
Ehud D. Laska 19,986 189,856 2.1
630 Fifth Avenue
New York, NY 10111
Richard B. Salomon 49,965 5,000 0.6
620 Fifth Avenue
New York, NY 10020
Glen R. Sergeon -0- 10,000 0.1
437 Madison Avenue, 18th Floor
New York, NY 10022
Philicia G. Levinson 66,621 11,667 0.8
850 Third Avenue
New York, NY 10022
All Executive officers and 2,372,171 2,770,411 41.0
Directors as a Group (6)
(1) These figures represent options and warrants that are vested
or will vest within 60 days from the date as of which information
is presented in the table.
(2) These figures represent the percentage of ownership of the
named individuals assuming each of them alone has exercised his
or her options, warrants, or conversion rights, and percentage
ownership of all officers and directors of a group assuming all
such purchase or conversion rights held by such individuals are
exercised.
(3) Messrs. Goldstein and Roseman are also officers and
directors of the Company.
(4) GarMark Partners, L.P., is the holder of Series F
Convertible Preferred Stock of the Company, which is convertible
to the number of shares of Common Stock reflected in the table,
subject to adjustment in certain circumstances. E Garrett
Bewkes, III, and Mark Solow are the Managing Members of GarMark
Associates L.L.C., the general partner of GarMark Partners, L.P.,
and, therefore, these persons may be deemed to have shared voting
and investment control with respect to such shares.
(5) Moore Capital Management, Inc. ("MCM"), is the discretionary
investment manager of Moore Global Investments, Ltd., a Bahamian
corporation ("MGI"). MGI is the holder of Series F Convertible
Preferred Stock of the Company, which is convertible to 683,333
shares of Common Stock, subject to adjustment in certain
circumstances. Moore Capital Advisors, LLC ("MCA"), is the
discretionary investment manager and general partner of Remington
Investment Strategies, L.P., a Delaware limited partnership
("RIS"). RIS is the holder of Series F Convertible Preferred
Stock of the Company, which is convertible to 150,000 shares of
Common Stock, subject to adjustment in certain circumstances.
Louis M. Bacon is the Chairman and Chief Executive Officer,
director, and controlling equity owner of both MCM and MCA.
Accordingly, Mr. Bacon and MCM, and Mr. Bacon and MCA,
respectively, may be deemed to have shared voting and investment
control with respect to the shares held, respectively, by MGI and
RIS.
(6) The figure for options, warrants and rights includes the
shares of GarMark Partners, L.P., because of the relationships
described in Note (4) to the table.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Officers
The following table sets forth the names, ages, and
positions with the Company for each of the directors and officers
of the Company. The Board of Directors is divided into three
classes, and only one class of directors is elected at each
annual meeting of stockholders. The table indicates the class of
which each director is a member and the year in which his term
expires based on the class.
Name Age Positions (1) Term Ends
Gary S. Goldstein 43 Chairman, Chief Executive Class 1
Officer and Director 1999
Barry S. Roseman 45 President, Treasurer, Chief Class 1
Operating Officer and Director 1999
G. Chris Andersen 60 Director Class 3
2000
E. Garrett Bewkes, III (2) 47 Director Class 2
1998
Bruce R. Ellig 61 Director Class 1
1999
Ehud D. Laska (2) 48 Director Class 2
1998
Richard B. Salomon 50 Director Class 3
2000
Glen R. Sergeon 48 Director Class 3
2000
Philicia G. Levinson 34 Senior Vice President and N/A
Secretary
(1) All executive officers are elected by the Board and hold
office until the next Annual Meeting of stockholders and until
their successors are elected and qualify.
(2) E. Garrett Bewkes, III and Ehud D. Laska are members of
Class 2 of the Board of Directors, and have been nominated by the
Board for re-election at the Annual Meeting. See "PROPOSAL NO. 1
- -- ELECTION OF DIRECTORS", above.
The following is information on the business experience of
each director and officer.
Gary S. Goldstein has served in a number of executive
positions with the Company and its predecessors over the past
twelve years, including, Chairman, President, and Chief Executive
Officer. He is currently a director and executive officer of
each of the Company's subsidiary corporations. Mr. Goldstein has
extensive experience in human resource recruitment within all
areas of the financial services industry. Prior to entering the
recruitment industry, Mr. Goldstein was on the audit and
consulting staffs of Arthur Andersen & Co., in New York. Mr.
Goldstein is an active member of the Young Presidents'
Organization, Inc., and serves on its Metro Division Board of
Directors. He is also an active member of The Brookings Council
of the Brookings Institution, The Presidents Association of the
American Management Association, and is listed in Who's Who in
Finance and Industry.
Barry S. Roseman oversees all operation of the Company and
its subsidiaries. He joined the Company as its Senior Executive
Vice President and Chief Operating Officer in January 1992, and
became President in September 1996. He is currently a director
and executive officer of each of the Company's subsidiary
corporations. For nine years prior to 1992, Mr. Roseman was
employed at FCB/Leber Katz Partners, Inc., a division of True
North Communications, Inc., in various positions; most recently
as Senior Vice President Director of Agency Operations.
G. Chris Andersen became a director of the Company in June
1995. He is one of the founders of Andersen, Weinroth & Co.,
L.P., a merchant banking firm, which commenced operations in
January 1996. For over five years prior to 1996, Mr. Andersen
served as the Vice Chairman of PaineWebber Incorporated. Mr.
Andersen also serves as a director of three other public
companies, Sunshine Mining and Refining Company, TEREX
Corporation, and All Star Systems, Inc.
E. Garrett Bewkes, III, became a director of the Company in
March 1998 pursuant to the terms of the new financing obtained by
the Company in that month. From November 1995 to the present he
has served as a Managing Member of GarMark Associates L.L.C. He
was a member of the Management Committee of Investcorp
International, Inc., from March 1994 to November 1995, where he
headed the North American Investment Group. Mr. Bewkes was with
Bear Stearns and Co., Inc., for nine years prior to March 1994,
most recently as Vice Chairman and Co-Head of Investment Banking.
From June 1994 to the present, Mr. Bewkes has served as a
director of Saks Holdings, Inc., in New York City.
Bruce R. Ellig became a director of the Company in April
1997. Currently Mr. Ellig is an independent consultant and
adviser on human resource matters. From 1985 through October
1996, Mr. Ellig served as a Corporate Vice President of the
research-based health care company, Pfizer Inc., with worldwide
responsibility for its personnel functions. He is a member of
the American Compensation Association and the Society for Human
Resource Management ("SHRM"). Mr. Ellig was the Chairman of the
SHRM board in 1996. Prior to his retirement from Pfizer, Mr.
Ellig was a member of many human resource organizations, and
received numerous awards for his contributions to the field. He
is a fellow of the National Academy of Human Resources, and is
listed in Who's Who in Finance and Industry, the East, America,
and the World.
Ehud D. Laska was appointed a director of the Company in
August 1993. He is the Chairman of Coleman and Company
Securities, Inc., a member firm of the National Association of
Securities Dealers, Inc. Mr. Laska is also a founding partner
and President of InterBank Capital Group, LLC. Through these
firms, Mr. Laska specializes in building up companies through
same industry consolidation and acquisitions. From August 1994
to February 1996, Mr. Laska served as a managing director at the
investment banking firm of Continuum Capital, Inc. While serving
as a Managing Director with Tallwood Associates, Inc., a boutique
investment banking firm, from May 1992 to August 1994, Mr. Laska
founded the Private Equity Finance Group, which merged with
Continuum Capital, Inc. in August 1994.
Richard B. Salomon became a director of the Company in June
1995. He has been engaged in the private practice of law for the
past five years, during which period he has been a partner in the
law firm of Christy & Viener, counsel to the Company. Mr.
Salomon's practice is primarily in the areas of real estate and
corporate law. He currently serves as a director of Tweedy
Browne Fund, Inc., a mutual fund based in New York City.
Glen R. Sergeon became a director of the Company in November
1997. From May 1995 to the present, he has served as a Managing
Director of Schroder Real Estate Associates, an asset management
firm based in New York City. Mr. Sergeon was a principal of TCB,
L.L.C., a firm engaged in the business of acquiring failed thrift
institutions, from June 1993 to 1995. Prior to June 1993, Mr.
Sergeon was a managing director at CitiCorp, where he was
responsible for managing municipal finance projects.
Philicia G. Levinson was appointed Secretary of the Company
in September 1996. She has served as Senior Vice President,
Director of Corporate Development and has managed the Company's
acquisition activities since April 1995. She was hired by the
Company in December 1992 to provide marketing consulting services
to investment banking clients.
Board Meetings and Committees/Compensation
The Board of Directors has established four committees. The
Compensation Committee considers salary and benefit matters for
the executive officers and key personnel of the Company. The
members of the Compensation Committee include G. Chris Andersen,
E. Garrett Bewkes, III, Bruce R. Ellig, and Ehud D. Laska. The
Finance Committee assists the Board in areas of financing
proposals, budgeting, and acquisitions. The members of the
Finance Committee include Gary S. Goldstein, Barry S. Roseman, G.
Chris Andersen, E. Garrett Bewkes, III, Ehud D. Laska, and
Richard B. Salomon. The Audit Committee is responsible for
financial reporting matters, internal controls, and compliance
with financial polices of the Company, and meets with the
Company's auditors when appropriate. The members of the Audit
Committee include E. Garrett Bewkes, III, Ehud D. Laska, and
Richard B. Salomon. The Stock Incentive Plan Committee
administers the Company's 1993 Incentive Stock Plan, assists the
Board in evaluating incentive stock compensation arrangements,
and recommends to the Board incentive stock awards. The members
of the Stock Incentive Plan Committee are G. Chris Andersen, E.
Garrett Bewkes, III, Bruce R. Ellig, and Ehud D. Laska.
The Board of Directors met five times during the past fiscal
year. All directors attended at least 75% of the meetings of the
Board of Directors. The Compensation Committee and Stock
Incentive Committee met together four times in 1997, and all
director members of those committees attended at least 75% of the
meetings, except for Bruce R. Ellig who attended two of the three
meetings held after he became a member. The Finance Committee
met twice in 1997, and all director members of that committee
attended at least 75% of the meetings, except for G. Chris
Andersen who attended one of the meetings. The Audit Committee
met once during 1997, and all director members of that committee
attended the meeting.
Prior to September 1997, non-employee directors were paid
$1,000 for attendance at each Board meeting, and reimbursed for
travel expenses. After September 1, 1997, non-employee directors
receive $2,500 for each meeting of the Board of Directors
attended, and $500 for each committee meeting attended, which is
held on a day other than a day when a Board of Directors meeting
is also held. Non-employee directors receive in September of
each year options to purchase 5,000 shares of the Company's
Common Stock exerciseable over a period of ten years at an
exercise price equal to the fair market value of the Company's
Common Stock on the date of issuance. Non-employee directors
also receive at the time they are first elected or appointed to
the board of directors options to purchase 10,000 shares of the
Company's Common Stock exerciseable over a period of ten years at
an exercise price equal to the fair market value of the Company's
Common Stock on the date of issuance.
Section 16(a) Filing Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires officers and Directors of the Company and persons who
own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in
their ownership on Forms 3, 4, and 5 with the Securities and
Exchange Commission, and forward copies of such filings to the
Company. Based on the copies of filings received by the Company,
during the most recent fiscal year the directors, officers, and
beneficial owners of more than ten percent of the equity
securities of the Company registered pursuant to Section 12 of
the Exchange Act have filed on a timely basis all required Forms
3, 4, and 5 and any amendments thereto.
Significant Employees
The following is information on positions with the Company
and business experience of employees whom the Company believes
will make significant contributions to its business.
Irene Cohen, age 61, has served as a Vice Chairman and
Executive Vice President of Headway Corporate Staffing Services,
Inc., a subsidiary of the Company ("HCSS"), President and Chief
Executive Officer of Corporate Staffing Alternatives, Inc., a
subsidiary of HCSS ("CSA"), and a director of Headway Personnel,
Inc. ("HPI"), a subsidiary of HCSS, since May 31, 1996. She is a
founder of Irene Cohen Temps, Inc. ("ICT"), CSA, and HPI, all
corporations acquired by the Company in 1996, and served as a
director and executive officer of those corporations prior to
their acquisition by the Company.
Michael List, age 41, has served as President and a director
of HCSS, ICT, and Certified Technical Staffing, Inc., a
subsidiary of HCSS ("CTS"), since May 1996. Prior to the
Company's acquisition of these corporations in 1996, Mr. List
served with them as a director and executive officer. Mr. List
currently serves on the Board of the New York Association of
Temporary Services.
Ronald Wendlinger, age 43, has served since May 1996 as a
Vice Chairman and Executive Vice President of HCSS, and as a
director and executive officer of ICT and CTS. In this role, Mr.
Wendlinger is responsible for all sales and marketing activities
of HCSS. Mr. Wendlinger was employed by these corporations in
various positions during the four year period prior to their
acquisition by the Company in May 1996.
EXECUTIVE COMPENSATION
Annual Compensation
The following table sets forth certain information regarding
the annual and long-term compensation for services in all
capacities to the Company for the prior fiscal years ended
December 31, 1997, 1996, and 1995, of those persons who were
either (i) the chief executive officer of the Company during the
last completed fiscal year or (ii) one of the other four most
highly compensated executive officers of the Company as of the
end of the last completed fiscal year whose annual salary and
bonuses exceeded $100,000 (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
Name and Principal Annual Compensation Long Term All Other
Position Compensation Compensation
(1)
Other Annual Options/
Year Salary($) Bonus($) Compensation SARs (#)
<C> <C> <C> <C> <C> <C> <C>
Gary S. Goldstein 1997 300,000 425,000 44,222 250,000 2,375
Chairman, Chief 1996 470,000 210,000 51,388 -- 2,375
Executive Officer 1995 470,000 90,000 28,483 50,000 2,310
Barry S. Roseman 1997 250,000 169,000 24,416 -- 2,375
President, Chief 1996 250,000 150,000 25,230 50,000 2,375
Operating Officer 1995 250,000 50,000 24,379 60,000 2,310
Philicia G. Levinson 1997 100,000 80,000 -- -- 1,750
Senior Vice President, 1996 100,000 70,000 -- -- 2,062
Secretary 1995 94,375 35,000 -- 10,000 1,180
</TABLE>
(1) Represents contributions by the Company to the defined
contribution 401(k) plan.
Employment and Other Arrangements
The Company adopted in 1993 a form employment agreement for
its executive officers and key employees for the purpose of
memorializing annual base compensation. The employment agreement
also provides that the employee is entitled to participate in
group insurance and benefit plans. Furthermore, the Company may,
at its election, obtain key-man life insurance on the employee.
From September 1993 through December 1996, Gary S. Goldstein and
Barry S. Roseman each entered into employment agreements
providing for annual compensation of $470,000 and $250,000,
respectively.
Beginning January 1, 1997, the Company implemented new
compensation arrangements for Messrs. Goldstein and Roseman by
resolution of the Board of Directors adopted on the
recommendation of the Compensation Committee. Under the new
arrangements, the base salaries of Messrs. Goldstein and Roseman
have been fixed at $300,000 and $250,000, respectively.
Additional incentive compensation is payable to each of them
equal to an escalating percentage of the Company's annual
earnings (before interest, income tax, depreciation, and
amortization expenses) in excess of $3,000,000; provided, that
the maximum cash compensation payable to Mr. Goldstein for any
one year is $750,000, and the maximum payable to Mr. Roseman for
any one year is $500,000. Messrs. Goldstein and Roseman may
receive additional bonus or stock incentive compensation from
time to time as determined by the Board of Directors on the
recommendation of the Compensation Committee.
The Company maintains key-man life insurance on Gary S.
Goldstein in the approximate amount of $5,644,000, Barry S.
Roseman in the amount of $1,000,000, and on the lives of five
other employees in the approximate amount of $3,631,000. All
policies are owned by the Company, and the Company is the named
beneficiary.
Defined Contribution Plan
The Company had four qualified 401(k) contribution plans for
their employees. Under the one plan the Company was required to
make matching contributions up to 25% of the amount contributed
by the employees. Employees are fully vested on their
contributions when made, and are fully vested on employer
contributions after five years of service. Contributions to the
plans for the fiscal years ended December 31, 1997 and 1996, were
$53,000 and $55,000, respectively. At January 1, 1998, the
Company replaced all existing 401(k) plans with a new plan
covering substantially all employees. The new plan does not
require matching contributions by the Company.
Stock Options
The following table sets forth certain information with
respect to grants of stock options during 1997 to the Named
Executive Officers pursuant to the Company's 1993 Incentive Stock
Plan ("Plan").
% of Total
Number of Options/SARs
Securities Granted to Exercise or
Name and Principal Underlying Employees in Base Price Expiration
Position Options Granted Fiscal Year ($/Sh) Date
Gary S. Goldstein 250,000 40.3 4.13 2/26/07
Chairman, Chief
Executive Officer
Barry S. Roseman -- -- -- --
President, Chief
Operating Officer
Philicia G. Levinson -- -- -- --
Senior Vice President,
Secretary
The following table sets forth certain information with
respect to unexercised options held by the Named Executive
Officers as of December 31, 1997. No outstanding options held by
the Named Executive Officers were exercised in 1997.
Number of Securities Value of Unexercised
Name and Principal Underlying Unexercised In-the-Money Options
Position Options at FY End ($) (1)
at FY End (#)
Exerciseable/Unexerciseable Exerciseable/Unexerciseable
Gary S. Goldstein 88,333/ 266,667 135,781/ 80,000
Chairman, Chief
Executive Officer
Barry S. Roseman 130,000/ 20,000 215,938/ 31,875
President, Chief
Operating Officer
Philicia G. Levinson 11,667/ 3,333 18,594/ 5,312
Senior Vice President,
Secretary
(1) This value is determined on the basis of the difference
between the fair market value of the securities underlying the
options and the exercise price at fiscal year end.
The Plan was adopted by the Company's board of directors in
August 1993, and approved by the Company's stockholders in
October 1993. The Plan provides for the grant of awards in the
form of options to purchase shares of Common Stock, stock
appreciation rights, shares of Common Stock subject to vesting
and/or forfeiture restrictions, or any combination thereof.
Awards under the Plan are granted by a committee (the
"Committee") consisting of at least two disinterested directors
of the Company appointed by the Company's board of directors.
The maximum number of shares of Common Stock issuable pursuant to
awards granted under the Plan is 3,771,567 shares. Directors
(other than directors serving on the Committee), officers, and
key employees of the Company who are expected to make significant
contributions to the Company are eligible to receive Plan awards
upon such terms, and subject to such conditions as the Committee,
in its sole discretion, shall determine, including, without
limitation, the number of shares issuable pursuant to the award,
type of award, restrictions upon the exercise of awards, vesting
conditions, and the manner of payment to be accepted for awards.
The Committee is authorized, within the provisions of the Plan,
to amend certain of the terms of outstanding awards, and to
modify or extend outstanding options with a higher exercise price
than new options.
During 1997, the Company granted options to purchase 641,962
shares of Common Stock to a number of employees. The exercise
price for all options granted is the fair market value of the
Company's Common Stock on the date of grant based on the price in
the over-the-counter market, and range from $3.94 to $5.50 per
share for grants in 1997. A total of 161,964 options were
canceled during the year, leaving 1,699,912 options outstanding
at December 31, 1997. The vesting period for outstanding options
varies, and includes immediate vesting, vesting over three years
subject to continued employment by the Company, and vesting over
five years subject to continued employment by the Company.
Furthermore, all options are exerciseable for periods of either
five or ten years from the date of grant; provided, that all
options expire one month following the date on which employment
is terminated for any reason.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion includes certain relationships and
related transactions which occurred during the Company's fiscal
year ended December 31, 1997, as well as the interim period ended
March 31, 1998.
Rights of Series F Stock
In March 1998, the Company obtained $105,000,000 of
financing consisting of $85,000,000 in debt and $20,000,000 of
equity financing. The equity financing was obtained through the
sale of 1,000 shares of Series F Convertible Preferred Stock of
the Company ("Series F Stock"). GarMark Partners, L.P.
("GarMark"), Moore Global Investments, Ltd. ("Moore"), and
Remington Investment Strategies, L.P. ("Remington"), purchased
666.67, 205, and 45 shares of the Series F Stock, respectively.
The Series F Stock is convertible to Common Stock of the Company
on the basis of the liquidation preference of the Series F Stock
at a conversion price of $5.58 per share, subject to adjustment
in certain circumstances including a provision to the effect that
conversion within the first two years of the date of issuance
will be at a conversion price of $6.00 per share. Assuming
GarMark, Moore, and Remington each converted their shares of
Series F Stock, they would receive 2,222,222, 683,333, and
150,000 shares of Common Stock, respectively, which together
would represent approximately 23.8% of the outstanding shares
assuming no other outstanding options, warrants, or rights were
exercised. Consequently, GarMark, Moore, and Remington would
have, assuming conversion of their Series F Stock, a significant
voice in any matter voted on by the stockholders of the Company.
The terms of the Series F Stock also provide that GarMark
has the right to designate for election one voting member of the
Company's Board of Directors and one voting member of each
committee of the Board. Each of GarMark and Moore also have the
right to designate one non-voting observer of the Company's Board
of Directors and one non-voting observer to each of the
committees of the Board. Pursuant to these requirements, the
Company appointed E. Garrett Bewkes, III, the designee of
GarMark, as a director of the Company and a member of each
committee of the Board.
If at any time there is a default in the payment of any
dividend on the Series F Stock, which remains unpaid for four
consecutive quarters, or if the Company fails to redeem any
shares of Series F Stock when required at the election of the
holders on the occurrence of a default or breach of the terms of
the Series F Stock, then the Company is required to increase the
number of directors constituting the Board by such number that
the number of directors nominated and elected by the holders of
the Series F Stock is at least one-third of the entire Board and
the holders of the Series F Stock shall have the exclusive right
to nominate and elect the new directors. In the event the
default or breach is subsequently cured, the right of the holders
of the Series F Stock to nominate and elect one-third of the
Board terminates.
At the time the terms of the financing and Series F Stock
were negotiated between the Company and the participants, none of
the participants, including, GarMark, Moore, Remington, and E.
Garrett Bewkes, III, were affiliated with the Company.
Sale of Furash
In December 1997, the Company sold its wholly owned
subsidiary, Furash & Company, inc. ("Furash"), to InterBank/
Furash, Inc., a privately held corporation ("IBF"), in exchange
for 1,500 shares of Series A Preferred Stock of IBF. Furash is a
service organization engaged in the business of offering
consulting and related services to the banking and financial
services industries. The sale of Furash represents a
determination by the Company to focus on its core business of
staffing solutions and human resource management and divest
itself of non-core business activities.
The IBF Series A Preferred Stock carries an 8% cumulative
dividend payable quarterly and has a preference in liquidation of
$1,000 per share, or a total of $1,500,000. The Series A
Preferred Stock may be redeemed by IBF at any time at a value of
$1,000 per share, and must be redeemed by IBF at the rate of 250
shares per year commencing December 31, 1998. In 1997, the
Company recorded a loss on the sale of Furash of approximately
$2,600,000.
In connection with the transaction, the Company made a short-
term working capital advance to Furash, which was repaid within a
week following the sale of Furash. In addition, the Company
acquired from Furash a warrant to purchase common stock
representing approximately 18% of the outstanding capital stock
of Furash exerciseable over a term of 10 years at a price of
$0.10 per share.
Ehud D. Laska, a director of the Company, is also an owner,
officer, and director of IBF. Because of this relationship, the
sale of Furash was approved by a committee of the Board of
Directors of the Company consisting solely of directors who were
disinterested with respect to the transaction. In connection
with the transaction, all obligations of the Company under the
employment agreement between Furash and Edward E. Furash, a
former director of the Company, were terminated. Following the
sale of Furash, Mr. Furash resigned his directorship with the
Company in April 1998.
Other Matters
In May 1996, the Company loaned a total of $507,366 to 10
employees and certain directors of the Company at 8% interest per
annum payable quarterly over a term of five years. The funds
were used by the employees and directors to purchase a total of
2,170 shares of the Company's Series A Convertible Preferred
Stock ("Series A Stock") from True North Communications, Inc.
("True North"). These purchases were part of a total sale of
2,800 shares of Series A Stock by True North to 15 purchasers.
The 2,800 shares of Series A Stock were convertible to a total of
1,332,412 shares of Common Stock. Loans made to persons who, at
the time of the transaction, were officers and directors of the
Company (Gary S. Goldstein received a loan of $59,059 to purchase
235 shares of Series A Stock and Barry S. Roseman received a loan
of $157,608 to purchase 631 shares of Series A Stock) are
collateralized by the Series A Stock purchased and additional
assets with a value in excess of the principal amount of each
loan. Prior to the sale of Series A Stock, True North had a
voice in all acquisition and financing activities of the Company
under the original agreement pursuant to which True North
acquired the Series A Stock. Sale of the Series A Stock
terminated True North's participation in the affairs of the
Company. Sale of the Series A Stock also provided an opportunity
to give management and other employees a greater equity interest
in the Company as an incentive for future performance.
Accordingly, the disinterested directors of the Company approved
the loans to facilitate the sale of Series A Stock. By the end
of 1997, all shares of Series A Stock were converted to Common
Stock of the Company.
In May 1996, the Company entered into a Credit Agreement
with ING (U.S.) Capital Corporation ("ING"), under which ING made
a term loan to the Company and established a revolving credit
facility for the Company. In connection with this financing
arrangement, the Company granted to ING a warrant to purchase
575,000 shares of Series E Convertible Preferred Stock of the
Company ("Series E Stock"), at an exercise price of $0.02 per
share. The Series E Stock was convertible at the election of the
holder to Common Stock of the Company at the rate of one share
for one share. In 1998, ING exercised the warrant and converted
the Series E Stock to 575,000 shares of Common Stock. The
Company also entered into a Registration Rights Agreement with
ING pertaining to the Common Stock of the Company issuable on
conversion of the Series E Stock. Pursuant to the Registration
Rights Agreement, the Company filed under the Securities Act of
1933 a shelf registration covering the Common Stock issuable to
ING, and is required to keep the registration effective until the
shares are sold.
Richard B. Salomon, a director of the Company, is also a
partner in the law firm of Christy & Viener, which represents the
Company on various legal matters from time to time. In 1997 and
1996, Christy & Viener received total payments of $282,000 and
$246,266, respectively, from the Company for legal services and
costs.
In November 1997, Gary S. Goldstein was indebted to the
Company in the aggregate amount of $927,777, which represented
principal and accrued interest on outstanding loans that
originated in 1993. With the approval of the Board of Directors
(Mr. Goldstein not participating) given on the recommendation of
the Compensation Committee, the Company purchased from Mr.
Goldstein 83,462 shares of the Company's Common Stock for
$438,178 or a price of $5.25 per share, which was the closing bid
price for the Company's Common Stock on the date the transaction
was approved by the Compensation Committee. Out of the purchase
price for the stock, $60,611 paid all accrued interest on the
loans, $289,931 was applied to reduce principal, and $87,636 was
retained by Mr. Goldstein to cover his income tax liability
arising from the transaction. The remaining balance of the loan
in the amount of $637,846 was repaid in March 1998, by Mr.
Goldstein in cash.
FORM 10-KSB
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE TO STOCKHOLDERS,
WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-
KSB FOR THE YEAR ENDED DECEMBER 31, 1997, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE DIRECTED
TO BARRY S. ROSEMAN, PRESIDENT, HEADWAY CORPORATE RESOURCES,
INC., 850 THIRD AVENUE, 11TH FLOOR, NEW YORK, NEW YORK 10022.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors of the Company knows of no other matters which may come
before the Annual Meeting. However, if any matters other than
those referred to herein should be presented properly for
consideration and action at the Annual Meeting, or any
adjournment or postponement thereof, the proxies will be voted
with respect thereto in accordance with the best judgment and in
the discretion of the proxy holders.
Please sign the enclosed proxy and return it in the enclosed
return envelope.
Dated: May 14, 1998
<PAGE>
APPENDIX/PROXY FORM
HEADWAY CORPORATE RESOURCES, INC.
850 THIRD AVENUE, 11TH FLOOR
NEW YORK, NEW YORK 10022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary S. Goldstein and Barry S.
Roseman as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and
to vote, as designated below, all the shares of Common Stock of
Headway Corporate Resources, Inc. (the "Company") held of record
by the undersigned on April 27, 1998, at the Annual Meeting of
Stockholders to be held on June 18, 1998, and at any adjournment
or postponement thereof.
(1) The election of each of the following persons as Class 2
directors of the Company to serve for a term of three years and
until their successors are duly elected and qualified
E. Garrett Bewkes, III For [ ] Against [ ] Abstain [ ]
Ehud D. Laska For [ ] Against [ ] Abstain [ ]
(2) Ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company for 1997; and
For [ ] Against [ ] Abstain [ ]
(3) The proxies are authorized to vote in accordance with their
judgment on any matters other than those referred to herein that
are properly presented for consideration and action at the Annual
Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
All other proxies heretofore given by the undersigned to vote
shares of stock of the Company, which the undersigned would be
entitled to vote if personally present at the Annual Meeting or
any adjournment or postponement thereof, are hereby expressly
revoked.
Dated:________________________, 1998
____________________________________
____________________________________
Please date this Proxy and sign it exactly as your name or names
appear below. When shares are held by joint tenants, both should
sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give full title as such. If shares
are held by a corporation, please sign in full corporate name by
the President or other authorized officer. If shares are held by
a partnership, please sign in partnership name by an authorized
person.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING
THE ENCLOSED ENVELOPE. IF YOUR ADDRESS IS INCORRECTLY SHOWN,
PLEASE PRINT CHANGES.
