EXHIBIT 2.1
================================================================================
STOCK AND ASSET PURCHASE AGREEMENT
among
PROVANT, INC.,
STAR MOUNTAIN, INC.
and
DRAKE BEAM XXXXX-JAPAN, INC.
Dated as of December 15, 2002
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE................................................. 2
1.1. Purchase and Sale of Shares...................................... 2
1.2. Asset Sale and Purchase.......................................... 2
1.3. Excluded Assets.................................................. 4
1.4. Assumption of Liabilities........................................ 4
1.5. Excluded Liabilities............................................. 4
1.6. Assignment of Transferred Assets................................. 6
1.7. Purchase Price; Purchase Price Allocations....................... 6
1.8. Closing.......................................................... 7
1.9. Deliveries by Sellers............................................ 7
1.10. Deliveries by Purchaser......................................... 8
1.11. Determination of Estimated Purchase Price....................... 8
1.12. Determination of Purchase Price................................. 8
1.13. Adjustment of Purchase Price.................................... 10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS........................ 10
2.1. Organization and Qualification; Subsidiaries..................... 10
2.2. Certificate of Incorporation and Bylaws.......................... 11
2.3. Capital Stock of Target Companies; No Subsidiaries............... 11
2.4. The Business..................................................... 12
2.5. Authority; Enforceability........................................ 13
2.6. No Conflict; Required Filings and Consents....................... 13
2.7. Material Agreements.............................................. 13
2.8. Compliance; Permits.............................................. 15
2.9. Financial Statements............................................. 16
2.10. Absence of Certain Changes or Events............................ 16
2.11. No Undisclosed Liabilities...................................... 17
2.12. Absence of Litigation........................................... 17
2.13. Employee Benefit Plans.......................................... 17
2.14. Employment and Labor Matters.................................... 20
2.15. Absence of Restrictions on Business Activities.................. 21
2.16. Government Contracts............................................ 21
2.17. Title to Assets; Leases......................................... 21
2.18. Taxes........................................................... 22
2.19. Environmental Matters........................................... 23
2.20. Intellectual Property........................................... 25
2.21. Security........................................................ 26
2.22. Insurance....................................................... 26
2.23. Brokers......................................................... 26
2.24. Certain Business Practices...................................... 26
2.25. Interested Party Transactions................................... 27
2.26. Opinion of Financial Advisor................................... 27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER..................... 27
3.1. Organization and Qualification.................................. 27
3.2. Authority; Enforceability....................................... 27
3.3. No Conflict; Required Filings and Consents...................... 28
3.4. Financing....................................................... 28
ARTICLE IV CONDUCT OF BUSINESS PENDING THE CLOSING.......................... 28
4.1. Conduct of Business Pending the Closing......................... 28
4.2. No Shop......................................................... 31
ARTICLE V ADDITIONAL AGREEMENTS............................................. 32
5.1. Access to Information; Confidentiality.......................... 32
5.2. Taxes........................................................... 33
5.3. Reasonable Best Efforts; Further Assurances..................... 35
5.4. Employee Benefits............................................... 36
5.5. Notification of Certain Matters................................. 38
5.6. Public Announcements............................................ 39
5.7. Non-Competition................................................. 39
5.8. Nonsolicitation................................................. 40
5.9. Transition Services............................................. 40
5.10. Release of Target Companies.................................... 40
5.11. Related Party Contracts........................................ 41
5.12. Assumed Obligations............................................ 41
5.13. Directors' and Officers' Insurance............................. 42
5.14. Insurance...................................................... 42
5.15. Name; Retained Trademarks...................................... 43
ARTICLE VI CONDITIONS....................................................... 44
6.1. Conditions to Obligation of Each Party.......................... 44
6.2. Additional Conditions to Obligations of Purchaser............... 44
6.3. Additional Conditions to Obligations of Sellers................. 45
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................... 46
7.1. Termination..................................................... 46
7.2. Effect of Termination........................................... 46
7.3. Fees and Expenses............................................... 47
7.4. Amendment....................................................... 47
7.5. Waiver.......................................................... 47
ii
ARTICLE VIII GENERAL PROVISIONS.............................................. 47
8.1. Notices........................................................... 47
8.2. Disclosure Schedules.............................................. 48
8.3. Certain Definitions............................................... 48
8.4. Interpretation.................................................... 51
8.5. Severability...................................................... 52
8.6. Entire Agreement.................................................. 52
8.7. Assignment........................................................ 52
8.8. Parties in Interest............................................... 52
8.9. Failure or Indulgence Not Waiver; Remedies Cumulative............. 52
8.10. Governing Law; Enforcement....................................... 52
8.11. Counterparts..................................................... 53
iii
Disclosure Schedules
Sellers Disclosure Schedule
Purchaser Disclosure Schedule
iv
Index of Defined Terms
1060 Forms........................................................... 1.7(b)
Acquisition Proposal................................................. 4.2
Adjustment Statement................................................. 1.12
Affiliate............................................................ 8.3(a)
Agreement............................................................ Preamble
Approvals............................................................ 2.1(a)
Asset Sale........................................................... 1.2
Assumed Contracts.................................................... 1.2(d)
Assumed Liabilities.................................................. 1.4
Business Day......................................................... 8.3(b)
Business Employees................................................... 2.13(a)
Businesses........................................................... Recitals
Businesses Financial Statements...................................... 2.9
Closing.............................................................. 1.8
Closing Date......................................................... 1.8
COBRA Coverage....................................................... 2.13(h)
COBRA Maintenance Period............................................. 5.4(g)(i)
Code................................................................. 1.7(b)
Company IP........................................................... 2.20(a)
Competitive Business................................................. 5.7
Conclusive Adjustment Statement...................................... 1.12(a)
Conclusive Statement................................................. 1.12(a)
Confidentiality Agreement............................................ 5.1(b)
Consolidated Group................................................... 2.18(a)
Contract............................................................. 8.3(c)
Control.............................................................. 8.3(c)
Controlled Group..................................................... 2.13(a)
Court................................................................ 8.3(e)
Covered Persons...................................................... 5.13(a)
Deficiency Amount.................................................... 1.12
Diversified Company.................................................. 5.7
EEI Non-Comp Obligations............................................. 5.12(a)
EEI Note............................................................. 5.12(a)
Employment Contracts................................................. 1.5(c)
Employee Plans....................................................... 2.13(a)
Employee Transfer Date............................................... 5.4(a)(i)
Encumbrance.......................................................... 8.3(f)
Environmental Laws................................................... 2.19(c)
Environmental Permits................................................ 2.19(c)
Environmental Report................................................. 2.19(c)
Equity Securities.................................................... 8.3(g)
ERISA................................................................ 2.13(a)
Estimated Net Working Capital........................................ 1.11
Estimated Purchase Price............................................. 1.7(a)
Excess Amount........................................................ 1.12
v
Excluded Assets..................................................... 1.3
Excluded Contracts.................................................. 1.3(f)
Excluded Liabilities................................................ 1.5
Foreign Benefit Plans .............................................. 2.13(b)
GAAP................................................................ 1.11
Government Permits.................................................. 2.8(b)
Governmental Authority.............................................. 8.3(h)
Indebtedness........................................................ 8.3(i)
Infringe............................................................ 2.20(d)
Intellectual Property............................................... 8.3(j)
XXX................................................................. 5.4(e)
Knowledge........................................................... 8.3(k)
Law................................................................. 8.3(l)
Learning Alliance Business.......................................... Recitals
Litigation.......................................................... 8.3(m)
Losses.............................................................. 5.13(a)
Material Adverse Effect............................................. 8.3(n)
Material Agreements................................................. 2.7(a)
Materials of Environmental Concern.................................. 2.19(c)
Monthly COBRA Premium Payment....................................... 5.4(g)(ii)
Net Working Capital................................................. 1.11
Neutral Accounting Arbitrator....................................... 1.12(b)
Non-Competition Period.............................................. 5.7
Order............................................................... 8.3(o)
Parent.............................................................. Preamble
Parent 401(k) Plan.................................................. 5.4(f)
Parent Plan Reimbursement........................................... 5.4(g)(ii)
Parent Plans........................................................ 5.4(g)(i)
Parent Target Businesses............................................ Recitals
Parent's Statement.................................................. 1.12(a)
PBGC................................................................ 2.13(f)
Performance Solutions............................................... Recitals
Performance Solutions Business...................................... Recitals
Performance Solutions Shares........................................ Recitals
Person.............................................................. 8.3(p)
Post-Closing Tax Period............................................. 8.3(q)
Pre-Closing Tax Period.............................................. 8.3(r)
Preliminary Statement............................................... 1.11
Project Management Business......................................... Recitals
Provant Canada...................................................... Recitals
Provant Canada Business............................................. Recitals
Provant Canada Shares............................................... Recitals
Provant Media....................................................... Recitals
Provant Media Business.............................................. Recitals
Provant Media Shares................................................ Recitals
Purchase Price...................................................... 1.7(a)
vi
Purchaser......................................................... Preamble
Purchaser 401(k) Plan............................................. 5.4(f)
Purchaser Designee................................................ 8.3(s)
Purchaser Disclosure Schedule..................................... 8.3(t)
Purchaser Employee................................................ 5.4(d)
Purchaser Employment Arrangements................................. 5.4(b)
Purchaser Representative.......................................... 5.1(a)
Purchaser Representatives......................................... 5.1(a)
Purchaser Severance Arrangements.................................. 5.4(c)
Purchaser Welfare Plans........................................... 5.4(g)(i)
Real Property..................................................... 2.17(b)
Reference Balance Sheets.......................................... 2.9
Regulation........................................................ 8.3(u)
Related Party Contract............................................ 8.3(v)
Resolution Period................................................. 1.12(a)
Retained Trademarks............................................... 5.15(a)
Seller............................................................ Preamble
Seller Financial Advisor.......................................... 2.23
Seller Representative............................................. 4.2
Sellers........................................................... Preamble
Sellers Disclosure Schedule....................................... 8.3(w)
Shares............................................................ Recitals
SI Obligation .................................................... 5.12(a)
Star Mountain..................................................... Preamble
Statement......................................................... 1.12
Strategic Alliance Business....................................... Recitals
Subsidiaries...................................................... 8.3(x)
Subsidiary........................................................ 8.3(x)
Systems........................................................... 2.21
Target Business Employee.......................................... 2.13(a)
Target Businesses................................................. Recitals
Target Companies.................................................. Recitals
Target Net Working Capital........................................ 1.7(a)
Tax............................................................... 2.18
Tax Returns....................................................... 2.18
Taxes............................................................. 2.18
Technology and Development Business............................... Recitals
Xxxx Note......................................................... 5.12(a)
Transfer Costs.................................................... 5.2(b)
Transferred Assets................................................ 1.2
Transferred Employees............................................. 5.4(a)(i)
Transferred IP.................................................... 1.2(h)
Transition Services Agreement..................................... 5.9
WARN.............................................................. 2.14(b)
vii
STOCK AND ASSET PURCHASE AGREEMENT, dated as of December 15, 2002 (the
"Agreement") among PROVANT, INC., a Delaware corporation ("Parent" or "Seller"),
STAR MOUNTAIN, INC., a Delaware corporation and wholly owned subsidiary of
Parent ("Star Mountain" or "Seller", and together with Parent, "Sellers"), and
DRAKE BEAM XXXXX-JAPAN, INC., a Japanese joint stock company ("Purchaser").
WHEREAS, Parent is engaged in, among other things: (i)
technology-based services that provide companies with improved employee and
organizational performance, which until June 30, 2002 were provided by Strategic
Interactive, Inc. (the "Technology and Development Business"); (ii) alliances
and strategic partnerships with third parties and e-learning solutions, all as
more particularly described in Section I of the Sellers Disclosure Schedule (the
"Strategic Alliance Business"); and (iii) managed services (i.e., outsourcing),
all as more particularly described in Section II of the Sellers Disclosure
Schedule (the "Learning Alliance Business", and together with the Strategic
Alliance Business and the Technology and Development Business, the "Parent
Target Businesses");
WHEREAS, Star Mountain provides, among other things, project
management training services, which prior to June 30, 2002 were provided by
Provant Project Management, Inc. (the "Project Management Business", and
together with the Parent Target Businesses, the "Target Businesses");
WHEREAS, Purchaser, directly or indirectly through its Purchaser
Designees, desires to purchase the Target Businesses, and in connection
therewith, Purchaser desires to purchase from Sellers the Transferred Assets
defined herein;
WHEREAS, Parent and Star Mountain desire to sell to Purchaser (i) all
of the outstanding shares of capital stock (the "Performance Solutions Shares")
of Provant Performance Solutions, Inc., a Delaware corporation and wholly owned
subsidiary of Star Mountain ("Performance Solutions"), which consists of the
following business operations: X. Xxxxxx & Associates, which provides consulting
and training services to help customers deal with issues presented by an
increasingly diverse and global workforce; Xxxxxx Communications, which helps
customers improve employee communication skills in the areas of presentation,
voicemail, email and writing; BT.Novations Group, which helps customers lengthen
employee tenure, broaden employee contribution and deepen employee commitment;
and Vertical Markets Group, which provides customers with industry-focused
service and product offerings to better satisfy their specific performance
improvement needs (each, a "Performance Solutions Business"), and (ii) all of
the outstanding shares of capital stock (the "Provant Media Shares") of Provant
Media, Inc., an Iowa corporation and wholly owned subsidiary of Star Mountain
("Provant Media"), which consists of the Provant Media business (the "Provant
Media Business"); and
WHEREAS, Parent desires to sell to Purchaser all of the outstanding
shares of capital stock (the "Provant Canada Shares", and together with the
Performance Solutions Shares and Provant Media Shares, the "Shares") of Provant
Canada, Ltd., a Canadian corporation and wholly owned subsidiary of Parent
("Provant Canada", and together with Provant Media and Performance Solutions,
the "Target Companies"), which consists of the Provant Canada business operation
(the "Provant Canada Business", and together with the Provant Media Business,
the Performance Solutions Businesses and the Target Businesses, the
"Businesses").
1
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, each Seller and Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1. Purchase and Sale of Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, (i) Star Mountain shall, and
Parent shall cause Star Mountain to, sell, assign, transfer, convey and deliver
the Performance Solutions Shares and the Provant Media Shares to Purchaser or
the Purchaser Designee and (ii) Parent shall sell, assign, transfer, convey and
deliver the Provant Canada Shares to Purchaser or the Purchaser Designee, in
each case, with full title guarantee and free and clear of all Encumbrances, and
Purchaser or the Purchaser Designee shall purchase the Shares.
1.2. Asset Sale and Purchase. Upon the terms and subject to the
conditions of this Agreement, at the Closing Purchaser shall purchase and each
Seller shall sell, assign, transfer and deliver, or cause to be sold,
transferred, assigned and delivered, to Purchaser, free and clear of all
Encumbrances, all of such Seller's respective rights, titles and interests in
and to the assets, properties, rights, licenses and business of every kind and
description, wherever located, real, personal or mixed, tangible or intangible
(but excluding the Excluded Assets), owned or held by such Seller and
principally used in the conduct of the Businesses by such Seller as the same
shall exist on the Closing Date (such purchases and sales, the "Asset Sale"),
including all such assets of the Target Businesses included in the respective
Reference Balance Sheets of Sellers and not disposed of in the ordinary course
of business or pursuant to Section 4.1, all assets of the Target Businesses
thereafter acquired by a Seller and not disposed of in the ordinary course of
business and all such assets owned, held or used in the conduct of the
Performance Solutions Business, the Provant Media Business or the Provant Canada
Business (collectively, the "Transferred Assets"), which shall include, without
limitation, except for the Excluded Assets, all right, title and interest of
each Seller in, to and under:
(a) all real property and leases of, easements upon or options for
easements upon, and other interests in, real property principally used in
connection with the Businesses, in each case together with all buildings,
fixtures, rights of way and improvements erected on such real property,
including, without limitation, the interests listed on Section 1.2(a) of
the Sellers Disclosure Schedule;
(b) all personal property and interests therein, including machinery,
equipment, furniture, office equipment, communications equipment, vehicles,
and all computer hardware and accessories, including servers, personal
computers, laptops, infrastructure and network equipment, required to
support the software and data used in the Businesses as presently conducted
and other tangible personal property owned by either Seller and principally
used in connection with the Businesses;
(c) all work-in-process and finished work product of Sellers
principally relating to the Businesses;
2
(d) all rights under the Contracts of Sellers principally related to
the conduct of the Businesses (other than Excluded Contracts) in effect as
of the date hereof, including, without limitation, the Contracts listed on
Section 1.2(a) and Section 1.2(d) of the Sellers Disclosure Schedule (which
shall include all capital and operating leases principally related to the
Businesses), together with such additional Contracts principally related to
the conduct of the Businesses as may be entered into by Sellers after the
date hereof and prior to the Closing in accordance with the provisions of
Section 4.1 (collectively, the "Assumed Contracts");
(e) all accounts, notes and other receivables and rights of Sellers to
receive payments from any Person principally arising from or in connection
with the conduct of the Businesses and the operation or use of the
Transferred Assets;
(f) the benefit of all prepaids, deferred costs, deposits, advances,
credits and expenses that have been prepaid by either Seller (including ad
valorem taxes, lease and rental payments) to the extent principally
relating to the Businesses or any Transferred Asset;
(g) all of Sellers' rights, claims, counterclaims, credits, causes of
action, lawsuits, judgments, demands or rights of set-off against third
parties principally relating to the Businesses (other than those relating
principally to Excluded Assets) or the Transferred Assets, including,
without limitation, those listed on Section 1.2(g) of the Sellers
Disclosure Schedule;
(h) all Intellectual Property owned or held by the Sellers and
principally used in connection with the conduct or operation of the Target
Businesses, including, without limitation, those items listed on Section
1.2(h) of the Sellers Disclosure Schedule (the "Transferred IP");
(i) all transferable governmental licenses, permits or other
governmental authorizations held by Sellers affecting, or relating in any
way to, the Businesses or the Transferred Assets;
(j) all cash, restricted cash and cash equivalents related to all
prepaids, deferred costs, deposits, advances, credits and expenses that
have been prepaid to either Seller to the extent relating to the Businesses
or any Transferred Asset;
(k) a copy of all books, records, files and papers in whatever media
retained or stored, including, without limitation, computer programs and
files, in the possession of Sellers and relating to the Businesses,
including, without limitation, training and similar material, sales and
promotional literature, manuals and data, sales and purchase
correspondence, lists of present and former suppliers and subcontractors,
lists of present and former customers, personnel and employment records,
and a copy of any information relating to Taxes imposed on the Transferred
Assets; and
(l) all goodwill related to the Businesses or the Transferred Assets,
together with the right to represent to third parties that Purchaser is the
successor to the Businesses.
3
1.3. Excluded Assets. Purchaser and Sellers agree that the following
assets and properties of Sellers (the "Excluded Assets") shall be retained by
Sellers and shall be excluded from the Transferred Assets:
(a) Sellers' cash, restricted cash and cash equivalents on hand and
in banks other than those referred to in Section 1.2(j);
(b) all assets of Sellers not owned, held or used principally in the
conduct of the Businesses;
(c) any Seller's contracts of insurance;
(d) any and all Equity Securities held by either Seller (other than
the Shares);
(e) all rights of Sellers under (i) any Contract or agreement, the
performance of which could reasonably be expected to give rise to or result
in the violation of any Law, and (ii) any Contract listed on Section 1.3(e)
of the Sellers Disclosure Schedule (the "Excluded Contracts");
(f) any refunds of Tax of a Seller; and
(g) other items set forth on Section 1.3(g) of the Sellers Disclosure
Schedule.
1.4. Assumption of Liabilities. In connection with the Asset Sale and
upon the terms and subject to the conditions of this Agreement, Purchaser
agrees, effective at the time of Closing, to assume the following liabilities of
Sellers (the "Assumed Liabilities"):
(a) all current liabilities of Sellers arising principally from or in
connection with the conduct of the Businesses or otherwise principally
related to the Transferred Assets, of a type reflected in the relevant
Reference Balance Sheets and in the amounts and to the extent set forth on
the Conclusive Adjustment Statement;
(b) all liabilities and obligations of Sellers arising under the
Assumed Contracts that shall be assigned to and assumed by Purchaser at
Closing, which liabilities and obligations are required to be performed
after the Closing Date and are fully set forth on the face (including in
addenda, attachments or schedules thereto) of such Assumed Contracts as
provided by Sellers to Purchaser (other than liabilities or obligations
excluded pursuant to Section 1.5); and
(c) those liabilities and obligations listed in Section 1.4 of
Sellers Disclosure Schedule; provided that, except for liabilities and
obligations listed in Section 1.4 of the Sellers Disclosure Schedule, in no
event shall the Assumed Liabilities include any Excluded Liabilities.
1.5. Excluded Liabilities. Notwithstanding any provision in this
Agreement or any other writing to the contrary, in connection with the Asset
Sale, Purchaser is assuming only the Assumed Liabilities and is not assuming any
other liability or obligation of either Seller (or any predecessor owner of all
or part of its business and assets) of whatever nature, whether presently in
4
existence or arising hereafter. All such other liabilities and obligations shall
be retained by and remain obligations and liabilities of Sellers (all such
liabilities and obligations not being assumed being herein referred to as the
"Excluded Liabilities"). Notwithstanding anything to the contrary in Section 1.4
or this Section 1.5, except for the liabilities and obligations set forth in
Section 1.4 of the Sellers Disclosure Schedule, none of the following shall be
Assumed Liabilities for the purposes of this Agreement:
(a) any Indebtedness of either Seller, including any interest related
thereto;
(b) any obligation or liability of either Seller for Taxes or Transfer
Costs of any kind arising for periods ending on or prior to the Closing
Date including taxes arising as a result of the transactions contemplated
by this Agreement;
(c) (i) any liabilities or obligations of either Seller relating to
employee benefits or compensation arrangements existing on or prior to the
Closing Date, including, without limitation, any liabilities or obligations
(A) for compensation or bonus not accrued on the Conclusive Statement or
(B) arising under or attributable to any employment agreements, consulting
agreements, change in control agreements, individual severance agreements
or similar agreements (whether oral or written) (such arrangements in
Clauses (A) and (B), the "Employment Contracts"), Employee Plans or any
other employee benefit agreements, severance and retention plans, programs
and policies sponsored, maintained or contributed to by Seller; and (ii)
any and all other liabilities or obligations which shall remain with
Sellers as set forth in Section 5.4 of this Agreement;
(d) any liability or obligation arising under any Environmental Law
from or relating to events or conditions occurring or existing prior to the
Closing Date arising out of (A) the operations of the Businesses, (B) the
operation or use of the Transferred Assets or (C) any other activity of
either Seller or otherwise prior to the Closing;
(e) any liabilities or obligations related to any claims made prior to
the Closing Date under any "claims made" insurance policies of Sellers or
their Subsidiaries;
(f) any liability for any deductible, uninsured or underinsured
retention or liability or other liability or obligation relating to any
claims under any Seller insurance policy with respect to events which occur
prior to the Closing Date;
(g) any liability under any Assumed Contract to the extent such
liabilities and obligations, but for a breach or default by either Seller,
would have been paid, performed or otherwise discharged on or prior to the
Closing Date, or to the extent the same arise out of any such breach or
default (including, without limitation, breaches which give rise to any
claim by a third Person for lost profits or special, consequential or
punitive damages) or to the extent the same arise out of any violation by
either Seller or its employees of any Law;
(h) all liabilities and obligations relating to services provided by
either Seller in connection with the Businesses on or prior to the Closing
Date, except for such obligations to be performed after the Closing Date
under any Assumed Contract;
5
(i) any liability or obligation or intercompany loan owed to the
Parent or any Affiliate thereof;
(j) any liability or obligation under any Excluded Contract or
relating to any other Excluded Asset;
(k) any liability or obligation arising out of the violation by either
Seller or their employees of any Law; and
(l) any other liability or obligation set forth on Section 1.5(l) of
the Sellers Disclosure Schedule.
1.6. Assignment of Transferred Assets. Notwithstanding any other
provision of this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any Transferred Asset or any claim or right or any
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
or other contravention thereof or in any way adversely affect the rights of
Purchaser thereunder. Sellers and Purchaser will use reasonable efforts (but
without any payment of money by either Seller or Purchaser) to obtain the
consent of the other parties to any such Transferred Asset or any claim or right
or any benefit arising thereunder for the assignment thereof to Purchaser as
Purchaser may request (provided, however, that receipt of consents with respect
to certain Assumed Contracts are a condition to closing as provided in Section
6.1(c)). If such consent is not obtained, or if an attempted assignment thereof
would be ineffective or would adversely affect the rights of either Seller
thereunder so that Purchaser would not in fact receive all such rights, Sellers
and Purchaser will cooperate in a mutually agreeable arrangement under which
Purchaser would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including subcontracting, sub-licensing or
sub-leasing to Purchaser, or under which Sellers would enforce for the benefit
of Purchaser, with Purchaser assuming such Sellers' obligations, any and all
rights of Sellers against a third party thereto. Sellers will promptly pay to
Purchaser when received all monies received by a Seller under any Transferred
Asset or any claim or right or any benefit arising thereunder that is not
assigned pursuant to this Section 1.6, less any reasonable out-of-pocket costs
or expenses related thereto.
1.7. Purchase Price; Purchase Price Allocations.
(a) The aggregate cash purchase price for the Shares, the Transferred
Assets and Assumed Liabilities shall be (i) $30,000,000, less (ii) $5,795,000
representing the amount to be paid at Closing by Purchaser pursuant to Section
5.12 in satisfaction of the EEI Note, the SI Obligation and the EEI Non-Comp
Obligations, (iii) less $675,211 representing the outstanding principal balance
under the Xxxx Note on December 31, 2002 (as the same may be adjusted to reflect
the actual outstanding principal balance under the Xxxx Note if the Closing
occurs on a date other than December 31, 2002), less (iv) $80,000 representing
the estimated amount of deferred compensation obligation assumed pursuant to
Item 10 of Section 1.4 of the Sellers Disclosure Schedule (the "Deferred
Compensation Obligation"), plus (v) the amount, if any, by which Estimated Net
Working Capital (as defined below) is greater than $10,165,000 (the "Target Net
Working Capital"), less (vi) the amount, if any, by which Estimated Net Working
Capital is less than Target Net Working Capital (the "Estimated Purchase
Price"), subject to adjustment as
6
provided in Section 1.12 (the Estimated Purchase Price, as so adjusted, being
the "Purchase Price").
(b) On or before the Closing Date, each Seller and Purchaser shall
jointly agree on an allocation schedule allocating the Purchase Price among the
Shares, Transferred Assets and Assumed Liabilities, as of the Closing Date. Such
allocation schedule shall be prepared in accordance with the rules under Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code") and the
Treasury Regulations promulgated thereunder. Each Seller and Purchaser agree to
act in accordance with the computations and allocations contained in the
allocation schedule in any relevant Tax Returns or filings (including Form 8594
and any other forms or reports to be filed pursuant to Section 1060 of the Code,
the Treasury Regulations promulgated thereunder or any provisions of local,
state and foreign tax law ("1060 Forms")), and to cooperate in the preparation
of any 1060 Forms and to file such 1060 Forms in the manner required by
applicable law.
1.8. Closing. Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VIII, and subject to the provisions of Article VI, the sale of the
Shares and the Transferred Assets and Assumed Liabilities shall take place at a
closing (the "Closing") at 10:00 a.m. (Eastern Standard Time) on such date (the
"Closing Date") that is mutually agreed upon by the parties, which date shall be
no later than the third Business Day after all the conditions set forth in
Article VI shall have been satisfied (or waived in accordance with Section 7.5,
to the extent the same may be waived), unless another time and/or date is agreed
by the parties hereto. The Closing shall take place at such place as the parties
hereto agree.
1.9. Deliveries by Sellers.
(a) At the Closing, Sellers shall deliver or cause to be delivered to
Purchaser:
(i) duly executed stock transfer form(s) in favor of Purchaser
or the Purchaser Designee together with certificates representing the
Shares, or, if applicable, certificates representing the Shares duly
endorsed in blank or accompanied by stock powers duly executed in blank, in
each case with all necessary stock transfer stamps attached thereto and
cancelled, if appropriate;
(ii) such deeds, bills of sale and other instruments of
transfer, conveyance and assignment, duly executed and in valid form, as
shall be sufficient to transfer to Purchaser or the Purchaser Designee all
rights, title and interest in and to the Transferred Assets;
(iii) a receipt for the Estimated Purchase Price;
(iv) the certificates and other documents required to be
delivered pursuant to Section 6.2; and
(v) written resignations, in the agreed form, from any director
or officer of the Target Companies as requested by Purchaser (as notified
in writing by Purchaser to Sellers no later than two Business Days prior to
Closing) effective as of the Closing, in
7
each case containing an acknowledgement from such director or officer that
he or she has no claim for loss of office.
(b) On or as promptly as practicable following the Closing Date,
Sellers shall take, or cause to be taken, such action as shall be necessary to
put Purchaser or the Purchaser Designee in the possession or control of the
Transferred Assets and Assumed Liabilities and any assets of the Target
Companies not in the possession or control of the Target Companies and shall
deliver, or cause to be delivered, to Purchaser or the Purchaser Designee copies
of all written agreements, arrangements, commitments, contracts, purchase
orders, leases, permits, business records, any other papers and documents
related to the Transferred Assets and Assumed Liabilities, the Target Businesses
or the Target Companies not in the possession or control of the Target
Companies, including, without limitation, the Charter, Bylaws, statutory books
(duly written up to date), books of account, records and common seals and any
securities seals of the Target Companies.
(c) Sellers waive, and Sellers shall cause each of their Affiliates
to waive, all rights that they may have under the Charter, Bylaws or other
constituent documents of the Target Companies and under any other Law concerning
shareholders' rights in respect of all other matters in relation to the sale of
the Shares.
1.10. Deliveries by Purchaser. At the Closing, Purchaser shall deliver
to Sellers:
(a) the Estimated Purchase Price by wire transfer of immediately
available funds to the account or accounts designated in writing by Sellers
to Purchaser at least two Business Days prior to the Closing;
(b) the certificates and other documents required to be delivered
pursuant to Section 6.3; and
(c) such instruments, duly executed and in valid form, as shall be
sufficient to evidence the assumption by Purchaser or the Purchaser
Designees of the Assumed Liabilities.
1.11. Determination of Estimated Purchase Price. At least two business
days prior to the Closing Date, Parent shall cause to be prepared and delivered
to Purchaser a statement (the "Preliminary Statement") setting forth the
estimated calculations of Net Working Capital of the Businesses (the "Estimated
Net Working Capital") as of 11:59 p.m. on the Closing Date. "Net Working
Capital" shall mean (a) current assets of the Businesses less (b) current
liabilities of the Businesses, all as determined in accordance with generally
accepted accounting principles in the United States ("GAAP") as applied on a
basis consistent with the preparation of the Reference Balance Sheet dated
September 30, 2002 and the methodology used to determine the Target Net Working
Capital as set forth in Section 1.11 of Sellers Disclosure Schedule.
1.12. Determination of Purchase Price. As promptly as practicable
following the Closing Date (but not later than 30 days after the Closing Date),
Purchaser shall (1) cause to be prepared and delivered to Parent a statement
(the "Statement") setting forth the estimated calculations of Net Working
Capital, and the components and calculation thereof, as of 11:59 p.m. on the
Closing Date and (2) cause to be prepared and delivered to Parent a statement
(the
8
"Adjustment Statement") setting forth the calculations of the amount by which
the Net Working Capital as shown on the Statement (i) exceeds the Estimated Net
Working Capital (any such excess amount, the "Excess Amount") or (ii) is less
than Estimated Net Working Capital (any such deficiency amount, the "Deficiency
Amount"). In addition, in connection with the calculation of Net Working
Capital, Purchaser shall be entitled to conduct a physical inventory of Provant
Media.
(a) Following receipt of the Statement and the Adjustment Statement,
Parent may review the same and, within 15 days after the date of such receipt,
may deliver to Purchaser written notice setting forth its specific objections to
the Statement or the Adjustment Statement and a written statement setting forth
Parent's calculation of each line item on the Statement or the Adjustment
Statement so disputed (the "Parent's Statement"). If Parent does not so object
within such 15-day period, Parent will be deemed to have accepted and agreed to
the Statement and the Adjustment Statement and such agreement will be final and
binding. If Parent so objects within such 15-day period and delivers the
Parent's Statement, Purchaser and Parent shall use their reasonable efforts to
resolve by written agreement, within 15 days next following such 15-day period
(the "Resolution Period"), any differences as to the Statement or the Adjustment
Statement. If Purchaser and Parent so resolve all such differences, the
Statement and the Adjustment Statement, as adjusted by the agreed adjustments,
shall be final and binding as the "Conclusive Statement" and the "Conclusive
Adjustment Statement", respectively, for purposes of this Section 1.12.
(b) If Parent's objections are not resolved by agreed adjustments
within the Resolution Period, then Purchaser and Parent shall, within 15 days
following expiration of the Resolution Period, submit the objections that are
then unresolved to Deloitte & Touche LLP or any other national independent
accounting firm mutually acceptable to Purchaser and Parent, and such firm (the
"Neutral Accounting Arbitrator") shall be directed by Purchaser and Parent to
resolve only the unresolved objections (based solely on information provided to
the Neutral Accounting Arbitrator by Purchaser and Parent) as promptly as
reasonably practicable and to deliver written notice to each of Purchaser and
Parent setting forth its resolution of the disputed matters (such notice to
include a worksheet setting forth all material calculations used in arriving at
such resolution). If either Parent or Purchaser fails to submit any information
to the Neutral Accounting Arbitrator within the time determined by the Neutral
Accounting Arbitrator, then the Neutral Accounting Arbitrator shall render a
decision based solely on the evidence timely submitted to the Neutral Accounting
Arbitrator by the other party. The Statement and the Adjustment Statement, after
giving effect to any agreed adjustments and to the resolution of disputed
matters by the Neutral Accounting Arbitrator, shall be final and binding as the
"Conclusive Statement" and the "Conclusive Adjustment Statement", respectively,
for purposes of this Section 1.12. The fees and expenses of the Neutral
Accounting Arbitrator shall be allocated between Purchaser and Parent in the
same proportion that the aggregate amount of the disputed items so submitted to
the Neutral Accounting Arbitrator that is unsuccessfully disputed by each such
party (as finally determined by the Neutral Accounting Arbitrator) bears to the
total amount of such disputed items so submitted.
(c) Each party hereto shall make available (promptly after the request
therefor) to the other party and, if applicable, the Neutral Accounting
Arbitrator, such books, records and other information (including work papers) as
any of the foregoing may reasonably request to prepare or
9
review the Statement, the Adjustment Statement or any matters submitted to the
Neutral Accounting Arbitrator, if applicable.
1.13. Adjustment of Purchase Price. Promptly (but not later than two
Business Days) after the date on which Purchaser and Parent agree to, or the
Neutral Accounting Arbitrator delivers, the Conclusive Statement and the
Conclusive Adjustment Statement:
(a) if the Conclusive Adjustment Statement contains a Deficiency
Amount, then the Purchase Price will be reduced by such Deficiency Amount
and Sellers shall pay to Purchaser, by wire transfer of immediately
available funds to the bank account or accounts specified by Purchaser, an
amount in cash equal to the Deficiency Amount; or
(b) if the Conclusive Adjustment Statement contains an Excess Amount,
then the Purchase Price will be increased by such Excess Amount and
Purchaser shall pay to Sellers, by wire transfer of immediately available
funds to the bank account or accounts specified by Sellers, an amount in
cash equal to the Excess Amount.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, jointly and severally, hereby represents and warrants to
Purchaser, except as set forth in the relevant section of the Sellers Disclosure
Schedule (as defined herein) as follows:
2.1. Organization and Qualification; Subsidiaries.
(a) Each Seller is a corporation duly organized, validly existing and
in good standing under Delaware law and has all the requisite power and
authority (corporate or otherwise), and is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents, waivers,
qualifications, certificates, Orders and approvals (collectively, "Approvals")
necessary to own, lease and operate the Transferred Assets and to carry on the
Target Businesses as they are now being conducted, except where the failure to
have such Approvals would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Each Seller is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the Transferred Assets owned, leased or
operated by it or the nature of the Businesses makes such qualification or
licensing necessary, except where the failure to be so qualified has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) Each Target Company is a corporation, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all the requisite power and authority, and is in
possession of all Approvals necessary to own, lease and operate its properties
and assets and to carry on its applicable Business as it is now being conducted,
except where the failure to have such power, authority and Approvals has not had
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect. Each Target Company is duly qualified or licensed as
a foreign corporation to do business, and is in
10
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of the applicable Business makes such
qualification or licensing necessary, except where the failure to be so
qualified has not had and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(c) Except as set forth in Section 2.1(c) of the Sellers Disclosure
Schedule, no Target Company owns, directly or indirectly, any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, directly or indirectly, any equity or similar interest in, any Person.
Neither Seller has any branch office in Japan or any Japanese Subsidiaries. The
gross sales of the Parent and its Affiliates in Japan for the last full fiscal
year prior to the Closing Date were less than (Yen)1 billion.
2.2. Certificate of Incorporation and Bylaws. Sellers have heretofore
furnished to Purchaser a true and complete copy of each Target Company's
Certificate of Incorporation and Bylaws or equivalent organizational documents,
as amended or restated to the date hereof. Such Certificate of Incorporation and
Bylaws and equivalent organizational documents of each Target Company are in
full force and effect, and no other organizational documents are applicable to
or binding upon the Target Companies.
2.3. Capital Stock of Target Companies; No Subsidiaries.
(a) The authorized capital of Performance Solutions consists of 1,000
shares, and as of the date hereof 100 shares were issued and outstanding. The
authorized capital of Provant Media consists of 2,000,000 shares, and as of the
date hereof 1,882,100 shares were issued and outstanding. The authorized capital
shares of Provant Canada consists of unlimited shares, and as of the date hereof
100 shares were issued and outstanding. None of the issued or unissued shares of
capital stock of the Target Companies are subject to, nor were they issued in
violation of any, purchase option, call option, warrant, right of first refusal,
preemptive right, subscription right or any right obligating any Target Company
to issue, transfer or sell or cause to be issued, transferred or sold any shares
of capital stock of any Target Company or any securities or instruments
convertible into or exchangeable for any such shares of capital stock. Except as
set forth above and in Section 2.3(a) of the Sellers Disclosure Schedule, no
shares of voting or non-voting capital stock, other equity interests, or other
voting securities of the Target Companies are authorized, issued, reserved for
issuance or outstanding. The Shares constitute all of the issued and outstanding
shares of capital stock of the Target Companies and are owned of record and
beneficially solely by Star Mountain, in the case of Performance Solutions and
Provant Media, and by Parent, in the case of Provant Canada, in all cases free
and clear of any Encumbrances. All of the Shares have been duly authorized and
validly issued and are fully paid and nonassessable, were issued in compliance
with all applicable laws relating to the issuance of securities and were not
issued in violation of or subject to any preemptive or other similar rights.
There are no voting trusts, stockholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any of the
Shares. As of the Closing Date and upon the consummation of the transactions
contemplated by this Agreement, Sellers shall deliver or cause to be delivered
to Purchaser or the Purchaser Designee good and valid legal and beneficial title
to the Shares free and clear of all restrictions and Encumbrances.
11
(b) On the Closing Date after the consummation of the transactions
contemplated by this Agreement, the Target Companies will not have any
Indebtedness other than as set forth in Section 2.3(b) of the Sellers Disclosure
Schedule.
(c) The minute books and records of each Target Company are current
and contain correct and complete copies of the Charter, Bylaws or other
constituent documents of such Target Company, including, without limitation, all
amendments thereto and restatements thereof, and of all minutes of meetings,
resolutions and other actions and proceedings of its shareholders or other
equity holders and board of directors and all committees thereof, fully signed
by the secretary or an assistant secretary, as applicable, and the stock and
other record books of each Target Company are also current, correct and complete
and reflect the issuance of all of the Shares, equity or other interests to the
shareholders or other interest holders.
2.4. The Business. The Transferred Assets include all of the assets
used in each of the Target Businesses, and the consummation of the transactions
contemplated by this Agreement shall enable Purchaser and its Affiliates to
carry on each of the Target Businesses in the same manner as currently carried
on, and all such assets are in good condition and repair (normal wear and tear
excepted). Each applicable Seller owns, licenses or leases beneficially and of
record, free and clear of all Encumbrances, and at the Closing Purchaser and/or
the Purchaser Designee will, directly or indirectly, own, license or lease
beneficially and of record, free and clear of all Encumbrances, all assets,
properties, Intellectual Property and rights currently used or held for use in
each of the applicable Target Businesses and all such assets and properties are
in good condition and repair (normal wear and tear excepted) and are sufficient
to support the conduct of each of the Target Businesses after the Closing in the
manner in which such Target Businesses are currently conducted. Performance
Solutions owns, licenses or leases, free and clear of all Encumbrances, all
assets, properties, Intellectual Property, and rights currently used or held for
use in each Performance Solutions Business (other than the assets and properties
used in any Performance Solutions Business that are owned by either Seller and
included in the Transferred Assets), and all such assets and properties
(including those owned by either Seller and included in the Transferred Assets)
are in good condition and repair (normal wear and tear excepted) and are
sufficient to support the conduct of each Performance Solutions Business after
Closing in the manner in which such Performance Solutions Business is currently
conducted. Provant Media owns, licenses or leases, free and clear of all
Encumbrances, all assets, properties, Intellectual Property, and rights
currently used or held for use in the Provant Media Business (other than the
assets and properties used in the Provant Media Business that are owned by
either Seller and included in the Transferred Assets) and all such assets and
properties (including those owned by either Seller and included in the
Transferred Assets) are in good condition and repair (normal wear and tear
excepted) and are sufficient to support the conduct of the Provant Media
Business after Closing in the manner in which the Provant Media Business is
currently conducted. Provant Canada owns, licenses or leases, free and clear of
all Encumbrances, all assets, properties, Intellectual Property, and rights
currently used or held for use in the Provant Canada Business (other than the
assets and properties used in the Provant Canada Business that are owned by
either Seller and included in the Transferred Assets) and all such assets and
properties (including those owned by either Seller and included in the
Transferred Assets) are in good condition and repair (normal wear and tear
excepted) and are sufficient to support the conduct of the Provant Canada
Business after Closing in the manner in which the Provant Canada Business is
currently conducted.
12
2.5. Authority; Enforceability. Each Seller has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery by Sellers of this Agreement, the performance
of their obligations hereunder and the consummation by Sellers of the
transactions contemplated hereby have been duly and validly authorized by all
corporate action and no other corporate proceedings or shareholder action on the
part of Sellers are necessary to authorize this Agreement or to consummate the
transactions so contemplated herein. This Agreement has been duly and validly
executed and delivered by each Seller and, assuming the due authorization,
execution and delivery thereof by Purchaser, constitutes a legal, valid and
binding obligation of each Seller enforceable against such Seller in accordance
with its terms.
2.6. No Conflict; Required Filings and Consents.
(a) The execution and delivery by each Seller of this Agreement do
not, and the performance of this Agreement and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws or equivalent organizational documents of
any Seller or any Target Company, (ii) conflict with or violate any Law or Order
in each case applicable to any Seller, any Target Company or any Business or by
which its or any of their respective properties, rights or assets (including
Intellectual Property) is bound or affected, or (iii) result in any breach or
violation of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair any Seller's, any Target
Company's or any Business' rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration, penalties, increased obligations or fees or cancellation of, or
result in the creation of an Encumbrance on any of the properties, rights or
assets of any Seller, any Target Company or any Business pursuant to, any note,
bond, mortgage, indenture, Contract, permit, franchise or other instrument or
obligation to which any Seller or any Target Company is a party or by which any
Seller, any Target Company or any Business or its or any of their respective
properties, rights or assets is bound or affected, or (iv) result in the
creation of any Encumbrance on (x) the Shares, (y) the properties or assets of
any Target Company or (z) the Transferred Assets and Assumed Liabilities, except
(A) as set forth in Section 2.6(a) of the Sellers Disclosure Schedule and (B) in
the case of clause (ii), (iii) or (iv) above, for any such conflicts, breaches,
violations, defaults or other occurrences that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The execution and delivery by Sellers of this Agreement do not,
and the performance of this Agreement and the consummation of the transactions
contemplated hereby will not, require any Seller to, except as set forth in
Section 2.6(b) of the Sellers Disclosure Schedule, obtain any Approval of any
Person or require the Approval of, observe any waiting period imposed by, or
make any filing with or notification to, any Governmental Authority, domestic or
foreign, except for where the failure to obtain such Approvals, or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.7. Material Agreements.
(a) Section 2.7(a) of the Sellers Disclosure Schedule sets forth a
true and complete list, and if oral, an accurate and complete summary, of the
following material Contracts with
13
respect to each of the Target Businesses or their properties, rights or assets
or to which any Target Company is a party or by which any of the Target
Companies or their properties, rights or assets are bound or have any rights, or
which form part of the Transferred Assets or Assumed Liabilities as of the date
hereof (collectively, "Material Agreements"):
(i) collective bargaining or any other Contract with a union (if
any);
(ii) Contracts involving annual revenues, expenditures or
liabilities in excess of $75,000 per annum;
(iii) promissory notes, loans, agreements, indentures, evidences of
indebtedness or other instruments and Contracts providing for the borrowing
or lending of money, whether as borrower, lender or guarantor, in each
case, relating to indebtedness or obligations in excess of $75,000;
(iv) Contracts required to be disclosed pursuant to Section 2.15;
(v) joint venture or partnership agreements or material joint
development, material distribution or similar material agreements pursuant
to which any third party is entitled or obligated to develop or distribute
any products on behalf of any Target Company or any of the Businesses, or
pursuant to which a Target Company or, with respect to any of the
Businesses, Sellers or their Affiliates are entitled or obligated to
develop or distribute any material products on behalf of any third party;
(vi) Contracts for the acquisition, directly or indirectly (by
merger or otherwise) of material assets (whether tangible or intangible) or
the capital stock of another Person that is material to a Target Company or
any of the Businesses and under which a Seller or a Target Company has
continuing material obligations;
(vii) Contracts concerning any material Company IP;
(viii) Contracts involving the future issuance or repurchase of any
capital stock of a Target Company;
(ix) Contracts under which a Target Company or, with respect to any
of the Businesses, Parent or its Affiliates has granted or received
exclusive rights;
(x) any interest rate swaps, caps, floors or option agreements or
any other interest rate risk management arrangement or foreign exchange
Contracts; and
(xi) Contracts that are material to the business of a Target Company
or any of the Businesses as conducted and as planned to be conducted as of
the date hereof.
True and complete copies of all written Material Agreements, including all
amendments and supplements thereto, have been delivered or been made available
to Purchaser by Sellers. Section 2.7(a) of the Sellers Disclosure Schedule sets
forth a true and complete list of all Contracts of the Sellers or the Target
Companies that would purport to bind Purchaser or any of its Affiliates (other
14
than the Target Companies) following the consummation of the transactions
contemplated hereby except for Assumed Contracts.
(b) Other than Material Agreements that have terminated or expired in
accordance with their terms, each Material Agreement is in full force and
effect, is a valid and binding obligation of a Target Company or a Seller, as
the case may be, and, to the Knowledge of Sellers, of each other party thereto
and is enforceable, in accordance with its terms, against such Target Company or
Seller, as the case may be, and, to the Knowledge of Sellers, against each other
party thereto, in each case except that the enforcement thereof may be limited
by (A) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws affecting creditors' rights
generally, (B) general principles of equity (whether in a proceeding in equity
or at law) and (C) an implied covenant of good faith and fair dealing, and such
Material Agreements will continue to be valid, binding and enforceable in
accordance with their respective terms and in full force and effect immediately
following the consummation of the transactions contemplated hereby. None of the
Target Companies or Sellers is or is alleged to be and, to the Sellers'
Knowledge, no other party is or is alleged to be in default under, or in breach
or violation of, any Material Agreement and, to the Sellers' Knowledge, no event
has occurred which, with the giving of notice or passage of time or both, would
constitute such a default, breach or violation. The designation or definition of
Material Agreements for purposes of this Section 2.7 and the disclosures made
pursuant thereto will not be construed or utilized to expand, limit or define
the terms "material" and "Material Adverse Effect" as otherwise referenced and
used in this Agreement.
2.8. Compliance; Permits.
(a) Each of the Target Companies, and with respect to the Businesses,
each of the Sellers, is in compliance with, and is not in default or violation
of, (i) its Certificate of Incorporation and Bylaws or the equivalent
organizational document, (ii) any Law or Order applicable to any of them or by
which any of their respective assets, rights or properties are bound or affected
and (iii) the terms of all notes, bonds, mortgages, indentures, Contracts,
franchises and other instruments or obligations to which any of them are a party
or by which any of them or any of their respective assets, rights or properties
are bound or affected, except, in the case of clauses (ii) and (iii), for any
such failures of compliance, defaults and violations which would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. The Target Companies, and with respect to the Businesses, Sellers, are
in compliance with the terms of all Approvals except where the failure to so
comply would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as set forth in Section 2.8(a) of
the Sellers Disclosure Schedule or as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, none of the Target
Companies nor with respect to the Businesses, any Seller has received notice of
any revocation or modification of any Approval of any federal, state, local or
foreign Governmental Authority that is material to the operation of any of the
Businesses.
(b) The Target Companies and, with respect to the Businesses, Sellers
hold all permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from Governmental Authorities which are
material to the operation of each Business, as it is now being conducted
(collectively, the "Governmental Permits"), except where the failure to hold
such
15
Governmental Permits would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Each of the Target Companies and,
with respect to the Businesses, Sellers are in compliance with, and are not in
default or violation of, the terms of the Governmental Permits, except where the
failure to so comply has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
2.9. Financial Statements. Set forth in Section 2.9 of the Sellers
Disclosure Schedule is a true and complete copy of the unaudited balance sheets
of each of the Businesses as of June 30, 2002 (the "Reference Balance Sheets")
and the related unaudited statements of income and cash flows for each of the
Businesses for the year ended June 30, 2002, and the unaudited balance sheets of
each of the Businesses as of September 30, 2002 and the related unaudited
statements of income and cash flows for each of the Businesses for the
three-month period ended September 30, 2002 (the "Businesses Financial
Statements"). The Reference Balance Sheets and the Businesses Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of the relevant Target Company or Seller, as the case may be,
(ii) present fairly the financial position and results of the relevant
Businesses as of their respective dates and for their respective periods covered
thereby, (iii) except as noted in Section 2.9 of the Sellers Disclosure
Schedule, have been prepared in accordance with GAAP and on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and (iv) with respect to the Performance Solutions Businesses, the
Provant Media Business and the Provant Canada Business, present fairly the
financial position and results of Performance Solutions, Provant Media and
Provant Canada, as the case may be, as of their respective dates and for their
respective periods covered thereby.
2.10. Absence of Certain Changes or Events.
(a) Except as described in Section 2.10(a) of the Sellers Disclosure
Schedule, since June 30, 2002, the Target Companies and, with respect to the
Businesses, Sellers have conducted their businesses only in the ordinary and
usual course and in a manner consistent with past practice, and, since such
date, there has not been any change, development, circumstance, condition,
event, occurrence, damage, destruction or loss that has had or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(b) Except as described in Section 2.10(b) of the Sellers Disclosure
Schedule, during the period from June 30, 2002 to the date hereof, there has not
been any (i) change by any of the Target Companies or, with respect to the
Businesses, any Seller in its accounting methods, principles or practices, any
revaluation by any of the Target Companies or, with respect to the Businesses,
any Seller of any of its assets, including writing down the value of inventory
or writing off notes or accounts receivable, (ii) material damage, destruction
or loss relating to any Target Company, any Business or the assets thereof
(including the Transferred Assets), whether or not insured, (iii) liability
created or incurred which Purchaser will assume under this Agreement other than
liabilities created or incurred in the ordinary course of business and in
amounts not unusual in respect of the ordinary course of business consistent
with past practice and other than employees, officers and directors of the
Sellers who are not also Business Employees or Target Business Employees, (iv)
Encumbrance created on any material asset of a Target Company or any Transferred
Asset, (v) increase in, or commitment or plan adopted or announced to increase,
the wages, salaries, compensation, pension, retirement or other benefits or
payments to any Business
16
Employee, Target Business Employee, or current or former director, officer, and
employee of the Businesses (except in the ordinary course of business consistent
with past practice and other than employees, officers and directors of the
Sellers who are not also Business Employees or Target Business Employees), (vi)
grant of any severance or termination pay to any Business Employee, Target
Business Employee, or current or former director, officer or employee of the
Businesses, (vii) loan or advance of money or other property to any Business
Employee, Target Business Employee, or any current or former director, officer,
or employee of the Businesses, (viii) establishment, adoption, entrance into,
amendment, or termination of any Employee Plan or collective bargaining
agreement, (ix) grant(s) of any equity or equity-based awards to any Business
Employee, Target Business Employee, or current or former director, officer, or
employee of the Businesses, other than in the ordinary course consistent with
past practice, (x) rights of substantial value waived with respect to any Target
Company, any Transferred Asset or any of the Businesses, and (xi) sale or
transfer of any assets of a Target Company or any Transferred Assets other than
dispositions of obsolete property in the ordinary course of business consistent
with past practice.
2.11. No Undisclosed Liabilities. None of the Target Companies and, with
respect to the Businesses, neither of the Sellers has any liabilities or
obligations of any nature (whether absolute, accrued, fixed, contingent or
otherwise), and there is no existing fact, condition or circumstance which could
reasonably be expected to result in such liabilities or obligations, except
liabilities or obligations (i) disclosed in Section 2.11 of the Sellers
Disclosure Schedule or (ii) that would not have, individually or in the
aggregate, a Material Adverse Effect.
2.12. Absence of Litigation. Except as described in Section 2.12 of the
Sellers Disclosure Schedule, there is no Litigation pending on behalf of or
against or, to the Knowledge of Sellers, threatened against any of the Target
Companies, or, with respect to the Businesses, any Seller, or any of their
respective properties or rights including any Transferred Asset, before or
subject to any Court or Governmental Authority that if adversely determined
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. None of the Target Companies and, with respect to the
Businesses, neither of the Sellers is subject to any outstanding Litigation or
Order that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
2.13. Employee Benefit Plans.
(a) Section 2.13(a) of the Sellers Disclosure Schedule contains a true
and complete list of each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans (within the
meaning of Sections 3(37) and 4001(a)(3) of ERISA), and all material stock
option, stock purchase, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other material employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or informal, oral
or written, legally binding or not, under which any Business Employee, Target
Business Employee, director, former director, or current or former employee of
the Businesses has any present or future right to benefits sponsored or
maintained by Sellers or any member of their
17
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Sections 414(b), (c),
(m) or (o) of the Code), or under which Sellers or any member of their
Controlled Group has had or has any present or future liability principally
related to the Businesses (collectively, all such plans, agreements, programs,
policies and arrangements, the "Employee Plans"). For purposes of this
Agreement, (i) "Business Employees" means all current employees and consultants
of the Target Companies and (ii) "Target Business Employees" means the current
employees and consultants of Sellers engaged in the Target Businesses to whom
Purchaser shall offer employment in accordance with Section 5.4(a)(i).
(b) Except as set forth in Section 2.13(b) of the Sellers Disclosure
Schedule, no Employee Plan is maintained outside the jurisdiction of the United
States or covers any employee residing or regularly working outside the United
States (any such Employee Plan set forth in Section 2.13(b) of the Sellers
Disclosure Schedule, the "Foreign Benefit Plans"). With respect to any Foreign
Benefit Plans, (i) all Foreign Benefit Plans have been established, maintained
and administered in compliance with their terms and all applicable statutes,
laws, ordinances, rules, orders, decrees, judgments, writs, and regulations of
any controlling governmental authority or instrumentality, (ii) all Foreign
Benefit Plans that are required to be funded are fully funded, and with respect
to all other Foreign Benefit Plans, adequate reserves therefor have been
established on the accounting statements of the Sellers, any Target Company, or
entity in their Controlled Group, and (iii) no material liability or obligation
of the Sellers, any Target Company, or entity in their Controlled Group exists
with respect to such Foreign Benefit Plans that has not been disclosed on
Section 2.13(b) of the Sellers Disclosure Schedule.
(c) Except as set forth in Section 2.13(c) of the Sellers Disclosure
Schedule, with respect to each Employee Plan, Sellers have provided to Purchaser
a current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof, and to the extent applicable: (i) any related
trust agreement or other funding instrument, (ii) the most recent determination
letter issued by the Internal Revenue Service, if applicable, (iii) any summary
plan description and other material written communications (or a description of
any oral communications) by Sellers, any Target Company or any member of their
Controlled Group relating to any commitment to provide benefits in connection
with an Employee Plan, and (iv) for the three most recent years, (A) the Form
5500 and attached schedules, (B) audited financial statements, and (C) actuarial
valuation reports.
(d) (i) Except as set forth in Section 2.13(d) of the Sellers Disclosure
Schedule, (i) each Employee Plan has been established and administered in
accordance in all material respects with its terms, and in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations, (ii) each Employee Plan which is
intended to be qualified within the meaning of Section 401(a) of the Code is so
qualified, has received a favorable determination letter as to its
qualification, and to the Sellers' Knowledge nothing has occurred, whether by
action or failure to act, that could reasonably be expected to cause the loss of
such qualification, (iii) with respect to each Employee Plan, no event has
occurred and no condition exists that would subject Sellers or any Target
Company, either directly or by reason of their affiliation with any member of
their Controlled Group, to any material tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable laws, rules and
regulations, (iv) for each Employee Plan with respect to which a Form 5500 has
been filed, no
18
material change has occurred with respect to the matters covered by the most
recent Form since the date thereof, and (v) no "reportable event" (as such term
is defined in Section 4043 of ERISA) that could reasonably be expected to result
in material liability, no "prohibited transaction" (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code) or "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA and Section 412 of
the Code (whether or not waived)) has occurred with respect to any Employee
Plan.
(e) Except as set forth in Section 2.13(e) of the Sellers Disclosure
Schedule, (i) no Employee Plan is an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) subject to Title IV of ERISA, and neither of
the Sellers, nor any Target Company or any member of their Controlled Group has
ever partially or fully withdrawn from any such plan, and (ii) no Employee Plan
is a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) and
neither of the Sellers, nor any Target Company or any member of their Controlled
Group has at any time sponsored or contributed to, or has or had any liability
or obligation in respect of, any multiemployer plan.
(f) Except as set forth in Section 2.13(f) of the Sellers Disclosure
Schedule, with respect to any Employee Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or
threatened, (ii) no facts or circumstances exist that could give rise to any
such actions, suits or claims, (iii) no written or oral communication has been
received from the Pension Benefit Guaranty Corporation ("PBGC") in respect of
any Employee Plan subject to Title IV of ERISA concerning the funded status of
any such plan or any transfer of assets and liabilities from any such plan in
connection with the transactions contemplated herein, and (iv) no administrative
investigation, audit or other administrative proceeding by the Department of
Labor, the PBGC, the Internal Revenue Service or other governmental agencies are
pending, threatened or in progress.
(g) Except as set forth in Section 2.13(g) of the Sellers Disclosure
Schedule, no Employee Plan exists that, as a result of the execution of this
Agreement or the transactions contemplated by this Agreement shall, with respect
to any Business Employee or Target Business Employee, result in the payment,
vesting or acceleration of any benefit or entitle any Business Employee or
Target Business Employee to severance benefits, termination indemnities,
supplementary compensation or any similar payments that are reasonably expected
to fail to be deductible as a result of the application of Section 280G of the
Code.
(h) Each Employee Plan that is a "group health plan" (within the meaning
of Code Section 5000(b)(1)) has been operated in compliance in all material
respects with the group health plan continuation coverage requirements of
Section 4980B of the Code and Sections 601 through 608 of ERISA ("COBRA
Coverage"), Section 4980D of the Code and Sections 701 through 707 of ERISA,
Title XXII of the Public Health Service Act and the provisions of the Social
Security Act, to the extent such requirements are applicable. Except as
disclosed in Section 2.13(h) of the Sellers Disclosure Schedule, no Employee
Plan or written or oral agreement exists which obligates Sellers or any Target
Company to provide health care coverage, medical, surgical, hospitalization,
death or similar benefits (whether or not insured) to any Business Employee,
Target Business Employee, or former employee of the Businesses following
termination of employment with Sellers or any Target Company, other than COBRA
Coverage.
19
2.14. Employment and Labor Matters.
(a) Section 2.14(a) of the Sellers Disclosure Schedule identifies all
Business Employees and Target Business Employees and sets forth each such
individual's rate of pay or annual compensation, job title and date of hire.
Except as set forth in Section 2.14(a) of the Sellers Disclosure Schedule, there
are no employment, consulting, collective bargaining, severance pay,
continuation pay, termination or indemnification agreements or other similar
Contracts of any nature (whether in writing or not) between either Seller, any
Target Company, or any member of their Controlled Group and any Business
Employee, Target Business Employee, current or former stockholder, officer,
director, employee, consultant, labor organization of the Businesses or other
representative of the Business Employees or Target Business Employees, nor is
any such Contract presently being negotiated. Neither of the Sellers, nor any
Target Company or any member of their Controlled Group is delinquent in payments
to any Business Employee or Target Business Employee for any wages, salaries,
commissions, bonuses, benefits or other compensation for any services or
otherwise arising under any policy, practice, agreement, plan, program or Law.
Except as set forth in Section 2.14(a) of the Sellers Disclosure Schedule,
neither of the Sellers, nor any Target Company or any member of their Controlled
Group is liable for any severance pay or other payments to any Business Employee
or Target Business Employee arising from the termination of employment, nor will
Sellers, any Target Company or any member of their Controlled Group have any
liability under any Employee Plan, benefit or severance policy, practice,
agreement, plan, or program which exists or arises, or may be deemed to exist or
arise, under any applicable Law or otherwise, as a result of or in connection
with the transactions contemplated hereunder or as a result of the termination
by Sellers, any Target Company or any member of their Controlled Group of any
Business Employee or Target Business Employee on or prior to the Closing Date.
None of the employment policies or practices relating to Business Employees or
Target Business Employees is currently being audited or investigated by any
Governmental Authority or Court. There is no pending or, to Sellers' Knowledge,
threatened Litigation, unfair labor practice charge, or other charge, inquiry or
investigation against Sellers, any Target Company or any member of their
Controlled Group brought by or on behalf of any Business Employee, Target
Business Employee, prospective employee, former employee, retiree, labor
organization or other representative of the Businesses or other individual or
any Governmental Authority with respect to employment practices brought by or
before any Court or Governmental Authority that individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 2.14(b) of the Sellers Disclosure
Schedule, no Target Company, and with respect to the Businesses, no Seller is a
party to any collective bargaining agreement or other labor union Contract
applicable to Persons employed by such Target Company or such Seller nor to the
Knowledge of Sellers are there any activities or proceedings of any labor union
to organize any such employees of such Target Company or such Seller; during the
past five years there have been no strikes, slowdowns, work stoppages, disputes,
lockouts, or threats thereof, by or with respect to any employees of any Target
Company, or with respect to the Businesses, any Seller. Except as set forth in
Section 2.14(b) of the Sellers Disclosure Schedule, there are no grievances
pending or, to Sellers' Knowledge, threatened, which, if adversely decided,
could reasonably be expected to have a Material Adverse Effect. No Target
Company, and with respect to the Businesses, no Seller is a party to, or
otherwise bound by, any consent decree with, or citation or other Order by, any
Governmental Authority relating to employees or employment practices. Each
Target Company, and with respect to the Businesses,
20
each Seller is in compliance in all material respects with all applicable Laws,
Contracts, and policies relating to employment, employment practices, wages,
hours, and terms and conditions of employment, including the obligations of the
Worker Adjustment and Retraining Notification Act of 1988, as amended ("WARN"),
and all other notification and bargaining obligations arising under any
collective bargaining agreement, by Law or otherwise. No Target Company and with
respect to the Businesses, no Seller has effectuated a "plant closing" or "mass
layoff" as those terms are defined in WARN, affecting in whole or in part any
site of employment, facility, operating unit or employee of such Target Company
or Seller, without complying with all provisions of WARN or implemented any
early retirement, separation or window program within the past five years, nor
has any Target Company or any Seller planned or announced any such action or
program for the future.
2.15. Absence of Restrictions on Business Activities. Except as set forth
in Section 2.15 of the Sellers Disclosure Schedule, there is no Contract or
Order binding upon any of the Target Companies or, with respect to any Business,
any Seller or any of their respective assets, rights or properties which has had
or would reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of any of the Target Companies or with respect
to the Businesses, any Seller, or the conduct of business by any of the Target
Companies or, with respect to the Businesses, any Seller as currently conducted
or as proposed to be conducted by any of the Target Companies or, with respect
to the Businesses, any Seller. Except as set forth in Section 2.15 of the
Sellers Disclosure Schedule, none of the Target Companies, nor, with respect to
the Businesses, any Seller, is subject to any non-competition, non-solicitation
or similar restriction on their respective businesses.
2.16. Government Contracts. None of the Target Companies nor, with
respect to the Businesses, any Seller is (or during the last six years has been)
performing under any contract, subcontract, grant, cooperative agreement, or any
other form of agreement with any Governmental Authority, nor have any of them
been awarded or a party to any contract, subcontract, grant, or cooperative
agreement with any Governmental Authority during the last six years. None of the
Target Companies or any Seller with respect to any of the Businesses is a party
to or otherwise bound by any material contract that requires such Target Company
or Seller to maintain a facility security clearance from a Governmental
Authority.
2.17. Title to Assets; Leases.
(a) Except as described in Section 2.17(a) of the Sellers Disclosure
Schedule, each of the Target Companies and, with respect to the Businesses, each
Seller has good and marketable title to all of its owned real or personal
properties and assets, a valid leasehold interest in its leased real or personal
properties and assets, and good and marketable rights to its licensed properties
and assets, free and clear of all Encumbrances, except for Encumbrances, if any,
as do not materially detract from the value of or interfere with the present use
of the property affected thereby.
(b) Section 2.17(b) of the Sellers Disclosure Schedule contains a list of
all of the real property and interests in real property owned by any of the
Target Companies or, with respect to the Businesses, any Seller and all leases
of real property to which any of the Target Companies or, with respect to the
Businesses, any Seller has a continuing financial or other obligation or by
which any of them holds a leasehold interest (collectively, "Real Property").
Except as set forth in
21
Section 2.17(b) of the Sellers Disclosure Schedule, (i) each Real Property lease
to which any of the Target Companies or, with respect to the Businesses, any
Seller is a party is in full force and effect in accordance with its terms, (ii)
all rents and additional rents due to date from any of the Target Companies or,
with respect to the Businesses, any Seller on each such lease have been paid,
(iii) none of the Target Companies and, with respect to the Businesses, neither
of the Sellers has received notice that it is in material default thereunder and
(iv) there exists no default by any of the Target Companies or, with respect to
the Businesses, any Seller under such lease. There are no leases, subleases,
licenses, concessions or any other agreements or commitments to which any of the
Target Companies or, with respect to the Businesses, any Seller is a party
granting to any Person other than the Target Companies or, with respect to the
Businesses, any Seller any right to possession, use, occupancy or enjoyment of
any of the Real Property or any portion thereof.
2.18. Taxes. For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes and governmental impositions of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including those on or measured by or referred to as income, franchise, profits,
gross receipts, capital ad valorem, custom duties, alternative or add-on minimum
taxes, estimated, environmental, disability, registration, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto; and "Tax Returns" shall mean
returns, reports and information statements, including any schedule or
attachment thereto, with respect to Taxes required to be filed with the Internal
Revenue Service or any other governmental or taxing authority or agency,
domestic or foreign, including consolidated, combined and unitary tax returns.
Except as set forth in Section 2.18 of the Sellers Disclosure Schedule:
(a) All Tax Returns required to be filed by or on behalf of each Seller,
the Target Companies and each affiliated, combined, consolidated or unitary
group ("Consolidated Group") of which any of the Target Companies are members
have been timely filed, and all such Tax Returns are true, complete and correct
in all material respects.
(b) All Taxes payable by or with respect to each Seller, the Target
Companies and any Consolidated Groups of which the Target Companies are members
(whether or not shown on any Tax Return) have been timely paid, and adequate
reserves (other than a reserve for deferred Taxes established to reflect timing
differences between book and Tax treatment) in accordance with GAAP are provided
on the Reference Balance Sheets for any Taxes not yet due. All assessments for
Taxes due and owing by or with respect to each Seller, the Target Companies and
any Consolidated Groups of which the Target Companies are members with respect
to completed and settled examinations or concluded litigation have been paid.
None of the Sellers, the Target Companies nor any Consolidated Groups of which
the Target Companies are members have incurred a Tax liability from the date of
the Reference Balance Sheets other than a Tax liability in the ordinary course
of business.
(c) No action, suit, proceeding, investigation, claim or audit has
formally commenced and no written notice has been given that such audit or other
proceeding is pending or threatened with respect to either Seller, the Target
Companies or Consolidated Groups of which the Target Companies are members of
which any of the Target Companies has been a member in
22
respect of any Taxes, and all deficiencies proposed as a result of such actions,
suits, proceedings, investigations, claims or audits have been paid, reserved
against or settled.
(d) None of the Sellers nor the Target Companies has requested, or been
granted any waiver of any federal, state, local or foreign statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. No extension or waiver of time within which to file any Tax Return of,
or applicable to Sellers and the Target Companies has been granted or requested
which has not since expired.
(e) The Target Companies are not and have never been (nor do the Target
Companies have any liability for unpaid Taxes because they once were) members of
a Consolidated Group (other than the Consolidated Group the common parent of
which is Parent), and neither of the Target Companies are a party to any Tax
allocation or sharing agreement or are liable for the Taxes of any other person
under Treasury Regulations (S)1.1502-6 (or any similar provision of state, local
or foreign law), as transferee or successor, by Contract, or otherwise.
(f) The Target Companies have not made any payments, are not obligated to
make any payments, and are not parties to any agreements that under any
circumstances could obligate either of them to make any payments, that will not
be deductible under Section 280G of the Code.
(g) The Target Companies have not been United States real property
holding corporations within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(h) Neither of the Target Companies has made an election under Section
341(f) of the Code.
(i) Neither of the Target Companies will be required to include any
material amount in taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of a change in the method of
accounting for a taxable period ending prior to the Closing Date, any "closing
agreement" as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign Tax Laws) entered into prior to the Closing
Date, any sale reported on the installment method that occurred prior to the
Closing Date.
2.19. Environmental Matters.
(a) Except as described on Section 2.19 of the Sellers Disclosure
Schedule, and except as have not had and would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: (i) the
Target Companies and, with respect to the Businesses, Sellers comply and have
complied, during all applicable statute of limitations periods, with all
applicable Environmental Laws, and possess and comply, and have possessed and
complied during all applicable statute of limitations periods, with all
Environmental Permits; (ii) there are and have been no Materials of
Environmental Concern or other conditions at any property owned, operated, or
otherwise used by any Target Company or any Seller now or in the past, or at any
other location (including, without limitation, any facility to which Materials
of Environmental Concern from the Target Companies or, with respect to the
Businesses, any Seller have been disposed of), that are in circumstances that
could reasonably be expected to give rise to any liability of the Target
Companies or, with respect to the Businesses, Sellers, or result in costs to the
23
Target Companies or, with respect to the Businesses, Sellers arising out of any
Environmental Law; (iii) no Litigation (including any notice of violation or
alleged violation), under any Environmental Law or with respect to any Materials
of Environmental Concern to which any Target Company or, with respect to the
Businesses, any Seller is, or to Sellers' Knowledge will be, named as a party,
or affecting their business, is pending or, to Sellers' Knowledge, threatened;
nor is any Target Company or, with respect to the Businesses, any Seller the
subject of any investigation or the recipient of any request for information in
connection with any such Litigation or potential Litigation; (iv) there are no
Orders or agreements under any Environmental Law or with respect to any
Materials of Environmental Concern to which any Target Company or, with respect
to the Businesses, any Seller is a party or affecting their business; (v) to
Sellers' Knowledge, there are no events, conditions, circumstances, practices,
plans, or any legal requirements (in effect or reasonably anticipated), that
could be expected to prevent any Target Company or, with respect to the
Businesses, any Seller from, or materially increase the burden on any Target
Company or, with respect to the Businesses, any Seller of: (A) complying with
applicable Environmental Laws, or (B) obtaining, renewing, or complying with all
Environmental Permits; and (vi) to Sellers' Knowledge, each of the foregoing
representations and warranties is true and correct with respect to any entity
for which any Target Company or, with respect to the Businesses, any Seller has
assumed or retained liability, whether by Contract or operation of Law.
(b) Sellers have furnished to Purchaser true and complete copies of all
Environmental Reports in the possession or control of any Target Company or,
with respect to the Businesses, any Seller.
(c) For purposes of this Agreement, the terms below are defined as
follows:
"Environmental Laws" shall mean any and all Laws, Orders, guidelines,
codes, or other legally enforceable requirement (including, without
limitation, common law) of any foreign government, the United States, or
any state, local, municipal or other Governmental Authority, regulating,
relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, or employee health and
safety.
"Environmental Permits" shall mean any and all permits, licenses,
registrations, notifications, exemptions and any other Approvals required
of Sellers under any Environmental Law.
"Environmental Report" shall mean any report, study, assessment, audit,
or other similar document that addresses any issue of actual or potential
noncompliance with, actual or potential liability under or cost arising out
of, or actual or potential impact on business in connection with, any
Environmental Law or any proposed or anticipated change in or addition to
Environmental Law, that may in any way affect the Parent or any entity for
which it may be liable or any of its Subsidiaries.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other substances
of any kind, whether or not any such substance is defined as
24
hazardous or toxic under any Environmental Law, that is regulated pursuant
to or could give rise to liability under any Environmental Law.
2.20. Intellectual Property.
(a) Section 2.20(a) of the Sellers Disclosure Schedule sets forth, with
respect to the Transferred IP and all other Intellectual Property owned, held or
used in connection with the conduct of each Business (the "Company IP"), all
material registrations, certifications, and patents and all applications
therefor (including applicable jurisdictions, ownership information,
registration or application numbers and dates issued or filed). Notwithstanding
the foregoing, Seller shall use reasonable efforts to schedule all
registrations, certifications, and patents and all applications therefor,
related to the Company IP.
(b) Except as disclosed in Section 2.20(b) of the Sellers Disclosure
Schedule, all material registrations, certifications, and patents and all
applications therefor related to the Company IP are currently in compliance in
all material respects with all legal requirements (including timely filings,
proofs and payments of fees), to the Sellers' Knowledge, are valid and
enforceable, and are not subject to any filings, fees or other actions falling
due within 90 days after the Closing Date.
(c) Except as set forth in Section 2.20(c) of the Sellers Disclosure
Schedule, the Target Companies or, with respect to the Businesses, Sellers own
or have the valid right to use all of the material Intellectual Property used
in, or necessary for, the conduct of the Businesses as currently conducted free
of all Encumbrances except for royalties, honoraria and other fees described in
the next sentence. No royalties, honoraria or other fees are payable by the
Target Companies or, with respect to the Businesses, Sellers to any third
parties for the right to use any Company IP, except to the extent set forth in
the Business Financial Statements or as set forth in Section 2.20(c) of the
Sellers Disclosure Schedule.
(d) Except as disclosed in Section 2.20(d) of the Sellers Disclosure
Schedule, (i) to the Sellers' Knowledge, the conduct of the Businesses as
currently conducted or planned to be conducted, and their use of the Company IP,
does not infringe, impair, violate or conflict with ("Infringe") any
Intellectual Property of any Person, and the Company IP is not being Infringed
by any Person; and (ii) there is no Litigation or Order pending or outstanding,
to the Sellers' Knowledge, threatened or imminent, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any
Company IP, and, to the Sellers' Knowledge, there is no valid basis for the
same.
(e) The Target Companies and, with respect to the Businesses, Sellers
exclusively own all of the Company IP that they purport to own, free of any
adverse ownership interests or claims (including from any current or former
employees, contractors or agents). Except as would not have, individually or in
the aggregate, a Material Adverse Effect, the Target Companies and, with respect
to the Businesses, Sellers take all reasonable steps to maintain, police and
protect the material Company IP, including, without limitation (i) executing all
appropriate confidentiality agreements with all employees and all other Persons
with access to their trade secrets or confidential information and preventing
disclosure of same absent such an agreement; and (ii) executing all appropriate
assignments from all Persons who have contributed to the creation of
25
development of Company IP owned by the Target Companies and Sellers of all
Intellectual Property therein.
(f) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, no party to a Contract related to any material Company
IP is, or is alleged to be, in breach or default thereunder. The transactions
contemplated by this Agreement shall in no way impair or limit the rights of the
Businesses, or cause any payments to be due, with respect to any material
Company IP.
2.21. Security. Each of the Target Companies and, with respect to the
Businesses, each Seller has taken and take all reasonable actions to maintain,
protect and police the integrity and security of their computer systems, servers
and other computer, Internet and electronic assets and equipment, and all
information contained therein and/or transmitted thereby ("Systems"), including
the protection and policing against all unauthorized use of, access to, or
"hacking" into the Systems, or the introduction into the Systems of viruses or
other unauthorized, damaging or corrupting elements, except as would not have,
individually or in the aggregate, a Material Adverse Effect.
2.22. Insurance. Section 2.22 of the Sellers Disclosure Schedule sets
forth a true and complete list of all insurance policies and fidelity bonds
covering the assets, business, equipment, properties, rights, operations,
employees, officers and directors of each of the Target Companies and, with
respect to the Businesses, each Seller. There is no claim by any of the Target
Companies or, with respect to the Businesses, any Seller pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid and each of the Target
Companies and, with respect to the Businesses, each Seller is otherwise in full
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage), and each of the
Target Companies and, with respect to the Businesses, each Seller shall maintain
in full force and effect all such insurance during the period from the date
hereof through the Closing Date. Such policies of insurance and bonds are of the
type and in amounts customarily carried by Persons conducting businesses similar
to the Businesses and reasonable in light of the assets of each of the Target
Companies and Sellers. To Sellers' Knowledge, there is not any threatened
termination of or material premium increase with respect to any of such policies
or bonds.
2.23. Brokers. No broker, financial advisor, finder or investment
banker or other Person is entitled to any broker's, financial advisor's,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any of the Target Companies or any Seller, except for Xxxxxxxx & Co. (the
"Seller Financial Advisor"), the fees and expenses of which will be paid by
Sellers. Section 2.23 of the Sellers Disclosure Schedule sets forth, and Sellers
have heretofore furnished to Purchaser a true and complete copy of, all
agreements between Parent and the Seller Financial Advisor pursuant to which
such Person would be entitled to any payment relating to the transactions
contemplated hereunder.
2.24. Certain Business Practices. None of the Target Companies,
neither of the Sellers and no director, officer, employee or agent of any of the
Target Companies or any Seller
26
has (i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments relating to political activity, (ii) made any unlawful payment
to any foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction,
made any payment, entered into any agreement or arrangement or taken any other
action in violation of Section 1128B(b) of the Social Security Act, as amended,
or (iv) made any other unlawful payment.
2.25. Interested Party Transactions. Except as disclosed in Section
2.25 of the Sellers Disclosure Schedule, there is no existing Contract,
transaction, indebtedness or other arrangement, or any related series thereof,
between any of the Target Companies, on the one hand, and any Seller or any of
the current directors or officers of any Target Company or any Seller, on the
other (except for (i) amounts due as normal salaries, bonuses and benefits and
in reimbursement of ordinary expenses and (ii) contracts or other arrangements
with such officers or directors that are otherwise listed in the Sellers
Disclosure Schedule).
2.26. Opinion of Financial Advisor. The board of directors of Parent
has received the written opinion of the Seller Financial Advisor to the effect
that, in its opinion, as of the date hereof, the transactions contemplated
hereby are fair to Parent from a financial point of view, and Parent has
provided copies of such opinion to Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
3.1. Organization and Qualification. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Japan.
Purchaser has all the requisite power and authority (corporate or otherwise),
and is in possession of all Approvals necessary to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted
except where the failure to have such Approvals would not reasonably be expected
to have a Material Adverse Effect. Purchaser is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.2. Authority; Enforceability. Purchaser has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery by Purchaser of this Agreement, the performance of
its obligations hereunder and the consummation by Purchaser of the transactions
contemplated hereby have been duly and validly authorized by all corporate
action, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions so
contemplated herein. This Agreement has been duly and validly executed and
delivered by Purchaser and, assuming the due authorization,
27
execution and delivery hereof by Sellers, constitutes a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms.
3.3. No Conflict; Required Filings and Consents.
(a) The execution and delivery by Purchaser of this Agreement do not,
and the performance of this Agreement by Purchaser will not, (i) conflict with
or violate the Articles of Incorporation, Regulations of the Board of Directors
or Sharehandling Regulations of Purchaser, or (ii) conflict with or violate any
Law or Order in each case applicable to Purchaser or by which its properties,
rights or assets are bound or affected, (iii) result in any breach or violation
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair Purchaser's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration, increased obligations or fees or
cancellation of or result in the creation of an Encumbrance on any of the
properties, rights or assets of Purchaser pursuant to, any note, bond, mortgage,
indenture, Contract, permit, franchise or other instrument or obligation to
which Purchaser is a party or by which Purchaser or its or any of its respective
properties, rights or assets is bound or affected, except in the case of clauses
(ii) and (iii) above, for any such conflicts or violations that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) The execution and delivery by Purchaser of this Agreement do not,
and the performance by Purchaser of this Agreement will not, require Purchaser
to obtain the Approval of, observe any waiting period imposed by, or make any
filing with or notification to, any Governmental Authority, domestic or foreign,
except for (A) the filing of a report under the Foreign Exchange and Foreign
Trade Law of Japan or (B) where the failure to obtain such Approvals, or to make
such filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.4. Financing. Purchaser or the Purchaser Designee has and shall have
at Closing sufficient cash in immediately available funds to pay the Estimated
Purchase Price required to be paid pursuant to Article I hereof and to
consummate the transactions contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1. Conduct of Business Pending the Closing. Each Seller covenants
and agrees that, between the date hereof and the Closing Date, except as
expressly required or permitted by this Agreement or unless Purchaser shall
otherwise agree in writing in advance, (i) Sellers shall cause each of the
Target Companies to conduct and shall conduct the Businesses only in, and (ii)
shall not permit any of the Target Companies to and shall not, take any action
except in, the ordinary course of business and in a manner consistent with past
practice and in compliance with applicable laws. Each Seller shall use its
commercially reasonable efforts to preserve substantially intact the business
organization and assets of each of the Target Companies and the Businesses
(including the Transferred Assets), to keep available the services of the
present officers, employees and consultants of each of the Target Companies and
the Businesses, to maintain in effect the Material Agreements and to preserve
the present material relationships of
28
each of the Target Companies and the Businesses with customers, licensees,
suppliers, subcontractors and other Persons with which each of the Target
Companies or the Businesses have business relations. By way of amplification and
not limitation, except to the extent expressly permitted or contemplated by this
Agreement and except as disclosed on Section 4.1 of the Sellers Disclosure
Schedule, none of the Target Companies nor, with respect to the Businesses,
Sellers shall, between the date hereof and the Closing Date, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of Purchaser:
(a) amend or otherwise change the Certificate of Incorporation or
Bylaws or equivalent organizational document of any of the Target Companies
or alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure of any of the Target Companies;
(b) issue, grant, sell, transfer, deliver, pledge, promise, dispose
of or encumber, or authorize the issuance, grant, sale, transfer,
deliverance, pledge, promise, disposition or encumbrance of, or alter or
modify the terms of rights or obligations under any shares of capital stock
of any class (common or preferred), or any options, warrants, convertible
or exchangeable securities or other rights of any kind to acquire any
shares of capital stock or any other ownership interest or stock-based
rights of any of the Target Companies;
(c) declare, set aside for payment or pay any dividend or other
distribution (whether in stock or property or any combination thereof),
other than in cash, in respect of any of the Target Companies' capital
stock; split, combine, subdivide or reclassify any of the Target Companies'
capital stock, or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for, shares of the Target
Companies' capital stock; or amend the terms of, repurchase, redeem or
otherwise acquire, or permit any Subsidiary to repurchase, redeem or
otherwise acquire, any of the Target Companies' securities;
(d) sell, transfer, deliver, lease, license, sublicense, mortgage,
pledge, encumber or otherwise dispose of (in whole or in part), or create,
incur, assume or subject any Encumbrance on any of the assets of any of the
Target Companies or any of the Transferred Assets, except for dispositions
of assets in the ordinary course of business and in a manner consistent
with past practice and except for licenses to use Company IP granted in the
ordinary course of business and consistent with past practice;
(e) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) or organize any corporation, limited liability company,
partnership, joint venture, trust or other entity or any business
organization or division thereof; cause any of the Target Companies to
incur any indebtedness for borrowed money (other than under Parent's Credit
Agreement which obligations will be released at the Closing with respect to
the Target Companies and the Transferred Assets) or issue any debt
securities or any warrants or rights to acquire any debt security or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans,
advances, capital contributions or enter into any financial commitments; or
authorize or make any capital expenditures which are, in the aggregate, in
excess of $100,000 taken as a whole for any of the Target Companies and,
with respect to the Businesses, any Seller;
29
(f) (i) hire or terminate any Business Employee or Target Business
Employee (except in the ordinary course of business and consistent with
past practice), (ii) increase the compensation or fringe benefits
(including, without limitation, bonus) payable or to become payable to any
Business Employee, Target Business Employee, or current or former director,
officer, or employee of the Businesses (except for increases in salary or
wages, in the ordinary course of business consistent with past practice or
the payment of accrued or earned but unpaid bonuses), (iii) grant any
severance or termination pay to any Business Employee, Target Business
Employee, or present or former director, officer or employee of the
Businesses, (iv) loan or advance any money or other asset or property to
any Business Employee, Target Business Employee, or current or former
director, officer or employee of the Businesses (other than business
expense reimbursements in the ordinary course of business consistent with
past practice pursuant to the expense reimbursement policy of either Seller
or any Target Company), (v) establish, adopt, enter into, amend or
terminate any Employee Plan or any plan, agreement, program, policy, trust,
fund or other arrangement that would be a Employee Plan if it were in
existence as of the date of this Agreement, (vi) grant any equity or
equity-based awards, other than those related to equity of Parent in the
ordinary course consistent with past practice, or (vii) allow for the
commencement of any new offering periods under any employee stock purchase
plans;
(g) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of
accounts payable and collection of accounts receivable) unless required by
a change in GAAP after the date hereof;
(h) (i) other than in the ordinary course consistent with past
practice, enter into any agreement that if entered into prior to the date
hereof would be a Material Agreement set forth in Section 2.7 of the
Sellers Disclosure Schedule; (ii) modify, amend in any material respect,
transfer or terminate any Material Agreement or waive, release or assign
any rights or claims thereto or thereunder; (iii) enter into or extend any
lease with respect to Real Property with any third party; (iv) modify,
amend or transfer in any material respect or terminate any license
agreement, standstill or confidentiality agreement with any third party, or
waive, release or assign any rights or claims thereto or thereunder; or (v)
enter into, modify or amend any Contract to provide exclusive rights or
obligations;
(i) make or change or cause the Target Companies to make or change
any Tax election, file any amended Tax Return, or settle or compromise any
federal, state, local or foreign income tax liability or agree to an
extension of a statute of limitations;
(j) pay, discharge, satisfy or settle any Litigation or waive, assign
or release any material rights or claims except, in the case of Litigation,
any Litigation such actions would not: (A) impose any injunctive or similar
Order on any of the Target Companies or with respect to the Businesses, any
Seller, or restrict in any way any of the Target Companies, any of the
Businesses or any of the Transferred Assets or (B) exceed $75,000 in cost
or value to any of the Target Companies or, with respect to the Businesses,
any Seller;
(k) pay, discharge or satisfy any liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
except (i) in the ordinary course of
30
business consistent with past practice in an amount or value not exceeding
$100,000 in any instance or series of related instances or $200,000 in the
aggregate or (ii) in accordance with their terms as in effect as of the
date hereof;
(l) engage in, enter into or amend any Contract, transaction,
indebtedness or other arrangement with, directly or indirectly, any of the
directors, officers, stockholders or other Affiliates of any of the Target
Companies or, in connection with the Businesses, Sellers, or any of their
respective Affiliates or family members including any Contract,
transaction, Indebtedness or other arrangement with any Affiliate or any
other person covered under Item 404 of Regulation S-K under the Securities
Act of 1933, as amended, that would be required to be described under such
Item 404, except for (i) amounts due as normal salaries, bonuses and
benefits and in reimbursement of ordinary expenses and (ii) those items
existing as of the date hereof and listed in Section 4.1(l) of the Sellers
Disclosure Schedule;
(m) fail to maintain in full force and effect all self-insurance and
insurance, as the case may be, currently in effect;
(n) authorize, recommend, propose or announce an intention to do any of
the foregoing, or agree or enter into or amend any Contract or arrangement
to do any of the foregoing; or
(o) other than in the ordinary course of business, based upon
reasonable business judgment, fail to protect, maintain, police or enforce
any material Company IP.
4.2. No Shop. From the date hereof until the earlier of the Closing or
the termination of this Agreement in accordance with its terms, Sellers shall
not, nor shall they permit any of their Affiliates (including the Target
Companies) to, nor shall they authorize or permit any of their respective
stockholders, directors, officers, employees, representatives or agents
(collectively, the "Seller Representatives"), to directly or indirectly, (i)
solicit, facilitate, initiate, encourage or take any action to solicit,
facilitate, initiate or encourage, any inquiries or communications or the making
of any proposal or offer that constitutes or may reasonably be expected to
result in an Acquisition Proposal or (ii) participate or engage in any
discussions or negotiations with, or provide any information to or take any
other action with the intent to facilitate the efforts of, any Person concerning
any possible Acquisition Proposal or any inquiry or communication which might
reasonably be expected to result in an Acquisition Proposal. For purposes of
this Agreement, the term "Acquisition Proposal" shall mean any inquiry, proposal
or offer from any person (other than Purchaser or any of its Affiliates)
relating to any merger, consolidation, recapitalization, liquidation or other
direct or indirect business combination, involving any Seller or any Target
Company or the issuance or acquisition of shares of capital stock or other
equity securities of any Target Company or any tender or exchange offer that if
consummated would result in any Person, together with all Affiliates thereof,
beneficially owning shares of capital stock or other equity securities of any
Seller or any Target Company, or the sale, lease, exchange, license (whether
exclusive or not), or other disposition of any portion of any Business or any
Transferred Asset or of the business or other assets of any Seller relating to
any Business or of any Target Company, or any other transaction, the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the consummation of the transactions contemplated
hereby. Notwithstanding the above, the term "Acquisition
31
Proposal" shall not include any inquiry, proposal or offer for any merger,
consolidation, recapitalization, liquidation or other direct or indirect
business combination relating solely to any of the businesses of the Sellers
other than the Businesses the consummation of which would not reasonably be
expected to prevent, impede or delay the consummation of the transactions
contemplated by this Agreement. Sellers shall immediately cease and cause to be
terminated, and shall cause their Affiliates and all Seller Representatives to
immediately terminate and cause to be terminated, all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
could reasonably be expected to lead to, an Acquisition Proposal. Sellers shall
promptly notify each Seller Representative of its obligations under this Section
4.2. Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth above by any Affiliate of a Seller or any Seller
Representative, whether or not such Person is purporting to act on behalf of any
Seller, shall be deemed to be a breach of this Section 4.2 by Sellers.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Access to Information; Confidentiality.
(a) Upon reasonable notice, Sellers and each of the Target Companies
shall afford to the officers, employees, accountants, counsel and other
representatives and agents of Purchaser (collectively the "Purchaser
Representatives"), reasonable access, during the period prior to the Closing
Date, to all its properties, books, Contracts, commitments, records and
personnel and, during such period, each Seller and each Target Company shall
furnish promptly to the Purchaser Representative all information concerning each
Business and their respective properties, books, Contracts, commitments, records
and personnel (in the case of Sellers, with respect to the Businesses) as
Purchaser may reasonably request. Each of the Sellers and the Target Companies
shall make available to Purchaser the appropriate individuals for discussion of
the Businesses and their properties and personnel (in the case of Sellers, with
respect to the Businesses) as Purchaser or the Purchaser Representatives may
reasonably request. No investigation pursuant to this Section 5.1(a) shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto.
(b) Purchaser shall keep all non-public information obtained pursuant
to Section 5.1(a) confidential in accordance with the terms of the
Confidentiality Agreement, dated August 20, 2002 (the "Confidentiality
Agreement"), between Parent and Purchaser. Anything contained in the
Confidentiality Agreement to the contrary notwithstanding, Parent and Purchaser
hereby agree that each such party may issue press release(s) or make other
public announcements in accordance with Section 5.6.
(c) Sellers acknowledge that certain of the information relating to
the Businesses and the Target Companies is confidential and that such
information is a special, valuable and major asset of the Businesses and the
Target Companies, and that wrongful use or disclosure of any such confidential
information would cause the Businesses and the Target Companies immediate and
irreparable harm. Without the prior written consent of Purchaser, for a period
of two years after the Closing, each Seller agrees that it will not, and will
not permit its current agents, representatives, employees, officers and
directors to, disclose to others or use for Sellers' own
32
benefit or purposes or the benefit or purposes of any other Person other than
Purchaser or its Affiliates, directly or indirectly, from and after the Closing
Date, any confidential information relating to the Businesses or any Target
Company including trade secrets and business "know-how," or other confidential
information relating to customers, costs, marketing, investment, sales
activities, promotion, or plans for the Businesses generally, as well as all
analyses, compilations, data bases, studies or other documents prepared by any
Sellers or any of such Seller's employees, officers or directors containing or
based in whole or in part on such information, except as may be necessary to
avoid a violation of law. If any Seller or any of such Seller's agents,
representatives, Affiliates, employees, officers or directors becomes legally
compelled to disclose any such information, each Seller agrees that it will, to
the extent practicable, and shall use its commercially reasonable efforts to
cause such agent, representative, employee, officer or director to, provide
Purchaser with prompt written notice of such requirement so that Purchaser or
its relevant Affiliate may seek a protective order or other remedy or waive
compliance with this Section 5.1(c). If such protective order or other remedy is
not obtained, or Purchaser waives compliance with this Section 5.1(c), each
Seller agrees that it will, to the extent practicable, use its reasonable best
efforts to cause its agents, representatives, employees, officers or directors
to, furnish only such portion of such confidential information which is legally
required to be provided and exercise reasonable best efforts to obtain
assurances that confidential treatment will be accorded such information.
(d) The obligation of Sellers to treat such information relating to
the Businesses and the Target Companies in confidence shall not apply to any
information which Sellers demonstrate (i) is on the date hereof or hereafter
becomes generally available to the public other than as a result of a
disclosure, directly or indirectly, by any Seller or its representatives, (ii)
was available to a Seller or its representatives on a nonconfidential basis
prior to its disclosure by such Seller or any of its representatives or becomes
available to such Seller on a nonconfidential basis, in each case from a source
other than Purchaser or any of its Affiliates or any of their representatives,
which source was not itself bound by a confidentiality agreement with Purchaser,
Parent or any of their respective Affiliates or any of their representatives and
had not received such information, directly or indirectly, from a Person so
bound, (iii) is required to be disclosed in order that such Seller not commit a
violation of law, (iv) required for financial and tax reporting or (v) necessary
for transition services pursuant to the Transition Services Agreement.
(e) Purchaser shall, and shall cause the Purchaser Designees to,
provide to Sellers all financial information and access to the books and records
of the Target Companies and the Businesses reasonably requested by Parent or its
auditors in connection with the preparation of Sellers' financial statements and
reviews and audits thereof for periods ending on or before the Closing Date.
5.2. Taxes.
(a) Parent shall include the income of the Target Companies on the
Parent's consolidated, combined and unitary income Tax Returns for all periods
through the Closing Date and pay any Taxes attributable to such income. All such
Tax Returns shall be prepared and filed in the same states wherein Parent has
previously filed such Tax Returns in a manner consistent with prior practice,
except as required by a change in applicable law. In addition, Parent shall file
all other Tax Returns of the Target Companies for periods ending on or before
the Closing Date and
33
pay any Taxes shown on such Tax Returns. Parent shall provide copies of all such
Tax Returns (whether combined, separate or otherwise) to Purchaser 10 Business
Days prior to filing, and Parent shall make any reasonable changes to such Tax
Returns requested by Purchaser to the extent such Tax Returns could adversely
affect Purchaser, the Target Companies or any other Affiliate of Purchaser in a
post-Closing period or a portion thereof. Purchaser shall cause the Target
Companies to file income Tax Returns of the Target Companies for all periods
other than periods ending on or before the Closing Date.
(b) Parent shall allow the Target Companies to participate in any Tax
audit or proceeding relating to Parent's consolidated, combined or unitary Tax
Returns to the extent such returns relate to the Target Companies. Parent shall
not settle any such audit or claim in a manner which would adversely affect the
Target Companies after the Closing Date without the prior written consent of
Purchaser, which consent shall not unreasonably be withheld. With respect to any
Tax audit or proceeding relating to Tax Returns of the Target Companies other
than combined, consolidated or unitary Tax Returns, Parent shall have the right
to represent the Target Companies' interests in audits or proceedings relating
to periods ending prior to the Closing Date; provided that Parent shall not
settle any such audit or proceeding without the written consent of Purchaser.
Purchaser shall control all other Tax audits and proceedings of the Target
Companies.
(c) Any Tax sharing, Tax allocation or similar contract to which the
Target Companies are party will be cancelled prior to the Closing Date.
(d) Sellers shall be responsible for, shall pay or cause to be paid,
and shall indemnify and hold harmless the Purchaser from and against any and all
Taxes for or in respect of the following: (i) any and all Taxes with respect to
any taxable period or a portion thereof, of Sellers and the Target Companies
ending on or before the Closing Date, (ii) with respect to any and all Taxes of
a Consolidated Group of which the Target Companies are or have been a member on
or prior to the Closing Date by reason of the liability of the Target Companies
pursuant to Treasury Regulation Section 1.1502-6(a) (or any analogous or similar
state, local or foreign law or regulation), as a transferee or successor, or by
contract or otherwise, or (iii) any payments required to be made after the
Closing Date under any Tax sharing, Tax indemnity, Tax allocation or similar
contracts (whether or not written) to which Sellers or the Target Companies was
obligated, or was a party, on or prior to the Closing Date.
(e) Parent and Seller shall be responsible for the timely payment of,
and to such extent shall indemnify and hold harmless Purchaser and the Target
Companies against, all sales (including bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license, stock transfer and other similar Taxes and fees ("Transfer
Costs") arising out of or in connection with this Agreement.
(f) Taxes attributable to the taxable period beginning on or before
and ending after the Closing Date shall be apportioned to the period ending on
the Closing Date and to the period beginning on the day after the Closing Date
by means of a closing of the books and records of the applicable entity as of
the close of business on the Closing Date and, to the extent not susceptible to
such allocation, by apportionment on the basis of elapsed days unless such Tax
is transaction based (such as sales, transfer and other similar taxes) in which
case such Tax shall be apportioned to the period in which the related
transaction occurred/occurs.
34
(g) Purchaser and Sellers agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Transferred Assets, Target Businesses or the Target
Companies as is reasonably necessary for the filing of all Tax Returns, and
making of any election related to Taxes, the preparation for any audit by any
taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax Return. Sellers and Purchaser shall cooperate
with each other in the conduct of any audit or other proceeding related to Taxes
involving the Transferred Assets, Target Businesses or the Target Companies and
each shall execute and deliver such powers of attorney and other documents as
are necessary to carry out the intent of this Section 5.2.
5.3. Reasonable Best Efforts; Further Assurances.
(a) Each Seller and Purchaser agree to use their commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary to consummate and make effective the
transactions contemplated by this Agreement and permit Purchaser, following the
consummation of the transactions contemplated by this Agreement, to continue to
conduct any part of the Businesses previously conducted, including all of the
following: (i) seeking to obtain prior to the Closing Date all licenses,
certificates, permits, approvals, consents, authorizations, qualifications and
orders of Governmental Authorities as are necessary for the consummation of the
transactions contemplated hereby; (ii) seeking to obtain all necessary or
appropriate consents of third parties; (iii) seeking to effect all necessary
registrations and other filings and submissions of information requested by
Governmental Authorities in connection with this Agreement and the transactions
contemplated hereby; (iv) seeking to take such actions and execute and deliver
such documents as may be necessary to effectuate the purposes of this Agreement
at the earliest practicable time; and (v) seeking to take such actions as are
necessary to satisfy the conditions to Closing; provided, however, that such
action shall not include any requirement to expend any significant amounts of
money, commence or participate in any litigation or offer or grant any
accommodation (financial or otherwise) to any third party; and provided,
further, that Purchaser shall not be obligated hereunder to divest (x) any
portion of the Businesses or (y) any of its assets owned prior to the Closing
Date. The proviso that the parties not be required to expend any significant
amounts of money shall not be construed so as to limit the parties' responses to
requests by Governmental Authorities for additional information or documentary
material. Parent and Purchaser shall cooperate fully with each other to the
extent reasonable in connection with the foregoing.
(b) The parties hereto shall use their reasonable best efforts to
satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VI, as applicable to each of them, and to cause the
transactions contemplated by this Agreement to be consummated. Each party
hereto, at the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby. In furtherance of the
foregoing, Purchaser shall use its reasonable best efforts to assist Sellers in
satisfying the condition set forth in Section 6.2(c), including reasonably
responding to Sellers' requests in connection with its efforts to retain the
employees identified in Section 6.2(c) of the Sellers Disclosure Schedule and to
satisfy such condition; provided, however, that Purchaser shall not be obligated
to pay or promise any monies or additional compensation pursuant to this
sentence.
35
5.4. Employee Benefits.
(a) (i) The parties hereto intend that there shall be continuity of
employment with respect to all Target Business Employees to whom Purchaser
offers employment. Purchaser shall offer employment to all Target Business
Employees, except those Target Business Employees set forth in Section 5.4(a)(i)
of the Purchaser Disclosure Schedule. All Target Business Employees who accept
Purchaser's offer of employment and commence employment with the Purchaser shall
be referred to as "Transferred Employees," and the date on or after the Closing
Date on which any such Target Business Employee commences such employment shall
be deemed the "Employee Transfer Date."
(ii) Notwithstanding anything set forth in clause (i), with
respect to any Target Business Employee to whom Purchaser does not offer
employment, or to whom an offer has been made by Purchaser and declined,
Seller shall retain all liabilities associated with such Target Business
Employee (including, without limitation, any severance payments).
(b) As of the Closing Date, Purchaser shall offer to enter into
employment arrangements with Transferred Employees ("Purchaser Employment
Arrangements") set forth in Section 5.4(b) of the Purchaser Disclosure Schedule.
Purchaser Employment Arrangements shall be substantially similar to the
Employment Contracts maintained by Seller for the benefit of such Transferred
Employees immediately prior to the Closing Date. Purchaser Employment
Arrangements replacing Employment Contracts providing for severance from Sellers
shall contain a release of Sellers by such Transferred Employees from all
severance liabilities under such Employment Contracts which may arise after the
Closing Date.
(c) As of the Closing Date, Purchaser shall use reasonable efforts to
enter into severance benefit agreements with the individuals listed in Section
5.4(c) of the Purchaser Disclosure Schedule ("Purchaser Severance
Arrangements"). Purchaser Severance Arrangements shall be substantially similar
to severance benefit agreements maintained by Parent for the benefit of such
individuals. Purchaser Severance Arrangements shall contain a release of Sellers
by such individuals from all severance liabilities which may arise after the
Closing Date. If any of the individuals listed in Section 5.4(c) of the
Purchaser Disclosure Schedule is terminated after the Closing Date and by reason
of such termination Parent is required to pay severance, then Purchaser shall
reimburse Parent for the amount of severance paid.
(d) Subject to the provisions of this Section 5.4, for one (1) year
following the Closing Date, Purchaser shall provide employee benefits, plans,
arrangements, programs and policies (excluding any equity-based plans) to
employees who continue to be employed during such period by the Purchaser (such
Business Employees and Transferred Employees, collectively, the "Purchaser
Employees") that are comparable, in the aggregate (excluding any equity-based
plans), to such benefits, plans, arrangements, programs and policies (excluding
any equity-based plans) that are provided to the Purchaser Employees immediately
prior to the Closing Date; provided, however, that nothing herein shall be
construed to (i) require the continuation of any particular benefit, plan,
arrangement, program or policy (ii) prevent Purchaser from making any change
thereto that it determines, or (iii) guarantee continued employment to any
Transferred Employees.
36
(e) Except as otherwise specifically provided in this Agreement, for
the avoidance of doubt, Sellers shall remain responsible and liable for all
liabilities and obligations (including, without limitation, severance) which
relate to, result from, or arise with respect to (i) the participation of
Purchaser Employees under Employee Plans, whether incurred before, on, or after
the Closing Date, (ii) the employment (or termination of employment) of Target
Business Employees prior to the Employee Transfer Date, (iii) Target Business
Employees who fail to become Transferred Employees, and (iv) all employees of
each Seller, any Target Company, or any member of their Controlled Group, who
are not Purchaser Employees, whether incurred before, on, or after the Closing
Date.
(f) Effective as of the Closing Date, Purchaser Employees shall cease
making contributions in the Parent 401(k) Savings and Retirement Plan (the
"Parent 401(k) Plan"), and Purchaser Employees who are participants in the
Parent 401(k) Plan shall become fully vested in their account balances as of the
Closing Date. Seller and Parent shall make best efforts to cause the trustee of
the trust under the Parent 401(k) Plan to permit distributions from the Parent
401(k) Plan to Purchaser Employees in accordance with and subject to the
provisions of Section 401(k)(2)(B)(i) of the Code. Purchaser Employees shall
have the option to maintain their account balances under the Parent 401(k) Plan
or to make an elective rollover of the balance of their account, including, if
applicable, any notes evidencing loans thereunder, if so permitted, to a 401(k)
plan established by Purchaser or Purchaser Designee, to be established as soon
as practicable after the Closing Date (the "Purchaser 401(k) Plan") or to an
Individual Retirement Account ("XXX") in accordance with and to the extent
permitted by Treasury Regulations 1.401(k)-1(d)(4) and 1.411(d)(4) Q&A 3(b) and
the provisions of the Purchaser 401(k) Plan; provided, however, that nothing
herein shall require Seller and/or Parent to maintain the Parent 401(k) Plan
beyond the COBRA Maintenance Period (as defined in Section 5.4(f)). Any such
distribution shall be in cash, except that with respect to distributions to be
rolled over into the Purchaser 401(k) Plan, such distributions may also include
notes evidencing loans. Sellers shall provide (or cause to be provided)
Purchaser with all records and information as may be necessary or appropriate to
carry out their respective obligations under this Section 5.4(f), including, in
connection with the elective transfer of notes representing plan loans to
participants, the assignment of such notes, and the provision by Parent of
amortization schedules and other documents relating thereto. Prior to the
Closing Date, Sellers shall cause the Parent 401(k) Plan to be amended, if
necessary, to permit such distribution of account balances, including loan
balances, to Purchaser Employees, in connection with the transactions pursuant
to this Agreement.
(g) (i) As of the Closing Date, Sellers shall allow Purchaser Employees
(and their respective dependents) to continue to participate in the same
medical, dental, vision and flexible benefit programs (provided such programs
are subject to the COBRA Coverage requirements) in which Purchaser Employees
participated immediately prior to the Closing Date (the "Parent Plans") in
accordance with the COBRA Coverage requirements. As soon as practicable after
the Closing Date, but in no event later than ninety (90) days following the
Closing Date, Purchaser shall establish Purchaser Welfare Plans (as hereinafter
defined) for the benefit of Purchaser Employees (and their respective
dependents). For the period commencing on the Closing Date and ending ninety
(90) days thereafter (such period, the "COBRA Maintenance Period"), Seller shall
not terminate Parent Plans, but shall in no event be required to maintain Parent
Plans beyond the COBRA Maintenance Period. As soon as Purchaser offers coverage
under comparable programs which it shall establish for the benefit of Purchaser
Employees (and
37
their respective dependents) (the "Purchaser Welfare Plans"), Parent Plan
Reimbursement shall cease.
(ii) To reimburse Parent for the costs associated with Purchaser
Employees (and their respective dependents) continuing to participate in
Parent Plans, Purchaser shall pay to Parent an amount equal to the cost to
Sellers associated with such plans and such continued participation, which
amount shall equal the sum of the Monthly COBRA Premium Payment (as defined
below) attributable to each Purchaser Employee (and his or her respective
qualified beneficiaries) who participates in Parent Plans during any given
calendar month during the COBRA Maintenance Period (the "Parent Plan
Reimbursement"). Parent acknowledges and agrees that the Parent Plan
Reimbursement shall be paid by Purchaser monthly in arrears on behalf and
in lieu of Purchaser Employees (and his or her respective qualified
beneficiaries) who participate in Parent Plans during the COBRA Maintenance
Period. For purposes of this Section 5.4(g)(ii), the "Monthly COBRA Premium
Payment" shall mean the "applicable premium" (as defined in Section 604 of
ERISA) that Seller (or members of its Controlled Group) would require each
Purchaser Employee (whether electing single, spousal or family coverage)
who experienced a qualifying event under COBRA to pay in respect of each
calendar month to maintain continuation coverage under Parent Plans.
(h) With respect to any Purchaser Welfare Plan, Purchaser shall (a)
cause there to be waived any pre-existing condition limitations and (b) give
effect, or cause there to be given effect, in determining any deductible and
maximum out-of-pocket limitations, to claims incurred and amounts paid by, and
amounts reimbursed to, Purchaser Employees under Parent Plans.
(i) Periods of employment with Sellers or any Target Company for which
credit was given under Parent Plans shall be taken into account for purposes of
eligibility and vesting to the same extent they were taken into account under
Parent Plans.
(j) No provision of this Section 5.4 shall create any third party
beneficiary rights in any employee or former employee of the Sellers, or any
Target Company (including any beneficiary or dependent thereof) in respect of
continued or resumed employment, and no provision of this Section 5.4 shall
create any rights in any such persons in respect of any benefits that may be
provided, directly or indirectly, under any Purchaser Welfare Plans or Purchaser
employee benefit plans or arrangements.
5.5. Notification of Certain Matters. Sellers shall give prompt notice
to Purchaser, and Purchaser shall give prompt notice to Sellers, of the
occurrence, or non-occurrence, of (i) any event the occurrence, or
non-occurrence, of which results in any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect (or, in the
case of any representation or warranty qualified by its terms by materiality or
Material Adverse Effect, then untrue or inaccurate in any respect), (ii) any
failure of Sellers or Purchaser, as the case may be, to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by it hereunder and (iii) any change that could reasonably be
expected to have a Material Adverse Effect on Sellers or Purchaser or is likely
to delay or impede the ability of either Seller or Purchaser to consummate the
transactions contemplated by this Agreement or to fulfill their respective
obligations set forth herein; provided, however, that the
38
delivery of any notice pursuant to this Section 5.5 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
5.6. Public Announcements. Purchaser and Sellers shall consult with and
obtain the approval of the other party before issuing any press release or other
public announcement with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release prior to such
consultation and approval, except as may be required by Law or any listing
agreement or any rules of a self-regulatory organization related to the trading
of the shares of Purchaser or Parent on any United States or Japanese securities
exchange, automated quotation system or over-the-counter market, in which case
the party proposing to issue such press release or make such public announcement
shall use its reasonable best efforts to consult in good faith with the other
party before issuing any such press release or making any such public
announcement.
5.7. Non-Competition. In order that Purchaser and its Affiliates may
have and enjoy the full benefit of the Businesses, until the earlier of (a) the
third anniversary of the Closing Date and (ii) the time Xxx Xxxxxx and Xxxxxx
Xxxx cease to be employees of or otherwise provide services to Parent, Star
Mountain or any of their respective Affiliates (the "Non-Competition Period"),
neither Sellers nor any of their Subsidiaries will, directly or indirectly,
engage in any activity involving, or own any equity of or debt convertible into
equity of, control, operate or assist an entity that is in, any business that
competes with the Project Management Business in any jurisdiction in which the
Project Management Business operates (the "Competitive Business") or provide any
project management related services to a Competitive Business or license,
sublicense or otherwise make available to any Person any project management
related technology or intellectual property that can be utilized to engage in
the Competitive Business; provided, however, that the foregoing shall not
prohibit Sellers or any of their Subsidiaries from (i) acquiring, directly or
indirectly, securities of any Person traded in a public market that participates
in a Competitive Business; provided that Sellers and their Subsidiaries do not,
in the aggregate, own more than 5% of any class of securities of such Person; or
(ii) acquiring a company (the "Diversified Company") or a business having not
more than 25% of its gross revenues attributable to a Competitive Business, so
long as, with respect to such Diversified Company or business acquired, such
Seller and/or its Subsidiaries shall have divested itself within 12 months of
its acquisition of such Diversified Company of the assets of such Diversified
Company that constitute the Competitive Business and pending such disposition of
the Competitive Business, Sellers and/or its Subsidiaries, as applicable, puts
into place procedures reasonably designed to ensure the autonomy and
independence of the entity or division engaged in the Competitive Business.
Notwithstanding the foregoing, nothing contained in this Section 5.7 shall
prevent the Sellers or any of their Subsidiaries through the Government group
from providing project management services to government agencies or
non-governmental parties involved in government contracts. In the event that the
provisions of this Section 5.7 should ever be deemed to exceed the time or
geographic limitations or any other limitations permitted by applicable law in
any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum permitted by applicable law. If any Seller violates
any of its obligations under this Section 5.7, Purchaser and its Affiliates may
proceed against such Seller in law or in equity for such damages or other relief
as a court may deem appropriate. Sellers each acknowledge that a violation of
this Section 5.7 will cause Purchaser and its Affiliates irreparable harm which
cannot be adequately compensated for by money damages. Each Seller therefore
agrees that in the event of any actual or threatened violation of this Section
5.7, Purchaser and its Affiliates shall be
39
entitled, in addition to other remedies that they may have, to a temporary
restraining order and to preliminary and final injunctive relief against Sellers
or such Subsidiary of Sellers to prevent any violations of this Section 5.7,
without the necessity of proving actual damages or posting a bond.
5.8. Nonsolicitation.
(a) Sellers shall not, and shall cause their respective Subsidiaries
not to, for a period commencing on the date hereof and ending on the second
anniversary of the Closing Date without the prior written approval of Purchaser,
directly or indirectly, solicit, encourage, entice or induce for employment or
hire as an employee or consultant any person who is a Purchaser Employee;
provided that Sellers and their Subsidiaries shall not be precluded or
restricted from making generalized searches for employees through general
advertisements not specifically directed towards employees of Purchaser or its
Affiliates (including the Target Companies) and hiring employees that respond to
such generalized searches or from hiring non-management level employees who
seek, without prior solicitation, employment from Sellers. If it is ever held
that the restriction placed on Parent or Seller by this Section 5.8 is too
onerous and is not necessary for the protection of Purchaser, each Seller agrees
that any court of competent jurisdiction may impose lesser restrictions which
such court may consider necessary or appropriate to properly protect Purchaser.
(b) Purchaser shall not, and shall cause its Subsidiaries not to, for a
period commencing on the date hereof and ending on the second anniversary of the
Closing Date without the prior written approval of Sellers, directly or
indirectly, solicit, encourage, entice or induce for employment or hire as an
employee or consultant any person who is an employee of one of the Sellers
(other than corporate employees) and is not a Purchaser Employee; provided that
Purchaser and its Subsidiaries shall not be precluded or restricted from making
generalized searches for employees through general advertisements not
specifically directed towards employees of Sellers and their Subsidiaries and
hiring employees that respond to such generalized searches or from hiring
non-management level employees who seek, without prior solicitation, employment
from Purchaser. If it is ever held that the restriction placed on Purchaser by
this Section 5.8 is too onerous and is not necessary for the protection of
Sellers, Purchaser agrees that any court of competent jurisdiction may impose
lesser restrictions which such court may consider necessary or appropriate to
properly protect Sellers.
5.9. Transition Services. Following the Closing Date, (i) Sellers shall
provide, or cause to be provided, to Purchaser and its Affiliates certain
services which are currently provided by Sellers to the Target Companies with
respect to the Businesses, and (ii) Purchaser shall provide, or cause to be
provided, to Sellers and their Affiliates certain services which are currently
provided by certain of the Target Companies to Sellers, all as more fully set
forth in a transition services agreement (the "Transition Services Agreement")
to be entered into by Sellers and Purchaser as of the Closing Date which shall
include the terms set forth in Section 5.9 of the Sellers Disclosure Schedule.
5.10. Release of Target Companies.
(a) Effective as of the Closing, each Seller hereby releases each
Target Company from any claims or demands that such Seller may have against such
Target Company to the extent
40
arising from, out of or in connection with any circumstances, acts or omissions
or contracts existing at the Closing, except for claims or demands that Sellers
may have pursuant to this Agreement or under arrangements set forth on Section
5.11 of the Sellers Disclosure Schedule.
(b) Effective as of the Closing, each Target Company hereby releases
each Seller from any claims or demands that such Target Company may have against
such Seller to the extent arising out of or in connection with any
circumstances, acts or omissions or contracts existing at the Closing, except
for claims or demands that Purchaser (including any Target Company) may have
pursuant to this Agreement or under arrangements set forth on Section 5.11 of
the Sellers Disclosure Schedule.
5.11. Related Party Contracts. Prior to the Closing Date, Sellers
shall cause any Contract or arrangement that is or is required to be listed on
Section 2.25 of the Sellers' Disclosure Schedule other than those Contracts or
arrangements set forth in Section 5.11 of the Sellers Disclosure Schedule, to be
terminated or otherwise amended to exclude any Target Company as a party thereto
(without any post-Closing payments by Purchaser or any Target Company)
notwithstanding any terms thereof to the contrary.
5.12. Assumed Obligations.
(a) At the Closing, or such later date not later than two business
days after the Closing as Sellers shall designate, the Purchaser shall, or shall
cause the Purchaser Designees to, pay (a) $3,255,000 which constitutes all
amounts due under the Promissory Note dated September 29, 2000 in favor of
Executive Education Institute, Inc. (the "EEI Note"), (b) $2,400,000 which
constitutes all amounts owed to the former stockholders of Strategic
Interactive, Inc. pursuant to the terms of that certain Agreement and Plan of
Merger dated October 26, 1998, as amended (the "SI Obligation"), and (c)
$140,000 which is $70,000 to each of Xxxxxx Xxxxxx and Xxxxxx Xxxxx which
constitutes all amounts due to each of them under their respective
non-competition and non-disclosure agreements (the "EEI Non-Comp Obligations").
After the Closing, Purchaser shall cause Performance Solutions to pay that
certain Promissory Note dated July 1, 1996 in the original principal amount of
$1,095,529 with an outstanding principal balance as of December 31, 2002 of
$675,211 (the "Xxxx Note") and the Deferred Compensation Obligation in
accordance with their terms. From and after the Closing the Purchaser shall, or
shall cause the Purchaser Designees to, timely pay, perform and discharge the
Assumed Liabilities, and cause the Target Companies to timely pay, perform and
discharge their respective obligations and liabilities, in accordance with their
respective terms.
(b) On or prior to the Closing Date, Sellers shall pay all interest
accrued through the Closing Date on the EEI Note, the SI Obligation and the EEI
Non-Comp Obligations to the holders thereof.
(c) Purchaser shall, and shall cause the Purchaser Designees to, upon
the request of either Seller, use reasonable efforts without expenditure of any
more than a nominal amount to obtain from the third parties to Assumed Contracts
the release (in the form of a novation or otherwise) of the Sellers from any and
all obligations and liabilities arising under the Assumed Contracts after the
Closing Date.
41
5.13. Directors' and Officers' Insurance.
(a) For a period of six years after the Closing Date each Seller shall
continue to indemnify and hold harmless each present and former director and
officer of it and its Subsidiaries and other persons entitled to indemnification
under the charter, bylaws or similar organizational documents of such Seller or
its Subsidiaries as in effect on the date hereof ("Covered Persons") against any
and all losses, costs, settlement payments, awards, judgments, fines, penalties,
damages, expenses, deficiencies or other charges (including court filing fees,
court costs, arbitration fees or costs, witness fees and fees and disbursements
of legal counsel, expert witnesses, accountants and other professionals)
("Losses") arising out of or pertaining to matters existing or occurring prior
to the Closing Date, whether asserted or claimed prior to, at or after the
Closing Date, to the fullest extent permitted under applicable law.
(b) Each Seller shall and shall cause its Subsidiaries to maintain for
a period of at least six years the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by Parent on
the date hereof with respect to claims arising from facts or events that
occurred on or prior to the Closing Date, including in respect of the
transactions contemplated by this Agreement. The provisions of the immediately
preceding sentence and subsection (a) shall be deemed to have been satisfied if
prepaid "tail" policies have been obtained by a Seller (or by the Person into
which any Seller or any of its Subsidiaries has merged, or by any Person that
acquires at least a majority of any Seller's or its Subsidiaries' outstanding
voting securities or to which any Seller or its Subsidiaries have sold all or
substantially all of its assets prior to the relevant transaction) prior to the
closing of any such transaction in which the Seller or its Subsidiaries merges
or sells all or substantially all of its assets, or a Person acquires a majority
of the outstanding voting securities of the Seller or its Subsidiaries, which
policies provide the Covered Persons with coverage at least as favorable to the
Covered Persons as Parent's current policies of directors' and officers'
liability insurance and fiduciary liability insurance for an aggregate period of
not less than six years with respect to claims arising from facts or events that
occurred on or prior to the Closing Date, including in respect of the
transactions contemplated by this Agreement.
(c) If any Seller or any of its Subsidiaries or any of their
successors or assigns (i) consolidates with or merges with or into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, (ii) transfers or conveys all or substantially all
of its properties and assets to any person or (iii) dissolves or liquidates,
then, and in each such case, to the extent that the provisions of the second
sentence of subsection (b) above are not satisfied, it shall be a condition
precedent to such transaction or event that proper provision shall be made so
that the successors and assigns of such Seller, such Subsidiary or such
successor or assign assume the obligations set forth in this Section 5.13 or the
prepaid policies described in (b) above are obtained.
5.14. Insurance.
(a) Sellers shall use reasonable efforts to acquire from American
International Group Companies or such other insurance company with an A.M. Best
rating of A+ or higher satisfactory to Purchaser a Buyer-Side Representations
and Warranties insurance policy insuring
42
Purchaser against any breaches of representations and warranties of Sellers in
this Agreement with such other terms as are set forth in Section 5.14(a) of the
Purchaser Disclosure Schedule.
(b) Notwithstanding anything to the contrary in this Agreement,
Sellers shall also use reasonable efforts without expenditure of any more than a
nominal amount to cause Purchaser to be named as an additional named insured and
loss payee under all of its occurrence based insurance policies in effect as of
the Closing Date that in any way relate to or cover any Target Company or any
Business or any of their respective properties or assets (including any
Transferred Asset).
(c) The representations and warranties of each of the Sellers
contained in Article II and of Purchaser contained in Article III hereof shall
remain operative and in full force and effect until the Closing. Effective upon
the Closing, the representations and warranties of each of the Sellers contained
in Article II and of Purchaser contained in Article III hereof shall terminate
and shall be of no further force and effect.
5.15. Name; Retained Trademarks.
(a) For a period of six months from the Closing Date, Sellers hereby
grant Purchaser a non-exclusive license to use the trademarks owned or held by
any Seller and used in connection with the Businesses that are not included in
the Transferred Assets including the "Provant" and "Star Mountain" names (the
"Retained Trademarks") (i) as a corporate name, (ii) on signs on or near
buildings or offices associated with one or more of the Businesses and (iii) on
any printed literature or stationary that is used or distributed solely for
internal purposes that exist in the inventories related to any of the Businesses
on the Closing Date, and that bear a name, phrase or logo incorporating the
Retained Trademarks. From and after the expiration of such six month period,
Purchaser shall cease to use any such items; or delete or cover (as by
stickering) any such name, phrase or logo from any item included in the
inventories related to the Businesses that bears such name, phrase or logo; and
take such other actions as may be practicable to indicate that Purchaser is not
affiliated with any Seller. In furtherance of the foregoing, within two months
after the Closing Date, Purchaser shall cause each of the Target Companies to
change its name to remove the word "Provant" therefrom.
(b) For a period of six months from the Closing Date, Purchaser hereby
grants Parent a non-exclusive license to use the "Novations" name in connection
with the Leadership group of Parent (i) on signs on or near buildings or offices
associated with the Leadership group of Parent and (ii) on any printed
literature or stationary that is used or distributed solely for internal
purposes that exist in the inventories related to the Leadership group of Parent
on the Closing Date, and that bear a name, phrase or logo incorporating the
"Novations" name. From and after the expiration of such six month period,
Sellers shall cease to use any such items; or delete or cover (as by stickering)
any such name, phrase or logo from any item included in the inventories related
to any of their businesses that bears such name, phrase or logo; and take such
other actions as may be practicable to indicate that Sellers are not affiliated
with Purchaser. In furtherance of the foregoing, within two months after the
Closing Date Sellers shall cease doing any business under the "Novations" name,
except as permitted above.
43
ARTICLE VI
CONDITIONS
6.1. Conditions to Obligation of Each Party. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or
other inquiry that is reasonably likely to result in such an action or
proceeding) by any Governmental Authority or before any Governmental
Authority or court of competent jurisdiction, United States or non-United
States, that would, or would reasonably be expected to, result in an order,
nor shall there be in effect any judgment, decree or order of any
Governmental Authority or court of competent jurisdiction, or any other
legal restraint, (i) preventing or making illegal consummation of the
transactions contemplated by this Agreement, (ii) prohibiting or limiting
Purchaser from exercising all material rights and privileges pertaining to
(A) its ownership of each of the Target Companies, the Businesses and the
Transferred Assets or (B) the ownership or operation by Purchaser or any of
its Subsidiaries of all or a material portion, of the business or assets of
each of the Target Companies and the Businesses, (iii) compelling Purchaser
or any of its Subsidiaries (including each of the Target Companies) to
dispose of or hold separate assets which are material to any Target Company
or any Business or (iv) imposing any material liability as a result of the
transactions contemplated by this Agreement.
(b) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the transactions
contemplated hereby which prevents or makes the consummation of the
transactions contemplated herein illegal.
(c) Third Party Consents. Purchaser shall have received evidence, in
form and substance reasonably satisfactory to it, that the third-party
consents related to Contracts set forth in Section 6.1(c) of the Purchaser
Disclosure Schedule have been obtained.
(d) Legal Opinion. Each of Purchaser and Sellers shall have received a
copy of the written opinion of Xxxxxxxx, Xxxxxx & Finger addressed to the
board of directors of Parent in form and substance reasonably satisfactory
to each of them to the effect that no vote or other shareholder action on
the part of the shareholders of Parent is required in order to consummate
the transactions contemplated by this Agreement.
(e) Transition Services Agreement. Sellers shall have executed and
delivered the Transition Services Agreement.
6.2. Additional Conditions to Obligations of Purchaser. The
obligations of Purchaser to effect the transactions contemplated hereby are also
subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of Sellers contained in this Agreement that are qualified by materiality or
Material Adverse
44
Effect shall be true and correct and the representations and warranties
that are not so qualified shall be true and correct in all material
respects on and as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date (other than representations and
warranties which address matters only as of a particular date, in which
case such representations and warranties shall be true and correct or true
and correct in all material respects, as the case may be, on and as of such
particular date) and Purchaser shall have received a certificate to such
effect signed by the Chief Executive Officer and Chief Financial Officer of
Parent.
(b) Agreements and Covenants. Sellers shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date; and Purchaser shall have received a certificate to such effect signed
by the Chief Executive Officer and Chief Financial Officer of each Seller.
(c) Employment Agreements. The employment agreements or employment
offer letters, dated on or prior to the Closing Date, between each of the
individuals identified in Section 6.2(c) of the Purchaser Disclosure
Schedule, on the one hand, and such individual's prospective employer
(being either one of the Target Companies or the Purchaser or Purchaser
Designee) shall be in full force and effect and shall not have been
anticipatorily breached or repudiated by the individuals party thereto.
(d) Deal Insurance. Sellers shall have obtained, and shall have
delivered to Purchaser, certificates of insurance of American International
Group Companies or such other insurance company with an A.M. Best rating of
A+ or higher satisfactory to Purchaser which names Purchaser as the insured
evidencing an insurance policy with a coverage period of 2 years from the
Closing Date (or such longer periods set forth in Section 5.14(a) of the
Purchaser Disclosure Schedule) insuring Purchaser against all breaches of
representations and warranties in this Agreement and with such other terms
as are set forth in Section 5.14(a) of the Purchaser Disclosure Schedule.
6.3. Additional Conditions to Obligations of Sellers. The obligation
of Sellers to effect the transactions contemplated hereby is also subject to the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Purchaser contained in this Agreement that are qualified by materiality
or Material Adverse Effect shall be true and correct and the
representations and warranties that are not so qualified shall be true and
correct in all material respects on and as of the Closing Date (other than
representations and warranties which address matters only as of a
particular date, in which case such representations and warranties shall be
true and correct or true and correct in all material respects, as the case
may be, on and as of such particular date) and Sellers shall have received
a certificate to such effect signed by the Representative Director of
Purchaser.
(b) Agreements and Covenants. Purchaser shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be
45
performed or complied with by them on or prior to the Closing Date; and
Sellers shall have received a certificate to such effect signed by a duly
authorized officer of Purchaser.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) By mutual written consent of Sellers and Purchaser;
(b) By either Seller or Purchaser if the Closing shall not have
been consummated on or before February 16, 2003; provided, however, that
the right to terminate this Agreement under this Section 7.1(b) shall not
be available to any party whose or whose Affiliate's willful failure (or
the failure of an Affiliate) to fulfill any material obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date;
(c) By either Seller or Purchaser, if a Court or Governmental
Authority shall have issued an Order or taken any other action, in each
case which has become final and non-appealable and which restrains,
enjoins or otherwise prohibits the transactions contemplated hereby;
(d) By Purchaser, if it is not in material breach of its
obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of Sellers herein become untrue or
inaccurate such that Section 6.2(a) would not be satisfied (treating such
time as if it were the Closing Date for purposes of this Section 7.1(d))
or (ii) there has been a breach on the part of any Seller of any of its
covenants or agreements contained in this Agreement such that Section
6.2(b) would not be satisfied (treating such time as if it were the
Closing Date for purposes of this Section 7.1(d)), and, in both case (i)
and case (ii), such breach (if curable) has not been cured within 30 days
after notice to Sellers; or
(e) By Sellers, if neither Seller is in material breach of its
obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of Purchaser herein become untrue or
inaccurate such that Section 6.3(a) would not be satisfied (treating such
time as if it were the Closing Date for purposes of this Section 7.1(e))
or (ii) there has been a breach on the part of Purchaser of any of its
covenants or agreements contained in this Agreement such that Section
6.3(b) would not be satisfied (treating such time as if it were the
Closing Date for purposes of this Section 7.1(e)), and such breach (if
curable) has not been cured within 30 days after notice to Purchaser.
7.2. Effect of Termination. Except as provided in this Section
7.2, in the event of the termination of this Agreement pursuant to Section 7.1,
this Agreement (other than this Section 7.2 and Sections 5.1(b), 7.3 and Article
VIII, which shall survive such termination) will forthwith become void, and
there will be no liability on the part of Sellers or Purchaser or any of their
respective officers or directors to the other and all rights and obligations of
any party hereto will
46
cease, except that nothing herein will relieve any party from liability for any
breach, prior to termination of this Agreement in accordance with its terms, of
any representation, warranty, covenant or agreement contained in this Agreement.
7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
transactions contemplated hereby are consummated.
(b) Nothing in this Section 7.3 shall be deemed to be exclusive of
any other rights or remedies any party may have hereunder or at law or in equity
for any breach of this Agreement.
7.4. Amendment. This Agreement may not be amended except by an
instrument in writing signed by all of the parties hereto.
7.5. Waiver. At any time prior to the Closing Date, any party
hereto may extend the time for the performance of any of the obligations or
other acts required hereunder of the other party hereto, waive any inaccuracies
in the representations and warranties of such other party contained herein or in
any document delivered pursuant hereto and waive compliance of such other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by nationally recognized overnight courier or by registered
or certified mail, postage prepaid, return receipt requested, or by electronic
mail, with a copy thereof to be delivered or sent as provided above or by
facsimile or telecopier, as follows:
(a) If to Purchaser:
Drake Beam Xxxxx-Japan, Inc.
00X, Xxxx Xxxxx, Xxxx Xxxx Xxxxxx, 0-00-0
Xxxxxx, Xxxxxxxxx-xx, Xxxxx 141-0032
Japan
Facsimile: 011-813-5437-1084
E-Mail: xxxxxxxxxx@xxx-x.xx.xx
Attention: Xxxxxxxx Xxxxxxxxx
47
With copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
E-Mail: xxxxxxxx@xxxxxx.xxx
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) If to Sellers:
Provant, Inc.
00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxx.xxx
xxxxx@xxxxxxx.xxx
Attention: Vice Chairman
Chief Financial Officer
With copies to:
Xxxxxx, XxXxxxxxx & Fish, LLP
World Trade Center West, 000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
E-Mail: Xxxxxxx@xxxxxx.xxx
Attention: Xxxxx X. Xxxxxx, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (i) in the case of personal
delivery, nationally recognized overnight courier or registered or certified
mail, on the date of such delivery and (ii) in the case of facsimile or
telecopier or electronic mail, upon confirmed receipt.
8.2. Disclosure Schedules. The Sellers Disclosure Schedule and the
Purchaser Disclosure Schedule each shall be divided into sections corresponding
to the sections and subsections of this Agreement. Disclosure of any fact or
item in any section of a party's Disclosure Schedule shall, should the existence
of the fact or item or its contents be relevant to any other section of the
Disclosure Schedule, be deemed to be disclosed with respect to such other
section if such relevance is readily apparent.
8.3. Certain Definitions. For purposes of this Agreement, the
term:
(a) "Affiliate" means any Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned Person, including, with
respect to Sellers, any corporation, partnership, limited
48
liability company or joint venture in which Sellers (either alone, or
through or together with any other Subsidiary) has, directly or
indirectly, an interest of 10% or more.
(b) "Business Day" means any day other than a Saturday, Sunday or
day on which banks are permitted to close in the State of New York or
Tokyo, Japan.
(c) "Contract" means any contract, plan, undertaking,
understanding, agreement, license, sublicense, royalty agreement, lease,
note, mortgage or other binding commitment, whether written or oral.
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies
of a Person, whether through the ownership of stock, as trustee or
executor, by Contract or credit arrangement or otherwise.
(e) "Court" means any court or arbitration tribunal of the United
States, any domestic state, or any foreign country, and any political
subdivision or agency thereof.
(f) "Encumbrance" means any security interest, pledge, mortgage,
lien (statutory or otherwise), license, claim, option, conditional sale
agreement, right of first refusal, first offer, termination or
participation, charge, encumbrance or other restrictions of any similar
kind.
(g) "Equity Securities" mean the shares of capital stock of a
corporation, the partnership interests in a partnership, or the equity
interests in any limited liability company or other Person.
(h) "Governmental Authority" means any governmental agency or
authority of the United States, any domestic state, or any foreign
country, and any political subdivision or agency thereof, and includes
any authority having governmental or quasi-governmental powers, including
any administrative agency or commission.
(i) "Indebtedness" means all obligations for borrowed money,
including (a) any obligation owed for all or any part of the purchase
price of property or other assets or for services or for the cost of
property or other assets constructed or of improvements to such property
or other assets, other than current trade accounts payable included in
current liabilities and incurred in respect of property or services
purchased in the ordinary course of business, (b) any capital lease
obligation, (c) any obligation (whether fixed or contingent) to reimburse
any bank or other Person in respect of amounts paid or payable under a
standby letter of credit, (d) any guarantee with respect to indebtedness
for borrowed money (of the kind otherwise described in this definition)
of another Person and (e) any factored or sold receivables.
(j) "Intellectual Property" means all United States and foreign
intellectual property, including, without limitation all (A) (i) patents,
discoveries, inventions, developments, processes, formulae, technology
and know-how; (ii) copyrights and works of authorship in any media,
including software, applications, code, programs, databases, user
interfaces, documentation, Internet site content, textual and literary
works,
49
compilations, manuals (in print and electronic form), advertising and
promotional materials and related items; (iii) trademarks, service marks,
trade names, URLs and Internet domain names, designs, slogans, logos,
trade dress, together with all goodwill related to the foregoing; and
(iv) trade secrets, data, training materials and other proprietary
confidential information, (B) all registrations, applications,
recordings, and licenses or other agreements related thereto, and (C) all
rights to obtain renewals, extensions, continuations,
continuations-in-part, reissues, divisions or similar legal protections
related thereto; and rights to bring an action at law or in equity for
the infringement or other impairment of the foregoing before the Closing
Date, including the right to receive all proceeds and damages therefrom.
(k) "Knowledge" means (i) in the case of an individual, knowledge
of a particular fact or other matter if such individual is actually aware
of such fact or other matter, and (ii) in the case of an entity (other
than an individual) such entity will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a
director, executive or statutory officer, partner, executor, or trustee
of such Person (or in any similar capacity) has, or at any time had,
Knowledge (as contemplated by clause (i) of this Section 8.3(l)) of such
fact or other matter.
(l) "Law" means all laws, statutes, ordinances and Regulations of
any Governmental Authority including all decisions of Courts having the
effect of law in each such jurisdiction.
(m) "Litigation" means any claim, suit, action, arbitration, cause
of action, claim, complaint, criminal prosecution, investigation, demand
letter, or proceeding, whether at law or at equity, before or by any
Court or Governmental Authority, any arbitrator or other tribunal.
(n) "Material Adverse Effect" means any fact, event, change,
development, circumstance or effect (i) that, when such term is used in
relation to the Target Companies and the Businesses, (A) is or is
reasonably likely to be materially adverse to the business, condition
(financial or otherwise), results of operations, assets, liabilities or
properties of any Target Company or any Business or (B) would materially
impair or delay the ability of Sellers to perform their obligations
hereunder, including the consummation of the transactions contemplated
hereby other than any such fact, event, change, development, circumstance
or effect (x) directly resulting from actions contemplated by the parties
in connection with, or which is attributable to the announcement of, this
Agreement and the transactions contemplated hereby, (y) arising out of or
resulting from conditions affecting the industry in which the Target
Companies and the Businesses operate as a whole or the U.S. economy as a
whole in each case that do not disproportionately affect the relevant
Target Company or the relevant Business, or (z) arising out of or
resulting from any action or omission by Sellers taken with the written
permission of Purchaser in connection with the transactions contemplated
hereby, that in each case do not disproportionately affect the relevant
Target Company or the relevant Business or (ii) that, when such term is
used in relation to Purchaser, would materially impair or delay the
ability of the Purchaser to perform its obligations hereunder, including
the consummation of the transactions contemplated hereby.
50
(o) "Order" means any judgment, order, writ, injunction, ruling or
decree of, or any settlement under the jurisdiction of, any Court or
Governmental Authority.
(p) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, limited liability
company, other entity or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
(q) "Post-Closing Tax Period" means any Tax period ending after
the Closing, including the portion of the Tax period that begins
immediately after the Closing.
(r) "Pre-Closing Tax Period" means any Tax period ending on or
before the Closing, including the portion of the Tax period in which the
Closing Date occurs that ends at the Closing.
(s) "Purchaser Designee" means any Subsidiary of Purchaser
notified to Sellers not less than two (2) days prior to the Closing.
(t) "Purchaser Disclosure Schedule" means a schedule of even date
herewith delivered by Purchaser to Sellers concurrently with the
execution of this Agreement, which, among other things, will identify
exceptions and other matters with respect to the representations,
warranties and covenants of Purchaser contained in certain specific
sections and subsections.
(u) "Regulation" means any rule or regulation of any Governmental
Authority having the effect of Law.
(v) "Related Party Contract" means any Contract between any of
Parent and its Affiliates, on the one hand, and any of the Target
Companies, on the other.
(w) "Sellers Disclosure Schedule" means a schedule of even date
herewith delivered by Sellers to Purchaser concurrently with the
execution of this Agreement, which, among other things, will identify
exceptions and other matters with respect to the representations,
warranties and covenants of Sellers contained in certain specific
sections and subsections.
(x) "Subsidiary" or "Subsidiaries" of Sellers, Purchaser or any
other Person means any corporation, partnership, joint venture, limited
liability company or other legal entity of which Sellers, Purchaser or
such other Person, as the case may be, owns, directly or indirectly,
greater than 50% of the stock or other equity interests the holder of
which is generally entitled to vote as a general partner or for the
election of the board of directors or other governing body of a
corporation, partnership, joint venture, limited liability company or
other legal entity.
8.4. Interpretation. When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include", "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation".
The word "herein" and similar references mean, except where a specific Section
or
51
Article reference is expressly indicated, the entire Agreement rather than any
specific Section or Article. The table of contents and the headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.5. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
8.6. Entire Agreement. This Agreement (including all exhibits and
schedules hereto) and other documents and instruments delivered in connection
herewith constitute the entire agreement and supersedes all prior agreements and
undertakings (other than the Confidentiality Agreement), both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
8.7. Assignment. This Agreement shall not be assigned by operation
of Law or otherwise, except that Purchaser may assign all or any of its rights
hereunder to any Affiliate, provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
8.8. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
8.9. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor will any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive to, and not exclusive
of, any rights or remedies otherwise available.
8.10. Governing Law; Enforcement. This Agreement and the rights
and duties of the parties hereunder shall be governed by, and construed in
accordance with, the Law of the State of Delaware. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the Federal
District Court for Massachusetts, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto, (a) consents to submit itself to the personal jurisdiction of the
Federal District Court for Massachusetts in the event any dispute arises out of
this Agreement or any transaction contemplated hereby, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction
52
by motion or other request for leave from any such court, (c) agrees that it
will not bring any action relating to this Agreement or any transaction
contemplated hereby in any court other than the Federal District Court for
Massachusetts and (d) waives any right to trial by jury with respect to any
action related to or arising out of this Agreement or any transaction
contemplated hereby.
8.11. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[Remainder of this page intentionally left blank]
53
IN WITNESS WHEREOF, Parent, Star Mountain and Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PROVANT, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice Chairman
STAR MOUNTAIN, INC.
By: /s/ Xxxxx Xxxx
---------------
Name: Xxxxx Xxxx
Title: Asst. Treasurer
DRAKE BEAM XXXXX-JAPAN, INC.
By: /s/ Xxxxx Xxxxxx
-----------------
Name: Xxxxx Xxxxxx
Title: President and Representative
Director
