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Exhibit 2.5
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this Agreement") dated as of
February 12, 1998 is among Provant, Inc., a Delaware corporation ("Provant"),
XXXX Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Provant ("Acquisition"), XXXX Retail Learning Systems, Inc., a New Jersey
corporation (the "Company"), Xxxxxxx Xxxxx, Xxxxxx Xxxxx and Xxxxxxx Xxxxxxx,
the sole stockholders of the Company (the "Stockholders"), and Xxxx X. Xxxxxxxx
and Xxxxxxx X. Xxxxxxx (the "Xxxxxxx Principals"), and provides for the merger
of the Company with and into Acquisition (the "Merger"). The Boards of Directors
of Provant, Acquisition and the Company have determined that the Merger is in
the best interests of their respective stockholders and the Merger has been
unanimously approved by the stockholders of the Company and Acquisition.
Accordingly, the parties hereto, in consideration of the mutual
representations, warranties and covenants contained herein, agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 "Additional Companies" mean those companies identified on Schedule
1.1 hereto, with which companies Provant is entering into separate Agreements
and Plans of Merger contemporaneously with the execution and delivery of this
Agreement.
1.2 "Additional Mergers" means the acquisitions (by merger or
otherwise) of each of the Additional Companies by Provant, and "Additional
Merger Agreements" means the agreements and plans of merger or other contracts
(in each case as described in Section 5.9 of the Provant Disclosure Schedule)
pursuant to which Provant will consummate the Additional Mergers.
1.3 "Additional Shares" means the additional shares, if any, of Provant
Common Stock issuable to the Stockholders pursuant to Section 2.8.
1.4 "Balance Sheet" means the balance sheet of the Company as of June
30, 1997 included in the Financial Statements.
1.5 "Balance Sheet Date" means June 30, 1997.
1.6 "Certificate of Merger" has the meaning given to it in Section 2.2.
1.7 "Closing" means the closing of the transactions contemplated by
this Agreement as provided in Section 2.2.
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1.8 "Closing Net Worth" means the Company's pro forma net worth as of a
date selected by Provant as close as practicable to the Effective Time (but in
no event more than thirty (30) days prior to the Effective Time), determined
using the same principles and assumptions used by Provant in its preparation of
its pro forma financial statements contained in the Registration Statement.
1.9 "Code" means the Internal Revenue Code of 1986, as amended to date.
1.10 "Commission" means the Securities and Exchange Commission.
1.11 "Company Disclosure Schedule" means the Disclosure Schedule
provided by the Company and attached hereto and incorporated herein by this
reference.
1.12 "Company Option" means an option to purchase Shares, whether or not
vested or exercisable as of the applicable time.
1.13 "DGCL" means the Delaware General Corporation Law.
1.14 "1998 EBIT" means the earnings before interest and taxes of the
Company for the period beginning July 1, 1997 and ending at the Effective Time
and of the Surviving Corporation for the period beginning at the Effective Time
and ending June 30, 1998 determined in accordance with the Instructions for
Determination of EBIT attached hereto as Exhibit 1; provided, that if the
Effective Time is after June 30, 1998, then 1998 EBIT shall consist solely of
the earnings before interest and taxes of the Company (determined as set forth
above) for the period beginning July 1, 1997 and ending June 30, 1998.
1.15 "Effective Time" means such time as the Certificate of Merger is
filed with the Secretary of State of the State of New Jersey in accordance with
Section 00-00-000 of the NJBCA or with the Secretary of State of the State of
Delaware in accordance with Section 252 of the DGCL, whichever is later, unless
Acquisition and the Company agree that a later time shall be the Effective Time,
in which case such time shall be specified in the Certificate of Merger.
1.16 "Employment Contracts" mean the employment agreements in the form
attached hereto as Exhibits 2A and 2B.
1.17 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.18 "Financial Condition" means that, using the same principles and
assumptions used by Provant in the preparation of its pro forma financial
statements contained in the Registration Statement, the Company's Closing Net
Worth is not less than $725,000 (the "Minimum Net Worth"), the Company's pro
forma revenues for the 12 months ended June 30, 1997 are not less than $3
million, the Company's pro forma earnings before interest and taxes for the 12
months ended June 30, 1997 are not less
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than $800,000, the Company's projected pro forma revenues (as determined in good
faith by Provant) for the 12 months ended June 30, 1998 are not less than $4.1
million and the Company's projected 1998 EBIT (as determined in good faith by
Provant) is not less than $1.2 million.
1.19 "Financial Statements" means the financial statements of the
Company attached hereto as Exhibit 3, consistent in form and substance with the
requirements of Regulation S-X of the Commission under the Securities Act,
consisting of (a) Balance Sheets at June 30, 1997 and 1996, and at September 30,
1997; (b) Statements of Income for the periods ending June 30, 1997, 1996 and
1995, and ending September 30, 1997; (c) Statements of Stockholders' Equity at
June 30, 1997, 1996, 1995 and 1994, and at September 30, 1997; (d) Statements of
Cash Flow for the periods ending June 30, 1997, 1996 and 1995, and ending
September 30, 1997; and (e) notes to the foregoing.
1.20 "First Accountants" means the firm of independent public
accountants then regularly employed by Provant.
1.21 "Fraction" means that fraction which has one as its numerator and
which has, as its denominator, the pro forma number of Shares outstanding on a
fully diluted basis as of immediately prior to the Effective Time, assuming the
exercise or conversion of all then-outstanding Company Options, warrants and
other instruments exercisable for or convertible into Shares (whether or not
then currently exercisable or convertible).
1.22 "IPO" means the initial underwritten public offering of shares of
Provant Common Stock.
1.23 "IPO Price" shall mean the price at which shares of Provant Common
Stock are sold to the public in the IPO.
1.24 "Investment Letter" means an investment letter in the form attached
hereto as Exhibit 4.
1.25 "Merger Stock" means the shares of Provant Common Stock exchanged
for Shares pursuant to Section 2 .7(c) and 2.8.
1.26 "NJBCA" means the New Jersey Business Corporation Act.
1.27 "Non-Competition and Non-Disclosure Agreement" means a
non-competition and non-disclosure agreement in the form attached hereto as
Exhibit 5.
1.28 "Prospectus" means the prospectus relating to the IPO first filed
with the Commission pursuant to Rule 424(b) and Rule 430A of the rules and
regulations of the Commission under the Securities Act or (if no such filing is
required) as included in the Registration Statement and, in the event of any
supplement or amendment to
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such prospectus after the date the Registration Statement becomes effective
under the Securities Act, such prospectus as so supplemented or amended from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment.
1.29 "Provant Disclosure Schedule" means the Disclosure Schedule
prepared by Provant and attached hereto and incorporated herein by this
reference.
1.30 "Provant Common Stock" means the shares of Common Stock, $0.01 par
value, of Provant.
1.31 "Registration Statement" means the registration statement on Form
S-1, including the related preliminary prospectus, to be filed with the
Commission in connection with the IPO, including all exhibits and financial
statements, in the form in which it becomes effective under the Securities Act
and, in the event of any amendment thereto after the effective date of any such
registration statement, such registration statement as so amended from and after
the effectiveness of such amendment.
1.32 "Second Accountants" means an accounting firm of national stature,
jointly selected by Provant and the Stockholders, that is not then employed by
Provant, either Stockholder or American Business Partners LLC ("ABP") (or any of
their respective affiliates) and that was not employed by the Company or ABP
during the two-year period immediately preceding the Effective Time; provided,
however, if the parties cannot jointly agree upon the Second Accountants, the
Stockholders (collectively) and Provant shall each designate one accounting firm
(which shall be of national stature but which may be employed or have been
employed by such party or its affiliates), and the two accounting firms so
designated shall jointly select a third accounting firm, meeting the criteria
set forth in the first clause of this sentence, to serve as the Second
Accountants.
1.33 "Securities Act" means the Securities Act of 1933, as amended.
1.34 "Share" means a share of Common Stock, $.__ par value per share, of
the Company, and "Shares" means all of such shares.
1.35 "Surviving Corporation" means the corporation that survives the
Merger.
1.36 "Provant Option" means an option to purchase shares of Provant
Common Stock, granted under the Plan to be established by Provant pursuant to
Section 6.11.
1.37 "Underwriter" means, collectively, the managing underwriters of the
IPO.
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1.38 "Underwriters' Discount" means the discount at which the
Underwriter purchases the Provant Common Stock in the IPO, but in no event more
than 7.0% of the IPO Price.
2. THE MERGER
2.1 THE MERGER. The Merger shall occur at the Effective Time upon the
terms and subject to the conditions hereof and in accordance with the NJBCA and
the DGCL. Following the Merger, Acquisition shall continue as the Surviving
Corporation and be a subsidiary of Provant, and the separate corporate existence
of the Company shall cease.
2.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver
of all conditions to the Merger, the parties (a) shall cause a duly executed
certificate of merger (the "Certificate of Merger") with respect to the Merger
to be filed and recorded in accordance with Section 14A:10-4.1 of the NJBCA to
be filed and recorded in accordance with Section 252 of the DGCL and (b) shall
take all such further actions as may be required by law to make the Merger
effective. The Merger shall be effective at the Effective Time. Before the
filing of the Certificate of Merger, a closing (the "Closing") will be held on
the date the IPO closes (or such earlier date as the parties may agree) at the
offices of Xxxxxx, XxXxxxxxx & Fish, LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx (or such other place as the parties may agree) for the purpose of
confirming all the foregoing.
2.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 14A:10-6 of the NJBCA and Sections 259, 260 and 261 of the DGCL.
2.4 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(2)(D) of the Code and that
this Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and the By-Laws of Acquisition, in each case as in effect at the
Effective Time, shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation, except that the name of the Surviving Corporation shall
be the name of the Company or such other name as Provant may designate.
2.6 DIRECTORS AND OFFICERS. At the Effective Time, the Board of
Directors and officers of the Surviving Corporation shall be as set forth on
Exhibit 6, and each such person shall hold office until his or her respective
successor is duly elected or appointed and qualified.
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2.7 CONVERSION OF STOCK.
At the Effective Time:
(a) Each share of Acquisition that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
without change.
(b) All Shares held in the treasury of the Company immediately prior to
the Effective Time shall be cancelled, without the payment of any consideration
therefor.
(c) Each other Share which is outstanding immediately prior to the
Effective Time shall be converted without any action on the part of the holder
thereof into and be exchangeable for:
(i) that number of shares of Provant Common Stock
determined by multiplying the Fraction times the number
obtained after (A) dividing $4.0 million by the IPO Price and
(B) subtracting from the quotient obtained pursuant to clause
(A) the number obtained by dividing $1.2 million by the IPO
Price net of underwriters' discount,
(ii) cash equal to the Fraction times the sum of (X)
$1.2 million, plus (Y) the excess, if any, of the Company's
Closing Net Worth over the Minimum Net Worth, and
(iii) the right to receive that number of Additional
Shares determined as provided in Section 2.8.
Provant shall not issue any fractional share of Provant Common Stock; in lieu of
issuing a fractional share, Provant shall make a cash payment in accordance with
Section 2.9. Notwithstanding the foregoing, which quantifies the merger
consideration to be received by the Stockholders in the aggregate, the
allocation of merger proceeds between the Stockholders and among the Shares
shall be as indicated on Schedule 2.7.
2.8 RIGHT TO RECEIVE ADDITIONAL SHARES.
(a) Promptly following June 30, 1998 (but in no event later than
October 15, 1998), Provant will determine 1998 EBIT.
(i) In the event 1998 EBIT is $800,000 or less, no
Additional Shares shall be issued in respect of the Shares.
(ii) In the event 1998 EBIT is greater than $800,000
but less than $1.1 million, there shall be issued in respect
of each Share that number of Additional Shares determined by
(A) multiplying $2 million by a fraction, the numerator of
which shall be the amount by which
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1998 EBIT exceeds $800,000 and the denominator of which shall
be $300,000, (B) dividing the product obtained pursuant to
clause (A) by the IPO Price, and (C) multiplying the quotient
obtained pursuant to clause (B) by the Fraction.
(iii) In the event 1998 EBIT equals or exceeds $1.1
million, there shall be issued in respect of each Share that
number of Additional Shares determined by multiplying the
Fraction times the quotient obtained by dividing $2 million by
the IPO Price.
Provant shall not issue any fractional share of Provant Common Stock; in lieu of
issuing a fractional share, Provant shall make a cash payment in accordance with
Section 2.9.
(b) No later than October 15, 1998, Provant shall deliver to each
Stockholder a statement showing in reasonable detail Provant's computation of
1998 EBIT, together with a stock certificate representing any Additional Shares
and a check in payment for any fractional Additional Share to which such
Stockholder may be entitled pursuant to subsection (a). Provant shall maintain,
and shall cause the Surviving Corporation to maintain, complete books and
records necessary for the proper computation of 1998 EBIT. The Stockholders,
acting unanimously, shall have the right at their expense, through an
independent certified public accountant reasonably acceptable to Provant, to
audit such books and records and the books and records of the Company solely for
the purpose of satisfying the accuracy of the computation of 1998 EBIT made by
Provant, and the Company and Provant shall cooperate fully in all reasonable
respects with any such audit. In no event shall the Stockholders, or either of
them, have the right to conduct more than one such audit. If the Stockholders do
not unanimously elect within 90 days of delivery of the statement of Provant
referred to in this subsection (b) to cause an audit of the books and records of
the Surviving Corporation as provided in this subsection (b), the Stockholders
shall be deemed to have agreed that such statement was correct in all respects.
(c) Any dispute as to the correct computation of 1998 EBIT shall be
referred to the First Accountants for determination. If the Stockholders do not
unanimously elect to dispute the First Accountants' determination of 1998 EBIT
within 30 days following the delivery thereof to the Stockholders, such
determination shall be final, binding and conclusive and shall not be subject to
challenge by Provant or any Stockholder, and in such event the fees and expenses
of the First Accountants shall be borne by Provant. In the event the
Stockholders do unanimously elect within such 30 day period to dispute the
determination of the First Accountants, the Stockholders shall specify the
amount (in dollars) that they contend to be the correct 1998 EBIT (the
Stockholders' "EBIT Position"), and the final calculation of 1998 EBIT shall be
referred to the Second Accountants. Absent manifest error or willful misconduct,
the determination of the Second Accountants shall be final, binding and
conclusive and shall not be subject to challenge by Provant or any Stockholder.
In the event the
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calculation of 1998 EBIT is referred to the Second Accountants, the fees and
expenses of both the First Accountants and the Second Accountants shall be borne
by that party (i.e., the Stockholders, jointly and severally, or Provant) whose
EBIT Position is furthest, in gross dollars, from the 1998 EBIT as finally
determined by the Second Accountants. For purposes of the preceding sentence,
Provant's "EBIT Position" shall be deemed to be the amount determined by the
First Accountants to be the 1998 EBIT. The parties recognize that in making such
determinations, each such firm of accountants will be performing a function
separate and distinct from their audit function, if any, and shall be entitled
to the immunities, rights and discretion of arbitrators in general. Any issuance
of Additional Shares (or cash in lieu of fractional Additional Shares) which is
finally determined to be due to the Stockholders in accordance with this
subsection (c) shall be made by Provant (i) if based on the determination of the
First Accountants, within 10 days after such determination becomes final, and
(ii) if based on the determination of the Second Accountants, within 10 days
after Provant receives notice of such determination, if Provant is responsible
for the fees and expenses of the accountants pursuant to this Section, and
within 10 days after the Stockholders have paid the fees and expenses of the
accountants, if the Stockholders are responsible for such fees and expenses
pursuant to this Section. In the event the 1998 EBIT has not been finally
determined as of the date one year following the Effective Time, or the 1998
EBIT has been finally determined and Additional Shares are due to be issued but
have not been issued to the Stockholders as of such date because the
Stockholders are obligated to pay but have not yet paid the fees and expenses of
the First and Second Accountants, then on or before such date Provant shall
issue and place into escrow, with an institutional escrow agent reasonably
selected by Provant, the number of Additional Shares that would be issued if the
Stockholders' EBIT Position were determined to be the actual 1998 EBIT (or, if
the 1998 EBIT has been finally determined, the actual number of Additional
Shares to be issued). Such shares shall be held in escrow pending final
determination of 1998 EBIT, upon which the final number of Additional Shares, if
any, shall be released from escrow to the Stockholders and any escrowed shares
not distributed as Additional Shares shall be released to the Company. The
expenses of the escrow agent will be allocated in the same manner as the
expenses of the First Accountants and Second Accountants, as set forth above.
(d) The Stockholders acknowledge and agree that Provant and the
Surviving Corporation shall be free to pursue their respective business goals
and that 1998 EBIT may be affected thereby. Notwithstanding the foregoing,
Provant agrees that it will take no action and adopt no policy (and will not
cause the Surviving Corporation to take any action or adopt any policy) during
the period from the Effective Time through June 30, 1998 that a
majority-in-interest of the Stockholders have reasonably asserted (in advance of
or contemporaneously with such action or adoption), in good faith and in
writing, can reasonably be expected to result (directly or indirectly) in a
reduction of 1998 EBIT.
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(e) The right of the Stockholders to receive Additional Shares and/or
cash payment for fractional shares may not be transferred or assigned except by
operation of law or pursuant to the laws of descent and distribution.
(f) If, subsequent to the IPO and prior to final determination of the
number of Additional Shares, if any, issuable pursuant to this Section 2.8, the
outstanding shares of Provant Common Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within said period, the IPO Price shall be correspondingly and appropriately
adjusted.
2.9 EXCHANGE OF AND PAYMENT FOR SHARES AS OF EFFECTIVE TIME.
(a) As soon as practicable after the Effective Time and after surrender
to Provant of any certificate which prior to the Effective Time shall have
represented any Shares, subject to the provisions of paragraphs (c) and (d) of
this Section 2.9 and to the provisions of Article 8, Provant shall cause to be
distributed to the person in whose name such certificate shall have been
registered certificates registered in the name of such person representing the
shares of Provant Common Stock into which any shares previously represented by
the surrendered certificate shall have been converted at the Effective Time and
a check payable to such person representing the payment of cash due such person
by reason of the Merger including cash in lieu of fractional shares determined
in accordance with paragraph (g) of this Section 2.9. Until surrendered as
contemplated by the preceding sentence, each certificate which immediately prior
to the Effective Time shall have represented any Shares shall be deemed at and
after the Effective Time to represent only the right to receive upon such
surrender the certificates and payment contemplated by the preceding sentence
and by Section 2.8.
(b) No dividends or other distributions declared after the Effective
Time with respect to Provant Common Stock shall be paid to the holder of any
unsurrendered certificate representing Shares until the holder thereof shall
surrender such certificate in accordance with this Section 2.9. After the
surrender of such certificate in accordance with this Section 2.9, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Provant Common Stock represented by such
certificate.
(c) No certificate representing Provant Common Stock shall be issued to
any Person, and no Person shall be treated as a holder of shares of Provant
Common Stock constituting Merger Stock for any purpose whatsoever (including
without limitation any right to vote the shares of Provant Common Stock into
which such Person's Shares are to be converted) unless and until such Person has
executed and delivered to Provant an Investment Letter.
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(d) If any cash or certificate representing shares of Provant Common
Stock is to be paid to or issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to Provant any transfer or other
taxes required by reason of the issuance of a certificate representing shares of
Provant Common Stock in any name other than that of the registered holder of the
certificate surrendered, or otherwise required, or shall establish to the
satisfaction of Provant that such tax has been paid or is not payable.
(e) All Provant Common Stock and cash, including cash in lieu of
fractional shares, shall be deemed, when paid or issued hereunder, to have been
paid or issued, as the case may be, in full satisfaction of all rights
pertaining to the Shares.
(f) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing such shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for cash or
certificates representing the shares of Provant Common Stock into which they
were converted, or both, as provided herein.
(g) Notwithstanding any other provision of this Agreement, no
certificates or scrip representing fractional shares of Provant Common Stock
shall be issued upon the surrender for exchange of certificates which prior to
the Effective Time shall have represented any Shares, no dividend or
distribution of Provant shall relate to any fractional share and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
shareholder of Provant. In lieu of any fractional shares, there shall be paid to
each holder of Shares who otherwise would be entitled to receive a fractional
share of Provant Common Stock an amount of cash equal to the amount of such
fraction times the IPO Price.
(h) In the event any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Stockholder claiming such certificate to be lost, stolen or destroyed and, if
required by Provant or its stock transfer agent, the posting by such Stockholder
of a bond in such amount as Provant or its stock transfer agent may direct as
indemnity against any claim that may be made against it with respect to such
certificate, Provant will issue in exchange for such lost, stolen or destroyed
certificate the Merger Stock and cash deliverable in respect thereof.
2.10 RESERVED.
3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE STOCKHOLDERS
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The Company and the Stockholders represent and warrant to Provant and
Acquisition that, except as expressly provided in the Company Disclosure
Schedule by specific reference to a Section of this Article 3:
3.1 ORGANIZATION AND AUTHORITY. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
New Jersey and has all requisite corporate power and authority to conduct its
business and own its properties as now conducted and owned. The Company is duly
qualified or licensed and in good standing as a foreign corporation, and has at
all times when legally required been so qualified or licensed and in good
standing, in those states listed on the Company Disclosure Schedule, which are
the only jurisdictions in which the property owned, leased or operated by it or
the nature of the business conducted by it would cause a failure to be so
qualified or licensed to have a material adverse effect on the business of the
Company. The Company has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and perform its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Company and the
performance of the Company's obligations hereunder have been duly and validly
authorized by a unanimous vote of the Board of Directors of the Company and the
Stockholders, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated or to perform the Company's obligations hereunder. This Agreement
has been duly and validly executed and delivered by the Company and constitutes
a legal, valid and binding obligation of the Company enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally.
3.2 CAPITALIZATION OF THE COMPANY; NO SUBSIDIARIES. The Company has
authorized capital consisting of 2.,500 shares of Common Stock, no par value, of
which no shares are held in the Company's treasury. As of the date hereof, there
are 100 issued and outstanding Shares. As of immediately prior to the Effective
Time, the Shares issued and outstanding shall consist solely of the foregoing
number plus the number of Shares, if any, issued between the date hereof and the
Effective Time upon the exercise or conversion of Company Options and other
instruments (in each case solely if existing on the date hereof and disclosed on
the Company Disclosure Schedule pursuant to Section 3.3), which exercise or
conversion and which issuance are in accordance with the terms of such
instruments as in effect on the date hereof. All of the Shares are duly
authorized, validly issued, fully paid and non-assessable and are owned of
record and beneficially by the Stockholders in the respective amounts listed on
the Company Disclosure Schedule. The Company has no other authorized class of
capital stock other than the Common Stock. The Company does not own and has not
owned any shares of capital stock or other securities of, or any other interest
in, nor does it control or has it controlled, directly or indirectly, any other
corporation, association, joint venture, partnership, or other business
organization. The Shares have been issued and sold in full compliance with all
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applicable Federal and state securities laws. No holder of Shares has any
dissenting shareholder or appraisal rights with regard to the Merger.
3.3 NO RIGHTS TO PURCHASE OR REGISTER STOCK. No person, firm, or
corporation has any written or oral agreement, option, warrant, call,
understanding, commitment, or any right or privilege capable of becoming a
binding agreement, for either the purchase of any Shares or the acquisition of
shares of any other class of capital stock of the Company, and the Company has
not otherwise agreed to issue or sell any shares of its capital stock and has no
obligation to register any of the Shares under the Securities Act. The Company
is not obligated directly, indirectly or contingently to purchase any Shares.
3.4 NAME. The Company has not had any other name and does not conduct or
operate, and has not heretofore conducted or operated, its business under any
name other than its current name.
3.5 NO VIOLATION OF EXISTING AGREEMENTS. The execution and delivery of
this Agreement, together with all documents and instruments contemplated herein,
the consummation by the Company of the transactions contemplated hereby and
thereby, the performance by the Company of its obligations hereunder and
thereunder and compliance with the terms, conditions and provisions hereof and
thereof by the Company do not (i) contravene any provisions of the Company's
Certificate of Incorporation or By-Laws; (ii) conflict with or result in a
breach of or constitute a default (or an event that might, with the passage of
time or the giving of notice or both, constitute a default) or give rise to any
right to terminate, cancel or accelerate or to any loss of benefit under any of
the material terms, conditions, or provisions of any indenture, mortgage, loan,
or credit agreement or any other agreement or instrument to which the Company is
a party or by which it or its assets may be bound or affected; (iii) violate or
constitute a material breach of any decision, judgment, or order of any court or
arbitration board or of any governmental department, commission, board, agency,
or instrumentality, domestic or foreign, by which the Company is bound or to
which it is subject; or (iv) violate any applicable law, rule, or regulation to
which the Company or any of its property is bound.
3.6 NO CONSENTS OR APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent or
approval of, or filing and expiration of a period for disapproval by, any
governmental authority is required for the Company to consummate the
transactions contemplated by this Agreement, except for filing the Certificate
of Merger pursuant to the DGCL and the NJBCA. Notwithstanding the immediately
preceding sentence, the Company and the Stockholders make no representation or
warranty regarding whether any filing is required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, but the Company and the
Stockholders do represent and warrant that (a) the aggregate gross assets of the
Company plus those of any direct or indirect legal or beneficial holder of 50%
or more of the Shares were less than $100 million as of September 30, 1997, and
(b) the aggregate revenues of the Company plus those of any
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direct or indirect legal or beneficial holder of 50% or more of the Shares were
less than $100 million for the Company's most recently completed fiscal year.
3.7 FINANCIAL STATEMENTS.
(a) The Financial Statements fairly present the financial position of
the Company as of their respective dates, and the results of operations and cash
flows for the periods presented therein, all in conformity with generally
accepted accounting principles applied on a consistent basis, except as
otherwise noted therein.
(b) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and with
statutory accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth or reserved
against in the Balance Sheet, the Company (a) did not have as of the Balance
Sheet Date any material liability or obligation of any nature, whether accrued,
absolute, contingent, or otherwise and whether due or to become due, including
without limitation liabilities that may become known or arise after the date
hereof and which relate to transactions entered into or any state of facts
existing on or before the Balance Sheet Date and which would be required under
generally accepted accounting principles to be shown in such balance sheet or
referenced in the notes thereto, and (b) has not incurred since the Balance
Sheet Date any such liability or obligation except in the ordinary course of
business. Without limiting the foregoing, and except as specifically reserved
against in the Balance Sheet or in the calculation of the Closing Net Worth, the
Company has no material liability or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, to any government entity for any adjustment
or reimbursement of any amount previously paid to the Company by such entity
under any agreement relating to the provision of any goods or services by the
Company.
3.9 CONDUCT OF BUSINESS SINCE THE BALANCE SHEET DATE. Since the Balance
Sheet Date, the Company has not taken (or suffered the occurrence of) any of the
following actions or events, agreed to take any of the following actions, or
taken any action that would otherwise result in any of the following (in each
case except directly in connection with this Agreement):
(a) entered into any transaction, agreement, or commitment other than
in the ordinary course of business; or
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(b) entered into any transaction, agreement, or commitment, suffered
the occurrence of any event or events, or experienced any change in financial
condition, business, results of operations, prospects, or otherwise, (i) that
has interfered or is reasonably likely to interfere with the normal and usual
operations of the Company's business or its business prospects in any material
respect or (ii) that, singly or in the aggregate, has resulted or is reasonably
likely to result in a material adverse change in the financial condition,
assets, liabilities, earnings, business, or business prospects of the Company;
or
(c) incurred any indebtedness for borrowed money, or assumed,
guaranteed, endorsed, or otherwise become responsible for the obligations of any
other individual, partnership, firm, or corporation (except to endorse checks
for collection for deposit in the ordinary course of business), or made any loan
or advance to any individual, partnership, firm, or corporation; or
(d) mortgaged, pledged, or otherwise encumbered, or, other than in the
ordinary course of business, sold, transferred, or otherwise disposed of, any of
the properties or assets of the Company, including any cancelled, released,
hypothecated, or assigned indebtedness owed to the Company, or any claims held
by the Company, except for purchase money mortgages arising in the ordinary
course of business and statutory liens arising or incurred in the ordinary
course of business with respect to which the underlying obligations are not
delinquent; or
(e) made any investment of a capital nature or entered into a
commitment for such investment either by purchase of stock or securities,
contributions to capital, property transfer, or otherwise, or by the purchase of
any property or assets of any other individual, partnership, firm, or
corporation; or
(f) declared, set aside, or paid any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in respect of
the capital stock of the Company, or redeemed or otherwise acquired, directly or
indirectly, any shares of capital stock of the Company, excepting only
dividends, distributions and redemptions that have not resulted and will not
result, directly or indirectly, in the Company not satisfying the Financial
Condition; or
(g) paid any long-term liability, otherwise than in accordance with its
terms; or
(h) paid any bonus compensation to any officer, director, shareholder,
or employee of the Company or otherwise increased the compensation paid or
payable to any of the foregoing; or
(i) sold, assigned, or transferred any trademarks, trade names, logos,
copyrights, formulae, or other intangible assets; or
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(j) contracted with or committed to any third party (i) to sell any
capital stock of the Company, (ii) to sell any material assets of the Company
other than in the ordinary course of business, (iii) to effect any merger,
consolidation, or other reorganization of the Company, or (iv) to enter into any
agreement with respect thereto; or
(k) incurred or paid any expenses or fees of counsel, accountants, or
consultants for services in preparation for or in connection with this Agreement
or the transactions contemplated hereunder.
3.10 TITLE TO ASSETS. The Company owns no real property. The Company has
good and clear record and marketable title to all properties owned by it,
including, without limitation, all property reflected in the Balance Sheet,
other than property disposed of in the ordinary course of business subsequent to
the Balance Sheet Date (none of such dispositions being materially adverse),
free and clear of any mortgage, lien, pledge, charge, claim or encumbrance, or
rights, title and interest in others, except (a) as reflected in the Balance
Sheet, or as specified in the notes thereto, (b) the lien of taxes not yet due
or payable or being contested in good faith by appropriate proceedings and as to
which appropriate reserves have been set aside in the Balance Sheet, and (c)
such imperfections of title and encumbrances, if any, as do not materially
detract from the value or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations.
3.11 INTELLECTUAL PROPERTY.
(a) The Company Disclosure Schedule contains a correct and complete
list of all copyrights, copyright registrations and copyright applications,
trademark registrations and applications for registration, patents and patent
applications, trademarks, service marks and trade names used in the Company's
business as presently conducted or contemplated and all licenses, assignments
and releases of the intellectual property rights of others in material works
embodied in its products. There is (i) no existing or, to the Company's
knowledge, threatened infringement, misuse or misappropriation of Proprietary
Information (as hereinafter defined) by others and (ii) no pending or threatened
claim by the Company against others for infringement, misuse or misappropriation
of any patent, patent application, invention disclosure, trademark, trade name,
service xxxx, trade secret, technology, technique, know-how, or copyright owned
by the Company or used in its business as presently conducted or contemplated
(the "Proprietary Information"). The Proprietary Information is sufficient to
carry on the business of the Company as presently conducted or contemplated, and
the Company has the right to use, free and clear of claims or rights of others,
all Proprietary Information required for or incident to its products or services
or its business as presently conducted or contemplated. The Company is the
exclusive owner of all right, title and interest in the Proprietary Information
as purported to be owned by the Company, and such Proprietary Information is
valid and in full force and effect. Neither the present nor contemplated
business activities or products of the Company infringe, misuse or
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misappropriate any patent, trademark, trade name, service xxxx, trade secret,
copyright or other intellectual property right of others, and to the Company's
knowledge no one is claiming nor is it anticipated that anyone will claim any
such infringement, misuse or misappropriation. To the knowledge of the Company,
the Proprietary Information is presently valid and protectible and is not part
of the public domain or knowledge, nor, to the knowledge of the Company, has any
of it been used, divulged or appropriated for the benefit of any person other
than the Company to the detriment of the Company. The Company has not granted to
any person any license or other right to use in any manner any of the
Proprietary Information, whether or not requiring the payment of royalties. The
Company has no obligation still outstanding to compensate other persons for the
use of any Proprietary Information or for the sale of any service or product
comprising or derived from Proprietary Information. No university, government
agency (whether federal or state) or other organization which sponsored research
and development conducted by the Company has any claim of right to or ownership
of or other encumbrance upon the Proprietary Information.
(b) The Company has taken all reasonable measures to protect and
preserve the security, confidentiality and value of the Proprietary Information,
including its trade secrets and other confidential information. All present and
previous officers, employees and consultants of or to the Company have executed
and delivered to and in favor of the Company an agreement regarding the
protection of confidential and proprietary information and the assignment to the
Company of all intellectual property rights arising from the services performed
for the Company by such persons in the forms attached to the Company Disclosure
Schedule. To the Company's knowledge, no employee or consultant of the Company
has used any trade secrets or other confidential information of any other person
in the course of his or her work for the Company. To the Company's knowledge,
the Company is not making unlawful use of any confidential information or trade
secrets belonging to any past or present employees of the Company. Neither the
Company nor, to the knowledge of the Company, any of the Company's employees or
consultants have any agreements or arrangements with former employers of such
employees or consultants relating to confidential information or trade secrets
of such employers or are bound by any consulting agreement relating to
confidential information or trade secrets of another entity. The activities of
the Company's employees on behalf of the Company do not violate any agreements
or arrangements known to the Company which any such employees have with former
employers or any other entity to whom such employees may have rendered
consulting services.
3.12 OBLIGATIONS TO OR FROM AFFILIATES.
(a) All transactions between the Company and any Stockholder, officer
or director of the Company, or any Affiliate (as defined below) of any
Stockholder, officer or director of the Company, entered into on or after
January 1, 1993 have been conducted on an arm's-length basis on terms no
different than would be obtained if the transaction had been between the Company
and an unrelated party. Except for
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debts or other outstanding obligations reflected on the Balance Sheet, there are
no debts or other obligations of the Company to, or to the Company from, any
Stockholder or any officer or director, or any Affiliate of a Stockholder,
officer or director of the Company. As used herein, "Affiliate" of a
Stockholder, officer or director means any member of the immediate family of
such person or any entity in which such person or any such family member is an
officer or owner of more than five percent of beneficial interest in the
outstanding equity securities.
(b) The Company Disclosure Schedule sets forth all information that
would be required to be provided under Item 404 of Regulation S-K of the
Commission under the Securities Act if a registration statement on Form S-1 were
filed by the Company with the Commission on the date hereof.
3.13 MATERIAL CONTRACTS. The Company Disclosure Schedule lists all
material leases, contracts, instruments, agreements or commitments (whether
written or oral) relating to the conduct of the business of the Company (the
"Material Company Contracts"). The Company has delivered to Provant true and
correct copies of each written Material Company Contract and a written
description, accurate in all material respects, of each oral arrangement so
listed. Without limiting the generality of the foregoing, the aforesaid list
includes all contracts, agreements and instruments of the following types to
which the Company is a party:
(a) labor union contracts, together with a list of all labor unions
representing or, to the Company's knowledge, attempting to represent employees
of the Company;
(b) pension, retirement, deferred compensation, death benefit, profit
sharing, bonus or other employee incentive, fringe benefit, stock purchase,
stock option, hospitalization or insurance plans or arrangements (and grant
certificates or other documents issued thereunder) or vacation pay, severance
pay and other similar benefit arrangements for officers, employees or agents,
together with a list of all pensioned employees or obligations to provide any
pensions hereafter other than pursuant to the plans hereinbefore in this item
described;
(c) employment contracts or agreements, consulting agreements,
agreements providing for termination or severance benefits, non-competition
agreements, non-disclosure agreements, contracts for professional personal
services, contracts with other persons engaged in sales or distributing
activities, and advertising contracts;
(d) written or oral agreements, understandings and arrangements of any
kind with any officer, director, employee, shareholder or agent of the Company
relating to present or future compensation or other benefits available to such
person or otherwise, together with a list of the names and current annual salary
rates of all present officers and employees of the Company whose current salary
rate is $25,000 or more and any bonuses paid or payable to each such person for
the 1996 fiscal year;
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(e) indentures, loan agreements, notes, security agreements, mortgages,
conditional sales contracts, leases of real or personal property, contracts for
the purchase or sale of real or personal property, and agreements for financing;
(f) property, casualty, crime, directors and officers, and other forms
of insurance;
(g) all bank accounts and safety deposit boxes identifying all
authorized signatories, together with a list of all effective powers of attorney
granted by the Company to anyone;
(h) agreements, contracts or other arrangements to which the Company is
a guarantor, surety or endorser;
(i) contracts, agreements, commitments, arrangements or understandings
providing for the purchase or sale of all or substantially all of the Company's
requisites of a particular product from a single supplier or to a single
customer;
(j) contracts, agreements, commitments, arrangements or understandings
which limit the freedom of the Company from competing in any line of business or
with any person or entity;
(k) license agreements (as licensor or licensee);
(l) leases of real and personal property with a term of more than one
year (regardless of whether the Company is lessor or lessee); and
(m) contracts, agreements, instruments, arrangements or understandings
which have not been included in items (a) through (l) above involving payment by
or to the Company of more than $50,000 or not terminable without penalty or
otherwise materially affecting the assets, financial condition, properties or
business of the Company.
All of the Material Company Contracts are in full force and effect. Except to
the extent that a material adverse effect on the Company's financial condition,
assets, liabilities, earnings, business or prospects would not result if the
following were not true: (A) the Company and each other party to each of the
Material Company Contracts have performed all the obligations required to be
performed by them to date, have received no notice of default and are not in
default (with due notice or lapse of time or both) under any of the Material
Company Contracts; (B) the Company has no present expectation or intention of
not fully performing all of its obligations under any of the Material Company
Contracts, and the Company has no knowledge of any breach or anticipated breach
by any other party to any of the Material Company Contracts; (C) there exists no
actual or, to the knowledge of the Company, threatened termination, cancellation
or limitation of the business relationship of the Company with any party to any
Material Company Contract; and
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(D) consummation of the transactions contemplated hereby and performance by the
Company of its obligations hereunder shall not require the consent or permission
of any party to any Material Company Contract or permit any party to terminate,
suspend or alter the terms of any Material Company Contract.
3.14 LITIGATION. There are no actions, suits, causes of action, claims,
litigation, arbitration, administrative hearings, or other form of proceedings
or disputes of any kind pending or, to the best knowledge of the Company,
threatened against the Company or involving, affecting, or relating to its
capacity to complete the transactions contemplated herein, the Company, or its
officers or directors (in their capacities as such), in any court, at law or in
equity, or before any arbitration board or any governmental department,
commission, board, bureau, agency, or instrumentality; nor has the Company been,
nor is it, subject to any orders, awards, fines, judgments, decrees, or
injunctions the effect of which in the aggregate would have a material adverse
effect on the business or financial position or prospects of the Company. The
Company does not know or have grounds to know of any basis for any such action,
suits, or other form of proceeding or disputes or of any governmental
investigation relating to the Company or its business.
3.15 TAXES.
(a) (i) All Tax Returns (as defined below) of, relating to or which
include the Company which are required to have been filed have been filed on a
timely basis with the appropriate authorities and all such Tax Returns are true,
correct and complete in all respects; (ii) all Taxes (as defined below) required
to have been paid by the Company (including amounts collected or withheld from
third parties required to have been paid over to the appropriate authorities)
have been paid in full on a timely basis to the appropriate authorities; and
(iii) all Taxes or other amounts required to have been collected or withheld by
the Company have been timely and properly collected or withheld.
(b) (i) No taxing authority has asserted in writing to the Company any
adjustment, deficiency, or assessment that could result in additional Tax for
which the Company is or may be liable; (ii) there is no pending audit,
examination, investigation, dispute, proceeding or claim for which the Company
has received notice relating to any Tax for which the Company is or may be
liable; (iii) no statute of limitations with respect to any Tax for which the
Company is or may be liable has been waived or extended; (iv) the due date of
any Tax Returns that the Company is required to file has not been extended; and
(v) Company is not a party to any Tax sharing or Tax allocation agreement,
arrangement or understanding.
(c) There are no liens on any of the assets of the Company which arose
in connection with any failure or asserted failure to pay any Tax, other than
liens for current Taxes not yet due and payable.
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(d) The Company is not a party to any contract, agreement, plan or
arrangement that, individually or collectively, could give rise to any payment
that would not be deductible by reason of Section 162, 280G or 404 of the Code.
(e) The Company has not been a member of an affiliated group filing a
consolidated federal income Tax Return, and the Company is not liable for the
Taxes of any person under Treasury Regulation 1.1502-6 (or any similar provision
of state, local, or foreign law) as transferee or successor, by contract or
otherwise.
(f) Copies of (i) any Tax examinations, (ii) extensions of statutory
limitations, (iii) the federal, state and local income Tax Returns and franchise
Tax Returns of the Company, and (iv) correspondence between the Company and all
taxing authorities for its last three (3) taxable years previously have been
furnished to Provant and such Tax Returns are true, correct and complete.
(g) The provision for Taxes, if any, shown on the Balance Sheet is
adequate to cover the aggregate liability of the Company arising out of facts or
circumstances occurring on or prior to the Balance Sheet Date for all Taxes.
(h) The Company has filed federal and state, and if applicable, local
Tax Returns for each period ending on or prior to the Effective Time.
(i) For purposes of this Section 3.15:
"Tax Returns" shall mean all returns, amended returns,
declarations, reports, estimates, information returns and statements regarding
Taxes which are or were filed or required to be filed under applicable law,
whether on a consolidated, combined, unitary or individual basis.
"Taxes" shall mean any federal, state, local, foreign or other
tax, fee, levy, assessment or other governmental charge, including without
limitation any income, franchise, gross receipts, property, sales, use, hotel,
bed, services, value added, withholding, social security, estimated, accumulated
earnings, alternative or add-on minimum, transfer, license, privilege, payroll,
profits, capital stock, employment, unemployment, excise, severance, stamp,
occupancy, customs or occupation tax, and any interest, additions to tax and
penalties in connection therewith.
3.16 ABSENCE OF MATERIAL EVENTS. Since January 1, 1997 there has not
been (a) any material adverse change in the business, affairs or prospects of
the Company nor, to the best of the Company's knowledge, are any such changes
threatened, anticipated or contemplated; (b) any actual or, to the Company's
knowledge, threatened, anticipated or contemplated damage, destruction, loss,
conversion, termination, cancellation, default or taking by eminent domain or
other action by governmental authority which has materially affected or may
hereafter materially affect the properties, assets, business affairs or
prospects of the Company; (c) any material and adverse pending or, to the
Company's knowledge, threatened,
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anticipated or contemplated dispute of any kind with any material customer,
supplier, source of financing, employee, landlord, subtenant or licensee of the
Company, or any pending or, to the Company's knowledge, threatened, anticipated
or contemplated occurrence or situation of any kind, nature or description which
is reasonably likely to result in any reduction in the amount, or any change in
the terms or conditions, of business with any material customer, supplier, or
source of financing; or (d) any pending, or to the Company's knowledge,
threatened, anticipated or contemplated occurrence or situation of any kind,
nature or description materially and adversely affecting the properties, assets,
business, affairs or prospects of the Company.
3.17 ABSENCE OF IMPROPER PAYMENTS. Since January 1, 1994 the Company:
(a) has not made any contributions, payments or gifts of its property to or for
the private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payments or gift is illegal under
the laws of the United States, any state thereof or any other jurisdiction
(foreign or domestic); (b) has not established or maintained any unrecorded fund
or asset for any purpose, or has made any false or artificial entries on its
books or records for any reason; (c) has not made any payments to any person
where the Company intended or understood that any part of such payment was to be
used for any other purpose other than that described in the documents supporting
the payment; or (d) has not made any contribution, or has reimbursed any
political gift or contribution made by any other person, to candidates for
public office, whether Federal, state or local, where such contribution would be
in violation of applicable law.
3.18 ERISA.
(a) None of the employee benefit plans maintained at any time by the
Company or the trusts (if any) forming part of such plans has engaged in a
prohibited transaction which could subject any such employee benefit plan or
trust to a material tax or penalty on prohibited transactions imposed under
Internal Revenue Code Section 4975 or ERISA.
(b) None of the employee benefit plans maintained at any time by the
Company which are employee pension benefit plans and which are subject to Title
IV of ERISA or the trusts that are part of such plans has been terminated so as
to result in a material liability of the Company under ERISA or the Code, nor
has any such employee benefit plan of the Company incurred any material
liability to the Pension Benefit Guaranty Corporation, other than for required
insurance premiums which have been paid or are not yet due and payable; neither
the Company nor any affiliate thereof has withdrawn, in either a complete or
partial withdrawal, from any multi-employer Plan resulting in any unpaid
withdrawal liability; the Company has made or provided for all contributions to
all such employee pension benefit plans which it maintains and which are
required by law or such plans as of the end of the most recent fiscal year under
each such plan; the Company has not incurred any accumulated funding deficiency
with respect to any such plan, subject to Section 412
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of the Code, whether or not waived; nor has there been any reportable event, or
other event or condition, which presents a material risk of termination of, or
liability with respect to, any such employee benefit plan by the Pension Benefit
Guaranty Corporation.
(c) The benefit liabilities under the employee pension benefit plans
which are subject to Title IV of ERISA, maintained by the Company, do not exceed
the current value of the assets of such employee benefit plans allocable to such
benefits, determined under the actuarial methods and assumptions that would
apply if such plans were terminated in accordance with ERISA and the Code.
(d) To the best of the Company's knowledge, each employee benefit plan
maintained by the Company has been administered in accordance with its terms in
all material respects and is in compliance in all material respects with all
applicable requirements of ERISA (if applicable) and other applicable laws,
regulations and rules. Each employee benefit plan maintained by the Company that
is intended to be "qualified" under Section 401(a) of the Code has received a
favorable determination letter of the Internal Revenue Service, which letter
remains in effect, and nothing has occurred since the date of such determination
that could adversely affect the qualification of such plan.
(e) As used in this Agreement, the terms "employee benefit plan",
"employee pension benefit plan", "multi-employer plan", "accumulated funding
deficiency", "reportable event", "benefit liabilities", "withdrawn" (including
its correlative forms "complete withdrawal" and "partial withdrawal") and
"accrued benefits" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transactions" shall have the meaning assigned to it in
Code Section 4975 and ERISA. Employee benefit plans "maintained by the Company"
include any such plan maintained, established or contributed to at any time by
the Company or any entity affiliated with or under common control with the
Company.
(f) The Company has no liability not disclosed on any of the Financial
Statements, contingent or otherwise, under any plan or program or the equivalent
for unfunded post-retirement benefits, including pension, medical and death
benefits, which liability would have a material adverse effect on the financial
condition of the Company.
3.19 LABOR MATTERS. A true and complete list of all of the Company's
officers, employees (the "Employees") and consultants (the "Consultants") and
their respective salaries, wages, other compensation, dates of employment, date
and amount of last salary or compensation increase, and positions has been
provided to Provant by the Company. There are no material disputes, employee
grievances, or disciplinary actions pending or, to the knowledge of the Company,
threatened by or between the Company and any of the Employees or Consultants.
With respect to the Employees and Consultants, the Company has complied in all
respects with all provisions of all laws relating to the employment of labor and
has no liability for any arrears of wages
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or taxes or penalties for failure to comply with any such law or for any
severance or termination payments of any type. None of the Consultants are or
were (while classified by the Company as Consultants) employees of the Company
for any purpose whatsoever. No employees of the Company are or ever have been
represented by a bargaining representative with respect to the Company, and no
election or proceedings relating to the labor relations of the Company is
pending or, to the best of the Company, knowledge, threatened. The Company has
not had any material union activity or had any material labor disruption or
material dispute with its employees of any kind, nature or description at any
time heretofore. All personnel policies and manuals of the Company are listed on
the Company Disclosure Schedule and true and complete copies thereof have been
provided to Provant. No Employee or Consultant shall have the right to receive
from the Surviving Corporation or Provant a severance payment or other payment
in the nature thereof in the event his or her employment is terminated by the
Surviving Corporation following the Merger, whether such right arises as a
matter of contract, past policy or understanding, by operation of law, or
otherwise.
3.20 PERMITS: COMPLIANCE WITH LAW. The Company possesses all franchises,
permits, licenses, certificates, approvals, and other authorizations ("Permits")
necessary to own or lease and operate its properties and to conduct its business
as now conducted, except for incidental Permits that would be readily obtainable
without undue burden in the event of any lapse, termination, cancellation, or
forfeiture or that if not obtained would not materially and adversely affect the
Company's business. All such material Permits are in full force and effect, and,
to the knowledge of the Company, no suspension or cancellation of any of them is
threatened, and no material Permits will be adversely affected by the
consummation of the Merger. The Company has not failed nor is it failing to
comply with any applicable law, rule, regulation, or order, where such failure
would have a material adverse effect on the Company's business, and there are no
proceedings pending or, to the Company's knowledge, threatened, nor has the
Company received any notice, regarding any such failure.
3.21 ENVIRONMENTAL MATTERS. The Company is, and to the Company's
knowledge all real property owned or otherwise occupied by the Company are and
have been at all times when so owned or occupied, in material compliance with
all applicable existing federal, state and local laws and regulations relating
to protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as hereinafter defined)
("Environmental Laws"), except, in each case, where such noncompliance, singly
or in the aggregate, would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company. No Hazardous Materials are stored, utilized or otherwise present
on any property owned or otherwise occupied by the Company, excepting only (x)
cleaning supplies and similar materials customarily used by businesses in the
Company's industry in quantities consistent with such use, and (y) petroleum
products that are used for heating (including water heating) in facilities
located on such property, none of which are
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stored in underground storage tanks, or that are present in vehicles located on
such property. There has not occurred any release of Hazardous Materials on,
under or affecting any real property during or prior to the period of the
Company's ownership, occupation or operation of such property (including its
participation in or exercise of any degree of control over the management of any
business located on such property). The term "Hazardous Material" means (a) any
"hazardous substance" as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended through the date hereof, (b)
any "hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended through the date hereof, (c) any petroleum or petroleum product, (d)
any polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law through the date hereof. For
purposes of this Section 3.21, real property owned by third parties but
"occupied" by the Company shall mean only that portion of such property as is
either leased by the Company or in fact otherwise physically occupied or
utilized by the Company. There is no alleged liability, or to the best knowledge
of the Company, potential liability (including, without limitation, alleged or
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or penalties) of the Company arising out of, based on or resulting from (i) the
presence or release into the environment of any Hazardous Material at any
location, whether or not owned by the Company or (ii) any violation or alleged
violation of any Environmental Law, which alleged or potential liability, singly
or in the aggregate, would have a material and adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company.
3.22 FURTHER ASSURANCES. The Company will use all commercially
reasonable efforts to have all present officers and directors of the Company
execute whatever minutes of meetings or other instruments and take whatever
action as may be necessary or desirable to effect, perfect or confirm of record
of otherwise, in the Surviving Corporation, full right, title and interest in
and to the business, properties and assets now conducted or owned by the
Company, free and clear of all restrictions, liens, encumbrances, rights, title
and interests in others (excepting only liens reflected on the Balance Sheet),
or to collect, realize upon, gain possession of, or otherwise acquire full
right, title and interest in and to such business, properties and assets, or to
carry out the intent and purposes of the transactions contemplated hereby and
the IPO.
3.23 CORPORATE RECORDS. The corporate record books of the Company are in
all material respects in good order, complete, accurate, up to date, with all
necessary signatures, and set forth all meetings and actions taken by the
shareholders and directors, and all votes of the shareholders or directors set
forth in certificates furnished to anyone at any time heretofore.
3.24 CONDITION OF ASSETS. All premises, fixtures and equipment owned or
used by the Company and material to its business have been properly maintained
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and are in good operating order and repair, free from known defects in
construction or design, sound and properly functioning (normal wear and tear
excepted), usable and not obsolete, and (to the Company's knowledge in the case
of leased property) in material compliance with all applicable zoning, building
and fire codes and all other applicable laws, rules, regulations and
requirements of governmental authorities and the fire insurance rating
association having jurisdiction.
3.25 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Company
shown or reflected on the Balance Sheet in the Financial Statements, less the
reserve for doubtful accounts in the amount shown on the Balance Sheet, are
valid and enforceable claims and subject to no set off or counterclaim. All of
the accounts receivable of the Company shown or reflected on the Balance Sheet
and as at December 31, 1997 (as reflected on the Company's balance sheet as of
such date, when and as delivered to Provant) will be collected in full within
150 days thereafter except to the extent of the reserve for doubtful accounts
shown on the Balance Sheet or posted on the books of the Company as of such
date. The reserve for doubtful accounts as at December 31, 1997 will not be in
excess of said reserve as shown on the Balance Sheet. The Company has no
accounts or loans receivable from any of its directors, officers or employees.
3.26 CHARTER DOCUMENTS. The Company has heretofore delivered to Provant
copies of its Certificate of Incorporation, as amended to date, certified by the
appropriate governmental authority, and copies of its By-Laws, as amended to
date, and a list of the officers and directors of the Company in office, all as
certified by its Secretary.
3.27 DISCLOSURE OF ALL MATERIAL MATTERS.
(a) No statement of a material fact set forth in this Agreement
(including without limitation all information in the Financial Statements, the
Company Disclosure Schedule and the other Schedules, Exhibits and attachments
hereto, taken as a whole) with respect to the Company or the Stockholders is
false or misleading in any respect, nor does this Agreement (including, without
limitation all information in the Financial Statements, the Company Disclosure
Schedule and the other Schedules, Exhibits and attachments hereto, taken as a
whole) omit to state a material fact necessary in order to make the statements
made or information disclosed, in the light of the circumstances under which
they were made or disclosed, not misleading.
(b) Provided only that Provant has accurately incorporated any
information furnished in writing to Provant by the Company specifically for
inclusion in the Registration Statement or the Prospectus (as applicable) and
has deleted from the Registration Statement or the Prospectus (as applicable)
any information that the Company has specifically requested in writing be so
deleted, (i) at the time the Registration Statement becomes effective under the
Securities Act, it will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) at
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the time of each closing in connection with the IPO, the Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties in this Section shall not apply to statements in or omissions
from the Registration Statement and Prospectus relating to any person or entity
other than the Company and its officers, directors and stockholders.
3.28 BROKERS. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders represent and warrant to Provant and Acquisition as
follows:
4.1 TITLE TO THE SHARES. All of the issued and outstanding Shares are
owned by the Stockholders free and clear of any claims, liens, charges,
encumbrances, security interests and rights of others whatsoever, and such
Shares are not bound by or subject to any proxy, agreement, voting trust or
other restriction regarding the voting thereof.
4.2 AUTHORITY. The Stockholders have full power, authority and capacity
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and no other action is necessary by the Stockholders to
consummate the transactions contemplated by the Agreement. This Agreement has
been duly and validly executed and delivered by the Stockholders and constitutes
a legal, valid and binding obligation of the Stockholders enforceable against
them in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Stockholders do not and will not violate, conflict with, result
in a breach of or constitute a default under (or an event which with due notice
or lapse of time, or both, would constitute a breach of or default under) or
result in the creation of any lien, security interest or other encumbrance under
(a) any material term of any note, agreement, contract, license, instrument,
lease or other obligation to which a Stockholder is a party or by which he is
bound, (b) any material provision of any judgment, order, decree, ruling or
injunction or (c) any statute, law, regulation or rule of any governmental
agency or authority.
5. REPRESENTATIONS AND WARRANTIES OF
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PROVANT, ACQUISITION AND THE PROVANT PRINCIPALS
Provant, Acquisition and the Provant Principals represent and warrant
to the Company and the Stockholders that, except as expressly provided in the
Provant Disclosure Schedule by specific reference to a Section of this Article
5:
5.1 ORGANIZATION AND AUTHORITY. Each of Provant and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, and each has all requisite corporate power and
authority to conduct its business and own its properties as now conducted and
owned, and is qualified and in good standing as a foreign corporation, and has
at all times when legally required been so qualified and in good standing, in
each jurisdiction where the failure to be so qualified would, in the aggregate,
have a material adverse effect on the business or financial condition of
Provant. Each of Provant and Acquisition has full power and authority to execute
and deliver this Agreement and the agreements being executed and delivered in
connection with the Additional Mergers and the IPO to which it is a party, and
to consummate the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the other agreements referenced above and the consummation of the
transactions contemplated hereby and thereby, and the performance of Provant's
and its subsidiaries' (including Acquisition's) obligations hereunder and
thereunder have been duly and validly authorized by the unanimous votes of the
respective Boards of Directors of Provant and such subsidiaries (including
Acquisition) and by Provant as the sole stockholder of such subsidiaries
(including Acquisition), and no other corporate proceedings on the part of
Provant or its subsidiaries (including Acquisition) are necessary to authorize
this Agreement or the other agreements referenced above or to consummate the
transactions contemplated hereby or thereby or to perform the obligations of
Provant and its subsidiaries (including Acquisition) hereunder or thereunder.
This Agreement has been duly and validly executed and delivered by each of
Provant and Acquisition and constitutes a valid and binding agreement of each,
enforceable against each in accordance with its terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally.
5.2 CAPITALIZATION OF PROVANT; SUBSIDIARIES. Provant has authorized
capital consisting of 10,000 shares of Provant Common Stock, $.01 per share par
value, of which no shares are held in Provant's treasury. As of the date hereof,
there are 3,417.9 issued and outstanding shares of Provant Common Stock, all of
which are duly authorized, validly issued, fully paid and non-assessable and are
owned of record and beneficially by those persons listed on the Provant
Disclosure Schedule. Provant has no other authorized class of capital stock
other than the Provant Common Stock. As of the date hereof and at all times
prior to the Effective Time, Provant does not (and will not) own and has not
owned any shares of capital stock or other securities of, or any other interest
in, nor does (or will) it control or has it controlled, directly or indirectly,
any other corporation, association, joint venture,
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partnership, or other business organization, other than Acquisition and the
subsidiaries intended to be merged with the Additional Companies. All of the
issued and outstanding shares of capital stock of Acquisition, and of each
subsidiary that will be merged with an Additional Company, are owned of record
and beneficially by Provant. All outstanding shares of Provant Common Stock have
been issued and sold in full compliance with all applicable Federal and state
securities laws. No holder of outstanding shares of Provant Common Stock has any
dissenting shareholder or appraisal rights with regard to the Merger. Provant
does not have knowledge of any voting agreements, voting trusts or similar
agreements governing the manner in which any shares of Provant Common Stock are
voted by the holders thereof.
5.3 NO RIGHTS TO PURCHASE OR REGISTER STOCK. Excepting only (a) the
shares of Provant Common Stock to be issued as Merger Shares and as merger
consideration in the Additional Mergers, (b) the shares of Provant Common Stock
to be sold in the IPO, and (c) the shares of Provant Common Stock to be issued
pursuant to Provant Options under the Plan, no person, firm, or corporation has
any written or oral agreement, option, warrant, call, understanding, commitment,
or any right or privilege capable of becoming a binding agreement, for either
the purchase of any shares of Provant Common Stock or the acquisition of shares
of any other class of capital stock of Provant, and Provant has not otherwise
agreed to issue or sell any shares of its capital stock and has no obligation to
register any shares of Provant Common Stock under the Securities Act. Provant is
not obligated directly, indirectly or contingently to purchase any shares of
Provant Common Stock. No person, firm, or corporation has any written or oral
agreement, option, warrant, call, understanding, commitment, or any right or
privilege capable of becoming a binding agreement, for the purchase or other
acquisition of any shares of capital stock of Acquisition or of any subsidiary
of Provant that will be merged with an Additional Company, and neither
Acquisition nor any such other subsidiary has otherwise agreed to issue or sell
any shares of its capital stock or to register any shares of its capital stock
under the Securities Act.
5.4 MERGER STOCK. The Merger Stock has been duly authorized by all
necessary corporate action and, when issued and delivered by Provant pursuant to
this Agreement, will be validly issued, fully paid and non-assessable.
5.5 CONSENTS AND APPROVALS; NO VIOLATION; NO KNOWN IMPEDIMENTS. Neither
the execution and delivery of this Agreement by Provant and Acquisition nor the
consummation of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective charter documents or
By-Laws of Provant or Acquisition; (ii) subject to the last sentence of this
Section 5.5, require on the part of Provant any consent, approval,
authorization, or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) filing the Certificate of Merger pursuant to
the NJBCA and the DGCL and (B) any filings required under the Securities Act and
the securities or blue sky laws of the various states; (iii) result in a default
(or give rise to any right of termination, cancellation, or acceleration) under
any of the material terms, conditions, or provisions of any note,
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license, lease, agreement, or other instrument or obligation to which Provant or
Acquisition is a party or by which Provant or Acquisition or any of their
respective assets may be bound, other than as previously disclosed in writing to
the Company; or (iv) violate or constitute a material breach of any order, writ,
injunction, decree, statute, law, rule, or regulation applicable to Provant or
Acquisition or any of their respective assets. Assuming no material change after
the date hereof in the condition of the capital markets or in the business or
financial condition of the Company or any of the Additional Companies and
assuming the Commission declares the Registration Statement effective in due
course, Provant has no knowledge of any matter (including without limitation any
law or regulation) that should reasonably be expected to prohibit the
consummation of the transactions contemplated hereby, the Additional Mergers or
the IPO. The representation and warranty contained in clause (ii) above is, with
respect to compliance with the HSR Act, made in reliance upon, and is expressly
conditioned upon, the accuracy of the representations and warranties of the
Company and the Stockholders made in the second sentence of Section 3.6.
5.6 OPERATIONS AND FINANCIAL CONDITION; ABSENCE OF UNDISCLOSED
LIABILITIES. Neither Provant nor Acquisition has conducted any material business
operations other than in connection with the Merger, the Additional Mergers and
the IPO or in preparation for operations to be conducted after the Effective
Time. Neither Provant nor Acquisition has any material tangible assets or
material liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise and whether due or to become due, including without
limitation liabilities that may become known or arise after the date hereof and
which relate to transactions entered into or any state of facts existing on or
before the date hereof and which would be required under generally accepted
accounting principles to be shown in a balance sheet or referenced in the notes
thereto prepared as of the date hereof, other than those incurred in connection
with the Merger, the Additional Mergers and the IPO or in connection with
Provant's preparation for future operations. Set forth on the Provant Disclosure
Schedule are all liabilities and obligations of Provant and Acquisition (by
type) that are as of the date hereof, or are expected to be as of the Effective
Time, in excess of $10,000.
5.7 LITIGATION. There are no actions, suits, causes of action, claims,
litigation, arbitration, administrative hearings or other form of proceedings or
disputes pending, or, to the best knowledge of Provant or Acquisition,
threatened, against, involving or affecting Provant or Acquisition, in any
court, at law or in equity, or before any arbitration board or any governmental
department, commission, board, bureau, agency, or instrumentality, that either
singly or in the aggregate might prevent Provant and Acquisition from
consummating the transactions contemplated hereby, the IPO or the Additional
Mergers, or which would have a material adverse effect on the business,
operations, or financial condition of Provant and its subsidiaries taken as a
whole.
5.8 MATERIAL CONTRACTS. The Provant Disclosure Schedule lists all
material leases, contracts, instruments, agreements or commitments (whether
written or oral),
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other than the Additional Merger Agreements, relating to the conduct of the
business of Provant or its subsidiaries (including Acquisition) in effect on the
date hereof (the "Material Provant Contracts"). Without limiting the generality
of the foregoing, the aforesaid list includes all contracts, agreements and
instruments of the following types to which Provant its subsidiaries is a party
or by which any of them is bound:
(a) employment or employment-related contracts or agreements (including
pension, retirement, deferred compensation, death benefit, profit sharing, bonus
or other employee incentive, fringe benefit, stock purchase or stock option
agreements), consulting agreements, agreements providing for termination or
severance benefits, non-competition agreements, non-disclosure agreements,
contracts for professional personal services, contracts with other persons
engaged in sales or distributing activities, and advertising contracts;
(b) written or oral agreements, understandings and arrangements of any
kind with any officer, director, employee, shareholder or agent of Provant or
Acquisition relating to present or future compensation or other benefits
available to such person or otherwise;
(c) indentures, loan agreements, notes, security agreements, mortgages,
conditional sales contracts, leases of real or personal property, contracts for
the purchase of sale of real or personal property, and agreements for financing;
(d) agreements, contracts or other arrangements to which Provant or
Acquisition is a guarantor, surety or endorser;
(e) contracts, agreements, instruments, arrangements or understandings
which have not been included in items (a) through (d) above involving payment by
or to Provant or Acquisition of more than $50,000 or not terminable without
penalty or otherwise materially affecting the assets, financial condition,
properties or business of Provant or Acquisition.
All of the Material Provant Contracts are in full force and effect. Except to
the extent that a material adverse effect on Provant's financial condition,
assets, liabilities, earnings, business or prospects (each considered on a
consolidated basis giving effect to the Merger and the Additional Mergers) would
not result if the following were not true: (A) Provant, Acquisition and each
other party to each of the Material Provant Contracts have performed all the
obligations required to be performed by them to date, have received no notice of
default and are not in default (with due notice or lapse of time or both) under
any of the Material Provant Contracts; (B) Provant and Acquisition have no
present expectation or intention of not fully performing all of their respective
obligations under any of the Material Provant Contracts, and Provant and
Acquisition have no knowledge of any breach or anticipated breach by any other
party to any of the Material Provant Contracts; (C) there exists no actual or,
to the knowledge of Provant and Acquisition, threatened termination,
cancellation or limitation of the business relationship of Provant or
Acquisition with any party to any
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Material Provant Contract; and (D) consummation of the transactions contemplated
hereby and performance by Provant and Acquisition of their respective
obligations hereunder shall not require the consent or permission of any party
to any Material Provant Contract or permit any party to terminate, suspend or
alter the terms of any Material Provant Contract.
5.9 ADDITIONAL MERGER AGREEMENTS. The Provant Disclosure Schedule sets
forth, with respect to the Additional Merger Agreements, the material economic
terms of each such Agreement and any other material terms of each such Agreement
that differ substantially from the corresponding terms of this Agreement.
5.10 DISCLOSURE OF ALL MATERIAL MATTERS. No statement of a material fact
made by Provant or Acquisition in this Agreement (including without limitation
all information in the Provant Disclosure Schedule and the other Schedules,
Exhibits, and attachments hereto, taken as a whole) is false or misleading in
any respect, nor does this Agreement (including, without limitation all
information in the Provant Disclosure Schedule and the other Schedules,
Exhibits, and attachments hereto, taken as a whole) omit to state a material
fact necessary in order to make the statements made or information disclosed, in
the light of the circumstances under which they were made or disclosed, not
misleading.
5.11 BROKERS. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Provant or Acquisition.
6. COVENANTS
6.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) Except as contemplated by this Agreement, during the period from
the date of this Agreement to the Effective Time, the Company will conduct its
operations only in the ordinary and usual course of business and consistent with
past practice and will use all commercially reasonable efforts to preserve
intact its present business organization, keep available the services of its
present officers and employees, and preserve its relationships with customers,
suppliers, contractors, and others having business dealings with it to the end
that its goodwill and on-going business shall not be impaired at the Effective
Time.
(b) Without limiting the generality of subsection (a) and except as
otherwise expressly provided in this Agreement, before the Effective Time, the
Company will comply with all laws applicable to the conduct of its business and
continue in effect its present insurance coverage and will not, without the
prior written consent of Provant, (i) issue, sell, or pledge, or authorize or
propose the issuance, sale, or pledge of (A) any shares of capital stock of any
class (including the Shares), or securities
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convertible into any such shares, or any rights, warrants or options to acquire
any such shares or other convertible securities, excepting only pursuant to the
exercise or conversion of Company Options and other instruments or securities
outstanding on the date hereof and disclosed on the Company Disclosure Schedule
which exercise or conversion and which issuance are in accordance with the terms
of such instruments or securities as in effect on the date hereof, or (B) any
other securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof; (ii) purchase or otherwise acquire, or propose
to purchase or otherwise acquire, any outstanding Shares; (iii) declare or pay
any dividend or distribution on any shares of its capital stock; (iv) authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into an agreement in principle or an agreement with respect to, any
change in its capitalization, merger, consolidation or business combination
(other than the Merger), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities, or any
entry into a material contract or any release or relinquishment of any material
contract rights, not in the ordinary course of business; (v) propose or adopt
any amendments to its Certificate of Incorporation or By-Laws (other than as
effected by the Merger); (vi) incur, assume, or prepay any long-term debt or,
except in the ordinary course of business under existing lines of credit, incur
or assume any short term debt; (vii) make any loans, advances, or capital
contributions to, or investments in, any other person, other than travel or
other advances to employees consistent with past practice; (viii) assume,
guarantee, endorse, or otherwise become liable or responsible (whether directly,
contingently, or otherwise) for the obligations of any other person, except to
endorse checks for collection or deposit in the ordinary course of business; or
(ix) agree in writing or otherwise to take any of the foregoing actions or any
action that would make any representation or warranty in this Agreement untrue
or incorrect as of the date hereof or as of the Effective Time, as if made as of
such time. Notwithstanding the foregoing provisions of this Section 6.1(b),
prior to the Effective Time the Company may make a cash dividend to the
Stockholders so long as doing so will not prevent the Company from satisfying
the Financial Condition (with any such dividend being accounted for prior to the
calculation of the Closing Net Worth).
6.2 NO SOLICITATION. The Company shall not, nor shall it permit any of
its officers, directors, employees, agents, or representatives (including,
without limitation, investment bankers, attorneys and accountants), directly or
indirectly to (a) initiate, contract with, solicit or encourage any inquiries or
proposals by, or (b) enter into any discussions or negotiations with, or
disclose directly or indirectly any information concerning its business and
properties to, or afford any access to its properties, books, and records to,
any corporation, partnership, person, or other entity or group in connection
with any possible proposal (an "Acquisition Proposal") regarding a sale of the
Company's capital stock or a merger, consolidation, or sale of all or a
substantial portion of the assets, or any similar transaction that is material
to the Company. The Company will notify Provant within one business day of
receipt if any discussions or negotiations are sought to be initiated, any
inquiry or proposal is made, or any such information is requested with respect
to an Acquisition Proposal or potential Acquisition Proposal or if any
Acquisition Proposal is received or indicated to be
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forthcoming. Such notice shall state all substantive terms and conditions of any
proposal or Acquisition Proposal and the identity of the person making the
proposal or Acquisition Proposal or seeking to initiate discussions or
negotiations or requesting information.
6.3 ACCESS TO INFORMATION.
(a) From the date of this Agreement, the Company will give Provant and
the Underwriter and their respective representatives full access, at reasonable
times and with reasonable notice, to the offices and other facilities and to the
books and records of the Company, will permit Provant and the Underwriter and
their respective representatives to make such inspections as they may reasonably
require, and will cause its officers and representatives (including, without
limitation, its firm of certified public accountants) to furnish Provant and the
Underwriter and their respective representatives with such financial and
operating data and other information with respect to the business, operations,
assets, liabilities and prospects of the Company as Provant and the Underwriter
and their respective representatives may from time to time reasonably request.
From the date of this Agreement, Provant and Acquisition will give the Company
full access, at reasonable times, to the offices and other facilities and to the
books and records of Provant and Acquisition, will permit the Company and its
representatives to make such inspections as they may reasonably require, and
will cause their respective officers and representatives (including, without
limitation, their firm of certified public accountants) to furnish the Company
and its representatives with such financial and operating data and other
information with respect to the business, operations, assets and liabilities of
Provant, Acquisition and the Additional Companies (in the last case to the
extent such information is in the possession of Provant and the applicable
Additional Company does not object to disclosure) as the Company and its
representatives may from time to time reasonably request.
(b) Provant and Acquisition, on the one hand, and the Company, on the
other hand, will, and will cause their respective employees and agents
(including, in the case of Provant, the Underwriter and its employees and
agents) (collectively, "Representatives") to, hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all Confidential Information (as
hereinafter defined) and will not disclose the same to any person. If this
Agreement is terminated, each party having received or created any documents
containing Confidential Information (including documents received or created by
its Representatives), will promptly return to the other party or destroy (or
cause to be returned or destroyed) all documents (including all copies thereof)
so received or created containing such Confidential Information. For purposes
hereof, "Confidential Information" shall mean all information of any kind
concerning the Company, or concerning any of Provant, Acquisition or any
Additional Company, respectively, except information (i) ascertainable or
obtained from public or published information, (ii) received from a third party
not known to Provant, Acquisition or their Representatives, or to the Company or
its
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Representatives, as applicable, to be under an obligation to the Company or
Provant, as applicable, to keep such information confidential, (iii) that is or
becomes known to the public (other than through a breach of this Agreement),
(iv) that was in the receiving party's possession before disclosure thereof to
it in connection with this Agreement, or (v) that is independently developed by
Provant or by the Company (including their respective Representatives), as
applicable.
6.4 REASONABLE BEST EFFORTS. Subject to the terms and conditions hereof,
each party to this Agreement agrees to fully cooperate in all reasonable
respects with the others and the others' counsel, accountants and
representatives in connection with any steps required to be taken as part of its
obligations under this Agreement and in connection with the IPO. Each of the
Company, Provant and Acquisition agrees that it will use its reasonable best
efforts to cause all conditions to its obligations under this Agreement to be
satisfied as promptly as possible, and will not undertake a course of action
inconsistent with this Agreement or which would make any of its representations,
warranties, agreements or covenants in this Agreement untrue in any material
respect or any conditions precedent to its obligations under this Agreement
unable to be satisfied at or prior to the Closing. The Provant Principals hereby
covenant and agree that, subject to the satisfaction (or, in Provant's sole
discretion, waiver) of the conditions set forth in Section 7.1, they will use
their reasonable best efforts to cause Provant to calculate the Financial
Condition in good faith and to cause Provant, Acquisition or Provant's counsel,
as applicable, to execute and/or deliver each of the items identified in
subsections 7.2(e), (h), (i) and (k) and to take the action described in
subsection 7.1(j).
6.5 CONSENTS. Each of Provant, Acquisition and the Company will use
reasonable efforts to obtain as promptly as practicable such consents of third
parties to agreements that would otherwise be violated by any provisions hereof
and to make such filings with governmental authorities as are necessary to
consummate the transactions contemplated by this Agreement.
6.6 PUBLIC ANNOUNCEMENTS. Except as provided in the immediately
following sentence, all public announcements, notices or other communications
regarding this Agreement and the transactions contemplated hereby to third
parties other than the parties hereto and their respective advisors and the
shareholders of the Company shall require the prior approval of Provant and of
the Company. Notwithstanding the foregoing, neither the filing of the
Registration Statement (or any other document filed with any public official in
connection with the IPO), nor the distribution of the Prospectus (whether in
preliminary or final form), nor any selling activity conducted by Provant or the
Underwriter in connection with the IPO, including without limitation those
conducted as part of the so-called road show, shall be construed to be public
announcements, notices or other communications requiring the prior approval of
the Company.
6.7 NOTIFICATION OF CERTAIN MATTERS. Each of the parties (the "Notifying
Party") shall give prompt notice to the other parties of (i) the occurrence or
non-
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occurrence of any event that would be likely to cause any representation or
warranty of the Notifying Party contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Notifying Party to comply with or satisfy any
covenant, condition, or agreement to be complied with or satisfied by it
hereunder. Without limiting the foregoing, from time to time prior to the
Closing the Company will promptly supplement or amend the Company Disclosure
Schedule both to correct any inaccuracy in the Company Disclosure Schedule when
delivered and to reflect any development which, if existing at the date of this
Agreement, would have been required to be set forth in the Company Disclosure
Schedule or which has rendered inaccurate the information contained in the
Company Disclosure Schedule (each notice furnishing such information being
called a "Company Disclosure Supplement"), and approximately six business days
prior to the Closing the Company will deliver to Provant a final Company
Disclosure Supplement consisting of a complete update of the Company Disclosure
Schedule as though all representations and warranties contained in Article 3
hereof were to be made as of the date of the Closing. In addition, the Company
shall promptly notify Provant in writing if at any time prior to a closing in
connection with the IPO it shall obtain knowledge of any facts relating to the
Company or its officers, directors or stockholders that might make it necessary
or appropriate to amend or supplement the Prospectus in order to make the
statements contained therein not misleading or comply with applicable law. The
delivery of any Company Disclosure Supplement or other notice pursuant to this
Section 6.7 shall not render correct any representation or warranty that was
incorrect when made or limit or otherwise affect the remedies available
hereunder to the party receiving such Company Disclosure Supplement or notice.
6.8 COVENANTS OF THE STOCKHOLDERS. The Stockholders hereby covenant and
agree with Provant and Acquisition that they shall:
(a) take no action which the Company may not take pursuant to Section
6.2;
(b) take action and refrain from action to the extent required of the
Company pursuant to Section 6.4;
(c) cause the Company to provide to Provant the notifications required
of the Company under Section 6.7;
(d) execute and deliver at the Closing the Employment Contracts, the
Non- Competition and Non-Disclosure Agreements, and the Investment Letters; and
(e) subject to the other terms of this Agreement, (i) use all
commercially reasonable efforts to take whatever action may be reasonably
necessary or desirable to effect, perform or confirm of record or otherwise in
the Surviving Corporation full right, title and interest in and to the business,
properties and assets now conducted or owned by the Company, free and clear of
all restrictions, liens, encumbrances, rights,
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title and interests in others (excepting only liens reflected on the Balance
Sheet, or otherwise disclosed on the Disclosure Schedule), or to collect,
realize upon, gain possession of, or otherwise acquire, full right, title and
interest in and to such business, properties and assets, and (ii) use their
reasonable best efforts to take whatever action may be reasonably necessary or
desirable to carry out the intent and purposes of the transactions contemplated
hereby and to permit Provant to undertake and complete the IPO;
(f) notify Provant in writing if at any time prior to a closing in
connection with the IPO they shall obtain knowledge of any facts relating to the
Company or its officers, directors or stockholders that might make it necessary
or appropriate to amend or supplement the Prospectus used in the registration
statement filed in connection with the IPO in order to make the statements
contained therein not misleading or comply with applicable law (with the
delivery of any notice pursuant to this Section 6.8(f) not limiting or otherwise
affecting the remedies available hereunder to the party receiving such notice);
(g) execute and deliver such other instruments and take such other
actions as may be reasonably required by the Company or the Underwriter in order
to carry out the intent of this Agreement and to complete and close the IPO,
subject to the other terms of this Agreement; and
(h) satisfy (or cause to be satisfied) prior to the Effective Time any
indebtedness to the Company owed by such Stockholder or by any Affiliate of such
Stockholder.
6.9 TAX FREE REORGANIZATION. From and after the Effective Time, neither
Provant nor the Surviving Corporation shall take or suffer to be taken any
action which will cause the Merger not to constitute a reorganization within the
meaning of Section 368(a)(2)(D) of the Code.
6.10 MONTHLY FINANCIAL INFORMATION. Within thirty days after the end of
each month ending after the date of this Agreement and prior to the Effective
Time, the Company will furnish to Provant internally prepared financial
statements comparable to the Financial Statements prepared in a manner
consistent with the Financial Statements and certified by the chief financial
officer of the Company.
6.11 PROVANT OPTION PLAN. Prior to the Effective Time, Provant shall
adopt an employee stock option plan (the "Plan") providing for the granting of
Provant Options from time to time as provided in the Plan. The Plan shall make
available for grant at or before the Closing, and the Board of Directors of
Provant shall so grant, Provant Options with respect to a number of shares of
Provant Common Stock equal to 5.0% of the shares of Provant Common Stock
outstanding as of immediately following the Closing of the Merger, the
Additional Mergers (excluding any Additional Merger that is terminated without
consummation) and the IPO, giving effect to the issuance of all shares of Merger
Stock issuable as of Closing, all shares of Provant Common Stock
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issuable as of the Closing as merger consideration in each of the Additional
Mergers, and the issuance of Provant Common Stock in the IPO. The Provant
Options granted as of such time shall have an exercise price equal to the IPO
Price, shall by their terms (i) become exercisable ratably over a period of
three years (provided that the holder remains employed by Provant or one of its
affiliates and subject to accelerated vesting in the event of a change in
control of Provant), (ii) have a term of seven years, (iii) in the case of
vested options, remain exercisable for a period of one year following any
termination of employment without cause (including termination resulting from
the expiration of any employment agreement in accordance with its terms and
termination upon death or disability) and for a period of ten business days
following any termination of employment for cause (conditioned, in the latter
case, upon the terminated employee's delivery of a general release to the
Surviving Corporation, Provant and their respective affiliates), and shall have
such other terms as the Board of Directors of Provant may determine. The Provant
Options granted as of such time shall be allocated among the employees of,
respectively, the Surviving Corporation and the surviving corporations of the
Additional Mergers in accordance with Schedule 6.11 hereto, and shall be granted
to individual employees of such corporations in accordance with directions to
the Board of Directors of Provant given by the executive officers of the Company
and the Additional Companies absent a good faith determination by the Board of
Directors of Provant that such a direction is manifestly contrary to the
interests of the Surviving Corporation.
7. CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO THE OBLIGATIONS OF PROVANT AND ACQUISITION. The
obligations of Provant and Acquisition to consummate the Merger are subject to
the satisfaction at the Closing, or waiver by Provant in writing, in whole or in
part, of each of the following conditions:
(a) The IPO and each of the Additional Mergers shall have been
completed at the same time.
(b) The Financial Condition shall have been satisfied, in the good
faith determination of Provant.
(c) Each of the representations, warranties, agreements and covenants
of the Company and the Stockholders (giving effect to the Company Disclosure
Schedule, but not to any Company Disclosure Supplement) shall be true and
correct as of, and shall not have been violated in any respect at, the Closing
as though made on and as of the Closing, except for (i) representations,
warranties, agreements and covenants which make reference to a specific date
(including the date of this Agreement), which need only be true and correct as
of the specified date, and (ii) failures of representations or warranties to be
true and correct as of the Closing solely on account of matters arising between
the date hereof and the Effective Time in the ordinary course of the Company's
business, if and to the extent such matters are
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consistent with past practice of the Company and are not materially adverse to
the Company, either singly or in the aggregate; the Company and the Stockholders
shall, on or before the Closing, have performed all of their respective
obligations under this Agreement which by the terms hereof are to be performed
on or before the Closing; and there shall have delivered to Provant and
Acquisition a certificate signed by the President of the Company on behalf of
and in the name of the Company and by the Stockholders dated as of the date of
the Closing to the foregoing effect.
(d) No action or proceeding by or before any court or other
governmental body shall have been instituted by any governmental body or other
person or entity or threatened in writing by any governmental body which seeks
to restrain, prohibit or invalidate the transactions contemplated by this
Agreement or which would materially adversely affect the right of the Surviving
Corporation, as a subsidiary of Provant, to conduct the business of the Company
as presently conducted by the Company or which claims damages from Provant with
respect to the transactions contemplated hereby.
(e) Provant and Acquisition shall have received the opinion of counsel
to the Company, dated the date of the Closing and in form and substance
reasonably satisfactory to Provant and its counsel, substantially to the effect
set forth on Exhibit 7 (subject to qualifications and assumptions customary in
transactions such as the Merger), which opinion provides that it may be relied
upon by the Underwriter.
(f) All proceedings taken by the Company and all instruments executed
and delivered by the Company prior to the date of the Closing in connection with
the transactions herein contemplated shall be satisfactory in form and substance
to counsel for Provant acting reasonably.
(g) No statute, rule or regulation shall have been enacted or
promulgated which makes illegal or prohibits consummation of the transactions
contemplated hereby or which materially and adversely affects the ability of the
Surviving Corporation, as a subsidiary of Provant, to conduct the business of
the Company as presently conducted by the Company.
(h) The Stockholders shall have executed and delivered to Provant the
Employment Contracts, the Non-Competition and Non-Disclosure Agreement, and the
Investment Letters.
(i) The Company shall have delivered to Provant and Acquisition a
certificate of its Secretary certifying as to requisite corporate or other
action authorizing the transactions contemplated by this Agreement, the
incumbency of officers and directors, and the status of record ownership of the
Shares.
(j) The Company shall have delivered to Provant such other
certificates, documents and consents as Provant and its counsel shall reasonably
require.
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7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS.
The obligation of the Company and the Stockholders to consummate this Agreement
is subject to the satisfaction at the Closing, or waiver by the Company in
writing, in whole or in part, of each of the following conditions:
(a) The IPO shall have been completed at the same time, and appropriate
measures shall have been adopted and shall be in place to ensure that the
Stockholders shall receive out of the proceeds of the IPO all cash to which they
will become entitled as of the Effective Time.
(b) Each of the Additional Mergers shall have been completed at the
same time as the Merger, and there shall have occurred no event (or series of
events, whether or not related) with respect to any Additional Company that (i)
constitutes a failure of a closing condition set forth in the applicable
Additional Merger Agreement such that, in the reasonable judgment of Provant,
Provant is not contractually obligated to consummate the applicable Additional
Merger, and (ii) has resulted in a material adverse change between the date
hereof and the date of the Closing in the financial condition, assets,
liabilities, earnings, business, or business prospects of the applicable
Additional Company.
(c) Each of the representations, warranties and agreements of Provant,
Acquisition and the Provant Principals (giving effect to the Provant Disclosure
Schedule) shall be true and correct as of, and shall not have been violated in
any respect at, the Closing as though made on and as of the Closing except for
(i) representations and warranties and agreements which make reference to a
specific date (including the date of this Agreement), which need only be true
and correct as of the specified date, and (ii) failures of representations or
warranties to be true and correct as of the Closing solely on account of matters
arising between the date hereof and the Effective Time in the ordinary course of
Provant's or Acquisition's business, if and to the extent such matters are not
materially adverse to Provant (considered on a consolidated basis giving effect
to the Merger and the Additional Mergers), either singly or in the aggregate;
Provant and Acquisition shall, on or before the Closing, have performed all of
their respective obligations under this Agreement which by the terms hereof are
to be performed on or before the Closing (including without limitation the
adoption of the Plan and the grant of Provant Options to persons who will be
employees of the Surviving Corporation in accordance with Schedule 6.11); and
Provant and Acquisition shall have delivered to the Company a certificate of
their respective Presidents signed on their behalf and in their names dated as
of the date of the Closing to the foregoing effect.
(d) No action or proceeding by or before any court or other
governmental body shall have been instituted by any governmental body or other
person or entity or threatened in writing by any governmental body which seeks
to restrain, prohibit or invalidate the transactions contemplated by this
Agreement or which would materially adversely affect the right of the Company to
consummate the Merger.
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(e) The Company shall have received the opinion, dated the date of the
Closing and in form and substance satisfactory to the Company and its counsel,
of Messrs. Xxxxxx, XxXxxxxxx & Fish, counsel to Provant, substantially to the
effect set forth on Exhibit 8 (subject to qualifications and assumptions
customary in transactions such as the Merger).
(f) All proceedings taken by Provant and Acquisition and all
instruments executed and delivered by Provant and Acquisition prior to the date
of the Closing in connection with the transactions herein contemplated, and any
instruments to be executed by the Stockholders at the request of Provant, shall
be satisfactory in form and substance to counsel for the Company, acting
reasonably.
(g) No statute, rule or regulation shall have been enacted or
promulgated which makes illegal or prohibits consummation of the transactions
contemplated hereby or which materially and adversely affects the ability of the
Surviving Corporation, as a subsidiary of Provant, to conduct the business of
the Company as presently conducted by the Company.
(h) Provant and Acquisition shall have delivered to the Company a
certificate of its Secretary, certifying as to requisite corporate or other
action authorizing the transactions contemplated by this Agreement.
(i) The Surviving Corporation shall have executed and delivered each
Employment Contract to the appropriate party.
(j) The individual listed on Schedule 7.2 as the designee of the
Company shall have been elected to the Board of Directors of Provant as of
immediately following the closing of the IPO.
(k) Provant and Acquisition shall have delivered to the Company such
other certificates and documents pertaining to the Merger (including the legal
existence and good standing of Provant and Acquisition) as the Company and its
counsel shall reasonably require.
8. RESTRICTIONS ON SALE OR TRANSFER OF MERGER STOCK
8.1 RESTRICTIONS ON SALE. The shares of Merger Stock will not have been
registered under the Securities Act or the blue sky laws of any state by reason
of their contemplated issuance in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act and of such state laws.
Such shares may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act and such state laws or an exemption
therefrom, or in contravention of the restrictions contained in the Investment
Letter attached hereto as Exhibit 4.
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8.2 REGISTRATION ON A PARI PASSU BASIS. Provant agrees that, in the
event that at any time after the closing of the IPO it conducts a public
offering of Common Stock registered under the Act and Provant and its
underwriter determine, in their sole discretion, to permit (i) any holder of
Merger Stock, (ii) any holder of Provant Common Stock issued as merger
consideration in any of the Additional Mergers, or (iii) any Provant Principal
to sell Provant Common Stock in such offering, then Provant shall permit each
holder of Merger Stock to sell shares of such Merger Stock in such offering in
the same proportion as the person referenced in any of clauses (i) through (iii)
above who is then being permitted to sell the highest proportion of his or her
shares of Provant Common Stock (all such proportions being based on the
respective number of shares of Provant Common Stock that each applicable person
then holds); provided, however, that the foregoing right shall not apply to
shares that are no longer subject to the two-year restriction period under the
Investment Letter and that are tradeable either without regard to Rule 144
promulgated under the Act or tradeable within a 90 day period under such Rule
144. For purposes of the foregoing, an agreement granting a person a right to
have shares registered in the future shall not be construed as "permitting" such
person to sell shares in an offering until such time as such right is properly
exercised under the terms of such agreement.
9. INDEMNIFICATION
9.1 AGREEMENTS TO INDEMNIFY.
(a) As used in this Article 9:
(i) "Damages" means claims, damages, liabilities,
losses, judgments, settlements, and expenses, including,
without limitation, all reasonable fees and disbursements of
counsel incident to the investigation or defense of any claim
or proceeding or threatened claim or proceeding.
(ii) "Provant Indemnified Party" means, collectively,
each of Provant, the Surviving Corporation, and their
respective affiliates.
(iii) "Company Indemnified Party" means, after the
Effective Time, the Stockholders collectively.
(iv) "Indemnified Party" means either of the Provant
Indemnified Party or the Company Indemnified Party, as
applicable under the circumstances.
(b) On the terms and subject to the limitations set forth in this
Agreement, the Company, prior to the Effective Time, shall, and, after the
Effective Time, the Stockholders shall indemnify, defend, and hold the Provant
Indemnified Party harmless from, against and in respect of any and all Damages
incurred by any
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Provant Indemnified Party arising from or in connection with any of the
following (collectively referred to herein as "Claims"):
(i) any breach of any representation, warranty,
covenant or agreement made by the Company or by the
Stockholders in this Agreement or in any exhibit, schedule,
certificate or other document delivered or to be delivered at
the Closing by or on behalf of the Company or the Stockholders
pursuant to the terms of this Agreement or otherwise referred
to or incorporated in this Agreement, including any allegation
by a third party which, if true, would constitute such a
breach; and
(ii) those matters identified on Schedule 9.1.
(c) In addition to the foregoing, and solely in the event the Merger
shall be consummated, the Stockholders shall indemnify Provant as set forth in
the immediately following sentence from any failure by the Company to have a
Closing Net Worth equal to or greater than the Minimum Net Worth. In the event
the Closing Net Worth shall be less than the Minimum Net Worth (and Provant
shall have elected, in its sole discretion, to waive the failure of the closing
condition set forth in Section 7.1(b) caused thereby), the Stockholders shall
reimburse Provant at the Closing for the amount of such deficit on a dollar for
dollar basis. Such reimbursement shall be the sole remedy of Provant on account
of a failure of the Closing Net Worth to equal or exceed the Minimum Net Worth
(other than Provant's right to terminate this Agreement), and neither the
Company nor the Stockholders shall be liable for any consequential damages on
account of any such failure. Any indemnity and reimbursement required by this
Section 9.1(c) shall not be subject to Section 9.2(c).
(d) From and after the Effective Time and solely if the Merger shall
have been consummated, on the terms and subject to the limitations set forth in
this Agreement, Provant and the Provant Principals shall indemnify, defend, and
hold the Company Indemnified Party harmless from, against and in respect of any
and all Damages incurred by any Company Indemnified Party arising from or in
connection with any actual or alleged breach of any representation, warranty,
covenant or agreement made by Provant or Acquisition in this Agreement or in any
exhibit, schedule, certificate or other document delivered or to be delivered at
the Closing by or on behalf of Provant or Acquisition pursuant to the terms of
this Agreement or otherwise referred to or incorporated in this Agreement (also
referred to herein as "Claims"); provided, however, that this provision shall
not be construed to provide to the Company Indemnified Party any indemnification
with respect to the Registration Statement and the information contained
therein, or with respect to any failure of the IPO to be consummated.
(e) Subject to Section 9.2, the Company's representations and
warranties set forth in Article 3, the Stockholders' representations and
warranties set forth in Article
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4 and Provant's and Acquisition's representations and warranties set forth in
Article 5 shall, for purposes of this Article 9, be deemed to have survived the
Effective Time and the Closing of the Merger and the other transactions
contemplated hereby notwithstanding any contrary terms of this Agreement, and
whenever such representations, warranties, covenants and agreements are referred
to in this Article 9, the text of the same as set forth in the aforesaid
Articles shall be deemed to be set forth in their entirety herein, and the same
are hereby incorporated herein by such references. Each representation,
warranty, covenant and agreement of the Company and the Stockholders shall be
deemed to have been relied upon by the Provant Indemnified Party, and each
representation, warranty, covenant and agreement of Provant and Acquisition
shall be deemed to have been relied upon by the Company Indemnified Party,
notwithstanding any investigation or inspection made by or on behalf of any
Provant Indemnified Party or the Company Indemnified Party, as applicable, and
shall not be affected in any respect of any such investigation or inspection. No
waiver of a closing condition by an Indemnified Party shall be deemed to relieve
a party that is otherwise obligated to provide indemnification of its
obligations pursuant to this Section 9.1 on account of the matters that were the
subject of such waiver.
(f) In addition to and not in limitation of the rights and remedies of
Provant under this Section 9.1, Provant may withhold from any shares of Provant
Common Stock issuable and all amounts payable under Section 2.8 the amount of
any Damages of Provant arising out of or in connection with Claims asserted
hereunder (as estimated in good faith by Provant in the event such Damages are
not yet fixed, subject to future release if appropriate upon final resolution of
the applicable Claim. For purposes of this subsection (f), shares of Provant
Common Stock otherwise issuable under Section 2.8 shall be valued at the lower
of (i) the closing price for a share of Provant Common Stock on the last trading
day immediately preceding the date Provant gives notice that it has a claim
under this Article 9 and (ii) the IPO Price adjusted as provided in Section
2.8(f).
(g) In the event the Stockholders shall indemnify the Provant
Indemnified Party for any breach of the warranties contained in Section 3.25 on
account of a failure of accounts receivable of the Company to be collected, the
Surviving Corporation shall assign to the Stockholders those accounts receivable
as to which such indemnity has been paid, but in no event shall accounts be
assigned having an outstanding balance in excess of the indemnity actually paid
to the Provant Indemnified Party.
9.2 Limitations on Indemnity Obligations and Liability for Breaches. The
indemnity obligations of the Company or the Stockholders, as applicable (in
either case, the "Company Indemnifying Party"), or Provant and the Provant
Principals (collectively, the "Provant Indemnifying Party") (both the Company
Indemnifying Party and the Provant Indemnifying Party being called generically
the "Indemnifying Party"), under this Agreement shall be subject to the
following limitations:
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(a) The indemnity obligations of the Indemnifying Party shall expire on
September 15, 1999 (the "Cut-off Date"); provided, however, that such
obligations with respect to (i) the representations and warranties contained in
Sections 3.1, 3.2, 3.10, and 3.22, Article 4, and Sections 5.1, 5.2, 5.3 and 5.4
of this Agreement and the matters identified on Schedule 9.1 and in Section
9.1(c) shall continue forever without limitation, and (ii) the representations
and warranties regarding taxes, which are contained in Section 3.15, shall
remain in effect until all claims for taxes due by or on account of the Company
for any period up to and including the Effective Time have been settled and any
statute of limitations period with respect to such taxes has expired; and
provided further that the indemnity obligations of the Indemnifying Party for
Claims asserted by an Indemnified Party before the expiration of the applicable
indemnity period, if any, in the manner provided in this Agreement shall
continue until such Claims are finally resolved and discharged.
(b) (i) Subject to subsection (b)(ii) below, the aggregate indemnity
obligations of each Stockholder for any Damages arising out of Claims the
operative facts of which were actually known to any Stockholder as of the date
of this Agreement ("Known Claims") shall not in any event exceed an amount equal
to the sum of (A) the cash received by all Stockholders pursuant to Section
2.7(c), plus (B) the product obtained by multiplying the number of shares of
Merger Stock received by all Stockholders by the IPO Price, minus (C) any
amounts paid pursuant to Section 9.1 by any Stockholder with respect to Claims
that are not Known Claims. Subject to subsection (b)(ii) below (and
notwithstanding Section 11.9), the aggregate indemnity obligations of Mr. and
Xxx. Xxxxx (collectively), or of Xx. Xxxxxxx, respectively, for Damages arising
out of Claims that do not constitute Known Claims shall not in any event exceed
Five Million Dollars ($5,000,000); provided, however, that the aggregate
indemnity obligations of all Stockholders for all Claims, whether or not
constituting Known Claims, shall not exceed the sum of the amounts referenced in
clauses (A) and (B) of the immediately preceding sentence. The aggregate
indemnity obligations of the Provant Principals for any Damages shall not in any
event exceed an amount equal to (X) the aggregate number of shares of Provant
Common Stock held by the Provant Principals as of immediately following the
closing of the IPO plus the aggregate number of warrant shares covered by those
certain warrants for the purchase of Provant Common Stock issued to the Provant
Principals as of the closing of the IPO, multiplied by (Y) the IPO Price, minus
(Z) the aggregate exercise price of such warrants.
(ii) Solely in the event that both (A) the Damages to be paid
by the Stockholders pursuant to Section 9.1(b) on account of the then-asserted
Claim, in aggregation with all such Damages previously paid by all Stockholders,
equal or exceed the aggregate amount of the cash received by all Stockholders
pursuant to Section 2.7, and (B) the Average Closing Price (as defined below) of
Provant Common Stock during the ten trading days immediately following (but not
including) the date on which notice of the liquidated amount of the claimed
Damages is given to the Stockholders (which may, if applicable, be the date on
which the initial notice of the Claim is given) (in either event, the "Claim
Date") is less than the IPO Price, then any
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Stockholder may, at his or her election, satisfy such portion of the Damages as
exceeds the cash received by all Stockholders pursuant to Section 2.7 by
tendering to Provant, for cancellation, shares of Provant Common Stock equal in
value to the Damages to be so satisfied, with such shares valued at the Average
Closing Price determined under clause (B) of this sentence. Notwithstanding the
first sentence of subsection (b)(i) above, if the foregoing clauses (A) and (B)
are satisfied and the Stockholders are therefore permitted to satisfy their
obligations to pay Damages by tendering shares of Provant Common Stock, and a
Stockholder elects to so tender Provant Common Stock, such Stockholder's
obligation for Damages shall be limited to the number of shares of Provant
Common Stock received by all Stockholders pursuant to Sections 2.7 and 2.8. In
the event that Damages are to be paid by the Stockholders before the final
distribution of Provant Common Stock (if any) on account of 1998 EBIT and if
this subsection (b)(ii) shall apply, the final number of shares of Provant
Common Stock that the Stockholder shall be obligated to tender to Provant shall
be left undetermined until such time as the distribution of Provant Common Stock
(if any) is to be made under Section 2.8. As used herein, "Average Closing
Price" means the average of the closing prices of Provant Common Stock on each
trading day during the stated period, as recorded on the New York Stock Exchange
or on such other exchange or market as is then the principal exchange or market
on which Provant Common Stock is traded.
(c) Except (i) as provided in Section 9.1(c), and (ii) with respect to
Damages arising out of the matters identified on Schedule 9.1, which Damages
shall be indemnified without respect to the threshold provided in this Section
9.2(c), an Indemnified Party shall be entitled to indemnification only if the
aggregate and collective Damages incurred or suffered by it exceeds $60,000, in
which event it shall be entitled to indemnification of the full amount of such
Damages. No amounts indemnified by the Company or the Stockholders pursuant to
Section 9.1(c) or with respect to matters identified on Schedule 9.1 shall be
treated as Damages incurred and suffered by the Indemnified Party for purposes
of the immediately preceding sentence, provided only that the amounts so
indemnified have been duly paid.
(d) Notwithstanding the preambles to, respectively, Article 3 and
Article 5, the contractual liability of the Stockholders and the Provant
Principals for any breach of the representations and warranties contained in,
respectively, Article 3 and Article 5 shall be limited to such Stockholder's or
Provant Principal's liability provided in this Article 9.
9.3 NOTICE OF THIRD PARTY CLAIMS. An Indemnified Party shall promptly
notify the Indemnifying Party in writing of any Claim consisting of a matter
asserted by a third person that might give rise to any indemnity obligation of
the Indemnifying Party hereunder (a "Third Party Claim"), specifying in
reasonable detail the nature thereof and indicating the amount (if known, or
estimated if necessary) of the Damages that have been or may be sustained by the
Indemnified Party. Failure of any Indemnified Party to promptly give such notice
shall not relieve the Indemnifying Party of its or his obligation to indemnify
under this Article 9, but as a
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result of any such failure, the Indemnified Party shall be liable to the
Indemnifying Party for, and only for, the amount of actual damages caused by
such failure, which amount shall be an offset against the amount of Damages for
which the Indemnifying Party is liable hereunder. Together with or following
such notice, the Indemnified Party shall deliver to the Indemnifying Party
copies of all notices and documents received by the Indemnified Party relating
to the Third Party Claim (including court papers).
9.4 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS. The Indemnifying Party
shall have the right (without prejudice to the right of any Indemnified Party to
participate at its or his own expense through counsel of its or his own
choosing) to defend against any Third Party Claim at its or his expense and
through counsel of its or his own choosing and to control such defense if the
Indemnifying Party gives written notice of its or his intention to do so within
15 business days of its or his receipt of notice of the Third Party Claim. The
Indemnified Party shall cooperate fully in all reasonable respects in the
defense of such Third Party Claim and shall make available to the Indemnifying
Party or its or his counsel all pertinent information under their control
relating thereto. The Indemnified Party shall have the right to elect to settle
any Third Party Claim; provided, however, the Indemnifying Party shall not have
any indemnification obligation with respect to any monetary payment to any third
party required by such settlement unless the Indemnifying Party shall have
consented thereto. The Indemnifying Party shall have the right to elect to
settle any Third Party Claim subject to the consent of the Indemnified Party;
provided, however, that if the Indemnified Party fails to give such consent
within 15 business days of being requested to do so, the Indemnified Party
shall, at its expense, assume the defense of such Third Party Claim and
regardless of the outcome of such matter, the Indemnifying Party's liability
hereunder shall be limited to the amount of any such proposed settlement. The
foregoing provisions notwithstanding, in no event (a) may either Indemnifying
Party adjust, compromise or settle any Third Party Claim unless such adjustment,
compromise or settlement unconditionally releases the Indemnified Party from all
liability, (b) may the Company Indemnifying Party adjust, compromise or settle
any Third Party Claim if such adjustment, compromise or settlement affects the
absolute and sole right of Provant or the Surviving Corporation to own or use
any of the Company's assets or (c) may the Company Indemnifying Party defend any
Third Party Claim which, if adversely determined, would materially impair the
financial condition, business or prospects of Provant or the Surviving
Corporation.
9.5 NOTICE OF OTHER CLAIMS. In the event any Indemnified Party should
incur any Claim that does not involve a Third Party Claim, the Indemnified Party
shall deliver a notice of such Claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the Claim described in such notice or fails to notify
the Indemnified Party within 30 days after delivery of such notice by the
Indemnified Party whether the Indemnifying Party disputes the Claim described in
such notice, the Damages in the amount specified in the Indemnified Party's
notice will be conclusively deemed a
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liability of the Indemnifying Party and the Indemnifying Party shall pay the
amount of such Damages to the Indemnified Party on demand. Failure of any
Indemnified Party to promptly give such notice shall not relieve the
Indemnifying Party of its or his obligation to indemnify under this Article 9,
but as a result of any such failure, the Indemnified Party shall be liable to
the Indemnifying Party for, and only for, the amount of the actual damages
caused by such failure, which amount shall be an offset against the amount of
Damages for which the Indemnifying Party is liable hereunder.
10. TERMINATION; AMENDMENTS; WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual consent of the Board of Directors of Provant and the
Company;
(b) by any party, in its sole discretion, if the Merger and the IPO
shall not have been consummated on or before June 30, 1998, unless the failure
of the Merger to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(c) by the Company if there has been a misrepresentation or breach on
the part of Provant or Acquisition in the representations, warranties, covenants
or obligations of Provant or Acquisition set forth herein, provided that in the
case of a breach of any such covenant or obligation, such breach has not been
cured within ten (10) business days after the Company has notified Provant and
Acquisition of such breach;
(d) by Provant if there has been a misrepresentation or breach on the
part of the Company or the Stockholders in the representations, warranties,
covenants and obligations of the Company and the Stockholders set forth herein,
provided that in the case of a breach of any such covenant or obligation, such
breach has not been cured within ten (10) business days after Provant has
notified the Company or the Stockholders of such breach; or
(e) by any party if any court shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and non-appealable.
The power of termination provided for by this Section 10.1 may be
exercised for Provant or the Company only by their respective Boards of
Directors in its sole
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discretion and will be effective only after written notice thereof, signed on
behalf of the party for which it is given by its Chairman of the Board,
President or other duly authorized officer, shall have been given to the other.
If this Agreement is terminated in accordance with this Section 10.1, the Merger
shall be abandoned without further action by Provant or the Company.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by any party as provided in Section 10.1, this Agreement shall
forthwith become void and have no effect, and neither Provant nor the Company,
nor any of the officers or directors of either of them, nor the Stockholders
shall have any liability of any nature whatsoever hereunder, or in connection
with the transactions contemplated hereby, except (a) Sections 6.3(b) and 11.8
shall survive any termination of this Agreement, (b) notwithstanding anything to
the contrary contained in this Agreement, no party shall be relieved of or
released from any liabilities or damages arising out of its breach of any
provision of this Agreement; and (c) until September 30, 1998, neither the
Company nor the Stockholders shall, directly or indirectly, discuss, negotiate,
submit or respond to proposals relating to, or enter into an agreement with any
other person with respect to, a transaction with other training companies to be
accompanied or followed by a public offering.
10.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized
(in the case of Provant, Acquisition and the Company) by their respective Boards
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
10.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized (in the case of Provant,
Acquisition and the Company) by their respective Boards of Directors, may, to
the extent legally allowed, subject to Section 10.3, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
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11. MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as provided in
Article 9 with respect to the representations and warranties contained in
Articles 3, 4 and 5, and except for the provisions of Section 10.2, the
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
11.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) constitutes, with
the Company Disclosure Schedule, the Provant Disclosure Schedule, the other
Schedules and the Exhibits hereto, the entire agreement among the parties with
respect to the subject matter hereto and supersedes all other prior agreements
and understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof (including, without limitation, the letter
of intent between the Company and American Business Partners LLC) and (b) shall
not be assigned by operation of law or otherwise, provided that Provant or
Acquisition may assign its respective rights and obligations to any direct or
indirect subsidiary of Provant, but no such assignment shall relieve Provant of
its obligations hereunder.
11.3 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
11.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by electronic facsimile transmission,
cable, telegram, or telex, or when mailed by registered or certified mail
(postage prepaid, return receipt requested) or delivered to a courier of
national reputation to the respective parties as follows:
If to Provant or Acquisition, to it at:
00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
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If to the Company or any Stockholder, to it or him at:
00 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
McCarthy, Fingar, Xxxxxxx, Xxxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
11.5 GOVERNING LAW. This Agreement and all rights of the parties arising
in connection with the transactions contemplated hereby (including the
negotiation hereof, and whether or not such transactions shall be consummated)
shall be governed by and construed in accordance with the internal laws of the
State of New Jersey, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
11.6 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
11.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement. Copies (photostatic,
facsimile or otherwise) of signatures to this Agreement shall be deemed to be
originals and may be relied upon to the same extent as originals, and delivery
of a duly executed signature page to this Agreement shall be deemed to be
delivery of this Agreement in its entirety.
11.8 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses, provided that (i) solely in the event the Merger is consummated,
the reasonable legal and accounting expenses of the Company, up to a maximum of
$50,000, shall be paid by (at the election of Provant) either Provant or the
Surviving Corporation, and (ii) all expenses of the Company not payable pursuant
to clause (i) shall be paid directly by the Stockholders or expensed (and not
capitalized) by the Company prior to the computation of the Company's net worth
for purposes of
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determining satisfaction of the Financial Condition. An account receivable for
expenses reimbursable by Provant or the Surviving Corporation under clause (i)
above may be included on the books of the Company for purposes of calculating
the Closing Net Worth, to the extent such amounts have previously been expensed
by the Company.
11.9 JOINT AND SEVERAL. The representations, warranties, agreements,
covenants and obligations of the Stockholders under this Agreement are joint and
several. The indemnity obligations of Provant and the Provant Principals under
this Agreement are joint and several.
11.10 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 confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
11.11 INTERPRETATION. The Parties acknowledge and agree that each party
and its counsel reviewed and negotiated the terms and provisions of this
Agreement and has contributed to its revision and that the rule of construction
to the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
11.12 MOST FAVORED NATION TREATMENT. Subject to the last sentence of
this Section 11.12, Provant covenants and agrees that the Company and the
Stockholders will be accorded "most favored nation" treatment with respect to
any material amendments adopted after the date hereof with respect to any
Additional Merger Agreement or any other agreement materially altering the
rights or obligations of any Additional Company or the stockholders thereof. The
parties agree to amend this Agreement as necessary from time to time to effect
any changes required pursuant to such "most favored nation" treatment.
Notwithstanding the foregoing, such "most favored nation" treatment shall not
apply to (a) amendments of any provisions not applicable generally to this
Agreement and all (or substantially all) of the Additional Merger Agreements,
and (b) any waiver of a closing condition or an affirmative or negative covenant
or comparable undertaking contained in any Additional Merger Agreement.
[Remainder of page intentionally blank]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement and
Plan of Merger to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
PROVANT, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
XXXX ACQUISITION CORP.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
XXXX RETAIL LEARNING SYSTEMS, INC.
By:
------------------------------------------
Name: Xxxxxxx Xxxxx
----------------------------------------
Title: Chairman and Chief Executive Officer
---------------------------------------
STOCKHOLDERS:
---------------------------------------------
XXXXXXX XXXXX
---------------------------------------------
XXXXXX XXXXX
---------------------------------------------
XXXXXXX XXXXXXX
XXXXXXX PRINCIPALS:
---------------------------------------------
XXXX X. XXXXXXXX
---------------------------------------------
XXXXXXX X. XXXXXXX
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