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Exhibit 2.6
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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"),
Star Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Provant ("Acquisition"), Star Mountain, Inc., a Virginia corporation (the
"Company"), A. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, the principal stockholder of the Company (the
"Stockholder"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇
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 approved by Provant as the sole
stockholder of 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" means 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 Consideration" means (i) the additional shares of
Provant Common Stock or cash, if any, issuable or payable to the holders of
Voting Shares and the additional cash, if any, payable by Provant to the holders
of Non-Voting Shares, in each case pursuant to Section 2.8, and (ii) the
additional shares of Provant Common Stock or cash, if any, issuable or payable
to the holders of Company Options pursuant to Section 2.10.
1.3 "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.
1.4 "Articles of Merger" has the meaning given to it in Section 2.2.
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1.5 "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.
1.6 "Balance Sheet" means the balance sheet of the Company as of June
30, 1997 included in the Financial Statements.
1.7 "Balance Sheet Date" means June 30, 1997.
1.8 "Certificate of Merger" has the meaning given to it in
Section 2.2.
1.9 "Closing" means the closing of the transactions contemplated by
this Agreement as provided in Section 2.2.
1.10 "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.
1.11 "Code" means the Internal Revenue Code of 1986, as amended to
date.
1.12 "Commission" means the Securities and Exchange Commission.
1.13 "Company Disclosure Schedule" means the Disclosure Schedule
prepared by the Company and attached hereto and incorporated herein by this
reference.
1.14 "Company Option" means an option to purchase Shares, whether or
not vested or exercisable as of the applicable time.
1.15 "Company Stockholder" means any person who holds a Share or a
Company Option as of immediately prior to the Effective Time.
1.16 "DGCL" means the Delaware General Corporation Law.
1.17 "Dissenting Share" means any Share the holder of which has
perfected, and not legally abandoned, dissenters rights of appraisal under
Article 15 of the VSCA.
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1.18 "Dissenting Share Holdback" means a dollar amount equal to the
Fraction, multiplied by the number of Shares that are Dissenting Shares,
multiplied by $18 million.
1.19 "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 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.
1.20 "1999 EBIT" means the earnings before interest and taxes of the
Surviving Corporation for the period beginning July 1, 1998 and ending at June
30, 1999, determined in accordance with the Instructions for Determination of
EBIT attached hereto as Exhibit 1.
1.21 "Effective Time" means such time as the Articles of Merger are
filed with the Virginia State Corporation Commission in accordance with Section
13.1-720 of the VSCA and the Certificate of Merger is filed 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
Articles of Merger and the Certificate of Merger.
1.22 "Employment Contract" means the employment agreement in the form
attached hereto as Exhibit 2.
1.23 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.24 "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 $3.45 million (the "Minimum Net Worth"), the Company's
pro forma revenues for the 12 months ended June 30, 1997 are not less than $20.8
million, the Company's pro forma earnings before interest and taxes for the 12
months ended June 30, 1997 are not less than $1.2 million, 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 $28.6 million and the Company's
projected 1998 EBIT (as determined in good faith by Provant) is not less than
$2.48 million.
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1.25 "Financial Statements" means the financial statements of the
Company attached hereto as Exhibit 3, which are intended to be 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; provided
that nothing herein shall constitute a representation by the Company or the
Stockholder that the Financial Statements in fact comply with the requirements
of such Regulation S-X.
1.26 "First Accountants" means the firm of independent public
accountants then regularly employed by Provant.
1.27 "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).
1.28 "IPO" means the initial underwritten public offering of shares of
Provant Common Stock.
1.29 "IPO Price" shall mean the price at which shares of Provant Common
Stock are sold to the public in the IPO.
1.30 "Investment Letter" means the investment letter, in the case of
the Stockholder and members of his family who are "accredited investors" (as
defined in Regulation D promulgated under the Securities Act), in the form
attached hereto as Exhibit 4A, and in the case of all other holders of Shares or
Company Options, in the form attached hereto as Exhibit 4B.
1.31 "Merger Stock" means the shares of Provant Common Stock exchanged
for Shares pursuant to Section 2 .7(d) and 2.8.
1.32 "Non-Competition and Non-Disclosure Agreement" means the
non-competition and non-disclosure agreement in the form attached hereto as
Exhibit 5.
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1.33 "Non-Voting Percentage" means the percentage that the Non-Voting
Shares represent with respect to all Shares outstanding on a pro forma basis as
of immediately prior to the Effective Time, giving effect to the exercise of
each Company Option into the class of Shares applicable to it.
1.34 "Non-Voting Share" means a share of the Non-Voting Common Stock,
no par value, of the Company, and "Non-Voting Shares" means all such shares
(including, in the case of references to holders of Non-Voting Shares, holders
of Company Options exerciseable into Non-Voting Shares).
1.35 "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 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.
1.36 "Provant Disclosure Schedule" means the Disclosure Schedule
prepared by Provant and attached hereto and incorporated herein by this
reference.
1.37 "Provant Common Stock" means the shares of Common Stock, $0.01 par
value, of Provant.
1.38 "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.
1.39 "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.
1.40 "Second Accountants" means an accounting firm of national stature,
jointly selected by Provant and the Stockholder, that is not then employed by
Provant, the Stockholder or American Business Partners LLC, a Delaware limited
liability company ("ABP") (or any of their respective affiliates) and that was
not
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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 Stockholder 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.
1.41 "Securities Act" means the Securities Act of 1933, as amended.
1.42 "Share" means either a Voting Share or Non-Voting Share, and
"Shares" means all of such shares.
1.43 "Stockholders' Representative" means the Stockholder, such other
person as may be designated in writing by the Stockholder, or, if the
Stockholder is no longer capable of serving as such and has not designated
another person, such person as a majority-in-interest of the Company
Stockholders may appoint.
1.44 "Surviving Corporation" means the corporation that survives the
Merger.
1.45 "Underwriter" means, collectively, the managing underwriters of
the IPO.
1.46 "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.
1.47 "Voting Percentage" means the percentage that the Voting Shares
represent with respect to all Shares outstanding on a pro forma basis as of
immediately prior to the Effective Time, giving effect to the exercise of each
Company Option into the class of Shares applicable to it.
1.48 "Voting Share" means a share of the Common Stock, no par value, of
the Company, and "Voting Shares" means all such shares (including, in the case
of references to holders of Voting Shares, holders of Company Options
exerciseable into Voting Shares).
1.49 "VSCA" means the Virginia Stock Corporation Act.
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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 VSCA 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 duly executed
articles of merger (the "Articles of Merger") with respect to the Merger to be
filed and recorded in accordance with Section 13.7-720 of the VSCA and shall
cause a certificate of merger (the "Certificate of Merger") with respect to the
Merger 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 Articles of Merger and 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 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Fish, LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (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 13.1-721 of the VSCA 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, that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code, and that the Merger shall be tax-free except to the
extent of the lesser of the cash payable hereunder to the stockholders of the
Company or the gain realized by such stockholders.
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 Non-Voting Share which is outstanding immediately prior
to the Effective Time (other than Dissenting Shares, if any) shall be converted
without any action on the part of the holder thereof into, and be exchangeable
for
(i) cash equal to the Fraction times the
arithmetic difference of (X) the sum of $18 million plus the
Non-Voting Percentage multiplied by the excess, if any, of the
Company's Closing Net Worth over the Minimum Net Worth, minus
(Y) the Non-Voting Percentage multiplied by the Dissenting
Share Holdback, minus (Z) the Non-Voting Percentage multiplied
by $18 million multiplied by the Underwriters' Discount
(expressed as a percentage); and
(ii) the right to receive Additional
Consideration determined as provided in Section 2.8.
(d) Each Voting Share which is outstanding immediately prior to
the Effective Time (other than Dissenting Shares, if any) 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 equal to the Fraction times the arithmetic difference of
(A) $18 million divided by the IPO Price, minus (B) the
quotient of $5,310,000 divided by the IPO Price net of
Underwriters' Discount, minus (C) the Non-Voting Percentage
multiplied by $18 million, divided by the IPO Price,
(ii) cash equal to the Fraction times the sum of
(X) $5,310,000, plus (Y) the Voting Percentage multiplied by
the excess, if any, of the Company's Closing Net Worth over
the Minimum Net Worth, minus (Z) the Voting Percentage
multiplied by the Dissenting Share Holdback, and
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(iii) the right to receive Additional
Consideration 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.
(e) Notwithstanding subsections 2.7(c) and 2.7(d), Dissenting
Shares shall not be converted into the right to receive cash or Provant Common
Stock pursuant to such subsections or Section 2.8. At the Effective Time, in
lieu thereof, holders of Dissenting Shares shall be entitled solely to payment
of the appraised value of such Dissenting Shares in accordance with the
provisions of Article 15 of the VSCA.
2.8 RIGHT TO RECEIVE ADDITIONAL CONSIDERATION.
(a) Promptly following June 30, 1999 (but in no event later than
October 15, 1999), Provant will determine 1999 EBIT.
(i) In the event 1999 EBIT is $3.1 million or less, no
Additional Consideration shall be issued in respect of the
Shares.
(ii) In the event 1999 EBIT is greater than $3.1
million, Provant shall issue in respect of each Non-Voting
Share (other than Dissenting Shares, if any) cash in the
amount of the Fraction multiplied by six (6) times the amount
by which 1999 EBIT exceeded $3.1 million.
(iii) In the event 1999 EBIT is greater than $3.1
million, Provant shall issue in respect of each Voting Share
(other than Dissenting Shares, if any) Additional
Consideration, in the form of either cash or Provant Common
Stock as elected by the holder of such Share in accordance
with subsection (b) below, calculated as follows:
if the Additional Consideration is to be paid in
cash, an amount equal to the Fraction multiplied by
six (6) times the amount by which 1999 EBIT exceeded
$3.1 million; and
if the Additional Consideration is to be paid in
Provant Common Stock, a number of shares of such
stock equal to (A) the Fraction, multiplied by (B)
six (6) times the amount by which 1999 EBIT exceeded
$3.1 million, divided by (C) 80% of the Average
Closing Price of Provant Common Stock during the
month of July, 1999.
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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, 1999, Provant shall deliver to each
Company Stockholder a statement showing in reasonable detail Provant's
computation of 1999 EBIT, together with, in the case of former holders of Voting
Shares (if such former holders are entitled to receive Additional Consideration
pursuant to subsection (a)), an election form by which each such former holder
(independent of each other former holder) may elect whether to receive such
Additional Consideration either in the form of cash or in the form of Provant
Common Stock. Provant shall maintain, and shall cause the Surviving Corporation
to maintain, complete books and records necessary for the proper computation of
1999 EBIT. The Stockholders' Representative (and only the Stockholders'
Representative, acting as representative of all Company Stockholders, as
provided in subsection (h) below) shall have the right at his 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 determining the accuracy of the computation of 1999 EBIT made by
Provant, and the Surviving Corporation and Provant shall cooperate fully in all
reasonable respects with any such audit. In no event shall the Stockholders'
Representative have the right to conduct more than one such audit. If the
Stockholders' Representative does not 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 herein, the
Stockholders' Representative, on his behalf and on behalf of all Company
Stockholders, shall be deemed to have agreed that such statement was correct in
all respects. Unless the Stockholders' Representative has asserted a dispute
with respect to Provant's calculation of the 1999 EBIT in accordance with
subsection (c), Provant shall pay or issue any Additional Consideration due
pursuant to subsection (a) within ten (10) days after (x) the expiration of the
90-day period referenced in the immediately preceding sentence or, if earlier,
Provant's receipt of written confirmation from the Stockholders' Representative
(as representative of all Company Stockholders) that the Stockholders'
Representative does not dispute Provant's calculation of the 1999 EBIT, and (y)
in the case of each former holder of Voting Shares, receipt of an election form
from such former holder.
(c) Any dispute as to the correct computation of 1999 EBIT shall be
referred to the First Accountants for determination. If the Stockholders'
Representative does not elect to dispute the First Accountants' determination of
1999 EBIT within 30 days following the delivery thereof to the Stockholders'
Representative, such determination shall be final, binding and conclusive and
shall not be subject to challenge by
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Provant, the Stockholders' Representative or any Company Stockholder, and in
such event the fees and expenses of the First Accountants shall be borne by
Provant. In the event the Stockholders' Representative does elect within such 30
day period to dispute the determination of the First Accountants, the
Stockholders' Representative shall specify the amount (in dollars) that he
contends to be the correct 1999 EBIT (the Stockholders' Representative's "EBIT
Position"), and the final calculation of 1999 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, the Stockholders'
Representative or any other Company Stockholder. In the event the calculation of
1999 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' Representative or Provant) whose EBIT Position is
furthest, in gross dollars, from the 1999 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 1999 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 and
payment of Additional Consideration which is finally determined to be due to the
Company 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' Representative has paid the fees and expenses of the
accountants, if the Stockholders' Representative is responsible for such fees
and expenses pursuant to this Section.
(d) Prior to the first anniversary of the Effective Time, Provant shall
issue and place into escrow, with an institutional escrow agent reasonably
selected by Provant, the number of shares of Provant Common Stock and the amount
of cash that Provant then estimates (based on the year-to-date EBIT of the
Surviving Corporation and Provant's projection for the remainder of the 1999
fiscal year) will be issued and paid as Additional Consideration. Such shares of
Provant Common Stock and cash shall be held in escrow pending final
determination of 1999 EBIT, upon which the final number of shares and the final
amount of cash constituting Additional Consideration, if any, shall be released
from escrow to the Company Stockholders and any escrowed shares and cash not
distributed as Additional Consideration shall be released to Provant. If and to
the extent the escrowed shares and cash are less than the final amount of
Additional Consideration as finally determined pursuant to
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subsection (b) or (c) above, Provant shall issue additional shares of Provant
Common Stock and pay additional cash as necessary. The expenses of the escrow
agent shall be paid by Provant, except that if the determination of 1999 EBIT is
referred to the Second Accountants, the incremental expenses of the escrow agent
for the period following such referral shall be allocated in the same manner as
the expenses of the Second Accountants, as set forth in subsection (c).
(e) It is understood and agreed that Provant and the Surviving
Corporation shall be free to pursue their respective business goals and that
1999 EBIT may be affected thereby. Notwithstanding the foregoing, Provant hereby
agrees that (i) except to the extent that the Stockholder, as President of the
Surviving Corporation, shall cause or assent to contrary action by the Surviving
Corporation, during the period from the Effective Time through June 30, 1999,
Provant will cause the Surviving Corporation to conduct its operations in a
manner consistent with past practice and will use all commercially reasonable
efforts to preserve intact in the Surviving Corporation the present business
organization of the Company, to keep available the services of an adequate
number of qualified officers and employees of the Surviving Corporation, and to
preserve the Surviving Corporation's 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 during the period from the
Effective Time through June 30, 1999, and (ii) Provant will take no action and
adopt no policy (and will not cause the Surviving Corporation to take any action
or adopt any policy, including without limitation through members of Provant
management who serve as directors of the Company) during the period from the
Effective Time through June 30, 1999 that the Stockholders' Representative has
reasonably asserted (in advance of or promptly following such action or
adoption), in good faith and in writing, can reasonably be expected to result
(directly or indirectly) in a reduction of 1999 EBIT. Provant further agrees
that, from the Effective Time through June 30, 1999, it shall make available to
the Company (either through internal Provant resources or through a third-party
credit facility) credit for use in the Company's ordinary course business
operations in amounts consistent with the Company's credit availability as of
the date of this Agreement.
(f) The right of the Stockholder or any other holder of Voting Shares
to receive Provant Common Stock as Additional Consideration 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.
(g) If, subsequent to the IPO and prior to final determination of the
number of shares of Provant Common Stock issuable as Additional Consideration,
if any, pursuant to this Section 2.8, the outstanding shares of Provant Common
Stock shall
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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.
(h) The Stockholder, and any other person hereafter designated as
the Stockholders' Representative, is hereby appointed as the representative of
all holders of Shares and Company Options for purposes of this Section 2.8. The
Stockholders' Representative shall have no liability to any other holder of
Shares or Company Options for any action taken or position asserted (or any
failure to act or to assert any position) pursuant to this Section 2.8, provided
only that the Stockholders' Representative has acted in a manner he believed in
good faith to be in the interest of all holders of Shares and Company Options,
or according to such other standard as the Stockholders' Representative and such
other holders may agree in writing.
2.9 EXCHANGE OF AND PAYMENT FOR SHARES AT THE 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 in the case of Voting Shares, the further requirements
of clause (ii) below), Provant shall:
(i) in the case of Non-Voting Shares, cause to
be distributed to the person in whose name such certificate
shall have been registered a check payable to such person
representing the payment of the amount of cash into which such
Shares have been converted; and
(ii) in the case of Voting Shares, 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 the Shares previously represented by the
surrendered certificate shall have become exchangeable at the
Effective Time, together with a check payable to such person
representing the payment of cash due to such person by reason
of the Merger including any cash in lieu of fractional shares
determined in accordance with paragraph (g) of this Section
2.9. Provant's issuance of Provant Common Stock in exchange
for Voting Shares is conditioned upon the prior execution and
delivery to Provant of the Investment Letter by the recipient
of such Provant Common Stock, and such
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Provant Common Stock shall in all events be issued subject to
the provisions of Article 8.
Until surrendered as contemplated by clause (i) or clause (ii) above, 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 cash and/or Provant Common Stock into
which such Share has been converted pursuant to Section 2.7.
(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 for any purpose whatsoever (including without limitation
any right to vote the shares of Provant Common Stock into which such person's
Shares or Company Options are to be converted) unless and until such person has
executed and delivered to Provant an Investment Letter.
(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 pursuant to this
Agreement, to have been paid or issued, as the case may be, in full satisfaction
of all rights pertaining to the Shares.
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(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 and/or certificates representing the shares of Provant Common
Stock into which they were converted, as applicable, 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 holder of such Shares claiming such certificate to be lost, stolen or
destroyed and, if required by Provant or its stock transfer agent, the posting
by such holder 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 cash and/or Provant Common Stock deliverable
in respect thereof.
2.10 TREATMENT OF COMPANY OPTIONS. Each holder of a Company Option,
if any, outstanding as of immediately prior to the Effective Time (whether or
not then vested and exercisable) shall be entitled to receive (subject to any
required withholding of taxes), in cancellation of such option, consideration
equal to (a) if such option is exercisable for Non-Voting Shares, the cash
(including rights to receive additional cash as Additional Consideration), or
(b) if such option is exercisable for Voting Shares, the Provant Common Stock
and cash (including rights to receive additional Provant Common Stock or cash as
Additional Consideration), which such holder would have been entitled to receive
pursuant to Sections 2.7 and 2.8 had such holder exercised such Company Option
in full (including any unvested portion thereof) immediately prior to the
Effective Time, reduced in either case by the aggregate exercise price of such
Company Option, which aggregate exercise price shall be paid first by reducing
the cash otherwise to be received pursuant to Section 2.7 and second, if
necessary and only in the case of options exercisable for Voting
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Shares, by reducing the number of shares of Provant Common Stock otherwise to be
received pursuant to Section 2.7 by a number equal to (a) the remaining balance
of such aggregate exercise price divided by (b) the IPO Price net of
Underwriters' Discount. Such payments of cash and Provant Common Stock to each
holder of Company Options shall be made by Provant contemporaneously with the
delivery of cash and Provant Common Stock to the holders of Shares pursuant to
Section 2.9, provided only that such holder has duly executed and delivered an
Investment Letter in accordance with Section 2.9(c). Nothing in this Section
2.10 shall be construed as preventing a holder from exercising his or her
Company Option prior to the Effective Time.
3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE STOCKHOLDER
The Company and the Stockholder 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
Commonwealth of Virginia 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 a failure to be so qualified
or licensed would, in the aggregate, have a material adverse effect on the
business of the Company or the nature of the business conducted by it. The
Company has full power and authority to execute and deliver this Agreement and,
subject to the approval of its stockholders under the VSCA, 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 excepting only the
affirmative votes of the holders of two-thirds of the outstanding Voting Shares
and the holders of two-thirds of the outstanding Non-Voting Shares, each in
accordance with the VSCA, 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
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and, subject only to the aforesaid vote of the Company's stockholders,
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 12,000,000 shares of Common Stock, no par
value, and 3,000,000 shares of Non-Voting Common Stock, no par value, of which
no shares are held in the Company's treasury. As of the date hereof, there are
8,067,241 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, to the Company's knowledge, beneficially by the stockholders of the
Company in the respective amounts listed on the Company Disclosure Schedule. The
Company has no authorized class of capital stock other than the Common Stock and
the Non-Voting 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
applicable federal and state securities laws.
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.
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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
Articles of Incorporation or By-Laws; (ii) conflict with, result in a breach of,
constitute a default (or an event that might, with the passage of time or the
giving of notice or both, constitute a default) under, give rise to any right to
terminate, cancel or accelerate, give rise to any loss of benefit under, or
result in the creation of any lien, security interest or other encumbrance
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 Articles of
Merger pursuant to the VSCA and for filing the Certificate of Merger pursuant to
the DGCL. Notwithstanding the immediately preceding sentence, the Company and
the Stockholder make no representation or warranty regarding whether any filing
is required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), but the Company and the Stockholder 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 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.
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(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
(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
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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, except in each case in the ordinary course of business; 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
individually or collectively 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) to the Company's
knowledge, no existing or 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 ▇▇▇▇, 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
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claims or rights of others, all Proprietary Information required for 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 misappropriate any patent, trademark, trade name, service
▇▇▇▇, 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 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
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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 material 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 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, the Stockholder or any
officer or director, or any Affiliate of a Stockholder, officer or director of
the Company. As used herein, "Affiliate" of a person 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
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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;
(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
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(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 (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.
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(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.
(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.
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(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, 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.
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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 gifts 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 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.
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(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's 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 is and
has 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
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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 stored in underground storage tanks, or that are present in
vehicles located on such property. The Company has not released, and has not
affirmatively consented to any release of, Hazardous Materials on, under or
affecting any real property during 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 as amended 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 is otherwise physically occupied or
utilized by the Company. To the knowledge of the Company, there is no alleged or
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 any act or event that
constitutes a violation or alleged violation of any Environmental Law, which
alleged or potential liability (i) arises out of or relates to acts or events
occurring during the Company's possession or occupation of the applicable
property, and (ii) 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
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otherwise acquire full right, title and interest in and to such business,
properties and assets.
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 conform in all
material respects to the votes contained in the record book of the Company.
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 and are in good operating order and repair, free from known defects
in construction or design, sound and properly functioning (normal wear and tear
expected), 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 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 Articles 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
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Disclosure Schedule and the other Schedules, Exhibits and attachments hereto,
taken as a whole) with respect to the Company or its stockholders is false or
misleading, nor does this Agreement (including, without limitation all
information in the Financial Statements, 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 by the Company to Provant 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 statement 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 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 STOCKHOLDER
The Stockholder represents and warrants to Provant and Acquisition
that, except as expressly provided in the Company Disclosure Schedule by
specific reference to a Section of this Article 4:
4.1 TITLE TO THE SHARES. All of the issued and outstanding Shares
purported to be owned by Stockholder as set forth on the Disclosure Schedule
pursuant to Section 3.2 are owned by the Stockholder free and clear of any
claims, liens, charges, encumbrances, security interests and rights of others
whatsoever, and such Shares are
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not bound by or subject to any proxy, agreement, voting trust or other
restriction regarding the voting thereof.
4.2 AUTHORITY. The Stockholder has full power, authority and capacity
to execute and deliver this Agreement and to consummate those transactions
contemplated hereby which pertain to him, and no other action is necessary by
the Stockholder to consummate such transactions. This Agreement has been duly
and validly executed and delivered by the Stockholder and constitutes a legal,
valid and binding obligation of the Stockholder enforceable against him in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement or creditors' rights generally.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Stockholder does not and will not (i) conflict with, result in
a breach of, constitute a default (or an event that might, with the passage of
time or the giving of notice or both, constitute a default) under, give rise to
any right to terminate, cancel or accelerate, give rise to any loss of benefit
under, or result in the creation of any lien, security interest or other
encumbrance 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 Stockholder is a party or by which he or his 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 Stockholder is bound or to which he is subject; or (iv)
violate any applicable law, rule, or regulation to which the Stockholder or any
of his property is bound.
5. REPRESENTATIONS AND WARRANTIES
OF PROVANT, ACQUISITION AND THE PROVANT PRINCIPALS
Provant, Acquisition and the Provant Principals represent and warrant
to the Company and the Company Stockholders (including the Stockholder) 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. Each of
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Provant and Acquisition 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
Provant Disclosure Schedule, which are the only jurisdictions in which a failure
to be so qualified or licensed would, in the aggregate, have a material adverse
effect on the business of Provant or Acquisition, as applicable, or the nature
of the business conducted by it. 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, 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
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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. There exist no 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 VSCA and the DGCL and (B) any filings required under the Securities Act and
the securities or blue sky laws of the various
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states; (iii) conflict with, result in a breach of, constitute a default (or an
event that might, with the passage of time or the giving of notice or both,
constitute a default) under, give rise to any right to terminate, cancel or
accelerate, give rise to any loss of benefit under, or result in the creation of
any lien, security interest or other encumbrance under, any note, 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 Stockholder 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 properly 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 or the effective time of the IPO, 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
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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 or 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), other than the Additional Merger Agreements, relating to the
conduct of the business of Provant or its subsidiaries, including Acquisition
(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) labor union contracts, together with a list of all labor unions
representing or, to Provant's knowledge, attempting to represent employees of
Provant;
(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 Provant
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 Provant 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) [reserved];
(h) agreements, contracts or other arrangements to which Provant 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 Provant'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 Provant 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 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
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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 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, 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.
5.12 OBLIGATIONS TO OR FROM AFFILIATES.
(a) All material transactions between Provant and any stockholder,
officer or director of Provant or Acquisition, or any Affiliate of any
stockholder, officer or director of Provant or Acquisition, 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 Provant
and an unrelated party. Except for matters disclosed on the Provant Disclosure
Schedule, there are no debts or other obligations of Provant or Acquisition to,
or to Provant or Acquisition from, any stockholder, officer or director, or any
Affiliate of a stockholder, officer or director of Provant.
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(b) The Provant 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 Provant with the Commission on the date hereof.
5.13 ABSENCE OF MATERIAL EVENTS. Since January 1, 1997 there has
not been (a) any material adverse change in the business, affairs or prospects
of Provant nor, to the best of Provant's knowledge, are any such changes
threatened, anticipated or contemplated; (b) any actual or, to Provant'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 Provant; (c) any material and adverse pending or, to Provant's
knowledge, threatened, anticipated or contemplated dispute of any kind with any
material customer, supplier, source of financing, employee, landlord, subtenant
or licensee of Provant, or any pending or, to Provant'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 Provant'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 Provant.
5.14 ABSENCE OF IMPROPER PAYMENTS. Since January 1, 1994 Provant:
(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 gifts 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 Provant 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.
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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, except with the prior
written consent of Provant, will not (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 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 Articles 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
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(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
pay a cash dividend 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 Financial Condition).
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 three business days 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 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
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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 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; SHAREHOLDER APPROVAL.
(a) 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
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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. Each of the Provant
Principals hereby covenants and agrees that, subject to the satisfaction (or, in
Provant's sole discretion, waiver) of the conditions set forth in Section 7.1,
he will cause Provant to calculate the Financial Condition in good faith and
cause Provant, Acquisition or Provant's counsel, as applicable, to execute
and/or deliver each of the items identified in subsections 7.2(f), (i), (j) and
(l) and to take the action described in subsection 7.2(k).
(b) Without limiting the foregoing, the Company will promptly and duly
call (and the Stockholder will cause the Company to so call) a special meeting
of its stockholders for the purpose of voting on the Merger and this Agreement.
The Board of Directors of the Company and the Stockholder shall give their
respective unqualified recommendations to the stockholders of the Company that
such stockholders approve the Merger and this Agreement, and the Company and the
Stockholder will otherwise use their reasonable best efforts to obtain
stockholder approval.
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.
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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-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 and Provant will promptly supplement or amend the Provant Disclosure
Schedule, in each case both to correct any inaccuracy in, respectively, the
Company Disclosure Schedule or the Provant 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 applicable party's Disclosure
Schedule or which has rendered inaccurate the information contained in such
Disclosure Schedule (each notice furnishing such information being called, as
applicable a "Company Disclosure Supplement" or a "Provant Disclosure
Supplement"), and approximately six business days prior to the Closing the
Company will deliver to Provant a final Company Disclosure Supplement and
Provant will deliver to the Company a final Provant Disclosure Supplement
consisting of a complete update of, respectively, the Company Disclosure
Schedule or the Provant Disclosure Schedule as though all representations and
warranties contained in Article 3 hereof and Article 5 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, and Provant 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,
Provant Disclosure Supplement or notice.
6.8 COVENANTS OF THE STOCKHOLDER. Subject to the last sentence of this
Section 6.8, the Stockholder hereby covenants and agrees with Provant and
Acquisition that he shall:
(a) take no action which the Company may not take pursuant to
Section 6.2;
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(b) take action and refrain from action to the extent required of the
Company pursuant to Section 6.4;
(c) vote, or cause to be voted, all of his Shares for the approval of
each aspect of this Agreement (including the Merger) requiring the approval of
the stockholders of the Company, and against the approval of any other agreement
providing for a merger, consolidation, sale of assets or other business
combination of the Company with any person or entity other than Provant or an
entity controlled by Provant;
(d) cause the Company to provide to Provant the notifications required
of the Company under Section 6.7;
(e) execute and deliver at the Closing the Employment Contract, the
Non-Competition and Non-Disclosure Agreement and the Investment Letter;
(f) subject to the other terms of this Agreement, (i) use all
commercially reasonable 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, 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; (ii) use his reasonable best efforts to take whatever
action may be reasonably necessary or desirable carry out the intent and
purposes of the transactions contemplated hereby and to permit Provant to
undertake and complete the IPO;
(g) notify Provant in writing if at any time prior to a closing in
connection with the IPO he shall obtain actual 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(g) not limiting or
otherwise affecting the remedies available hereunder to the party receiving such
notice);
(h) 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
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(i) satisfy (or cause to be satisfied) prior to the Effective Time any
indebtedness to the Company owed by the Stockholder or by any Affiliate of the
Stockholder (other than an Affiliate that is a subsidiary of the Company);
PROVIDED that such indebtedness (up to the amount of cash that the Stockholder
will receive pursuant to Section 2.7) may be satisfied as of the Effective Time
with cash to be so received by the Stockholder, and the Stockholder hereby
authorizes Provant to offset any such indebtedness not repaid prior to the
Effective Time against cash payable to or for the account of the Stockholder
pursuant to Section 2.7.
The Stockholder's obligations under subsections (b), (d) and (f) of this Section
6.8 shall be limited to exercising such power as he possesses as an officer,
director and stockholder of the Company, and in no event (i) shall the
Stockholder be liable pursuant to such provisions for any failure of any action
to be taken that is not within the Stockholder's power, in the aforesaid
capacities, to cause to be performed, or (ii) shall the Stockholder be required
to expend any personal funds in furtherance of such obligations.
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 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
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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, and (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 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.
6.12 COVENANTS OF PROVANT. Subject to the consummation of the Merger,
Provant hereby covenants and agrees with the Stockholder as follows:
(a) In the event that, prior to the Effective Time, a Company
Stockholder shall give written notice to Provant of a statement contained in the
Registration Statement that, in such Company Stockholder's opinion, is false or
misleading, or that the Registration Statement omits to state a fact necessary
to make the statements contained therein not false or misleading, and if Provant
fails to amend the Registration Statement to address such statement or omission
to the reasonable satisfaction of such Company Stockholder, then Provant hereby
agrees to indemnify such Company Stockholder against any loss or damage
(including reasonable attorneys' fees) suffered by such Company Stockholder as a
consequence of any claim brought against such Company Stockholder by any third
party on the basis of the statement or omission of which such Company
Stockholder gave notice.
(b) Each of Provant and Acquisition will use all commercially
reasonable efforts to obtain the release, at or immediately following the
Effective Time, of all contractual guarantees by the Stockholder of loans,
leases and similar obligations of the Company, provided only that such loans,
leases and other obligations are disclosed on the Company Disclosure Schedule
and are reflected on the Balance Sheet and in the computation of Closing Net
Worth to the extent required under generally accepted accounting principles to
be so reflected. Provant covenants that it will either (i) take steps to ensure,
to the Stockholder's reasonable satisfaction, that each such
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loan and similar credit obligation guaranteed by the Stockholder will be
satisfied and permanently discharged promptly following the Effective Time, or
(ii) obtain and deliver to the Stockholder at or before the Closing the written
assurance from the guaranteed party with respect to each such loan and similar
credit obligation guaranteed by the Stockholder to the effect that, upon or
immediately following the Effective Time, the Stockholder will be released from
the applicable contractual guaranty. Provant further covenants that it will
indemnify the Stockholder against any loss (including reasonable attorneys'
fees) in connection with any such guaranty by the Stockholder of a loan, lease
and similar obligation that has been so disclosed and, if applicable, reflected.
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 has been satisfied.
(c) Each of the representations, warranties, agreements and covenants
of the Company and the Stockholder (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 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 Stockholder 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
Stockholder dated as of the date of the Closing to the foregoing effect.
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(d) The Merger and this Agreement shall have been approved by the
requisite vote of the stockholders of the Company, and not more than 5.0% of the
Shares shall constitute Dissenting Shares.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) The Stockholder shall have executed and delivered to Provant the
Employment Contract, the Non-Competition and Non-Disclosure Agreement, and his
Investment Letter.
(j) 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.
(k) 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 STOCKHOLDER.
The obligation of the Company and the Stockholder 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 of the Company entitled to receive Cash Consideration shall receive
such Cash Consideration out of the proceeds of the IPO.
(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 but not to any Provant Disclosure Supplement) shall be true and correct
as of, and shall not have been violated in any respect at, the Closing (without
giving effect to the Merger or the Additional Mergers) 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, Acquisition and the Provant Principals 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 there shall have been delivered to the
Company a certificate signed by the respective Presidents of Provant and
Acquisition on the behalf of and in the name of, respectively, Provant and
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Acquisition, and by each of the Provant Principals, 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.
(e) The Merger and this Agreement shall have been approved by the
requisite vote of the stockholders of the Company.
(f) 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. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & 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).
(g) 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 Stockholder at the request of Provant, shall
be satisfactory in form and substance to counsel for the Company, acting
reasonably.
(h) 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.
(i) 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.
(j) The Surviving Corporation shall have executed and delivered the
Employment Contract to the Stockholder.
(k) The individual listed on Schedule 7.2A 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.
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(l) Provant, Acquisition and the Provant Principals 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.
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.
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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 (including in its capacity as the Surviving
Corporation) and its affiliates.
(iii) "Company Indemnified Party" means, after the
Effective Time, the former stockholders of the Company
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 Stockholder shall indemnify, defend, and hold the Provant
Indemnified Party harmless from, against and in respect of any and all Damages
incurred by any Provant Indemnified Party arising from or in connection with any
of the following (collectively referred to herein as "Claims"):
(i) any actual or alleged breach of any representation,
warranty, covenant or agreement made by the Company or by the
Stockholder 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 Stockholder
pursuant to the terms of this Agreement or otherwise referred
to or incorporated in this Agreement; and
(ii) those matters identified on Schedule 9.1.
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(c) In addition to the foregoing, and solely in the event the Merger
shall be consummated, the Stockholder 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 Stockholder 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 Stockholder 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 each of 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, Acquisition or the Provant
Principals 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,
Acquisition or the Provant Principals 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 and the Stockholder's
representations and warranties set forth in Article 3, the Stockholder's
representations and warranties set forth in Article 4, and Provant's,
Acquisition's and the Provant Principals' 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,
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warranty, covenant and agreement of the Company and the Stockholder shall be
deemed to have been relied upon by the Provant Indemnified Party, and each
representation, warranty, covenant and agreement of Provant, Acquisition and the
Provant Principals 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, and provided that Provant has given to the
Stockholder the notice required by Section 9.3 or 9.5, as applicable, 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(g).
(g) In the event the Stockholder 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 Stockholder those accounts receivable
as to which such indemnity has been paid.
9.2 LIMITATIONS ON INDEMNITY OBLIGATIONS. The indemnity obligations of
the Company or the Stockholder, 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:
(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,
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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 timely
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 the maximum aggregate amounts provided elsewhere in
this Subsection 9.2(b) with respect to the Stockholder's indemnity obligations,
in the event of any Damages for which the Stockholder is liable pursuant to
Section 9.1, the Stockholder shall be liable solely for a fraction of each
dollar of Damages suffered equal to the fraction derived by dividing the number
of Shares held by the Stockholder as of the date hereof by the total number of
Shares outstanding on a fully diluted basis. Subject to subsection (b)(ii)
below, the aggregate indemnity obligations of the Stockholder for any Damages
arising out of Claims the operative facts of which were actually known to the
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 to which the Stockholder
becomes entitled pursuant to Section 2.7 or 2.8, plus (B) the product of the
total number of shares of Provant Common Stock to which the Stockholder becomes
entitled pursuant to Section 2.7 or 2.8, multiplied by the IPO Price, minus (C)
any amounts paid pursuant to Section 9.1 by the Stockholder with respect to
Claims that are not Known Claims. Subject to subsection (b)(ii) below, the
aggregate indemnity obligations of the Stockholder for any Damages arising out
of Claims that do not constitute Known Claims shall not in any event exceed Five
Million Dollars ($5,000,000). 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 Stockholder pursuant to Section 9.1(b) on account of the then-asserted
Claim, in aggregation with all such Damages previously paid by the Stockholder,
equal or exceed the aggregate amount of the cash received by the Stockholder
pursuant to
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Sections 2.7 and 2.8, and (B) the Average Closing Price 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
Stockholder (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 the Stockholder may, at his election, satisfy such portion of the
Damages as exceed the cash received by the Stockholder pursuant to Sections 2.7
and 2.8 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 Stockholder is therefore permitted to
satisfy his obligation to pay Damages by tendering shares of Provant Common
Stock, and the Stockholder elects to so tender Provant Common Stock, the
Stockholder's obligation for Damages shall be limited to the number of shares of
Provant Common Stock received by the Stockholder pursuant to Sections 2.7 and
2.8. In the event that Damages are to be paid by the Stockholder before the
final distribution of Provant Common Stock (if any) on account of 1999 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
(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 an amount
(the "Basket") equal to one percent (1%) of the aggregate consideration paid
pursuant to Sections 2.7 and 2.8 (valuing the Provant Common Stock issued under
Section 2.7 at the IPO Price and valuing the Provant Common Stock issued under
Section 2.8 at the same price as utilized in determining the number of shares to
be issued as Additional Consideration (i.e., 80% of the then-current Average
Closing Price)), in which event it shall be entitled to indemnification of the
full amount of such Damages; PROVIDED, HOWEVER, that in the event Damages are to
be paid before the final determination of the amount of Additional
Consideration, the Basket shall be assumed tentatively to be $250,000 pending
final determination of the Additional Consideration. No amounts indemnified by
the Company or the Stockholder 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.
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(d) Notwithstanding the preambles to, respectively, Article 3 and
Article 5, the contractual liability of the Stockholder 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 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
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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 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 Stockholder and the Boards 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
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Agreement to perform or observe the covenants and agreements of such party set
forth herein;
(c) by the Company or the Stockholder if there has been a
misrepresentation or breach on the part of Provant, Acquisition or the Provant
Principals in the representations, warranties, covenants or obligations of
Provant, Acquisition or the Provant Principals 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,
Acquisition and the Provant Principals of such breach;
(d) by Provant if there has been a misrepresentation or breach on the
part of the Company or the Stockholder in the representations, warranties,
covenants and obligations of the Company and the Stockholder 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 Stockholder 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 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 Stockholder
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 Stockholder shall, directly or indirectly, discuss, negotiate,
submit or
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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.
11. MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as provided in
Article 9 with respect to the representations and warranties contained in
Article 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
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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, Acquisition or any Provant Principal, to it or him at:
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Fish, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company or the Stockholder, to it or him at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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
Commonwealth of Virginia, 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 Stockholder or expensed (and not
capitalized) by the Company prior to the computation of the Company's net worth
for purposes of determining satisfaction of the Financial Condition. An account
receivable for expenses reimbursable by Provant under clause (i) above may be
included on the
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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 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 to the benefit of the
Company Stockholders, 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
Stockholder 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, or
(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:
--------------------------------------
STAR ACQUISITION CORP.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
STAR MOUNTAIN, INC.
By:
-----------------------------------------
Name: A. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
STOCKHOLDER:
--------------------------------------------
A. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
PROVANT PRINCIPALS:
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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