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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") dated as of
December 14, 1999 is by and among PROVANT, Inc., a Delaware corporation
("PROVANT"), SDL Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of PROVANT ("Acquisition"), Xxxx-Xxxxxxx Leadership Consulting Group,
Inc., a California corporation ("Xxxx-Xxxxxxx"), Xxxx-Xxxxxxx Leadership
Consulting U.K., Ltd., a California corporation ("Xxxx-Xxxxxxx UK"), the
shareholders of Xxxx-Xxxxxxx and Xxxx-Xxxxxxx UK, all of whom are listed on
Schedule 1 hereto, and Xxxxx X. Xxxx, Xxxx Xxxxxxxxx and Xxxx Xxxxx,
individually, and provides for the merger of SDL with and into Xxxx-Xxxxxxx (the
"SDL Merger") and the merger of Xxxx-Xxxxxxx UK with and into Xxxx-Xxxxxxx (the
"SDL-UK Merger" and, together with the SDL Merger, the "Mergers"). PROVANT
desires to acquire Xxxx-Xxxxxxx and Xxxx-Xxxxxxx UK through the Mergers, and
Xxxx-Xxxxxxx and Xxxx-Xxxxxxx UK desire to be so acquired.
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 "Balance Sheet" means the balance sheet dated December 31, 1998
contained in the Financial Statements (as defined herein), and the accompanying
schedules thereto.
1.2 "Balance Sheet Date" means December 31, 1998.
1.3 "Business" means the existing business of the Company and shall
include the Company's operations, facilities, assets, financial condition,
results of operations, finances, markets, products, services, competitive
position, customers and personnel.
1.4 "CGCL" means the California General Corporation Law.
1.5 "Closing" means the closing of the transactions contemplated by this
Agreement.
1.6 "Code" means the Internal Revenue Code of 1986, as amended to date.
1.7 "Commission" means the Securities and Exchange Commission.
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1.8 "Company" means Xxxx-Xxxxxxx and Xxxx-Xxxxxxx UK, both together and
individually.
1.9 "Company's Knowledge" means actual knowledge of each of the
executive officers of the Company (Xxxxx X. Xxxx, Xxxx Xxxxxxxxx and Xxxx X.
Xxxxxx).
1.10 "Contract" means any written or oral contract, agreement, lease,
plan, instrument or other document, commitment, arrangement, undertaking or
authorization that is or may be binding on any person or its property under
applicable Law.
1.11 "Court Order" means any judgment, decree, injunction, order or
ruling of any Governmental Authority that identifies by name and is binding on
any person or its property under applicable Law.
1.12 "Damages" means any loss, Liability, claim, damage and expense
(including but not limited to, costs of investigation and defense and reasonable
attorneys' and accountants', consultants' and experts' fees and expenses that
would not have been expended but for the breach) whether or not involving a
third party claim; provided, however, that Damages shall be determined net of
the sum of any amounts received under insurance policies with respect to such
Damages.
1.13 "Default" means (a) a breach of or default under any Contract, (b)
the occurrence of an event that with the passage of time or the giving of notice
or both would constitute a breach of or default under any Contract, or (c) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
1.14 "DGCL" means the Delaware General Corporation Law.
1.15 "Disclosure Schedule" means the Disclosure Schedule attached hereto
as Schedule 2.
1.16 "EBIT" means earnings before interest and taxes determined in
accordance with (i) GAAP (as defined herein) and (ii) the accounting principles
utilized in the preparation of the Financial Statements.
1.17 "Effective Time" means the date and time that both of the following
have occurred: (i) the Delaware Certificate of Merger is filed with the
Secretary of State of Delaware (in accordance with Section 252 of the DGCL) and
the SDL Agreement of Merger, together with an Officers' Certificate and tax
clearance certificate, is filed with the Secretary of State of California (in
accordance with Sections 1103 and 1108 of the CGCL) and (ii) the SDL-UK
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Agreement of Merger, together with an Officers' Certificate and tax clearance
certificate, is filed with the Secretary of State of California (in accordance
with Section 1103 of the CGCL).
1.18 "Employment Agreement" means the employment agreement between the
Surviving Corporation and each of Xxxxx X. Xxxx and Xxxx Xxxxxxxxx,
substantially in the form attached hereto as EXHIBIT 1.
1.19 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.20 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.21 "Financial Statements" means the financial statements of the
Company, consisting of the balance sheets as of December 31, 1997 and December
31, 1998 and the statements of operations, changes in stockholders' equity and
cash flows for the years ended December 31, 1997 and December 31, 1998, and the
balance sheets, statements of operations, changes in stockholders' equity and
cash flows as of and for the nine month period ended September 30, 1999, all as
attached hereto as EXHIBIT 2.
1.22 "GAAP" means generally accepted accounting principles.
1.23 "Governmental Authority" means any federal, state, local, foreign,
national, or provincial governmental agency, body, authority, district, board,
commission, court, tribunal, political subdivision or other governmental
instrumentality or any self-regulatory organization.
1.24 AHSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
1.25 "Law" means any statute, law, ordinance, regulation, decision,
order or rule of any Governmental Authority.
1.26 "Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, deficiency or guaranty of or by any person of any
type, whether accrued, absolute, contingent, matured, unmatured or other.
1.27 "License" means any license, franchise, permit, easement, right,
authorization, approval, consent, waiver or certification of or from any
Governmental Authority.
1.28 "Lien" means any mortgage, lien, security interest, pledge,
encumbrance, restriction on transferability, defect of title, charge or claim of
any nature whatsoever on any property or property interest.
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1.29 "Managers" means Xxxxx X. Xxxx and Xxxx Xxxxxxxxx.
1.30 "Merger Stock" means the shares of PROVANT Common Stock exchanged
for Shares pursuant to this Agreement.
1.31 "Ordinary Course of Business" means the ordinary course of business
of the Company consistent with past customs and practice.
1.32 "Prime Rate" means the fluctuating rate per annum announced from
time to time in The Wall Street Journal as the prime rate.
1.33 "Proceeding" means any lawsuit, action, arbitration, administrative
or other proceeding, criminal prosecution or governmental investigation or
inquiry or examination or audit involving the Company, the Business or any
Contract to which the Company is a party or by which it or any of the assets of
the Company or the Business may be bound.
1.34 "PROVANT Common Stock" means the common stock, $0.01 par value, of
PROVANT.
1.35 "Registrable Shares" means 40% of the Merger Stock on a pro rata
basis among the Shareholders, and any shares of PROVANT Common Stock issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of such Merger Stock.
1.36 "Securities Act" means the Securities Act of 1933, as amended.
1.37 "Selling Stockholder" means (i) any Shareholder who requests or
joins in any registration of Registrable Shares (ii) any family member of any
such Shareholder to whom Registrable Shares are transferred by bona fide gift
and (iii) any other persons to whom Registrable Shares are transferred in
compliance with the Securities Act, provided that in no event shall the number
of persons who seek to be treated as Selling Stockholders exceed fifty (50).
1.38 "Xxxx-Xxxxxxx Common Stock" means the common stock, $.01 par value
per share, of Xxxx-Xxxxxxx.
1.39 "Xxxx-Xxxxxxx Shares" means shares of Xxxx-Xxxxxxx Common Stock.
1.40 "Xxxx-Xxxxxxx UK Shares" means shares of common stock, without par
value, of Xxxx-Xxxxxxx UK.
1.41 "Shareholders" means the shareholders of the Company, all of whom
are listed on SCHEDULE 1 hereto.
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1.42 "Shares" means Xxxx-Xxxxxxx Shares and Xxxx-Xxxxxxx UK Shares.
1.43 "Shareholder Representative" means Xxxxx X. Xxxx.
1.44 "Surviving Corporation" means Xxxx-Xxxxxxx, the corporation that
shall survive the Mergers.
1.45 "Tax Return" shall mean any return, declaration, report, claim for
refund, information return or statement relating to Taxes, including any
schedule or attachment thereon, and including any amendment thereof, which are
or were filed or required to be filed under applicable law, whether on a
consolidated, combined, unitary or individual basis.
1.46 "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, 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.
1.47 "Treasury Regulations" shall mean the treasury regulations
promulgated under the Code.
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For purposes of this Agreement, each of the following terms are defined
in the Section of this Agreement indicated below:
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DEFINED TERM SECTION
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Affiliate 4.13
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Annual Meeting 6.5
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Benefit Arrangements 4.19(a)
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Closing Date 3.1
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Controlled Group Member 4.19(a)
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Delaware Certificate of Merger 2.2
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Employees 4.20
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Environmental Laws 4.23
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Founding Company Mergers 7.6
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Hazardous Material 4.23
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Nasdaq 7.2(d)
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Material Adverse Effect 4.10(b)
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Projections 4.8(b)
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Proprietary Information 6.2(e)
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Proprietary Property 4.12(a)
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PROVANT Group 6.2(a)
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PROVANT Proprietary Information 6.2(f)
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PROVANT SEC Filings 5.5
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Registration Expenses 7.3
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Representation Letter 3.1(a)(iii)
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S-3 Registration Statement 7.1(a)
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SDL Agreement of Merger 2.2
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SDL-UK Agreement of Merger 2.2
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Year 2000 Compliant 4.28(d)
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2. THE MERGER
2.1 THE MERGERS.
(a) The SDL Merger shall occur, upon the terms and conditions hereof,
at the date and time that the Delaware Certificate of Merger is filed with the
Secretary of State of Delaware (in accordance with Section 252 of the DGCL) and
the SDL Agreement of Merger, together with an Officers' Certificate and tax
clearance certificate, is filed with the Secretary of State of California (in
accordance with Sections 1103 and 1108 of the CGCL). Following the SDL Merger,
Xxxx-Xxxxxxx shall continue as the surviving corporation and a wholly-owned
subsidiary of PROVANT, and the separate corporate existence of Acquisition shall
cease.
(b) The SDL-UK Merger shall occur, upon the terms and conditions
hereof, at the date and time that the SDL-UK Agreement of Merger, together with
an Officers' Certificate and tax clearance certificate, is filed with the
Secretary of State of California (in accordance with Section 1103 of the CGCL).
Following the SDL-UK Merger, Xxxx-Xxxxxxx shall continue as the surviving
corporation and a wholly-owned subsidiary of PROVANT, and the separate corporate
existence of Xxxx-Xxxxxxx UK shall cease.
(c) It is intended that the Mergers shall each constitute a
reorganization within the meaning of Section 368(a) of the Code and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
2.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver
of all conditions to the Mergers, the parties (a) shall cause a certificate of
merger (the "Delaware Certificate of Merger") with respect to the SDL Merger to
be filed and recorded in accordance with Section 252 of the DGCL and shall cause
an Agreement of Merger with respect to the SDL Merger (the "SDL Agreement of
Merger"), together with an Officers' Certificate and tax clearance certificate,
to be filed in accordance with Sections 1103 and 1108 of the CGCL, (b)
immediately following the filing of both the Delaware Certificate of Merger and
the SDL Agreement of Merger with respect to the SDL Merger, shall cause an
Agreement of Merger with respect to the SDL-UK Merger (the "SDL-UK Agreement of
Merger"), together with an Officers' Certificate and tax clearance certificate,
to be filed in accordance with Sections 1103 of the CGCL, and (c) shall take all
such further actions as may be required by law to make the Mergers effective.
The effective time of the SDL Merger shall occur, and shall be deemed to have
occurred, prior to the effective time of the SDL-UK Merger. The Closing will be
held before the filing of the Delaware Certificate of Merger in Delaware and the
SDL Agreement of Merger and the SDL-UK Agreement of Merger in California at the
Company, 0000 Xxxxxx Xxxxxxx Xxx, Xxxx Xxxxx, Xxxxxxxxxx (or such other place as
the parties may agree) for the purpose of confirming all the foregoing.
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2.3 EFFECTS OF THE MERGERS. The SDL Merger shall have the effects set
forth in Section 1107 of the CGCL and Sections 259, 260 and 261 of the DGCL, and
the SDL-UK Merger shall have the effects set forth in Section 1107 of the CGCL.
2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and the By-laws of Xxxx-Xxxxxxx, in each case as in effect
immediately prior to the SDL Merger, shall be the Certificate of Incorporation
and By-laws of the surviving corporation of the SDL Merger. The Certificate of
Incorporation and the By-laws of Xxxx-Xxxxxxx, in each case as in effect
immediately prior to the SDL-UK Merger, shall be the Certificate of
Incorporation and By-laws of the surviving corporation of the SDL-UK Merger.
2.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors and
officers of the Surviving Corporation shall be as set forth on EXHIBIT 3, and
each such person shall hold office until his or her respective successor is duly
elected or appointed and qualified.
2.6 CONVERSION OF STOCK.
(a) All Xxxx-Xxxxxxx Shares held in the treasury of Xxxx-Xxxxxxx
immediately prior to the SDL Merger shall be canceled, without
payment of any consideration therefor. Each other Xxxx-Xxxxxxx
Share that is outstanding immediately prior to the SDL Merger
shall be converted without any action on the part of the
holder thereof into and be exchangeable in the aggregate for
1.925357 shares of PROVANT Common Stock.
(b) All shares of Acquisition that are outstanding immediately
prior to the SDL Merger shall be converted into without any
action on the part of the holders thereof into and be
exchangeable in the aggregate for 100 shares of Xxxx-Xxxxxxx
Common Stock.
(c) All Xxxx-Xxxxxxx Shares issued and outstanding immediately
prior to the SDL-UK Merger shall remain issued and outstanding
without change.
(d) All Xxxx-Xxxxxxx UK Shares held in the treasury of
Xxxx-Xxxxxxx UK immediately prior to the SDL-UK Merger shall
be canceled, without payment of any consideration therefor.
Each other Xxxx-Xxxxxxx UK Share that is outstanding
immediately prior to the SDL-UK Merger shall be converted
without any action on the part of the holder thereof into and
be exchangeable in the aggregate for 1.070627 shares of
PROVANT Common Stock.
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2.7 EXCHANGE OF AND PAYMENT FOR SHARES.
(a) On or promptly following the Effective Time (but in no event before
surrender to PROVANT of any certificate(s) which prior to the Effective Time
shall have represented Shares), subject to the provisions of subsection (c)
below, PROVANT shall cause to be delivered to the person in whose name such
certificate(s) shall have been registered (i) a certificate registered in the
name of such person representing the shares of PROVANT Common Stock into which
the Shares previously represented by the surrendered certificate(s) shall have
been converted at the Effective Time, and (ii) a check payable to such person
representing the payment of the amount of cash, if any, in lieu of a fractional
share determined in accordance with subsection (f) below. Until surrendered as
contemplated by the preceding sentence, each certificate which immediately prior
to the Effective Time shall have represented any Shares shall be deemed at and
after the Effective Time to represent only the right to receive upon such
surrender, subject to the provisions of subsection (c) below, the certificate
and payment contemplated by the preceding sentence.
(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 2.7. After the
surrender of such certificate in accordance with this Section 2.7, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which prior to surrender had become
payable with respect to shares of PROVANT Common Stock represented by such
certificate.
(c) All rights to receive Merger Stock and cash in lieu of any
fractional shares as described above shall be deemed, when paid or issued
hereunder, to have been paid or issued, as the case may be, in full satisfaction
of all rights pertaining to the Shares.
(d) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
that 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 canceled and exchanged for Merger Stock and
cash in lieu of any fractional shares into which they were converted as provided
herein.
(e) 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
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otherwise would be entitled to receive a fractional share of PROVANT Common
Stock an amount of cash equal to the fractional amount multiplied by $22.31.
(f) In the event any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by a
shareholder claiming such certificate to be lost, stolen or destroyed and, if
required by PROVANT or its stock transfer agent, the posting by such shareholder
of a bond in such amount as PROVANT or its stock transfer agent may direct as
indemnity against any claim that may be made against it with respect to such
certificate, PROVANT will issue in exchange for such lost, stolen or destroyed
certificate the Merger Stock and cash in lieu of any fractional share
deliverable in respect thereof.
2.8 RESTRICTIVE LEGENDS; OTHER RESTRICTIONS.
(a) 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. Each stock
certificate representing the Merger Stock shall bear a legend in, or
substantially in, the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
pledged or otherwise transferred without an effective registration
under said Act or unless (i) PROVANT shall have received an opinion
reasonably satisfactory to PROVANT of counsel reasonably satisfactory
to PROVANT that an exemption from registration under such Act is then
available or (ii) the holder has demonstrated to PROVANT's reasonable
satisfaction that the legend may be removed pursuant to Rule 144
promulgated under such Act."
(b) PROVANT has informed the Company and the Shareholders that PROVANT
intends to account for the Mergers as a pooling-of-interests under Accounting
Principals Board Opinion No. 16 ("Opinion 16"). PROVANT has also informed the
Company and the Shareholders that its ability to account for the Mergers as a
pooling-of-interests was a material factor considered by PROVANT in PROVANT's
decision to enter into the Agreement. Therefore, pursuant to Opinion No. 16,
prior to the publication and dissemination by PROVANT of consolidated financial
results that include results of the operations of the Company and PROVANT for at
least thirty (30) days on a consolidated basis following the Effective Time, the
Shareholders shall not sell, offer to sell, or otherwise transfer or dispose of,
any shares of the PROVANT Common Stock received by them, engage in put, call,
short-sale, straddle or similar transactions, or in any other way reduce their
risk of owning shares of PROVANT Common Stock. The certificates evidencing
PROVANT Common Stock to be received by the Shareholders will bear a legend in,
or substantially in, the following form:
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"The shares represented by this certificate may not be sold,
transferred or assigned, and the issuer shall not be required to give
effect to any attempted sale, transfer or assignment, prior to the
publication and dissemination of financial statements filed with the
United States Securities and Exchange Commission by the issuer which
include the results of at least thirty (30) days of combined operations
of the issuer and the company acquired by the issuer for which these
shares are issued. Upon the written request of the holder of this
certificate, the issuer will remove this restrictive legend when this
requirement has been met."
2.9 ROLL-OVER OPTIONS. The Board of Directors of the Company has taken
all necessary action to cause unexercised options to purchase Shares to become
exercisable to purchase shares of PROVANT Common Stock as set forth on SCHEDULE
4 hereto. PROVANT shall assume such options at the Closing. Promptly following
the Closing, PROVANT shall file a Registration Statement on Form S-8 with the
Commission with respect to the shares of PROVANT Common Stock that may be
acquired under such options, provided that the holders of such options agree
that they will purchase under the Registration Statement prior to the first
anniversary of the Closing Date no more than 40% of the shares of PROVANT Common
Stock that may be purchased under such options immediately after the Closing.
PROVANT agrees that it will keep such Registration Statement effective for so
long as the PROVANT Common Stock is registered under Exchange Act and such
options are outstanding.
2.10 TERMINATION OF CERTAIN AGREEMENTS. At the Effective Time, the
Shareholders and Managers of the Company hereby agree that the following
agreements shall terminate and be of no further force and effect:
(a) Salary Continuation Agreements dated September 1, 1988 between
Xxxx-Xxxxxxx and each of the Managers;
(b) Disability Salary Continuation Agreements dated September 1, 1988
between Xxxx-Xxxxxxx and each of the Managers;
(c) Agreement Among Shareholders dated September 1, 1988 among the
Managers and Xxxx-Xxxxxxx, as amended by the Amendment to Agreement Among
Shareholders dated June 18, 1999 among Xxxxx X. Xxxx, Xxxx X.
Childress and Xxxx-Xxxxxxx;
(d) Agreement Among Shareholders dated December 14, 1994 among Xxxxx X.
Xxxx and Xxxxxxxxxx Xxxx, Trustees of The Xxxx Family Trust, u/t/a dated
September 26, 1988, as amended, Xxxx X. Childress and Xxxxxxx X. Childress,
Trustees of the Childress Family Trust, u/t/a dated September 26, 1988, Xxxx
Xxxxx, Xxx Xxxxxx, Xxxxxx Xxxx, Xxxx Xxxxxx and Xxxx-Xxxxxxx, as amended by
Amendment No. 1 to Agreement Among Shareholders dated March 29, 1995 among Xxxxx
X. Xxxx and Xxxxxxxxxx Xxxx, Trustees of The Xxxx Family Trust, u/t/a dated
September 26, 1988, as amended, Xxxx X. Childress and Xxxxxxx X. Childress,
Trustees of the Childress Family Trust, u/t/a dated
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September 26, 1988, Xxxx Xxxxx, Xxx Xxxxxx, Xxxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxx
Xxxxxx and Xxxx-Xxxxxxx;
(e) Buy-Out Agreement Relating to Xxxx Xxxxx'x Shares of Stock dated
November 1, 1990 among The Xxxx Family Trust, u/t/a September 26, 1988, The
Childress Family Trust, u/t/a October 29, 1988, Blackburne Costin, Xxxx Xxxxx
and Xxxx-Xxxxxxx;
(f) Buy-Out Agreement Relating to Blackburne Xxxxxx'x Shares of Stock
dated November 1, 1990 among The Xxxx Family Trust, u/t/a September 26, 1988,
The Childress Family Trust, u/t/a October 29, 1988, Blackburne Costin, Xxxx
Xxxxx and Xxxx-Xxxxxxx;
(g) Agreement among Shareholders dated January 1, 1997 by and among
Xxxxx X. Xxxx, Xxxx X. Childress, Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxx X.
Xxxxx, Xxxxxx Xxxx, Xxxx X. Xxxxxx and Xxxx-Xxxxxxx UK; and
(h) Any other agreement among any of the shareholders of the Company
and either or both of Xxxx-Xxxxxxx or Xxxx-Xxxxxxx UK with respect to the
purchase, sale, voting or ownership of Shares
2.11 AMENDMENT OF CERTAIN AGREEMENTS. At the Effective Time, the
Shareholders and the Company hereby agree that the following agreements shall be
amended to freeze the benefits thereunder and give effect to Section 6.5:
(a) Bonus and Deferred Compensation Agreements dated December 14, 1994
between Xxxx-Xxxxxxx and each of Xxxx Xxxxxx, Xxx Xxxxxx, Xxxxxx Xxxx and Xxxx
Xxxxx; and
(b) Bonus and Deferred Compensation Agreement dated March 29, 1995
between Xxxx-Xxxxxxx and Xxxxxxx X. Xxxxxx.
3. CLOSING; CONDITIONS TO CLOSING
3.1 THE CLOSING. The Closing shall take place on December 14, 1999, or
such other date agreed to by the Company and Acquisition, at the offices of the
Company, 0000 Xxxxxx Xxxxxxx Xxx, Xxxx Xxxxx, Xxxxxxxxxx. The date on which the
Closing is to occur is referred to herein as the "Closing Date."
(a) COMPANY'S DELIVERIES. At the Closing, as a condition of PROVANT's
and Acquisition's obligations to consummate the transactions contemplated by
this Agreement, the
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Company shall cause to be delivered to PROVANT and Acquisition the following (or
receive PROVANT's and Acquisition's written waiver with respect thereto):
(i) Copies of resolutions of the Board of Directors and
shareholders of the Company, each certified by the
Company's Secretary as being complete and correct as
of the Closing and satisfactory in form and substance
to Acquisition authorizing and approving the
execution, delivery and performance of this Agreement
and the transactions contemplated hereby and the acts
of the officers and employees of the Company in
carrying out the terms and provisions hereof, and a
copy of the Company's By-laws and a list of officers
and directors currently holding offices, all
certified by the Company's Secretary as being
complete and correct as of the Closing;
(ii) An opinion of counsel to the Company and the
Shareholders, dated as of the Closing and in form and
substance satisfactory to Acquisition and PROVANT and
its counsel;
(iii) A representation letter in the form attached as
EXHIBIT 4 signed by each of the Shareholders (the
"Representation Letter");
(iv) A copy of the Company's articles of organization,
certified as of a recent date by an appropriate
official of the State of California; a certificate or
certificates of good standing and tax status, also
certified by an appropriate official of the State of
California; and certificates of foreign qualification
with respect to all jurisdictions in which the
Company, by the conduct of its business, is required
to be so qualified;
(v) Consents satisfactory in form and substance to
Acquisition to the assignment to Acquisition of all
Contracts where such consents are required;
(vi) Agreements with the Shareholders who are employees of
the Company confirming their bonus arrangements after
the Closing;
(vii) Such other certificates and documents as Acquisition
and PROVANT and their counsel shall reasonably
require.
(b) ACQUISITION'S DELIVERIES. At the Closing, as a condition of the
Company's obligation to consummate the transactions contemplated by this
Agreement, each of Acquisition and PROVANT is delivering or causing to be
delivered to the Company the following (or receive the Company's written waiver
with respect thereto):
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(i) A copy of the resolutions of the Boards of Directors
of each of Acquisition and PROVANT certified by its
Secretary or Assistant Secretary as being complete
and correct as of the Closing and satisfactory in
form and substance to the Company, authorizing and
approving the execution, delivery and performance of
this Agreement and the transactions contemplated
hereby and the acts of the officers and employees of
each of Acquisition and PROVANT in carrying out the
terms and provisions hereof, and copies of
Acquisition's By-laws certified by its Secretary or
Assistant Secretary as being complete and correct as
of the Closing;
(ii) An opinion of Xxxxxx, XxXxxxxxx & Fish, LLP, counsel
to PROVANT and Acquisition, dated as of the Closing
and in form and substance satisfactory to the Company
and its counsel;
(iii) A copy of each of Acquisition's and PROVANT's
Certificate of Incorporation, certified by the
Secretary of State of Delaware; a certificate of good
standing and tax status, also certified by the
Secretary of State of Delaware; and certificates of
foreign qualification with respect to all states in
which each of Acquisition and PROVANT is required to
be so qualified;
(iv) The Employment Agreements referred to in Section
3.1(a)(i), executed by the Surviving Corporation; and
(v) Such other certificates and documents as the Company
and its counsel shall reasonably require.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to PROVANT and Acquisition that,
except as set forth in the Disclosure Schedule:
4.1 ORGANIZATION AND AUTHORITY. The Company is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of California, and has full corporate power and authority to conduct its
business and own its property as now conducted and owned. The Company is duly
qualified or licensed and in good standing as a foreign corporation in those
states listed on the Disclosure Schedule, which are the only jurisdictions in
which the property owned, leased or operated by it or the nature of the business
conducted by it
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makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed would not have a Material Adverse Effect with respect
to the Company. The Company has corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors and shareholders of the Company, and no other corporate proceedings on
the part of the Company, and no other actions on the part of the shareholders of
the Company, are necessary to authorize this Agreement. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms. No shareholder of the Company has the right to assert
or claim any appraisal or dissenter's rights with respect to the Mergers.
4.2 CAPITALIZATION OF THE COMPANY; NO SUBSIDIARIES; TITLE. The
authorized capital and number of issued and outstanding shares of capital stock
of the Company are as set forth on the Disclosure Schedule, together with the
name, mailing address and social security number of each record holder of
outstanding stock. No shares of capital stock are held in the Company's
treasury. All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable and are owned of record by the persons listed on the Disclosure
Schedule. The Company does not own any shares of capital stock or other
securities of, or any other interest in, nor does the Company control, directly
or indirectly, any other corporation, association, joint venture, partnership or
other business organization. The Shares have been issued and sold in compliance
in all material respects with all applicable federal and state securities laws.
To the Company's Knowledge, neither the Shareholders nor the shares of capital
stock of the Company are bound by or subject to any proxy, agreement, voting
trust or other restriction regarding the voting thereof.
4.3 NO RIGHTS TO PURCHASE OR REGISTER STOCK. No person, firm or
corporation has any written or oral agreement, option, warrant, call or
commitment from the Company to issue or sell any shares of any capital stock of
the Company, and the Company has not otherwise agreed to issue or sell any
shares of its capital stock or obligated itself to register any shares of
capital stock under the Securities Act. The Company is not obligated directly,
indirectly or contingently to purchase any shares of its capital stock in
connection with this transaction, and since January 1, 1997, the Company has
not, directly or indirectly, repurchased any shares of its capital stock.
4.4 POOLING-OF-INTERESTS ACCOUNTING. The Company has never been a
subsidiary or division of another corporation or a part of an acquisition which
was later rescinded, and, within the past two years, there has not been any sale
or spin-off of a significant amount of assets of the Company other than in the
ordinary course of business. The Company owns no capital stock of PROVANT. The
Company has not acquired any of its capital stock during the past two years. The
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of the capital stock of the Company or any interest
therein or to pay any dividend or
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make any distribution in respect thereof. Except as provided above, neither the
voting stock structure of the Company nor the relative ownership of shares among
any of the shareholders of the Company has been altered or changed with the last
two (2) years in contemplation of the Mergers. None of the Shares were issued
pursuant to awards, grants or bonuses.
4.5 NAME. The Company has not had any other name. The Company does not
conduct or operate, and has not heretofore conducted or operated, its business
under any published name other than "Xxxx-Xxxxxxx Leadership Consulting Group,
Inc." and "Xxxx-Xxxxxxx Leadership Consulting U.K., Ltd."
4.6 VALIDITY OF CONTEMPLATED TRANSACTIONS. Neither the execution and
delivery of this Agreement, nor the execution and delivery of the documents and
instruments contemplated herein by the Company, nor the consummation of the
transactions contemplated hereby or thereby, will directly or indirectly:
(a) Contravene, conflict with or result (with or
without notice or lapse of time) in violation of (i) any of the
provisions of the articles of organization or By-laws of the Company or
(ii) any resolution adopted by the Board of Directors or the
shareholders of the Company that is in effect on the date hereof;
(b) Contravene, conflict with or result (with or
without notice or lapse of time) in a violation of any Laws or Court
Order to which the Company is subject;
(c) Contravene, conflict with or result (with or
without notice or lapse of time) in a violation or breach of any of the
terms or requirements of, or give any Governmental Authority the right
(with or without notice or lapse of time) to revoke, withdraw, suspend,
cancel, terminate or modify, any License that is held by or on behalf
of the Company that relates to the Business;
(d) Contravene, conflict with or result (with or
without notice or lapse of time) in a violation or breach of any of the
provisions of, or give any person the right (with or without notice or
lapse of time) to declare a Default or exercise any right or remedy
under, or to accelerate the maturity or performance of or cancel,
terminate or modify, any Contract to which the Company is a party or
under which the Company has any rights, or by which the Company, or any
of the assets owned or used by the Company, may be bound; or
(e) Result (with or without notice or lapse of time)
in the imposition or creation of any Lien upon or with respect to any
of the assets of the Company.
4.7 NO CONSENTS OR APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent or
approval of, or filing and expiration of a waiting period or a period for
disapproval by, any Governmental
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Authority is required for the Company to consummate the transactions
contemplated by this Agreement, except for the pre-merger filing and waiting
period requirements of the HSR Act and filing and acceptance of the Delaware
Certificate of Merger pursuant to the DGCL and the SDL Agreement of Merger, the
SDL-UK Agreement of Merger, Officers' Certificates and tax clearance
certificates pursuant to the CGCL.
4.8 FINANCIAL STATEMENTS.
(a) The Financial Statements were prepared in accordance with GAAP, and
fairly present the financial position and results of operations of the Company
as of and for their respective dates, in conformity with GAAP applied on a
consistent basis, except as otherwise noted therein. The Financial Statements
were created from the books and records of the Company, which books and records
are complete and correct.
(b) The projections attached to this Agreement as SCHEDULE 3 (the
"Projections"), including the projected revenue, EBIT and other financial
information for the 12 months ending December 31, 2000, were prepared in good
faith based upon reasonable assumptions and accurate historical data.
4.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth or reserved
against in the Balance Sheet (including the footnotes thereto), the Company (a)
did not have as of the date of such Balance Sheet any Liability that would be
required under GAAP to be shown in such Balance Sheet, and (b) has not incurred
since the Balance Sheet Date any Liability except in the Ordinary Course of
Business.
4.10 CONDUCT OF BUSINESS SINCE THE BALANCE SHEET DATE. Since the Balance
Sheet Date, the Company has not:
(a) entered into or agreed to enter into any transaction, agreement or
commitment other than in the Ordinary Course of Business;
(b) entered into or agreed to enter into any transaction, agreement or
commitment, suffered the occurrence of any event or events, or experienced any
material change in financial condition, business, results of operations or
otherwise, that singly or in the aggregate has resulted in or, to the best of
the Company's Knowledge, is reasonably likely to have, a material adverse effect
on the business, assets, financial position or results of operations of the
Company (a "Material Adverse Effect");
(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
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corporation (except for loans to employees of the Company made in the ordinary
course of business that in the aggregate do not exceed $25,000.00);
(d) 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 or
lease of any property or assets of any other individual, partnership, firm, or
corporation, other than capital expenditures in the ordinary course of business
that individually do not exceed $25,000.00 and in the aggregate do not exceed
$100,000.00;
(e) 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 canceled, released,
hypothecated, or assigned indebtedness owed to the Company or any claims held by
the Company;
(f) declared, set aside or paid any extraordinary dividend or other
extraordinary distribution (whether in cash, stock or property or any
combination thereof) in respect of the capital stock of the Company, or
otherwise acquired, directly or indirectly, any shares of capital stock of the
Company;
(g) paid any bonus compensation or fee to any officer, director,
shareholder, employee or consultant of the Company (other than base salary
regularly paid) or otherwise increased the compensation paid or payable to any
of the foregoing (except in the case of employees' routine scheduled increases
in salary or raises associates with promotions);
(h) sold, assigned or transferred any of the Company's trademarks,
trade names, logos, copyrights, formulae, or other intangible assets;
(i) contracted with or committed to any third party (i) to sell any
capital stock of the Company, (ii) to sell any assets of the Company other than
in the Ordinary Course of Business, or (iii) to effect any merger,
consolidation, or other reorganization of the Company;
(j) paid any long-term Liability, otherwise than in accordance with its
terms;
(k) changed its accounting methods, practices or principles;
(l) terminated or waived any material rights to the Business;
(m) modified in any material respect any material Contract; or
(n) made or entered into any agreement or understanding to do any of
the foregoing (except as provided for herein).
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4.11 TITLE TO ASSETS. The Company has never owed any real property. The
Company has good title to, or a valid leasehold interest in, all other
properties owned or leased by it, including, without limitation, all property
reflected on the Balance Sheet, other than property disposed of in the Ordinary
Course of Business subsequent to the Balance Sheet Date, free and clear of any
Lien, except (a) the Lien of Taxes not yet due or payable or being contested in
good faith by appropriate proceedings, (b) Liens reflected on 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 the Company's
business operations.
4.12 INTELLECTUAL PROPERTY.
(a) The Disclosure Schedule contains a correct and complete list of all
copyright registrations and applications, trademark registrations and
applications for registration, patents and patent applications, trademarks,
service marks and trade names used in the Business or contemplated, and all
licenses, assignments and releases of the intellectual property rights of others
in material works embodied in the Company's products. There is (i) no existing
or, to the Company's Knowledge, threatened infringement, misuse or
misappropriation of Proprietary Property (as hereinafter defined) by others and
(ii) no pending or threatened claim by the Company against others for
infringement, misuse or misappropriation of any patent, patent application,
invention, disclosure, trademark, trade name, service xxxx, trade secret,
technology, technique, process, know-how, or copyright owned by the Company or
used in the Business or contemplated (the "Proprietary Property"). The Company
has the right to use, free and clear of claims or rights of others, all
Proprietary Property required for or incident to its products or services or the
Business. The Company is the exclusive owner of all right, title and interest in
the Proprietary Property as purported to be owned by the Company, and such
Proprietary Property is valid and in full force and effect, provided, however,
that to the extent that the representation contained in this sentence relates to
trade secrets, it is qualified as to the Company's Knowledge. Any Proprietary
Property created by any Shareholder or employee or consultant of the Company is
the sole property of the Company and no Shareholder or employee or consultant of
the Company has any right, title or interest in or to any of the Proprietary
Property. The Business does not infringe, misuse or misappropriate any patent,
trademark, trade name, service xxxx, trade secret, copyright or other
intellectual property right of others, and, to the Company's Knowledge, no one
is claiming nor is it anticipated that anyone will claim any such infringement,
misuse or misappropriation. The Proprietary Property is presently valid and
protectible. The Company has not granted to any person any license or other
right to use in any manner any of the Proprietary Property, 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 Property
or for the sale of any service or product comprising or derived from Proprietary
Property. Proprietary Property does not include widely available software that
the
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Company licenses; however, the Company has all material licenses required with
respect to such software and is in material compliance with all such licenses.
(b) The activities of the Company's employees and consultants on behalf
of the Company do not violate any other agreements or arrangements known to the
Company which any such employees or consultants have with former employers or
any other entity to whom such employees or consultants may have rendered
consulting services.
4.13 OBLIGATIONS TO OR FROM AFFILIATES. The Disclosure Schedule contains
a true and complete description of each transaction conducted or completed, in
whole or in part, since January 1, 1998, or currently proposed, between the
Company (on the one hand) and (on the other hand) any shareholder, officer or
director of the Company, or any Affiliate (as defined below) of any such person,
other than employment and benefit arrangements between any such shareholder,
officer or director and the Company disclosed pursuant to Section 4.20. 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, any
shareholder, officer or director, or any Affiliate of such shareholder, officer
or director. As used herein, an "Affiliate" of a shareholder or an officer or
director means any member of the immediate family of such person or any entity
in which such person or any such family member is an officer or director or
owner of more than five percent of beneficial interest in the entity's
outstanding equity securities.
4.14 CONTRACTS. (a) The Disclosure Schedule lists all material Contracts
(whether written or oral) relating to the conduct of the Business and described
below and, where applicable, all consents or approvals required under any such
Contract as a result of the Mergers. The Company has made available to PROVANT
true and correct copies of each such 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
material Contracts of the following types to which the Company is a party:
(i) labor union Contracts, together with a list of all labor
unions representing or attempting to represent employees of the Company;
(ii) pension, retirement, deferred compensation, death
benefit, profit sharing 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 present or former employees, or
obligations to provide any pensions hereafter other than pursuant to the
foregoing plans;
(iii) bonus plans or arrangements maintained by the Company,
together with a list of employees eligible to participate;
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(iv) employment Contracts, consulting Contracts, Contracts
providing for termination or severance benefits, non-competition Contracts,
non-disclosure Contracts, Contracts for professional services rendered to the
Company, Contracts with persons engaged in sales or distributing activities for
the Company, and advertising Contracts;
(v) Contracts 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
employees of the Company whose current salary rate is $25,000.00 or more, and
any bonuses paid or payable to each such person for the 1998 and 1999 calendar
years;
(vi) indentures, loan agreements, notes, security agreements,
mortgages, material leases of personal property, and Contracts for the purchase
or sale of material property or assets;
(vii) licenses and other contractual rights to any Proprietary
Information, including, without limitation, any copyright, trademark, service
xxxx or trade name, whether domestic or foreign, owned in whole or in part or
used by the Company;
(viii) other license Contracts (whether the Company is
licensor or licensee);
(ix) Contracts or other arrangements to which the Company
and/or any of its shareholders is a guarantor, surety or endorser;
(x) Contracts providing for the purchase or sale of all or
substantially all of the Company's or a customer's requirements for a particular
product or service from a single supplier or to a single customer;
(xi) Contracts limiting the freedom of the Company from
competing in any line of business or with any person or entity;
(xii) leases of real property (regardless of whether the
Company is the lessor or lessee);
(xiii) Contracts with clients involving the payment of more
than $25,000; and
(ix) Contracts that have not been included in items (i)
through (xiii) above which otherwise are material to the Business and that
involve the payment by or to the Company of more than $25,000.
(b) The Company has received no written or, to the Company's Knowledge,
oral notice that any other party to a Contract intends to cancel or terminate
any existing or proposed
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Contract described in Section 4.14(a) or to exercise or refrain from exercising
any option under any Contract, other than Contracts that have been previously
terminated or Contracts whose fixed term will expire or with respect to which
the options have lapsed prior to the date of this Agreement.
(c) The Company has received no written or, to the Company's Knowledge,
oral notice that any other party to any existing or proposed Contract described
in Section 4.14(a) has (i) ceased, or specifically stated any intention to cease
doing business with the Company or to reduce to any material extent the amount
of business it does with the Company or (ii) specifically stated that it will
not consent to or approve the transfer or assignment of such business from the
Company in connection with the Mergers (if such consent or approval is
required).
(d) All of the Contracts described in Section 4.14(a) are in full force
and effect, are valid and binding and are enforceable in accordance with their
terms against the Company and, to the Company's Knowledge, all other parties
thereto. No condition exists or event has occurred as a result of action or
inaction by the Company or, to the Company's Knowledge, any other person that,
with notice or lapse of time or both, would constitute a Default or a basis for
force majeure or non-performance under any Contract.
4.15 CLAIMS. There is no Proceeding now pending or, to the Company's
Knowledge, threatened, before any court, grand jury, administrative or
regulatory body, Governmental Authority, arbitration or mediation panel or
similar body to which the Company is a party relating to the Business, nor is
there any judgment, decree, injunction, rule or order of any court, Governmental
Authority, commission, agency, instrumentality or arbitrator outstanding against
the Company or otherwise affecting the Business. There is no reasonable basis
for any Proceeding that, if decided adversely, could have a Material Adverse
Effect. There is no Proceeding now pending or, to the Company's Knowledge,
threatened before any court, grand jury, administrative or regulatory body,
Governmental Authority, arbitration or mediation panel or similar body involving
the Company that could prevent or delay the consummation of the Mergers and the
transactions contemplated by this Agreement. Set forth on the Disclosure
Schedule is a complete list of all Proceedings (including those settled or
otherwise resolved) filed or otherwise asserted in writing against the Company
since January 1, 1996 before any court, grand jury, administrative or regulatory
body, Governmental Authority, arbitration or mediation panel or similar body
relating to the Business, and the outcome or status of such Proceeding.
4.16 TAXES.
(a) The Company has timely filed all material Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all material
respects.
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(b) All Taxes owed by the Company have been paid or provided for. All
Taxes that the Company has been required to collect or withhold have been duly
collected or withheld and; to the extent required when due, have been or will be
duly paid to the proper Tax authority. There are no liens for Taxes or
assessments against any assets of the Company, except for liens for Taxes not
yet due and payable. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Returns.
(c) No deficiencies for Taxes had been claimed, proposed or assessed in
writing by any Tax authority against the Company. There are no pending or
threatened audits, investigations or claims for or relating to any additional
liability in respect of Taxes. Audits of federal, state, local, foreign or other
returns for Taxes have been completed for each period indicated on Section
4.16(c) of the DISCLOSURE SCHEDULE. The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency. The Company has furnished to PROVANT correct
and complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company with
respect to the last three (3) taxable years.
(d) The Company is not a party to any contract, agreement, plan or
arrangement that, individually or collectively, provides for any payment the
deduction for which would be disallowed by reason of Section 280G 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 ss.1.1502-6 (or any similar
provision of state, local, or foreign law) as transferee or successor, by
contract or otherwise. The Company is not a party to any Tax allocation or
sharing agreement.
(f) The Company has not consented at any time under Section 341(f)(1)
of the Code to have the provisions of Sections 341(1)(2) of the Code apply to
any disposition of any of the Company's assets.
(g) The unpaid Taxes of the Company did not, as of the Balance Sheet
Date, exceed the reserve for Taxes (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Balance Sheet.
(h) The Company is not required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Company, and the Company has no knowledge
that the Internal Revenue Service has proposed any such adjustment or change in
accounting method.
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(i) The liabilities of the Company to be assumed by Acquisition and the
liabilities to which the transferred assets of the Company are subject were
incurred by it in the ordinary course of its business.
(j) The Company is not an investment company within the meaning of
Section 368(a)(2)(f)(iii) and (iv) of the Code.
(k) The fair market value of the assets of the Company transferred to
Acquisition will equal or exceed the sum of the liabilities assumed by
Acquisition plus the amount of liabilities to which the transferred assets are
subject.
(l) The Company will transfer to Acquisition at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by it immediately prior to the Mergers. For purposes of this
representation, amounts paid by the Company to dissenting shareholders, if any,
in the Mergers, Company assets used to pay reorganization expenses and all
redemptions and distributions (except for regular, normal dividends) made by the
Company immediately preceding the Mergers will be included as assets of the
Company held immediately prior to the Mergers.
(m) The Company is not under the jurisdiction of a court in a Title 11
or a similar case within the meaning of Section 368(a)(3)(A) of the Code.
(n) The Company is now taxable as an S corporation under the Code
pursuant to an election (and required consents) filed with the Internal Revenue
Service, and has continuously since the filing of such election been taxable as
an S corporation.
(o) The estimated fair market value of the PROVANT Common Stock and
cash to be received by each shareholder of the Company pursuant to this
Agreement is approximately equal to the estimated fair market value at the
Effective Time of the Shares surrendered in exchange therefor.
(p) The Company, as a result of any "closing agreement" as defined in
section 7121 of the Code (or corresponding provision of any state, local or
foreign tax law), is not required to include any item of income in, or exclude
any item of deduction from, taxable income.
4.17 ABSENCE OF MATERIAL EVENTS. Since the Balance Sheet Date, there has
not been: (a) any Material Adverse Effect; (b) any actual or, to the Company's
Knowledge, threatened damage, destruction, loss, conversion, termination,
cancellation, default or taking by eminent domain or other action by any
Governmental Authority which has had or may have a Material Adverse Effect; (c)
any pending or, to the Company's Knowledge, threatened dispute with any material
customer, supplier, employee, lessor or licensee of the Company which could have
a Material Adverse Effect, or (d) any pending or, to the Company's Knowledge,
threatened
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reduction in the amount, or any change in the terms or conditions, of business
with any material customer, lessor or supplier which could have a Material
Adverse Effect.
4.18 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, payment or gift is illegal under
the laws of the United States, any state thereof or any other jurisdiction
(foreign or domestic); (b) has neither established or maintained any unrecorded
fund or asset for any purpose, nor made any false or artificial entries on its
books or records for any reason; (c) has not made any payments to any person
with the intention or understanding that any part of such payment was to be used
for any purpose other than that described in the documents supporting the
payment; or (d) has neither made any contribution, nor reimbursed any political
gift or contribution made by any other person, to candidates for public office,
whether Federal, state or local, where such contribution or reimbursement would
be in violation of applicable law.
4.19 ERISA.
(a) The Disclosure Schedule lists each employee plan, program or
arrangement other than the Employment Agreements that has provided, does provide
or may reasonably be expected to hereafter provide benefits to current or former
employees, directors, consultants, contractors or other individuals in
connection with their provision of services to the Company and/or one or more
Controlled Group Members (as defined below) or to such individual's
beneficiaries (including, without limitation, any employee benefit plan) that
is, or at any time within the sixty (60) consecutive month period preceding the
date of this Agreement was, established or maintained by the Company or any
Controlled Group Member, to which the Company or any Controlled Group Member has
contributed or been obligated to contribute, or with respect to which the
Company or any Controlled Group Member has any liability (collectively referred
to hereinafter as "Benefit Arrangements"). For purposes of this Section 4.19,
"Controlled Group Member" shall mean any entity that is treated as a single
employer with the Company under subsections (b), (c), (m) or (o) of Section 414
of the Code.
(b) The Company has not engaged in or been a party to any transaction
in violation of Section 406 of ERISA, or any non-exempt prohibited transaction,
with respect to any Benefit Arrangement and has no Liability with respect to any
such transaction.
(c) None of the Benefit Arrangements are subject to Title IV of ERISA,
or Section 412 of the Code, and the Company has no Liability with respect to any
plan that is or was subject to Title IV of ERISA or Section 412 of the Code.
None of the Benefit Arrangements are multiemployer plans, and neither the
Company nor any Controlled Group Member has withdrawn in a complete or partial
withdrawal from any multiemployer plan under Title IV,
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Subtitle E of ERISA, and the transaction(s) contemplated under this Agreement
shall not constitute or cause such a complete or partial withdrawal from any
multiemployer plan.
(d) The Company has made or provided for all material contributions to
all Benefit Arrangements which were due as of the date of this Agreement, and,
in the case of plans funded by means other than direct employer contributions,
the Company or the affected Controlled Group Member has made or provided for all
such funding (including, without limitation, the payment of insurance policy
premiums for insured plans) due through the date hereof. Each asset of each
Benefit Arrangement intended to be qualified under Section 401(a) of the Code
may be converted upon the Closing into cash without penalty, charges,
contractual market rate adjustments or similar costs. For purposes of this
Section 4.19(d), any contribution amount equal to or greater than $5,000 shall
be deemed to be material.
(e) The Company has complied in all material respects with all of its
obligations under each Benefit Arrangement and each Benefit Arrangement has been
administered in accordance with its terms in all material respects and is, and
at all times has been, in compliance in all material respects with all
applicable requirements of ERISA and other applicable laws, regulations and
rules. No facts or circumstances exist and the transactions contemplated by this
Agreement shall not cause to exist any fact or circumstance that could give rise
to any liability of the Company with respect to any Benefit Arrangement other
than (i) claims for benefits submitted in the ordinary course, and (ii)
obligations to make funding contributions in the ordinary course.
(f) Each Benefit Arrangement (and any trusts created thereunder and/or
forming a part thereof) that is intended to be qualified under Section 401 (or
Section 501) of the Code has received a favorable determination letter from the
Internal Revenue Service concerning such Benefit Arrangement's (and trust's)
qualified status and, to the Knowledge of the Company there is and has been no
event, condition or circumstance that would adversely affect the qualified
status of any such Benefit Arrangement or trust. No asset or income of any
Benefit Arrangement is subject to tax as unrelated business taxable income.
(g) There are no material claims, complaints or causes of action
pending or, to the Knowledge of the Company, overtly threatened against any
Benefit Arrangement, or against the Company with respect to any Benefit
Arrangement (other than claims filed in the ordinary course for benefits under
such Arrangement). Each Benefit Arrangement that is an employee benefit plan by
its terms provides that such Benefit Arrangement may be amended or terminated by
the Company (or if the Company is not a sponsor of such Benefit Arrangement, by
the Controlled Group Member that is the sponsor of such Benefit Arrangement) at
any time and from time to time, without penalty or cost (other than reasonable
and necessary administrative costs associated with such amendment or
termination) and without the vesting or acceleration of any benefits payable
from such Benefit Arrangement.
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(h) The Company has no Liability that is not disclosed on the Financial
Statements, contingent or otherwise, under any Benefit Arrangement including,
without limitation, any Liability for unfunded post-retirement benefits,
including pension, medical and death benefits, which Liability would have a
Material Adverse Effect. No promise, representation or other statement, whether
written or oral, has been made by the Company or any Controlled Group Member
with regard to any Benefit Arrangement that was not in all material respects in
accordance with the terms of such Benefit Arrangement.
(i) As used in this Section 4.19, the terms "employee benefit plan" and
"multiemployer plan" shall have the respective meanings assigned to them in
ERISA and the term "prohibited transaction" shall have the meaning assigned to
it in Code Section 4975 as well as in applicable regulations and rulings issued
with respect thereto.
4.20 LABOR MATTERS. A true and complete list of all of the Company's
officers, employees and consultants (collectively, the "Employees") and their
respective salaries, wages, other compensation, dates of employment, date and
amount of last salary increase and positions previously has been provided to
PROVANT by the Company. There are no material disputes, employee grievances or
disciplinary actions pending or, to the Company's Knowledge, threatened by or
between the Company and any of the Employees. With respect to the Employees, the
Company has complied in all material respects with all provisions of all Laws
relating to the employment of labor and has no liability for any arrears of
wages or taxes or penalties for failure to comply with any such law or for any
severance or termination payments of any type. No election or Proceeding
relating to the labor relations of the Company is pending or, to the Company's
Knowledge, threatened. The Company has had neither any material union activity
nor any material labor trouble of any kind, nature or description at any time
heretofore. All written personnel policies and manuals currently in effect of
the Company are listed on the Disclosure Schedule and true and complete copies
of each written policy and manual have been provided to PROVANT. There are no
claims by any Employee against the Company now pending before any Governmental
Authority. Since January 1, 1997, no present or former Employee has given
written notice to the Company of, and there is no claim pending against the
Company (whether under Law, any employment agreement or otherwise) on account of
or for (i) overtime pay, other than overtime pay for the current payroll period,
(ii) wages or salary (excluding current bonus, accruals and amounts accruing
under pension and profit-sharing plans) for any period other than the current
payroll period, (iii) vacation, time off or pay in lieu of vacation or time off,
other than that earned in respect of the current fiscal year, or (iv) any
violation of any Law relating to minimum wages or maximum hours of work. No
person or party (including, but not limited to, any Governmental Authority) has
any claim or basis for any claim against the Company arising out of any Law
relating to discrimination in employment or employment practices or occupational
safety and health standards. There are no pending workers' compensation claims
involving the Company. The Company has delivered to PROVANT a true, correct and
complete list of all workers' compensation claims made since January 1, 1997.
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4.21 COMPLIANCE WITH LAW
(a) The Company is not in violation of any Court Order or any
Law, and the assets of the Company have not been used or operated by the Company
or any other person or entity in violation of any Court Order or any Law except
where such violation, use or operation would not have a Material Adverse Effect.
(b) The Company has delivered to PROVANT copies of all
material reports and other filings (other than with respect to Taxes) required
to be filed by the Company with all Governmental Authorities since January 1,
1999. All such reports and filings were at the time of filing true and accurate,
and were prepared in compliance in all material respects with all applicable
Laws.
4.22 LICENSES. The Disclosure Schedule sets forth a complete list of
all material Licenses used in the operation of the Business. The Company owns,
possesses or lawfully uses in the operation of its Business all material
Licenses or permits (or exemptions therefrom) that are necessary to conduct the
Business as now conducted or to the ownership of the assets of the Company, free
and clear of all Liens. The Company is not in Default, nor has it received any
written notice of any claims of Default, with respect to any such License except
where such Default would not have a Material Adverse Effect.
4.23 ENVIRONMENTAL MATTERS. The Company is in compliance with all
applicable existing foreign, federal, state and local laws, rules, regulations
and ordinances 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. The term "Hazardous Material" means (a) any "hazardous substance" as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (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 law, rule, regulation or ordinance
relating to the regulation of the same or the protection of human health or the
environment. There is no alleged or (to the Company's Knowledge) potential
liability (including, without limitation, liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) of the Company arising out of, based on
or resulting from (i) the presence or release into the environment of any
Hazardous Material at any location, whether or not owned by the Company or (ii)
any violation or alleged violation of any Environmental Law, which alleged or
potential liability, singly or in the aggregate, would have a Material Adverse
Effect.
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4.24 CORPORATE RECORDS. The corporate record books of the Company are
complete, and are accurate, and set forth all meetings and actions taken by the
Company's shareholders and directors, and all votes of the Company's
shareholders or directors set forth in certificates furnished to anyone at any
time heretofore.
4.25 CONDITION OF ASSETS. All premises, fixtures and equipment owned or
otherwise used by the Company have been properly maintained and are in good
operating order and repair (ordinary wear and tear excepted), free from known
defects in construction or design, sound and properly functioning, usable and
not obsolete, and are in compliance with all zoning, building and fire codes and
all other laws, rules, regulations and requirements of governmental authorities
and the fire insurance rating associations having jurisdiction, except to the
extent that the failure to be in such compliance, in the aggregate, would not
have a Material Adverse Effect.
4.26 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Company
shown or reflected on the Balance Sheet, less the reserve for doubtful accounts
in the amount shown on such Balance Sheet, are valid claims. To the Company's
Knowledge, no obligor on such accounts has advised the Company it will not pay
the amounts owed. The Company has no accounts or loans receivable from any of
its directors, officers or employees (other than loans receivable from employees
in the Ordinary Course of Business which in the aggregate do not exceed
$25,000.00).
4.27 BROKERS. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
4.28 YEAR 2000 COMPLIANCE
(a) To the extent described in the Disclosure Schedule, the
Company has conducted one or more "year 2000" audits with respect to (i) all of
the Company's internal systems used in its business or operations, including,
without limitation, computer hardware systems, software applications, firmware,
equipment containing embedded microchips and other embedded systems, and (ii)
the software, hardware, firmware and other technology that constitute part of
the products and services marketed or sold by the Company or licensed by the
Company to third parties. The Company has obtained "year 2000" certifications
with respect to all material third-party systems used in connection with its
business or operations, including, without limitation, systems belonging to the
Company's suppliers, service providers and customers. The Company has furnished
to PROVANT true and correct copies of all "year 2000" audits, certifications,
reports and other similar documents that have been prepared or performed by or
on behalf of the Company or any third party with respect to the Company's
business or operations.
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(b) To the Company's Knowledge, all of (i) the Company's
internal systems used in the business or operations of the Company, including,
without limitation, computer hardware systems, software applications, firmware,
equipment containing embedded microchips and other embedded systems, and (ii)
the software, hardware, firmware and other technology that constitute part of
the products and services marketed or sold by the Company or licensed by the
Company to third parties, are Year 2000 Compliant and will not be adversely
affected with respect to functionality, performance or volume capacity
(including without limitation the processing and reporting of data) by virtue of
the arrival of the year 2000.
(c) The Company has no Knowledge of any failure to be Year
2000 Compliant of any third-party system used in connection with the business or
operations of the Company, including, without limitation, any system belonging
to any of the Company's suppliers, service providers or customers.
(d) For purposes of this Agreement, "Year 2000 Compliant"
means that the applicable system or item:
(i) will accurately receive, record, store, provide,
recognize and process all date and time data from, during, into and between the
twentieth and twenty-first centuries and the years 1999 and 2000;
(ii) will accurately perform all date-dependent
calculations and operations (including, without limitation, mathematical
operations, sorting, comparing and reporting) from, during, into and between the
twentieth and twenty-first centuries and the years 1999 and 2000; and
(iii) will not malfunction, cease to function or
provide invalid or incorrect results as a result of (x) the change in years from
1999 to 2000 or from 2000 to 2001, (y) date data, including date data that
represents or references different centuries, different dates during 1999 and
2000, or more than one century or (z) the occurrence of any particular date;
in each case without human intervention, other than original data entry;
provided, in each case, that all applications, hardware and other systems used
in conjunction with such system or item which are not owned or licensed by the
Company correctly exchange date data with or provide data to such system or
item.
(e) The Company has not provided any guarantee or warranty for
any product sold or licensed, or service provided, by the Company to the effect
that such product or service (i) complies with or accounts for the fact of the
arrival of the year 2000, (ii) will not be adversely affected with respect to
functionality, performance or volume capacity (including, without limitation,
the possessing and reporting of data) by virtue of the arrival of the year 2000
or (iii) is otherwise Year 2000 Compliant.
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(f) For purposes of this Section 4.28, the term "Company"
shall include each employee benefit plan within the meaning of Section 3(3) of
ERISA with respect to which the Company, or any Company employee(s) or agent(s),
is or was a fiduciary for purposes of ERISA.
4.29 INSURANCE. The Disclosure Schedule contains a true list of the
insurance coverage applicable to the Business and the Company for the past three
years, including amounts and lines of coverage. All of the insurance coverage
listed on the Disclosure Schedule as remaining in effect is in full force and
effect and is valid, binding and enforceable in accordance with its terms. There
is no Default by the Company or, to the Company's Knowledge, by the relevant
insurance company under any such coverage. There are no outstanding or overdue
unpaid premiums, and no written notice of cancellation or nonrenewal of any of
such coverage has been received by the Company.
4.30 CERTAIN INFORMATION.
(a) The Disclosure Schedule lists all bank accounts, lock
boxes, post office boxes and safe deposit boxes maintained in the name of or
controlled by the Company and the names of the persons having access thereto;
and
(b) All safe, security and computer passwords, codes, log-ins,
combinations and similar information necessary to avail, access or use Company
property have been delivered or will be delivered on or before the Closing Date
to Xxxx Xxxxx.
4.31 NO OTHER OBLIGATIONS. Except as otherwise provided in this
Agreement, the Company does not have any legal or contractual obligation,
absolute or contingent, to sell or otherwise dispose of all or any part of the
assets of the Company (other than in the Ordinary Course of Business), or any
equity interest in the Company, or to effect any merger, consolidation or
reorganization of the Company or to enter into any agreement with respect
thereto.
4.32 DISCLOSURE OF ALL MATERIAL MATTERS. No statement of fact set forth
in this Agreement (including without limitation all information in the Financial
Statements and the other Schedules, Exhibits, and attachments hereto, taken as a
whole) or otherwise provided by any of the Shareholders or officers of the
Company or by or on behalf of the Company to PROVANT or Acquisition in
connection with the Closing (including, without limitation, any letter or
certificate provided by or on behalf of the Company to KPMG LLP for its
pooling-of-interests letter) is false or misleading in any material respect.
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4A. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND
MANAGERS
Each of the Shareholders and the Managers, severally and not jointly
and solely as to himself, herself or itself, represents and warrants to PROVANT
and Acquisition as follows:
4A.1 ORGANIZATION AND AUTHORITY. Such Shareholder or Manager has power,
authority and capacity to execute and deliver this Agreement and consummate the
transactions contemplated hereby, and no other actions on the part of such
Shareholder or Manager are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by such Shareholder or Manager and constitutes a
legal, valid and binding obligation of such Shareholder or Manager, enforceable
against such Shareholder or Manager in accordance with its terms.
4A.2 OWNERSHIP OF THE SHARES; TITLE. Such Shareholder owns of record
and beneficially, and free and clear of any Liens, the Shares listed opposite
his, her or its name on the Disclosure Schedule, and such shares are not bound
by or subject to any proxy, agreement, voting trust or other restriction
regarding the voting thereof.
4A.3 NO RIGHTS TO PURCHASE. No Shareholder or Manager has any written
or oral agreement, option, warrant, call, commitment to sell any shares of any
capital stock of the Company.
4A.4 VALIDITY OF CONTEMPLATED TRANSACTIONS. Neither the execution and
delivery of this Agreement, nor the execution and delivery of the documents and
instruments contemplated herein by such Shareholder or Manager, nor the
consummation of the transactions contemplated hereby or thereby, will directly
or indirectly:
(a) Contravene, conflict with or result (with or
without notice or lapse of time) in a violation of any Laws or Court
Order to which such Shareholder or Manager may be subject; or
(b) Contravene, conflict with or result (with or
without prior notice or lapse of time) in a violation or breach of any
of the provisions of, or give any person the right (with or without
notice or lapse of time) to declare a Default or exercise any right or
remedy under, or to accelerate the maturity or performance of or
cancel, terminate or modify, any Contract to which such Shareholder or
Manager is a party.
4A.5 BROKERS. No broker, finder, or investment banker is entitled to
any brokerage, finder's, or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Shareholder or Manager.
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5. REPRESENTATIONS AND WARRANTIES OF PROVANT
AND ACQUISITION
PROVANT and Acquisition jointly and severally represent and warrant to
the Company and its shareholders as follows:
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, has all requisite corporate power and authority to
conduct its business as now conducted and own its properties as now owned, and
is qualified to do business as a foreign corporation in each jurisdiction where
the failure to be so qualified would, in the aggregate, have a material adverse
effect on the business or financial condition of PROVANT or Acquisition (as the
case may be). Each of PROVANT and Acquisition has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of each of PROVANT and Acquisition
and by the sole shareholder of Acquisition and no other corporate proceedings on
the part of any of them are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. 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 of them, enforceable against
each in accordance with its terms.
5.2 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by each of PROVANT and Acquisition nor the
consummation of the transactions contemplated hereby will (i) conflict with or
result in a breach of any provision of the Certificate of Incorporation or
By-laws of any of them, (ii) require any consent or approval of, or filing and
expiration of a waiting period or a period for disapproval by, any Governmental
Authority (except for (a) the pre-merger filing and waiting period requirements
of the HSR Act, (b) filing and acceptance of the Delaware Certificate of Merger
pursuant to the DGCL and the SDL Agreement of Merger, SDL-UK Agreement of
Merger, Officers' Certificates and tax clearance certificates pursuant to the
CGCL, (c) such filings and approvals as are required to be made or obtained
under the Securities Act and the securities or "Blue Sky" laws of various states
in connection with the issuance of PROVANT Common Stock pursuant to the
Agreement and (d) such filings as are required under the Exchange Act), (iii)
result in a Default for which a waiver has not been obtained or give rise to any
right to terminate, cancel or accelerate or to any loss of benefit under any of
the terms, conditions, or provisions of any Contract filed by PROVANT as an
exhibit to its filings under either the Securities Act or the Exchange Act, or
(iv) violate any applicable Law to which PROVANT or Acquisition, or any of their
assets are bound.
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5.3 LITIGATION. There are no actions, suits or other forms of
proceedings or disputes pending or threatened against PROVANT or Acquisition
before any Governmental Authority, that would, if resolved adversely to it,
whether singly or in the aggregate, have a material adverse effect on its
business or financial condition; nor has PROVANT or Acquisition been, or is
either of them, subject to any orders, awards, fines, judgments, decrees or
injunctions the effect of which in the aggregate would have a material adverse
effect on its business or financial condition. Neither PROVANT nor Acquisition
knows or has grounds to know of any basis for any such action, suit or other
form of proceeding or dispute or of any governmental investigation relating to
either of them.
5.4 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of either Acquisition or PROVANT.
5.5 SEC FILINGS. The PROVANT SEC Filings (as defined below), when filed
with the Commission, complied as to form with the requirements for such filings
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or incorporated by reference therein or
necessary to make the statement and information therein, in light of the
circumstances under which they were made, not misleading. The financial
statements contained in the PROVANT SEC Filings were prepared in accordance with
GAAP, and fairly present the consolidated financial position and results of
operations of PROVANT and its subsidiaries as of and for their respective dates,
in conformity with GAAP applied on a consistent basis, except as otherwise noted
therein. There has not been any change that is materially adverse to the
business, assets, financial condition or results of operations of PROVANT, other
than any such changes set forth or described in the PROVANT SEC Filings,
provided that none of the following shall be deemed by itself or by themselves,
either alone or in combination, to constitute such a material adverse change:
(a) any change in the market price or trading volume of the PROVANT Common
Stock; (b) any failure by the Company to meet the revenue or earnings,
predictions or expectations of equity analysts for any period ending (or for
which earnings are released) on or after the date of this Agreement; (c) any
adverse change arising out of or resulting from actions contemplated by the
parties in connection with, or which is attributable to, the announcement of
this Agreement and the transactions contemplated by the parties in connection
with, or which is attributable to, the announcement of this Agreement and the
transactions contemplated hereby; or (d) any change arising out of conditions
affecting the industry in which the Company operates as a whole or the U.S.
economy as a whole. "PROVANT SEC Filings" means all Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other publicly
available documents of PROVANT filed by PROVANT with the Commission pursuant to
the federal securities laws.
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5.6 REORGANIZATION.
(a) Prior to the Mergers, PROVANT will be in control of Acquisition
within the meaning of Section 368(c)(1) of the Code.
(b) Except as otherwise specifically set forth in the Agreement,
PROVANT and Acquisition will pay their own expenses, if any, incurred in
connection with the Mergers.
(c) There is no intercorporate indebtedness existing between PROVANT
and the Company or Acquisition and the Company that was issued, acquired or will
be settled at a discount.
(d) Neither PROVANT nor Acquisition is an "investment company" as
defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.
(e) No stock of Acquisition will be issued in the Mergers.
(f) Acquisition is a corporation newly formed for the purpose of
participating in the Mergers and at no time prior to the Effective Time has had
assets (other than nominal assets contributed upon the formation of Acquisition,
which assets will be held by Acquisition following the Mergers) or business
operations.
(g) Neither PROVANT nor any "related person" of PROVANT within the
meaning of Treasury Regulation ss.1.368-1(e)(3), (e)(4) and (e)(5), has any plan
to purchase, redeem or otherwise reacquire any Merger Stock issued pursuant to
the Agreement.
(h) PROVANT has no plan or intention to liquidate the Surviving
Corporation; to merge Acquisition with and into another corporation (other than
the Surviving Corporation); to sell or otherwise dispose of the stock of the
Surviving Corporation; or to cause the Surviving Corporation to sell or
otherwise dispose of any of the Company's assets acquired in the Mergers, except
for dispositions made in the ordinary course of business or transfers described
in Section 368(a)(2)(C) of the Code.
(i) The terms of this Agreement and all other agreements entered into
in connection therewith are the product of arm's-length negotiations.
(j) PROVANT and Acquisition have bona fide business reasons for
engaging in the Mergers.
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6. COVENANTS
6.1 PUBLIC ANNOUNCEMENTS. 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
shall require the prior approval of PROVANT and, except for filings with the
Commission, the Shareholder Representative.
6.2 COVENANTS OF XXXXX X. XXXX AND XXXX XXXXXXXXX. Each of the Managers,
severally and not jointly, hereby covenants and agrees with PROVANT and
Acquisition that he shall:
(a) for five (5) years from the Closing, refrain from engaging or
becoming interested, directly or indirectly, as an owner, employee, director,
partner, consultant, through stock ownership, investment of capital, lending of
money or property, rendering of services, or otherwise, either alone or in
association with others, in the operation, management or supervision of any type
of business or enterprise that during such period is in any way similar to or
competitive with the businesses or enterprises of PROVANT and its operating
subsidiaries (whether now existing or later formed) (collectively, the "PROVANT
Group"), or any new business or enterprise which, at the time of the termination
of the Manager's employment with the PROVANT Group, the PROVANT Group plans in
good faith in the near future to commence which is related to the PROVANT
Group's then-existing performance improvement and training businesses or
enterprises, provided that the Manager was involved in the planning of such new
business or enterprise, (i) in the Los Angeles and London metropolitan areas or
(ii) in any metropolitan area in which any member of the PROVANT Group operates
or plans in good faith in the near future to commence operations, except that
the Manager will be allowed during such period to do (and is not prohibited from
doing) any of the following (subject to the terms of his Employment Agreement):
(A) own shares in a publicly-traded corporation or publicly-traded
mutual fund or publicly-traded limited partnership in which
the Manager does not materially participate and in which the
Manager's ownership interest is one percent (2%) or less;
(B) after the term of his employment with the PROVANT Group, for
pay or on a volunteer basis, teach classes, courses, seminars
or individuals and lecture in public and private settings on
topics involving topics that may be similar to or competitive
with topics involved in the businesses or enterprises of the
PROVANT Group, so long as (i) the Manager is not then employed
as an employee of PROVANT or the Surviving Corporation and
(ii) the Manager does not teach or lecture as an employee or
independent contractor of a for-profit business that competes
with the PROVANT Group; and
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(C) after his term of employment with the PROVANT Group, on his
own or in collaboration with other individuals, entities or
associations (provided that such other individuals, entities
or associations do not compete with the PROVANT Group), write
books, articles, websites, and other printed publications or
literary works on topics that may be similar to or competitive
with topics involved in the businesses or enterprises of the
PROVANT Group, provided that by doing so the Manager does not
expressly denigrate or contradict the Proprietary Property;
(b) for five (5) years from the Closing, refrain from, directly or
indirectly, whether on behalf of himself or anyone else: (i) soliciting or
accepting orders from any present or past customer of the PROVANT Group for a
product or service offered or sold by, or competitive with a product or service
offered or sold by, the PROVANT Group; (ii) inducing or attempting to induce any
such customer to reduce such customer's purchases from the PROVANT Group; (iii)
using for his benefit or disclosing the name and/or requirements of any such
customer to any other person or persons, natural or corporate; or (iv)
soliciting any of the PROVANT Group's employees to leave the employ of the
PROVANT Group or hiring anyone who is an employee of the PROVANT Group or was
such an employee during the twelve (12) months preceding the proposed date of
hire;
(c) refrain from knowingly disclosing to or using for the benefit of
anyone else any of the Proprietary Information (from the date of the Closing) or
the PROVANT Proprietary Information (as defined below) (from the date hereof)
without PROVANT's prior written authorization in each particular case, unless
compelled to disclose any such information by judicial or administrative
process, or, in the opinion of legal counsel, by other requirements of law; and
(d) from the date of the Closing, take all action and sign and deliver
all instruments PROVANT or the Surviving Corporation may reasonably require to
vest or perfect in PROVANT or the Surviving Corporation all right, title and
interest in and to the Proprietary Information or the PROVANT Proprietary
Information, or to assist PROVANT or the Surviving Corporation in filing or
prosecuting any application, in either his name or any other name, in any
country, for any patent, trademark, service xxxx, copyright or other right
therein, or any modification, reissue, division, continuation, revival or
extension thereof, or in conducting any legal or administrative proceedings for
securing, protecting or enforcing any of the foregoing.
(e) As used in this Section 6.2, "Proprietary Information" means (i)
any and all inventions, discoveries, ideas, writings, communications, research,
engineering methods, practices, processes, systems, formulae, designs, products,
projects, improvements and developments which (a) relate to the Company or the
Business and (b) are made, conceived or reduced to practice by the Managers on
or before the Closing Date or in which any of such Managers has any right, title
or interest, in whole or in part at the expense of the Company or on the
premises of Company or with the assistance of the Company's employees or
consultants or
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with the Company's equipment or supplies or otherwise relating to the Business
and (ii) any and all trade secrets, marketing plans, forecasts, unpublished
financial statements, budgets, licenses, prices and employee, customer and
supplier lists of the Company or the Business. For purposes of this Agreement,
"Proprietary Information" shall not include any information referred to in
clause (ii) above that already is in the public domain or subsequently becomes
part of the public domain through no fault of the Managers.
(f) As used in this Section 6.2, "PROVANT Proprietary Information"
means (i) any and all inventions, discoveries, ideas, writings, communications,
research, engineering methods, practices, processes, systems, formulae, designs,
products, projects, improvements and developments which (a) relate to the
PROVANT Group and (b) are made, conceived or reduced to practice by either of
the Managers subsequent to the Closing Date, in whole or in part at the expense
of the PROVANT Group or on the premises of the PROVANT Group or with the
assistance of the PROVANT Group's employees or consultants or with the PROVANT
Group's equipment or supplies or otherwise relating to the PROVANT Group's
business, and (ii) any and all trade secrets, marketing plans, forecasts,
unpublished financial statements, budgets, licenses, prices and employee,
customer and supplier lists of the PROVANT Group. For purposes of this
Agreement, "PROVANT Proprietary Information" shall not include any information
referred to in clause (ii) above that already is in the public domain or
subsequently becomes part of the public domain through no fault of the Managers.
(g) For five (5) years after the Closing Date, any agreements with
respect to options to purchase PROVANT Common Stock granted to either of the
Managers after the Closing will not provide for any forfeiture or repayment of
gain for activities that would not be prohibited under this Section 6.2.
6.3 TAX FREE REORGANIZATION AND TAX RETURNS.
(a) Following the Mergers, neither PROVANT nor the Surviving
Corporation shall take or suffer to be taken any action which will cause the
Mergers not to constitute a reorganization within the meaning of Section 368(a)
of the Code.
(b) Following the Mergers, the Surviving Corporation will not issue
additional shares of its stock that would result in PROVANT losing control of
Surviving Corporation within the meaning of Section 368(c)(1) of the Code for as
long as such issuance would result in a disqualification of the Mergers as a
reorganization under Section 368(a) of the Code.
(c) Following the Mergers, the Surviving Corporation (or a member or
members of the "qualified group," as defined in Treasury Regulation
ss.1.368-1(d)(4)(ii), that includes PROVANT as the "issuing corporation," as
defined in Treasury Regulation ss.1.368-1(b)), will continue the historic
business of the Company or use a significant portion of the Company's historic
business assets in a business to the extent required by the Treasury Regulations
or the
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Code to avoid a disqualification of the Mergers as a reorganization under
Section 368(a) of the Code.
(d) Following the Mergers, PROVANT will comply with the record-keeping
and information filing requirements of Treasury Regulation ss.1.368-3.
(e) Neither PROVANT nor the Surviving Corporation will take any
position in any federal, state, local or foreign income or other Tax Return, or
take any other Tax reporting position, that is inconsistent with the treatment
of the Mergers as a reorganization within the meaning of section 368(a) of the
Code, unless otherwise required by a "determination" (as defined in Section
1313(a)(1) of the Code) or by applicable state, local or foreign tax law.
(f) In addition to the foregoing, each of the Managers covenants and
agrees that he shall permit representatives of PROVANT to review all proposed
Tax filings to be made by the Surviving Corporation relating to periods ending
on or prior to the Closing, prior to the date of any such filing.
6.4 OPTIONS.
(a) PROVANT agrees that on the date of the Closing it will grant to the
Company's employees (other than the Shareholders and Managers) options under its
1998 Non-Qualified Stock Option Plan to purchase an aggregate of 200,000 shares
of PROVANT Common Stock, and further covenants and agrees that on the date of
the Closing it will prepare and promptly thereafter distribute option agreements
to such employees provided that PROVANT has received from the Shareholder
Representative, prior to the Closing, instructions relating to the identity of
the employee grantees and the number of shares of PROVANT Common Stock
underlying the options to be granted to them. Each of the option agreements will
be in the form attached hereto as EXHIBIT 5, and each option will have a per
share exercise price equal to the last sale price of the PROVANT Common Stock on
the date of the Closing, as reported by the principal national securities
exchange (or automated quotation system) on which the PROVANT Common Stock is
then being traded. However, if PROVANT has not received the instructions
described above with respect to any grantees on the Closing Date, the options
granted to such grantees hereunder will have a per share exercise price equal to
the last sale price of the PROVANT Common Stock on the date on which such
instructions are actually received.
(b) For a minimum of the next three years, if the Compensation
Committee of PROVANT grants stock options, the employees of the Surviving
Corporation shall receive options to purchase 200,000 shares of PROVANT Common
Stock. There is no guaranty that this will happen.
(c) In the event that the employment of any employee of the Surviving
Corporation who has received options under this Section 6.4 ceases such that
such options are forfeited, in
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part or in full, to PROVANT, PROVANT agrees that options to purchase that number
of shares of PROVANT Common Stock as is equal to the number of shares issuable
upon the exercise of any such forfeited options will be granted, at the then
current fair market value of the PROVANT Common Stock, to other employees of the
Surviving Corporation.
6.5 SENIOR TEAM BONUS POOL. The Surviving Corporation shall maintain
and pay annually a senior team bonus pool, pursuant to which 25% of the
Surviving Corporation's annual EBIT less the amount of any other bonuses paid to
employees of the Surviving Corporation (other than quarterly bonuses consistent
with past practice) and expenses associated with the Surviving Corporation's
annual meeting of employees (the "Annual Meeting") will be available for senior
team employee bonuses in each year in which the Surviving Corporation achieves
at least 80% of its EBIT Targets (as defined below) for such year, with the
allocation of any such bonuses being made by Xxxxx X. Xxxx (or his successor as
Chief Executive Officer of the Surviving Corporation), provided that if the
Surviving Corporation achieves less than 80% of its EBIT Targets, the percentage
of the annual bonus shall be reduced to 20% of the Surviving Corporation's
annual EBIT less the amount of any other bonuses paid to employees of the
Surviving Corporation (other than quarterly bonuses consistent with past
practice) and expenses associated with the Annual Meeting. "EBIT Targets" means
EBIT of $9.96 million, $11.95 million and $14.34 million for 2000, 2001 and
2002, respectively, and for each year thereafter, 120% of the previous year's
EBIT target.
6.6 OPERATIONS AFTER CLOSING.
(a) PROVANT represents and warrants that it has no present intention to
make any changes after the Closing with respect to the Surviving Corporation
that would result in a change in the following not being true: (i) that the
Surviving Corporation's name will remain "Xxxx-Xxxxxxx Leadership Consulting
Group, Inc."; (ii) that the Surviving Corporation's main offices will not be
relocated farther than five (5) miles from their present location at Xxxxxx
Xxxxxxx Xxxxxx xx Xxxx Xxxxx, Xxxxxxxxxx; (iii) that no employee of the
Surviving Corporation who works from a location other than Long Beach will be
required to relocate farther than ten (10) miles from his or her present work
location; (iv) that the Surviving Corporation will be operated as an autonomous
entity in a manner consistent with the operation of PROVANT's other operating
subsidiaries, with senior management setting budget and operating goals; and (v)
the Surviving Corporation will have autonomy with regard to employee
compensation and will be able to continue its Annual Meeting, all consistent
with past practices of the Company as modified by Section 6.5 above.
(b) PROVANT agrees after the Closing (i) that, except as otherwise
required by ERISA, PROVANT will not change the employee benefits received by
employees of the Surviving Corporation so as to reduce them from their levels at
the Effective Time; and (ii) the Shareholders, while employees of the Surviving
Corporation, will be able to take vacation at
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their discretion consistent with past practices of the Company.
6.7 CALCULATION OF EBIT. For purposes of determining whether the
Surviving Corporation has achieved the EBIT targets referenced in Section 6.5
above, the following shall apply:
(a) The Surviving Corporation will not be deemed to have incurred any
overhead expense or other charges allocated by PROVANT that are not approved by
the Shareholder Representative or Xxxx X. Xxxxxx.
(b) A separate income statement shall be maintained for the Business.
If following the Closing the Surviving Corporation or the Business is merged or
otherwise combined in any way into or with any other business, or any other
business, subsidiary or division of PROVANT shall hereafter be added to or
consolidated with the Surviving Corporation, unless other arrangements are
agreed to in writing by PROVANT and the Shareholder Representative, EBIT shall
be calculated as if such merger, combination, addition or consolidation had not
been effected.
7. REGISTRATION OF MERGER STOCK
7.1 DEMAND REGISTRATION.
(a) PROVANT shall cause a Registration Statement on Form S-3 (the "S-3
Registration Statement") covering the offer and resale of the Registrable
Shares, which shall include a prospectus for the purpose of offering for resale
Registrable Shares, to be filed with the Commission on or prior to May 15, 2000
and will use its best efforts to cause such S-3 Registration Statement to be
declared effective by the Commission as soon as practicable thereafter. Any
offering of the Registrable Shares under the S-3 Registration Statement shall
not be underwritten.
(b) PROVANT shall use its best efforts to cause the S-3 Registration
Statement to remain effective until the first to occur of 365 days from the date
it is declared effective by the Commission or such earlier date on which all
Registrable Shares are sold or such later date determined pursuant to Section
7.1(c) below. The 365 day period referred to in this Section 7.1(b) will be
extended one day for each day of any delay or suspension pursuant to Section
7.1(c).
(c) In the event that (i) PROVANT is engaged or has fixed plans to
engage in an underwritten public offering of PROVANT Common Stock registered
under the Securities Act or (ii) PROVANT is engaged in any activity or
transaction or preparations or negotiations for
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any activity or transaction that PROVANT desires to keep confidential for
business reasons and PROVANT determines in good faith that the public disclosure
requirements imposed on PROVANT under the Securities Act in connection with the
S-3 Registration Statement would require disclosure of such activity,
transaction, preparation or negotiations and that such disclosure would be
materially disadvantageous to PROVANT, PROVANT may, by written notice to the
Selling Stockholders, for up to an aggregate of forty-five (45) days, (A) delay
the filing or effectiveness of the S-3 Registration Statement and/or (B) suspend
the S-3 Registration Statement after effectiveness and require that the Selling
Stockholders immediately cease sales of shares pursuant to the S-3 Registration
Statement.
(d) Notwithstanding anything to the contrary contained herein, the
number of shares of PROVANT Common Stock that any Selling Stockholder shall be
entitled to resell pursuant to the S-3 Registration Statement shall be reduced
by the number of shares of PROVANT Common Stock, if any, that any such Selling
Stockholder has sold in an underwritten public offering pursuant to Section 7.6
of this Agreement.
(e) Shares of PROVANT Common Stock shall cease to be Registrable Shares
once they are transferred pursuant to Rule 144, or are sold pursuant to a
registration statement, under the Securities Act. PROVANT shall not have any
obligation to treat any person as a Selling Stockholder unless such person
notifies PROVANT that he or she or it is a permitted transferee and should be
treated as a Selling Stockholder.
(f) For the purpose of maintaining an orderly market in the PROVANT
Common Stock, the Selling Stockholders shall direct the sale of any Registrable
Shares sold under the S-3 Registration Statement through such brokerage firm (or
firms) as is (or are) reasonably designated by PROVANT.
7.2 CERTAIN REGISTRATION PROCEDURES. If and whenever PROVANT is
required by the provisions of this Agreement to use its best efforts to effect
or maintain the registration of any of the Registrable Shares under the
Securities Act, PROVANT shall as expeditiously as possible:
(a) prepare and file with the Commission any amendments and supplements
to the S-3 Registration Statement and the prospectus included in the S-3
Registration Statement as may be necessary to keep the S-3 Registration
Statement effective for the period required in Section 7.1(b);
(b) (i) furnish to the Shareholder Representative prior to the filing
thereof with the Commission, a copy of the S-3 Registration Statement and each
amendment thereof and each amendment or supplement, if any, to the prospectus
included therein and (ii) include the names of each Selling Stockholder who
proposes to sell Registrable Shares pursuant to the S-3 Registration Statement,
as selling security holders, and the manner of distribution they have elected;
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(c) at its own expense, shall cooperate with the Selling Stockholders
to facilitate the timely preparation and delivery of certificates representing
the Registrable Shares to be sold pursuant to the S-3 Registration Statement
free of any restrictive legends and in such denominations and registered in such
names as the Selling Stockholders may request a reasonable period of time prior
to sales of the Registrable Shares;
(d) cause the Registrable Shares (if not then listed) to be listed on
the Nasdaq National Market (the "Nasdaq") or, if not then listed on the Nasdaq,
on the principal securities exchange or market on which the PROVANT Common Stock
shall then be traded;
(e) Upon written request of a Selling Stockholder, prepare and file
with the Commission a supplement to the prospectus which forms a part of the S-3
Registration Statement with respect to such Selling Stockholder's name and/or
number of Registrable Shares, so that, as thereafter delivered to the purchasers
of the Registrable Shares being sold thereunder, such prospectus will contain
such Selling Stockholder's correct name and/or number of Registrable Shares as
indicated in writing by such Selling Stockholder;
(f) furnish to each Selling Stockholder such reasonable number of
copies of the prospectus included in the S-3 Registration Statement, including
any preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Selling Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by such Selling Stockholder;
(g) use its best efforts to register or qualify the Registrable Shares
covered by the S-3 Registration Statement under the securities or Blue Sky laws
of such states as the Selling Stockholder shall reasonably request and shall be
required under applicable law, and do any and all other acts and things that may
be reasonably necessary to enable the Selling Stockholder to consummate the
public sale or other disposition in such jurisdictions of the Registrable Shares
owned by the Selling Stockholder, provided, however, that PROVANT shall not be
required in connection with this Section 7.2(c) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction; and
(h) immediately notify each Selling Stockholder, at any time when a
prospectus contained in the S-3 Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus contained in the S-3 Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and
provide the Selling Stockholders with revised prospectuses.
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7.3 ALLOCATION OF EXPENSES. PROVANT will pay all Registration Expenses
(as defined below) for the S-3 Registration Statement. For purposes of this
Section 7.3, the term "Registration Expenses" shall mean all expenses incurred
by PROVANT in preparing and filing the S-3 Registration Statement and any
amendments thereto, including, without limitation, all registration and filing
fees, exchange or NASDAQ listing fees, printing expenses, accounting fees, fees
and disbursements of counsel for PROVANT, state Blue Sky fees and expenses of
special audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions relating to the Registrable
Shares and fees and disbursements of counsel to the Selling Stockholders.
7.4 INFORMATION BY SELLING STOCKHOLDERS. PROVANT shall not be required
to include any Registrable Shares in the S-3 Registration Statement unless the
Selling Stockholder owning such shares furnishes to PROVANT in writing such
information regarding such Selling Stockholder and the distribution proposed by
such Selling Stockholder as shall be required in connection therewith by the
Commission or any state securities law authorities.
7.5 INDEMNIFICATION.
(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, PROVANT will indemnify and
hold harmless each Selling Stockholder, each underwriter of such Registrable
Shares, and each person, if any, who controls such Selling Stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which such
Selling Stockholder, underwriter or controlling person may become subject under
the Securities Act, the Exchange Act, state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the S-3 Registration Statement under
which such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the S-3 Registration
Statement, or any amendment or supplement to such S-3 Registration Statement, or
any offering circular or other document related to such registration, or arise
out of or are based upon the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or arise out of or are based on any violation by PROVANT of any
rule or regulation promulgated under the Securities Act, the Exchange Act, state
securities laws or otherwise, applicable to PROVANT and relating to any action
or registration required of PROVANT in connection with any such registration;
and PROVANT will reimburse such Selling Stockholder, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such Selling Stockholder, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that PROVANT will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in (i) such S-3 Registration
Statement, preliminary prospectus or final
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prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information pertaining to such Selling Stockholder
furnished to PROVANT by or on behalf of such Selling Stockholder, underwriter or
controlling person specifically for use in the preparation thereof or (ii) a
preliminary prospectus, if a copy of a final prospectus correcting any such
untrue statement or omission was timely delivered to such Selling Stockholder.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Stockholder,
severally and not jointly, will indemnify and hold harmless PROVANT, each
underwriter and each person, if any, who controls PROVANT or any such
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
PROVANT, such underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any S-3 Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the S-3 Registration Statement, or
any amendment or supplement to the S-3 Registration Statement, or arise out of
or are based upon any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if the statement or omission pertained to such Selling Stockholder
and was made in reliance upon and in conformity with written information
pertaining to such Selling Stockholder furnished to PROVANT by or on behalf of
such Selling Stockholder, specifically for use in connection with the
preparation of such S-3 Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of each Selling Stockholder
hereunder shall be limited to the proportion of any such losses, claims, damages
or liabilities that are equal to the proportion that the public offering price
of the Registrable Shares sold by each such Selling Stockholder bears to the
total offering price of all securities sold thereunder, but not in any event to
exceed an amount equal to the proceeds to each such Selling Stockholder sold
pursuant hereto.
(c) Each party entitled to indemnification under this Section 7.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld). The failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 7.5, but as a result of any such failure, the Indemnifying Parties shall
not be liable to the Indemnified Party for the amount of actual damages caused
by such failure. The Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall pay such
expense if representation of such
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Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
7.6 REGISTRATION ON A PARI PASSU BASIS.
(a) In the event of a public offering of PROVANT Common Stock
registered under the Securities Act and any holder of shares issued in
connection with the mergers (the "Founding Company Mergers") of wholly-owned
subsidiaries of PROVANT with certain companies on May 4, 1998, or any PROVANT
Principal (as such term is defined in the definitive agreements evidencing the
Founding Company Mergers), is permitted to sell PROVANT Common Stock in such
offering, each Shareholder shall be permitted to sell shares of PROVANT Common
Stock in equal proportions and on the same terms, based on the respective number
of shares of PROVANT Common Stock each then holds (provided, however, that this
Section 7.6 shall not apply to any shares that are tradable immediately pursuant
to Rule 144(k) promulgated under the Securities Act).
(b) Notwithstanding anything to the contrary contained herein, the
number of shares of PROVANT Common Stock that any Shareholder shall be entitled
to sell, if any, in the first underwritten public offering of PROVANT Common
Stock after the filing of the S-3 Registration Statement shall be reduced by the
number of shares of PROVANT Common Stock, if any, that any such former
shareholder has sold pursuant to the S-3 Registration Statement.
7.7 LOCK-UP. If any Selling Stockholder who participates in a public
offering of PROVANT Common Stock pursuant to Section 7.6 is required by PROVANT,
and an underwriter of PROVANT Common Stock or other securities of PROVANT to be
sold by PROVANT as being necessary in the underwriter's opinion to effect an
orderly distribution of the securities being registered, any such Shareholder
(and any permitted transferee) will not sell or otherwise transfer, or dispose
of, any shares held by him for seven days prior and for a period of up to 180
days following the effective date of a registration statement filed by PROVANT
under the Securities Act covering the offer and sale of PROVANT Common Stock or
such other securities by PROVANT. PROVANT may impose stop-transfer instructions
with respect to shares of PROVANT Common Stock subject to the foregoing
restriction until the end of the lock-up period.
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8. SURVIVAL AND INDEMNIFICATION
8.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES AND INDEMNIFICATION
OBLIGATIONS.
(a) The respective representations and warranties of the Company and
the Shareholders and PROVANT and Acquisition contained herein or in any
certificates or other documents delivered at the Closing are true, accurate and
correct and shall not be deemed waived or otherwise affected by any
investigation made by any party hereto or by the occurrence of the Closing. Each
and every such representation shall be deemed to have been relied upon by the
party or parties to which made, notwithstanding investigation or inspection made
by or on behalf of such party or parties.
(b) Except to the extent set forth herein to the contrary, each and
every such representation and warranty and indemnification obligation of any
party hereunder with respect to such representation and warranty shall survive
for a period of one (1) year after the Closing Date, except (i) for items
expected to be encountered in the audit process that under the Commission's
pooling-of-interest rules cannot survive beyond the completion of the audit of
PROVANT's financial statements for the year ended June 30, 2000, which shall
survive until the completion of the audit of PROVANT's financial statements for
the year ended June 30, 2000. Any claim made in accordance with this Article 8
within the applicable survival period and any representation and warranty
relating thereto shall survive the Closing until finally resolved
notwithstanding expiration of the applicable survival period.
8.2 INDEMNIFICATION BY THE SHAREHOLDERS AND THE COMPANY.
(a) The Shareholders shall severally and not jointly indemnify and hold
harmless PROVANT, Acquisition and the Surviving Corporation, and shall reimburse
PROVANT, Acquisition and the Surviving Corporation for, any Damages for which a
written claim is made and given to the Shareholder Representative prior to the
expiration of the survival period, if any, under Section 8.1, arising from or in
connection with (i) any inaccuracy in any of the representations and warranties
of the Shareholders and the Company made in this Agreement or in any document,
agreement, instrument or certificate delivered by any shareholder or the Company
at the Closing pursuant to this Agreement or (ii) any failure by the Company or
a Shareholder to perform or comply with any agreement or covenant in this
Agreement or under any document, agreement, instrument or certificate delivered
at the Closing by the Company or any Shareholder pursuant to this Agreement. The
Shareholders agree that they shall have no rights of any nature whatsoever
against PROVANT or the Surviving Corporation from any and all claims arising out
of, in connection with or relating to the assertion by PROVANT or the Surviving
Corporation of a right to indemnification.
(b) For purposes of Articles 8 and 10, when the term "Shareholder" as
used in this Article 8 refers to The Xxxx Family Trust, it shall mean Xxxxx X.
Xxxx and Xxxxxxxxxx Xxxx, as
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trustees, together and jointly and severally, and Xxxxx X. Xxxx, individually.
For purposes of this Article 8, when the term "Shareholder" as used in this
Article 8 refers to The Childress Family Trust, it shall mean Xxxx Xxxxxxxxx, as
trustee, together and jointly and severally, and Xxxx Xxxxxxxxx, individually.
For purposes of this Article 8, when the term "Shareholder" as used in this
Article 8 refers to the Xxxx and Xxxxx Xxxxx Trust, it shall mean Xxxx Xxxxx and
Xxxxx Xxxxx, as trustees, together and jointly and severally, and Xxxx Xxxxx,
individually.
8.3 INDEMNIFICATION BY PROVANT. PROVANT and Acquisition shall jointly
and severally indemnify and hold harmless the Shareholders (and the Company
prior to the Closing) and shall reimburse them for any Damages for which a claim
is made prior to the expiration of the survival period, if any, under Section
8.1, arising from or in connection with (a) any inaccuracy in any of the
representations and warranties of PROVANT or Acquisition made in this Agreement
or in any document, agreement, instrument or certificate delivered by PROVANT or
Acquisition at the Closing pursuant to this Agreement, or (b) any failure by
PROVANT or Acquisition to perform or comply with any agreement or covenant in
this Agreement or under any document, agreement, instrument, or certificate
delivered at the Closing by PROVANT or Acquisition pursuant to this Agreement.
8.4 LIMITATIONS ON INDEMNIFICATION.
(a) The aggregate liability of PROVANT, Acquisition and the Surviving
Corporation on the one hand, and the Shareholders on the other hand, for any and
all Damages arising from indemnification claims under Section 8.2 or 8.3 shall
not exceed $20,000,000.
(b) The indemnification obligations of any Shareholder under Section
8.2 shall not exceed his or her or its pro rata portion of any Damages, based
upon the relative number of Shares held by the Shareholders at the Effective
Time.
(c) PROVANT, Acquisition and the Surviving Corporation on the one hand,
and the Shareholders on the other hand, (i) shall be entitled to indemnification
only if the aggregate and collective Damages for which it otherwise would be
entitled under this Agreement exceed $400,000, in which event it shall be
entitled to indemnification of all such Damages in excess of $400,000, and (ii)
shall not be entitled to assert any indemnity claim with respect to any
individual item of Damages unless the amount thereof equals at least $5,000.
(d) Any indemnification payment owed by the Shareholders under Section
8.2, or by PROVANT, Acquisition or the Surviving Corporation under Section 8.3,
shall be payable solely in shares of PROVANT Common Stock, with the value of
such shares being deemed to be equal to $22.3125, the ten day average of the
last sale price of PROVANT Common Stock on the Nasdaq National Market, upon
which the number of Merger Shares was determined. Notwithstanding anything to
the contrary contained herein, any indemnification payment owed
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by Shareholder may be paid in cash to the extent that the amount of the
indemnification payment exceeds the value of PROVANT Common Stock held by such
Shareholder.
8.5 THIRD-PARTY CLAIMS. After receipt by a party of notice of the
commencement of any Proceeding against it for which such party is entitled or is
seeking to assert a right to indemnification under Section 8.2 or 8.3 (an
"Indemnified Party"), the Indemnified Party shall promptly give notice to the
party or parties from whom indemnification will be sought (the "Indemnifying
Party") of the commencement thereof, but the failure so to notify the
Indemnifying Party shall not relieve them of any liability they may have to any
Indemnified Party except to the extent of actual prejudice caused by such
failure. In case any such Proceeding shall be brought against an Indemnified
Party and it shall give notice to the Indemnifying Party of the commencement
thereof, the Indemnifying Party will be entitled to participate therein and, to
the extent that they shall wish (except as provided in the next sentence),
assume the defense thereof with counsel reasonably satisfactory to such
Indemnified Party. The Indemnifying Party may not assume the defense if (i) an
Indemnifying Party is also a party to such Proceeding and the Indemnified Party
determines in good faith that joint representation would be inappropriate
because of a conflict of interest, (ii) the Indemnifying Party fails to provide
reasonable assurance to the Indemnified Party of its financial capacity to
defend such Proceedings and provide indemnification with respect thereto, (iii)
equitable relief is being sought against the Indemnified Party, (iv) the claim
involves Taxes or (v) the Proceeding, if adversely determined, would materially
impair the financial condition, business or prospects of an Indemnified Party.
If entitled and after notice from the Indemnifying Party to such Indemnified
Party of its election so to assume the defense, the Indemnifying Party shall not
be liable to such Indemnified Party for any fees of other counsel or any other
expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by such Indemnified Party in connection with the defense
thereof, other than reasonable costs of investigation; provided that the
Indemnifying Party may only assume control of the defense of such Proceeding if
it acknowledges in writing to the Indemnified Party that any damages, fines,
costs or Liabilities that may be assessed against the Indemnified Party in
connection with the Proceeding constitute Damages for which the Indemnified
Party shall be indemnified pursuant to Section 8.2 or 8.3, as the case may be.
If an Indemnifying Party assumes the defense of such Proceeding, no compromise
or settlement thereof may be effected by the Indemnifying Party without the
Indemnified Party's prior written consent (which consent will not unreasonably
be withheld or delayed) unless the settlement provides for a full and
unconditional release of the Indemnified Party without payment of any funds by
the Indemnified Party or (A) there is no finding or admission of any violation
of Law or any violation of the rights of any person and no effect on any other
claims that may be made against the Indemnified Party and (B) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party. If
notice is given to the Indemnifying Party of the commencement of any Proceeding
and it does not, within fifteen (15) days after the Indemnified Party's notice
is given, give notice to the Indemnified Party of its election to assume the
defense thereof, the Indemnifying Party shall be bound by any
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determination made in such action or any compromise or settlement thereof
effected by the Indemnified Party.
Notwithstanding the other provisions of this Section 8.5, if a third
party asserts (other than by means of a Proceeding) that PROVANT or either of
the Surviving Corporation is liable to such third party for a monetary or other
obligation which may constitute or result in Damages for which PROVANT or the
Surviving Corporation may be entitled to indemnification pursuant to Section
8.2, and PROVANT or the Surviving Corporation reasonably determines in good
faith that it would be materially disadvantageous to PROVANT if it failed to
fulfill such obligation, then (i) PROVANT or the Surviving Corporation shall be
entitled to satisfy such obligation, without prior consent from any of the
former shareholders of the Company, (ii) PROVANT or the Surviving Corporation
may subsequently make a claim for indemnification in accordance with the
provisions of this Article 8, and (iii) PROVANT or the Surviving Corporation
shall be reimbursed, in accordance with the provisions of Article 8, for any
such Damages for which it is entitled to indemnification pursuant to this
Article 8 (subject to the right of the former shareholders of the Company to
dispute PROVANT's or the Surviving Corporation's entitlement to indemnification,
or the amount for which it is entitled to indemnification, under the terms of
this Article 8).
8.6 PAYMENT.
(a) In the event that any Indemnified Party determines that it is
entitled to an indemnity payment pursuant to this Article 8, the Indemnified
Party shall deliver a written notice to the Indemnifying Party. If the
Indemnifying Party disputes all or any portion of the claim, the Indemnifying
Party must provide written notice of its objection (reasonably detailing the
objection) to the Indemnified Party within thirty (30) business days after the
receipt of the notice by all Indemnifying Parties from the Indemnified Party.
Failure by the Indemnifying Party to give such notice shall be deemed
acknowledgment and agreement by the Indemnifying Party that it is liable for
that portion of the claim as to which no objection is made.
(b) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the Indemnifying Party shall pay the
Indemnified Party interest on the unpaid amount of the obligation for each day
from the date the amount became due until payment in full, payable on demand, at
the Prime Rate plus two percent (2%).
8.7 NO CONTRIBUTION. None of the former shareholders of the Company
shall have any right of contribution against the Company or the Surviving
Corporation with respect to any breach by the Company of any of its
representations, warranties, covenants or agreements.
8.8 CONSTRUCTION. The parties intend that each representation, warranty,
and covenant herein shall have independent significance. If any party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another
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representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant, as the case may be.
9. MISCELLANEOUS
9.1 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and either (i) delivered by hand, (ii) made by facsimile
transmission, (iii) sent by recognized overnight courier, or (iv) sent by
registered or certified mail, return receipt requested, postage prepaid.
If to PROVANT or Acquisition:
PROVANT, Inc.
00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Facsimile telephone number: (000) 000-0000
with a copy to:
Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile telephone number: (000) 000-0000
If to the Company, the Shareholders or the Managers:
Xxxx-Xxxxxxx Leadership Consulting Group, Inc.
0000 Xxxxxx Xxxxxxx Xxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Xxxx Xxxxxxxxx
Xxxx X. Xxxxxx
Facsimile telephone number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
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Suite 4000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxxx, Esq.
Facsimile telephone number: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been properly given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
9.2 ENTIRE AGREEMENT. It is agreed that all offers, statements of
intent, understandings and agreements heretofore had among the parties or their
affiliates respecting this transaction are merged in this Agreement (including
the Schedules and Exhibits thereto), which fully and completely expresses the
agreement of the parties, and that there are no representations, warranties or
agreements except as specifically set forth or referred to in this Agreement.
9.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement, this Agreement shall forthwith become void and have no effect, and no
party shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except 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.
9.4 WAIVER; AMENDMENT. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any other breach of that or any other
provision hereof. No supplement or modification of or amendment to this
Agreement shall be binding unless agreed to and executed in writing by PROVANT,
the Company (or the Surviving Corporation following the Closing) and the
Shareholder Representative.
9.5 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the
internal laws of the Commonwealth of Massachusetts, without giving effect to the
conflict of law principles thereof, except that the laws of the State of
Delaware shall apply to all matters involving the Mergers.
9.6 SEVERABILITY. In the event that any court of competent jurisdiction
shall finally determine that any provision, or any portion thereof, contained in
this Agreement shall be void or unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court determines it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine any such provision, or portion thereof,
wholly
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unenforceable, the remaining provisions of this Agreement nevertheless shall
remain in full force and effect.
9.7 ENFORCEMENT OF COVENANTS; INJUNCTIVE RELIEF. Each of the Managers
acknowledges and agrees that, were he to breach any of the covenants contained
in Sections 6.2(b) or (c) of this Agreement, the damage would be irreparable.
Each of the Managers therefore agrees that PROVANT or the Surviving Corporation,
in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened
breach by the Manager of any of said covenants, without having to post bond.
9.8 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.
9.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.10 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
expressed 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.
9.11 REPRESENTATION BY COUNSEL; INTERPRETATION: Each of the parties
hereto acknowledges that she or it has been represented by counsel in connection
with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived.
10. SHAREHOLDER REPRESENTATIVE
10.1 Authorization of Shareholder Representative.
(a) Xxxxx X. Xxxx is hereby appointed, authorized and empowered to act
as the shareholder representative (the "Shareholder Representative"), for the
benefit of the Shareholders and the Managers in connection with and to
facilitate the consummation of the transactions contemplated hereby as the
exclusive agent and attorney-in-fact to act on behalf of each Shareholder with
respect to such transactions including without limitation any and all
indemnification claims made by PROVANT or the Surviving Corporation ("PROVANT
Indemnity Claims"), which shall include the power and authority:
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(i) as Shareholder Representative, to enforce and protect the
rights and interests of the Shareholders and the Managers (including the
Shareholder Representative, in his capacity as a Shareholder and a Manager) and
to enforce and protect the rights and interests of the Shareholder
Representative arising out of or under or in any manner relating to this
Agreement, and each other agreement, document, instrument or certificate
referred to herein or therein or the transactions provided for herein or therein
(including, without limitation, in connection with any and all PROVANT Indemnity
Claims, and to take any and all actions which the Shareholder Representative
believes are necessary or appropriate under this Agreement for and on behalf of
the Shareholders and the Managers, including, without limitation, defending all
PROVANT Indemnity Claims, consenting to, compromising or settling all PROVANT
Indemnity Claims, conducting negotiations with PROVANT and its representatives
regarding such claims, and engaging counsel, accountants or other
representatives in connection with the foregoing matters, and, in connection
therewith, to (i) assert any claim or institute any action, proceeding or
investigation; (ii) investigate, defend, contest or litigate any claim, action,
proceeding or investigation initiated by PROVANT, the Surviving Corporation or
any person, or by any federal, state or local Governmental Authority against the
Shareholder Representative, any of the Shareholders and/or either of the
Managers, and receive process on behalf of any or all Shareholders and/or either
or both of the Managers in any such claim, action, proceeding or investigation
and compromise or settle on such terms as the Shareholder Representative shall
determine to be appropriate, and give receipts, releases and discharges with
respect to, any such claim, action, proceeding or investigation; (iii) file any
proofs of debt, claims and petitions as the Shareholder Representative may deem
advisable or necessary; or (iv) file and prosecute appeals from any decision,
judgment or award rendered in any such action, proceeding or investigation, it
being understood that the Shareholder Representative shall not have any
obligation to take any such actions, and shall not have any liability for any
failure to take any such actions;
(ii) to refrain from enforcing any right of the Shareholders
or any of them, the Managers or either of them, and/or the Shareholder
Representative arising out of or under or in any manner relating to this
Agreement or any other agreement, instrument or document in connection with the
foregoing; provided, however, that no such failure to act on the part of the
Shareholder Representative shall be deemed a waiver of any such right or
interest by the Shareholder Representative or by the Shareholders or by the
Managers unless such waiver is in writing signed by the waiving party or by the
Shareholder Representative;
(iii) to make, execute, acknowledge and deliver all such other
agreements, guarantees, orders, receipts, endorsements, notices, requests,
instructions, certificates, stock powers, letters and other writings, and, in
general, to do any and all things and to take any and all action that the
Shareholder Representative, in his sole and absolute discretion, may consider
necessary or proper or convenient in connection with or to carry out the
transactions
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contemplated by this Agreement and all other agreements, documents or
instruments referred to herein or therein or executed in connection herewith and
therewith; and
(iv) to amend this Agreement.
(b) The Shareholder Representative shall not be entitled to any fee,
commission or other compensation for the performance of its services hereunder,
but shall be entitled to the payment from the other Shareholders and Manager of
all its expenses incurred as the Shareholder Representative. In connection with
this Agreement, and in exercising or failing to exercise all or any of the
powers conferred upon the Shareholder Representative hereunder (A) the
Shareholder Representative shall incur no responsibility whatsoever to any
Shareholders or Managers by reason of any error in judgment or other act or
omission performed or omitted hereunder or any such other agreement, instrument
or document, excepting only responsibility for any act or failure to act which
represents willful misconduct, and (B) the Shareholder Representative shall be
entitled to rely on the advice of counsel, public accountants or other
independent experts experienced in the matter at issue, and any error in
judgment or other act or omission of the Shareholder Representative pursuant to
such advice shall in no event subject the Shareholder Representative to
liability to any Shareholders or Managers. Each Shareholder shall indemnify, pro
rata based upon each Shareholder's pro rata ownership of Shares, the Shareholder
Representative against all losses, damages, liabilities, claims, obligations,
costs and expenses, including reasonable attorneys', accountants' and other
experts' fees and the amount of any judgment against them, of any nature
whatsoever (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened or any claims whatsoever), arising out of or
in connection with any claim, investigation, challenge, action or proceeding or
in connection with any appeal thereof, relating to the acts or omissions of the
Shareholder Representative hereunder or otherwise. The foregoing indemnification
shall not be deemed exclusive of any other right to which the Shareholder
Representative may be entitled apart from the provisions hereof. In the event of
any indemnification hereunder, upon written notice from Shareholder
Representative to the Shareholders as to the existence of a deficiency toward
the payment of any such indemnification amount, each Shareholder shall promptly
deliver to the Shareholder Representative full payment of his or her ratable
share of the amount of such deficiency, in accordance with such Shareholder's
pro rata ownership of Shares.
(c) All of the indemnities, immunities and powers granted to the
Shareholder Representative under this Agreement shall survive the Closing.
(d) PROVANT shall have the right to rely upon all actions taken or
omitted to be taken by the Shareholder Representative pursuant to this
Agreement, all of which actions or omissions shall be legally binding upon the
Shareholders and the Managers.
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(e) The grant of authority provided for herein (i) is coupled with an
interest and shall be irrevocable and survive the death, incompetency,
bankruptcy or liquidation of any Shareholder or Manager; and (ii) shall survive
the delivery of an assignment by a Shareholder or Manager of the whole or any
fraction of his or her interest hereunder.
(f) In the event of the death, disability or resignation of the
Shareholder Representative, Shareholders who held two-thirds of the Shares
immediately prior to the Effective Time shall appoint a successor
representative, who from the time of his or her appointment shall be the
Shareholder Representative hereunder.
IN WITNESS WHEREOF, PROVANT, Acquisition, the Company and the
Shareholders have executed this Agreement as of the day and year first above
written.
PROVANT, INC.
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice Chairman
SDL ACQUISITION CORP.
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
XXXX-XXXXXXX LEADERSHIP CONSULTING GROUP, INC.
/s/ Xxxxx X. Xxxx /s/ Xxxx X. Xxxxxx
---------------------- --------------------------
Name: Xxxxx X. Xxxx Name: Xxxx X. Xxxxxx
Title: Chairman Title: Secretary
XXXX-XXXXXXX LEADERSHIP CONSULTING U.K., LTD.
/s/ Xxxxx X. Xxxx /s/ Xxxx X. Xxxxxx
---------------------- --------------------------
Name: Xxxxx X. Xxxx Name: Xxxx X. Xxxxxx
Title: Chairman Title: Secretary
/s/ Xxxxx X. Xxxx
------------------------------------
Xxxxx X. Xxxx, both individually and
as Trustee of The Xxxx Family Trust,
u/t/a dated September 26, 1988, as
amended
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/s/ Xxxxxxxxxx Xxxx
----------------------------------------
Xxxxxxxxxx Xxxx, as Trustee of The
Xxxx Family Trust, u/t/a dated
September 26, 1988, as amended
/s/ Xxxx Xxxxxxxxx
----------------------------------------
Xxxx Xxxxxxxxx, both individually and
as Trustee of The Childress Family
Trust, u/t/a dated October 29, 1988
/s/ Eugenie Childress
----------------------------------------
Eugenie Childress, as Trustee of The
Childress Family Trust, u/t/a dated
October 29, 1988
/s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx, both individually and
as Trustee of the Xxxx and Xxxxx Xxxxx
Trust, u/t/a dated March 28, 1995
/s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx, as Trustee of the
Xxxx and Xxxxx Xxxxx Trust, u/t/a
dated March 28, 1995
/s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx
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/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx Xxxx
----------------------------------------
Xxxxxx Xxxx
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx
/s/ Xxxx Xxxxxxxxx
----------------------------------------
Xxxx Xxxxxxxxx
/s/ Xxxx Xxxxxxxx
----------------------------------------
Xxxx XxxXxxxx
/s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxxx
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1 - Form of Employment Agreement
Exhibit 2 - Financial Statements
Exhibit 3 - Directors and Officers of the Surviving Corporation
Exhibit 4 - Form of Representation Letter
Exhibit 5 - Form of Option Agreement
SCHEDULES
Schedule 1 - Shareholders
Schedule 2 - Disclosure Schedule
Schedule 3 - Projections
Schedule 4 - Roll-Over Options
