Securities & Exchange Commission
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 2, 1996
MarketLink, Inc.
(Exact name of small business issuer as specified in its charter)
Commission file number: 0-25764
Minnesota 41-1675041
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10340 Viking Drive, Suite 150
Eden Prairie, MN 55344
(Address of principal executive offices)
612-996-9000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On August 2, 1996, the Company (the "Company") completed its acquisition of
Provident Worldwide Communications, Inc. ("Provident"), a provider of long
distance telephone cards. Under the terms of the agreement, Provident became a
wholly-owned subsidiary of the Company. Shares of Provident common stock were
converted into Options to purchase Common Stock of the Company at the ratio of 1
Company Option to acquire one share of Company Common Stock for each 10.111
Provident shares outstanding at prices indicated below. The Options received by
the Provident shareholders are subject to several conditions including repayment
by Provident, at any time prior to February 2, 1999, of certain loans and
advances made to it by the Company. Based upon the exchange ratio and assuming
that all conditions to the exercise of the Options are satisfied, the Company
will issue, upon exercise, a maximum of 200,000 shares of Company Common Stock
as acquisition consideration to former Provident shareholders. One half of the
options (100,000) are exercisable at a price equal to the fair market value of
the Company's Common Stock at the close of business on the closing date and one
half (100,000) of the Options are exercisable at one cent ($0.01) per share. In
addition, Incentive Stock Options totaling 60,000 shares were granted to key
employees of Provident upon consummation of the acquisition. An additional
30,000 Non-Qualified Options were granted in exchange for satisfaction of
certain obligations of Provident to creditors and former Provident directors.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired:
Audited financial statements for Provident are unavailable and
their relative significance is less than or equal to twenty
(20) percent of the Company, therefore under item
310(c)(3)(ii) of Regulation SB, the Company's obligation to
file financial statements of Provident is automatically
waived. The Company may file unaudited financial statements or
other financial information, if available, by amendment to
this Form 8-K within 60 days of the due date of this report.
(b) Pro forma Financial Information:
See (a) above.
(c) Exhibits:
2.0 Agreement and Plan of Merger, dated August 2, 1996 by
and among the Company, MarketLink Acquisition Corp. and
Provident Worldwide Communications, Inc.
10.1 Employment Agreement dated August 2, 1996, between
Kevin Pollari and Provident Worldwide Communications, Inc.
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MarketLink, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARKETLINK, INC.
(Registrant)
Date: August 16, 1996
BY: /s/ Rodney Larson
Controller
(Principal Financial &
Accounting Officer)
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Exhibit Index
MarketLink, Inc.
Form 8-K
Exhibit Number Description
2.0 Agreement and Plan of Merger, dated August 2, 1996 by and
among the Company, MarketLink Acquisition Corp. and Provident
Worldwide Communications, Inc.
10.1 Employment Agreement dated August 2, 1996, between Kevin
Pollari and Provident Worldwide Communications, Inc.
AGREEMENT AND PLAN OF MERGER
Dated August 2, 1996
By and Among
MARKETLINK, INC.,
MARKETLINK ACQUISITION CORPORATION
and
PROVIDENT WORLDWIDE COMMUNICATIONS, INC.
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AGREEMENT AND PLAN OF MERGER
DATE: August 2, 1996
PARTIES: MarketLink, Inc.
a Minnesota corporation
10340 Viking Drive, Suite 150
Minneapolis, Minnesota 55344 ("MarketLink")
MarketLink Acquisition Corporation
a Minnesota corporation
10340 Viking Drive, Suite 150
Minneapolis, Minnesota 55344 ("Company")
and
Provident Worldwide Communications, Inc.
a Minnesota corporation
895 Anthony Lane South, Suite 110
Minneapolis, MN 55418 ("Provident")
(Company and Provident are sometimes referred to
herein collectively as "Constituent Corporations,"
or separately as "Constituent Corporation.")
RECITALS:
A. Company is a wholly-owned subsidiary corporation of MarketLink, formed
for the purpose of effecting the transactions described in this Agreement and
Plan of Merger (the "Agreement and Plan").
B. The respective Boards of Directors of MarketLink and the Constituent
Corporations deem it to be advisable and in the best interests of their
respective shareholders that MarketLink acquire Provident by causing Company to
merge with and into Provident (the "Merger"), upon the terms and subject to the
conditions set forth herein, with the result that Provident will become a
wholly-owned subsidiary of MarketLink and the shareholders of Provident (the
"Selling Shareholders") will receive options to acquire shares of common stock
of MarketLink (the "MarketLink Options") in exchange for their shares of stock
of Provident (the "Provident Shares").
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C. The respective Boards of Directors of MarketLink and the Constituent
Corporations and the shareholders of the respective Constituent Corporations
have approved this Agreement and Plan.
NOW, THEREFORE, the parties hereby agree to the terms and conditions
relating to the Merger, the method of carrying the Merger into effect, and
related matters, all as set forth herein.
AGREEMENT AND PLAN:
ARTICLE 1.
DEFINITIONS
Unless otherwise specifically stated in this Agreement and Plan, the
following terms shall have the meanings set forth in this Article 1.
1.1 Benefit Plans. "Benefit Plans" shall have the meaning given to such
term in Paragraph 5.19 hereof.
1.2 Closing. "Closing" shall have the meaning given to such term in
Paragraph 3.2 hereof.
1.3 Closing Date. "Closing Date" shall have the meaning given to such term
in Paragraph 3.2 hereof.
1.4 Code. "Code" shall have the meaning given to such term in Paragraph
5.19.3 hereof.
1.5 Contracts. "Contracts" shall have the meaning given to such term in
Paragraph 5.13 hereof.
1.6 Effective Time. "Effective Time" shall have the meaning given to such
term in Paragraph 3.1 hereof.
1.7 ERISA. "ERISA" shall have the meaning given to such term in Paragraph
5.19 hereof.
1.8 ERISA Plans. "ERISA Plans" shall have the meaning given to such term in
Paragraph 5.19 hereof.
1.9 Indemnified Party. "Indemnified Party" shall have the meaning given to
such term in Paragraph 9.4.1 hereof.
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1.10 Indemnifying Party. "Indemnifying Party" shall have the meaning given
to such term in Paragraph 9.4.1 hereof.
1.11 Indemnity Period. "Indemnity Period" shall have the meaning given to
such term in Paragraph 9.1 hereof.
1.12 Key Employee. "Key Employee" shall have the meaning given to such term
in Paragraph 5.8.6 hereof.
1.13 Loss or Losses. "Loss" or "Losses" shall have the meaning given to
such terms in Paragraph 9.2 hereof.
1.14 MBCA. "MBCA" shall have the meaning given to such term in Paragraph
2.1 ---- hereof.
1.15 MarketLink Loans. "MarketLink Loans" shall have the meaning given to
such term in Paragraph 7.3.1 hereof.
1.16 MarketLink Options. "MarketLink Options" shall have the meaning given
to such term in Paragraph B of the recitals hereof and as described more fully
in Paragraph 4.1.4 hereof.
1.17 Merger. "Merger" shall have the meaning given to such term in
Paragraph B of the recitals hereof.
1.18 Merger Consideration. "Merger Consideration" shall have the meaning
given to such term in Paragraph 4.1.3 hereof.
1.19 Provident Financial Statements. "Provident Financial Statements" shall
have the meaning given to such term in Paragraph 5.7 hereof.
1.20 Provident Shares. "Provident Shares" shall have the meaning given to
such term in Paragraph B of the recitals hereof.
1.21 Provident Options. "Provident Options" shall have the meaning given to
such term in Paragraph 4.1.3 hereof.
1.22 PBGC. "PBGC" shall have the meaning given to such term in Paragraph
5.19.5 hereof.
1.23 Schedule Volume. "Schedule Volume" shall mean and refer to the
separate bound volumes initialed by the parties, containing the Schedules and
copies of other documents referred to herein and required hereby to be furnished
on the date of execution hereof or such other time as expressly set forth
herein. The Schedules and such other documents constituting the Schedule Volume
shall be deemed to be part of this Agreement and Plan and are incorporated
herein by reference.
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1.24 Selling Shareholders. "Selling Shareholders" shall have the meaning
given to such term in Paragraph B of the recitals hereof.
1.25 Surviving Corporation. "Surviving Corporation" shall have the meaning
given to such term in Paragraph 2.1 hereof.
1.26 Tax or Taxes. "Tax" or "Taxes" shall have the meaning given to such
terms in.Paragraph 5.9 hereof.
1.27 Threshold Amount. "Threshold Amount" shall have the meaning given to
such term in Paragraphs 9.2 and 9.3 hereof.
ARTICLE 2.
THE MERGER
2.1 Merger. At the Effective Time, pursuant to the provisions of this
Agreement and Plan and pursuant to the Provisions of the Minnesota Business
Corporation Act (the "MBCA"), Company shall be merged with and into Provident,
which shall be the surviving corporation in the Merger (the "Surviving
Corporation"), and the separate existence of Company shall thereupon cease.
After the Effective Time, the existence and corporate organization of Provident
shall continue in effect as the Surviving Corporation. (Reference hereinafter to
"Provident" in the post-Effective Time context shall mean and refer to Provident
as the Surviving Corporation.)
2.2 Articles of Incorporation of Surviving Corporation. At the Effective
Time, the Articles of Incorporation of Company, as in effect immediately prior
to the Effective Time, shall be amended as follows:
Article 1 thereof shall be amended to state that the name of the
corporation shall be "Provident Worldwide Communications, Inc."
As so amended, the Articles of Incorporation of Company, as in effect
immediately prior to the Effective Time, shall constitute and become the
Articles of Incorporation of the Surviving Corporation until further amended or
changed as provided therein or by law.
2.3 Bylaws of Surviving Corporation. At the Effective Time, the Bylaws of
Company, as in effect immediately prior to the Effective Time, shall constitute
and become the Bylaws of the Surviving Corporation until amended or changed as
provided therein or by law.
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2.4 Board of Directors and Officers of Surviving Corporation. At the
Effective Time and continuing thereafter, the members of the Board of Directors
of Company immediately prior to the Effective Time shall constitute the members
of the Board of Directors of the Surviving Corporation until such board may be
changed or reconstituted as provided by the Articles of Incorporation or Bylaws
of the Surviving Corporation, or by law; and the individuals holding officer
positions in Company immediately prior to the Effective Time shall be the
officers holding such offices in the Surviving Corporation until such officers
are changed as provided by the Articles of Incorporation or Bylaws of the
Surviving Corporation, or by law.
2.5 Certain Effects of the Merger. At the Effective Time, the Surviving
Corporation shall succeed to and possess all the rights, privileges, powers,
franchises and immunities of a public as well as of a private nature, and be
subject to all liabilities, restrictions, disabilities, and duties of both of
the Constituent Corporations; and all and singular, the rights, privileges,
powers, franchises and immunities of both of the Constituent Corporations and
all property, real, personal and mixed, and all other things in action of or
belonging to either of the Constituent Corporations on whatever account, shall
be vested in the Surviving Corporation; and all property, assets, rights,
privileges, powers, franchises, immunities and all and every other interest
shall be thereafter as effectively the property of the Surviving Corporation as
they were or would be of the Constituent Corporations or either of them; and
title to any real estate or any interest therein vested by deed or otherwise in
either of the Constituent Corporations shall not revert or be in any way
impaired by any reason of the Merger; provided, however, that all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, limited in lien to the property
affected by such liens at the Effective Time, and all debts, liabilities and
duties of either of the Constituent Corporations shall thenceforth become those
of the Surviving Corporation and may be enforced against it to the same extent
as if such debts, liabilities and duties had been incurred or contracted by it.
2.6 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any instruments of
further assurance are desirable in order to evidence the vesting in it of the
title of either of the Constituent Corporations to any of the property rights of
the Constituent Corporations, the appropriate officers or directors of Company
or of Provident, as the case may be, are hereby authorized to execute,
acknowledge and deliver all such instruments of further assurance and to do all
other acts or things, either in the name of Company, in the name of Provident,
or in the name of the Surviving Corporation, as may be requisite or desirable to
carry out the provisions of this Agreement and Plan.
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ARTICLE 3.
EFFECTIVE TIME; CLOSING DATE; CLOSING
3.1 Effective Time. The Merger shall become effective when properly
executed and acknowledged Articles of Merger are duly filed with the Secretary
of State of Minnesota as provided in Section 302A.641 of the MBCA or at such
later time as stated in such Articles of Merger. Such filing shall be made on
the Closing Date, and the time when the Merger becomes effective is herein
referred to as the "Effective Time."
3.2 Closing and Execution of Articles of Merger. The appropriate officers
of the Constituent Corporations shall execute and acknowledge Articles of Merger
in the form attached hereto as Exhibit A at the offices of MarketLink, Inc.,
10340 Viking Drive, Suite 150, Minneapolis, Minnesota 55344, commencing at 11
a.m. local time, on August 2, 1996, or at such other place or on such other date
as the parties shall mutually agree in writing (the "Closing Date"). Completion
of the deliveries, filings, payments, exchanges and transactions designated
herein to occur at Closing (the "Closing") shall occur on the Closing Date.
ARTICLE 4.
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES; PAYMENT
4.1 Conversion of Shares. Subject to the other provisions of this Article
4, the manner and basis of converting the shares of stock of Provident and
Company, and the consideration to be given therefor, shall be as follows:
4.1.1 Company Shares. At the Effective Time, each share of
Common Stock of Company then outstanding shall, by virtue of the Merger
and without any further action on the part of the holder thereof, be
converted into and thereafter shall constitute one share of common
stock of Provident.
4.1.2 Provident Shares. At the Effective Time, each of the
Provident Shares then outstanding, regardless of class, shall, by
virtue of the Merger and without any further action on the part of the
holder thereof, be converted into and thereafter shall constitute the
right to receive options to acquire the number of shares of common
stock of MarketLink which shall be calculated as described in Paragraph
4.1.3, which shall be governed by the terms and conditions described in
Paragraph 4.1.4, and which shall be delivered as described in Paragraph
4.3.
4.1.3 MarketLink Options to be Delivered; Merger
Consideration. The MarketLink Options to be delivered to holders of
Provident Shares shall constitute options to acquire an aggregate of
Two Hundred Thousand (200,000) shares of common stock of MarketLink.
The MarketLink Options shall constitute the "Merger
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Consideration." The allocation of Merger Consideration among Selling
Shareholders shall be as set forth on Schedule 4.1.3 of the Schedule
Volume.
4.1.4 Terms and Conditions of MarketLink Options. The
MarketLink Options shall be governed by the following terms:
4.1.4.1 One half (1/2) of the MarketLink Options
received by each Provident Shareholder (100,000 options in the
aggregate) shall have an exercise price equal to the fair
market value of MarketLink shares at the close of business on
the Closing date (the "Fair Market Value Options"). One half
(1/2) of the MarketLink Options received by each Provident
Shareholder (100,000 options in the aggregate) shall have an
exercise price of one cent ($0.01) per share (the "One Cent
Options").
4.1.4.2 The MarketLink Options shall be exercisable
only if Provident's obligation to MarketLink for borrowed
funds described in Paragraph 7.3 (the "MarketLink Loans") have
been fully satisfied.
4.1.4.3 If the MarketLink Loans have not been fully
satisfied on or before the date indicated in the table below,
the number of shares covered by the MarketLink Options shall
be reduced to the number corresponding to such date, with the
reductions being borne by all holders in proportion to the
percentages set forth on Schedule 4.1.3:
Date MarketLink Options Reduced To
---- -----------------------------
15 months after Closing 175,000 shares
18 months after Closing 150,000 shares
24 months after Closing 0 shares
Provided, however, that if on the date twenty-four (24) months
after Closing, the MarketLink Loans have been reduced to
$100,000 or less, the MarketLink Options shall not be reduced
to zero (0) unless the MarketLink Loans are not fully
satisfied on or before the completion of thirty (30) months
after Closing. Reductions in the number of shares subject to
MarketLink Options shall apply equally to the Fair Market
Value Options and the One Cent Options.
4.1.4.4 MarketLink Options which remain exercisable
after the completion of thirty (30) months after Closing
shall, if not exercised by the end of the sixtieth (60th)
month after Closing, thereupon terminate and be of no further
effect.
4.2 Treatment of Stock Options. Each outstanding option to acquire
Provident stock which was previously granted by Provident under the option plans
or option agreements as described and listed in Schedule 4.2 (the "Provident
Options") shall have been, prior to
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the Effective Time, or shall become at the Effective Time, cancelled,
terminated, and of no further force or effect by virtue of the Merger and
whatever further agreements are necessary to cause such termination.
4.3 Exchange of Certificates:
4.3.1 Marketlink Shares and Provident Shares. At the Closing,
and effective as of the Effective Time, there shall be delivered to the
appropriate officers of MarketLink, the certificates representing the
Provident Shares owned by the Selling Shareholders. Upon receipt of
such certificates, the Merger Consideration consisting of MarketLink
Options shall be issued to the Selling Shareholders by delivery thereof
to Kevin Pollari as agent for the Selling Shareholders; and Kevin
Pollari will immediately distribute the Merger Consideration to the
appropriate Selling Shareholders. Upon the exchange of the Merger
Consideration described herein, the certificates representing the
Provident Shares shall be cancelled by the Surviving Corporation.
4.3.2 Company Shares. MarketLink, Company and Surviving
Corporation shall, at the Effective Time, cause the outstanding shares
of the stock of the Company to be cancelled and to cause the delivery
to MarketLink of the shares of the Surviving Corporation to which
MarketLink is entitled hereunder upon surrender by it on the Effective
Time of its shares of stock of the Company.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PROVIDENT
Provident hereby represents and warrants to MarketLink and Company as of
the date hereof and as of the Closing Date as follows:
5.1 Organization and Capitalization of Provident. Provident is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as currently being
conducted. Provident has authorized capital consisting of Five Million
(5,000,000) shares of $0.01 par Common Stock. There are issued and outstanding
Two Million Twenty-Two Thousand Two Hundred Thirty-Two (2,022,232) shares of
Common Stock, and all of such issued and outstanding shares are duly authorized,
validly issued, fully paid and nonassessable. The registered owners and holders
of the issued and outstanding capital stock of Provident which are referred to
herein as the Selling Shareholders own, and at Closing will own, the number of
shares of stock set forth following their name on Schedule 5.1 of the Schedule
Volume, and there are, and at Closing there will be, no other or different
shareholders of Provident.
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5.2 Subsidiaries. Provident owns no capital stock of any other corporation,
and is not a partner, limited partner, co-venturer or co-owner of or in any
other business.
5.3 Stock Options. As of the Effective Time upon completion of the Merger,
Provident shall have no stock option or stock bonus agreements or contractual or
other obligations outstanding that commit or obligate (or that with the
occurrence of any event or the passage of time would commit or obligate)
Provident to issue additional shares of common stock or other equity interests
in Provident including those described and set forth in Schedule 4.2 of the
Schedule Volume.
5.4 Foreign Qualification. Provident is duly qualified to do business in
all jurisdictions in which the failure to so qualify would materially adversely
affect the business or financial condition of Provident. Schedule 5.4 of the
Schedule Volume sets forth the foreign jurisdictions in which the Provident is
qualified.
5.5 Articles and Bylaws. The copies of the Articles of Incorporation and
Bylaws of Provident which are attached as Schedule 5.5 of the Schedule Volume
are complete and correct as of the date hereof, and prior to the Closing any
amendments, changes or restatements of such instruments (by reason of the
transactions contemplated hereby or otherwise) will be delivered to MarketLink.
5.6 Authority and Approval. Provident has all necessary corporate power and
authority to enter into this Agreement and Plan and, to perform all the
obligations to be performed by it hereunder. The execution, delivery and
performance of this Agreement and Plan by Provident, and the consummation of the
Merger and the other transactions contemplated or required in connection
herewith, have been authorized and approved by the Board of Directors and the
shareholders of Provident. This Agreement and Plan constitutes the valid and
binding agreement of Provident, enforceable in accordance with its terms except
to the extent limited by bankruptcy, reorganization, insolvency, moratorium, and
other laws of general application relating to or affecting generally the
enforcement of creditors' rights, by equitable limitations on its
enforceability, and by other laws of general application relating to general
equitable principles, and (ii) the execution, delivery and performance of this
Agreement and Plan by Provident, and the consummation of the transactions
contemplated or required in connection herewith, will not, with or without the
giving of notice and/or the passage of time:
5.6.1 violate any provision of law applicable to Provident;
5.6.2 materially conflict with, result in the material breach
of any provision of or the termination of, or constitute a material
default under, the Articles of Incorporation or Bylaws of Provident or
any material instrument, license, agreement, or commitment to which
Provident is a party or by which it, or any of the assets or properties
of Provident is bound; or
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5.6.3 constitute a violation of any order, judgment or decree
to which Provident is a party or by which Provident or any of its
respective assets or properties is bound.
5.7 Financial Statements. Attached as Schedule 5.7 of the Schedule Volume
is a true and complete copy of the financial statements of Provident (the
"Provident Financial Statements") as of June 30, 1996, and as of immediately
prior to Closing, constituting in each case an income statement and a balance
sheet. The Provident Financial Statements have been prepared in conformity with
sound accounting principles applied on a consistent basis. The Provident
Financial Statements have been prepared by Provident and reflect, in the opinion
of management, all normal recurring adjustments necessary to present fairly in
all material respects the financial position of Provident and the results of its
operations as of the dates and for the periods indicated, subject to normal
year-end adjustments and any other adjustments described therein.
5.8 Absence of Changes or Events. Except as described in Schedule 5.8 of
the Schedule Volume, or as otherwise provided or contemplated by this Agreement
and Plan, or as disclosed in the Provident Financial Statements, since the date
of the most recent Provident Financial Statement, Provident has not:
5.8.1 Undergone any materially adverse change in its business
or financial condition taken as a whole;
5.8.2 Incurred any debts, obligations or liabilities, whether
accrued, absolute, contingent or otherwise, except liabilities incurred
in the ordinary course of business, if any, none of which materially
and adversely affects the business and properties of Provident and the
subsidiaries taken as a whole;
5.8.3 Discharged, cancelled, forgiven or otherwise permitted
to be satisfied for less than full and valuable consideration, any
rights, liens, or other claims held against parties other than
Provident, except in the ordinary course of business or consistent with
good business practices not materially adversely affecting the business
and properties of Provident taken as a whole;
5.8.4 Declared, paid or set aside for payment any dividend or
other distribution in cash, stock or property with respect to any class
of its capital stock;
5.8.5 Issued or agreed to issue any additional shares of
capital stock or other securities or granted any rights to purchase or
to convert any obligation into shares of capital stock or other
securities;
5.8.6 Except in the ordinary course of business made or
granted any increase in the compensation or benefits payable or to
become payable to any of its officers, employees whose current base
salary exceeds $75,000 per year ("Key Employee"),
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consultants or directors, or any increase in the amounts payable or to
become payable pursuant to any existing bonus, incentive compensation,
deferred compensation, profit sharing, stock option, insurance,
retirement or other employee benefit plan or arrangement for or with
any officer or Key Employee of Provident;
5.8.7 Entered into any material commitment, contractual
obligation or transaction (including borrowings, other than borrowings
in the ordinary course of business under the provisions of the
Financing Agreements), or any other commitment, contractual obligation
or transaction other than in the ordinary course of business;
5.8.8 Acquired or disposed of any assets or properties of
material value except in the ordinary course of business;
5.8.9 Suffered any destruction, damage or loss, whether
covered by insurance or not, materially adversely affecting the
properties or business of Provident taken as a whole;
5.8.10 Entered into any agreement or made any commitment to
take any of the types of actions or intending to result in the
conditions described in Paragraph 5.8.1 through 5.8.9.
5.9 Taxes. Provident has prepared and filed in a timely manner with the
appropriate federal, state and local authorities all Tax returns and other
related reports required to be filed by it prior to the date hereof, which Tax
returns and reports were prepared on a basis consistent with the Provident
Financial Statements (except as otherwise disclosed in such financial statements
or in schedules filed with such Tax returns), and have paid all Taxes shown on
such returns to be due or which have become due pursuant to any assessment,
notice of deficiency or other notice received by Provident (except for any
amounts being contested in good faith by appropriate proceedings and described
in Schedule 5.9 of the Schedule Volume). Provident will not be liable for any
Taxes with respect to any periods through the Closing Date, except for Taxes
paid or accrued as of the Closing Date and except for amounts relating to losses
being contested in good faith by appropriate proceedings and described in
Schedule 5.9 of the Schedule Volume. Provident has not executed and filed with
the Internal Revenue Service, any agreements now in effect extending the period
for assessment or collection of income or other Taxes. Provident is not a party
to any pending action or proceeding by any governmental authority for assessment
or collection of Taxes, and no claim for assessment or collection of Taxes has
been asserted against Provident. The accrual for deferred income Taxes as
reflected on the Audited Financial Statements is accurate in all material
respects and fully states in all material respects the deferred income Tax
liability of Provident as of the dates thereof. "Tax" or "Taxes," as used in
this Agreement and Plan, shall mean and refer to any federal, state, county,
local or foreign income, gross receipts, excise, import, ad valorem, property,
franchise, license, sales, use, stamp, transfer, estimated or interim,
withholding or other tax imposed by a
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governmental authority. "Tax" or "Taxes" shall also include any deficiency,
penalty, addition to tax, interest, assessment or other charges imposed by a
governmental authority in connection with a Tax.
5.10 Licenses. Provident holds all licenses, authorizations, and permits
necessary to enable it to conduct its business as currently conducted.
5.11 Conduct of Business; Compliance With Laws. Except as disclosed in
Schedule 5.11 of the Schedule Volume, the businesses of Provident is not being
conducted in material default or in material violation of any term, condition or
provision of:
5.11.1 Its Articles of Incorporation or Bylaws;
5.11.2 Any note, bond, mortgage, indenture, deed of trust,
contract, license, lease, agreement or other instrument or obligation
of any kind to which Provident is a party or by which Provident
properties or assets may be bound, except as described on the Provident
Financial Statements;
5.11.3 Any federal, state, local or foreign statute, law,
ordinance, rule, regulation, order, or other governmental authorization
or approval applicable to Provident;
but excluding from the foregoing Paragraphs 5.11.2 and 5.11.3 defaults or
violations that would not, individually or in the aggregate, have a material
adverse effect on the business or financial condition of Provident taken as a
whole.
5.12 Properties; Title. Provident owns no real properties. Provident has
good title to its tangible personal properties (other than those that are
leased), free and clear of all liens, encumbrances, pledges or claims, except as
described and set forth on Schedule 5.12 of the Schedule Volume. Such personal
properties include all the properties used in and necessary to the conduct of
the operations of Provident and taken as a whole are in a good state of repair.
5.13 Material Agreements, Contracts, Leases. Described and set forth on
Schedule 5.13 of the Schedule Volume is a true and complete list of each of the
following contracts, instruments, and agreements (the "Contracts") including
amendments thereto, to which Provident is a party or by which Provident is
bound:
5.13.1 written employment and compensation agreements and
written employment policies with employees, officers or directors and
agreements that contain any severance pay liability or obligation to
any employee, former employee, director, former director or consultant;
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5.13.2 agreements of guarantee or indemnification (except
endorsements of negotiable instruments in the ordinary course of
business);
5.13.3 loan or credit agreements providing for any extension
of credit to or by Provident (other than the Financing Agreements);
5.13.4 collectively bargained union agreements;
5.13.5 leases to or for any property, real or personal, that
involve the payment or receipt of rent of more than $25,000 per year;
5.13.6 national sales representative contracts;
5.13.7 any other agreement, contract, commitment or other
arrangement not otherwise described above if it:
5.13.7.1 is not terminable by Provident on 60 days
or less notice without penalty; and
5.13.7.2 requires payment to or by Provident in
excess of $5,000 per month or $20,000 in the aggregate before
expiration thereof.
Except as noted on Schedule 5.13 of the Schedule Volume, each of the Contracts
is in full force and effect and valid and enforceable in accordance with its
terms, and neither Provident nor (to the knowledge of Provident) any other party
thereto, has in any material respect breached any term or condition of any of
the Contracts. A true and correct copy of each of the Contracts has been made
available to MarketLink. Provident has no continuing obligation, whether fixed
or contingent, under or as a result of, any real estate lease to which it has
been a party.
5.14 Books and Records. The books of account and other financial records of
Provident are, to the best of Provident's knowledge, in all material respects
complete and correct, have been maintained in accordance with good business
practices, and the content thereof is accurately reflected in the Provident
Financial Statements. The corporate minute books of Provident, which Provident
has made available to MarketLink, contain accurate records of all meetings and
accurately reflect all other material corporate action of the shareholders and
directors of Provident.
5.15 Insurance. Schedule 5.15 of the Schedule Volume contains a true and
complete list and brief description (including name of insurer, agent, annual
premium, date to which premium has been paid, coverage and expiration date for
each) of all insurance policies (including but not limited to life, fire,
liability, and workers' compensation) maintained by Provident. All such
insurance policies are in full force and effect and all current premiums thereon
have been paid, except for possible delays in payment that do not affect the
effectiveness of any such policies. No notice of cancellation or threat thereof
has been received by Provident.
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5.16 Trademarks, Trade Names, Etc. Described and set forth on Schedule 5.16
of the Schedule Volume is a complete and accurate list of all trademarks, trade
names, assumed or fictitious names, and all applications therefor, presently
owned or held by Provident, or with respect to which Provident owns or holds any
license or any other direct or indirect interest; and no others are necessary
for the conduct of the respective business of Provident. Except as set forth on
Schedule 5.16, Provident is aware of no:
5.16.1 violation or infringement by Provident of any other
person's rights in or ownership of trademarks or trade names, or
5.16.2 violation or infringement by any other person of the
rights in or ownership of trademarks or trade names of Provident.
5.17 Litigation. Except as described and set forth on Schedule 5.17 of the
Schedule Volume, no federal, state or local litigation, proceeding,
investigation, review, arbitration or claim by governmental representatives or
authorities or others is pending or, to the knowledge of Provident, threatened
against or relating to Provident and no such litigation, proceeding,
investigation, review, arbitration or claim by governmental representatives or
authorities or others is so pending or, to the knowledge of Provident,
threatened which could reasonably be expected to interfere with the consummation
of the Merger. Except as described and set forth in schedule 5.17, none of
Provident, nor any of its officers and directors is subject to any continuing
material court or administrative order, writ, judgment, injunction or decree
relating to the business or properties of Provident. To the knowledge of
Provident, there neither exists nor has occurred any material infringement by
others of any proprietary right owned or licensed by Provident, nor any material
infringement by Provident of any proprietary rights owned or licensed by others.
5.18 Employees. Schedule 5.18 of the Schedule Volume sets forth a correct
and complete list of the names, job titles, compensation rates, and other
information as designated thereon of all employees of Provident as of the date
shown on such schedule.
5.19 Employee Benefits. Schedule 5.19 of the Schedule Volume sets forth a
complete list and description of all employee benefit plans within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(sometimes referred to as "ERISA Plans"), and each other benefit plan which is
not an ERISA Plan, which Provident maintains for any of its employees or former
employees and with respect to which Provident has or may incur any future or
contingent obligations. Such agreements, plans or arrangements are hereinafter
collectively referred to as the "Benefit Plans," which term is used in this
Agreement and Plan for convenience only and does not constitute an
acknowledgment that a particular agreement, plan or arrangement is an employee
benefit plan within the meaning of Section 3(3) of ERISA. Except as set forth in
Schedule 5.19:
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5.19.1 True and correct copies of each of the Benefit Plans
have been provided to MarketLink.
5.19.2 All required contributions and other payments to be
made by Provident as of or prior to the Closing Date to any Benefit
Plan shall have been made, or reserves adequate for such purpose shall
have been set aside therefor and accrued on the financial statements of
Provident as of the Closing Date. All reports and disclosures relating
to Benefit Plans required to be filed or distributed under ERISA have
been filed or distributed.
5.19.3 With respect to Benefit Plans that constitute employee
pension benefit plans, as defined in Section 3(2) of ERISA, subject to
minimum funding standards under Section 412 of the Internal Revenue
Code of 1986 (the "Code"), which are maintained pursuant to a
collective bargaining agreement or any other arrangement to which
Provident is a party and under which employers other than Provident
make contributions, Provident has not suffered or otherwise caused a
"complete withdrawal" or "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA.
5.19.4 Provident has received determination letters from the
Internal Revenue Service with respect to qualification of each ERISA
Plan maintained by it under Section 401(a) of the Code (where such
qualification is appropriate to such ERISA Plan), and Provident knows
of no fact that would adversely affect the qualified status of any such
ERISA Plan.
5.19.5 No "reportable event" within the meaning of Section
4043(b) of ERISA and any regulations thereunder has occurred, and there
exists no condition or set of circumstances known to Provident which is
expected to result in the termination of any of the ERISA Plans or the
appointment by the Pension Benefit Guaranty Corporation ("PBGC") of a
trustee of any of the ERISA Plans. Provident has not incurred any
material liability to PBGC under ERISA in connection with any ERISA
Plans.
5.20 Environmental Matters.
5.20.1 The following terms used in this Paragraph 5.20 have
the meaning set forth herein:
5.20.1.1 "Property" is defined as any parcel of real
estate owned by or leased by Provident within the two-year period
preceding Closing.
5.20.1.2 "Regulated Substances" are defined as toxic,
radioactive or hazardous substances or wastes, pollutants or
contaminants including, without limitation, asbestos, urea
formaldehyde, polychlorinated biphenyls, petroleum
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products (including gasoline, fuel oil, crude oil and various
constituents of such products), any hazardous substance (as defined in
the Comprehensive Environmental Response Compensation and Liability Act
of 1980, 42 U.S.C. ss. 9601 et seq.), and any other chemical, substance
or material defined as hazardous or as a pollutant or contaminant in,
or the release or disposal of which is regulated by, any environmental
regulation, ordinance or code in effect on the date hereof.
5.20.2 Except as described in schedule 5.20 of the Schedule
Volume, to the best of Provident's knowledge:
5.20.2.1 No polychlorinated biphenyls are located on
the Property in the form of electric transformers, light
fixtures, cooling oils or any other form;
5.20.2.2 The improvements to the Property do not
contain asbestos materials; and
5.20.2.3 The Property presently is not, and never has
been, utilized for the storage, manufacture, disposal,
handling, transportation or use of any Regulated Substances.
No Regulated Substances have been discharged, released or
disposed of at the Property.
5.20.3 The Property is not listed in the United States
Environmental Protection Agency's National Priority List of Hazardous
Waste Sites.
5.20.4 Provident has obtained all necessary permits, licenses
and other authorizations related to environmental matters under
federal, state and local statutes, regulations and ordinances, and all
such permits, licenses and other authorizations are in full force and
effect as of the date hereof. Except as described in Schedule 5.20 of
the Schedule Volume, Provident is and has at all times been in material
compliance with all such permits, licenses and authorizations and are,
as of the date hereof, in material compliance with all such laws,
regulations and ordinances.
5.20.5 Except as described in Schedule 5.20 of the Schedule
Volume, no investigation, administrative proceeding, litigation,
regulatory hearing, judgment, complaint, claim, request for information
or other request for relief in any form relating to or alleging
noncompliance with or violation of or liability under any environmental
law, regulation or ordinance or relating to any required environmental
permit has occurred, is pending or, to the knowledge of Provident, is
threatened against it.
5.21 Bank Accounts. Schedule 5.21 of the Schedule Volume contains a true
and complete list of all financial institutions in which Provident has an
account (including short- term cash investment accounts, such as money market
funds) or safe deposit box, the account or box number, as the case may be, and
the name of every person authorized to draw thereon or to have access thereto.
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5.22 Disclosure. No representation or warranty made by Provident in this
Agreement and Plan, nor any statement or certificate furnished or to be
furnished by it to MarketLink or in any document filed with any governmental
agency pursuant to this Agreement and Plan, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF
MARKETLINK AND COMPANY
MarketLink and Company hereby jointly and severally represent and warrant
to Provident, as of the date hereof and as of the Closing Date, as follows:
6.1 Organization and Capitalization of MarketLink and Company. MarketLink
and Company are corporations duly organized, validly existing and in good
standing under the laws of the State of Minnesota, and each has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as currently being conducted. Company has authorized capital consisting
of 1,000,000 shares of no par common stock. There are issued and outstanding
1,000 shares of such stock, all of such issued and outstanding shares are duly
authorized, validly issued, fully paid and nonassessable, and all of such issued
and outstanding shares are owned and held by MarketLink. MarketLink has
authorized capital consisting of 5,000,000 shares of $0.01 par common stock.
There are issued and outstanding 2,931,415 shares of such stock, all of which
are validly issued, fully paid and nonassessable.
6.2 Authority and Approval. Each of MarketLink and Company has all
necessary corporate power and authority to enter into this Agreement and Plan
and to perform all the obligations to be performed by each of them hereunder.
The execution, delivery and performance of this Agreement and Plan by each of
MarketLink and Company, and the consummation of the Merger and the other
transactions contemplated or required in connection herewith, have been
authorized and approved by the Boards of Directors of MarketLink and Company,
and by MarketLink as the holder of all of the stock of Company entitled to vote
thereupon. This Agreement and Plan constitutes the valid and binding agreement
of each of MarketLink and Company enforceable in accordance with its terms
except to the extent limited by bankruptcy, reorganization, insolvency,
moratorium, and other laws of general application relating to or affecting
generally the enforcement of creditors' rights, by equitable limitations on its
enforceability, and by other laws of general application relating to general
equitable principles. The execution, delivery and performance
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of this Agreement and Plan by MarketLink and Company, and the consummation of
the Merger and the other transactions contemplated or required in connection
therewith, will not, with or without the giving of notice and/or the passage of
time:
6.2.1 violate any provision of law applicable to MarketLink
or Company;
6.2.2 conflict with, result in the breach of any provision of
or the termination of, or constitute a default under the Articles of
Incorporation or Bylaws of MarketLink or Company or any material instrument,
license, agreement or commitment to which MarketLink or Company is a party or by
which either of them or any of their respective assets or properties is bound;
or
6.2.3 constitute a violation of any order, judgment or decree
to which MarketLink or Company is a party or by which MarketLink or
Company or any of their respective assets or properties is bound.
6.3 Litigation. No federal, state, local or foreign litigation, proceeding,
investigation, review, arbitration or claim by governmental representatives or
authorities or others is pending or, to the knowledge of MarketLink, threatened
against or relating to MarketLink or Company with respect to the Merger or the
other transactions contemplated hereby or which might reasonably have a material
adverse effect on the business, financial prospects, properties, results of
operations, or condition (financial or otherwise) of MarketLink or Company,
taken as a whole, or on the Surviving Corporation following the Merger.
6.4 Disclosures Regarding MarketLink. MarketLink has provided to Provident,
accurate and complete copies of its most recent Form 10Q and Form 10K as filed
with the Securities Exchange Commission.
6.5 Disclosure. No representation or warranty made by MarketLink or Company
in this Agreement and Plan, nor any statement or certificate furnished or to be
furnished by either of them to Provident or in any document filed with any
governmental agency pursuant to this Agreement and Plan, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements contained therein not
misleading.
ARTICLE 7.
COVENANTS
7.1 Covenants of Provident and MarketLink. Provident and MarketLink
mutually covenant and agree with each other as follows:
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7.1.1 Press Releases. Neither MarketLink nor Provident shall
release information to the public or any governmental authority (except
as necessary to comply with covenants and agreements herein) concerning
this Agreement and Plan or the transactions contemplated hereby without
first consulting with and obtaining the consent of the other; it being
understood, however, that neither party shall be precluded by the
foregoing from any action necessary to comply with applicable
provisions of law.
7.2 Covenant of Provident. Provident covenants and agrees with MarketLink
and Company as follows:
7.2.1 Cancellation of Options. All Provident Options and all
similar rights and agreements, as more fully described in Paragraph
5.3, have been cancelled and terminated, or will be cancelled and
terminated effective as of the Effective Time, without any further
obligation or liability on the part of Provident.
7.3 Covenants of MarketLink. MarketLink covenants and agrees with Provident
as follows:
7.3.1 MarketLink Loans. On or about June 7, 1996 MarketLink
agreed to loan $100,000 to Provident for working capital needs, and
Provident delivered its promissory note to MarketLink in that principal
amount. MarketLink further hereby agrees to provide additional working
capital loans to Provident, from and after Closing, as is deemed by
MarketLink and Provident management to be reasonably necessary and
prudent, applying sound business judgment, to meet the regular and
ordinary needs of the Company for operations and growth. (The June 7,
1996 advance and the advances described in the preceding sentence are
referred to herein as "MarketLink Loans".) The MarketLink Loans shall
be secured by all available assets of the Surviving Corporation, shall
bear no interest, and shall be due and payable in full not later than
twenty-four (24) months after Closing, provided, however, that if the
aggregate unpaid principal balance of MarketLink Loans is $100,000 or
less on the date twenty-four (24) months after Closing, the due date
for such balance shall be extended for six (6) months thereafter. The
obligations shall be evidenced by duly executed promissory notes of
Provident and/or the Surviving Corporation.
ARTICLE 8.
DOCUMENTS DELIVERED AT CLOSING
8.1 Closing Documents Delivered by Provident. At the Closing on the Closing
Date, Provident shall execute and/or deliver or cause to be delivered to
MarketLink or Company, as appropriate, in form reasonably satisfactory to
MarketLink:
8.1.1 The Articles of Merger, in the form of Exhibit A hereto;
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8.1.2 A satisfaction and release of Provident by George
Johnson, with respect to the real estate lease under which George
Johnson was the landlord and Provident was the tenant, in form
satisfactory to MarketLink;
8.1.3 All necessary consents and waivers;
8.1.4 A copy of resolutions of the Board of Directors and the
shareholders of Provident, certified by its Secretary or Assistant
Secretary, authorizing the execution, delivery, and performance of this
Agreement and Plan and related documents;
8.1.5 Form of Discharge and Release of Provident and
MarketLink to be executed by each Selling Shareholder, discharging and
releasing Provident and MarketLink from any liability or obligation
they may have to such Selling Shareholders by virtue of their ownership
of Provident Stock (except obligations described in this Agreement and
Plan of Merger) in the form attached as Exhibit D.
8.1.6 Such other documents or instruments as may be reasonably
required by MarketLink and Company to effectuate the transaction herein
contemplated.
8.2 Closing Documents Delivered by MarketLink and Company. At the Closing
on the Closing Date, MarketLink or Company, as applicable, shall execute and/or
deliver or cause to be delivered to Provident, in form reasonably satisfactory
to Provident:
8.2.1 The Articles of Merger, in the form of Exhibit A hereto;
8.2.2 A copy of resolutions of the Boards of Directors of
MarketLink and Company, including resolutions by MarketLink as the sole
shareholder of Company, certified by their respective Secretary,
authorizing the execution, delivery and performance of this Agreement
and Plan and related documents;
8.2.3 An Employment Agreement between Marketlink and/or
Company on the one hand, and Kevin Pollari on the other, providing a
description of duties, compensation and other relevant provisions, in
the form attached hereto as Exhibit B.
8.2.4 Agreements for the grant of stock options to certain key
employees of Provident, in the form attached hereto as Exhibit C, under
which MarketLink
8.2.4.1 grants to each of Roland Christensen, Keith
Pollari and Anthony M. Kuefler, nonqualified options to
purchase ten thousand (10,000) shares of common stock of
MarketLink at a price equal to fair market value thereof at
the close of business on the Closing date, and exercisable
from the date of grant until the fourth anniversary of the
date of grant, and;
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8.2.4.2. grants to each of Phillip Roche and John F.
Ziehlsdorff, Incentive Stock Options under MarketLink's
Incentive Stock Option Plan to purchase ten thousand (10,000)
shares of common stock of MarketLink at a price equal to fair
market value thereof at the date of grant, and exercisable
from the date of grant until the fourth anniversary of the
date of grant.
8.2.5 Documentation granting to the Provident Shareholders,
the MarketLink Options constituting the Merger Consideration;
8.2.6 Such other documents or instruments as may be reasonably
required by Provident to effectuate the transaction herein
contemplated.
ARTICLE 9.
SURVIVAL; INDEMNIFICATION
9.1 Survival. All representations, warranties, covenants and agreements
contained in this Agreement and Plan, or in any Schedule, Exhibit, certificate,
agreement, document or statement delivered pursuant hereto, shall survive (and
not be affected in any respect by) the Closing, any investigation conducted by
any party hereto, or any information which any party may receive, for a period
of two years following the Closing Date (the "Indemnity Period"). Upon the
expiration of the Indemnity Period, all such representations, warranties,
covenants and agreements shall expire, terminate, and be of no further force or
effect.
9.2 Indemnification by Kevin Pollari. Kevin Pollari ("Pollari") shall
personally indemnify and hold harmless MarketLink and its directors, officers,
and employees, and shall reimburse MarketLink and its directors, officers, and
employees for all actual out-of-pocket losses, claims, damages, and liabilities
(to the extent not covered by insurance), and all reasonable fees, costs and
expenses (including reasonable attorneys' fees) related thereto (together
referred to herein as "Loss" or "Losses"), arising out of, based upon, or
resulting from (i) the inaccuracy or breach as of the Closing Date of any
representation, warranty or covenant of Provident contained in or made pursuant
to this Agreement and Plan, or (ii) the breach of or failure by Provident to
perform or discharge its obligations under this Agreement and Plan; provided,
however, that Pollari shall not be responsible for any such Losses covered by
this indemnity until the aggregate amount of the Losses exceeds $10,000 (the
"Threshold Amount"), in which case Pollari shall then be liable for all Losses
in excess of the Threshold Amount.
9.3 Indemnification by MarketLink. MarketLink shall indemnify and hold the
Selling Shareholders and holders of Valued Options harmless, and shall reimburse
the Selling Shareholders and holders of Valued Options for all Losses (as
defined in Paragraph 9.2), arising out of, based upon, or resulting from (i) the
inaccuracy or breach as of the Closing Date of any representation, warranty or
covenant of MarketLink or Company contained in or
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made pursuant to this Agreement and Plan, or (ii) the breach of or failure by
MarketLink to perform or discharge its obligations under this Agreement and
Plan; provided, however, that MarketLink shall not be responsible for any such
Losses covered by this indemnity until the aggregate amount of the Losses
exceeds $10,000 (the "Threshold Amount"), in which case MarketLink shall then be
liable for all Losses in excess of the Threshold Amount. Kevin Pollari (the
"Shareholder Representative") shall act for and on behalf of the Selling
Shareholders and holders of Valued Options with respect to all claims for
indemnification pursuant to this Paragraph 9.3, unless and until the Shareholder
Representative either resigns or is removed or replaced through the affirmative
vote of the former holders of a majority of the Provident Shares. The
Shareholder Representative shall have the sole authority to bring, settle and
compromise all such claims.
9.4 Procedure for Indemnification.
9.4.1 With respect to claims for indemnification made under
this Article 9, the party from which indemnification is sought (the
"Indemnifying Party") shall be liable to the party seeking
indemnification (the "Indemnified Party") for the Loss only if written
notice of the claim for indemnification is given by the Indemnified
Party to the Indemnifying Party before the expiration of the Indemnity
Period. If such notice is timely given, the Indemnifying Party's
obligation to indemnify the Indemnified Party shall survive the
expiration of the Indemnity Period until resolved. After the expiration
of the Indemnity Period, neither of the parties shall have any right to
make any further claims under this Article 9.
9.4.2 As promptly as practicable but in any event within 15
calendar days after the receipt by MarketLink or the Shareholder
Representative, as the case may be, of any notice of the commencement
of any action, suit or proceeding, the assertion of any claim, or
notice or actual knowledge of any event or of the incurrence of any
Loss for which MarketLink or the Shareholder Representative, as the
case may be, assert that indemnification is provided for by this
Article 9, the Indemnified Party shall give written notice to the
Indemnifying Party specifying the amount and describing in reasonable
detail the basis of such claim for indemnification. If the Indemnified
Party does not so notify the Indemnifying Party within 15 calendar days
of the date of such notice, assertion or actual knowledge of such
incurrence, the Indemnifying Party shall be relieved of liability
hereunder. If such claim involves the claim of any third party, the
Indemnifying Party shall be entitled to participate in, and assume sole
control over, the defense or settlement of such claim; provided,
however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim;
and
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(ii) the Indemnifying Party shall obtain the prior
written approval of the Indemnified Party, which shall not be
unreasonably withheld or delayed, before entering into any
settlement of such claim or ceasing to defend against such
claim, if pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief would be
imposed against the Indemnified Party.
After written notice by the Indemnifying Party to the Indemnified Party
of its election to assume control of the defense of any such action,
the Indemnifying Party shall not be liable to such Indemnified Party
hereunder for any legal expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof. If the
Indemnifying Party does not assume sole control over the defense or
settlement of such claim as provided in this Paragraph 9.4, the
Indemnified Party shall have the right to defend and settle the claim
in such manner as it may deem appropriate at the cost and expense of
the Indemnifying Party, and the Indemnifying Party shall promptly
reimburse the Indemnified Party therefor.
9.4.3 In any event involving the claim of any third party, the
Indemnified Party shall cooperate fully with the Indemnifying Party in
the defense of any such claim under this Article 9. Without limiting
the generality of the foregoing, the Indemnified Party shall furnish
the Indemnifying Party with such documentary or other evidence as is
then in its possession as may reasonably be requested by the
Indemnifying Party for the purpose of defending against any such claim.
9.4.4 In the event that the Indemnifying Party shall be
obligated to indemnify the Indemnified Party pursuant to this Article
9, the Indemnifying Party shall, upon payment of such indemnity, be
subrogated to all rights of the Indemnified Party with respect to
claims to which such indemnification relates. The rights of MarketLink,
and the Selling Shareholders and holders of Valued Options under this
Article 9 are exclusive and in lieu of any and all other rights or
remedies that MarketLink, and the Selling Shareholders and holders of
Valued Options may have under this Agreement and Plan or otherwise with
respect to the transactions contemplated hereby.
9.5 Assumption of Certain Pollari Guaranties. From and after the Effective
Time, MarketLink agrees to hold Pollari harmless from and against obligations he
may have solely as a result of personal guaranties of loan obligations and debt
obligations of Provident, to the extent such obligations are reflected on the
June 30, 1996 balance sheet of Provident as more specifically enumerated on
Schedule 9.5 of the Schedule Volume (the "Guaranties"). The Guaranties are
hereby assumed by MarketLink, but MarketLink shall have no obligation to obtain
formal releases of Pollari from the beneficiaries of the Guaranties.
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ARTICLE 10.
ADDITIONAL AGREEMENTS
10.1 Amendment. This Agreement and Plan and the Exhibits and Schedules
attached hereto or contained in the Schedule Volume may be amended, supplemented
or modified by the parties hereto only by an agreement in writing signed on
behalf of each of the parties hereto following due authorization at any time.
10.2 Extension; Waiver. MarketLink (on its own behalf and on behalf of
Company) and Provident each may, by an instrument in writing signed on behalf of
such party or parties following due authorization by its Board of Directors, (a)
extend the time for the performance of any of the obligations or other acts of
such other party or parties, (b) waive any inaccuracies in the representations
and warranties of such other party or parties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions of such other party or parties contained herein. No
such waiver or extension shall be effective unless in writing and signed by the
party or parties sought to be bound thereby, and any such waiver or extension on
a specific occasion shall not imply a waiver or extension on a future occasion.
10.3 Access to Books and Records. After the Effective Time, MarketLink and
the Surviving Corporation shall, upon the request of the Shareholder
Representative in connection with the defense of claims for indemnification
under Article 9 hereof, or for other reasonable purposes, (i) provide to the
Shareholder Representative full access, during normal business hours upon
reasonable advance notice, to the premises, properties, files, books, records,
documents and other information relating to Provident, and (ii) make available
for inspection and copying by the Shareholder Representative at its expense true
and complete copies of any documents relating to the foregoing.
10.4 Brokers. Provident and MarketLink each represents to the other that no
person is entitled as a result of its actions to any investment banker's,
brokerage or finder's fee or commission in respect of the transactions
contemplated by this Agreement and Plan.
10.5 Expenses. Whether or not the Merger becomes effective, the parties
hereto will pay their own expenses and the fees and expenses of their respective
counsel and accountants and other experts in connection with carrying this
Agreement and Plan into effect and accomplishing the Merger.
10.6 Notices. All notices and other communications that are required to be
or may be given under this Agreement and Plan shall be in writing and shall be
deemed to have been duly given if delivered or mailed, certified first class
mail, return receipt requested, postage prepaid, or sent by Federal Express or
other overnight delivery, to the party to which the same is so given or made,
addressed as follows:
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(a) If to Provident:
Provident Worldwide Communications, Inc.
10340 Viking Drive, Suite 150
Minneapolis, MN 55344
ATTN: Kevin Pollari
(b) If to MarketLink:
MarketLink, Inc.
10340 Viking Drive, Suite 150
Minneapolis, MN 55344
ATTN: Ron Eibensteiner
With a copy to:
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402-3397
ATTN: Thomas W. Garton
(c) If to Kevin Pollari:
913 Harriet Avenue
Shoreview, MN 55126
or to such other addresses as such party may specify by notice in writing to the
other parties in the manner described herein.
10.7 Entire Agreement. This Agreement and Plan (including the Schedules and
Exhibits) constitutes the entire agreement, and supersedes all prior oral and
written agreements and understandings among the parties hereto with respect to
the Merger and the other transactions contemplated hereby.
10.8 Descriptive Headings. The descriptive headings contained in this
Agreement and Plan are for convenience of reference only and shall not affect in
any way the meaning or interpretation, of this Agreement and Plan.
10.9 Counterparts. This Agreement and Plan may be executed in any number of
counterparts, each of which shall, when executed, be deemed to be an original
and all of which shall be deemed to constitute but one agreement.
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<PAGE>
10.10 Severability. In the event that any provision of this Agreement and
Plan is held invalid by a court of competent jurisdiction, the remaining
provisions shall nonetheless be enforceable according to their terms. Any
provision held overbroad as written shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable under
applicable law, and enforced as amended.
10.11 Governing Law; Consent to Jurisdiction. This Agreement and Plan shall
be construed as to both validity and performance, enforced in accordance with,
and interpreted and governed by the laws of the State of Minnesota. Venue for
any lawsuit or other proceeding arising under this Agreement and Plan shall be
in the federal district court for the district of Minnesota or in the district
court for Hennepin County, Minnesota. Each party hereto consents to the
jurisdiction of such courts.
10.12 Third Parties. Nothing in this Agreement and Plan, express or
implied, shall confer on any person other than the parties hereto any rights,
remedies, obligations or liabilities.
10.13 Assignment. This Agreement and Plan and the rights and obligations
hereunder shall not be assignable to any person without the written consent of
all parties, and any purported noncomplying assignment of rights and obligations
hereunder shall be void.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
to be signed by officers duly authorized to sign the same, all as of the date
first above written.
PROVIDENT WORLDWIDE
COMMUNICATIONS, INC.
By___________________________________
Its________________________________
MARKETLINK, INC.
By___________________________________
Its________________________________
(Signatures continued on next page.)
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<PAGE>
MARKETLINK ACQUISITION CORPORATION
By_________________________________
Its_____________________________
The undersigned hereby consents and agrees to be bound by the
indemnification provisions of Article 9, and all matters contained in the
Agreement and Plan related to or impacting upon such obligations and their
determination. Further, the undersigned agrees to serve as Shareholder
Representative as described in Article 9 and to perform the duties and fulfill
the functions ascribed to him under Paragraph 4.3.
____________________________
Kevin Pollari
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<PAGE>
EXHIBIT A
Plan of Merger
<PAGE>
EXHIBIT B
Pollari Employment Agreement
<PAGE>
EXHIBIT C
Stock Option Agreements for Key Employees
Non-Qualified Options:
Roland Christensen 10,000 shares
Anthony M. Kuefler 10,000 shares
Keith Pollari 10,000 shares
Incentive Stock Options:
Phillip Roche 10,000 shares
John F. Ziehlsdorff 10,000 shares
<PAGE>
EXHIBIT D
Discharge and Release Form
EXHIBIT B
EMPLOYMENT AGREEMENT
EFFECTIVE DATE: August 2, 1996
PARTIES: Kevin Pollari ("Employee")
Provident Worldwide Communications, Inc. ("Provident")
RECITALS:
A. Employee served as President of Provident immediately prior to the
Effective Time of the merger of MarketLink Acquisition Corporation ("MAC") with
and into Provident (the "Merger"), which occurred on the Effective Date of this
Agreement.
B. As a result of the Merger, Provident has become the wholly-owned
subsidiary of MarketLink, Inc. (the "Parent").
C. Employee and Provident mutually desire to continue Employee's
relationship with Provident on new terms and conditions set forth herein, which
terms and conditions were negotiated to take effect simultaneously with the
Merger.
D. The parties therefore mutually agree as follows:
AGREEMENTS:
1. Term of Agreement. This Agreement, and the term of Employee's employment
hereunder shall continue from the Effective Date hereof for a period of Two
years or until the occurrence of any of the following events:
A. The death of the Employee.
B. The insolvency or bankruptcy of Provident.
C. The mutual written agreement of both parties to
terminate Employee's employment hereunder.
D. The inability of Employee to satisfactorily perform
a substantial part of his duties set forth in this
Agreement for a period of twelve (12) consecutive
months due to physical or mental disability.
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<PAGE>
E. The written notice to Employer by Employee of his
desire to terminate this Agreement, which notice must
be given sixty (60) days prior to the date upon which
termination is to be effective.
F. The breach by Employee of any material provision of
this Agreement, or his failure to carry out, in a
competent manner, any material duties and
responsibilities ascribed to him hereunder or as
assigned from time to time by the Employer.
Notwithstanding termination of this Agreement, if the event of termination is
one provided in Paragraphs C, D, E, or F of this Paragraph 1, the provisions of
Paragraph 7 (relating to the Covenant Not to Compete) and Paragraph 9 (relating
to Confidential Information) shall survive such termination and remain in effect
for the respective periods described therein.
2. Duties, Responsibilities and Supervision. Employee shall retain his
title as President of Provident. He shall be responsible for duties and
functions customarily attributed to the chief operating officer of a business
corporation. He shall serve under the supervision and direction of Provident's
Board of Directors and subject to consultation and supervision by the CEO of
Parent. Employee shall have authority to make appropriate decisions relating to
the hiring and termination of employees of Provident, subject to the Parent's
corporate employment policies and procedures and its budget and business plans
in effect from time to time.
3. Compensation; Signing Bonus. As described in that certain Letter of
Intent dated June 7, 1996 between Parent and Provident, and as acknowledged in
that certain Acknowledgment of Repayment Obligation dated June 11, 1996 between
Parent and Employee (the "Acknowledgment"), Parent has agreed on behalf of MAC
to pay Employee a signing bonus in consideration for his execution and delivery
of this Agreement. Upon execution of this Agreement, Employee shall have no
obligation under the Acknowledgment to return to Parent the payments made prior
to the date hereof, and Employee shall be entitled to receive the balance of the
payments described in Paragraph 1 of the Acknowledgment.
4. Compensation; Base Salary. From and after the date hereof, during the
term of Employee's employment hereunder, Provident shall pay to Employee, at the
intervals and on the dates regularly established for Provident's payroll, a base
salary of $50,000 per year, upon which gross compensation Provident shall
withhold as required by applicable law, all applicable withholding for taxes,
FICA and any other proper payroll deduction. Future increases, if any, in annual
base compensation shall be those negotiated between Provident and Employee
consistent with direction from the CEO of Parent.
5. Compensation; Commission Income. In addition to base salary, Employee
shall be paid additional compensation as a commission based upon a percentage of
Gross Margin on Commissionable Sales made by Provident during Employee's service
as an
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<PAGE>
employee from and after the Effective Date hereof. The percentage to be applied
to Gross Margin for purposes of this computation, the definition of Gross
Margin, and the definition of Commissionable Sales shall be the same as in
effect between Employee and Provident immediately prior to the Effective Date of
this Agreement as described on Attachment A to this Agreement, and all
commissions earned with respect to activities of Provident prior to the
Effective Date hereof but remaining unpaid, shall be paid by Provident to
Employee. With respect to sales following the Effective Date hereof, the terms
of the commission payments may be modified by mutual agreement between Provident
and Employee.
6. Compensation; Discretionary Bonus. The Board of Directors of Provident,
in consultation with the CEO of Parent, may from time to time consider granting
a discretionary bonus to Employee, as they shall determine appropriate in view
of the value of Employee's contributions, the business success and economic
performance of Provident, Employee's other compensation, and any other factors
determined relevant by the Board of Directors.
7. Covenant Not to Compete.
A. At no time during the term of this Agreement or for a
period of one (1) year immediately following the
termination of Employee's employment, will Employee:
(i) Acting on behalf of himself, another
business or competitor, call upon or
communicate with or attempt to call upon or
communicate with any customer customer of
Provident or Parent, with whom Employee,
during the twelve (12) months prior to his
termination, had contact, for the purpose
(either directly or indirectly) of
soliciting, or selling services, merchandise
or products competitive with the services,
merchandise or products sold by Provident or
Parent; and
(ii) Without the prior written consent of
Provident, directly or indirectly render any
services, advice or counsel as an owner,
employee, representative, agent, independent
contractor, consultant or in any other
capacity, for any third party, if the
rendering of such services, advice or
counsel involves, may involve, requires or
is likely to result in the use of disclosure
by Employee of any Confidential Information.
B. Employee will not in any way, directly or indirectly,
solicit or divert any customers which Provident or
Parent had expectation of obtaining for a period ending
(6) six months after termination of employment, if
termination is involuntary, and one (1) year after
termination if termination is voluntary, nor in any
way, directly or indirectly for a
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<PAGE>
period of (2) two years from termination of
employment, solicit or divert any customers for
Parent's products existing at this date (including
IVR and GIS/mapping), or which Parent had
expectation of obtaining.
C. The parties acknowledge that Provident and Parent will
suffer irreparable harm if Employee breaches this
Agreement, either during or after its term.
Accordingly, Provident shall be entitled, in addition
to any other right and remedy it may have, at law or
equity, to a temporary restraining order and/or
injunction, without the posting of a bond or other
security, enjoining or restraining Employee from any
violation of this Agreement, and Employee hereby
consents to Provident's right to the issuance of such
injunction. If Provident institutes and prevails in any
such action against Employee, alone or in conjunction
with any third party or parties to enforce any terms or
provisions of this Agreement, Employee shall pay
Provident its reasonable attorney's fees incurred in
instituting and maintaining such action and all costs
and expenses incurred in connection therewith.
D. In the event that a court of competent jurisdiction
determines that any of the provisions of this Agreement
are unreasonable, it may limit such provisions to the
extent it deems reasonable, without declaring the
provision or this Agreement invalid in its entirety.
This provision shall not be construed as an admission
by Provident, but is only included to provide Provident
with the maximum possible protection for its business,
Confidential Information, trade secrets and data,
consistent with the right of Employee to earn a
livelihood subsequent to the termination of his
employment.
8. Confidential Information. For the purposes of this Agreement,
"Confidential Information" means any information not generally known to the
public and proprietary to Provident and/or Parent and includes, without
limitation, trade secrets, inventions, and information pertaining to research,
development, manufacturing, purchasing, marketing, selling, accounting,
licensing, business systems, business techniques, customer lists, prospective or
potential customer lists, price lists, business strategies and plans.
Information shall be treated as Confidential Information irrespective of its
source and any information which is identified as being "confidential" or "trade
secret" shall be presumed to be Confidential Information. This definition of
"Confidential Information" is not intended to be complete. From time to time
during the term of his employment, the employee may gain access to other
information concerning Provident's or Parent's business of commercial value to
Provident and/or Parent which information shall be included in the definition
even though not specifically listed in this paragraph.
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<PAGE>
9. Protection of Confidential Information. The Employee promises and agrees
that the Confidential Information, including trade secrets and/or data, will be
held in the strictest confidence and will never, without prior written consent
of Provident, be (directly or indirectly) disclosed, assigned, transferred,
conveyed, communicated to or used for his own or another's benefit or (directly
or indirectly) disclosed, assigned, transferred, conveyed, communicated to or
used by him, a competitor of Provident and/or Parent or any other person or
entity, including but not limited to, the press, other professionals,
corporations, partnerships or the public, at any time during his employment with
Provident or at any time after his termination of employment with Provident,
regardless of the reason for the Employee's termination, whether voluntary or
involuntary. The Employee further promises and agrees that he will faithfully
abide by any rules, policies, practices or procedures existing or which may be
established by Provident for insuring the confidentiality of the Confidential
Information. Upon termination of the employer-employee relationship, whether
voluntary or involuntary, the Employee will return to Provident any and all
written or otherwise recorded form of all Confidential Information (and any
copies thereof) in his possession, custody or control, including, but not
limited to, notebooks, memoranda, specifications, customer lists, prospective or
potential customer lists, or price lists, and will take with him, upon leaving
Provident's place of business or employment with Provident, no such documents,
data writings, recordings, or reproduction in any form which may have been
entrusted or obtained by him during the course of his employment or to which he
had access, possession, custody or control.
10. Miscellaneous.
A. Modifications. This Agreement supersedes and replaces
all prior agreements and understandings between the
parties relating to employment, benefits, compensation
(whether in the form of current or deferred cash, or in
the form of shares of stock, options to acquire stock,
or other property) or duties and responsibilities. No
modification, termination, or waiver of any of the
provisions of this Agreement shall be valid unless in
writing signed by the party against whom the same is
sought to be enforced.
B. Governing Law. This Agreement and all questions arising
in connection with it shall be governed by the laws of
the State of Minnesota.
C. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of Provident, its successors
and assigns, and Employee, his heirs and legal
representatives.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the Effective Date stated above.
PROVIDENT WORLDWIDE
COMMUNICATIONS, INC.
By_______________________________
Its____________________________
_________________________________
Kevin Pollari
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<PAGE>
ATTACHMENT A
Commission Definitions
