EXHIBIT 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
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by and among
ISLAND PACIFIC, INC.,
RETAIL TECHNOLOGIES INTERNATIONAL, INC.,
IPI MERGER SUB, INC.,
and
XXXXXXX XXXXXXX and XXXXXXX XXXXX
March 12, 2004
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APPENDIX 1
DEFINITIONS
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"Accounts Receivable" shall have the meaning set forth in Section 3.8.
"Affiliate" shall have the meaning set forth in the rules and regulations
promulgated by the Securities and Exchange Commission pursuant to the Securities
Act.
"Agreement" shall mean this Agreement of Merger and Plan of Reorganization.
"Applicable Contract" shall have the meaning set forth in Section 3.16.
"Applicable Share Price" shall have the meaning set forth in Section 2.1.
"Balance Sheet" shall have the meaning set forth in Section 3.5.
"Best Efforts" shall mean the efforts that a prudent Person desiring to achieve
a result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible.
"California Law" shall have the meaning set forth in Section 1.1.
"Cash Merger Consideration" shall have the meaning set forth in Section 2.1.
"Certificates" shall have the meaning set forth in Section 2.3.5.
"Certificate of Merger" shall have the meaning set forth in Section 1.3.
"Closing" and "Closing Date" shall have the meanings set forth in Section 1.2.
"Closing Documents" shall mean all of the documents to be delivered pursuant to
Section 7.3.
"Code" means the Federal Internal Revenue Code of 1986, as amended (set forth in
Recital E).
"Common Stock Equivalent" shall mean any security convertible into common stock,
including without limitation any option, warrant, convertible stock or
convertible debenture.
"Common Stock Merger Consideration" shall mean the Merger Consideration less the
Series A Merger Consideration.
"Common Cash Exchange Ratio" shall mean cash equal to 0.5 times the amount
determined by dividing (x) the Common Stock Merger Consideration by (y) the
Total Outstanding Common Shares.
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"Common Stock Exchange Ratio" shall mean the number obtained by (x) dividing (a)
0.5 times the Common Stock Merger Consideration by (b) the Total Outstanding
Common Shares, divided by (y) the Applicable Share Price (calculated to four
decimal places); provided that the Common Stock Exchange Ratio shall be
appropriately adjusted to reflect fully the effect of any stock split, reverse
stock split, stock dividend, reorganization or like change with respect to IPI
Common Stock occurring after the date of this Agreement and prior to the
Effective Time.
"Contemplated Transactions" shall mean the Merger and the transactions
contemplated under this Agreement (including the Disclosure Schedule delivered
pursuant to Article 3 hereof and IPI Disclosure Schedule delivered pursuant to
Article 4 hereof) and the documents or agreements required to be delivered
hereunder.
"Continuing Employee" shall have the meaning set forth in Section 6.3.
"Contract," with respect to a Party, shall mean any agreement, contract,
obligation, promise, or undertaking (whether written or oral and whether express
or implied) that is legally binding on such Party and currently in effect.
"Copyrights" shall have the meaning set forth in Section 3.21.1(c).
"Damages" shall include any loss, damage, injury, liability, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including reasonable
attorneys' fees), charge, interest, costs (including reasonable costs of
investigation) or reasonable related third party expenses.
"Delaware Law" shall have the meaning set forth in Section 1.1.
"Disclosure Schedule" shall have the meaning set forth in Article 3.
"Effective Time" shall have the meaning set forth in Section 1.3.
"Employment Agreements" shall mean the employment agreements in the form
attached as EXHIBIT A to be entered into between Merger Sub and the
Shareholders, as set forth in Section 7.1.8 and Section 7.2.6.
"Encumbrance" shall mean any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Entity" shall mean any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
"Environmental and Safety Laws" shall mean any federal, state or local laws,
ordinances, codes, regulations, rules, policies and Orders that are intended to
assure the protection of the environment, or that classify, regulate, call for
the remediation of, require reporting with respect to, or list or define air,
water, groundwater, solid waste, hazardous or toxic substances, materials,
wastes, pollutants or contaminants, or which are intended to assure the safety
of employees, workers or other persons, including, without limitation, the
public.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" shall mean the United States generally accepted accounting principles in
effect on the date on which they are to be applied pursuant to this Agreement,
applied consistently throughout the relevant periods.
"Governmental Authorization" shall mean any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body pursuant to any
Legal Requirement.
"Governmental Body" shall mean any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or Entity and any court or other tribunal).
"Intellectual Property Assets" shall have the meaning set forth in Section
3.21.1.
"Intuit" shall mean Intuit, Inc.
"IPI" shall mean Island Pacific, Inc., as set forth in the introductory
paragraph.
"IPI Common Stock" shall mean the common stock of IPI.
"IPI Disclosure Schedule" shall have the meaning set forth in Article 4.
"Knowledge" a Person will be deemed to have "Knowledge" of a particular fact or
other matter if such individual is actually aware of such fact or other matter,
or a prudent individual could be expected to discover or otherwise become aware
of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter. "Knowledge," with respect to RTI, shall include the Knowledge of Xxxxxxx
Xxxxxxx and Xxxxxxx Xxxxx.
"Legal Requirement" shall mean any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Marks" shall have the meaning set forth in Section 3.21.1(a).
The term "material" when not capitalized and used with respect to any subsection
or subsections shall be construed, except as specifically otherwise provided, to
qualify the matter or matters referred to as having a value in excess of Twenty
Thousand Dollars ($20,000). For example, a "material breach" would be a breach
resulting in Damages exceeding Twenty Thousand Dollars ($20,000).
"Material Adverse Effect" shall mean any change, event or effect that is
materially adverse to the business, assets (whether tangible or intangible),
condition (financial or otherwise), results of operations or capitalization of
the RTI or IPI, as applicable, and its subsidiaries, taken as a whole, provided
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that a Material Adverse Effect will not exist as a result of circumstances that
are demonstrated to have resulted directly from the public announcement of the
Merger or the performance by the Company of its obligations hereunder. A
violation or other matter will be deemed to have a "Material Adverse Effect" on
RTI or IPI, as applicable, if such violation or other matter would be material
in impact or amount to RTI's or IPI's, as applicable, business, intellectual
property rights or condition, or, taken as a whole, its assets, liabilities,
operations, or financial performance. The definition of "material" for purposes
of this definition shall be construed as having a value in excess of Fifty
Thousand Dollars ($50,000).
"Merger" shall have the meaning set forth in Section 1.1.
"Merger Consideration" shall have the meaning set forth in Section 2.1.
"Merger Sub" shall mean IPI Merger Sub, Inc., as set forth in the introductory
paragraph.
"Ordinary Course of Business" shall describe any action taken by a Person if:
(a) such action is consistent with such Person's past practices and is taken in
the ordinary course of such Person's normal day to day operations; (b) such
action is taken in accordance with sound and prudent business practices; (c)
such action is not required to be authorized by such Person's shareholders,
board of directors or any committee thereof and does not require any other
separate or special authorization of any nature; and (d) such action is similar
in nature and magnitude to actions customarily taken, without any separate or
special authorization, in the ordinary course of the normal day to day
operations of other Entities that are engaged in businesses similar to such
Person's business.
"Order" shall mean any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Organizational Documents" of any Party shall mean the articles or certificate
of incorporation and the bylaws of such Party, together with any amendments
thereto.
"Parties" shall have the meaning set forth in the introductory paragraph.
"Patents" shall have the meaning set forth in Section 3.21.1(b).
"PBGC" shall have the meaning set forth in Section 3.12.
"Plan" shall have the meaning set forth in Section 3.12.
"Person" shall mean any individual, Entity or Governmental Body.
"Proceeding" shall mean any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Proprietary Rights Agreement" shall have the meaning set forth in Section
3.21.2.
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"Registration Rights Agreement" shall mean the registration rights agreement
attached as EXHIBIT E, to be entered between IPI and the holders of RTI Common
Stock and RTI Preferred Stock as set forth in Section 7.2.7.
"Representatives" shall mean officers, directors, employees, agents, attorneys,
accountants and other professional advisors.
"RTI" shall mean Retail Technologies International, Inc., as set forth in the
introductory paragraph.
"RTI Common Stock" shall mean the common stock of RTI, as set forth in Section
2.2.
"RTI Preferred Stock" shall mean the Series A Preferred Stock of RTI.
"RTI Options" shall mean all options to purchase RTI Common Stock issued under
the RTI 2003 Stock Incentive Plan.
"Sage" shall mean The Sage Group plc.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 4.4.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Merger Consideration" shall mean the sum of (x) the Series A
Liquidation Preference Amount and (y) the Series A Participation Amount.
"Series A Liquidation Preference Amount" shall mean the number obtained by
multiplying (x) the Total Outstanding Series A Shares by (y) $0.3436.
"Series A Participation Amount" shall mean the lesser of (x) the number obtained
by (a) dividing (1) the amount of the Merger Consideration less the Series A
Liquidation Preference Amount by (2) the Total Outstanding Capital Stock,
multiplied by (b) Total Outstanding Series A Shares and (y) the number obtained
by multiplying (1) the number of Total Outstanding Series A Shares by (y)
$0.6872.
"Series A Cash Exchange Ratio" shall mean cash equal to 0.5 times the amount
determined by dividing (x) the Series A Merger Consideration by (y) the Total
Outstanding Series A Shares.
"Series A Stock Exchange Ratio" shall mean the number obtained by dividing (x) a
number equal to (a) 0.5 times the Series A Merger Consideration divided by (b)
the Total Outstanding Series A Shares, divided by (y) the Applicable Share Price
(calculated to four decimal places); provided that the Series A Stock Exchange
Ratio shall be appropriately adjusted to reflect fully the effect of any stock
split, reverse stock split, stock dividend, reorganization or like change with
respect to IPI Common Stock occurring after the date of this Agreement and prior
to the Effective Time.
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"Shareholders" shall mean Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxx in their capacity as
shareholders of RTI.
"Stock Merger Consideration" shall have the meaning set forth in Section 2.1.
"Surviving Corporation" shall have the meaning set forth in Section 1.1.
"Threatened" shall mean a claim, proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made in writing or any written notice has been given.
"Total Outstanding Capital Stock" shall mean the aggregate number of shares of
RTI Common Stock and RTI Preferred Stock issued and outstanding immediately
prior to the Effective Date.
"Total Outstanding Common Stock" shall mean the aggregate number of shares of
RTI Common Stock issued and outstanding immediately prior to the Effective Date.
"Total Outstanding Series A Shares" shall mean the aggregate number of shares of
RTI Series A Preferred Stock issued and outstanding immediately prior to the
Effective Date.
"Trade Secrets" shall have the meaning set forth in Section 3.21.1(e).
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "Agreement")
is entered into as of March 12, 2004 by and among Island Pacific, Inc., a
Delaware corporation ("IPI"), Retail Technologies International, Inc., a
California corporation ("RTI"), IPI Merger Sub, Inc., a Delaware corporation
("Merger Sub"), and Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxx (each, a "Shareholder" and
collectively, the "Shareholders"). The capitalized terms used herein shall have
the meanings set forth in the text of the Agreement or on the attached Appendix
I. (IPI, RTI, Merger Sub and the Shareholders are collectively referred to
herein as the "Parties.")
RECITALS
A. The Shareholders own a majority of outstanding shares of capital
stock of RTI.
B. Under the terms and subject to the conditions of this Agreement,
IPI, Merger Sub, RTI and the Shareholders intend to enter into a business
combination transaction such that RTI merges with and into Merger Sub, a wholly
owned subsidiary of IPI.
C. The Boards of Directors of RTI and IPI (i) have determined that the
Merger is consistent with, and in furtherance of, their respective long term
business strategies and fair to, and in the best interest of, their respective
shareholders, and (ii) have approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
D. The Board of Directors of Merger Sub has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement.
E. The Parties intend, by executing this Agreement to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
F. The Parties desire to set forth certain representations, warranties
and covenants made by each to the other as an inducement to the consummation of
the transactions contemplated hereby.
AGREEMENT
NOW THEREFORE, in consideration of the mutual agreements, covenants and
other premises set forth herein, the parties hereby agrees as follows:
ARTICLE 1
MERGER
1.1 THE MERGER. As of the Effective Time and subject to and upon the
terms and conditions of this Agreement and the applicable provisions of Delaware
General Corporation Law ("Delaware Law") and California General Corporation Law
("California Law"), RTI shall be merged with and into Merger Sub the separate
corporate existence of RTI shall cease and Merger Sub shall continue as the
surviving corporation (the "Merger"). Merger Sub as the surviving corporation
after the Merger is sometimes referred to as the "Surviving Corporation."
1.2 CLOSING. The closing (the "Closing") of the Merger shall take place
at the offices of IPI's counsel, Xxxxxxx Xxxx Seidenwurm & Xxxxx, LLP, 000 X
Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, as promptly as practicable after the
execution and deliver of this Agreement, but no later than five (5) days
following the satisfaction or waiver of the closing conditions set forth in
Article 7 (the "Closing Date").
1.3 EFFECTIVE TIME. If all of the conditions to the Merger set forth in
Articles 5 and 6 have been fulfilled or waived in accordance herewith and this
Agreement has not been terminated pursuant to Article 11, the parties shall
cause the Merger to be completed by properly filing certificates of merger of
RTI and Merger Sub with the Secretary of State of the States of California and
Delaware on the Closing Date in accordance with applicable law (each, a
"Certificate of Merger"). As between the Parties, risk of loss and the benefits
of ownership of the consideration shall be transferred, and the Merger shall
become effective, as of the date and time as the Parties shall agree and shall
be specified in the Certificates of Merger (the date and time the Merger becomes
effective shall be referred to as the "Effective Time").
1.4 EFFECT OF THE MERGER. As of the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law and California Law. Without limiting the generality of the
foregoing, and subject thereto, as of the Effective Time all the property,
rights, privileges, powers and franchises of RTI and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of RTI and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.5 CERTIFICATE OF INCORPORATION; BYLAWS.
1.5.1 As of the Effective Time, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation.
1.5.2 As of the Effective Time, the Bylaws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be, at the Effective
Time, the Bylaws of the Surviving Corporation until thereafter amended.
1.6 OFFICERS AND DIRECTORS. The officers and directors of Merger Sub
immediately prior to the Effective Time shall be the officers and directors of
the Surviving Corporation at and after the Effective Time, in each case until
the earliest of their resignation or removal from office or their otherwise
ceasing to be officers or directors, each to hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation.
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ARTICLE 2
MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES
2.1 MERGER CONSIDERATION. The aggregate merger consideration ("Merger
Consideration") payable by IPI to the securityholders of RTI at the Closing
shall be as follows: (a) Four Million Five Hundred Thousand Dollars ($4,500,000)
in cash by certified check or bank wired funds payable to the holders of RTI
Common Stock and RTI Preferred Stock ("Cash Merger Consideration"), and (b) the
number of shares of IPI common stock determined by dividing $4,500,000 by the
Applicable Share Price (the "Stock Merger Consideration"). "Applicable Share
Price" shall mean the average closing price of IPI's common stock traded on the
American Stock Exchange during the ten (10) trading days immediately preceding
the Closing Date. The number of shares shall be rounded to the nearest whole
share and no fractional shares shall be issued. The Parties shall execute a
certificate on the Closing Date to evidence their agreement with respect to the
final calculation of the number of shares constituting the Stock Merger
Consideration.
2.2 NO FRACTIONAL SHARES. Notwithstanding any provision of this
Agreement to the contrary, neither certificates nor scrip for fractional shares
of IPI common stock shall be issued in connection with the Merger, but in lieu
thereof the holders of RTI Preferred Stock and RTI Common Stock otherwise
entitled to a fraction of a share of IPI Common Stock pursuant to the provisions
of Section 2.1 (after aggregating all fractional shares of IPI Common Stock
issuable to such holder) shall be paid in cash (without interest) in an amount
equal to such fraction multiplied by the Applicable Share Price, rounded up to
the nearest whole cent.
2.3 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, RTI or the holders of
any of the securities described below, the Merger shall have the following
additional effects:
2.3.1 RTI PREFERRED STOCK. To the extent not converted prior
to the Effective Time, each share of RTI Preferred Stock issued and outstanding
immediately prior to Effective Time shall be exchangeable for the following: (i)
an amount in cash equal to Series A Cash Exchange Ratio and (ii) a portion of a
share of IPI common stock equal to Series A Stock Exchange Ratio.
2.3.2 RTI COMMON STOCK. Each share of RTI Common Stock issued
and outstanding immediately prior to the Effective Time shall be exchangeable
for the following: (i) an amount in cash equal to Common Cash Exchange Ratio and
(ii) a portion of a share of IPI common stock equal to Common Stock Exchange
Ratio.
2.3.3 RTI OPTIONS.
(a) IPI will take all action necessary such that, at
the Effective Time, it will assume the RTI 2003 Stock Incentive Plan and the
options issued and outstanding thereunder (the "RTI Options").
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(b) Each RTI Option shall be automatically converted
into an option to purchase that number of whole shares of IPI Common Stock equal
to the product of (i) the number of shares of RTI Common Stock that were
issuable upon exercise of such RTI Option immediately prior to the Effective
Time, multiplied by (ii) two (2) times the Common Stock Exchange Ratio, rounded
to the nearest whole number of shares of IPI Common Stock (each, an "IPI
Option").
(c) The per share exercise price for the shares of
IPI Common Stock issuable upon exercise of each IPI Option shall be equal to the
quotient obtained by dividing (i) the exercise price per share (immediately
prior to the Effective Time) of RTI Common Stock under the RTI Option from which
such IPI Option was converted, by (ii) two (2) times the Common Stock Exchange
Ratio, rounded up to the nearest whole cent.
2.3.4 TAX WITHHOLDING. IPI and the Surviving Corporation shall
be entitled to deduct and withhold from any consideration payable or otherwise
deliverable to any holder or former holder of capital stock of RTI pursuant to
this Agreement such amounts as IPI or the Surviving Corporation may be required
to deduct or withhold therefrom under the Code or under any provision of state,
local or foreign tax law. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the person to whom such amounts would otherwise have been
paid.
2.3.5 SURRENDER OF CERTIFICATES; DELIVERY OF MERGER
CONSIDERATION. At the Closing (a) the holders of RTI Preferred Stock and RTI
Common Stock shall deliver to IPI the preferred and common stock certificates
representing such securities of RTI (the "Certificates"), and (b) IPI shall
deliver to the former holders of RTI Preferred Stock and RTI Common Stock the
Merger Consideration due to such holders at Closing in accordance with Section
2.1. The Certificates so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Certificate that, prior to the Effective Time,
evidenced shares of RTI Common Stock or RTI Preferred Stock, as applicable, will
be deemed from and after the Effective Time, for all corporate purposes, other
than the payment of dividends or other distributions, to evidence the ownership
of the number of whole shares of IPI Common Stock into which such shares of RTI
Common Stock or RTI Preferred Stock are convertible and the right to receive an
amount in cash in accordance with Section 2.1. If any Certificate shall have
been lost, stolen or destroyed, the owner of such lost, stolen or destroyed
Certificate may provide, in lieu of such Certificate, an appropriate affidavit
of loss with respect to such Certificate.
2.3.6 TAX CONSEQUENCES. It is intended by each of the Parties
that the Merger shall constitute a reorganization within the meaning of Section
368 of the Code, and each of the Parties will use commercially reasonable
efforts to cause the Merger to be treated as such a reorganization. The Parties
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368 2(g) and 1.368 3(a) of the tax regulations promulgated under the
Code. Each party shall seek the advice of such party's counsel or financial
advisor regarding the ability of the Merger to qualify as such a reorganization.
2.3.7 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of RTI and Merger Sub, the Shareholders and
officers and directors of RTI and Merger Sub will, at RTI's expense, take all
such lawful and necessary action.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF RTI AND THE SHAREHOLDERS
RTI and the Shareholders hereby jointly and severally represent and
warrant to IPI and Merger Sub, subject to such exceptions as are specifically
disclosed in the disclosure schedule furnished by RTI and the Shareholders to
IPI and Merger Sub in connection with this Article 3 ("Disclosure Schedule"), as
follows:
3.1 ORGANIZATION AND GOOD STANDING.
3.1.1 Part 3.1 of the Disclosure Schedule contains a complete
and accurate list for RTI of its name, its jurisdiction of incorporation and
other jurisdictions in which it is qualified to do business. RTI is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under the Applicable Contracts. RTI is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualifications, except where the failure to be so qualified would not have a
Material Adverse Effect.
3.1.2 RTI has delivered to IPI copies of the Organizational
Documents of RTI, as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
3.2.1 This Agreement constitutes the legal, valid, and binding
obligation of RTI enforceable against RTI in accordance with its terms. Upon the
execution and delivery by RTI of the Closing Documents, the Closing Documents
will constitute the legal, valid, and binding obligations of RTI, enforceable
against RTI in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. RTI have the right, power,
authority, and capacity to execute and deliver this Agreement and the Closing
Documents and to perform their respective obligations under this Agreement and
the Closing Documents.
3.2.2 This Agreement constitutes the legal, valid, and binding
obligation of Shareholders enforceable against Shareholders in accordance with
its terms. Upon the execution and delivery by Shareholders of the Agreement, the
Agreement will constitute the legal, valid, and binding obligations of
Shareholders, enforceable against Shareholders in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
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enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies. The Shareholders have the right, power, authority, and
capacity to execute and deliver this Agreement and to perform their respective
obligations under this Agreement.
3.2.3 Except as set forth in Part 3.2 of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of RTI, or (B)
any resolution adopted by the board of directors or the shareholders of RTI;
(b) contravene, conflict with, or result in a
violation of, any judgment, Order or decree applicable to RTI or its assets;
(c) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by RTI or that otherwise relates to the
business of, or any of the assets owned or used by, RTI;
(d) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract;
(e) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by RTI; or
(f) require RTI to give any notice to or obtain any
consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of transactions contemplated
hereunder.
3.3 ACCREDITED INVESTORS. To the extent that the Shareholders are
receiving IPI Common Stock that has not been registered under the Securities
Act, the Shareholders are acquiring the Stock Merger Consideration for their own
account and not with a view to distribution within the meaning of Section 2(11)
of the Securities Act. Each Shareholder is an "accredited investor" as such term
is defined in Rule 501(a) of the Securities Act.
3.4 CAPITALIZATION.
3.4.1 As of the date of this Agreement, the authorized capital
stock of RTI consists of 25,000,000 shares of common stock, of which 7,055,000
shares are issued and outstanding ("RTI Common Stock") and 1,445,000 shares of
Series A Preferred Stock, all of which are issued and outstanding ("RTI
Preferred Stock"). Except as disclosed in Part 3.4 of the Disclosure Schedule,
no legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of RTI. All of the outstanding
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capital stock of RTI has been duly authorized and validly issued and is fully
paid and non-assessable. Except for options granted under RTI's 2003 Stock
Incentive Plan, there are no contracts, arrangements or understandings which
require RTI to the issue or sell any of its equity securities. None of the
outstanding equity securities or other securities of RTI were issued in
violation of the Securities Act or any other Legal Requirement.
3.4.2 The Shareholders are and will be on the Closing Date the
record and beneficial owners and holders of the shares of RTI Common Stock held
by them, free and clear of all Encumbrances.
3.5 RTI FINANCIAL STATEMENTS. RTI has delivered to IPI audited
consolidated balance sheets of RTI (including the report of the independent
certified public accountants who performed the audit) for the years ending
December 31, 2000, 2001, 2002 and 2003, and the related consolidated statements
of income, changes in shareholders' equity, and cash flow for each of the fiscal
years then ended (the balance sheet for the year ended December 31, 2003 is
referred to herein as the "Balance Sheet"). Such financial statements fairly
present the financial condition and the results of operations, changes in
shareholders' equity, and cash flow of RTI as at the respective dates of and for
the periods referred to in such financial statements, all in accordance with
GAAP, subject, in the case of interim financial statements, to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the foregoing balance
sheets); the financial statements referred to in this Section 3.5 reflect the
consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. No
financial statements of any Person other than RTI are required by GAAP to be
included in the consolidated financial statements of RTI.
3.6 BOOKS AND RECORDS.
3.6.1 RTI has delivered to IPI and Merger Sub accurate,
correct and complete copies of: (i) RTI's Articles of Incorporation and Bylaws,
including all amendments thereto, as presently in effect; (ii) all stock records
of RTI, including RTI's stock ledger and copies of any stock certificates issued
by RTI; and (iii) all minutes and other records of all meetings and other
proceedings (including, without limitation, any actions taken by written consent
or otherwise without a meeting) of RTI's shareholders and RTI's board of
directors and all committees thereof (collectively, the "Resolutions").
3.6.2 RTI has made available to IPI and the IPI
Representatives all books of account and other financial records of RTI.
3.6.3 RTI's minute book accurately and completely reflects all
material corporate actions of RTI's shareholders and RTI's board of directors
and all committees thereof. RTI's books of account and other financial records
are accurate and complete and have been maintained in accordance with reasonably
sound business practices.
7
3.6.4 RTI is not in violation of any of the provisions of its
Articles of Incorporation, Bylaws or the Resolutions, and no condition or
circumstance exists that likely would (with or without notice or lapse of time)
constitute or result directly or indirectly in such a violation.
3.7 TITLE TO PROPERTIES; ENCUMBRANCES. RTI owns no real property. Part
3.7 of the Disclosure Schedule contains a complete and accurate list of all
leaseholds, or other interests therein owned by RTI. RTI owns (with good and
marketable title) all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that it purports to own located in the
facilities owned or operated by RTI or reflected as owned in the books and
records of RTI, including all of the properties and assets reflected in the
Balance Sheet (except for assets held under capitalized leases disclosed or not
required to be disclosed in Part 3.7 of the Disclosure Schedule and personal
property sold since the date of the Balance Sheet in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by RTI since the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the Ordinary Course of
Business). All material properties and assets reflected in the Balance Sheet are
free and clear of all Encumbrances other than (a) security interests shown on
the Balance Sheet or set forth on Part 3.7 of the Disclosure Schedule as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) security interests incurred in connection with the purchase
of property or assets after the date of the Balance Sheet (such security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, and (c) liens for current taxes not yet due.
3.8 ACCOUNTS RECEIVABLE. Part 3.8 of the Disclosure Schedule contains a
complete and accurate list of all accounts receivable as of the date of the
Balance Sheet ("Accounts Receivable"), which list sets forth the aging of such
Accounts Receivable. All RTI Accounts Receivable represent or will represent
valid obligations arising from services actually performed or sales actually
made in the Ordinary Course of Business. All of the Accounts Receivable are or
will be collectible at the full recorded amount thereof, less any applicable
reserves established in accordance with GAAP, in the Ordinary Course of
Business. There is no contest, claim, or right of set-off, other than returns in
the Ordinary Course of Business, under any contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable.
3.9 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.9 of the
Disclosure Schedule, RTI has no material liabilities or material obligations of
any nature (whether known or unknown and whether absolute, accrued, contingent,
or otherwise) except for liabilities or obligations reflected or reserved
against in the Balance Sheet and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.
3.10 TAXES.
3.10.1 RTI has filed or caused to be filed on a timely basis
all RTI tax returns that are or were required to be filed by it, pursuant to
applicable Legal Requirements, except where the failure to so file could or
would not have a Material Adverse Effect. Part 3.10 of the Disclosure Schedule
contains a complete and accurate list of, all such tax returns filed after
December 31, 2000. RTI has paid, or made provision for the payment of, all taxes
that have or may have become due pursuant to those tax returns or otherwise, or
pursuant to any assessment received by RTI, except such taxes, if any, as are
listed in Part 3.10 of the Disclosure Schedule and are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided in the Balance Sheet.
8
3.10.2 The United States federal and state income tax returns
of RTI have been audited by the IRS or relevant state tax authorities or are
closed by the applicable statute of limitations for all taxable years through
2000. Part 3.10 of the Disclosure Schedule contains a complete and accurate list
of all audits of all such tax returns, including a reasonably detailed
description of the nature and outcome of each audit. All deficiencies proposed
as a result of such audits have been paid, reserved against, settled, or, as
described in Part 3.10 of the Disclosure Schedule, are being contested in good
faith by appropriate proceedings. Part 3.10 of the Disclosure Schedule describes
all adjustments to the United States federal income tax returns filed by RTI for
all taxable years since 2000, and the resulting deficiencies proposed by the
IRS. Except as described in Part 3.10 of the Disclosure Schedule, RTI has not
given or been requested to give waivers or extensions (or is or would be subject
to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of taxes of RTI or for which RTI may be
liable.
3.10.3 The charges, accruals, and reserves with respect to
taxes on the respective books of RTI are adequate (determined in accordance with
GAAP) and are at least equal to that RTI's liability for taxes. There exists no
proposed tax assessment against RTI except as disclosed in the Balance Sheet or
in Part 3.10 of the Disclosure Schedule. No consent to the application of
Section 341(f)(2) of the Code has been filed with respect to any property or
assets held, acquired, or to be acquired by RTI. All taxes that RTI is or was
required by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person, except where any failure to withhold or collect such taxes
does not exceed $10,000 in the aggregate.
3.10.4 All tax returns filed by (or that include on a
consolidated basis) RTI are true, correct, and complete in all material
respects. There is no tax sharing agreement that will require any payment by RTI
after the date of this Agreement. RTI is not, nor within the five-year period
preceding the Closing Date has been, an "S" corporation. During the consistency
period (as defined in Section 338(h)(4) of the Code with respect to the sale of
the RTI capital stock to IPI), neither RTI nor any target affiliate (as defined
in Section 338(h)(6) of the Code with respect to the sale of RTI capital stock
to IPI) has sold or will sell any property or assets to IPI or to any member of
the affiliated group (as defined in Section 338(h)(5) of the Code) that includes
IPI. Part 3.10 of the Disclosure Schedule lists all such target affiliates.
3.11 NO MATERIAL ADVERSE CHANGE. Since December 31, 2003, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of RTI, and no event has occurred or
circumstance exist that may result in such a material adverse change.
3.12 ERISA. RTI is in compliance in all material respects with all
applicable provisions of Title IV of the Employee Retirement Income Security Act
of 1974, Pub. L. No. 93-406, September 2, 1974, 00 Xxxx. 000, 00 X.X.X.X. SS
1001 et seq. (1975), as amended from time to time ("ERISA"). Neither a
9
reportable event nor a prohibited transaction (as defined in ERISA) has occurred
and is continuing with respect to any "pension plan" (as such term is defined in
ERISA, a "Plan"); no notice of intent to terminate a Plan has been filed nor has
any Plan been terminated; no circumstances exist which constitute grounds
entitling the Pension Benefit Guaranty Corporation (together with any entity
succeeding to or all of its functions, the "PBGC") to institute proceedings to
terminate, or appoint a trustee to administer a Plan, nor has the PBGC
instituted any such proceedings; neither RTI nor any commonly controlled entity
(as defined in ERISA) has completely or partially withdrawn from a
multi-employer plan (as defined in ERISA). RTI and each commonly controlled
entity has met its minimum funding requirements under ERISA with respect to all
of its Plans and the present fair market value of all Plan property equals or
exceeds the present value of all vested benefits under each Plan, as determined
on the most recent valuation date of the Plan and in accordance with the
provisions of ERISA and the regulations thereunder for calculating the potential
liability of RTI or any commonly controlled entity to the PBGC or the Plan under
Title IV or ERISA; and neither RTI nor any commonly controlled entity has
incurred any liability to the PBGC under ERISA.
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
3.13.1 To the Knowledge of RTI and the Shareholders and except
as set forth in Part 3.13 of the Disclosure Schedule, RTI is in material
compliance with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets. No event has occurred or circumstance exists that may constitute or
result in a violation by RTI of, or a failure on the part of RTI to comply with,
any Legal Requirement, except where such violation or failure would not have a
Material Adverse Effect.
3.13.2 Part 3.13 of the Disclosure Schedule contains a
complete and accurate list of each material Governmental Authorization that is
held by RTI or that otherwise relates to the business of, or to any of the
assets owned or used by, RTI. Each Governmental Authorization listed in Part
3.13 of the Disclosure Schedule is valid and in full force and effect and,
except as set forth in Part 3.13 of the Disclosure Schedule, RTI has been in
full compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part 3.13 of the
Disclosure Schedule:
(a) To the Knowledge of RTI and the Shareholders, RTI
has not received, at any time since July 1, 2000, any notice or other
communication from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental Authorization;
and
(b) Except as otherwise set forth in Part 3.13 of the
Disclosure Schedule, all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.13 of the Disclosure Schedule have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies, except where the failure
to so file could or would not have a Material Adverse Effect.
10
3.13.3 The Governmental Authorizations listed in Part 3.13 of
the Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit RTI to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit RTI to own and use their assets in the manner in which they currently
own and use such assets.
3.14 LEGAL PROCEEDINGS; ORDERS.
3.14.1 Except as set forth in Part 3.14 of the Disclosure
Schedule, there is no pending Proceeding, nor to the Knowledge of RTI and the
Shareholders, any Threatened Proceeding that:
(a) has been commenced by or against RTI or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by RTI, that would have a Material Adverse Effect; or
(b) challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
3.14.2 RTI has delivered to IPI copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.14 of the Disclosure Schedule. The Proceedings listed in Part 3.14 of the
Disclosure Schedule will not have a Material Adverse Effect on RTI.
3.14.3 Except as set forth in Part 3.14 of the Disclosure
Schedule:
(a) there is no Order to which any of RTI or any of
the assets owned or used by RTI, is subject; or
(b) no officer, director, agent, or employee of RTI
is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of RTI.
(c) RTI is in material compliance with all of the
terms and requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject; and
(d) RTI has not received, at any time since July 1,
2000, any written notice from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which RTI, or any of the
assets owned or used by RTI, is or has been subject.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in Part
3.15 of the Disclosure Schedule, since December 31, 2003, RTI has conducted its
businesses only in the Ordinary Course of Business and there has not been any:
11
3.15.1 change in RTI's authorized or issued capital stock;
3.15.2 grant of any stock option or right to purchase shares
of capital stock of RTI; issuance of any security convertible into such capital
stock;
3.15.3 grant of any registration rights;
3.15.4 purchase, redemption, retirement, or other acquisition
by RTI of any shares of any such capital stock;
3.15.5 declaration or payment of any dividend or other
distribution or payment in respect of shares of its capital stock;
3.15.6 amendment to the Organizational Documents of RTI;
3.15.7 payment or increase by RTI of any bonuses, salaries, or
other compensation to any shareholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar contract with any director, officer, shareholder, or employee;
3.15.8 adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
RTI;
3.15.9 damage to or destruction or loss of any asset or
property of RTI, whether or not covered by insurance, that would result in a
Material Adverse Effect;
3.15.10 entry into, termination of, or receipt of notice of
termination of (a) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement or (b) any contracts or transactions
involving a total remaining commitment by or to RTI of $15,000 or more, in the
aggregate;
3.15.11 sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of RTI
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of RTI, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
3.15.12 cancellation or waiver of any claims or rights with an
aggregate value to RTI in excess of $15,000;
3.15.13 material change in the accounting methods used by RTI;
or
3.15.14 agreement in writing by RTI to do any of the
foregoing.
12
3.16 CONTRACTS; NO DEFAULTS.
3.16.1 Part 3.16 of the Disclosure Schedule sets forth a
complete and accurate list and RTI has delivered to IPI true and complete
copies, of all of the contracts of RTI described below and currently in effect:
(a) any contract that involves performance of
services or delivery of goods or materials by RTI of an aggregate amount or
value in excess of $15,000 per annum;
(b) any contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of RTI in
excess of $15,000 per annum;
(c) any contract related to any lease, rental or
occupancy agreement, license, installment and conditional sale agreement, and
other contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property (except personal
property leases and installment and conditional sales agreements having a value
per item or aggregate payments of less than $15,000 per annum and with terms of
less than one year);
(d) any contract with respect to RTI's Intellectual
Property Assets, including agreements with current or former employees,
consultants, or contractors regarding the appropriation of RTI's Intellectual
Property Assets;
(e) any contract with respect to any collective
bargaining agreement or other agreement with any labor union or other employee
representative of a group of employees;
(f) any joint venture, partnership, and other
contract (however named) involving RTI sharing any profits, losses, costs, or
liabilities with any other Person;
(g) any contract containing covenants that in any way
purport to restrict the business activity of RTI or limit the freedom of RTI to
engage in any line of business or to compete with any Person in any geographical
area;
(h) any contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
(i) any power of attorney that is currently effective
and outstanding;
(j) any contract for capital expenditures in excess
of $15,000 per annum;
(k) any contract involving financing or borrowing of
money, or evidencing indebtedness, any liability for borrowed money, any
obligation for the deferred purchase price of any property in excess of $15,000
per annum, other than in the Ordinary Course of Business;
(l) any contract with any Governmental Body;
13
(m) any contract with or between the Shareholders;
(n) any written warranty, guaranty, and/or other
similar undertaking with respect to contractual performance extended by RTI
other than in the Ordinary Course of Business;
(o) any amendment, supplement, and modification in
writing with respect of any of the foregoing;
excluding end-user licenses and reseller agreements, the forms of which shall be
provided by RTI to IPI (each contract set forth in Part 3.16 of the Disclosure
Schedule, an "Applicable Contract" and collectively, the "Applicable
Contracts"). Part 3.16 also includes a reasonably complete description of the
Applicable Contracts, including the identities of the parties to each Applicable
Contract, RTI's remaining commitment under each Applicable Contract and RTI's
office where details concerning each Applicable Contract are located.
3.16.2 Except as set forth in Part 3.16 of the Disclosure
Schedule:
(a) neither Shareholder (nor any related Person of
either Shareholder) has or may acquire any rights under, and neither Shareholder
has or may become subject to any obligation or liability under, any contract
that relates to the business of, or any of the assets owned or used by, RTI;
(b) to the Knowledge of RTI and the Shareholders, no
officer, director, agent, employee, consultant, or contractor of RTI is bound by
any contract that purports to limit the ability of such officer, director,
agent, employee, consultant, or contractor to (A) engage in or continue any
conduct, activity, or practice relating to the business of RTI, or (B) assign to
RTI or to any other Person any rights to any invention, improvement, or
discovery;
(c) each Applicable Contract is in full force and
effect and is valid and enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies;
(d) RTI is in material compliance with all applicable
terms and requirements of each Applicable Contract under which such RTI has or
had any obligation or liability or by which RTI or any of the assets owned or
used by RTI is or was bound;
(e) to the Knowledge of RTI and the Shareholders,
each other Person that has or had any obligation or liability under any
Applicable Contract under which an RTI has or had any rights is in material
compliance with all applicable terms and requirements of such contract;
(f) to the Knowledge of RTI and the Shareholders, no
event has occurred or circumstance exists that (with or without notice or lapse
of time) may contravene, conflict with, or result in a violation or breach of,
or give RTI or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract;
14
(g) to the Knowledge of RTI and the Shareholders, RTI
has not given to or received from any other Person at any time, any written
notice or other communication regarding any actual, alleged, possible, or
potential violation or breach of, or default under, any Applicable Contract.
(h) there are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to RTI under any Applicable Contract with any Person and no such Person
has made written demand for such renegotiation; and
(i) all contracts relating to the sale, design,
manufacture, or provision of products or services by RTI have been entered into
in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
3.17 INSURANCE.
3.17.1 RTI has delivered to IPI:
(a) true and complete copies of all policies of
insurance currently in effect to which RTI is a party or under which RTI, or any
director or officer of RTI is now covered;
(b) true and complete copies of all pending
applications for policies of insurance; and
(c) any statement by the auditor of RTI's financial
statements with regard to the adequacy of RTI's coverage or of the reserves for
claims.
3.17.2 Part 3.17 of the Disclosure Schedule describes:
(a) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by RTI; and
(b) all obligations of RTI to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
3.17.3 Part 3.17 of the Disclosure Schedule sets forth, by
year, for the current policy year and each of the three preceding policy years:
(a) a summary of the loss experience under each
policy;
15
(b) a statement describing each claim under an
insurance policy for an amount in excess of $15,000, which sets forth:
(i) the name of the claimant;
(ii) a description of the policy by insurer,
type of insurance, and period of coverage; and
(iii) the amount and a brief description of the
claim.
3.17.4 Except as set forth in Part 3.17 of the Disclosure
Schedule:
(a) All policies to which RTI is a party or that
provide coverage to either Shareholder, RTI, or any director or officer of RTI:
(i) are valid, outstanding, and enforceable;
(ii) taken together, provide adequate insurance
coverage for the assets and operations of RTI for all the risks normally insured
against by a Person carrying on the same or similar businesses as RTI;
(iii) are sufficient for compliance with all
Legal Requirements and contracts to which RTI is a party or by which any of them
is bound; and
(iv) to the Knowledge of RTI and the Shareholder
do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of RTI.
(b) Since December 20, 2002, RTI has not received (A)
any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(c) Since December 20, 2002, RTI has paid all
premiums due, and has otherwise performed all of its respective obligations,
under each policy to which RTI is a party or that provides coverage to RTI or
any director or officer thereof.
(d) RTI has given notice to the insurer of all claims
that may be insured thereby.
3.18 ENVIRONMENTAL MATTERS.
3.18.1 RTI is and has been at all times in material compliance
with Environmental and Safety Laws. RTI has all necessary permits required under
Environmental and Safety Laws for the operation of its business, and is not and
has not been in violation of any of the terms and conditions of any of such
permits, except for such permits the failure to obtain would not have a Material
Adverse Effect. RTI has not received any written notice that alleges that RTI is
not in compliance with any Environmental and Safety Law.
16
3.18.2 RTI has not generated, manufactured, produced,
transported, imported, used, treated, refined, processed, handled, stored,
discharged, released or disposed of any hazardous materials (whether lawfully or
unlawfully). To the Knowledge of RTI and the Shareholders: (i) there are not and
have not been any releases or threatened releases of any hazardous materials at,
on or from RTI's facilities, and (ii) no former owner or user of RTI's
facilities engaged in any type of manufacturing or commercial activity that
might be reasonably expected to generate, manufacture, produce, transport,
import, use, treat, refine, process, handle, store, discharge, release or
dispose of any hazardous materials (whether lawfully or unlawfully) on RTI's
facilities.
3.19 EMPLOYEES.
3.19.1 Part 3.19 of the Disclosure Schedule contains a
complete and accurate list of the following information for each employee or
director of RTI, including each employee on leave of absence: name; job title;
current compensation paid or payable and any change in compensation since
January 1, 2003; vacation accrued; and service credited for purposes of vesting
and eligibility to participate under RTI's pension, retirement, profit-sharing,
thrift savings, deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll stock
ownership), severance pay, insurance, medical, welfare, or vacation plan, other
employee pension benefit plan or employee welfare benefit plan, or any other
employee benefit plan or any director plan.
3.19.2 To the Knowledge of RTI and the Shareholders, no
employee, officer or director of RTI is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality, non-competition, or
proprietary rights agreement ("Proprietary Rights Agreement"), that in any way
adversely affects or will affect (a) the performance of his duties as an
employee, officer or director of RTI, or (b) the ability of RTI to conduct its
business as now conducted or as contemplated by RTI to be conducted after the
Effective Time. To the Knowledge of RTI and the Shareholders, no director,
officer, or other employee of RTI intends to terminate his employment with RTI.
3.19.3 Part 3.19 of the Disclosure Schedule also contains a
complete and accurate list of the following information for each retired
employee or director of RTI, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.20 LABOR RELATIONS; COMPLIANCE. RTI has not been and is not now a
party to any collective bargaining or other labor contract. There is not
presently pending, existing, or, to the Knowledge of RTI and the Shareholders,
Threatened (a) any strike, slowdown, picketing, work stop order, or employee
grievance process, (b) any Proceeding against or affecting RTI relating to the
alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
17
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body or organization, or any other
labor or employment dispute against or affecting RTI or its premises, or (c) any
application for certification of a collective bargaining agent. There is no
lockout of any employees by RTI, and no such action is contemplated by RTI. RTI
has complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. RTI is not
liable for the payment of any compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements, other than where such failure would not exceed
$10,000 in the aggregate.
3.21 INTELLECTUAL PROPERTY.
3.21.1 INTELLECTUAL PROPERTY ASSETS. The term "Intellectual
Property Assets" includes:
(a) the name "Retail Technologies International," all
fictional business names, trading names, registered and unregistered trademarks,
service marks of RTI, and applications relating thereto (collectively, "Marks");
(b) all patents and patent applications
(collectively, "Patents");
(c) all registered copyrights in both published works
and unpublished works (collectively, "Copyrights");
(d) all rights in mask works; and
(e) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade Secrets"),
owned, used, or licensed by RTI as licensee or licensor.
3.21.2 AGREEMENTS. Part 3.21 of the Disclosure Schedule
includes a list and summary description, including any royalties paid or
received by RTI during the last two completed fiscal years, of all material
contracts, licenses and agreements to which RTI is a party (i) with respect to
the licensing or transfer of RTI's Intellectual Property Assets to any third
party, (except for end-user licenses and reseller agreements related to the sale
of RTI products in the Ordinary Course of Business); or (ii) pursuant to which a
third party has licensed or transferred any material Intellectual Property
Assets to RTI, except for perpetual, paid-up licenses for commonly available
software programs with the value of less than $1,000.
3.21.3 KNOW-HOW NECESSARY FOR THE BUSINESS.
(a) Except as set forth in Part 3.21 of the
Disclosure Schedule, the Intellectual Property Assets are all those necessary
for the operation of RTI's businesses as they are currently conducted. RTI is
the owner of all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security interests, charges,
Encumbrances, equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets.
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(b) Except as set forth in Part 3.21 of the
Disclosure Schedule, all former and current employees of RTI have executed
written contracts with RTI that assign to RTI all rights to any inventions,
improvements, discoveries, or information relating to the business of RTI. To
the Knowledge of RTI and the Shareholders, no employee of RTI has entered into
any contract that restricts or limits in any way the scope or type of work in
which the employee may be engaged or requires the employee to transfer, assign,
or disclose information concerning his work to anyone other than RTI.
3.21.4 PATENTS.
(a) RTI owns no Patents.
(b) To the Knowledge of RTI and the Shareholders,
none of the products manufactured and sold, nor any process or know-how used by
RTI infringe or are alleged to infringe any patent or other proprietary right of
any other Person.
3.21.5 TRADEMARKS.
(a) Part 3.21 of Disclosure Schedule contains a
complete and accurate list and summary description of all Marks. RTI is the
owner of all right, title and interest in and to each of the Marks, free and
clear of all liens, security interests, charges, Encumbrances, equities, and
other adverse claims.
(b) All Marks that have been registered with the
United States Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date.
(c) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and, to the Knowledge of RTI and the
Shareholders, no such action is Threatened with respect to any of the Marks.
(d) RTI has not received any written notice that any
of its Marks are infringing on any trademark or trademark application of any
third party.
(e) To the Knowledge of RTI and the Shareholders, no
Xxxx is infringed by any trade name, trademark, or service xxxx of any third
party.
3.21.6 COPYRIGHTS.
(a) RTI has no Copyrights.
(b) To the Knowledge of RTI and the Shareholders, RTI
has not infringed nor is RTI alleged to infringe any copyright of any third
party.
3.22 TRADE SECRETS. RTI has taken all reasonable precautions to protect
the secrecy, confidentiality, and value of RTI's Trade Secrets.
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3.23 DISCLOSURE. No representation or warranty of RTI or the
Shareholders in this Agreement and no statement in the Disclosure Schedule omits
to state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading. No notice
given pursuant to Section 5.4 will contain any untrue statement or omit to state
a material fact necessary to make the statements therein or in this Agreement,
in light of the circumstances in which they were made, not misleading.
3.24 RELATIONSHIPS WITH RELATED PERSONS. Neither Shareholder nor any
related Person of the Shareholders or RTI has, or since the first day of the
next to last completed fiscal year of RTI has had, any interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to RTI's businesses. Neither the Shareholders nor any related
Person of Shareholders or of RTI is, or since the first day of the next to last
completed fiscal year of RTI has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
(a) had business dealings or a material financial interest in any transaction
with RTI other than business dealings or transactions conducted in the Ordinary
Course of Business with RTI at substantially prevailing market prices and on
substantially prevailing market terms, or (b) engaged in competition with RTI
with respect to any line of the products or services of RTI (a "Competing
Business") in any market presently served by RTI. Except as set forth in Part
3.24 of the Disclosure Schedule, no Shareholder or any related Person of
Shareholders or of RTI is a party to any contract with, or has any claim or
right against, RTI.
3.25 BROKERS OR FINDERS. RTI, the Shareholders and their agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF IPI AND MERGER SUB
IPI and the Merger Sub jointly and severally represent and warrant to
RTI and the Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING. IPI and the Merger Sub are
corporations duly organized, validly existing, and in good standing under the
laws of the State of Delaware, with full corporate power and authority to
conduct their business as now being conducted, to own or use the properties and
assets that it purports to own or use, and to perform all its obligations under
this Agreement. IPI and the Merger Sub are duly qualified to do business as
foreign corporations and are in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualifications, except where the failure to be so qualified would not have a
Material Adverse Effect.
4.2 AUTHORITY; NO CONFLICT.
4.2.1 This Agreement constitutes the legal, valid, and binding
obligation of IPI and the Merger Sub, enforceable against IPI and the Merger Sub
in accordance with its terms. Upon the execution and delivery by IPI and the
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Merger Sub of the Closing Documents, the Closing Documents will constitute the
legal, valid, and binding obligations of IPI and the Merger Sub, enforceable
against IPI and the Merger Sub in accordance with their respective terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. IPI and the Merger
Sub have the right, power and authority to execute and deliver this Agreement
and the Closing Documents and to perform their respective obligations under this
Agreement and the Closing Documents.
4.2.2 Except as set forth in Part 4.2 of the IPI Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will give
any Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(a) any provision of IPI's Organizational Documents;
(b) any resolution adopted by the board of directors
or the stockholders of IPI;
(c) any Legal Requirement or Order to which IPI may
be subject; or
(d) any contract to which IPI is a party or by which
IPI may be bound.
4.2.3 Except as set forth in Part 4.2 of the IPI Disclosure
Schedule, IPI is not and will not be required to obtain any consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3 CAPITALIZATION. The capitalization of IPI is as described in IPI's
most recent periodic report filed with the SEC. Except as set forth in Part 4.3
of the IPI Disclosure Schedule, IPI has not issued any capital stock since such
filing, other than pursuant to the exercise of employee stock options under
IPI's stock option plan(s), the issuance of shares of common stock to employees
pursuant to IPI's employee stock purchase plan(s) and pursuant to the conversion
or exercise of any Common Stock Equivalents. No person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the Contemplated Transactions. The issuance and sale of the
Common Stock Merger Consideration will not obligate IPI to issue shares of
Common Stock or other securities without consideration (other than nominal
consideration) to any Person and will not result in a right of any holder of
IPI's securities to adjust the exercise, conversion, exchange or reset price
under such securities.
4.4 SEC REPORTS; FINANCIAL STATEMENTS. IPI has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as IPI was required by law to
file such material) (the foregoing materials, including the exhibits thereto,
being collectively referred to herein as the "SEC Reports"). To IPI's Knowledge
and as of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
21
the rules and regulations of the SEC promulgated thereunder. The financial
statements of IPI included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the SEC
with respect thereto as in effect at the time of filing, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of IPI and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
4.5 MATERIAL CHANGES. Since December 31, 2003, except as disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could have a Material Adverse Effect on IPI, (ii) IPI has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the Ordinary Course of Business consistent with
past practice and (B) liabilities not required to be reflected in IPI's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) IPI has not altered its method of accounting, and (iv)
IPI has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock.
4.6 LITIGATION. Except as disclosed in the SEC Reports or in Part 4.6,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the Knowledge of IPI, threatened against or
affecting IPI, any Subsidiary of IPI or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an "Action") which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have a Material Adverse Effect.
Neither IPI nor any Subsidiary of IPI, nor any director or officer thereof, is
or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been any formal investigation, and to the
Knowledge of IPI, there is not pending or contemplated, any investigation by the
SEC involving IPI or any current or former director or officer of IPI. The SEC
has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by IPI or any Subsidiary of IPI under the Exchange
Act or the Securities Act.
4.7 NO DISAGREEMENTS WITH ACCOUNTANTS OR LAWYERS. There are no
disagreements of any kind presently existing, or reasonably anticipated by IPI
to arise, between the accountants and lawyers presently employed by IPI and IPI
is current with respect to any fees owed to its accountants and lawyers.
22
4.8 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against IPI and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To IPI's Knowledge, no such Proceeding has been Threatened.
4.9 BROKERS OR FINDERS. IPI and its officers and agents have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold RTI and the Shareholders harmless from any
such payment alleged to be due by or through IPI as a result of the action of
IPI or its officers or agents.
ARTICLE 5
CONDUCT OF RTI AND SHAREHOLDERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, RTI and the Shareholders will, or through their
Representatives will afford IPI and its Representatives full and free access to
RTI's personnel, properties, contracts, books and records, related documents and
data, and such additional financial, operating, and other data and information,
as IPI may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE RTI. Between the date of this
Agreement and the Closing Date, RTI and the Shareholders will, or through their
Representatives will:
5.2.1 conduct the business of RTI only in the Ordinary Course
of Business;
5.2.2 use their Best Efforts to preserve intact the current
business organization of RTI, keep available the services of all Representatives
of RTI, and maintain the relations and good will with suppliers, customers,
landlords, creditors, Representatives, and any other Persons that have business
relationships with RTI;
5.2.3 confer with IPI concerning operational matters of a
material nature; and
5.2.4 otherwise report periodically to IPI concerning the
status of the business, operations, and finances of RTI.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, RTI will
not, without the prior consent of IPI, (i) take any affirmative action, or fail
to take any reasonable action within its control, as a result of which any of
the changes or events listed in Section 3.15 is likely to occur, or (ii) incur
any indebtedness for borrowed funds under RTI's credit facility with Silicon
Valley Bank.
5.4 NOTIFICATION. Between the date of this Agreement and the Closing
Date, RTI and the Shareholders will promptly notify IPI in writing if RTI
becomes aware of any fact or condition that causes or constitutes a Breach of
any of RTI's representations and warranties in this Agreement as of the date of
this Agreement or at any time prior to the Closing Date (except as expressly
contemplated by this Agreement). If any such fact or condition requires any
change in the Disclosure Schedule in order for the Disclosure Schedule to be
accurate as of the Closing Date, RTI will promptly deliver to IPI a supplement
to the Disclosure Schedule specifying such change. During the same period, RTI
23
will promptly notify IPI of the occurrence of any Breach of any covenant of RTI
in this Article 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Article 7 impossible or unlikely.
5.5 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
provided in this Agreement, RTI will cause all indebtedness owed to RTI by
either Shareholder, including without limitation all notes receivable, employee
advances, and shareholder advances to be paid in full prior to Closing.
5.6 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Article 11, neither the RTI nor the Shareholders will or
will permit their Representatives to, directly or indirectly solicit, initiate,
or encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than IPI) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of RTI, the sale of any of the capital stock of
RTI, or any merger, consolidation, business combination, or similar transaction
involving RTI.
ARTICLE 6
COVENANTS
6.1 REQUIRED FILINGS. RTI will, or through its Representatives will,
cooperate with IPI with respect to all filings that IPI elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions.
6.2 CONSENTS. RTI will use reasonable commercial efforts to obtain the
consents, waivers and approvals identified in Part 3.2 of the Disclosure
Schedule. IPI will use reasonable commercial efforts to obtain the consents,
waivers and approvals identified in Part 4.2 of the IPI Disclosure Schedule.
6.3 EMPLOYEES. Except as otherwise provided in this Agreement, all
persons who are employees of RTI immediately prior to the Closing Date shall be
deemed "at will" employees of the Surviving Corporation from and after the
Effective Time. Each employee of RTI who continues as an employee of Surviving
Corporation after the Closing Date shall be referred to hereafter as a
"Continuing Employee." Continuing Employees shall be eligible to receive
benefits in connection with their employment consistent with IPI's applicable
human resources policies. The Surviving Corporation will give Continuing
Employees full credit under its benefit plans, if any, for prior service at RTI
for purposes of eligibility, vesting, benefit accrual, and determination of the
level of benefits to the extent permissible under applicable law and the
relevant plan documents.
6.4 RTI SHAREHOLDER NOTES. On or before the Closing, the Shareholders
shall pay the outstanding principal and interest due on any such outstanding
debts owed by such Shareholders to RTI.
6.5 EXISTING PROMISSORY NOTES. IPI and Merger Sub acknowledge that RTI
issued certain promissory notes on December 20, 2002 to certain former
shareholders in connection with the repurchase of their interests in RTI. IPI
and Merger Sub further acknowledge that, as a result of the Contemplated
24
Transactions, the maturity of those notes will become accelerated effective as
of the Closing Date. IPI and Merger Sub agree to cause the Surviving Corporation
to satisfy the obligations under those notes as soon as practicable but in no
event later than 30 days after the Closing Date.
6.6 SAGE'S EQUITY INTEREST IN IPI. IPI will exercise its right to
purchase or eliminate the equity interest of Sage in IPI to maximum extent of
such right and will use its commercially reasonable best efforts to work with
Sage to eliminate the balance of Sage's equity interest in IPI on or before the
Closing.
6.7 FINANCING. As soon as reasonably practicable after the execution of
this Agreement, IPI will use its best efforts to file a registration statement
with the Securities and Exchange Commission ("Financing Registration Statement")
and have such registration statement declared effective pursuant to which IPI
would (i) raise the capital for the Cash Merger Consideration and the repurchase
or elimination (as applicable) of Sage's equity interest to extent that IPI has
the right to purchase such interest, and (ii) register the IPI Common Stock to
be issued as part of the Stock Merger Consideration. If the Financing
Registration Statement is not declared effective prior to the Closing Date, IPI
agrees that it will use commercially reasonable efforts to register the IPI
Common Stock that is issued as part of the Stock Merger Consideration on a
registration statement filed with the Securities and Exchange Commission within
45 days following the Closing Date in accordance with the terms of the
Registration Rights Agreement attached hereto as Exhibit E.
6.8 IPI BOARD OF DIRECTORS. IPI shall take all reasonable steps
necessary to elect Xxxx Xxxxxxx to its board of directors as soon as practicable
following the Effective Time.
6.9 FILING OF FORM S-8. Immediately following the Closing Date, but in
no event longer than two (2) business days following the Closing Date, IPI shall
file a Form S-8 to register the shares of IPI common stock that may be issued
under the RTI 2003 Stock Incentive Plan after the Closing Date.
6.10 REPRESENTATIONS BY INTUIT. RTI will use reasonable commercial
efforts to obtain the representation from Intuit prior to the Effective Time
that it is record and beneficial owner and holder of the shares of RTI Preferred
Stock held by it, free and clear of all Encumbrances.
6.11 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, both IPI and RTI will use its Best Efforts to cause the conditions in
Article 7 to be satisfied.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF IPI. IPI's obligation to effect the
Merger and to take the other actions required to be taken by IPI at the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by IPI, in whole or in part):
25
7.1.1 ACCURACY OF RTI'S REPRESENTATIONS. All of RTI's and the
Shareholders' representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date (except that representations and
warranties given as of a specific date shall be true and correct only as of such
date), and IPI shall have received a certificate from RTI and the Shareholders
to such effect.
7.1.2 RTI'S PERFORMANCE. All of the covenants and obligations
that RTI is required to perform or to comply with, and all of the consents
identified in this Agreement must be obtained, pursuant to this Agreement at or
prior to the Closing (considered collectively), each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects, and IPI shall have received a
certificate from RTI and the Shareholders to such effect.
7.1.3 FINANCING. IPI shall have secured financing in an amount
not less than the aggregate amount required for the Cash Merger Consideration.
7.1.4 CONSENTS. Each of the consents identified in Part 3.2 of
the Disclosure Schedule must have been obtained and must be in full force and
effect.
7.1.5 ADDITIONAL DOCUMENTS. Each of the following documents
must have been delivered to IPI:
(a) an opinion of RTI's counsel dated the Closing
Date, in a form attached in EXHIBIT D, and
(b) such other documents RTI is required to deliver
to IPI pursuant to this Agreement.
7.1.6 NO PROCEEDINGS. At Closing there shall not have been
commenced or Threatened against IPI, or any Person affiliated with IPI, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.1.7 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the consummation
of the Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
7.1.8 EMPLOYMENT AGREEMENTS. Merger Sub shall enter into
Employment Agreements with each of Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxx in
substantially the form of attached EXHIBIT A.
7.1.9 NON-COMPETITION AGREEMENTS. IPI and Merger Sub shall
enter into Non-competition Agreements with each of Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxx in substantially the form of attached EXHIBIT B.
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7.2 CONDITIONS PRECEDENT TO SHAREHOLDERS' AND RTI'S OBLIGATION TO
CLOSE. The obligation of RTI and the Shareholders to consummate the Contemplated
Transactions and to take the other actions required to be taken by RTI and the
Shareholders at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by RTI,
in whole or in part):
7.2.1 ACCURACY OF IPI'S REPRESENTATIONS. All of IPI's and
Merger Sub's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, and RTI shall have received a
certificate from each of IPI and Merger Sub to such effect.
7.2.2 IPI'S PERFORMANCE. All of the covenants and obligations
that IPI is required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these covenants
and obligations (considered individually), must have been performed and complied
with in all material respects, and RTI shall have received a certificate from
each of IPI and Merger Sub to such effect.
7.2.3 CONSENTS. Each of the consents identified in Part 4.2 of
the IPI Disclosure Schedule must have been obtained and must be in full force
and effect.
7.2.4 ADDITIONAL DOCUMENTS. IPI must have caused the following
documents to be delivered to Shareholders:
(a) an opinion of IPI's counsel dated the Closing
Date, in a form attached in EXHIBIT C; and
(b) such other documents IPI is required to deliver
to RTI pursuant to this Agreement.
7.2.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the consummation
of the Contemplated Transactions; and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
7.2.6 EMPLOYMENT AGREEMENTS. Merger Sub shall enter into
Employment Agreements with each of Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxx in
substantially the form of attached EXHIBIT A.
7.2.7 REGISTRATION RIGHTS. The holders of RTI Common Stock and
RTI Preferred Stock shall receive registration rights for IPI's Common Stock
issued to such holders as Stock Merger Consideration in the form of the
Registration Rights Agreement attached as EXHIBIT E.
7.2.8 EQUITY INTERESTS IN IPI. No stockholder or group of
stockholders of IPI who may be deemed to be an "Intuit Competitor" as such term
is defined in that certain license agreement by and between RTI and Intuit dated
December 20, 2003, shall beneficially own greater than 5% of the
then-outstanding voting securities of IPI.
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7.2.9 DELIVERIES BY RTI AND THE SHAREHOLDERS. On the Closing
Date, RTI and the Shareholders shall deliver the following items, all of which
shall be in a form and substance acceptable to IPI and IPI's counsel:
(a) this Agreement, duly executed by RTI and the
Shareholders;
(b) the stock certificates representing all the
outstanding shares of RTI Common Stock and RTI Preferred Stock;
(c) a certificate executed by RTI certifying to IPI
and Merger Sub that each of RTI's representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the Closing Date
(giving full effect to the any supplements to the Disclosure Schedule that were
delivered by RTI in accordance with Section 5.4) and that RTI has performed in
all material respects all obligations required to be performed by RTI under this
Agreement at or prior to the Closing Date;
(d) a certificate executed by each Shareholder
certifying to IPI and Merger Sub that each of the Shareholders' representations
and warranties in this Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all respects as of the Closing Date as if made
on the Closing Date (giving full effect to the any supplements to the Disclosure
Schedule that were delivered by RTI in accordance with Section 5.4) and that the
Shareholders have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date;
(e) employment agreements executed by Xxxxxxx Xxxxxxx
and Xxxxxxx Xxxxx in substantially the form of attached EXHIBIT A;
(f) non-competition agreements executed by Xxxxxxx
Xxxxxxx and Xxxxxxx Xxxxx in substantially the form of attached EXHIBIT B;
(g) an opinion of RTI's counsel dated as of the
Closing Date, in a form attached as EXHIBIT D;
(h) a certificate executed by the Secretary of RTI
attaching certified copies of (i) RTI's Organizational Documents; (ii)
resolutions of RTI's Board of Directors and the Shareholders authorizing the
execution, delivery and performance of RTI's obligations under this Agreement;
and (iii) resolutions of shareholder of RTI approving this Agreement and the
Contemplated Transactions;
(i) a counterpart to the Registration Rights
Agreement executed by RTI and the Shareholders; and
(j) any other documents RTI or the Shareholders are
required to deliver pursuant to this Agreement.
28
7.2.10 DELIVERIES BY IPI AND MERGER SUB. On the Closing Date,
IPI and the Merger Sub shall deliver the following items:
(a) this Agreement, duly executed by IPI and the
Merger Sub;
(b) the Merger Consideration;
(c) a certificate executed by IPI and Merger Sub to
the effect that, except as otherwise stated in such certificate, each of IPI's
and Merger Sub's representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is accurate in all respects
as of the Closing Date as if made on the Closing Date and that IPI and Merger
Sub have performed in all material respects all obligations required to be
performed under this Agreement at or prior to the Closing Date;
(d) employment agreements executed by IPI and Merger
Sub in substantially the form of attached EXHIBIT A;
(e) non-competition agreements executed by IPI in
substantially the form of attached EXHIBIT B;
(f) an opinion of IPI's counsel dated as of the
Closing Date in a form attached as EXHIBIT C;
(g) a certificate executed by the secretary of IPI
attaching certified copies of (i) IPI's Organizational Documents and (ii) the
resolutions of IPI's Board of Directors authorizing the execution, delivery and
performance of IPI's obligations under this Agreement;
(h) a certificate executed by the secretary of Merger
Sub attaching certified copies of copies of (i) Merger Sub's Organizational
Documents; (ii) resolutions of Merger Sub's Board of Directors authorizing the
execution, delivery and performance of Merger Subs' obligations under this
Agreement; and (iii) resolutions of Merger Sub's sole shareholder approving this
Agreement and the Contemplated Transactions;
(i) a counterpart to the Registration Rights
Agreement executed by IPI; and
(j) any other documents IPI or the Merger Sub are
required to deliver pursuant to this Agreement.
ARTICLE 8
INDEMNIFICATION REMEDIES
8.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Schedule and IPI Disclosure
Schedule (including any supplements made thereto), the certificates delivered
pursuant to Section 7.3, and any other certificate or document delivered
pursuant to this Agreement will survive the Closing for a period of 18 months.
The right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
29
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY RTI. RTI and the
Shareholders, jointly and severally, will indemnify and hold harmless IPI and
Merger Sub and their respective Representatives, stockholders, controlling
persons, and Affiliates for, and will pay to the indemnified party the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third- party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
8.2.1 any Breach of any representation or warranty made by RTI
or the Shareholders in this Agreement as if such representation or warranty were
made on and as of the Closing Date without giving effect to any supplement to
the Disclosure Schedule, other than any such Breach that is disclosed in a
supplement to the Disclosure Schedule and is expressly identified in the
certificate delivered pursuant to Section 7.3.1(c) as having caused the
condition specified in Section 7.1.1 not to be satisfied;
8.2.2 any Breach by either Shareholder of any covenant or
obligation of the Shareholders in this Agreement; or
8.2.3 any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Shareholder or RTI (or
any Person acting on their behalf) in connection with any of the Contemplated
Transactions.
8.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY IPI. IPI will indemnify
and hold harmless RTI, and will pay to RTI the amount of any Damages arising,
directly or indirectly, from or in connection with (a) any Breach of any
representation or warranty made by IPI in this Agreement or in any certificate
delivered by IPI pursuant to this Agreement, (b) any Breach by IPI of any
covenant or obligation of IPI in this Agreement, or (c) any claim by any Person
for brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person with IPI (or
any Person acting on its behalf) in connection with any of the Contemplated
Transactions.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. If the Closing occurs,
neither RTI nor any of the Shareholders will have any liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Section 3.4 (Capitalization) and Section 3.21
(Intellectual Property), unless on or before the 18 months after the Closing
Date IPI notifies RTI of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by IPI; a claim with respect to
Section 3.4 (Capitalization) and Section 3.21 (Intellectual Property), or a
30
claim for indemnification or reimbursement not based upon any representation or
warranty or any covenant or obligation to be performed and complied with prior
to the Closing Date, may be made at any time. If the Closing occurs, IPI will
have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before the one year
anniversary of the Closing Date RTI notifies IPI of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
RTI.
8.5 LIMITATIONS ON AMOUNT--RTI. Neither RTI nor any Shareholder will
have liability (for indemnification or otherwise) with respect to the matters
described in Article VIII until the total of all Damages with respect to such
matters exceeds $100,000 in the aggregate, and then only for the amount by which
such Damages exceed $100,000, up to but not exceeding an aggregate amount of
Damages payable by either RTI or the Shareholders of $1,400,000. However, the
limitations set forth in this Section 8.5 will not apply to any Breach of any of
RTI's and the Shareholders' representations and warranties of which either RTI
or the Shareholders had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by either RTI or
the Shareholders of any covenant or obligation, and RTI will be jointly and
severally liable for all Damages with respect to such Breaches.
8.6 LIMITATIONS ON AMOUNT--IPI. IPI will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
8.3 until the total of all Damages with respect to such matters exceeds $75,000
and then only for the amount by which such Damages exceed $75,000. However, this
Section 8.6 will not apply to any Breach of any of IPI's representations and
warranties of which IPI had Knowledge at any time prior to the date on which
such representation and warranty is made or any intentional Breach by IPI of any
covenant or obligation, and IPI will be liable for all Damages with respect to
such Breaches.
8.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
8.7.1 Promptly after receipt by an indemnified party of notice
of the commencement of any Proceeding against it, such indemnified party will,
if a claim is to be made against an indemnifying party under Sections 8.2 or
8.3, give notice to the indemnifying party of the commencement of such claim,
but the failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnifying party's failure to give such
notice.
8.7.2 If any Proceeding referred to in Section 8.7.1 is
brought against an indemnified party and such indemnified party gives notice to
the indemnifying party of the commencement of such Proceeding, the indemnifying
party will, unless the claim involves taxes, be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (a) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (b) the indemnifying
party fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such Proceeding with
31
counsel reasonably satisfactory to the indemnified party and, after notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as the
indemnifying party diligently conducts such defense, be liable to the
indemnified party under this Article 8 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (a) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (b) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (i) there is no finding or
admission of any violation of Legal Requirements 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 (ii) the sole relief provided is monetary damages that
are to be paid in full by the indemnifying party; and (c) the indemnified party
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying party
of the commencement of any Proceeding and the indemnifying party does not,
within ten days after such notice is given to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
8.7.3 Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
8.8 PROCEDURE FOR INDEMNIFICATION-OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE 9
TERMINATION OF AGREEMENTS
9.1 STOCK OWNERSHIP AGREEMENT. Effective upon the Closing, any
Shareholder's Buy-Sell or similar agreement existing among RTI and any holders
of RTI Common Stock or RTI Preferred Stock the Shareholders shall be deemed
terminated and of no further force and effect.
9.2 TERMINATION OF EMPLOYMENT AGREEMENTS.
9.2.1 Effective upon the Closing, any and all employment
agreements existing between RTI and any Shareholder shall be terminated and of
no further force and effect.
32
9.2.2 Each Shareholder fully and forever releases and
discharges RTI, IPI and Merger Sub and their Representatives, Affiliates and
assigns from any and all claims, demands, damages, liabilities and obligations,
whether known or unknown, in any way relating to any agreements that were
terminated in accordance with this Section 9.2.
9.2.3 Each Shareholder expressly waives all rights under
Section 1542 of the California Civil Code with regard to the release set forth
in Section 9.2.1 above, which provides:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if know by him, must have materially affected his
settlement with the debtor."
ARTICLE 10
POST-CLOSING COVENANTS
10.1 KEY MAN LIFE INSURANCE. Each Shareholder shall make himself
reasonably available and shall cooperate with IPI to permit IPI to obtain
key-man insurance on his life for the benefit of IPI.
10.2 CONDUCT OF BUSINESS.
10.2.1 IPI and the Shareholders confirm that it is their
intention that the day to day business of the Surviving Corporation will
continue to be directed by its Board of Directors and conducted in generally the
same manner as RTI has historically been operated.
10.2.2 IPI and the Shareholders desire that, after the Closing
of the transaction contemplated by the Agreement, the day-to-day management of
the Surviving Corporation shall continue to be managed by Xxxxxxx Xxxxxxx and
Xxxxxxx Xxxxx, subject to the direction of the Board of Directors of the
Surviving Corporation.
ARTICLE 11
TERMINATION
11.1 TERMINATION. Except as provided in Section 11.2 hereof, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Closing by:
11.1.1 mutual agreement of RTI, the Shareholders and IPI;
11.1.2 IPI, the Shareholders or RTI if the Closing Date shall
not have occurred by June 30, 2004; provided, however, that the right to
terminate this Agreement under this Section 11.1.2 shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes breach of this Agreement;
33
11.1.3 IPI, the Shareholders or RTI if: (i) there shall be a
final non-appealable Order of a federal or state court in effect preventing
consummation of the Merger, or (ii) there shall be any statute, rule, regulation
or Order enacted, promulgated or issued or deemed applicable to the Closing by
any Governmental Body that would make consummation of the Closing illegal; or
11.1.4 IPI if there shall be any action taken, or any statute,
rule, regulation or Order enacted, promulgated or issued or deemed applicable to
the Merger by any Governmental Body, which would: (i) prohibit IPI's ownership
or operation of any portion of the business of RTI or (ii) compel IPI or RTI to
dispose of or hold separate all or any portion of the business or assets of RTI
or IPI as a result of the Merger.
11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 11.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of IPI,
RTI or the Shareholders, or their respective officers, directors or
shareholders, if applicable; provided, however, that each party hereto shall
remain liable for any breaches of this Agreement prior to its termination; and
provided further, however, that, Article 11 hereof and this Section 11.2 shall
remain in full force and effect and survive any termination of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 GOVERNING LAWS AND VENUE. It is the intention of the Parties that
the internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
Parties. Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement, (a) if initiated by IPI shall be
brought against any of the other parties only in the courts of the State of
California, County of Sacramento or, if it has or can acquire the necessary
jurisdiction, in the United States District Court for the Central District of
California, and (b) if initiated by the Shareholders shall be brought against
any of the other parties only in the courts of the State of California, County
of San Diego, or, if it has or can acquire the necessary jurisdiction, in the
United States District Court for the Southern District of California. Each of
the parties consents to the exclusive jurisdiction of such courts (and the
appropriate appellate courts) as determined in accordance with this Section 12.1
in any such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
12.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, Representatives,
administrators and assigns of the Parties. Neither RTI nor any Shareholder shall
assign this Agreement to any person or Entity (including by operation of law)
without the prior written consent of IPI, which consent shall not be
unreasonably withheld.
34
12.3 SEVERABILITY. Each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of such provision to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability, unless such provision or such
application of such provision is essential to this Agreement.
12.4 ENTIRE AGREEMENT. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of the Parties with respect to the subject matter
hereof and thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the Parties with respect hereto and thereto.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the Parties reflected hereon as signatories.
12.6 EXPENSES. Except as provided to the contrary herein, each party
shall pay all of its own costs and expenses incurred with respect to the
negotiation, execution and delivery of this Agreement and the exhibits hereto.
No other legal, accounting, investment banking, broker's and finder's fees
incurred by RTI or the Shareholders in connection with the transactions
contemplated by this Agreement shall be borne or assumed by IPI.
12.7 AMENDMENT AND WAIVERS. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of a default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
12.8 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations
and warranties made herein shall survive the execution and delivery of this
Agreement for the applicable time period set forth in this Agreement and the
consummation of the transactions contemplated hereby notwithstanding any
investigation of the Parties.
12.9 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
12.10 ATTORNEYS' FEES. If any litigation, arbitration, mediation, or
other Proceeding is initiated by any party against any other party to enforce,
interpret or otherwise obtain judicial or quasi-judicial relief in connection
with this Agreement, the prevailing party in such Proceeding shall be entitled
to recover from the unsuccessful party all costs, expenses, actual attorney's
and expert witness fees, relating to or arising out of (1) such Proceeding
(whether or not such Proceeding proceeds to judgment), and (2) any post-judgment
or post-award proceeding including, without limitation, one to enforce any
judgment or award resulting from any such Proceeding. Any such judgment or award
35
shall contain a specific provision for the recovery of all such subsequently
incurred costs, expenses, actual attorney and expert witness fees.
12.11 NOTICES. Any notice provided for or permitted under this
Agreement will be treated as having been given when (a) delivered personally,
(b) sent by confirmed telecopy, (c) sent by commercial overnight courier with
written verification of receipt, or (d) mailed postage prepaid by certified or
registered mail, return receipt requested, to the party to be notified, at the
address set forth below, or at such other place of which the other party has
been notified in accordance with the provisions of this Section 12.11.
IF TO RTI: Retail Technologies International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
WITH COPY TO RTI'S COUNSEL:
Xxxxxxxx & Xxxxxxxx, LLP
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO IPI
OR MERGER SUB: Island Pacific, Inc.
00000 XxxXxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
WITH COPY TO IPI"S COUNSEL:
Xxxxxxx Xxxx Seidenwurm & Xxxxx, LLP
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO SHAREHOLDER(S): Retail Technologies International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx or Xxxxxxx Xxxxx
(as applicable)
Such notice will be treated as having been received upon actual receipt, except
that if it is sent by mail in accordance with this Section 12.11, then it shall
be deemed given, delivered and received three days after the date such notice or
other communication is deposited with the United States Postal Service.
36
12.12 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective Parties and their attorneys and the language hereof shall not be
construed for or against any party. The titles and headings herein are for
reference purposes only and shall not in any manner limit the construction of
this Agreement which shall be considered as a whole.
12.13 PRONOUNS. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, Entity or Entities may require.
12.14 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
any other party to evidence and reflect better the Contemplated Transactions and
to carry into effect the intents and purposes of this Agreement.
12.15 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as IPI determines. Unless
consented to by IPI in advance or required by Legal Requirements, prior to the
Closing, RTI and the Shareholders shall keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person
unless and until such time as this Agreement is publicly disclosed. RTI and the
Shareholders and IPI will consult with each other concerning the means by which
RTI's employees, customers, and suppliers and others having dealings with RTI
will be informed of the Contemplated Transactions, and IPI will have the right
to be present for any such communication.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
--------------------------------------------------------------------------------
ISLAND PACIFIC, INC. RETAIL TECHNOLOGIES INTERNATIONAL, INC.
a Delaware corporation a California corporation
By: /s/ Ran Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------- -------------------------------
Name: Ran Xxxxxx Name: Xxxxxxx Xxxxxxx
----------------------------- -----------------------------
Its: Chief Financial Officer Its: President
----------------------------- -----------------------------
--------------------------------------------------------------------------------
IPI MERGER SUB, INC. SHAREHOLDERS:
a Delaware corporation
By: /s/ Ran Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxxxx Xxxxxxx
Name: Ran Xxxxxx
----------------------------- /s/ Xxxxxxx Xxxxx
-------------------------------
Its: Chief Financial Officer Xxxxxxx Xxxxx
-----------------------------
---------------------------------------- ---------------------------------------
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
Exhibit A Employment Agreement
Exhibit B Non-competition Agreement
Exhibit C Form of Opinion of IPI's Counsel
Exhibit D Form of Opinion of RTI's Counsel
Exhibit E Registration Rights Agreement
