EXHIBIT 2.2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
ENGINEERING ANIMATION, INC.,
TRANSITORY BEAVER, INC.,
and
ROSETTA TECHNOLOGIES, INC.
_____________________
Dated as of November 14, 1997
_____________________
TABLE OF CONTENTS
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
ARTICLE I. THE MERGER..............................................1
1.1. THE MERGER.................................................1
1.2. CLOSING....................................................2
1.3. EFFECTIVE TIMES............................................2
1.4. EFFECTS OF THE MERGER......................................2
1.5. ARTICLES OF INCORPORATION AND BY-LAWS......................2
1.6. DIRECTORS AND OFFICERS.....................................2
1.7. SUB COMMON STOCK...........................................2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES.......................2
2.1. CONVERSION OF RTI COMMON STOCK.............................2
2.2. EXCHANGE OF RTI SHARES.....................................3
2.3. OPTIONS TO ACQUIRE RTI COMMON STOCK........................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF RTI...................5
3.1. CORPORATE ORGANIZATION.....................................5
3.2. CAPITALIZATION.............................................5
3.3. AUTHORITY; NO VIOLATION....................................6
3.4. CONSENTS AND APPROVALS.....................................6
3.5. REPORTS....................................................7
3.6. COMPLIANCE WITH APPLICABLE LAW.............................7
3.7. FINANCIAL STATEMENTS.......................................7
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.......................7
3.9. LEGAL PROCEEDINGS AND RESTRICTIONS.........................8
3.10. TAXES AND TAX RETURNS......................................8
3.11. EMPLOYEE BENEFITS..........................................10
3.12. EMPLOYMENT AND LABOR RELATIONS.............................12
3.13. CONTRACTS..................................................12
3.14. UNDISCLOSED LIABILITIES....................................13
3.15. ENVIRONMENTAL LIABILITY....................................13
3.16. TANGIBLE ASSETS............................................14
3.17. REAL PROPERTY..............................................14
3.18. INTELLECTUAL PROPERTY......................................15
3.19. INVENTORY..................................................16
3.20. NOTES AND ACCOUNTS RECEIVABLE..............................16
3.21. BANK ACCOUNTS AND POWERS OF ATTORNEY.......................16
3.22. GUARANTIES.................................................16
i
3.23. INSURANCE..................................................16
3.24. SERVICE CONTRACTS AND WARRANTIES...........................16
3.25. CERTAIN RELATIONSHIPS......................................17
3.26. PPM/PROXY STATEMENT INFORMATION............................17
3.27. BROKER'S FEES..............................................17
3.28. CERTAIN CUSTOMER RELATIONSHIPS.............................17
3.29. DISCLOSURE.................................................17
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EAI...................17
4.1. CORPORATE ORGANIZATION.....................................17
4.2. CAPITALIZATION.............................................18
4.3. AUTHORITY; NO VIOLATION....................................18
4.4. CONSENTS AND APPROVALS.....................................18
4.5. SEC REPORTS................................................19
4.6. COMPLIANCE WITH APPLICABLE LAW.............................19
4.7. FINANCIAL STATEMENTS.......................................19
4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.......................19
4.9. PPM/PROXY STATEMENT INFORMATION............................19
4.10. OWNERSHIP OF SUB; NO PRIOR ACTIVITIES......................20
4.11. BROKER'S FEES..............................................20
4.12. DISCLOSURE.................................................20
ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS...............20
5.1. CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME............20
5.2. RTI FORBEARANCES...........................................21
ARTICLE VI. ADDITIONAL AGREEMENTS...................................22
6.1. REGULATORY AND OTHER MATTERS...............................22
6.2. ACCESS TO INFORMATION......................................22
6.3. SHAREHOLDERS' APPROVAL.....................................22
6.4. NNM LISTING................................................22
6.5. ADDITIONAL AGREEMENTS......................................22
6.6. ADVICE OF CHANGES..........................................22
6.7. TAKEOVER PROPOSALS.........................................23
6.8. TAX MATTERS................................................24
ARTICLE VII. CONDITIONS PRECEDENT....................................24
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER................................................24
7.2. CONDITIONS TO OBLIGATIONS OF EAI AND SUB TO EFFECT
THE MERGER................................................25
7.3. CONDITIONS TO OBLIGATIONS OF RTI...........................26
ii
ARTICLE VIII. TERMINATION AND AMENDMENT...............................26
8.1. TERMINATION................................................26
8.2. EFFECT OF TERMINATION......................................27
8.3. AMENDMENT; EXTENSION; WAIVER...............................27
ARTICLE IX. GENERAL PROVISIONS......................................28
9.1. EXPENSES...................................................28
9.2. NOTICES....................................................28
9.3. INTERPRETATION.............................................29
9.4. COUNTERPARTS...............................................29
9.5. ENTIRE AGREEMENT...........................................29
9.6. GOVERNING LAW..............................................29
9.7. SEVERABILITY...............................................30
9.8. PUBLICITY..................................................30
9.9. ASSIGNMENT; THIRD PARTY BENEFICIARIES......................30
9.10. KNOWLEDGE AND AWARENESS....................................30
9.11. CONSTRUCTION...............................................30
EXHIBITS
A - Registration Rights Agreement
B - Employee Proprietary Information Agreement
iii
INDEX OF DEFINED TERMS
Agreement.......................................................Recitals
Articles of Merger..............................................Section 1.3
Beaver..........................................................Recitals
Certificates of Merger..........................................Section 1.3
Closing.........................................................Section 1.2
Closing Date....................................................Section 1.2
Code............................................................Recitals
Common Certificate..............................................Section 2.1(b)
Consents........................................................Section 3.4
Delaware Secretary..............................................Section 1.3
DGCL............................................................Section 1.1
Disclosure Schedule.............................................Art. III
EAI.............................................................Recitals
EAI Common Stock................................................Section 2.1(a)
EAI Stock Value.................................................Section 2.1(a)
Effective Time..................................................Section 1.3
Environmental Laws..............................................Section 3.15(e)
ERISA...........................................................Section 3.11(a)
ERISA Affiliate.................................................Section 3.11(f)
Exchange Act....................................................Section 4.5
Exchange Ratio..................................................Section 2.1(a)
GAAP............................................................Section 3.7
Governmental Authority..........................................Section 3.4
Hazardous Material..............................................Section 3.15(e)
HSR Filing......................................................Section 3.4
Inconsistent Action.............................................Section 6.8
Indemnifying Person.............................................Section 9.2
Intellectual Property...........................................Section 3.18
Interim Financial Statements....................................Section 3.7
IRS.............................................................Section 3.11(b)
Liens...........................................................Section 3.3(b)
Losses..........................................................Section 9.1
Material Adverse Effect.........................................Section 3.1(a)
Merger..........................................................Recitals
1997 Balance Sheet..............................................Section 3.14
NNM.............................................................Section 2.1(a)
Note............................................................Section 5.2(b)
OBCA............................................................Section 1.1
Oregon Secretary................................................Section 1.3
Person..........................................................Section 5.2(a)
PPM/Proxy Statement.............................................Section 3.26
Primary Customers...............................................Section 3.28
Requisite Regulatory Approvals..................................Section 7.1(b)
Returns.........................................................Section 3.10(c)
RTI.............................................................Recitals
iv
RTI Common Stock................................................Section 2.1(a)
RTI Contracts...................................................Section 3.13
RTI Financial Statements........................................Section 3.7
RTI Options.....................................................Section 2.1(a)
RTI Plans.......................................................Section 3.11(a)
SEC Reports.....................................................Section 4.5
Sub.............................................................Recitals
Subsidiaries....................................................Section 3.1(a)
Takeover Proposal...............................................Section 6.7(c)
Taxes...........................................................Section 3.10(c)
Ventures........................................................Recitals
Ventures Merger.................................................Recitals
v
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of November
14, 1997 (the "Agreement"), by and among ENGINEERING ANIMATION, INC., a
Delaware corporation ("EAI"), TRANSITORY BEAVER, INC., a Delaware corporation
and an indirect wholly-owned subsidiary of EAI ("Sub"), and ROSETTA
TECHNOLOGIES, INC., an Oregon corporation ("RTI").
WHEREAS, EAI, Shell Beaver L.L.C., a Delaware limited liability company,
the sole member of which is EAI ("Beaver"), and Technology Company Ventures,
L.L.C., an Oregon limited liability company and majority shareholder of RTI
("Ventures"), have entered into that certain Agreement and Plan of Merger,
dated October 29, 1997, pursuant to which Ventures will merge with and into
Beaver (the "Ventures Merger") and the membership interests in Ventures shall
be converted solely into voting stock of EAI;
WHEREAS, EAI desires to acquire all outstanding shares of stock of RTI
not held by Ventures solely in exchange for voting stock of EAI;
WHEREAS, the Boards of Directors of EAI, Sub and RTI have determined
that it is in the best interests of their respective companies and
stockholders to consummate the business combination provided for in this
Agreement in which, subject to the terms and conditions set forth herein, Sub
shall merge with and into RTI (the "Merger") and as a result RTI shall become
a wholly-owned subsidiary of Beaver;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as part of a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and to establish certain
conditions to the Merger;
WHEREAS, the parties entered into an Agreement and Plan of Merger dated
October 29, 1997, which they now wish to amend and restate to modify the
registration rights of RTI shareholders who will receive stock of EAI
pursuant to the Merger; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, the parties
agree as follows:
ARTICLE I.
THE MERGER
1.1. THE MERGER. Subject to the terms and conditions of this Agreement,
in accordance with the Oregon Business Corporation Act (the "OBCA") and the
Delaware General Corporate Law (the "DGCL"), at the Effective Time (as
hereinafter defined) of the Merger, Sub shall merge with and into RTI and RTI
shall be the surviving corporation in the Merger and shall continue its
corporate existence under the laws of the State of Oregon as a wholly-owned
subsidiary of Beaver. Upon consummation of the Merger, the separate corporate
existence of Sub shall terminate.
1.2. CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m., at the
offices of Xxxxxxx, Carton & Xxxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx, not later than five business days after the satisfaction or waiver
of the latest to occur of the conditions set forth in Article VII, unless
extended by mutual agreement of the parties (the "Closing Date").
1.3. EFFECTIVE TIMES. The Merger shall become effective as set forth in
the articles of merger (the "Articles of Merger") and the certificate of
merger (the "Certificate of Merger"), which shall be filed with the Secretary
of State of the State of Oregon (the "Oregon Secretary") and the Secretary of
State of the State of Delaware (the "Delaware Secretary") on the Closing Date
pursuant to the OBCA and the DGCL. The term "Effective Time" shall be the
date and time when the Merger become effective, as set forth in the
Certificate of Merger and Articles of Merger.
1.4. EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in the OBCA and the DGCL, as the case may be.
1.5. ARTICLES OF INCORPORATION AND BY-LAWS. Subject to the terms and
conditions of this Agreement, at the Effective Time of the Merger, the
Articles of Incorporation and By-Laws of RTI shall be the Articles of
Incorporation and By-Laws of RTI as the surviving corporation in the Merger
until thereafter amended in accordance with applicable law.
1.6. DIRECTORS AND OFFICERS. The directors and officers of Sub
immediately prior to the Effective Time of the Merger shall continue as the
directors and officers of RTI as the surviving corporation in the Merger,
unless and until thereafter changed in accordance with the OBCA and RTI's
Articles of Incorporation and By-Laws.
1.7. SUB COMMON STOCK. At the Effective Time of the Merger, each share
of Sub Common Stock issued and outstanding immediately prior thereto shall be
canceled.
ARTICLE II.
CONVERSION AND EXCHANGE OF SHARES
2.1. CONVERSION OF RTI COMMON STOCK. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of EAI,
Sub, RTI or any shareholder of RTI:
(a) Each share of common stock, par value $.001 per share, of RTI (the
"RTI Common Stock") issued and outstanding immediately prior to the Effective
Time of the Merger, other than shares which remain outstanding pursuant to
Section 2.1(c), shall be converted into the right to receive shares of the
common stock, par value $.01 per share, of EAI (the "EAI Common Stock") at an
exchange ratio (the "Exchange Ratio") determined as follows: each share of RTI
Common Stock shall be exchanged for that number of shares of EAI Common Stock
equal to the quotient obtained by dividing (i) $25,550,000 divided by the
average of the high and low per
2
share sale price of the EAI Common Stock, as reported on the Nasdaq Stock
Market National Market ("NNM") for each of the date hereof and the two
immediately preceding trading days, as reported in the NNM listings published
in THE WALL STREET JOURNAL (the "EAI Stock Value"), BY (ii) the sum of the
total number of shares of RTI Common Stock outstanding immediately prior to
the Effective Time plus the number of shares of RTI Common Stock issuable
upon the exercise of all outstanding options to purchase RTI Common Stock
(the "RTI Options") outstanding immediately prior to the Effective Time. No
fractional shares of EAI Common Stock shall be issued, and in lieu thereof,
EAI shall pay to each former shareholder of RTI who otherwise would be
entitled to receive such fractional share an amount in cash determined by
multiplying (i) the EAI Stock Value BY (ii) the fraction of a share (rounded
to the nearest thousandth when expressed as an Arabic number) of EAI Common
Stock to which such holder would otherwise be entitled to receive pursuant to
this Section 2.1.
(b) All of the shares of RTI Common Stock converted into EAI Common
Stock pursuant to this Article shall no longer be outstanding and shall
automatically be canceled and cease to exist at the Effective Time of the
Merger. Each certificate previously representing any such shares of RTI
Common Stock (a "Common Certificate") shall thereafter represent the right to
receive (i) a certificate representing the number of whole shares of EAI
Common Stock and (ii) cash in lieu of fractional shares into which the shares
of RTI Common Stock represented by such Common Certificate have been
converted. If, prior to the Effective Time, the outstanding shares of EAI
Common Stock or RTI Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization, then an appropriate and proportionate
adjustment shall be made to the Exchange Ratio.
(c) At the Effective Time of the Merger, all shares of RTI Common Stock
that are owned by RTI as treasury stock shall be canceled and all shares of
RTI Common Stock that are owned, directly or indirectly, by Beaver or any
other entity wholly-owned by EAI shall remain outstanding, and no stock of
EAI or other consideration shall be delivered in exchange therefor. At the
Effective Time of the Merger, all shares of EAI Common Stock that are owned
by RTI, if any, shall become treasury stock of EAI.
(d) After the Effective Time of the Merger, there shall be no transfers
on RTI's stock transfer books of shares of RTI Common Stock.
2.2. EXCHANGE OF RTI SHARES.
(a) At the Effective Time of the Merger, each shareholder of RTI shall
have the right to deliver to EAI Common Certificates representing all of the
issued and outstanding shares of RTI Common Stock owned by such shareholder,
duly endorsed for transfer or accompanied by duly executed stock powers, free
and clear of all options, liens, claims, charges, restrictions and other
encumbrances of any nature whatsoever, other than federal and state
securities law restrictions. Upon proper surrender of a Common Certificate
for exchange and cancellation to EAI, and in accordance with and subject to
the other provisions of this Agreement, the holder of such Common Certificate
shall receive in exchange therefor (i) a certificate representing that
3
number of whole shares of EAI Common Stock to which such holder of RTI Common
Stock shall have become entitled, and (ii) a check representing the amount of
any cash in lieu of fractional shares which such holder has the right to
receive. The Common Certificate so surrendered shall forthwith be canceled.
No interest shall be paid or accrued on any cash in lieu of fractional shares
payable to holders of Common Certificates.
(b) If any certificate representing shares of EAI Common Stock is to be
issued in a name other than that in which the Common Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that such Common Certificate shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to EAI in advance any
transfer or other taxes required by reason thereof, or shall establish to the
satisfaction of EAI that such tax has been paid or is not payable.
(c) In the event any Common Certificate shall have been lost, stolen or
destroyed, the person so claiming shall make an affidavit of that fact and, if
required by EAI, post a bond in such amount as EAI may determine is reasonably
necessary as indemnity against any claim that may be made against it with
respect to such Common Certificate. Thereafter, EAI shall issue in exchange for
such lost, stolen or destroyed Common Certificate the shares of EAI Common Stock
and any cash in lieu of a fractional share deliverable in respect thereof
pursuant to this Agreement.
2.3. OPTIONS TO ACQUIRE RTI COMMON STOCK.
(a) At the Effective Time of the Merger, each outstanding RTI Option,
whether vested or unvested, shall be assumed by EAI. Each such RTI Option
shall thereafter be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable under such RTI Option and the plan
related thereto, (i) the same number of shares of EAI Common Stock as such
RTI Option would have been exchangeable for had such RTI Option been
exercised in full immediately prior to the merger and (ii) at an exercise
price per share (rounded up to the nearest whole cent) equal to (A) the
aggregate exercise price for the shares of RTI Common Stock otherwise
purchasable pursuant to such RTI Option divided by (B) the number of whole
shares of EAI Common Stock deemed to be purchasable under such option to
acquire EAI Common Stock; PROVIDED, HOWEVER, that the number of shares of EAI
Common Stock that may be purchased upon exercise of such RTI Option shall not
include any fractional share and, upon exercise of such RTI Option, a cash
payment shall be made for any fractional share based upon the closing price
of a share of EAI Common Stock as reported on the NNM on the trading day
immediately preceding the date of exercise.
(b) As soon as practicable after the Effective Time of the Merger, EAI
shall deliver to the holders of RTI Options appropriate notices setting forth
such holders' rights and the agreements evidencing the grants of such RTI
Options shall be deemed to be appropriately amended so that such RTI Options
shall represent rights to acquire EAI Common Stock on terms and conditions as
contained in the outstanding RTI Options (subject to the adjustments required
by this Section 2.3 after giving effect to the assumption by EAI as set forth
above).
4
(c) The amended RTI Options shall be issued under EAI's employee stock
option plan as incentive stock options. EAI has filed a registration statement
on Form S-8 with respect to the shares of EAI Common Stock subject to such plan
and shall use all reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses referred to therein) for so long as
such options remain outstanding. The shares of EAI Common Stock subject to such
plan have been approved for listing on the NNM.
(d) At the Effective Time of the Merger, all outstanding warrants,
options, phantom stock, convertible securities or any other rights to acquire
shares of RTI Common Stock other than the RTI Options, if any such rights exist,
shall be canceled and extinguished without any conversion thereof or payment
with respect thereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF RTI
Except as disclosed by RTI in the disclosure schedule delivered pursuant
to this Agreement (the "Disclosure Schedule"), RTI represents and warrants to
EAI as follows:
3.1. CORPORATE ORGANIZATION. (a) RTI and the entities listed in Section
3.1(b) of the Disclosure Schedule which are designated as subsidiaries in
such Section ("Subsidiaries") are each a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, which is set forth in Section 3.1(b) of the Disclosure
Schedule. RTI and each Subsidiary have the corporate power and authority to
own or lease all of their respective properties and assets and to carry on
their respective business as it is now being conducted, and are duly licensed
or qualified to do business and are in good standing in each jurisdiction in
which the nature of the business conducted by them or the character or
location of the properties and assets owned or leased by them makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the
business, properties, profits, operations or financial condition (a "Material
Adverse Effect") of RTI. Correct and complete copies of the Articles of
Incorporation and By-Laws of RTI and the charter documents and by-laws of
each Subsidiary, as in effect on the date of this Agreement, have been made
available to EAI by RTI. For the purposes of this Article III and Article
VI, each reference to RTI shall also include each Subsidiary, unless the
context requires otherwise.
(b) Except as set forth in Section 3.1(b) of the Disclosure Schedule,
RTI does not own of record or beneficially, directly or indirectly, (i) any
shares of outstanding capital stock or securities convertible into capital
stock of any other corporation or (ii) any participating interest in any
partnership, limited liability company, joint venture or other non-corporate
business.
(c) The minute books of RTI accurately reflect in all material respects
all actions taken by the boards of directors, including committees thereof,
and the shareholders of RTI.
3.2. CAPITALIZATION. The authorized capital stock of RTI consists of
25,000,000 shares of RTI Common Stock, of which 9,874,975 shares are issued and
outstanding. The name and address of record of each record holder of RTI Common
Stock and the number of shares owned
5
by each, and the name and address of record of each holder of an RTI Option
and the number of shares of RTI Common Stock which such holder may purchase,
are set forth in Section 3.2 of the Disclosure Schedule. No shares of RTI
Common Stock are held in RTI's treasury and no shares of RTI Common Stock are
reserved for issuance other than those shares reserved for issuance under the
RTI Options. All of the issued and outstanding shares of RTI Common Stock
have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. Other than the RTI Options
listed in Section 3.2 of the Disclosure Schedule, RTI does not have and is
not bound by any outstanding subscriptions, options, convertible securities,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of its capital stock.
3.3. AUTHORITY; NO VIOLATION. (a) RTI has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of RTI. Except for
the adoption of this Agreement by the requisite vote of holders of the issued
and outstanding shares of RTI Common Stock, no other corporate proceedings on
the part of RTI are necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by RTI and, assuming due authorization and execution
by EAI and Sub, constitutes a valid and binding obligation of RTI,
enforceable against RTI in accordance with its terms.
(b) The execution and delivery of this Agreement by RTI, the
consummation by RTI of the transactions contemplated hereby, and the
compliance by RTI with the terms or provisions hereof, shall not (i) violate
any provision of the Articles of Incorporation or By-Laws of RTI, (ii)
violate any law, statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to RTI or any of its properties or
assets, or (iii) violate, conflict with, breach any provision of or result in
the loss of any benefit or the increase in the amount of any liability or
obligation under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result in the
creation of any liens, pledges, charges, encumbrances or security interests
of any kind (collectively, "Liens") upon any of the properties or assets of
RTI under any note, bond, mortgage, indenture, deed of trust, license, lease,
contract, agreement or other instrument or obligation to which RTI is a
party, or by which it or any of its properties or assets may be bound or
affected, except where such violation, conflict, breach, loss, increase,
default, termination, acceleration or Lien which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
on RTI.
3.4. CONSENTS AND APPROVALS. Except for (i) the filing of the Notification
and Report Form under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxxxxx") and the expiration of the waiting period thereunder, (ii) the
filing of Articles of Merger with the Oregon Secretary pursuant to the OBCA,
(iii) the filing of the Certificate of Merger with the Delaware Secretary
pursuant to the DGCL, and (iv) the approval of this Agreement by the requisite
vote of the holders of RTI Common Stock, no consent, approval or authorization
of, or withholding of objection on the part of, or filing, registration or
qualification with, or notice to (collectively, the "Consents") any court,
administrative agency, commission or other
6
governmental authority or instrumentality, whether Federal, state, local or
foreign (each a "Governmental Authority"), or with any third party are
necessary in connection with the execution and delivery by RTI of this
Agreement and the consummation by RTI of the Merger and the other
transactions contemplated by this Agreement.
3.5. REPORTS. RTI has timely filed all reports, registrations and
statements required to be filed since January 1, 1995 with any Governmental
Authority, and has paid all fees and assessments due and payable in connection
therewith, except where failure to so file or pay, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
RTI. No Governmental Authority has initiated any proceeding or, to the
knowledge of RTI, investigation into the business or operations of RTI.
3.6. COMPLIANCE WITH APPLICABLE LAW. RTI holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business and
has complied with and is not in default under any law, statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction of any
Governmental Authority applicable to RTI, except where failure to so hold or
such default, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on RTI.
3.7. FINANCIAL STATEMENTS. RTI has previously provided EAI with correct
and complete copies of the following (collectively, the "RTI Financial
Statements"): (a) the balance sheets of RTI as of June 30, 1997 and 1996, and
the related statements of income and retained earnings and cash flows for the
fiscal years ended June 30, 1997 and 1996, in each case accompanied by the audit
report of Xxxxxx Xxxxxxxx LLP, independent public accountants with respect to
RTI, and (b) the unaudited balance sheets of RTI as of September 30, 1997 and
the related unaudited statements of income for the period then ended (the
"Interim Financial Statements"). The RTI Financial Statements fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments customary in nature and amount), the financial position of RTI as of
the dates thereof, and the results of operations and cash flows of RTI for the
respective fiscal periods or as of the respective dates thereof. Each of the
RTI Financial Statements, including the notes thereto, has been, or will be,
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved. The books and records of RTI
have been, and are being, maintained in accordance with all applicable legal and
accounting requirements.
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since June 30, 1997,
(i) RTI has not incurred any material liability that is not disclosed in the
INTERIM FINANCIAL STATEMENTS, (ii) no event has occurred which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on RTI, and (iii) RTI has carried on its business in the ordinary and
usual course.
(b) Except as set out in Section 3.8 of the Disclosure Schedule, since
June 30, 1997, RTI has not (i) increased the salaries, wages, or other
compensation, or pensions, fringe benefits or other perquisites payable to
any director, executive officer or employee, or (ii) granted any severance or
termination pay, or (iii) paid or accrued any bonuses or commissions, or
7
(iv) suffered any strike, work stoppage, slowdown, or other labor disturbance
which would, either individually or in the aggregate, result in a Material
Adverse Effect on RTI.
3.9. LEGAL PROCEEDINGS AND RESTRICTIONS (a) There are no actions, suits,
proceedings, claims or investigations pending, or to the knowledge of RTI,
threatened against or directly and materially affecting RTI at law or in equity
or before any Governmental Authority.
(b) There is no judgment, order, writ, decree, injunction or regulatory
restriction imposed upon RTI or its assets which has had, or would reasonably be
expected to have, a Material Adverse Effect on RTI.
3.10. TAXES AND TAX RETURNS.
(a) (i) RTI (which term for purposes of this Section 3.10 shall include
former subsidiaries of RTI for periods during which they were owned) has
timely filed (when due or prior to the expiration of any extension of the
time to file) correct and complete Returns in respect of Taxes required to
be filed; all Taxes shown on such Returns or otherwise known by RTI to be
due or payable have been timely paid; no adjustment relating to any such
Return has been proposed in writing by any Governmental Authority, except
proposed adjustments that have been resolved prior to the date hereof; and
there are no outstanding summons, subpoenas or written requests for
information with respect to any such Returns or the Taxes reflected
thereon. To RTI's knowledge there is no basis for imposing any additional
Taxes on it other than the Taxes shown on such Returns. There are no
outstanding waivers or agreements extending the statute of limitations for
any period with respect to any Tax to which RTI may be subject and RTI is
not under audit by any Governmental Authority for any Tax. There are no
Tax liens on any assets of RTI other than liens for Taxes not yet due or
payable;
(ii) RTI has paid, on the basis of RTI's good faith estimate of the
required installments, all estimated Taxes required to be paid under
Section 6655 of the Code or any comparable provision of state, local or
foreign law; and all Taxes which shall be due and payable for any period or
portion thereof ending on or prior to the Closing Date shall have been paid
or shall be reflected on RTI's books as an accrued Tax liability, either
current or deferred. The amount of such Tax liabilities as of September 30,
1997 shall be set forth in Section 3.10 of the Disclosure Schedule. All
Taxes required to be withheld, collected or deposited by RTI during any
taxable period for which the applicable statute of limitations on
assessment remains open have been timely withheld, collected or deposited
and, to the extent required, have been paid to the relevant Governmental
Authority;
(iii) For each taxable period for which the statute of limitations
on assessment or collection remains open, RTI has not (A) been either a
common parent corporation or a member corporation of an affiliated group of
corporations filing a consolidated Federal income tax return, or
(B) acquired any corporation that filed a consolidated Federal income tax
return with any other corporation that was not also acquired by RTI; and no
other entity that was included in the filing of a Return with RTI on a
consolidated,
8
combined, or unitary basis has left RTI's consolidated, combined or
unitary group in a taxable year for which the statute of limitations
on assessment remains open. RTI has not been at any time a member of
any partnership, limited liability company or joint venture or the
holder of a beneficial interest in any trust for any period for which
the statute of limitations for any Tax potentially applicable as a result
of such membership or holding has not expired;
(iv) No consent under Section 341(f) of the Code has been filed with
respect to RTI; and
(v) There is no significant difference on the books of RTI between
the amounts of the book basis and the tax basis of assets (net of
liabilities) that is not accounted for by an accrual on the books for
Federal income tax purposes.
(b) RTI:
(i) Does not have any property that is or will be required to be
treated as being owned by another person under the provisions of
Section 168(f)(8) of the Code (as in effect prior to amendment by the Tax
Reform Act of 1986) or is "tax-exempt use property" within the meaning of
Section 168 of the Code;
(ii) Does not have any Tax sharing or allocation agreement or
arrangement (written or oral), does not owe any amount pursuant to any Tax
sharing or allocation agreement or arrangement, and will not have any
liability in respect to any Tax sharing or allocation agreement or
arrangement with respect to any entity that has been sold or disposed of;
(iii) Was not acquired in a qualified stock purchase under
Section 338(d)(3) of the Code and no elections under Section 338(g) of the
Code, protective carryover basis elections, offset prohibition elections or
other deemed or actual elections under Section 338 are applicable to RTI;
(iv) Is not and has not been subject to the provisions of
Section 1503(d) of the Code related to "dual consolidated loss" rules;
(v) Is not a party to any agreement, contract or arrangement that
would result, individually or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code
by reason of the Merger;
(vi) Does not have any income reportable for a period ending after the
Closing Date but attributable to an installment sale occurring in or a
change in accounting method made for a period ending on or prior to the
Closing Date which resulted in a deferred reporting of income from such
transaction or from such change in accounting method (other than a deferred
intercompany transaction), or deferred gain or loss arising out of any
deferred intercompany transaction;
9
(vii) Does not have any unused net operating loss, unused net
capital loss, unused tax credit, or excess charitable contribution for
Federal income tax purposes, except as set out in the Disclosure Schedule;
(viii) Is not a United States real property holding corporation as
defined in Section 897 of the Code; and
(ix) No withholding of Taxes by EAI or Sub will be required in this
transaction under Sections 3406 or 1445 of the Code or any other provision
of the Code or state, local or foreign law and RTI will provide any
required certificates to avoid any such withholding.
(c) For purposes of this Agreement:
(i) "Returns" means any and all returns, reports, information
returns and information statements with respect to Taxes required to be
filed with any Governmental Authority, including consolidated, combined
and unitary tax returns.
(ii) "Tax" or "Taxes" means any and all taxes, charges, fees, levies,
and other governmental assessments and impositions of any kind, payable to
any Governmental Authority, including income, franchise, net worth,
profits, gross receipts, minimum alternative, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social security,
Medicare, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, customs duties, imposts, charges, levies
or other similar assessments of any kind, and interest, penalties and
additions to tax imposed with respect thereto.
3.11. EMPLOYEE BENEFITS.
(a) Section 3.11 of the Disclosure Schedule sets forth a list of each
pension, profit-sharing, thrift or 401(k), disability, medical, dental, health,
life (including any individual life insurance policy), death benefit, group
insurance or any other welfare plan, bonus, incentive, deferred compensation,
stock purchase, stock option, severance plan, salary continuation, vacation,
holiday, sick leave, fringe benefit, personnel policy, or similar plan, trust,
program, policy, commitment or arrangement whether or not covered by Employee
Retirement and Income Security Act of 1974, as amended ("ERISA") and whether or
not funded or insured and whether written or oral maintained or contributed to
by RTI or any ERISA Affiliate (as hereinafter defined) during the past three
years and pursuant to which RTI has or could have any on-going liability
(hereinafter referred to as the "RTI Plans").
(b) RTI has made available to EAI, to the extent applicable to the
particular RTI Plan, correct and complete copies of (i) each RTI Plan document,
amendments thereto and board resolutions adopting such plans and amendments,
(ii) each current summary plan description, (iii) any and all material
agreements, insurance policies and other documents related to any RTI Plan,
(iv) the most recent determination letter from the Internal Revenue Service (the
"IRS") for
10
each RTI Plan, and (v) the three most recent Annual Reports - Form 5500
(including accompanying schedules) and summary annual reports for each RTI
Plan.
(c) (i) Except as disclosed in Section 3.11 of the Disclosure Schedule,
each RTI Plan and RTI have at all times complied in all material respects with
the applicable requirements of ERISA, the Code and any other applicable law
(including regulations and rulings thereunder), and the RTI Plans have at all
times been properly administered in all material respects in accordance with all
such laws and with their terms, (ii) each of the RTI Plans intended to be
"qualified" within the meaning of Code Section 401(a) is so qualified and, to
the knowledge of RTI, no facts exist that could reasonably be expected to affect
adversely such "qualified" status (other than the failure to adopt amendments
required to maintain an Employee Plan's tax-qualified status but for which the
remedial amendment period of Code Section 401(b) has not expired as of the
Closing Date), (iii) no RTI Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), for current or
former employees following their retirement or other termination of service,
other than coverage mandated by applicable law, including, but not limited to,
Code Section 4980B(f) and ERISA Sections 601 through 609, (iv) there has not
occurred nor, to the knowledge of RTI, is any person contractually bound to
enter into any non-exempt "prohibited transaction" within the meaning of Code
Section 4975 or ERISA Section 406 that could result in any civil penalty under
ERISA Section 502(i) or a tax under Code Section 4975, (v) RTI has not engaged
in a transaction which could subject it to either a civil penalty under ERISA
Section 409 or a tax under Code Section 4976, (vi) there are no pending or, to
the knowledge of RTI, threatened claims (other than routine claims for benefits)
with respect to any RTI Plan by, on behalf of or against RTI, any of the RTI
Plans or any trusts related thereto, (vii) RTI has made or caused to be made on
a timely basis any and all contributions, premiums and other amounts due and
owing under the terms of any RTI Plan or as otherwise required by applicable
law, (viii) RTI has in all material respects complied with Code Section 4980B
and other applicable laws concerning the continuation of employer-provided
health benefits following a termination of employment or any other event that
would otherwise terminate such coverage, (ix) neither RTI nor any ERISA
Affiliate has at any time maintained, administered or contributed to any plan
subject to ERISA Title IV, and (x) neither RTI nor any ERISA Affiliate has at
any time participated in, made contributions to or had any other liability with
respect to a "multiemployer plan" under ERISA Section 4001(a)(3), a "multiple
employer plan" under Code Section 413(c), or a "multiple employer welfare
arrangement" under ERISA Section 3(40).
(d) Except as disclosed in Section 3.11 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director, officer or employee of RTI,
(ii) increase any benefits otherwise payable under any RTI Plan, (iii) result in
any acceleration of the time of payment or vesting of any such benefits other
than the acceleration of vesting of the RTI Options, or (iv) impair the rights
of RTI under any RTI Plan.
(e) There are no actions, claims, investigations or audits pending or, to
RTI's knowledge, threatened with respect to any RTI Plan (other than claims for
benefits in the ordinary course) that will create any liability or obligation
for RTI as the surviving corporation in
11
the Merger with respect to any RTI Plan participant, beneficiary, alternate
payee or other claimant, or with respect to any Governmental Authority,
including, but not limited to, the IRS, the Department of Labor and the
Pension Benefit Guaranty Corporation.
(f) For purposes of this Agreement, "ERISA Affiliate" means RTI and
(i) any corporation that is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Code of which RTI is a member,
(ii) any trade or business (whether or not incorporated) which is a member of
a group of trades or businesses under common control within the meaning of
Section 414(c) of the Code of which RTI is a member; and (iii) any member of
an affiliated service group within the meaning of Section 414(m) or (o) of
the Code of which RTI, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is a member.
3.12. EMPLOYMENT AND LABOR RELATIONS. to the knowledge of RTI, no
executive, key employee or group of employees has any plans to terminate its or
their employment with RTI. There are no charges, complaints, investigations or
litigation currently pending, or to the knowledge of RTI threatened (and to the
knowledge of RTI there is no basis therefor which would be reasonably expected
to have a Material Adverse Effect on RTI), against RTI, relating to alleged
employment discrimination, unfair labor practices, equal pay discrimination,
affirmative action noncompliance, occupational safety and health, breach of
employment contract, employee benefit matters, wrongful discharge or other
employment-related matters. There are no outstanding orders or charges against
RTI under any applicable occupational safety and health laws in any jurisdiction
in which RTI conducts business, other than routine actions which, individually
or in the aggregate, are not material to RTI. All levies, assessments and
penalties made against RTI pursuant to any applicable workers' compensation
legislation in any jurisdiction in which RTI conducts business have been paid by
RTI, other than such levies, assessments and penalties which, individually or in
the aggregate, are not material to RTI. RTI is not a party to any contracts
with any labor union or employee association nor has RTI made commitments to or
conducted negotiations with any labor union or employee association with respect
to any future contracts. RTI is not aware of any current attempts to organize
or establish any labor union or employee association with respect to any
employees of RTI, and there is no existing or pending certification of any such
union with regard to a bargaining unit.
3.13. CONTRACTS. Section 3.13 of the Disclosure Schedule lists or
describes the following contracts, agreements, licenses, permits,
arrangements, commitments or understandings (whether written or oral) which
are currently in effect or which will, without any further action on the part
of RTI become effective in the future, to which RTI is a party (collectively,
the "RTI Contracts"):
(a) any agreement for the lease of personal property or real property
to or from any person or entity that individually involves an expenditure by
the lessee of in excess of $10,000 in any one year;
(b) any agreement for the purchase, sale or distribution of products,
materials, commodities, supplies or other personal property, or for the
furnishing or receipt of services, the
12
performance of which will extend over a period of more than one year or
involve consideration payable by any party in excess of $10,000 in any one
year;
(c) any agreement creating, governing or providing for an investment or
participation in a partnership, limited liability company or joint venture;
(d) any agreement under which RTI has created, incurred, assumed or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, or under which RTI has imposed a Lien on any of its assets;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with any director, officer, employee or shareholder of
RTI or any of their affiliates;
(g) any pension, profit sharing, thrift or 401(k), bonus, incentive,
deferred compensation, stock purchase, stock option, severance, salary
continuation or other plan or arrangement for the benefit of current or former
directors, officers or employees;
(h) any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis;
(i) any agreement relating to any Intellectual Property (as that term is
defined in Section 3.18) used by RTI in the conduct of its business, or that is
licensed by RTI for use by others;
(j) any agreement under which the consequences of a default, termination,
non-renewal or acceleration would have a Material Adverse Effect on RTI; or
(k) any other agreement the performance of which involves consideration
payable by any party in excess of $10,000 in any one year.
RTI has made available to EAI a correct and complete copy of each RTI
Contract. Except as set forth in Section 3.13 of the Disclosure Schedule,
(i) each RTI Contract is legal, valid, binding, enforceable and in full force
and effect, (ii) the consummation of the Merger will not cause a breach or
termination of any RTI Contract nor effect a change in any of the terms of any
RTI Contract, (iii) RTI is not, and, to RTI's knowledge, no other party is, in
breach or default of any RTI Contract and no event has occurred which with
notice or lapse of time, or both, would constitute a breach or default that
would result in or permit termination, modification or acceleration under any
RTI Contract, and (iv) RTI has not, and, to RTI's knowledge, no other party has,
repudiated any provision of any RTI Contract.
3.14. UNDISCLOSED LIABILITIES. Except for liabilities (i) that are
fully reflected or reserved against on the June 30, 1997 balance sheet of RTI
(the "1997 Balance Sheet") or (ii) that were incurred in the ordinary course of
business consistent with past practice since June 30, 1997, or (iii) that are
fully reflected or reserved against in the Interim Financial
13
Statements, RTI has not incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to
become due).
3.15. ENVIRONMENTAL LIABILITY.
(a) RTI has not received any notice, and does not otherwise have
knowledge, of any claim, and no proceeding has been instituted raising any
claim, against RTI or any of the real properties now or formerly owned, leased
or operated by RTI or other assets of RTI, alleging any damage to the
environment or violation of any Environmental Laws;
(b) RTI does not have knowledge of any facts which would give rise to any
claim, public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by RTI or to other assets
of RTI or their use;
(c) RTI has not stored or released any Hazardous Materials on real
properties now or formerly owned, leased or operated by it or disposed of any
Hazardous Materials, in each case in a manner contrary to any Environmental
Laws; and
(d) All buildings on all real properties now owned, leased or operated by
RTI are in compliance with applicable Environmental Laws, except where the
failure to comply would not reasonably be expected to result in a Material
Adverse Effect on RTI.
(e) For purposes of this Agreement,
(i) "Environmental Laws" means any and all Federal, state, county,
local and foreign laws, statutes, codes, ordinances, rules, regulations,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or governmental restrictions relating to pollution and
the protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public
systems; and
(ii) "Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances, the removal of which, as of the
date hereof, may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or
filtration of which is restricted or prohibited by any Environmental Law
(including asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
3.16. TANGIBLE ASSETS. RTI has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, shown on the 1997 Balance Sheet or acquired after the date
thereof, except for properties and assets disposed of in the ordinary course of
business, free and clear of all Liens. RTI owns or leases pursuant to a RTI
Contract all buildings, machinery, equipment and other tangible assets material
to the conduct of its business as presently conducted. Each such tangible asset
is free from defects (patent and latent) other than defects that do not
individually or in the aggregate materially impair its value or intended use,
has been maintained in accordance with normal industry practice, is in good
14
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. Section 3.16 of the Disclosure
Schedule contains a schedule of such tangible assets owned or leased by RTI that
have a value in excess of $10,000.
3.17. REAL PROPERTY. RTI does not own any real property. Section 3.17
of the Disclosure Schedule lists and describes briefly all real property leased
or subleased to RTI. RTI has made available to EAI correct and complete copies
of each such lease and sublease. except as set forth in section 3.17 of the
Disclosure Schedule:
(a) each such lease or sublease is legal, valid, binding, enforceable and
in full force and effect;
(b) the consummation of the transactions contemplated hereby will neither
cause the termination of each such lease or sublease nor effect a change in any
of its terms;
(c) RTI is not, and, to the knowledge of RTI, no other party to such lease
or sublease is, in breach or default, and no event has occurred which, with
notice or lapse of time, or both, would constitute a breach or default that
would permit termination, modification or acceleration thereunder;
(d) neither RTI nor, to the knowledge of RTI, any other party to each such
lease or sublease has repudiated or disputed any provision thereof;
(e) there are no oral agreements in effect as to each such lease or
sublease;
(f) to the knowledge of RTI, the representations and warranties set forth
in clauses (a) through (e) above are true and correct with respect to the lease
underlying each such sublease; and
(g) RTI has not assigned, transferred, conveyed, mortgaged, deeded in
trust or encumbered any interest in any leasehold or subleasehold.
3.18. INTELLECTUAL PROPERTY. (a) Section 3.18 of the Disclosure
Schedule identifies each patent, trademark, service xxxx, trade name, assumed
name, copyright, trade secret, license to or from third parties with respect to
any of the foregoing, applications to register or registrations of any of the
foregoing or other intellectual property rights which are owned or used by or
have been issued to RTI (collectively the "Intellectual Property"). RTI has
made available correct and complete copies of all patents, trademarks,
copyrights, registrations, licenses, permits, agreements and applications
related to the Intellectual Property to EAI and correct and complete copies of
all other written documentation evidencing ownership of or the right to use each
such item. Except as set forth in Section 3.18 of the Disclosure Schedule:
(i) RTI possesses all right, title and interest in and to the
Intellectual Property, free and clear of any Lien or other restriction;
15
(ii) the legality, validity, enforceability, ownership or use of the
Intellectual Property is not currently being challenged, nor to the
knowledge of RTI is it subject to any such challenge;
(iii) RTI has taken all necessary action to maintain and protect
the Intellectual Property and will continue to maintain those rights prior
to the Closing so as not to affect materially the validity or enforcement
of the rights set forth in Section 3.18 of the Disclosure Schedule; and
(iv) the Intellectual Property will be owned or available for use by
RTI on identical terms and conditions immediately subsequent to the Closing
and the transactions contemplated by this Agreement will have no Material
Adverse Effect on RTI's rights, title and interest in and to any of the
rights set forth in Section 3.18 of the Disclosure Schedule.
(b) To the knowledge of RTI, (i) RTI has not interfered with, infringed
upon or misappropriated any intellectual property rights of third parties, nor
is RTI currently interfering with, infringing upon, misappropriating or
otherwise coming into conflict with any intellectual property rights of third
parties, and (ii) no third party has, in the past three years, interfered with,
infringed upon or misappropriated any Intellectual Property rights of RTI that
would result in a Material Adverse Effect on RTI, nor is any third party
currently interfering with, infringing upon, misappropriating or otherwise
coming into conflict with any Intellectual Property rights of RTI.
3.19. INVENTORY. No material portion of the inventory of RTI is unfit
for the purpose for which it was procured, or is obsolete, expired, damaged or
defective. Substantially all of the inventory of RTI consists of items of a
quantity and quality which are usable and salable in the ordinary course of
business.
3.20. NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of RTI are reflected properly on RTI's books and records, are not subject to any
setoff or counterclaim, are current and collectible, subject only to the reserve
for bad debts established in accordance with the past practice of RTI.
3.21. BANK ACCOUNTS AND POWERS OF ATTORNEY. Section 3.21 of the
Disclosure Schedule sets forth a list of all accounts, borrowing resolutions and
deposit boxes maintained by RTI at any bank or other financial institution and
the names of the persons authorized to effect transactions in such accounts and
pursuant to such resolutions and with access to such boxes. There are no
outstanding powers of attorney executed on behalf of RTI.
3.22. GUARANTIES. RTI is not a guarantor or otherwise is liable for
any indebtedness, liability or other obligation of any other person or entity.
3.23. INSURANCE. Section 3.23 of the Disclosure Schedule lists each
insurance policy and self-insurance arrangement to which RTI is a party, a named
insured or otherwise the beneficiary of, specifying the insurer, type of
insurance, policy number and pending claims thereunder with respect to RTI. The
coverage provided by each of such policies is in an amount,
16
and of a type sufficient for the business presently conducted and proposed to
be conducted by RTI. RTI is in substantial compliance with all conditions
contained in such policies.
3.24. SERVICE CONTRACTS AND WARRANTIES. Except as set out in
Section 3.24 of the Disclosure Schedule, RTI is not a party to any service
contract pursuant to which services are provided by RTI to a third party.
Section 3.24 of the Disclosure Schedule includes copies of the standard terms
and conditions of all product warranties and service or maintenance contracts
granted or entered into by RTI.
3.25. CERTAIN RELATIONSHIPS. No shareholder, director, officer or, to
rti's knowledge, employee of RTI (i) is, or controls, or is an employee of any
competitor, supplier, customer or lessor or lessee of RTI, or (ii) is indebted
to rti in an amount in excess of $1,000 in any individual case, or (iii) owns
any asset, tangible or intangible, which is used in the business of RTI, other
than assets that are immaterial in value; and RTI has not entered into any
transaction (including the furnishing of goods or services) with any
shareholder, director, officer, employer or other affiliate, except on terms and
conditions no less favorable to RTI than would be obtained in a comparable
arm's-length transaction with a third party.
3.26. PPM/PROXY STATEMENT INFORMATION. None of the written information
to be supplied by RTI for inclusion in the private placement memorandum and
information statement contemplated by this Agreement (the "PPM/Proxy
Statement") will, at the time the PPM/Proxy Statement is mailed to RTI
shareholders, at any time it is amended or supplemented, or at the Closing
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
3.27. BROKER'S FEES. Neither RTI nor, to the knowledge of RTI, any of
its directors, officers or employees has employed any person or entity as a
broker, finder or agent or incurred any liability for any broker's fees,
finder's fees or other commission in connection with the Merger or the
related transactions contemplated by this Agreement.
3.28. CERTAIN CUSTOMER RELATIONSHIPS. Section 3.28 of the Disclosure
Schedule contains an accurate list of RTI's ten largest customers for the
fifteen month period ending September 30, 1997 (the "Primary Customers"),
together with the total dollar amount of all products purchased by such
Primary Customers from RTI during such period. RTI has not received any
notice and does not otherwise have knowledge that any Primary Customer
intends to reduce the volume or dollar amount of the products it purchases
from RTI.
3.29. DISCLOSURE. No representation or warranty by RTI contained in
this agreement (including the Disclosure schedule and the exhibits referred to
herein), or in any certificate furnished or to be furnished by RTI to EAI in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make the statements herein or therein not misleading.
17
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF EAI
EAI represents and warrants to RTI as follows:
4.1. CORPORATE ORGANIZATION. EAI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. EAI has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified would not have a Material Adverse
Effect on EAI and its subsidiaries, taken as a whole. Correct and complete
copies of the Certificate of Incorporation and By-Laws of EAI, as in effect
as of the date of this Agreement, have been made available to RTI by EAI.
4.2. CAPITALIZATION. The authorized capital stock of EAI consists of
20,000,000 shares of EAI Common Stock, of which as of September 30, 1997,
5,759,234 shares were issued and outstanding, and 20,000,000 shares of
preferred stock, $.01 par value per share, none of which is issued and
outstanding. As of September 30, 1997, no shares of EAI Common Stock were
held in EAI's treasury. As of September 30, 1997, there were 2,099,522 shares
of EAI Common Stock reserved for issuance under EAI stock options, including
1,352,477 shares of EAI Common Stock reserved for issuance under options
outstanding as of September 30, 1997. All of the issued and outstanding
shares of EAI Common Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. The shares of
EAI Common Stock to be issued pursuant to the Merger will be duly authorized
and validly issued and, at the Effective Time, all such shares will be fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
4.3. AUTHORITY; NO VIOLATION. (a) EAI has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of EAI. No other
corporate proceedings on the part of EAI are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by EAI and,
assuming due authorization and execution by RTI, constitutes a valid and
binding obligation of EAI, enforceable against EAI in accordance with its
terms.
(b) The execution and delivery of this Agreement by EAI, the
consummation by EAI of the transactions contemplated hereby, and the
compliance by EAI with the terms or provisions hereof, will not (i) violate
any provision of the Certificate of Incorporation or By-Laws of EAI, (ii)
violate any law, statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to EAI or any of its properties or
assets, or (iii) violate, conflict with, breach any provision of or result in
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result
in the
18
termination of, accelerate the performance required by, or result in
the creation of any Lien upon any of the properties or assets of EAI under
any note, bond, mortgage, indenture, deed of trust, license, lease, contract,
agreement or other instrument or obligation to which EAI is a party, or by
which it or any of its properties or assets may be bound or affected.
4.4. CONSENTS AND APPROVALS. Except for (i) the HSR Filing and the
expiration of the waiting period thereunder, (ii) the filing of Certificate of
Merger with the Delaware Secretary pursuant to the DGCL and the Articles of
Merger with the Oregon Secretary pursuant to the OBCA, (iii) such filings and
approvals as are required to be made or obtained under the securities or ''Blue
Sky'' laws of various states in connection with the issuance of the shares of
EAI Common Stock pursuant to this Agreement, and (iv) the filings and
authorizations necessary to list the shares of EAI Common Stock issued pursuant
to this Agreement on the NNM, no Consents from any Governmental Authority or
any third party are necessary in connection with the execution and delivery by
EAI or Sub of this Agreement and the consummation by EAI and Sub of the Merger
and the other transactions contemplated by this Agreement.
4.5. SEC REPORTS. The annual report on form 10-K of EAI for the fiscal
year ended December 31, 1996, as filed under the Securities Exchange Act of 1934
("Exchange Act"), and all other reports and proxy statements filed or required
to be filed by EAI subsequent to such report (the "SEC Reports"), have been duly
and timely filed by EAI, complied as to form with all requirements under the
Exchange Act, were true and correct in all material respects as of the dates at
which the information was furnished, and contained no untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading.
4.6. COMPLIANCE WITH APPLICABLE LAW. EAI holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business and
has complied with and is not in default under any law, statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction of any
Governmental Authority applicable to EAI, except where failure to so hold or
such default, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on EAI.
4.7. FINANCIAL STATEMENTS. The EAI financial statements set forth in the
SEC Reports fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments customary in nature and amount), the financial
position of EAI as of the dates thereof, and the results of operations and cash
flows of EAI for the respective fiscal periods or as of the respective dates
thereof. Each of the EAI financial statements set forth in the SEC Reports,
including the notes thereto, has been, or will be, prepared in accordance with
GAAP consistently applied during the periods involved.
4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in a report
filed under the Exchange Act or set forth on the Disclosure Schedule, since
December 31, 1997, (i) EAI has not incurred any material liability that is not
disclosed in the EAI financial statements and (ii) no event has occurred which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on EAI.
19
4.9. PPM/PROXY STATEMENT INFORMATION. None of the information that EAI
will include or incorporate by reference in the PPM/Proxy Statement will, at the
time the PPM/Proxy Statement is mailed to the RTI shareholders, at any time it
is amended or supplemented, or at the Closing Date, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
Notwithstanding the foregoing, EAI makes no representation or warranty with
respect to statements made in the PPM/Proxy Statement based on written
information supplied by Ventures or RTI specifically for inclusion therein.
4.10. OWNERSHIP OF SUB; NO PRIOR ACTIVITIES.
(a) Sub was formed for the purpose of engaging in the transactions
contemplated by this Agreement; is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; and has
the corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
(b) As of the Effective Time of the Merger, all of the outstanding capital
stock of Sub will be owned directly by Beaver. As of such Effective Time, there
will be no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments to which Sub is a party of any character
relating to the issued or unissued capital stock of, or other equity interests
in, Sub or obligating Sub to grant, issue or sell any shares of the capital
stock of, or other equity interests in, Sub, by sale, lease, license or
otherwise. There are no obligations, contingent or otherwise, of Sub to
repurchase, redeem or otherwise acquire any shares of the capital stock of Sub.
(c) As of the date hereof and the Effective Time of the Merger, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Sub has not
and will not have incurred, directly or indirectly, through any affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any
person.
4.11. BROKER'S FEES. Neither EAI nor, to the knowledge of EAI, any of
its directors, officers or employees has employed any person or entity as a
broker, finder or agent or incurred any liability for any broker's fees,
finder's fees or other commission in connection with the Merger or the related
transactions contemplated by this Agreement.
4.12. DISCLOSURE. No representation or warranty by EAI contained in
this Agreement (including the Disclosure Schedule and the Exhibits referred to
herein), or in any certificate furnished or to be furnished by EAI to RTI in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make the statements herein or therein not misleading.
20
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time of the Merger, except as
expressly contemplated or permitted by this Agreement, RTI shall (i) conduct its
business in the usual, regular and ordinary course consistent with past
practice, (ii) use its reasonable efforts to maintain and preserve intact its
business organization and advantageous business relationships and retain the
services of its key officers and employees and (iii) not knowingly take any
action which would adversely affect or delay the ability of RTI, Sub or EAI to
obtain any necessary approvals of any Governmental Authority required for the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement.
5.2. RTI FORBEARANCES. During the period from the date of this Agreement
to the Effective Time of the Merger, except as expressly contemplated or
permitted by this Agreement, RTI shall not, without the prior written consent of
EAI:
(a) incur any indebtedness for borrowed money (except pursuant to existing
funded debt agreements described in Section 3.13 of the Disclosure Schedule),
assume, guarantee, endorse or otherwise as an accommodation, become responsible
for the obligations of any other individual, partnership, limited liability
company, corporation or other entity (collectively, "Person"), or make any loan
or advance;
(b) (i) adjust, split, combine or reclassify any capital stock; (ii) make,
declare or pay any dividend, or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, (iii) grant any Person any right to acquire any
shares of its capital stock, or (iv) issue any additional shares of capital
stock, except upon the exercise of vested RTI Options or upon the conversion of
the Promissory Note, dated May 15, 1993, payable to the order of Cronus, Inc.
(the "Note");
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets to any Person, or cancel or release any indebtedness or
claims owed to or held by RTI or by any Person, except in the ordinary course of
business consistent with past practice;
(d) make any investment in any Person by purchase of securities,
contributions to capital, property transfers, or purchase of any property or
assets of any other Person;
(e) except for transactions in the ordinary course of business consistent
with past practice, enter into or terminate any RTI Contract, or change any
terms in any RTI Contract, other than renewals or changes in immaterial terms
thereof;
(f) increase in any manner the compensation or fringe benefits of any of
its directors, officers or employees other than in the ordinary course of
business consistent with past practice, pay any pension or retirement allowance
not required by any existing plan or agreement to any of the foregoing, or
become a party to, amend or commit itself to, any pension, retirement,
21
profit-sharing or welfare benefit plan or agreement or employment agreement with
or for the benefit of any of the foregoing;
(g) settle any claim, action or proceeding involving money damages, except
in the ordinary course of business consistent with past practice;
(h) knowingly take any action that would prevent or impede the Merger from
qualifying as part of a reorganization within the meaning of Section 368(a) of
the Code;
(i) amend its Articles of Incorporation or By-Laws; or
(j) take any action that is intended or may reasonably be expected to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or (ii) any of the
conditions to the Merger set forth in Article VII not being satisfied or
(iii) any violation of any provision of this Agreement, except, in each case, as
may be required by applicable law.
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. REGULATORY AND OTHER MATTERS (a) EAI, with the cooperation of RTI,
shall promptly prepare the PPM/Proxy Statement. RTI shall, upon request,
furnish EAI with all information or documents concerning RTI and its directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the PPM/Proxy Statement. EAI shall also use its
reasonable efforts to obtain all necessary state securities law or "Blue Sky"
qualifications, permits and approvals required to carry out the transactions
contemplated by this agreement, and RTI shall furnish all information concerning
RTI and the holders of RTI common stock as may be reasonably requested by EAI in
connection with such qualifications, permits and approvals.
(b) The parties shall cooperate with each other and use their best efforts
to prepare and file promptly all necessary documentation to effect all
applications, notices, petitions and filings, including the HSR Filing, and to
obtain as promptly as practicable all Consents of Governmental Authorities and
third parties which are necessary or advisable to consummate the Merger and the
other transactions contemplated by this Agreement, and the parties shall keep
each other apprised of the status of matters relating to completion of the
transactions contemplated herein.
6.2. ACCESS TO INFORMATION. Upon reasonable notice, RTI shall afford to
the officers, employees, accountants, counsel and other representatives of EAI
reasonable access during normal business hours during the period prior to the
Effective Time of the Merger to all of RTI's books and records, properties and
contracts, and, during such period, RTI shall make available to EAI all
information concerning its business, assets and personnel as EAI may reasonably
request.
22
6.3. SHAREHOLDERS' APPROVAL. RTI shall call a meeting of its shareholders
for the purpose of voting upon this Agreement and the Merger, which meeting
shall be held as soon as reasonably practicable after the PPM/Proxy Statement is
mailed.
6.4. NNM LISTING. EAI shall cause the shares of EAI Common Stock to be
issued in the Merger to be approved for listing on the NNM, subject to official
notice of issuance, prior to the Effective Time of the Merger.
6.5. ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest RTI with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
proper officers and directors of each party to this Agreement shall take all
such necessary or advisable action.
6.6. ADVICE OF CHANGES. RTI shall promptly advise EAI of any change or
event which is likely to have a Material Adverse Effect on RTI or which RTI
believes would or would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties or covenants contained herein.
EAI shall promptly advise RTI of any change or event which is likely to have a
Material Adverse Effect on EAI or which EAI believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein.
6.7. TAKEOVER PROPOSALS. (a) RTI agrees that from and after its execution
of this Agreement through the Effective Time of the Merger, it shall not, and it
shall instruct its directors and officers and all investment bankers, attorneys
or other advisors or representatives retained by it not to, (i) solicit or
encourage the submission of any Takeover Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
third party any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, a
Takeover Proposal, (iii) make or authorize any statement or recommendation in
support of any Takeover Proposal, or (iv) enter into any agreement with respect
to any Takeover Proposal.
(b) Notwithstanding the foregoing paragraph (a), nothing contained in this
Section 6.7 shall prohibit the Board of Directors, executive officers or
shareholders of RTI, or the investment bankers, attorneys, or other advisors or
representatives retained by RTI from participating in any discussions or
negotiations with, or furnishing any information to, any third party that makes
a Takeover Proposal to RTI if all of the following events shall have occurred:
(i) EAI has been notified in writing of such Takeover Proposal within 24 hours
of RTI's receipt thereof, including the identity of the party making the
Takeover Proposal and the specific terms and conditions thereof, and has been
given copies of such Takeover Proposal; (ii) such third party has made a written
Takeover Proposal to the Board of Directors of RTI, which takeover proposal
identifies a price or range of values to be paid, and the Board of Directors of
RTI has determined that such Takeover Proposal is financially more favorable to
the shareholders of RTI than the terms of the Merger; (iii) RTI's Board of
Directors has determined that such third party is financially capable of
consummating the transactions specified in the Takeover Proposal; and (iv) the
Board of Directors of RTI has determined, after consultation with its outside
legal
23
counsel, that its fiduciary duties require it to furnish information to
and negotiate with such third party. Notwithstanding the foregoing, RTI shall
not provide any non-public information to such third party unless (x) prior to
the date thereof RTI has provided such information to EAI; (y) RTi has notified
EAI in advance of any such proposed disclosure of non-public information and has
provided EAI with a description of the information RTI intends to disclose; and
(z) RTI provides such non-public information pursuant to a nondisclosure
agreement in a form substantially similar to that entered into between EAI and
RTI. In addition to the foregoing requirements, RTI shall not accept or enter
into any agreement concerning a Takeover Proposal until at least 48 hours after
EAI's receipt of a copy of such Takeover Proposal. Upon compliance with the
requirements in this paragraph (b), RTI shall be entitled to terminate this
Agreement in accordance with the provisions of Section 8.1(d).
(c) For purposes of this Agreement, "Takeover Proposal" means any
proposal or offer for a merger, consolidation or other business combination
involving RTI or any proposal or offer to acquire a material equity interest
in, or a substantial portion of the assets of, RTI other than by EAI as
contemplated by this Agreement.
(d) RTI shall be entitled to furnish a copy of this Section 6.7 to any
third party who expresses an interest in making a Takeover Proposal after the
execution of this Agreement.
6.8. TAX MATTERS. RTI will use its best efforts to provide EAI information
as to the adjusted tax basis of the RTI shareholders in their RTI Common Stock.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) VENTURES MERGER CONSUMMATED. The Ventures Merger shall have been
consummated as contemplated by EAI.
(b) APPROVALS AND CONSENTS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(c) NNM LISTING. The shares of EAI Common Stock which shall be issued to
the shareholders of RTI upon consummation of the Merger or exercise of the RTI
Options, as the case may be, shall have been authorized for listing on the NNM,
subject to official notice of issuance.
24
(d) BLUE SKY. EAI shall have received all state securities or "Blue Sky"
permits and other authorizations necessary to issue the shares of EAI Common
Stock pursuant to this Agreement and the Merger.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or
decree issued by any Governmental Authority or other legal restraint or
prohibition preventing, or material legal action relating to, the consummation
of the Merger or any of the other transactions contemplated by this Agreement
shall be in effect. No law, statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits, materially restricts or makes illegal
the consummation of the Merger or the other transactions contemplated by this
Agreement.
(f) FEDERAL TAX OPINION. RTI and the shareholders of RTI shall have
received an opinion of Xxxxxx Xxxxxxxx LLP in form and substance reasonably
satisfactory to them on or about the date that is two business days prior to the
date the PPM/Proxy StatemenT is first mailed to shareholders of RTI,
substantially to the effect that the discussion in the PPM/Proxy Statement under
the caption "The Merger--Certain Federal Income Tax Consequences" insofar as it
relates to matters of federal income tax law is a fair and accurate summary of
such matters, and such opinion shall not have been withdrawn or modified in any
material respect on the Closing Date. In rendering such opinion, Xxxxxx
Xxxxxxxx LLP may require and rely upon representations contained in certificates
of officers or shareholders of RTI, EAI and others, which certificates shall
have been executed and delivered to Xxxxxx Xxxxxxxx LLP at such times as
reasonably requested in connection with its delivery of an opinion with respect
to the Merger.
(g) REGISTRATION RIGHTS AGREEMENT. EAI and each shareholder of RTI shall
have entered into a Registration Rights Agreement substantially in the form of
EXHIBIT A hereto.
(h) RTI SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite holders of the
issued and outstanding shares of RTI Common Stock.
(i) EMPLOYMENT AGREEMENTS. Xxxxxxx X. Xxxxx, Xxx Xxxxxxxxx, Xxxxx Xxxx
and Xxxxx Xxxxxx shall have each executed and delivered to EAI an employment
agreement in a form reasonably satisfactory to EAI.
7.2. CONDITIONS TO OBLIGATIONS OF EAI AND SUB TO EFFECT THE MERGER. The
obligation of EAI and Sub to effect the Merger is also subject to the
satisfaction or waiver by EAI at or prior to the Effective Time of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
RTI set forth in this Agreement that are qualified with reference to a Material
Adverse Effect or materiality shall be true and correct, and the representations
and warranties of RTI that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date. EAI shall
have received a certificate signed on behalf of RTI by its principal officers to
the foregoing effect.
25
(b) PERFORMANCE OF OBLIGATIONS OF RTI. RTI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and EAI shall have received a
certificate signed on behalf of RTI by its principal officers to such effect.
(c) EMPLOYEE PROPRIETARY INFORMATION AGREEMENTS. Each employee of RTI
shall have executed and delivered to EAI an employee proprietary information
agreement substantially in the form attached as EXHIBIT B.
(d) LEGAL OPINION; CLOSING CERTIFICATES. EAI shall have received from
Venture Counsel P.C. or Xxxxxxx Coie, counsel to RTI, an opinion reasonably
acceptable to EAI and its counsel, together with such customary closing
documents and certificates as EAI or its counsel shall reasonably request.
(e) PRIVATE PLACEMENT. EAI shall have received from the holders of RTI
Common Stock documentation establishing to the reasonable satisfaction of EAI
and its counsel that: (i) there were, as of the date hereof and as of the date
of the meeting of RTI shareholders to approve the Merger, not more than
34 holders of RTI Common Stock who were not, on each such date, "accredited
investors" as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended, and (ii) each RTI shareholder who is not an
"accredited investor" as so defined, either alone or with his or her purchaser
representative(s) has such knowledge and experience in financial and business
matters that he or she is capable of evaluating the merits and risks of the
Merger.
(f) MATERIAL ADVERSE CHANGE. There shall not have occurred any change
which would constitute a Material Adverse Effect on RTI.
(g) NOTE. RTI shall have prepaid the Note in full or the holder of the
Note shall have converted the Note into RTI Common Stock, prior to the Effective
Time.
7.3. CONDITIONS TO OBLIGATIONS OF RTI. The obligation of RTI to effect the
Merger is also subject to the satisfaction or waiver by RTI at or prior to the
Effective Time of the Merger of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
EAI set forth in this Agreement that are qualified with a reference to
materiality shall be true and correct, and the representations and warranties of
EAI that are not so qualified shall be true and correct in all material
respects, in each case, as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date. RTI shall have
received a certificate signed on behalf of EAI by the Chief Executive Officer or
the Chief Financial Officer of EAI to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF EAI. EAI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and RTI shall have received a
certificate signed on behalf of EAI by the Chief Executive Officer or the Chief
Financial Officer of EAI to such effect.
26
(c) LEGAL OPINION; CLOSING CERTIFICATES. RTI shall have received from
Xxxxxxx, Carton & Xxxxxxx, special counsel to EAI, an opinion reasonably
acceptable to RTI and its counsel, together with such customary closing
documents and certificates as RTI or its counsel shall reasonably request.
(d) MATERIAL ADVERSE CHANGE. There shall not have occurred any change
which would constitute a Material Adverse Effect on EAI and its subsidiaries,
taken as a whole.
ARTICLE VIII.
TERMINATION AND AMENDMENT
8.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the
shareholders of RTI:
(a) by mutual consent of RTI and EAI in a written instrument, if the Board
of Directors of each so determines by a vote of a majority of the members of its
entire Board;
(b) by either the Board of Directors of RTI or the Board of Directors of
EAI, if any Governmental Authority which must grant a Requisite Regulatory
Approval has denied approval of the Merger, or any Governmental Authority of
competent jurisdiction shall have issued an order permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement;
(c) by the Board of Directors of RTI or the Board of Directors of EAI
(PROVIDED that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein), if
(x) there shall have been a material breach of any of the representations or
warranties or any of the covenants or agreements set forth in this Agreement on
the part of the other party, which breach is not cured within 30 days following
written notice to the party committing such breach, or which breach, by its
nature or timing, cannot be cured prior to December 31, 1997, (y) the Closing
shall not have occurred on or before December 31, 1997; PROVIDED, HOWEVER, that
neither Board of Directors shall be entitled to terminate the Agreement pursuant
to this clause (y) if the reason the Closing has not occurred by such date is
because any Governmental Authority which must grant a Requisite Regulatory
Approval has failed to act, the RTI shareholder meeting shall not have occurred
in accordance with the requirements of the OBCA or some similar event beyond the
control of both parties shall not have occurred by such date, or (z) the Closing
shall not have occurred on or before March 31, 1998; or
(d) by the Board of Directors of RTI (after consulting with its legal
counsel), if such action is required for the Board of Directors to comply with
its fiduciary duties to RTI and its shareholders, as contemplated by
Section 6.7; PROVIDED, HOWEVER, if such action is taken by RTI, then (i) within
two days of such termination RTI shall pay to EAI $250,000 as reimbursement for
EAI's out-of-pocket expenses incurred in connection with the transactions
contemplated by this Agreement (for which EAI shall not be required to account);
and (ii) if RTI shall consummate any transaction pursuant to a Takeover Proposal
(x) within 12 months following the date of this
27
Agreement, or (y) pursuant to a definitive agreement executed by RTI during
such 12-month period, RTI shall also promptly pay to EAI $1,500,000 upon the
occurrence of such transactions.
8.2. EFFECT OF TERMINATION. In the event of termination of this Agreement
by either RTI or EAI as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect, and none of RTI, EAI, Sub or any of their
directors or officers shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (i) Sections 8.1(d) and 9.1 and this Section 8.2 shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the contrary
contained in this Agreement, neither RTI or EAI shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
8.3. AMENDMENT; EXTENSION; WAIVER. At any time prior to the Effective Time
of the Merger, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed, (i) amend any
term or provision of this Agreement, (ii) extend the time for the performance of
any of the obligations or other acts of the parties hereto, (iii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iv) waive compliance with any of the
agreements or conditions contained herein; PROVIDED, HOWEVER, that after any
approval of the transactions contemplated by this Agreement by the shareholders
of RTI, there may not be, without further approval of such shareholders, any
amendment, extension or waiver of this Agreement which reduces the amount or
changes the form of the consideration to be delivered to such holders of RTI
Common Stock hereunder other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such amendment, extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party, but such amendment, extension or waiver or failure to insist on
strict compliance with any obligation, covenant, agreement or condition in this
Agreement shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX.
GENERAL PROVISIONS
9.1. EXPENSES. Except as set forth in Section 8.1(d), all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
9.2. NOTICES. All notices and other required communications hereunder
shall be in writing and shall be deemed given: if delivered personally, when so
delivered; if telecopied, on the date telecopied (PROVIDED there is written
confirmation of receipt and a confirming notice or communication is delivered in
the manner set forth herein); if mailed by registered or certified mail (postage
prepaid and return receipt requested), on the date five days after deposit in
the mail; or if delivered by overnight courier (with written confirmation of
delivery to such courier), on the next business after such delivery, in each
case to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
28
(a) if to EAI, to:
Engineering Animation, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxx, Xxxxxx Xxxx 00000
Attention: Xxxxx X. Xxxx
Vice President of Administration, General Counsel and Secretary
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
and
(b) if to RTI, to:
Rosetta Technologies, Inc.
00000 X.X. Xxxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Fax: (000) 000-0000
with copies to:
Venture Counsel P.C.
0000 X.X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
and
Xxxxxxx Coie
0000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx-Xxxx
Fax: (000) 000-0000
9.3. INTERPRETATION. When a reference is made in this Agreement to
Sections, Schedules or Exhibits, such reference shall be to a Section of or
Schedule or Exhibit to this Agreement unless otherwise indicated. The table of
contents and headings contained in this
29
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." No provision of this
Agreement shall be construed to require EAI, Sub, RTI or any of their
respective affiliates to take any action which would violate any applicable
law, rule or regulation.
9.4. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement.
9.5. ENTIRE AGREEMENT. This Agreement (including the Disclosure Schedule,
Exhibits, documents and instruments referred to herein) constitutes the entire
agreement of the parties and supersedes all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof.
9.6. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law which would result in the application of any other
law.
9.7. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.8. PUBLICITY. Except as otherwise required by applicable law or the
rules of the NNM, neither RTI or EAI, shall nor shall they permit any of their
respective affiliates to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this agreement without
the prior consent of the other party, which consent shall not be unreasonably
withheld.
9.9. ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations set forth herein shall be assigned by
either of the parties (whether by operation of law or otherwise) without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns. This
Agreement (including the Disclosure Schedule, Exhibits, documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
9.10. KNOWLEDGE AND AWARENESS. As used in this Agreement, "knowledge"
or "awareness" of any entity means the actual knowledge or awareness of such
entity's directors, managers, officers, shareholders or members who are active
in the business of the entity and other persons exercising supervisory
authority.
30
9.11. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumptions or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any Federal, state,
county, local or foreign law or statute shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.
31
IN WITNESS WHEREOF, EAI, Sub and RTI have caused this AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER to be executed by their respective officers
thereunto duly authorized as of the date first above written.
ENGINEERING ANIMATION, INC.
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer, President and Treasurer
TRANSITORY BEAVER, INC.
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer, President and Treasurer
ROSETTA TECHNOLOGIES, INC.
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Xxxxxxx X. Xxxxx
President
32
