EXHIBIT H
REORGANIZATION AGREEMENT
REORGANIZATION AGREEMENT dated as of this 12th day of March
1993 among ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of
Connecticut (hereinafter referred to as the "General Partner"),
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a corporation
organized and existing under the laws of the State of Delaware
(hereinafter referred to as the "Corporation"), and those persons
listed on Schedule 1 attached hereto as limited partners
(hereinafter referred to, collectively, as the "Limited Partners"
and, individually, as a "Limited Partner") of ERS Associates
Limited Partnership, a limited partnership organized and existing
under the laws of the State of Connecticut (hereinafter referred
to as the "Partnership").
W I T N E S S E T H:
WHEREAS, the Partnership is engaged in the development and
commercialization of a fully-integrated electronic shelf labelling
system; and
WHEREAS, the Limited Partners own the entire limited
partnership interest in the Partnership, and the Predecessor
Corporation is the sole general partner thereof, pursuant to the
terms of an Amended and Restated Agreement of Limited Partnership
of the Partnership dated as of June 23, 1992 (hereinafter referred
to as the "Partnership Agreement"); and
WHEREAS, the Corporation has been incorporated to serve as a
holding company for the business and assets of the Partnership and
the General Partner pursuant to a reorganization (hereinafter
referred to as the "Reorganization") whereby the Corporation: (i)
will issue 1,421,250 shares of its common stock, $.01 par value
(hereinafter referred to as the "Common Stock"), for all limited
partnership interests in the Partnership, (ii) will issue
8,500,050 shares of Common Stock for all outstanding stock of the
General Partner, (iii) will contribute the limited partnership
interests in the Partnership to the General Partner, and (iv) will
liquidate the Partnership and transfer ownership of all assets and
liabilities of the Partnership to the Predecessor Corporation; and
WHEREAS, the parties intend that, immediately following the
Reorganization, the Corporation will consummate its first sale
(hereinafter referred to as the "Initial Public Offering") to the
public for cash through underwriters of shares of the Common
Stock, by means of a registration statement under the Securities
Act of 1933, as amended (hereinafter referred to as the "Act");
and
WHEREAS, in furtherance of the Reorganization: (i) the
stockholders of the General Partner have entered into a
Reorganization Agreement dated as of even date herewith
(hereinafter referred to as the "Corporate Reorganization
Agreement") with the Corporation and the General Partner, and (ii)
the Limited Partners desire to exchange their interests in the
Partnership for shares of Common Stock, and to terminate the
Partnership Agreement and related agreements, upon the terms and
subject to the provisions hereof;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as
follows:
ARTICLE I
EXCHANGE OF LIMITED PARTNERSHIP INTERESTS
1.1 Exchange of Limited Partnership Interests.
Effective immediately prior to the consummation of the
Initial Public Offering (the "Closing"), and contemporaneously
with the effectuation of the exchange of shares contemplated under
the Corporate Reorganization Agreement and the contribution to the
General Partner of the principal amount of all stockholder loans
to the Predecessor Corporation, and all accrued and unpaid
interest thereon, and all shares of the capital stock of Amacrine
International, Inc., a corporation organized and existing under
the laws of Canada: (x) each Limited Partner hereby assigns,
transfers and conveys to the Corporation, free and clear of all
liens, charges and encumbrances of any nature whatsoever, all
right, title and interest in and to the Partnership, in exchange
for the number of shares of Common Stock set forth opposite its
name on Schedule 1; and (y) all provisions of the Partnership
Agreement (except for the provisions of Article XII thereof with
respect to liquidation and dissolution), and of the letters dated,
respectively, June 23, July 14, October 2, 1992 to the
Partnership, the General Partner and the Limited Partners from
Norton Xxxxxxxxx and Xxxxx X. Failing, Jr., shall terminate and
have no further effect.
1.2 Registration Rights Agreement.
Contemporaneously herewith, the Corporation and the Limited
Partners are entering into the registration rights agreement in
the form of Exhibit A annexed hereto (the "Registration Rights
Agreement").
1.3 Sale of Controlling Interest.
In the event that any party offers to acquire, directly or
indirectly, a "controlling interest" in the Corporation, the
Corporation shall use its best efforts to ensure that such offer
is not accepted until the offeror shall first, by written notice,
have offered to purchase from each Limited Partner its entire
interest in the Corporation on the same terms per share and the
same price per share applicable to the "controlling interest"
proposed to be sold. The Limited Partners, and each of the, shall
have the right and option, in their respective sole discretion, to
sell such interest upon such terms by giving written notice of
such election to the Corporation and such offeror within 30 days
after the receipt of the applicable offer under this Section 1.3.
For purposes hereof, a "controlling interest" shall entail the
possession, direct or indirect, of the power of cause the
direction of the management and policies of the Corporation,
whether through ownership of voting securities, or otherwise.
1.4 Lock-Up Agreement.
Contemporaneously herewith, the Limited Partners are each
executing and delivering a lock-up letter in the form of Exhibit B
annexed hereto.
1.5 No Further Actions Required.
The effectuation of the transactions contemplated hereby,
including without limitation those set forth in Section 1.1
hereof, shall take place immediately prior to the Closing without
any further actions by any Limited Partner.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION AND THE GENERAL PARTNER
The Corporation and the General Partner hereby, jointly and
severally, represent, warrant and covenant that:
Section 2.1 Incorporation.
The Corporation and the General Partner are corporations duly
organized, validly existing and in good standing under the laws of
their respective states of incorporation and have the full
corporate power and authority to own or hold under lease all of
their respective assets and properties which they own or hold
under lease and to perform all of their respective obligations in
accordance with this Agreement.
Section 2.2 Authorization.
The execution and delivery by the Corporation and the General
Partner of this Agreement, the performance by the Corporation and
the General Partner of their covenants and agreements hereunder
and the consummation by the Corporation and the General Partner of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action. When executed and delivered by
the Corporation and the General Partner, this Agreement shall
constitute the valid and legally binding obligations of the
Corporation and the General Partner enforceable against the
Corporation and the General Partner in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors' rights and by
limitation on the availability of equitable remedies.
Section 2.3 Conflicts.
Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will violate
any provision of the certification of incorporation or by-laws of
either the Corporation or the General Partner or any law, rule,
regulation, writ, judgment, injunction, decree, determination,
award or other order of any court, government, or governmental
agency or instrumentality, domestic or foreign, binding upon the
Corporation or the General Partner or conflict with or result in
any breach of any of the terms of or constitute a default under or
result in the termination of the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature pursuant to the terms of any
material contract or agreement to which the Corporation or the
General Partner is a party or by which the Corporation or the
General Partner or any of their respective assets are bound.
Section 2.4 Capitalization.
Upon consummation of the Reorganization, the authorized
capital stock of the Corporation will consist of 2,000,000 shares
of preferred stock, $1.00 par value, none of which will be issued
and outstanding, and 25,000,000 shares of Common Stock, 1,421,250
shares of which will be issued pursuant to this Agreement, and
8,500,050 shares of which will be issued pursuant to the Corporate
Reorganization Agreement. Upon consummation of the
Reorganization, the Corporation shall have assumed the 1993
Employee Stock Option Plan of the General Partner, authorizing the
issuance of options with respect to 850,005 shares of Common
Stock, options with respect to 725,104 shares of which will be
outstanding and assumed by the Corporation upon consummation of
the Reorganization, and the 1993 Director Stock Option Plan of the
General Partner, authorizing the issuance of options with respect
to 50,000 shares of Common Stock, none of which will be
outstanding upon consummation of the Reorganization. The shares
of Common Stock to be issued to the Limited Partners pursuant to
the terms of this Agreement, when so issued, will be duly
authorized, validly issued and outstanding, fully-paid and non-
assessable shares, free and clear of all liens, charges, and
encumbrances of any nature whatsoever.
Section 2.5 Disclosure.
The Corporation has heretofore delivered to each Limited
Partner a copy of its registration statement on Form S-1 (No.
33-59486), together with the preliminary prospectus therein,
containing the balance sheets of the General Partner as and at
December 31, 1992 and 1991 and the related statements of
operations for the years ended December 31, 1992 and 1991 and the
period from April 18, 1990 (date of inception) through December
31, 1990 (hereinafter refereed to as the "Financial Statements").
The Financial Statements are true and correct in all material
respects and have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the
periods to which such financial statements relate, except as
otherwise indicated therein. The Financial Statements fully and
fairly present in all material respects, in conformity with such
principles as so applied, the respective financial positions and
results of operations of the General Partner at the dates shown
and for the periods therein specified.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERS
Each of the Limited Partners hereby represents, warrants and
covenants that:
(a) He is a sophisticated investor familiar with the
types of risks inherent in an investment in the Corporation and
has such business or financial experience that he is capable of
protecting his own interests in connection with an investment in
the Corporation.
(b) He has examined, or has had an opportunity to
examine before the date hereof, all information concerning the
Corporation, the General Partner and the Partnership, and the
exchange of interests hereunder, including all additional
information which he has considered necessary to verify the
accuracy of the information so received, and on the basis of such
examination is thoroughly familiar with the business and affairs
of the Corporation, the General Partner and the Partnership. He
has had an opportunity to ask questions of and receive answers
from the officers and directors of the Corporation, concerning the
terms and conditions of the exchange contemplated hereunder, and
all such questions have been answered to its full satisfaction.
(c) He does not intend or anticipate that his
investment in the Corporation be a source of income, is able to
bear the substantial economic risks of the investment in the
Corporation being made by him and can afford to retain the shares
of Common Stock for an indefinite period of time without realizing
any direct or indirect cash return, and at the present time can
afford a complete loss of such investment.
(d) Except as permitted under the Act, he is acquiring
his shares of Common Stock for his own account, for investment
purposes only, and not with a view to the sale or other
distribution thereof, in whole or in part.
(e) He understands that: (i) the shares of Common
Stock are speculative investments and involve a high degree of
risk; and (ii) there are substantial restrictions on the
transferability of the shares of Common Stock.
(f) He understands that the shares of Common Stock
have not been registered under the Act in reliance on an exemption
thereunder and that the shares of Common Stock have not been
approved or disapproved by the United States Securities and
Exchange Commission or by any other federal or state agency.
(g) He will not sell, transfer, pledge or otherwise
dispose of any shares of Common Stock until either of the
following events has occurred: (i) he has received an opinion of
counsel for the Corporation that registration thereof under the
Act is not required; or (ii) a registration statement under the
Act covering such shares of Common Stock and the disposition
thereof has become effective under the Act. All shares of the
Common Stock issued pursuant to this Agreement shall be endorsed
with a legend to the foregoing effect, and stop-transfer
instructions shall be issued with respect to such shares of Common
Stock, as long as such shares of Common Stock are subject to such
restrictions on disposition.
(h) He is an "accredited investor", as defined under
Regulation D promulgated pursuant to the Act.
(i) He owns the limited partnership interest in the
Partnership assigned, transferred and conveyed hereunder free and
clear of any lien, charge or encumbrance of any nature whatsoever
and has not granted any rights, options, claims or interests
therein to any third party, and he has the right to assign,
transfer and convey good and clear title to such interest to the
Corporation hereunder, free and clear of any liens, charges,
encumbrances or adverse claims.
(j) If a corporation or trust, the officer or trustee
executing this Agreement represents and warrants that he is
authorized to so sign; that the corporation or trust is authorized
by the articles (or certificate) of incorporation and bylaws of
the corporation or by the trust agreement, as the case may be, to
enter into this Agreement; and, in the case of a corporation will
upon request of the Corporation or counsel to the Corporation,
furnish to the Corporation a true and complete copy of the
provisions of the articles (or certificate) of incorporation or
by-laws, or both, authorizing the Corporation to enter into this
Agreement as well as a copy (certified by the secretary or other
authority officer) of appropriate corporate resolutions
authorizing the exchange hereunder; and in the case of a trust, he
will, upon request of the Corporation or counsel to the
Corporation, furnish to the Corporation a true and correct copy of
the provisions of the trust agreement authorizing the trustee to
make such exchange.
(k) If a partnership, the partner executing this
Agreement represents and warrants that each one of the foregoing
representations or agreements or understandings set forth herein
applies to each partner; that he is authorized to so sign; upon
request of the Corporation or counsel to the Partnership, he will
furnish to the Corporation a true and correct xxx of the
provisions of the partnership agreement authorizing the executing
partner to enter into this Agreement; in the case of any partner
that is a trust, a trustee (or co-trustee) of the trust is
authorized by the trust agreement to enter into this Agreement;
and in the case of any partner that is a corporation, the
corporation will, upon request of the Corporation or counsel to
the Partnership, furnish to the Corporation a true and correct
copy of the provisions of the articles (or certificate) of
incorporation or by-laws, or both, authorizing the corporation to
enter into this Agreement, and a copy (certified by the secretary
or other authorized officer) of appropriate corporate resolutions
authorizing the exchange hereunder); and in the case of any
partner that is a trust, he will, upon request of the Corporation
or counsel to the Corporation, furnish to the Corporation a true
and correct copy of the provisions of the trust agreement
authorizing the trustee to make such exchange.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices.
Any notice, requests, or instructions hereunder to the
Corporation, the General Partner or to any Limited Partner shall
be in writing and shall be deemed to have been given when it (a)
shall have been sent by certified or registered United States
mail, postage pre-paid, or (b) shall have been delivered, in
either case, if to the Corporation or the General Partner, to 000
Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000, Xxxxxx Xxxxxx of America,
or if to a Limited Partner to his address set forth on Schedule 1,
or such other address as shall hereafter be designated by notice
to the Corporation by a party.
Section 4.2 Entire Agreement.
This Agreement and the documents referred to herein contain
the entire agreement between the parties hereto with respect to
the transactions contemplated hereby, and supersede all prior
understandings, arrangements and agreements with respect to the
subject matter hereof.
Section 4.3 Further Action.
Each of the parties hereto shall use such party's best
efforts to take such actions as may be necessary or reasonably
requested by the other parties hereto to carry out and consummate
the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, each Limited Partner from time to
time, at the request of the Corporation and without further
consideration, shall execute and deliver further instruments of
transfer and assignment and take such further action as the
Corporation may reasonably require more effectively to transfer
and assign to, and vest in, the Corporation the interests in the
Partnership assigned hereunder.
Section 4.4 Expenses.
Each of the parties hereto shall bear such party's own
expenses in connection with this Agreement and the transactions
contemplated hereby. Each Limited Partner shall be responsible
for all taxes and governmental fees in connection with the
transfer of its limited partnership interests hereunder.
Section 4.5 Governing Law.
This Agreement shall be governed by and construed in accor-
dance with the laws of the State of Delaware applicable in the
case of agreements made and to be performed entirely within such
state.
Section 4.6 Captions.
The captions appearing herein are for the convenience of the
parties only and shall not be construed to affect the meaning of
the provisions of this Agreement.
Section 4.7 Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Section 4.8 Third Party Beneficiaries; Termination.
(a) The parties acknowledge that the agreements,
representations and covenants contained herein are made for the
benefit of, and may be relied upon by, underwriters of the Initial
Public Offering, for which Xxxxxxxxxx Securities is acting as
representative.
(b) If the Closing has not occurred on or before August 31,
1993, the Reorganization will not be effected hereunder and this
Agreement and the Registration Rights Agreement will terminate and
have no further force or effect.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation
By s/Xxxxx X. Failing, Jr.
---------------------------
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Connecticut corporation
By s/Xxxxx X. Failing, Jr.
-----------------------------
LIMITED PARTNERS:
BY: ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation, as
Attorney-in-Fact for the
Limited Partners named in
Schedule 1 annexed hereto
By s/Xxxxx X. Failing, Jr.
-------------------------------
Schedule 1
Names and Address Shares
Xxxx X. Xxxxxxxxx
00 Xxxx 00xx Xxxxxx, Xxx. 00X
Xxx Xxxx, Xxx Xxxx 00000 22,500
Xxxxx X. Xxxxxxxx
0 Xxxx 00xx Xxxxxx, Xxx. 00X
Xxx Xxxx, Xxx Xxxx 00000 15,000
BVP Nominees Limited
Xxxxxxxx House
St. Julian's Avenue
St. Xxxxx Port
Guernsey, Channel Islands 150,000
Coral Partners
c/o Douglas Xxxxxx
Xxxxxxxx Group, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000 15,000
ERS Holdings, Inc.
000 Xxxxx Xxx Xxxxxxxxxx
X-0000 Xxxxxxxxxx 150,000
Xxxxxxxx Xxxxx
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 0000
Xxxxxxxxx 3,750
Island Trading Company, Inc.
000 Xxxxxxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 108,750
F. Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx 0
Xxxxxxx Xxxx
Xxxxxx X.X.00 0XX
Xxxxxx Xxxxxxx 60,000
Xxxxxxx Investment Fund
0000 Xxxxxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000 187,500
Seabury Holdings Corp.
c/o Hanseatic Corporation
000 Xxxx Xxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 150,000
Xxxxxxxx Group, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000 135,000
Talwood Limited
0 Xxxx xx X'xxx
0000 Xxxxxx, Xxxxxxxxxxx 37,500
Xxxxxx X. Xxxxxxxxx/
Xxxxx X. Xxxxxxxxxxxx
000 Xxxxxxxxx Xxxxx, Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000 3,750
Xxxxxxx X. Xxxxx
30 Rockefeller Plaza - Room 0000
Xxx Xxxx, Xxx Xxxx 00000-0000 7,500
Xxxxx Xxxxxxx
000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000 15,000
Xxxxxx X. Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000 30,000
Xxxxxx X. Xxxxxx
00 Xxxx 00xx Xxxxxx, Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000 15,000
Xxxx X. Xxxxxx
00 Xxxxxxxxxxx Xxxxx - Xxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000 30,000
Xxxxx X. Xxxxxx Trust
000 Xxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 210,000
BBVG Capital 2 - Fondo De Capital
Riesgo
XX Xxxxxxxxxx, 00
Xxxxxx, Xxxxx 28046 37,500
Hanseatic Investments Limited, L.P.
c/o Hanseatic Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 15,000
Xxx X. Xxxxxxx
c/o X. X. Xxxxxxx-Xxxxxxxxxx
Xxxxx & Co.
Xxxxxxxxxxxxxxxx 00
0000 Xxxxxxx 0, Xxxxxxx 15,000
First Neck Corporation
c/o Xxxxx X. Xxxxxxxxxx
KPMG Peat Marwick
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 7,500
corp\ers\agreemnt\reorg.ers 12
