AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 17, 2003
BY AND AMONG
RAPIDTRON, INC., a Nevada corporation
(formerly THE FURNISHING CLUB)
AND
RTI ACQUISITION SUBSIDIARY, INC., a Nevada corporation
AND
RAPIDTRON INC., a Delaware corporation
TABLE OF CONTENTS
ARTICLE 1. The Merger 1
Section 1.1. The Merger 1
Section 1.2. Effective Time 1
Section 1.3. Closing of the Merger 2
Section 1.4. Effects of the Merger 2
Section 1.5. Board of Directors and Officers of RPDT 2
Section 1.6. Conversion of Shares 3
Section 1.7. Exchange of Certificates 4
Section 1.8. Stock Options 4
Section 1.9. Taking of Necessary Action; Further Action 4
Section 1.10. Option for Axess AG Shares 4
Section 1.11 Financing 5
Section 1.12 Options 5
ARTICLE 2. Representations and Warranties of RPDT and RTI SUB 6
Section 2.1. Organization and Qualification 6
Section 2.2. Capitalization of RPDT and RTI SUB 6
Section 2.3.Authority Relative to this Agreement; Recommendation. 7
Section 2.4. SEC Reports; Financial Statements 8
Section 2.5. Information Supplied 8
Section 2.6. Consents and Approvals; No Violations 8
Section 2.7. No Default 9
Section 2.8. No Undisclosed Liabilities; Absence of Changes 10
Section 2.9. Litigation 10
Section 2.10. Compliance with Applicable Law 10
Section 2.11. Employee Benefit Plans; Labor Matters 11
Section 2.12. Environmental Laws and Regulations 12
Section 2.13. Tax Matters 13
Section 2.14. Title To Property 13
Section 2.15. Intellectual Property 13
Section 2.16. Insurance 14
Section 2.17. Vote Required 14
Section 2.18. Tax Treatment 14
Section 2.19. Affiliates 14
Section 2.20. Certain Business Practices 14
Section 2.21. Insider Interests 14
Section 2.22. Opinion of Financial Adviser 15
Section 2.23. Brokers 15
Section 2.24. Disclosure 15
Section 2.25. No Existing Discussions 15
Section 2.26. Material Contracts 15
Section 2.27 Stockholder Claims 16
Section 2.28 Knowledge of RPDT 16
ARTICLE 3. Representations and Warranties of Rapidtron. 16
Section 3.1. Organization and Qualification 16
Section 3.2. Capitalization of Rapidtron 17
Section 3.3.Authority Relative to this Agreement; Recommendation 18
Section 3.4. SEC Reports; Financial Statements 18
Section 3.5. Information Supplied 18
Section 3.6. Consents and Approvals; No Violations 18
Section 3.7. No Default 19
Section 3.8 No Undisclosed Liabilities; Absence of Changes 19
Section 3.9. Litigation 20
Section 3.10. Compliance with Applicable Law 20
Section 3.11. Employee Benefit Plans; Labor Matters 20
Section 3.12. Environmental Laws and Regulations 22
Section 3.13. Tax Matters 22
Section 3.14. Title to Property 22
Section 3.15. Intellectual Property 23
Section 3.16. Insurance 23
Section 3.17. Vote Required 23
Section 3.18. Tax Treatment 23
Section 3.19. Affiliates 23
Section 3.20. Certain Business Practices 24
Section 3.21. Insider Interests 24
Section 3.22. Opinion of Financial Adviser 24
Section 3.23. Brokers 24
Section 3.24. Disclosure 24
Section 3.25. No Existing Discussions 24
Section 3.26. Material Contracts 24
Section 3.27 Affiliate Loans; Related Party Transactions;
Accrued Salaries 25
ARTICLE 4. Covenants 25
Section 4.1. Conduct of Business of RPDT and RTI SUB 25
Section 4.2. Conduct of Business of Rapidtron 27
Section 4.3. Preparation of SEC 29
Section 4.4. Meetings of Stockholders 29
Section 4.5. OTC:BB Listing 30
Section 4.6. Access to Information 30
Section 4.7. Additional Agreements; Reasonable Efforts. 30
Section 4.8. Employee Benefits; Stock Option and Employee
Purchase Plans 31
Section 4.9. Public Announcements 31
Section 4.10. Indemnification 31
Section 4.11. Notification of Certain Matters 32
ARTICLE 5. Conditions to Consummation of the Merger 33
Section 5.1. Conditions to Each Party's Obligations to Effect
the Merger 33
Section 5.2. Conditions to the Obligations of RPDT 33
Section 5.3. Conditions to the Obligations of Rapidtron 34
ARTICLE 6. Termination; Amendment; Waiver 35
Section 6.1. Termination 35
Section 6.2. Effect of Termination 36
Section 6.3. Fees and Expenses 36
Section 6.4. Amendment 36
Section 6.5. Extension; Waiver 36
ARTICLE 7. Miscellaneous 36
Section 7.1. Nonsurvival of Representations and Warranties 36
Section 7.2. Entire Agreement; Assignment 37
Section 7.3. Validity 37
Section 7.4. Notices 37
Section 7.5. Governing Law 37
Section 7.6. Descriptive Headings 38
Section 7.7. Parties in Interest 38
Section 7.8. Certain Definitions 38
Section 7.9. Personal Liability 38
Section 7.10. Specific Performance 38
Section 7.11. Construction 39
Section 7.12. Counterparts 39
Section 7.13. Confidentiality 39
SIGNATURES 40
Exhibit A - Employment Agreements
Exhibit B - Use of Proceeds
Exhibit C - Replacement Notes
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
January 17, 2003, is by and among Rapidtron, Inc., a Nevada corporation
formerly known as The Furnishing Club ("RPDT"), RTI Acquisition Subsidiary,
Inc., a Nevada corporation and wholly-owned subsidiary of RPDT ("RTI SUB"),
and Rapidtron, Inc., a Delaware corporation ("Rapidtron").
Whereas, the Boards of Directors of RPDT, RTI SUB and Rapidtron each
have, in light of and subject to the terms and conditions set forth herein,
(i) determined that the Merger (as defined below) is fair to their respective
stockholders and in the best interests of such stockholders and (ii) approved
the Merger in accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, RPDT, RTI SUB and Rapidtron desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
Now, therefore, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, RPDT, RTI SUB and Rapidtron hereby
agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with Chapter 78
of the Nevada Revised Statutes (the "NGCL"), RTI SUB shall be merged with and
into Rapidtron (as defined below) (the "Merger"). Following the Merger,
Rapidtron shall continue as the surviving corporation (the "Surviving
Corporation"), shall continue to be governed by the laws of the jurisdiction
of its incorporation or organization and the separate corporate existence of
RTI SUB shall cease. Rapidtron shall continue its existence as a wholly-owned
subsidiary of RPDT. The officers and directors of Rapidtron shall continue
to serve as the officers and directors of Rapidtron following the Merger.
Prior to the Effective Time, the parties hereto shall mutually agree as to
the name of the Surviving Corporation; however, initially the Surviving
Corporation shall be named Rapidtron USA, Inc. The Merger is intended to
qualify as a tax-free reorganization under Section 368 of the Code as relates
to the non-cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by each of Rapidtron, RTI SUB and
RPDT, and thereafter the Merger Certificate reflecting the Merger shall be
delivered on the Closing Date (as defined in Section 1.3) to the Exchange
Agent, who shall hold and file same with the Secretary of State of the State
of Nevada pursuant to the NGCL and the Secretary of State of Delaware for
filing pursuant to the Delaware General Corporation Law (the "Delaware Law"),
only upon satisfaction of the contingencies set forth in Article 5 hereof.
The Merger shall become effective at such time as a properly executed and
certified copy of the Merger Certificate is duly filed by both the Secretary
of State of the State of Nevada and the Secretary of State of the State of
Delaware or such later time as the parties may agree upon and set forth in
the Merger Certificate (the time at which the Merger becomes effective shall
be referred to herein as the "Effective Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Securities Law Institute, 0000 X.
Xxxxxxxx Xx., Xxxxx 000, Xxx Xxxxx, Xxxxxx, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL and the Delaware Law. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers of RTI SUB shall vest in the Surviving
Corporation, and all debts, liabilities and duties of RTI SUB shall become
the debts, liabilities and duties of the Surviving Corporation. Concurrently,
the Surviving Corporation shall remain a wholly owned subsidiary of RPDT.
Section 1.5. Board of Directors and Officers of RPDT. As of the
Effective Time, each of Rapidtron and RPDT agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of RPDT to be three (3) persons and (ii) to cause Xxxx Xxxxx and
Xxxxx Xxxxxxx (the "Rapidtron Designees") to be appointed as directors of
RPDT. In addition, majority stockholders of RPDT prior to the Effective Time
shall take all action necessary to cause, to the greatest extent practicable,
the Rapidtron Designees to serve on RPDT's Board of Directors until the next
Annual Meeting. If a Rapidtron Designee shall decline or be unable to serve
as a director prior to the Effective Time, Rapidtron shall nominate another
person to serve in such person's stead, which such person shall be subject to
approval of the other party. For a period of two (2) years following the
Effective Time, the current majority stockholders of Rapidtron shall take all
action necessary to cause, to the greatest extent practicable, Xxxxxxx
Xxxxxxxx (the "RPDT Designee") to be appointed or elected to serve as
Director of RPDT. If the RPDT Designee shall decline or be unable to serve
as a Director for the two (2) year period following the Effective Time, Xx.
Xxxx Xxxxxxxx shall nominate another person to serve in such person's stead.
From and after the Effective Time, and until successors are duly elected or
appointed and qualified in accordance with applicable law, Xxxx Xxxxx shall
be Chief Executive Officer, President and Chairman of the Board, and Xxxxx
Xxxxxxx shall be Secretary and Treasurer of RPDT, each pursuant to an
Employment Agreement in the form attached hereto as Exhibit A. At Closing,
RPDT shall deliver resignations signed by each of the then existing RPDT
Officers, effective at the Effective Time, and the RPDT Directors, excluding
Hendrik Rethwim, effective upon the later of ten (10) days following the
filing of an Information Statement pursuant to Regulation 14C which includes
the information required by Rule 14f-1 promulgated by the SEC, or the
Effective Time.
Section 1.6. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $0.001
per share of Rapidtron (individually a "Rapidtron Share" and collectively,
the "Rapidtron Shares") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of Rapidtron, RPDT, RTI SUB or the holder thereof, be converted into and
shall become fully paid and nonassessable shares of RPDT common stock
determined by dividing (i) Nine Million Six Hundred Thousand (9,600,000), by
(ii) the total number of shares of Rapidtron, Ten Million Fifty-two Thousand
(10,052,000), outstanding immediately prior to the Effective Time (such
quotient, the "Exchange Ratio"). Each holder of one or more shares of
Rapidtron common stock shall receive in exchange therefor a number of shares
of RPDT Shares ("RPDT Shares") equal to the product of (x) the number of
shares of Rapidtron common stock owned by such holder, times (y) the Exchange
Ratio. No fractional shares shall be issued, and any right to receive a
fractional share shall be converted to cash at the rate of $1.00 per share.
RPDT Shares and Rapidtron Shares are sometimes referred to collectively
herein as "Shares." By way of example, 9,600,000/10,052,000 = 0.955033824
(the Exchange Ratio). The number of shares of Rapidtron common stock held by
a stockholder (100,000) times the Exchange Ratio of 0.955033824 equals 95,503
shares of RPDT Shares to be issued, plus $0.38.
(b) Rapidtron hereby acknowledges that (i) the RPDT Shares have not been
and will not be registered under the Securities Act of 1933 ("1933 Act") or
under the securities laws of any state and, therefore, the RPDT Shares cannot
be resold unless they are subsequently registered under said laws or
exemptions from such registrations are available; and (ii) the
transferability of the Shares is restricted and that a legend shall be placed
on the certificates representing the securities substantially to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT WITH
RESPECT TO SUCH SHARES, OR AN OPINION SATISFACTORY TO THE ISSUER AND
ITS COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
(c) At the Effective Time, each Rapidtron Share held in the treasury of
Rapidtron, by Rapidtron immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of Rapidtron, RTI SUB
or RPDT be canceled, retired and cease to exist and no payment shall be made
with respect thereto.
(d) Concurrent with the Closing of the Merger, RPDT stockholders holding
Thirteen Million Nine Hundred Forty-Three Thousand Seven Hundred Fifty
(13,943,750) shares of RPDT common stock, shall tender to RPDT, for no
consideration, all of the shares to RPDT for cancellation and such shares
shall be cancelled concurrent with the Effective Time.
(e) Concurrent with the Closing of the Merger, RPDT shall amend its
Articles of Incorporation to increase its authorized common stock from
20,000,000 shares to 100,000,000 shares, par value $0.001.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, RPDT shall enter into an agreement
with, and shall deposit with, Securities Law Institute, or such other agent
or agents as may be satisfactory to RPDT and Rapidtron (the "Exchange
Agent"), for the benefit of the holders of Rapidtron Shares, for exchange
through the Exchange Agent in accordance with this Article I: (i)
certificates representing the appropriate number of RPDT Shares to be issued
to holders of Rapidtron Shares issuable pursuant to Section 1.6 in exchange
for outstanding Rapidtron Shares (the "RPDT Certificates").
(b) Effective as of the Effective Time, RPDT shall issue the RPDT Shares
to all of the Rapidtron stockholders in accordance with Section 1.6, and at
the Effective Time, the Exchange Agent shall mail to each holder of record of
Rapidtron identified in the Rapidtron Disclosure Schedule, the RPDT
Certificate representing the RPDT Shares issued to such Rapidtron
stockholder.
(c) In the event that any Certificate for Rapidtron Shares or RPDT
Shares shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange therefor, upon the making of an affidavit of that fact by
the holder thereof such RPDT Shares and cash in lieu of fractional RPDT
Shares, if any, as may be required pursuant to this Agreement; provided,
however, that the Exchange Agent may require the delivery of a suitable bond,
opinion or indemnity.
(d) No fractional RPDT Shares shall be issued in the Merger, but in lieu
thereof each holder of Rapidtron Shares otherwise entitled to a fractional
RPDT Share shall receive an additional share to round up to the nearest round
number of shares.
Section 1.8. Stock Options. At the Effective Time, each outstanding
option to purchase Rapidtron Shares, if any (a "Rapidtron Stock Option" or
collectively, "Rapidtron Stock Options") issued pursuant to any Rapidtron
Stock Option Plan or Rapidtron Long Term Incentive Plan whether vested or
unvested, shall be cancelled.
Section 1.9. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, Rapidtron or RPDT reasonably determines that any
deeds, assignments, or instruments or confirmations of transfer are necessary
or desirable to carry out the purposes of this Agreement and to vest RPDT
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Rapidtron, the officers and directors of
RPDT and Rapidtron are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary or desirable action.
Section 1.10. Option for Axess AG Shares. Prior to the Effective Time,
Rapidtron shall use its reasonable best efforts to ensure that an option
agreement will be in place between RPDT and the shareholders and management
of Axess AG, whereby RPDT will have the right to acquire approximately 35% of
Axess AG's issued and outstanding shares, currently held by Axess AG's
management, in exchange for 5,950,000 shares of restricted common stock of
RPDT. The option shall remain effective for 6 months from the date it is
executed.
Section 1.11. Financing. Within the later of (a) ten (10) days
following the filing of the Schedule 14C to approve this transaction, or (b)
satisfaction of all comments by the SEC to the Schedule 14C, RPDT shall cause
to be loaned Five Hundred Thousand Dollars ($500,000) to Rapidtron pursuant
to a Convertible Note (the "Convertible Note"), in substantially the same
form as the Replacement Notes (defined in Section 5.3(d) below). The
Convertible Note and Replacement Notes shall, upon Closing, be converted into
restricted shares of common stock of RPDT at the rate of $1.00 per share.
Following Closing, RPDT shall use its commercially reasonable best efforts to
sell in a private placement offering (the "Private Placement"), up to One
Million (1,000,000) shares of RPDT restricted common stock at no less than
One Dollar ($1.00) per share, that combined with the proceeds of the Bridge
Notes (defined in Section 5.2(f) below) and the Convertible Note, shall
result in total proceeds of at least Two Million dollars ($2,000,000),
pursuant to those private placement documents and related subscription
agreements previously delivered to Rapidtron. The proceeds of the Private
Placement shall be available to RPDT as follows: $250,000 within thirty (30)
days following Closing, an additional $500,000 within sixty (60) days
following Closing, and an additional $250,000 within ninety (90) days
following Closing (the "Funding Schedule"). Provided that the Funding
Schedule is timely met, the proceeds shall be used by RPDT and/ or Rapidtron
only in accordanced with the use of proceeds set forth on Exhibit C, attached
hereto and incorporated herein (the "Use of Proceeds"). The expenses of RPDT
set forth in and permitted by Section 2.8 below, shall be paid from the
proceeds of the Convertible Note. For six (6) months following Closing,
Rapidtron shall deliver to Xx. Xxxx Xxxxxxxx a copy of the unaudited,
combined financial statements and general ledger of RPDT and Rapidtron within
fifteen (15) days following the end of each month to confirm Rapditron's
compliance with the Use of Proceeds as set forth in Exhibit B; provided,
however, as a condition to receipt of such information, Xx. Xxxxxxxx shall
execute a reasonable confidentiality agreement with RPDT, pursuant to which
Xx. Xxxxxxxx shall agree not to trade any of RPDT's stock during such six (6)
month period and for thirty (30) days following receipt of the last financial
statements.
Section 1.12 Options. Through the calendar year 2005, employee stock
options granted by RPDT shall not exceed fifteen percent (15%) of the then
total issued and outstanding shares of common stock of RPDT, on an as-
converted basis, and the exercise price shall be the lesser of $1.00 or fair
market value. Such stock options shall vest pro rata over the period ending
December 31, 2005. All other terms of the employee stock option plans in
effect through December 31, 2005, shall be approved by unanimous consent of
the directors, unless such other terms are otherwise set forth in the
Employment Agreements attached hereto.
ARTICLE 2
Representations and Warranties of RPDT and RTI SUB
Each of RPDT and RTI SUB hereby represents, warrants and covenants to
Rapidtron as follows:
Section 2.1. Organization and Qualification.
(a) Each of RPDT and RTI SUB is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Material Adverse Effect (as
defined below) on RPDT. When used in connection with RPDT, the term "Material
Adverse Effect" means any change or effect (i) that is or is reasonably
likely to be materially adverse to the business, results of operations,
condition (financial or otherwise) or prospects of RPDT, (ii) that may impair
the ability of RPDT to perform its obligations hereunder or to consummate the
transactions contemplated hereby, or (iii) that causes or is reasonably
expected to cause RPDT to spend more than $5,000.
(b) RPDT has heretofore delivered to Rapidtron accurate and complete
copies of the Articles of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of RPDT and RTI SUB. Except as set forth
on Schedule 2.1 of the "RPDT Disclosure Schedule" attached hereto, each of
RPDT and RTI SUB is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property is owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on RPDT.
Section 2.2. Capitalization of RPDT and RTI SUB.
(a) The authorized capital stock of RPDT consists of: (i) Twenty Million
(20,000,000) RPDT Common Shares, par value $0.001 per share, of which, as of
the date of this Agreement, Nineteen Million Nine Hundred Ninety Three
Thousand Seven Hundred Fifty-two (19,993,752) RPDT Shares were issued and
outstanding, (ii) Five Million (5,000,000) RPDT Preferred Shares, par value
$0.001 per share, of which, as of December 1, 2002 there were no preferred
outstanding, and no RPDT Shares were held in treasury. The authorized capital
stock of RTI SUB consists of 20,000,000 shares of common stock ("RTI SUB
Shares"), of which, as of the date of this Agreement, 1,000,000 were issued
and outstanding. All of the outstanding RPDT Shares and RTI SUB Shares have
been duly authorized and validly issued, and are fully paid, nonassessable
and free of preemptive rights. Except as set forth herein, as of the date
hereof, there are no outstanding (i) shares of capital stock or other voting
securities of RPDT or RTI SUB, (ii) securities of RPDT convertible into or
exchangeable for shares of capital stock or voting securities of either RPDT
or RTI SUB, (iii) options or other rights to acquire from RPDT or RTI SUB
and, except as described in the RPDT SEC Reports (as defined below), no
obligations of RPDT or RTI SUB to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of RPDT or RTI SUB, and (iv) equity equivalents, derivatives,
interests in the ownership or earnings of RPDT or RTI SUB or other similar
rights (collectively, "RPDT Securities"). As of the date hereof, there are no
outstanding obligations of RPDT or its subsidiaries to repurchase, redeem or
otherwise acquire any RPDT Securities or stockholder agreements, voting
trusts or other agreements or understandings to which RPDT is a party or by
which it is bound relating to the voting or registration of any shares of
capital stock of RPDT or RTI SUB. For purposes of this Agreement, ``Lien"
means, with respect to any asset (including, without limitation, any
security) any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
(b) The RPDT Shares constitute the only class of equity securities of
RPDT registered or required to be registered under the Exchange Act.
(c) Other than its 100% ownership of RTI SUB, RPDT does not own directly
or indirectly the outstanding voting securities or interests (including
membership interests) of any entity.
(d) Concurrent with the Closing of the Merger, the RPDT stockholders
identified on the RPDT Disclosure Schedule, holding collectively 13,943,750
shares of restricted common stock, shall tender to RPDT for cancellation all
of the above mentioned shares, each in the amount set forth on the RPDT
Disclosure Schedule.
(e) Concurrent with the Closing of the Merger, RPDT shall amend its
Articles of Incorporation to increase its authorized common stock from
20,000,000 shares to 100,000,000 shares, par value $0.001. RPDT shall comply
at its sole cost and expense, with Regulation 14A or 14C, as may be
applicable, when seeking the approval of such amendment and the approval of
this Agreement.
Section 2.3. Authority Relative to this Agreement; Recommendation. RPDT
and RTI SUB has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly and validly authorized
by the Board of Directors of RPDT (the "RPDT Board") and no other corporate
proceedings on the part of RPDT are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 2.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding RPDT Shares. This Agreement has
been duly and validly executed and delivered by RPDT and constitutes a valid,
legal and binding agreement of RPDT, enforceable against RPDT in accordance
with its terms. Prior to Closing, RPDT shall obtain approval of the Merger
and the transactions contemplated herein in accordance with Section 78.378,
et seq. of the Nevada Revised Statutes, and shall deliver the notice to
Stockholders required by the NGCL.
Section 2.4. SEC Reports; Financial Statements.
(a) RPDT has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since the filing of its
initial registration statement on Form 10-SB on October 6, 2000, each of
which has complied in all material respects with all applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act (and the rules and regulations promulgated thereunder,
respectively), each as in effect on the dates such forms, reports and
documents were filed. RPDT has heretofore delivered or promptly will deliver
prior to the Effective Time to Rapidtron, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits): (i) its Annual
Reports on Form 10-KSB for the fiscal years ended December 31, 2000 and 2001,
(ii) all definitive proxy statements relating to RPDT's meetings of
stockholders (whether annual or special) held since October 6, 2000, if any,
and (iii) all other proxy solicitations, reports or registration statements
filed by RPDT with the SEC since October 6, 2000 or any similar state agency
at any time (all of the foregoing, collectively, the "RPDT SEC Reports").
None of such RPDT SEC Reports, including, without limitation, any financial
statements or schedules included or incorporated by reference therein,
contain any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
financial statements of RPDT included in the RPDT SEC Reports fairly present,
in conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
financial position of RPDT as of the dates thereof and its results of
operations and changes in financial position for the periods then ended. All
material agreements, contracts and other documents required to be filed as
exhibits to any of the RPDT SEC Reports have been so filed.
(b) RPDT has heretofore made available or promptly will make available
to Rapidtron a complete and correct copy of any amendments or modifications
which are required to be filed with the SEC but have not yet been filed with
the SEC, to agreements, documents or other instruments which previously had
been filed by RPDT with the SEC pursuant to the Exchange Act.
(c) RPDT shall prior to the Effective Time cause its independent auditor
to deliver complete audited financial statements for the period ending
December 31, 2002, ready to be filed with the Form 10-KSB (if not already
filed), and a current copy of all documents in the auditor's file regarding
RPDT, including work product, so that the new officers and directors of RPDT
can cause the annual audit of RPDT for the year 2003 to be performed by a new
auditor to be appointed by the new directors following the Closing. In
addition, RPDT shall obtain at its sole cost and expense and cause its
existing accountant to provide the letter to the SEC required by Regulation
229.304 (item 304). At Closing, RPDT shall not have any outstanding or
unpaid liability for the foregoing, except as disclosed and permitted
pursuant to Section 2.8 below.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by RPDT for inclusion or incorporation by reference in
connection with the Merger (the "Information Statement") will at the date
mailed to stockholders of RPDT and at the times of the meeting or meetings of
stockholders of RPDT to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Information Statement, or proxy material insofar as it
relates to the majority consent of RPDT's stockholders for the Merger, will
comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
Section 2.6. Consents and Approvals; No Violations. At Closing, no
filing with or notice to, and no permit, authorization, consent or approval
of, any court or tribunal or administrative, governmental or regulatory body,
agency or authority (a "Governmental Entity") shall be necessary for the
execution and delivery by RPDT or RTI SUB of this Agreement or the
consummation by RPDT and RTI SUB of the transactions contemplated hereby,
except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings or give such notice would not have a
Material Adverse Effect on RPDT.
Except as set forth in Section 2.6 of the RPDT Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by RPDT or
RTI SUB nor the consummation by RPDT or RTI SUB of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective Articles of Incorporation or Bylaws (or similar
governing documents) of RPDT or RTI SUB, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which RPDT or RTI SUB is a party or by
which any of its properties or assets may be bound, or (iii) violate any
order, writ, injunction, decree, law, statute, rule or regulation applicable
to RPDT or RTI SUB or any of its properties or assets, except in the case of
(ii) or (iii) for violations, breaches or defaults which would not have a
Material Adverse Effect on RPDT or RTI SUB.
Section 2.7. No Default. Except as set forth in Section 2.7 of the RPDT
Disclosure Schedule, neither RPDT nor RTI SUB is in breach, default or
violation (and no event has occurred which with notice or the lapse of time
or both would constitute a breach, default or violation) of any term,
condition or provision of (i) its Articles of Incorporation or Bylaws (or
similar governing documents), (ii) any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which RPDT or RTI SUB is now a party or by which any of its respective
properties or assets may be bound or (iii) any order, writ, injunction,
decree, law, statute, rule or regulation applicable to RPDT or RTI SUB or any
of its respective properties or assets, except in the case of (ii) or (iii)
for violations, breaches or defaults that would not have a Material Adverse
Effect on RPDT. Except as set forth in Section 2.7 of the RPDT Disclosure
Schedule, each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which RPDT or RTI SUB is now a
party or by which its respective properties or assets may be bound that is
material to RPDT or RTI SUB and that has not expired is in full force and
effect and is not subject to any material default thereunder of which RPDT or
RTI SUB is aware by any party obligated to RPDT or RTI SUB thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the RPDT Disclosure Schedule, as of the date of
this Agreement and Closing, RPDT does not and shall not have any liabilities
or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles
to be reflected on a balance sheet of RPDT (including the notes thereto) or
which would have a Material Adverse Effect on RPDT. Except as set forth in
Section 2.8 of the RPDT Disclosure Schedule, since September 30, 2002, RPDT
has not incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which could reasonably be expected to have, and
there have been no events, changes or effects with respect to RPDT having or
which reasonably could be expected to have, a Material Adverse Effect on
RPDT. Except as set forth in Section 2.8 of the RPDT Disclosure Schedule,
since September 30, 2002, there has not been (i) any material change by RPDT
in its accounting methods, principles or practices (other than as required
after the date hereof by concurrent changes in generally accepted accounting
principles), (ii) any revaluation by RPDT of any of its assets having a
Material Adverse Effect on RPDT, including, without limitation, any
write-down of the value of any assets other than in the ordinary course of
business or (iii) any other action or event that would have required the
consent of any other party hereto pursuant to Section 4.1 of this Agreement
had such action or event occurred after the date of this Agreement. All
liabilities and potential liabilities of RPDT (except any de minimus
liabilities not exceeding $500.00 in the aggregate) are set forth in Section
2.8 of the RPDT Disclosure Schedule and shall not exceed Fifty Thousand
Dollars ($50,000.00) in the aggregate, and at Closing, RPDT shall have no
other liabilities whatsoever (provided, however, Rapidtron shall have no
right to terminate this Agreement as a result of a breach of the
representation and warranty contained in this sentence unless (i) RPDT knew
or should have known of such liability, or (ii) such liability would have a
Material Adverse Effect upon RPDT).
Section 2.9. Litigation. Except as disclosed in Section 2.9 of the RPDT
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of RPDT, threatened against RPDT
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on RPDT or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Neither RPDT nor RTI SUB is
subject to any outstanding order, writ, injunction or decree which, insofar
as can be reasonably foreseen in the future, could reasonably be expected to
have a Material Adverse Effect on RPDT or RTI SUB or could reasonably be
expected to prevent or delay the consummation of the transactions
contemplated hereby.
Section 2.10. Compliance with Applicable Law. RPDT holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
"RPDT Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which would not have a Material
Adverse Effect on RPDT. RPDT is in compliance with the terms of the RPDT
Permits, except where the failure so to comply would not have a Material
Adverse Effect on RPDT. The business of RPDT is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity
except that no representation or warranty is made in this Section 2.10 with
respect to Environmental Laws (as defined in Section 2.12 below) and except
for violations or possible violations which do not, and, insofar as
reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on RPDT. No investigation or review by any Governmental Entity with
respect to RPDT is pending or, to the knowledge of RPDT, threatened, nor, to
the knowledge of RPDT, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which RPDT reasonably
believes will not have a Material Adverse Effect on RPDT.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the RPDT Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by RPDT or RTI SUB or any entity required to be aggregated with RPDT
pursuant to Section 414 of the Code (each, a "RPDT Employee Plan"), no event
has occurred and to the knowledge of RPDT, no condition or set of
circumstances exists in connection with which RPDT could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on RPDT.
(b) (i) No RPDT Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each RPDT Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the RPDT Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any RPDT Stock Options, together with the number of RPDT Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the RPDT
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. RPDT has furnished Rapidtron with
complete copies of the plans pursuant to which the RPDT Stock Options were
issued. Other than the automatic vesting of RPDT Stock Options that may occur
without any action on the part of RPDT or its officers or directors, RPDT has
not taken any action that would result in any RPDT Stock Options that are
unvested becoming vested in connection with or as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby. All such options and other employment agreements shall
be terminated as of Closing, and RPDT shall have no liability to any such
parties except as disclosed and permitted pursuant to Section 2.8 above.
(d) RPDT has made available to Rapidtron (i) a description of the terms
of employment and compensation arrangements of all officers of RPDT and a
copy of each such agreement currently in effect; (ii) copies of all written
agreements or a complete description of all oral agreements with consultants
who are individuals obligating RPDT to make annual cash payments in an amount
exceeding $10,000; (iii) a schedule listing all officers of RPDT who have
executed a non-competition agreement with RPDT and a copy of each such
agreement currently in effect; (iv) copies (or descriptions) of all severance
agreements, programs and policies of RPDT with or relating to its employees,
except programs and policies required to be maintained by law; and (v) copies
of all plans, programs, agreements and other arrangements of RPDT with or
relating to its employees which contain change in control provisions all of
which are set forth in Section 2.11(d) of the RPDT Disclosure Schedule. All
such employment and other agreements shall be terminated as of Closing, and
RPDT shall have no liability to any such parties except as disclosed and
permitted pursuant to Section 2.8 above.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any RPDT Employee
Plan or any agreement or arrangement disclosed under this Section 2.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of RPDT,
threatened, between RPDT and any of their employees. Neither RPDT nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by RPDT or any of its
subsidiaries (and neither RPDT nor any of its subsidiaries has any
outstanding material liability with respect to any terminated collective
bargaining agreement or labor union contract), nor does RPDT know of any
activities or proceedings of any labor union to organize any of its or
employees. RPDT has no knowledge of any strike, slowdown, work stoppage,
lockout or threat thereof, by or with respect to any of its employees.
Section 2.12. Environmental Laws and Regulations.
(a) (i) RPDT and RTI SUB is in material compliance with all applicable
federal, state, local and foreign laws and regulations relating to pollution
or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) (collectively, "Environmental Laws"), except for
non-compliance that would not have a Material Adverse Effect on RPDT, which
compliance includes, but is not limited to, the possession by RPDT of all
material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (ii) RPDT has not received written notice of, or, to the knowledge
of RPDT, is the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability
under or non-compliance with any Environmental Law (an ``Environmental
Claim") that could reasonably be expected to have a Material Adverse Effect
on RPDT; and (iii) to the knowledge of RPDT, there are no circumstances that
are reasonably likely to prevent or interfere with such material compliance
in the future.
(b) There are no Environmental Claims which could reasonably be expected
to have a Material Adverse Effect on RPDT that are pending or, to the
knowledge of RPDT, threatened against RPDT or, to the knowledge of RPDT,
against any person or entity whose liability for any Environmental Claim RPDT
has or may have retained or assumed either contractually or by operation of
law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the RPDT Disclosure Schedule:
(i) RPDT has filed or has had filed on its behalf in a timely manner (within
any applicable extension periods) with the appropriate Governmental Entity
all income and other material Tax Returns (as defined herein) with respect to
Taxes (as defined herein) of RPDT and all Tax Returns were in all material
respects true, complete and correct, except the income tax return for the
calendar year 2001 which shall be filed prior to Closing, and the income tax
return for the calendar year 2002, which shall be filed prior to the
Effective Time; (ii) all material Taxes with respect to RPDT have been paid
in full or have been provided for in accordance with GAAP on RPDT's most
recent balance sheet which is part of the RPDT SEC Documents. (iii) there are
no outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local or foreign income or
other material Tax Returns required to be filed by or with respect to RPDT;
(iv) to the knowledge of RPDT none of the Tax Returns of or with respect to
RPDT is currently being audited or examined by any Governmental Entity; and
(v) no deficiency for any income or other material Taxes has been assessed
with respect to RPDT which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. Each of RPDT and RTI SUB has good and
defensible title to all of its properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which, individually or in the aggregate, would
not have a Material Adverse Effect on RPDT; and, to RPDT's knowledge, all
leases pursuant to which RPDT leases from others real or personal property
are in good standing, valid and effective in accordance with their respective
terms, and there is not, to the knowledge of RPDT, under any of such leases,
any existing material default or event of default (or event which with notice
of lapse of time, or both, would constitute a default and in respect of which
RPDT has not taken adequate steps to prevent such a default from occurring)
except where the lack of such good standing, validity and effectiveness, or
the existence of such default or event, would not have a Material Adverse
Effect on RPDT.
Section 2.15. Intellectual Property.
(a) Each of RPDT and RTI SUB owns, or possesses adequate licenses or
other valid rights to use, all existing United States and foreign patents,
trademarks, trade names, service marks, copyrights, trade secrets and
applications therefor that are material to its business as currently
conducted (the "RPDT Intellectual Property Rights").
(b) The validity of the RPDT Intellectual Property Rights and the title
thereto of RPDT is not being questioned in any litigation to which RPDT is a
party.
(c) Except as set forth in Section 2.15(c) of the RPDT Disclosure
Schedule, the conduct of the business of RPDT as now conducted does not, to
RPDT's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any RPDT
Intellectual Property Rights. Rapidtron acknowledges and consents to RPDT's
use of the corporate name Rapidtron during the term of this Agreement, and in
the event the Merger fails to Close or this Agreement is otherwise
terminated, RPDT shall immediately cease using the tradename Rapidtron and
shall seek to promptly change its corporate name from Rapidtron, Inc. to a
dissimilar name.
(d) RPDT has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where RPDT has elected to rely on
patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. RPDT currently does not maintain general
liability or other business insurance.
Section 2.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding RPDT Shares is the only vote of the
holders of any class or series of RPDT's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 2.18. Tax Treatment. Neither RPDT nor, to the knowledge of RPDT,
any of its affiliates has taken or agreed to take action that would prevent
the Merger from constituting a reorganization qualifying under the provisions
of Section 368 of the Code.
Section 2.19. Affiliates. Except for Principal RPDT Stockholders ("PFS")
and the directors and executive officers of RPDT, each of whom is listed in
Section 2.19 of the RPDT Disclosure Schedule, there are no persons who, to
the knowledge of RPDT, may be deemed to be affiliates of RPDT under Rule
1-02(b) of Regulation S-X of the SEC (the "RPDT Affiliates").
Section 2.20. Certain Business Practices. None of RPDT, RTI SUB, or any
directors, officers, agents or employees of RPDT or RTI SUB has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), or (iii) made
any other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of
the RPDT Disclosure Schedule, no officer or director of RPDT or RTI SUB has
any interest in any material property, real or personal, tangible or
intangible, including without limitation, any computer software or RPDT
Intellectual Property Rights, used in or pertaining to the business of RPDT,
except for the ordinary rights of a stockholder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the RPDT Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of RPDT Shares.
Section 2.23. Brokers. Except as set forth in Section 2.23 of the RPDT
Disclosure Schedule, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of RPDT or RTI SUB.
Section 2.24. Disclosure. No representation or warranty of RPDT or RTI
SUB in this Agreement or any certificate, schedule, document or other
instrument furnished or to be furnished to Rapidtron pursuant hereto or in
connection herewith contains, as of the date of such representation, warranty
or instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, neither
RPDT nor RTI SUB is engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to any Third Party
Acquisition.
Section 2.26. Material Contracts.
(a) RPDT and RTI SUB has delivered or otherwise made available to
Rapidtron true, correct and complete copies of all contracts and agreements
(and all amendments, modifications and supplements thereto and all side
letters to which RPDT is a party affecting the obligations of any party
thereunder) to which RPDT is a party or by which any of its properties or
assets are bound that are material to the business, properties or assets of
RPDT taken as a whole, including, without limitation, to the extent any of
the following are, individually or in the aggregate, material to the
business, properties or assets of RPDT taken as a whole, all: (i) employment,
product design or development, personal services, consulting,
non-competition, severance, golden parachute or indemnification contracts
(including, without limitation, any contract to which RPDT is a party
involving employees of RPDT); (ii) licensing, publishing, merchandising or
distribution agreements; (iii) contracts granting rights of first refusal or
first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise entered into since September 30, 2002; (vi)
contracts or agreements with any Governmental Entity. and (vii) all
commitments and agreements to enter into any of the foregoing (collectively,
together with any such contracts entered into in accordance with Section 4.1
hereof, the "RPDT Contracts"). RPDT is not a party to or bound by any
severance, golden parachute or other agreement with any employee or
consultant pursuant to which such person would be entitled to receive any
additional compensation or an accelerated payment of compensation as a result
of the consummation of the transactions contemplated hereby.
(b) Each of the RPDT Contracts is valid and enforceable in accordance
with its terms, and there is no default under any RPDT Contract so listed
either by RPDT or, to the knowledge of RPDT, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by RPDT or, to the knowledge of
RPDT, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on RPDT.
(c) No party to any such RPDT Contract has given notice to RPDT of or
made a claim against RPDT with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be expected
to have a Material Adverse Effect on RPDT.
Section 2.27. Stockholder Claims. To the best of RPDT's knowledge,
there are no existing Claims against RPDT by any current or former
stockholders of RPDT.
Section 2.28. Knowledge of RPDT. For purposes of the representations
and warranties made by RPDT pursuant to this Article 2, knowledge of RPDT
shall include the knowledge of all officers and directors, past and present.
ARTICLE 3
Representations and Warranties of Rapidtron
Except as set forth on the Disclosure Schedule delivered by Rapidtron to
RPDT (the "Rapidtron Disclosure Schedule") or as otherwise set forth in this
Agreement, Rapidtron hereby represents and warrants, and Xxxx Xxxxx
represents to his actual knowledge, to RPDT, as follows:
Section 3.1. Organization and Qualification.
(a) Each of Rapidtron and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its businesses as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority would not have a Material
Adverse Effect (as defined below) on Rapidtron. When used in connection with
Rapidtron, the term "Material Adverse Effect'' means any change or effect (i)
that is or is reasonably likely to be materially adverse to the business,
results of operations, condition (financial or otherwise) or prospects of
Rapidtron and its subsidiaries, taken as a whole, other than any change or
effect arising out of general economic conditions unrelated to any businesses
in which Rapidtron and its subsidiaries are engaged, or (ii) that may impair
the ability of Rapidtron to consummate the transactions contemplated hereby.
(b) Rapidtron has heretofore delivered to RPDT accurate and complete
copies of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of Rapidtron. Each of Rapidtron and its
subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not have a Material
Adverse Effect on Rapidtron.
Section 3.2. Capitalization of Rapidtron.
(a) The authorized capital stock of Rapidtron consists of: (i) Twenty
Million (20,000,000) Rapidtron Common Shares, par value $0.001 per share, of
which, as of December 31, 2002, Ten Million Fifty-two Thousand (10,052,000)
Rapidtron Shares were issued and outstanding, and (ii) Five Million
(5,000,000) Rapidtron Preferred Shares, par value $0.001 per share, of which,
as of December 31, 2002 there were no preferred shares outstanding, and no
Rapidtron Shares were held in treasury. As of December 31, 2002 there were
1,325,000 Rapidtron Shares reserved for issuance pursuant to certain stock
option agreements, all of which will be cancelled upon Closing of this
Agreement. All of the outstanding Rapidtron Shares have been duly authorized
and validly issued, and are fully paid, nonassessable and free of preemptive
rights. Except as set forth herein, as of the date hereof, there are no
outstanding (i) shares of capital stock or other voting securities of
Rapidtron, (ii) securities of Rapidtron convertible into or exchangeable for
shares of capital stock or voting securities of Rapidtron, (iii) options or
other rights to acquire from Rapidtron and, no obligations of Rapidtron to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Rapidtron, and (iv)
equity equivalents, interests in the ownership or earnings of Rapidtron or
other similar rights (collectively, "Rapidtron Securities"). As of the date
hereof, except as set forth on Schedule 3.2(a) of the Rapidtron Disclosure
Schedule there are no outstanding obligations of Rapidtron or its
subsidiaries to repurchase, redeem or otherwise acquire any Rapidtron
Securities or stockholder agreements, voting trusts or other agreements or
understandings to which Rapidtron is a party or by which it is bound relating
to the voting or registration of any shares of capital stock of Rapidtron.
(b) Except as set forth in Section 3.2(b) of the Rapidtron Disclosure
Schedule, Rapidtron is the record and beneficial owner of all of the issued
and outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the Rapidtron Disclosure
Schedule, between January 1, 2003 and the date hereof, no shares of
Rapidtron's capital stock have been issued and no Rapidtron Stock options
have been granted.
(d) Except as set forth in Section 3.2(d) of the Rapidtron Disclosure
Schedule, there are no securities of Rapidtron convertible into or
exchangeable for, no options or other rights to acquire from Rapidtron, and
no other contract, understanding, arrangement or obligation (whether or not
contingent) providing for the issuance or sale, directly or indirectly, of
any capital stock or other ownership interests in, or any other securities
of, any subsidiary of Rapidtron.
(e) The Rapidtron Shares constitute the only class of equity securities
of Rapidtron or its subsidiaries currently issued and outstanding.
(f) Except as set forth in Section 3.2(f) of the Rapidtron Disclosure
Schedule or otherwise contemplated in this Agreement with respect to Axess
AG, Rapidtron does not own directly or indirectly any outstanding voting
securities or interests (including membership interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) Rapidtron has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Rapidtron (the "Rapidtron Board"), and no other
corporate proceedings on the part of Rapidtron are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby, except,
as referred to in Section 3.17, the approval and adoption of this Agreement
by the holders of at least a majority of the then outstanding Rapidtron
Shares. This Agreement has been duly and validly executed and delivered by
Rapidtron and constitutes a valid, legal and binding agreement of Rapidtron,
enforceable against Rapidtron in accordance with its terms.
(b) The Rapidtron Board has resolved to recommend that the shareholders
of Rapidtron approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements. Rapidtron's stock is not
registered under the Exchange Act, and Rapidtron is not required to file
periodic reports under Section 12 or 15(d) thereunder.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by Rapidtron for inclusion or incorporation by reference to
the RPDT Information Statement, 8-K or other SEC Report will, at the time it
is delivered to RPDT or confirmed in writing prior to filing with the SEC,
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, and none of the information supplied or to be
supplied by Rapidtron for inclusion or incorporation by reference to the
Information Statement will, at the date mailed to stockholders of RPDT and at
the times of the meeting or meetings of stockholders of RPDT to be held in
connection with the Merger, if necessary, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the Rapidtron Disclosure Schedule, and for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
Rapidtron of this Agreement or the consummation by Rapidtron of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or
give such notice would not have a Material Adverse Effect on Rapidtron.
Neither the execution, delivery and performance of this Agreement by
Rapidtron nor the consummation by Rapidtron of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of Rapidtron or any of Rapidtron's subsidiaries, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Rapidtron or any of
Rapidtron's subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or (iii) violate any order,
writ, injunction, decree, law, statute, rule or regulation applicable to
Rapidtron or any of Rapidtron's subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Material Adverse Effect on
Rapidtron.
Section 3.7. No Default. Except as set forth on the Disclosure Schedule,
none of Rapidtron or any of its subsidiaries is in breach, default or
violation (and no event has occurred which with notice or the lapse of time
or both would constitute a breach, default or violation) of any term,
condition or provision of (i) its Certificate of Incorporation or Bylaws (or
similar governing documents), (ii) any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which Rapidtron or any of its subsidiaries is now a party or by which any of
them or any of their respective properties or assets may be bound or (iii)
any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Rapidtron, its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults that would not have a Material Adverse Effect on
Rapidtron. Each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Rapidtron or any of its
subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound that is material to Rapidtron
and its subsidiaries taken as a whole and that has not expired is in full
force and effect and is not subject to any material default thereunder of
which Rapidtron is aware by any party obligated to Rapidtron or any
subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed by Rapidtron, none of Rapidtron or its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of Rapidtron and its consolidated subsidiaries (including the notes
thereto) or which would have a Material Adverse Effect on Rapidtron. Except
as disclosed by Rapidtron, none of Rapidtron or its subsidiaries has incurred
any liabilities of any nature, whether or not accrued, contingent or
otherwise, which could reasonably be expected to have, and there have been no
events, changes or effects with respect to Rapidtron or its subsidiaries
having or which could reasonably be expected to have, a Material Adverse
Effect on Rapidtron. Except as and to the extent disclosed by Rapidtron there
has not been (i) any material change by Rapidtron in its accounting methods,
principles or practices (other than as required after the date hereof by
concurrent changes in generally accepted accounting principles), (ii) any
revaluation by Rapidtron of any of its assets having a Material Adverse
Effect on Rapidtron, including, without limitation, any write-down of the
value of any assets other than in the ordinary course of business or (iii)
any other action or event that would have required the consent of any other
party hereto pursuant to Section 4.2 of this Agreement had such action or
event occurred after the date of this Agreement.
Section 3.9. Litigation. Except as set forth in Schedule 3.9 of the
Rapidtron Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Rapidtron, threatened against
Rapidtron or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Rapidtron or could reasonably be expected to prevent or delay the
consummation of the transactions contemplated by this Agreement. Except as
disclosed by Rapidtron, none of Rapidtron or its subsidiaries is subject to
any outstanding order, writ, injunction or decree which, insofar as can be
reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on Rapidtron or could reasonably be expected to
prevent or delay the consummation of the transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as disclosed by
Rapidtron, Rapidtron and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the
"Rapidtron Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which would not have a Material
Adverse Effect on Rapidtron. Except as disclosed by Rapidtron, Rapidtron and
its subsidiaries are in compliance with the terms of the Rapidtron Permits,
except where the failure so to comply would not have a Material Adverse
Effect on Rapidtron. Except as disclosed by Rapidtron, Rapidtron has not
received written notice from any governmental entity that the businesses of
Rapidtron and its subsidiaries are being conducted in violation of any law,
ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have
a Material Adverse Effect on Rapidtron. Except as disclosed by Rapidtron, no
investigation or review by any Governmental Entity with respect to Rapidtron
or its subsidiaries is pending or, to the knowledge of Rapidtron, threatened,
nor, to the knowledge of Rapidtron, has any Governmental Entity indicated an
intention to conduct the same, other than, in each case, those which
Rapidtron reasonably believes will not have a Material Adverse Effect on
Rapidtron.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by Rapidtron, any of its subsidiaries or any
entity required to be aggregated with Rapidtron or any of its subsidiaries
pursuant to Section 414 of the Code (each, a "Rapidtron Employee Plan"), no
event has occurred and, to the knowledge of Rapidtron, no condition or set of
circumstances exists in connection with which Rapidtron or any of its
subsidiaries could reasonably be expected to be subject to any liability
which would have a Material Adverse Effect on Rapidtron.
(b) (i) No Rapidtron Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each Rapidtron Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended
to qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the Rapidtron Disclosure Schedule sets forth a
true and complete list, as of the date of this Agreement, of each person who
holds any Rapidtron Stock Options, together with the number of Rapidtron
Shares which are subject to such option, the date of grant of such option,
the extent to which such option is vested (or will become vested as a result
of the Merger), the option price of such option (to the extent determined as
of the date hereof), whether such option is a nonqualified stock option or is
intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code, and the expiration date of such option. Section
3.11(c) of the Rapidtron Disclosure Schedule also sets forth the total number
of such incentive stock options and such nonqualified options. Rapidtron has
furnished RPDT with complete copies of the plans pursuant to which the
Rapidtron Stock Options were issued. Other than the automatic vesting of
Rapidtron Stock Options that may occur without any action on the part of
Rapidtron or its officers or directors, Rapidtron has not taken any action
that would result in any Rapidtron Stock Options that are unvested becoming
vested in connection with or as a result of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
(d) Rapidtron has made available to RPDT (i) a description of the terms
of employment and compensation arrangements of all officers of Rapidtron and
a copy of each such agreement currently in effect; (ii) copies of all
agreements with consultants who are individuals obligating Rapidtron to make
annual cash payments in an amount exceeding $60,000; (iii) a schedule listing
all officers of Rapidtron who have executed a non-competition agreement with
Rapidtron and a copy of each such agreement currently in effect; (iv) copies
(or descriptions) of all severance agreements, programs and policies of
Rapidtron with or relating to its employees, except programs and policies
required to be maintained by law; and (v) copies of all plans, programs,
agreements and other arrangements of Rapidtron with or relating to its
employees which contain change in control provisions.
(e) Except as disclosed in Section 3.11(e) of the Rapidtron Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any Rapidtron
Employee Plan or any agreement or arrangement disclosed under this Section
3.11 solely by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of Rapidtron
threatened, between Rapidtron or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on Rapidtron. Neither Rapidtron
nor any of its subsidiaries is a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by Rapidtron or
any of its subsidiaries (and neither Rapidtron nor any of its subsidiaries
has any outstanding material liability with respect to any terminated
collective bargaining agreement or labor union contract), nor does Rapidtron
know of any activities or proceedings of any labor union to organize any of
its or any of its subsidiaries' employees. Rapidtron has no knowledge of any
strike, slowdown, work stoppage, lockout or threat thereof by or with respect
to any of its or any of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by Rapidtron, (i) each of Rapidtron and its
subsidiaries is in material compliance with all Environmental Laws, except
for non-compliance that would not have a Material Adverse Effect on
Rapidtron, which compliance includes, but is not limited to, the possession
by Rapidtron and its subsidiaries of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (ii) none of Rapidtron or
its subsidiaries has received written notice of, or, to the knowledge of
Rapidtron, is the subject of, any Environmental Claim that could reasonably
be expected to have a Material Adverse Effect on Rapidtron; and (iii) to the
knowledge of Rapidtron, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future.
(b) Except as disclosed by Rapidtron, there are no Environmental Claims
which could reasonably be expected to have a Material Adverse Effect on
Rapidtron that are pending or, to the knowledge of Rapidtron, threatened
against Rapidtron or any of its subsidiaries or, to the knowledge of
Rapidtron, against any person or entity whose liability for any Environmental
Claim Rapidtron or its subsidiaries has or may have retained or assumed
either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
Rapidtron Disclosure Schedule: (i) Rapidtron and each of its subsidiaries has
filed or has had filed on its behalf in a timely manner (within any
applicable extension periods) with the appropriate Governmental Entity all
income and other material Tax Returns with respect to Taxes of Rapidtron and
each of its subsidiaries and all Tax Returns were in all material respects
true, complete and correct; (ii) all material Taxes with respect to Rapidtron
and each of its subsidiaries have been paid in full or have been provided for
in accordance with GAAP on Rapidtron's most recent balance sheet; (iii) there
are no outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local or foreign income or
other material Tax Returns required to be filed by or with respect to
Rapidtron or its subsidiaries; (iv) to the knowledge of Rapidtron none of the
Tax Returns of or with respect to Rapidtron or any of its subsidiaries is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with
respect to Rapidtron or any of its subsidiaries which has not been abated or
paid in full.
Section 3.14. Title to Property. Rapidtron and each of its subsidiaries
have good and defensible title to all of their properties and assets, free
and clear of all liens, charges and encumbrances except liens for taxes not
yet due and payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with the present
use of the property affected thereby or which, individually or in the
aggregate, would not have a Material Adverse Effect on Rapidtron; and, to
Rapidtron's knowledge, all leases pursuant to which Rapidtron or any of its
subsidiaries lease from others real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not, to the knowledge of Rapidtron, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default and in respect of
which Rapidtron or such subsidiary has not taken adequate steps to prevent
such a default from occurring) except where the lack of such good standing,
validity and effectiveness, or the existence of such default or event of
default would not have a Material Adverse Effect on Rapidtron.
Section 3.15. Intellectual Property.
(a) Each of Rapidtron and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, service marks, copyrights, trade secrets,
and applications therefor that are material to its business as currently
conducted (the "Rapidtron Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the Rapidtron Disclosure
Schedule the validity of the Rapidtron Intellectual Property Rights and the
title thereto of Rapidtron or any subsidiary, as the case may be, is not
being questioned in any litigation to which Rapidtron or any subsidiary is a
party.
(c) The conduct of the business of Rapidtron and its subsidiaries as now
conducted does not, to Rapidtron's knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any Rapidtron Intellectual Property Rights.
(d) Each of Rapidtron and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where Rapidtron has elected to rely on patent or copyright protection
in lieu of trade secret protection.
Section 3.16. Insurance. Rapidtron and its subsidiaries maintain general
liability and other business insurance that Rapidtron believes to be
reasonably prudent for its business.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding Rapidtron Shares is the only vote of the
holders of any class or series of Rapidtron's capital stock necessary to
approve and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither Rapidtron nor, to the knowledge of
Rapidtron, any of its affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a reorganization qualifying under
the provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of Rapidtron, each of whom is listed in Section 3.19 of the
Rapidtron Disclosure Schedule, there are no persons who, to the knowledge of
Rapidtron, may be deemed to be affiliates of Rapidtron under Rule 1-02(b) of
Regulation S-X of the SEC (the "Rapidtron Affiliates").
Section 3.20. Certain Business Practices. None of Rapidtron, any of its
subsidiaries or any directors, officers, agents or employees of Rapidtron or
any of its subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the FCPA, or (iii) made any other
unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the Rapidtron Disclosure Schedule, no officer or director of Rapidtron has
any interest in any material property, real or personal, tangible or
intangible, including without limitation, any computer software or Rapidtron
Intellectual Property Rights, used in or pertaining to the business of
Rapidtron or any subsidiary, except for the ordinary rights of a stockholder
or employee stock optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the Rapidtron Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of Rapidtron Shares.
Section 3.23. Brokers. Except as set forth on the Rapidtron Disclosure
Schedule, no broker, finder or investment banker is entitled to any
brokerage, finders or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Rapidtron.
Section 3.24. Disclosure. No representation or warranty of Rapidtron in
this Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to RPDT pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, Rapidtron
is not engaged, directly or indirectly, in any discussions or negotiations
with any other party with respect to any Third Party Acquisition.
Section 3.26. Material Contracts.
(a) Rapidtron has delivered or otherwise made available to RPDT true,
correct and complete copies of all contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to
which Rapidtron is a party affecting the obligations of any party thereunder)
to which Rapidtron or any of its subsidiaries is a party or by which any of
their properties or assets are bound that are material to the business,
properties or assets of Rapidtron and its subsidiaries taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of Rapidtron and its subsidiaries taken as a whole, all: (i)
employment, product design or development, personal services, consulting,
non-competition, severance, golden parachute or indemnification contracts
(including, without limitation, any contract to which Rapidtron is a party
involving employees of Rapidtron); (ii) licensing, publishing, merchandising
or distribution agreements; (iii) contracts granting rights of first refusal
or first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise. (vi) contracts or agreements with any
Governmental Entity; and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 4.2 hereof, the "Rapidtron Contracts").
Neither Rapidtron nor any of its subsidiaries is a party to or bound by any
severance, golden parachute or other agreement with any employee or
consultant pursuant to which such person would be entitled to receive any
additional compensation or an accelerated payment of compensation as a result
of the consummation of the transactions contemplated hereby.
(b) Each of the Rapidtron Contracts is valid and enforceable in
accordance with its terms, and there is no default under any Rapidtron
Contract so listed either by Rapidtron or, to the knowledge of Rapidtron, by
any other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default thereunder by
Rapidtron or, to the knowledge of Rapidtron, any other party, in any such
case in which such default or event could reasonably be expected to have a
Material Adverse Effect on Rapidtron.
(c) No party to any such Rapidtron Contract has given notice to
Rapidtron of or made a claim against Rapidtron with respect to any breach or
default thereunder, in any such case in which such breach or default could
reasonably be expected to have a Material Adverse Effect on Rapidtron.
Section 3.27 Affiliate Loans; Related Party Transactions; Accrued
Salaries. Rapidtron expressly agrees that any outstanding loans payable or
accrued salary due to its officers, directors, management, employees and/or
affiliates shall be paid only from revenues earned by Rapidtron through the
sale of its products or services, or future equity investments or loans not
contemplated by this Agreement. In no event shall Rapidton, directly or
indirectly, use any of the financing proceeds described in Section 1.11 of
this Agreement for the repayment of any outstanding loan payable or accrued
salary due to any of the above referenced parties.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of RPDT and RTI SUB. Except as
contemplated by this Agreement or as described in Section 4.1 of the RPDT
Disclosure Schedule, during the period from the date hereof to the Effective
Time, RPDT will conduct its operations in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing,
except as otherwise expressly provided in this Agreement or as described in
Section 4.1 of the RPDT Disclosure Schedule, prior to the Effective Time,
RPDT will not, without the prior written consent of Rapidtron, except as
required to perfect this Agreement:
(a) amend its Articles of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents, or issue any new RPDT Securities.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of RPDT (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of RPDT; or (v) mortgage or pledge any of its material assets, tangible
or intangible, or create or suffer to exist any material Lien thereupon
(other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent RPDT from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 2002 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 2002 in amounts previously disclosed to Rapidtron (to the extent that
such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to RPDT);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to RPDT; (iii) authorize any new
capital expenditure or expenditures which, individually is in excess of
$10,000 or, in the aggregate, are in excess of $50,000; provided, however
that none of the foregoing shall limit any capital expenditure required
pursuant to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to RPDT;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
RPDT;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of RPDT contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of Rapidtron. Except as contemplated by
this Agreement or as described in Section 4.2 of the Rapidtron Disclosure
Schedule during the period from the date hereof to the Effective Time,
Rapidtron will conduct its operations in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing,
except as otherwise expressly provided in this Agreement or as described in
Section 4.2 of the Rapidtron Disclosure Schedule, prior to the Effective
Time, Rapidtron will not, without the prior written consent of RPDT, except
as required to perfect this Agreement:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, re-capitalization or other reorganization of
Rapidtron (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of Rapidtron or its subsidiaries; or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent Rapidtron or its subsidiaries from (i)
entering into employment agreements or severance agreements with employees in
the ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 2002 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 2002 in amounts previously disclosed to RPDT (to the
extent that such compensation increases and new or amended bonus arrangements
do not result in a material increase in benefits or compensation expense to
Rapidtron);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to Rapidtron; (iii) authorize any new
capital expenditure or expenditures which, individually, is in excess of
$25,000 or, in the aggregate, are in excess of $100,000: provided, however
that none of the foregoing shall limit any capital expenditure required
pursuant to existing contracts or made in the ordinary course of business;
(k) make any different tax election or settle or compromise any income
tax liability material to Rapidtron and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Rapidtron;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of Rapidtron contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of SEC Filings. Prior to the Effective Time,
RPDT shall at its sole cost and expense promptly prepare and, if required
before the Effective Time, file with the SEC (a) the required Information
Statement(s) or proxy materials to be sent to its stockholders and filed with
the SEC (either prior to or after Closing), and (b) the required Form 8-K
regarding the transactions contemplated herein, which documents shall be
subject to the reasonable approval of Rapidtron. Rapidtron shall provide
information reasonably requested by RPDT to complete such documents. RPDT
shall pay all cost and expense thereof prior to Closing, including the cost
of formatting such documents for XXXXX filing. RPDT shall file such
documents timely after the Effective Time.
Section 4.4. Meetings of Stockholders. Each of Rapidtron, RTI SUB and
RPDT shall take all action necessary, in accordance with the law of its
respective state, and its respective certificate of incorporation and bylaws,
to (i) duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable, to consider and vote upon the
adoption and approval of this Agreement and the transactions contemplated
hereby; or (ii) receive a majority written consent of its stockholders. The
stockholder votes required for the adoption and approval of the transactions
contemplated by this Agreement shall be the vote required by the NGCL and its
charter and bylaws (in the case of RPDT and of RTI SUB) and the Delaware Law,
and its charter and bylaws (in the case of Rapidtron). RPDT and Rapidtron
will, through their respective Boards of Directors, recommend to their
respective stockholders approval of such matters.
Section 4.5. OTC:BB Listing. The parties shall use all reasonable
efforts to cause the RPDT Shares, subject to Rule 144, to be traded on the
National Association of Securities Dealers (NASD) Over-the-Counter Bulletin
Board (OTC:BB).
Section 4.6. Access to Information.
(a) Between the date hereof and the Effective Time, RPDT will give
Rapidtron and its authorized representatives, and Rapidtron will give RPDT
and its authorized representatives, reasonable access to all employees,
plants, offices, warehouses and other facilities and to all books and records
of itself and its subsidiaries, will permit the other party to make such
inspections as such party may reasonably require and will cause its officers
and those of its subsidiaries to furnish the other party with such financial
and operating data and other information with respect to the business and
properties of itself and its subsidiaries as the other party may from time to
time reasonably request.
(b) Between the date hereof and the Effective Time, RPDT shall furnish
to Rapidtron, and Rapidtron will furnish to RPDT, within 25 business days
after the end of each quarter, quarterly statements prepared by such party in
conformity with its past practices as of the last day of the period then
ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.7. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the Information Statement
and the 8-K, any filings that may be required under the HSR Act, and any
amendments to any thereof; (ii) obtaining consents of all third parties and
Governmental Entities necessary, proper or advisable for the consummation of
the transactions contemplated by this Agreement; (iii) contesting any legal
proceeding relating to the Merger and (iv) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, Rapidtron and RPDT
agree to use all reasonable efforts to cause the Effective Time to occur as
soon as practicable after the stockholder votes with respect to the Merger.
In case at any time after the Effective Time any further action is necessary
to carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
Section 4.8. Employee Benefits; Stock Option and Employee Purchase
Plans. It is the parties' present intent to provide after the Effective Time
to employees of Rapidtron employee benefit plans (other than stock option or
other plans involving the potential issuance of securities of RPDT) which, in
the aggregate, are not less favorable than those currently provided by
Rapidtron. Notwithstanding the foregoing, nothing contained herein shall be
construed as requiring the parties to continue any specific employee benefit
plans.
Section 4.9. Public Announcements. Subject to Section 7.13 below,
Rapidtron, RTI SUB and RPDT will consult with one another before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation,
the Merger, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable law or by obligations pursuant to any listing agreement with the
NASD Over-the-Counter Bulletin Board (OTC:BB) as determined by Rapidtron or
RPDT.
Section 4.10. Indemnification.
(a) Subject to subparagraph (e) below, to the extent not provided by an
existing right under one of the parties' directors and officers liability
insurance policies, from and after the Effective Time through six (6) years
following Closing, RPDT shall, to the fullest extent permitted by applicable
law, indemnify, defend and hold harmless Hue Do, Xxxxxxx Xxxxxxxx, and Xx.
Xxxx Xxxxxxxx in each such person's capacity as a director, officer or
employee of RPDT prior to Closing (each, an "Indemnified Party") against all
losses, expenses (including reasonable attorneys' fees and expenses), claims,
damages or liabilities or, subject to the proviso of the next succeeding
sentence, amounts paid in settlement arising out of actions or omissions
occurring at or prior to the Effective Time and asserted or claimed after the
Effective Time (each, a "Claim"), that are in whole or in part based on, or
arising out of the fact that such person is or was a director, officer or
employee of RPDT. In the event of any such loss, expense, claim, damage or
liability (whether or not arising before the Effective Time), (i) RPDT shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to RPDT, promptly
after statements therefor are received and otherwise advance to the
Indemnified Parties upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited by the NGCL
or its certificate of incorporation or bylaws, (ii) RPDT will cooperate in
the defense of any such matter and (iii) any determination required to be
made with respect to whether an Indemnified Party's conduct complies with the
standards set forth under the NGCL and RPDT's certificate of incorporation or
bylaws shall be made by independent counsel mutually acceptable to RPDT and
such Indemnified Party; provided, however, that RPDT shall not be liable for
any settlement effected without its written consent (which consent shall not
be unreasonably withheld). The Indemnified Parties may retain only one law
firm with respect to each related matter except to the extent there is, in
the opinion of counsel to the Indemnified Parties, under applicable standards
of professional conduct, conflict on any significant issue between positions
of any two or more Indemnified Parties.
(b) In the event RPDT or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that
the successors and assigns of RPDT shall assume the obligations set forth in
this Section 4.10.
(c) To the fullest extent permitted by law and the Bylaws in effect on
the date hereof, from and after the Effective Time, all rights to
indemnification now existing in favor of the employees, agents, directors or
officers of RPDT and Rapidtron and their subsidiaries with respect to their
activities as such prior to the Effective Time, as provided in RPDT's and
Rapidtron's certificate of incorporation or bylaws, in effect on the date
thereof or otherwise in effect on the date hereof, shall survive the Merger
and shall continue in full force and effect for a period of six years from
the Effective Time.
(d) The provisions of this Section 4.10 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
(e) Notwithstanding anything to the contrary in this Section 4.10, no
Indemnified Party shall be indemnified, defended or held harmless if any of
the facts upon which a Claim is based results in a breach of any
representation, warranty or covenant contained in this Agreement or otherwise
would have resulted in a breach of this Agreement if such provision had
survived Closing, and in no event shall the total amount paid by RPDT as a
result of this Section 4.10 exceed the amount of proceeds actually received
by RPDT from the Bridge Notes, the Convertible Note and the Private
Placement.
Section 4.11. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.11 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of RPDT, RTI SUB and Rapidtron;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or Governmental Entity which prohibits, restrains,
enjoins or restricts the consummation of the Merger; and
(c) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received.
Section 5.2. Conditions to the Obligations of RPDT. The obligation of
RPDT to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of Rapidtron and its directors contained in this
Agreement or in any other document delivered pursuant hereto shall be true
and correct (except to the extent that the breach thereof would not have a
Material Adverse Effect on Rapidtron) at and as of the Effective Time with
the same effect as if made at and as of the Effective Time (except to the
extent such representations specifically related to an earlier date, in which
case such representations shall be true and correct as of such earlier date),
and at the Closing Rapidtron shall have delivered to RPDT a certificate to
that effect;
(b) each of the covenants and obligations of Rapidtron to be performed
at or before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the Effective
Time and at the Closing Rapidtron shall have delivered to RPDT a certificate
to that effect;
(c) Rapidtron shall have obtained the consent or approval of each
person whose consent or approval shall be required in order to permit the
Merger as relates to any obligation, right or interest of Rapidtron under any
loan or credit agreement, note, mortgage, indenture, lease or other agreement
or instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of RPDT, individually or in
the aggregate, have a Material Adverse Effect on Rapidtron;
(d) there shall have been no events, changes or effects with respect to
Rapidtron or its subsidiaries having or which could reasonably be expected to
have a Material Adverse Effect on Rapidtron; and
(e) RPDT shall have received an executed copy of an option agreement(s)
between RPDT and the shareholders and management of Axess AG, an affiliate of
Rapidtron, for the purchase of 35% of Axess AG's common stock in exchange for
5,950,000 shares of RPDT's restricted common stock.
Section 5.3. Conditions to the Obligations of Rapidtron. The obligation
of Rapidtron to effect the Merger are subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations of RPDT and RTI SUB contained in this Agreement
and the officer's certificate or in any other document delivered pursuant
hereto shall be true and correct (except to the extent that the breach
thereof would not have a Material Adverse Effect on RPDT and RTI SUB) at and
as of the Effective Time with the same effect as if made at and as of the
Effective Time (except to the extent such representations specifically
related to an earlier date, in which case such representations shall be true
and correct as of such earlier date), and at the Closing RPDT and RTI SUB
shall have delivered to Rapidtron a certificate to that effect;
(b) each of the covenants and obligations of RPDT and RTI SUB to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Effective Time and at the Closing RPDT and RTI SUB shall have
delivered to Rapidtron a certificate to that effect; and
(c) there shall have been no events, changes or effects with respect to
RPDT and RTI SUB having or which could reasonably be expected to have a
Material Adverse Effect on RPDT and RTI SUB.
(d) Rapidtron shall have received from the holder thereof a replacement
note (each, a "Replacement Note") duly executed by Rapidtron and the payee
and holder of each Bridge Note (defined below) in the form attached hereto as
Exhibit C, replacing the following promissory notes (each, a "Bridge Note"):
(i) Promissory Note dated October 31, 2002 in the principal amount of
$180,000.00, made by Rapidtron payable to an unrelated third party (the
"Investor"); (ii) Promissory Note dated November 7, 2002 in the principal
amount of $70,000, payable to the Investor; (iii) Promissory Note dated
November 26, 2002 in the principal amount of $80,000, payable to the
Investor; (iv) Promissory Note, dated January 3, 2003, in the principal
amount of $100,000, payable to RPDT, together with the related Promissory
Note, dated January 2, 2003, in the principal amount of $100,000, made
payable to a separate unrelated third party; and (v) Promissory Note dated
January 7, 2003 in the principal amount of $70,000, payable to the Investor,
together with the original Bridge Notes duly cancelled and marked "Replaced"
by the holder thereof.
(e) Rapidtron shall have received the principal amount of the
Convertible Note.
(f) Rapidtron shall have received a complete list of all stockholders of
RPDT that approved this Agreement and all stockholders that did not vote in
favor of approving this Agreement (each, a "Dissenting Stockholder"). If
there are one or more Dissenting Stockholders, then in addition to the
foregoing list, RPDT shall have deposited in a separate account in the name
of RPDT (the "Post-Closing Escrow Account"), one (1) dollar ($1.00) for each
share of stock held by the Dissenting Stockholders, which sum shall be held
and used by RPDT only to contest, defend, pay or otherwise satisfy claims
made under Sections 78.378 through 78.320 and Section 92A.300 through 92A.500
of the Nevada Revised Statutes or similar laws, until such time that such
claims are satisfied or have otherwise expired.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by RPDT's or
Rapidtron's stockholders:
(a) by mutual written consent of RPDT and Rapidtron;
(b) by Rapidtron or RPDT if (i) any court of competent jurisdiction in
the United States or other Governmental Entity shall have issued a final
order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by March 31, 2003; provided, however, that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure
to fulfill any of its obligations under this Agreement shall have been the
reason that the Effective Time shall not have occurred on or before said
date;
(c) by RPDT if (i) there shall have been a breach of any representation
or warranty on the part of Rapidtron set forth in this Agreement, or if any
representation or warranty of Rapidtron shall have become untrue, in either
case such that the conditions set forth in Section 5.2(a) would be incapable
of being satisfied by March 31, 2003 (or as otherwise extended), (ii) there
shall have been a breach by Rapidtron of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on Rapidtron or
materially adversely affecting (or materially delaying) the consummation of
the Merger, and Rapidtron, as the case may be, has not cured such breach
within 20 business days after notice by RPDT thereof, provided that RPDT has
not breached any of its obligations hereunder, or (iii) RPDT shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders;
(d) by Rapidtron if (i) there shall have been a breach of any
representation or warranty on the part of RPDT set forth in this Agreement,
or if any representation or warranty of RPDT shall have become untrue, in
either case such that the conditions set forth in Section 5.3(a) would be
incapable of being satisfied by March 31, 2003 (or as otherwise extended),
(ii) there shall have been a breach by RPDT of its covenants or agreements
hereunder having a Material Adverse Effect on RPDT or materially adversely
affecting (or materially delaying) the consummation of the Merger, and RPDT,
as the case may be, has not cured such breach within twenty business days
after notice by Rapidtron thereof, provided that Rapidtron has not breached
any of its obligations hereunder, (iii) the RPDT Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or the
Merger or shall have failed to call, give notice of, convene or hold a
stockholders' meeting to vote upon the Merger, or shall have adopted any
resolution to effect any of the foregoing, or (iv) Rapidtron shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders.
(e) Upon receipt of the proceeds of the Convertible Note, Rapidtron
shall not have the right to terminate this Agreement pursuant to this Section
6.1 except in the event of a material breach by RPDT of any covenant or
condition set forth in Section 5.1 or Section 5.3 above.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
terminate and be of no further force or effect, without any liability on the
part of any party hereto or its affiliates, directors, officers or
shareholders, other than the provisions of this Section 6.2 and Sections
4.6(c) and 6.3 hereof. Nothing contained in this Section 6.2 shall relieve
any party from liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically set forth in and
permitted by Section 2.8 above, each party shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby, and
RPDT shall satisfy all liability for such expenses prior to Closing.
Section 6.4. Amendment. This Agreement may be amended by action taken by
RPDT and Rapidtron at any time before or after approval of the Merger by the
stockholders of RPDT and Rapidtron (if required by applicable law) but, after
any such approval, no amendment shall be made which requires the approval of
such stockholders under applicable law without such approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to Rapidtron: Rapidtron, Inc.
0000 Xxxxxx Xxx., Xxxx. X
Xxxxx Xxxx, XX 00000
with a copy to: Xxx Xxxxxxx LLP
00000 Xxx Xxxxxx Xxx.
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxx, Esq.
If to RPDT: Rapidtron, Inc.
000 X. Xxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxx, XX 00000-0000
with a copy to: Xxxxxxxxxx Law Group
Xxxxxx X. Xxxxxxxxxx, Esq.
Suite 400
000 Xxxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. Except to the extent the actions of the
parties are specifically governed by the provisions of the NGCL or the
Delaware Law, this Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to the principles of
conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 1.10,
5.2(e), 2.19, 3.19 and 4.13) a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge" or "known" means, with respect to any matter in
question, if an executive officer of RPDT or Rapidtron or its subsidiaries,
as the case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of RPDT, Rapidtron or any other
person, means any corporation, partnership, limited liability company,
association, trust, unincorporated association or other legal entity of which
RPDT, Rapidtron or any such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
50% or more of the capital stock, the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of RPDT, Rapidtron or any officer,
director, employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder.
Section 7.11. Construction. RPDT and Rapidtron have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, the Agreement shall
be construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement.
Section 7.12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
Section 7.13. Confidentiality. RPDT, RTI SUB and Rapidtron hereto
agree that the existence and terms of this Agreement are confidential and
that if this Agreement is terminated, the parties shall return to one another
any and all financial, technical and business documents delivered to the
other party or parties in connection with the negotiation and execution of
this Agreement. Each party shall keep the terms of this Agreement and all
information and documents received from or regarding the other and the
contents thereof confidential and not utilize nor reveal or release same;
provided, however, RPDT may disclose such information to the extent required
by law to maintain the currency of RPDT's filings with the SEC. Prior to the
Closing, RPDT shall cooperate with Rapidtron regarding any disclosure of
information about Rapidtron and its business and shall not disclose any
proprietary information that by law is not required to be disclosed at that
time or absent any voluntary disclosures by RPDT. Prior to the Effective
Time, neither party shall issue any press release regarding this Agreement or
the content thereof except as approved in writing by RPDT and Rapidtron. The
parties agree that following execution of this Agreement, RPDT shall issue a
press release at its sole cost and expense regarding the execution of this
Agreement, the nature of the transactions contemplated herein, and the
conditions to Closing that must be satisfied. Such press release shall be
approved in writing by Rapidtron prior to release.
SIGNATURE PAGE TO FOLLOW
In Witness Whereof, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
RPDT: RTI SUB:
Rapidtron, Inc., a Nevada corporation RTI Acquisition Subsidiary, Inc.
(formerly The Furnishing Club)
By: _____________________________ By: _______________________
Name: Xx. Xxxx Xxxxxxxx Name: Xx. Xxxx Xxxxxxxx
Title: President Title: President
Rapidtron:
Rapidtron Inc., a Delaware corporation
By: ____________________________
Name: Xxxx Xxxxx
Title: President
RPDT and RTI SUB DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended Articles/Bylaws/Minutes
Schedule 2.2(d) Capitalization/Return of Shares
Concurrent with the Closing of the Merger, the following RPDT
stockholders shall tender to RPDT, for cancellation, 13,943,750
shares of restricted common stock in the amounts set forth below:
Stockholder Number of Shares
XXXX XXXX 7,500,000
HUE DO 2,500,000
XXX DO 2,500,000
ANT, INC. 1,443,750
TOTAL 13,943,750
Schedule 2.6 Consents & Approvals None Required
Schedule 2.7 No Default None Exist
Schedule 2.8 No Undisclosed Liability
Since the filing of RPDT's 10-QSB for the quarter ending September
30, 2002, RPDT has incurred the following liabilities:
Liability Amount
Note payable Top View, $100,000
AG*
Xxxxxxxxxx Law Group $15,000
Securities Law Institute $1,800
G. Xxxx Xxxxxxxxx CPA $500
Big Sky Management** $5,736
Iridium Capital Inc.** $9,561
TOTAL $132,597
* Top View Note shall be converted into restricted common
stock of RPDT at $1.00 per share.
** These liabilities are listed in U.S. dollars but are
payable in Canadian dollars. Therefore, the amounts
payable are subject to exchange rate fluctuation.
The above referenced liabilities, other than the Top View Note,
shall be paid from the proceeds of the Convertible Note and any
additional liabilities incurred from the date hereof (the
"Reserve") shall not, together with those listed above, exceed
$50,000 in the aggregate.
Schedule 2.9 Litigation None Exist
Schedule 2.11 Employee Benefit Plans Section 2.11(a) None Exist
Section 2.11(b) No Benefit Plan Exist
Section 2.11( c)No Options Exist
Section 2.11(d) No Change in control
Agreements Exist
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters
12/31/2001 Tax return to be filed prior to Closing
12/31/2002 Tax return to be filed prior to the Effective Time
Schedule 2.15(c) Intellectual Property
RPDT is currently using the corporate name Rapidtron, Inc.. In the
event the Merger fails to Close or this Agreement is otherwise
terminated, RPDT shall immediately cease using the tradename
Rapidtron, Inc. and shall seek to promptly change its corporate
name from Rapidtron, Inc. to a dissimilar name.
Schedule 2.19 Affiliates
Hue Do: prior officer/director and 10% stockholder
Xxx Do: 10% stockholder
Xxxx Xxxx: 10% stockholder
Xx. Xxxx Xxxxxxxx: current sole officer and a director
Xxxxxxx Xxxxxxxx: current director
Schedule 2.21 Insider Interests None Exist
Schedule 2.23 Brokers
RPDT acknowledges the existence of the finder's fee agreements
payable by Rapidtron, as described in Schedule 3.23 of Rapidtron's
Disclosure Schedule, and shall issue the required 400,000 shares of
restricted common stock, upon Closing, to the respective Finders.
Schedule 4.1 Conduct of Business
See Form 10-QSB filed 11/14/2002 and Form 10-KSB filed 2/20/2002
RAPIDTRON DISCLOSURE SCHEDULE
Schedule 3.1(b) Organization and Qualification
Rapidtron is qualified to do business in Delaware and California.
Rapidtron is performing services in Colorado, Nevada, New York, Utah,
Illinois, Pennsylvania and Florida, pursuant to contracts previously
disclosed to RPDT. Rapidtron may need to qualify to do business in
these jurisdictions as a result.
Schedule 3.2(a) Obligations of Rapidtron See Schedule 3.11(c)
Schedule 3.2(b) Subsidiary Stock Not applicable
Schedule 3.2(c) Capital Stock Rights None
Schedule 3.2(d) Securities conversions 1,325,000 options
Schedule 3.2 (f) Subsidiaries None
Schedule 3.6 Consents & Approvals
Need consent of vested options holders to terminate options (see
Schedule 3.11(c))
Schedule 3.7 No Default
From the period 10-01-02 through 01-16-03, Rapidtron did not have
worker's compensation insurance coverage
Schedule 3.8 No Undisclosed Liability
Payables to affiliates and independent contractors of $637,046.29 as of
12-31-02 (including some amounts disclosed in unaudited financial
statements for the period ending 09-30-02). This amount includes
unaudited statements of accounts payable to Equus as of 12-31-02,
pursuant to the marketing services agremeent dated January 1, 2002 and
the operating expenses agreement dated January 1, 2002, copies of which
have been previously provided to RPDT, and is subject to change upon
audit. Additional amounts have become payable thereunder since 12-31-
02.
Schedule 3.9 Litigation None
Schedule 3.10 Compliance with Applicable Law
FCC and XXX approvals being sought by Axess AG
Schedule 3.11 Employee Benefit Plans
Section 3.11(c) Rapidtron Stock Options
The following individuals have the following number of options,
each for one share of Rapidtron common stock, at the following
exercise price:
* Xxxx Xxxxx, 450,000 options, vested, $0.50
* Xxxxx Xxxxxxx, 625,000 options, vested, $0.50
* Xxx Xxxxxxx, 50,000 options, vested, 100,000 unvested, $1.00
* Xxxxx Xxxxxxxx, 100,000 options, vested, $0.50
All of the foregoing vested options shall be terminated at Closing
in favor of a right to receive the same number of options in the
RPDT employee stock option plan, vested one-half on January 1, 2004
and one-half on January 1, 2005.
Section 3.11(e) Additional Benefits and Vesting None
Schedule 3.12 Environmental Laws and Regs None
Schedule 3.13 Tax Matters None
Schedule 3.14 Title to Property None
Schedule 3.15(b) Intellectual Property None
Schedule 3.19 Affiliates
Xxxx Xxxxx - officer, director, shareholder
Xxxx Xxxxx, Xxxx Xxxxx and Xxxx Xxxxx, Xx. - beneficial shareholders
Xxxxx Xxxxxxx - director, shareholder
Xxxxx Xxxxxxx - officer
Equus Design, -Xxxx Xxxxx is principal
Schedule 3.20 Certain Business Practices None
Schedule 3.21 Insider Interests None
Schedule 3.23 Brokers (pursuant to agreements previously delivered)
Xxxxxxx Xxxxxx - 2.5% of financing, plus 300,000 shares of RPDT common
stock
Xxxxx Xxxxxxx - 2.0% of financing or $40,000, plus 100,000 shares of
RPDT common stock
Xxxx Xx Xxxxxxxx - 0.50% of financing or $10,000, no stock
Schedule 4.2 Conduct of Business None
Exhibit A
RAPIDTRON
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is dated and entered into effective
as of January 1, 2003 (the "Effective Date"), by and between RAPIDTRON, INC.,
a Delaware corporation ("Rapidtron"), and XXXX XXXXX, an individual ("you"
or "Xxxxx").
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants, provisions and terms set forth in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Rapidtron and Xxxxx agree as follows:
1. Term. Unless terminated earlier as provided in this Agreement,
Rapidtron employs Xxxxx for a term beginning on the Effective Date and ending
on December 31, 2004 (the "Term").
2. Title; Base Salary: Effective as of the date of this Agreement, you
will be employed as Chairman of the Board, Chief Executive Officer and
President of Rapidtron and will earn a base salary of $120,000.00 per annum
through December 31, 2004; provided, however, if Rapidtron is "profitable"
(as defined below) at the end of the calendar year 2003, you will receive a
bonus in the amount of $55,000.00 and your base salary will be increased
thereafter to $175,000.00 per year through December 31, 2004. If you do not
receive the foregoing increase in base salary for the calendar year 2004 and
Rapidtron is profitable and the end of the calendar year 2004, you will
receive a bonus in the amount of $55,000.00. Subject to the foregoing, base
salary will be payable on the same schedule and otherwise in accordance with
Rapidtron's normal practices for its senior executives. As used in this
Agreement, "profitable" shall mean Rapidtron's EBITDA for the fiscal year
shall be at least $500,000.00.
3. Incentive Bonus. In addition to your base salary, you will be entitled
to earn incentive compensation during the Term, in an amount based on
Rapidtron's Board approved Bonus Plan, as approved by unanimous consent of
the directors of Rapidtron, Inc., a Nevada corporation (formerly known as The
Furnishing Club, Inc)("RPDT").
4. Withholding. All payments under paragraphs 1 and 2 and other payments
and compensatory benefits will be subject to taxes and withholding in
accordance with applicable law.
5. Benefits.
a. Medical and Dental. You will be entitled to participate in the
Company's regular health insurance plan for employees, or a comparably priced
plan with 75% of the premium expense applicable to you paid by the Company
and 25% of such expense paid by you. You will be entitled to elect spousal
and dependent care coverage under such plan at your expense.
b. Vacation. You will be entitled to four (4) weeks of paid vacation time
per year of employment, such vacation to be scheduled at times that do not
materially interfere with the business of the Company. At no time will
benefits relating to unused vacation in excess of four (4) weeks be payable.
c. Stock Options. You shall be entitled to participate in all retirement
plans, profit sharing, stock option plans, stock appreciation rights, and
other such employee benefits, provided by Rapidtron or RPDT, to employees
similarly situated. Subject to closing the Agreement and Plan of Merger
between RPDT and Rapidtron, Rapidtron shall cause RPDT to finalize and
approve, a qualified stock option plan for its executive officers, including
you, to be implemented by July 31, 2003. You shall receive stock options in
accordance with the plan for at least 450,000 shares of RPDT's common stock
with a conversion price of $1.00 per share, one-half to be vested on January
1, 2004, and one-half to be vested on January 1, 2005; provided, however,
such options shall vest immediately upon a "change in control" (as defined
below) if, as a result of such change in control, you are removed without
cause from your position as officer or director of Rapidtron or RPDT). You
shall also be eligible to receive additional options based upon the plan to
be vested over a three (3) year period beginning on the Effective Date hereof
and to expire not less than five (5) years after termination of this
Agreement. The remaining terms shall be subject to the plan to be adopted by
RPDT's Board of Directors. As used herein, the term "change of control"
means the removal of you from your current level of management as the result
of any of the following: (i) the acquisition of 50% or more of the common
stock of RPDT, (ii) a change in the majority of the Board of Directors of
RPDT, (iii) any reorganization, merger, or consolidation with Rapidtron or
RPDT that results in either (i) or (ii) above, (iv) sale of all or
substantially all of the assets of Rapidtron, (v) liquidation of Rapidtron,
or (vi) dissolution of Rapidtron.
6. Reimbursement of Expenses. Rapidtron shall reimburse you for all
business-related expenses and costs actually incurred in the performance of
your duties under this Agreement, including, without limitation, the lodging
and travel costs and expenses necessitated by performance and the equipment
and airtime charges for a mobile telephone. Reimbursement of all such costs
and expenses shall be subject to reasonable policies and procedures
established from time to time by Rapidtron, including, without limitation,
completion of Rapidtron's expense reports to qualify for expense
reimbursement.
7. Confidentiality, Assignment of Inventions, and Non-Compete.
7.1 Proprietary Information. In the course of your engagement by
Rapidtron, you will continue to have access to confidential and proprietary
information regarding Rapidtron and its business, including, but not limited
to, information regarding Rapidtron's technologies, methods and techniques,
product information, specifications, technical drawings and designs, trade
secrets, know-how, sources of supply, product and market research data,
customer lists, marketing plans, and financial information regarding
Rapidtron and its operations. Such information shall be referred to
hereinafter as "Proprietary Information" and shall include any and all of the
information of the type described and shall also include any and all other
confidential and proprietary information relating to the business to be
conducted by Rapidtron, whether previously existing, now existing or arising
hereafter, whether conceived or developed by others or by you alone or with
others, and whether or not conceived or developed during regular working
hours. Proprietary Information which is released into the public domain
during the period of your engagement under this Agreement, provided the same
is not in the public domain as a consequence of disclosure directly or
indirectly by you in violation of this Agreement, shall not be subject to the
restrictions of this Section 7.1.
7.2 Non-Disclosure. You shall not disclose, directly or indirectly,
(except as your duties may require and except as required by law) any
Proprietary Information to any person other than Rapidtron, any employees of
Rapidtron who are authorized, at the time of such disclosure, to receive such
information, or such other persons to whom you have been specifically
instructed to make disclosure by the Board of Directors of Rapidtron and in
all such cases only to the extent required in the course of your service to
Rapidtron. At the termination of this Agreement, you shall deliver to
Rapidtron all notes, letters, documents, records, computer files, programs
and other media which may contain Proprietary Information which are then in
its possession or control and shall not retain or use any copies or summaries
thereof.
7.3 Assignment of Inventions. All ideas, inventions, and other
developments or improvements conceived or reduced to practice by you, alone
or with others, during the term of this Agreement, whether or not during
working hours, that are within the scope of the business of Rapidtron or RPDT
or that relate to or result from any of Rapidtron's or RPDT's work or
projects or the services provided by you to Rapidtron or RPDT pursuant to
this Agreement, shall be the exclusive property of Rapidtron or RPDT. You
agree to assist Rapidtron or RPDT during the term, at Rapidtron's or RPDT's
expense, to obtain patents and copyrights on any such ideas, inventions,
writings, and other developments, and agrees to execute all documents
necessary to obtain such patents and copyrights in the name of Rapidtron or
RPDT, including an assignment of any rights therein.
7.4 Covenant Not to Compete. During the term of this Agreement, you
shall not engage in any of the following competitive activities: (a) engaging
directly or indirectly in any business or activity substantially similar to
any business or activity engaged in (or proposed to be engaged in) by
Rapidtron or RPDT; (b) engaging directly or indirectly in any business or
activity competitive with any business or activity engaged in (or proposed to
be engaged in) by Rapidtron or RPDT; (c) soliciting or taking away any
employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor of Rapidtron or RPDT, or attempting to so
solicit or take away; (d) interfering with any contractual or other
relationship between Rapidtron or RPDT and any employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor; or (e) using, for the benefit of any person or entity other than
Rapidtron or RPDT, any Proprietary Information of Rapidtron or RPDT. The
foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement and shall extend, and shall remain enforceable
against you, for the period of one (1) year following the date this Agreement
is terminated. In addition, during the two-year period following such
expiration or earlier termination, you shall not make or permit the making of
any negative statement of any kind concerning Rapidtron or RPDT.
8. Indemnification. To the maximum extent permitted by law, Rapidtron
shall indemnify, defend (with counsel selected by you and reasonably
acceptable to Rapidtron) and hold harmless, you and your attorneys,
successors and assigns, and each of them (each a "Xxxxx Indemnitee"), from
and against all claims, losses, liabilities, damages, demands, actions,
causes of actions, judgments, settlements, costs and expenses of any nature
whatsoever (including, without limitation, reasonable attorneys' fees, expert
witness fees, and costs related thereto) (collectively, "Claims") which any
such Xxxxx Indemnitee may suffer or incur in connection with (i) a breach by
Rapidtron of its obligations hereunder, or (ii) the performance by you as an
officer, director or employee of Rapidtron, including, without limitation,
your acts and omissions as Chairman and Chief Executive Officer; provided,
however, that the indemnity obligations as set forth hereunder shall not
extend to any Claims arising or resulting solely from your gross negligence
or willful misconduct. Rapidtron's obligations to pay Claims hereunder shall
be due and payable as and when such Claims are incurred, including without
limitation, all legal fees and costs and other expenses, incurred by you in
connection with the defense against and settlement of any Claim. To the
maximum extent permitted by law and to the extent reasonably affordable to
Rapidtron, Rapidtron shall procure, pay for and maintain standard form
directors' and officers' liability insurance with an insurance carrier and in
amounts reasonably acceptable to you. The indemnification provided by this
Section 8 shall be deemed cumulative, and not exclusive, of any other rights
to which you may be entitled under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.
Nothing in this section shall affect any right to indemnification to which
you may be entitled by contract or otherwise.
9. Termination and Resignation.
9.1 Termination Upon Death. If you die during the Term, this Agreement
shall terminate. Upon such termination, (i) you shall be entitled to all
accrued and unpaid compensation including the Base Salary and the prorated
amount of the Incentive Bonus as of the date of death; and (ii) your heirs,
legal representatives and designated beneficiaries shall be entitled to any
and all insurance proceeds in connection with the insurance policies
maintained.
9.2 Termination Upon Permanent Disability. In the event of your
"Permanent Disability" (as hereinafter defined), Rapidtron may terminate this
Agreement effective upon thirty (30) days notice to you. For the purposes of
this Agreement, you shall be deemed to have suffered "Permanent Disability"
in the event that you become disabled by physical or mental illness or injury
to the extent that the Board of Directors of Rapidtron reasonably believes,
notwithstanding such reasonable accommodations as Rapidtron may make in
response to such disability, that you cannot carry out or perform
responsibilities, and such disability continues for a period of six (6)
consecutive months or three hundred sixty-five (365) days in any twenty-four
(24) month period, without regard to whether such three hundred sixty-five
(365) days are consecutive. In the event that Rapidtron terminates this
Agreement following your Permanent Disability, Rapidtron shall continue to
pay you (a) your Base Salary for twelve (12) months following the date of
such termination, (b) the Insurance Benefits set forth in Section 5 above for
twelve (12) months following the date of such termination, and (c) a prorated
Incentive Bonus through the date of your termination.
9.3 Resignation by Xxxxx.
9.3.1 You may immediately resign for cause at any time by written
notice to Rapidtron. For purposes of this Agreement, the term "cause" for
your resignation shall be (a) a breach by Rapidtron of any material covenant
or obligation hereunder; (b) the voluntary or involuntary dissolution of
Rapidtron; or (c) a "Change in Control" (as defined below) of Rapidtron. The
written notice given hereunder by you to Rapidtron shall specify in
reasonable detail the cause for resignation, and, in the case of the cause
described in (a) above, such resignation notice shall not be effective until
thirty (30) days after Rapidtron's receipt of such notice, during which time
Rapidtron shall have the right to respond to your notice and cure the breach
or other event giving rise to the resignation. In the event that Rapidtron
is able to cure, this Agreement shall continue in full force and effect. For
purposes of this Agreement, a "Change in Control" shall mean the occurrence
of any one of the following events: (i) any merger or consolidation in which
Rapidtron is not the surviving or resulting entity; (ii) any transfer of all
or substantially all of the assets of Rapidtron; (iii) the transfer of a
majority of the common stock or voting power of Rapidtron by one or more
shareholders in one or more transactions; or (iv) the issuance of stock in
Rapidtron constituting a change in control immediately following such
issuance.
9.4 Termination by Rapidtron.
9.4.1 Rapidtron may terminate this Agreement for cause at any
time by written notice to you. For purposes of this Agreement, the term
"cause" for termination by Rapidtron shall be (a) a conviction of or plea of
guilty or nolo contendere by you to a felony which could reasonably be
expected to have a material adverse effect on Rapidtron, its business, its
goodwill or its prospects; (b) the consistent refusal by you to perform your
material duties and obligations hereunder; or (c) your willful and
intentional misconduct in the performance of your material duties and
obligations. The written notice given hereunder by Rapidtron to you shall
specify in reasonable detail the cause for termination. In the case of a
termination for the cause described in (a) above, such termination shall be
effective upon receipt of the written notice. In the case of the causes
described in (b) and (c) above, such termination notice shall not be
effective until thirty (30) days after your receipt of such notice, during
which time you shall have the right to respond to Rapidtron's notice and cure
the breach or other event giving rise to the termination. In the event that
you are able to cure, this Agreement shall continue in full force and effect.
9.5 Effect of Termination. Upon any termination of this Agreement,
neither party shall have any further obligations thereafter arising under
this Agreement, except as provided in Section 17 below.
9.5.1 Upon your resignation without cause , or a termination of
this Agreement by Rapidtron with cause pursuant to Section 9.4 above,
Rapidtron shall immediately pay to you all accrued and unpaid compensation as
of the date of such termination. Thereafter, all compensation obligations of
Rapidtron under Section 6 shall cease.
9.5.2 Upon a resignation of this Agreement with cause by you
pursuant to Section 9.3.1 above, or a termination of this Agreement by
Rapidtron without cause, (a) Rapidtron shall immediately pay to you all
accrued and unpaid compensation as of the date of such termination; (b)
Rapidtron shall continue to pay the Base Salary through the period twelve
(12) months following the date of termination; (c) at the time of
termination, Rapidtron shall pay the Incentive Bonus for the calendar year of
termination as if you had continued to perform for the remainder of said
calendar year at the average rate of increase in Profits over the prior Term
of this Agreement, and (d) Rapidtron shall be required to buyout your common
stock at a price determined by the "Fair Market Value" (defined below), or
$2.00 per share, whichever is greater. As used herein "Fair Market Value"
shall mean the average daily trading price of the common stock during the
immediately preceding thirty (30) trading days.
9.6 Effect of Combination or Dissolution. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Rapidtron, or by
any merger or consolidation in which Rapidtron is not the surviving or
resulting entity, or any transfer of all or substantially all of the assets
of Rapidtron, or upon any transfer of a majority of the ownership interests
of Rapidtron by one or more members in one or more transactions, or upon the
issuance of any other security interests of Rapidtron constituting a majority
of the outstanding securities immediately following such issuance. Instead,
subject to your right to terminate this Agreement pursuant to Section 9.3
above, the provisions of this Agreement shall be binding on and inure to the
benefit of Rapidtron's successors and assigns.
9.6.1 Upon acquisition, merger and/or any other business combination with
Rapidtron, you hereby agree that notwithstanding Section 9.3.1, if so
requested by the resulting board of directors, you will maintain your
management role within Rapidtron, as a "transitional period" to assist
incoming management in the proper performance of his duties. Said
"transitional period" shall not exceed 12 calendar months unless otherwise
mutually agreed, pursuant to the terms and conditions of this Agreement,
including compensation.
10. Remedies.
10.1 Injunctive Relief Regarding Confidentiality. You acknowledge and
agree that (i) the covenants and the restrictions contained in Sections 7 and
8 above are necessary, fundamental, and required for the protection of the
business of Rapidtron; (ii) such covenants relate to matters which are of a
special, unique, and extraordinary character that gives each of such
covenants a unique and extraordinary value; and (iii) a breach of any of such
covenants will result in irreparable harm and damages to Rapidtron which
cannot be adequately compensated by a monetary award. Accordingly, it is
expressly agreed that in addition to all other remedies available at law or
in equity, Rapidtron shall be entitled to seek injunctive or other equitable
relief to restrain or enjoin you from breaching any such covenant or to
specifically enforce the provisions of Sections 7 or 8 above.
10.2 No Limitation of Remedies. Notwithstanding the provisions set
forth in Section 10.1 of this Agreement or any other provision contained in
this Agreement, the parties hereby agree that no remedy conferred by any of
the specific provisions of this Agreement, including without limitation, this
Section 10, is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
10.3 No Setoff. Notwithstanding anything to the contrary set forth in
this Agreement, all payments paid by Rapidtron to you under this Agreement,
including, without limitation, the compensation under Section 6 above, shall
be made without setoff, deduction or counterclaim of any kind whatsoever.
11. Successors and Assigns. This Agreement is in the nature of a personal
services contract; and subject to Section 9.6 above, neither party shall
assign this Agreement without the prior written consent of the other party.
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors, permitted assigns, heirs and legal
representatives.
12. Governing Law. This Agreement shall be construed under and in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of law).
13. Waiver. The failure of any party to insist on strict compliance with
any of the terms, covenants, or conditions of this Agreement by any other
party shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or
any other times.
14. Notices. Any notice or other communication required or permitted
hereunder (each, a "Notice") shall be in writing, and shall be deemed to have
been given (a) two (2) days following deposit of such Notice in the United
States mail, certified, postage prepaid, return receipt requested, or (b)
upon receipt if delivered personally, or delivered by reputable, recognized
third party overnight delivery service or courier service or (c) the next
business day following receipt, if transmitted by facsimile (provided that
such facsimile is followed by the deposit of the original Notice, or a copy
thereof, in the United States mail, certified, postage prepaid, return
receipt requested, no later than the next business day following transmission
of such facsimile), addressed to the parties as follows:
Xxxxx: Xxxx Xxxxx
00 XxXxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
To Rapidtron: Rapidtron, Inc.
0000 Xxxxxx Xxxxxx, xxxxxxxx X
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile Number: 000-000-0000
with copies to: Xxxxxxx X. Xxx, Esq.
Xxx Xxxxxxx LLP
00000 Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx, XX 00000
Either party may require such Notices to be delivered and given to any
address different from or additional to the address set forth above, by
delivering Notice thereof to the other party pursuant to this Section.
15. Integration. This Agreement constitutes the entire agreement of the
parties hereto with respect to the engagement and retention of you by
Rapidtron and your services to Sub, and supersedes any and all prior and
contemporaneous agreements, whether oral or in writing, between the parties
hereto with respect to the subject matter hereof. Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied in this Agreement or such
addenda (or in other written agreements signed by the parties and dated the
date hereof), and that no other agreement, statement or promise not contained
in this Agreement or such addenda (or such other written agreements) shall be
valid or binding on either party.
16. Amendments. This Agreement may not be amended, modified, altered or
supplemented except by written agreement executed and delivered by the
parties hereto.
17. Survival of Certain Rights and Obligations. The rights and obligations
of the parties hereto pursuant to Sections 7, 8, 9, 9.5, and 10 of this
Agreement shall survive the termination of this Agreement.
18. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired
or invalidated in any way. If any court of competent jurisdiction holds any
provision of this Agreement to be invalid, void or unenforceable with respect
to any state, region or locality, such provision shall nevertheless continue
in full force and effect in all other states, regions and localities to which
such provision applies.
19. Further Assurances. The parties agree that, at any time and from time
to time during the Term, they will take any action and execute and deliver
any document which the other party reasonably requests in order to carry out
the purposes of this Agreement.
20. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover any and all reasonable attorneys' fees, expert witness
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
23. Incorporation. The recitals and exhibits to this Agreement are
incorporated herein and, by this reference, made a part hereof as if fully
set forth herein.
24. No Third Party Beneficiary. This Agreement is made and entered into
between the parties solely for the benefit of the parties, and not for the
benefit of any other third party or entity. Except Xxxx Xxxxx, no third
party or entity shall be deemed or considered a third party beneficiary of
any covenant, promise or other provision of this Agreement or have any right
to enforce any such covenant, promise or other provision against either or
both parties.
[signatures follow on next page]
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
"Rapidtron"
RAPIDTRON, INC,
a Delaware corporation
By:
Xxxxx Xxxxxxx, General Manager
"You"
XXXX XXXXX, an individual
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is dated and entered into effective
as of January 1, 2003 (the "Effective Date"), by and between RAPIDTRON, INC.,
a Delaware corporation ("Rapidtron"), and XXXXX XXXXXXX, an individual
("you" or "Dermutz").
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants, provisions and terms set forth in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Rapidtron and Dermutz agree as follows:
1. Term. Unless terminated earlier as provided in this Agreement,
Rapidtron employs Dermutz for a term beginning on the Effective Date and
ending on December 31, 2004 (the "Term").
2. Title; Base Salary: Effective as of the date of this Agreement, you
will be employed as General Manager of Rapidtron and will earn a base salary
of $150,000 per annum through December 31, 2004. Base salary will be payable
on the same schedule and otherwise in accordance with Rapidtron's normal
practices for its senior executives.
3. Incentive Bonus. In addition to your base salary, you will be entitled
to earn incentive compensation during the Term, in an amount based on
Rapidtron Inc.'s Board approved Bonus Plan, as approved by unanimous consent
of the directors of Rapidtron, Inc., a Nevada corporation (formerly known as
The Furnishing Club, Inc)("RPDT").
4. Withholding. All payments under paragraphs 1 and 2 and other payments
and compensatory benefits will be subject to taxes and withholding in
accordance with applicable law.
5. Benefits.
a. Medical and Dental. You will be entitled to participate in the
Company's regular health insurance plan for employees, or a comparably priced
plan with 75% of the premium expense applicable to you paid by the Company
and 25% of such expense paid by you. You will be entitled to elect spousal
and dependent care coverage under such plan at your expense.
b. Vacation. You will be entitled to four (4) weeks of paid vacation time
per year of employment, such vacation to be scheduled at times that do not
materially interfere with the business of the Company. At no time will
benefits relating to unused vacation in excess of four (4) weeks be payable.
c. Stock Options. You shall be entitled to participate in all retirement
plans, profit sharing, stock option plans, stock appreciation rights, and
other such employee benefits, provided by Rapidtron or Rapidtron, Inc., a
Nevada corporation (formerly known as The Furnishing Club, Inc)("RPDT"), to
employees similarly situated. Subject to closing the Agreement and Plan of
Merger between RPDT and Rapidtron, Rapidtron shall cause RPDT to finalize and
approve, a qualified stock option plan for its executive officers, including
you, to be implemented by July 31, 2003. You shall be eligible to receive
stock options for shares of RPDT's common stock based upon the plan to be
vested over a three (3) year period beginning on the Effective Date hereof
and to expire not less than five (5) years after termination of this
Agreement. The remaining terms shall be subject to the plan to be adopted by
RPDT's Board of Directors, as the case may be.
6. Reimbursement of Expenses. Rapidtron shall reimburse you for all
business-related expenses and costs actually incurred in the performance of
your duties under this Agreement, including, without limitation, the lodging
and travel costs and expenses necessitated by performance and the equipment
and airtime charges for a mobile telephone. Reimbursement of all such costs
and expenses shall be subject to reasonable policies and procedures
established from time to time by Rapidtron, including, without limitation,
completion of Rapidtron's expense reports to qualify for expense
reimbursement.
7. Confidentiality, Assignment of Inventions, and Non-Compete.
7.1 Proprietary Information. In the course of your engagement by
Rapidtron, you will continue to have access to confidential and proprietary
information regarding Rapidtron and its business, including, but not limited
to, information regarding Rapidtron's technologies, methods and techniques,
product information, specifications, technical drawings and designs, trade
secrets, know-how, sources of supply, product and market research data,
customer lists, marketing plans, and financial information regarding
Rapidtron and its operations. Such information shall be referred to
hereinafter as "Proprietary Information" and shall include any and all of the
information of the type described and shall also include any and all other
confidential and proprietary information relating to the business to be
conducted by Rapidtron, whether previously existing, now existing or arising
hereafter, whether conceived or developed by others or by you alone or with
others, and whether or not conceived or developed during regular working
hours. Proprietary Information which is released into the public domain
during the period of your engagement under this Agreement, provided the same
is not in the public domain as a consequence of disclosure directly or
indirectly by you in violation of this Agreement, shall not be subject to the
restrictions of this Section 7.1.
7.2 Non-Disclosure. You shall not disclose, directly or indirectly,
(except as your duties may require and except as required by law) any
Proprietary Information to any person other than Rapidtron, any employees of
Rapidtron who are authorized, at the time of such disclosure, to receive such
information, or such other persons to whom you have been specifically
instructed to make disclosure by the Board of Directors of Rapidtron and in
all such cases only to the extent required in the course of your service to
Rapidtron. At the termination of this Agreement, you shall deliver to
Rapidtron all notes, letters, documents, records, computer files, programs
and other media which may contain Proprietary Information which are then in
its possession or control and shall not retain or use any copies or summaries
thereof.
7.3 Assignment of Inventions. All ideas, inventions, and other
developments or improvements conceived or reduced to practice by you, alone
or with others, during the term of this Agreement, whether or not during
working hours, that are within the scope of the business of Rapidtron or RPDT
or that relate to or result from any of Rapidtron's or RPDT's work or
projects or the services provided by you to Rapidtron or RPDT pursuant to
this Agreement, shall be the exclusive property of Rapidtron or RPDT. You
agree to assist Rapidtron or RPDT during the term, at Rapidtron's or RPDT's
expense, to obtain patents and copyrights on any such ideas, inventions,
writings, and other developments, and agrees to execute all documents
necessary to obtain such patents and copyrights in the name of Rapidtron or
RPDT, including an assignment of any rights therein.
7.4 Covenant Not to Compete. During the term of this Agreement, you
shall not engage in any of the following competitive activities: (a) engaging
directly or indirectly in any business or activity substantially similar to
any business or activity engaged in (or proposed to be engaged in) by
Rapidtron or RPDT; (b) engaging directly or indirectly in any business or
activity competitive with any business or activity engaged in (or proposed to
be engaged in) by Rapidtron or RPDT; (c) soliciting or taking away any
employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor of Rapidtron or RPDT, or attempting to so
solicit or take away; (d) interfering with any contractual or other
relationship between Rapidtron or RPDT and any employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor; or (e) using, for the benefit of any person or entity other than
Rapidtron or RPDT, any Proprietary Information of Rapidtron or RPDT. The
foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement and shall extend, and shall remain enforceable
against you, for the period of one (1) year following the date this Agreement
is terminated. In addition, during the two-year period following such
expiration or earlier termination, you shall not make or permit the making of
any negative statement of any kind concerning Rapidtron or RPDT.
8. Indemnification. To the maximum extent permitted by law, Rapidtron shall
indemnify, defend (with counsel selected by you and reasonably acceptable to
Rapidtron) and hold harmless, you and your attorneys, successors and assigns,
and each of them (each a "Dermutz Indemnitee"), from and against all claims,
losses, liabilities, damages, demands, actions, causes of actions, judgments,
settlements, costs and expenses of any nature whatsoever (including, without
limitation, reasonable attorneys' fees, expert witness fees, and costs
related thereto) (collectively, "Claims") which any such Dermutz Indemnitee
may suffer or incur in connection with (i) a breach by Rapidtron of its
obligations hereunder, or (ii) the performance by you as an officer, director
or employee of Rapidtron, including, without limitation, your acts and
omissions as Chairman and Chief Executive Officer; provided, however, that
the indemnity obligations as set forth hereunder shall not extend to any
Claims arising or resulting solely from your gross negligence or willful
misconduct. Rapidtron's obligations to pay Claims hereunder shall be due and
payable as and when such Claims are incurred, including without limitation,
all legal fees and costs and other expenses, incurred by you in connection
with the defense against and settlement of any Claim. The indemnification
provided by this Section 8 shall be deemed cumulative, and not exclusive, of
any other rights to which you may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to
action in an official capacity and as to action in another capacity while
holding such office. Nothing in this section shall affect any right to
indemnification to which you may be entitled by contract or otherwise. To the
maximum extent permitted by law and to the extent reasonably affordable to
Rapidtron, Rapidtron shall procure, pay for and maintain standard form
directors' and officers' liability insurance with an insurance carrier and in
amounts reasonably acceptable to you.
9. Termination and Resignation.
9.1 Termination Upon Death. If you die during the Term, this Agreement
shall terminate. Upon such termination, (i) you shall be entitled to all
accrued and unpaid compensation including the Base Salary and the prorated
amount of the Incentive Bonus as of the date of death; and (ii) your heirs,
legal representatives and designated beneficiaries shall be entitled to any
and all insurance proceeds in connection with the insurance policies
maintained.
9.2 Termination Upon Permanent Disability. In the event of your
"Permanent Disability" (as hereinafter defined), Rapidtron may terminate this
Agreement effective upon thirty (30) days notice to you. For the purposes of
this Agreement, you shall be deemed to have suffered "Permanent Disability"
in the event that you become disabled by physical or mental illness or injury
to the extent that the Board of Directors of Rapidtron reasonably believes,
notwithstanding such reasonable accommodations as Rapidtron may make in
response to such disability, that you cannot carry out or perform
responsibilities, and such disability continues for a period of six (6)
consecutive months or three hundred sixty-five (365) days in any twenty-four
(24) month period, without regard to whether such three hundred sixty-five
(365) days are consecutive. In the event that Rapidtron terminates this
Agreement following your Permanent Disability, Rapidtron shall continue to
pay you (a) your Base Salary for twelve (12) months following the date of
such termination, (b) the Insurance Benefits set forth in Section 5 above for
twelve (12) months following the date of such termination, and (c) a prorated
Incentive Bonus through the date of your termination.
9.3 Resignation by Dermutz.
9.3.1 You may immediately resign for cause at any time by written
notice to Rapidtron. For purposes of this Agreement, the term "cause" for
your resignation shall be (a) a breach by Rapidtron of any material covenant
or obligation hereunder; (b) the voluntary or involuntary dissolution of
Rapidtron; or (c) a "Change in Control" (as defined below) of Rapidtron. The
written notice given hereunder by you to Rapidtron shall specify in
reasonable detail the cause for resignation, and, in the case of the cause
described in (a) above, such resignation notice shall not be effective until
thirty (30) days after Rapidtron's receipt of such notice, during which time
Rapidtron shall have the right to respond to your notice and cure the breach
or other event giving rise to the resignation. In the event that Rapidtron
is able to cure, this Agreement shall continue in full force and effect. For
purposes of this Agreement, a "Change in Control" shall mean the occurrence
of any one of the following events: (i) any merger or consolidation in which
Rapidtron is not the surviving or resulting entity; (ii) any transfer of all
or substantially all of the assets of Rapidtron; (iii) the transfer of a
majority of the common stock or voting power of Rapidtron by one or more
shareholders in one or more transactions; or (iv) the issuance of stock in
Rapidtron constituting a change in control immediately following such
issuance.
9.4 Termination by Rapidtron.
9.4.1 Rapidtron may terminate this Agreement for cause at any
time by written notice to you. For purposes of this Agreement, the term
"cause" for termination by Rapidtron shall be (a) a conviction of or plea of
guilty or nolo contendere by you to a felony which could reasonably be
expected to have a material adverse effect on Rapidtron, its business, its
goodwill or its prospects; (b) the consistent refusal by you to perform your
material duties and obligations hereunder; or (c) your willful and
intentional misconduct in the performance of your material duties and
obligations. The written notice given hereunder by Rapidtron to you shall
specify in reasonable detail the cause for termination. In the case of a
termination for the cause described in (a) above, such termination shall be
effective upon receipt of the written notice. In the case of the causes
described in (b) and (c) above, such termination notice shall not be
effective until thirty (30) days after your receipt of such notice, during
which time you shall have the right to respond to Rapidtron's notice and cure
the breach or other event giving rise to the termination. In the event that
you are able to cure, this Agreement shall continue in full force and effect.
9.5 Effect of Termination. Upon any termination of this Agreement,
neither party shall have any further obligations thereafter arising under
this Agreement, except as provided in Section 17 below.
9.5.1 Upon your resignation without cause , or a termination of
this Agreement by Rapidtron with cause pursuant to Section 9.4 above,
Rapidtron shall immediately pay to you all accrued and unpaid compensation as
of the date of such termination. Thereafter, all compensation obligations of
Rapidtron under Section 6 shall cease.
9.5.2 Upon a resignation of this Agreement with cause by you
pursuant to Section 9.3.1 above, or a termination of this Agreement by
Rapidtron without cause, (a) Rapidtron shall immediately pay to you all
accrued and unpaid compensation as of the date of such termination; (b)
Rapidtron shall continue to pay the Base Salary through the period twelve
(12) months following the date of termination; (c) at the time of
termination, Rapidtron shall pay the Incentive Bonus for the calendar year of
termination as if you had continued to perform for the remainder of said
calendar year at the average rate of increase in Profits over the prior Term
of this Agreement, and (d) Rapidtron shall be required to buyout your common
stock at a price determined by the "Fair Market Value" (defined below), or
$2.00 per share, whichever is greater. As used herein "Fair Market Value"
shall mean the average daily trading price of the common stock during the
immediately preceding thirty (30) trading days.
9.6 Effect of Combination or Dissolution. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Rapidtron, or by
any merger or consolidation in which Rapidtron is not the surviving or
resulting entity, or any transfer of all or substantially all of the assets
of Rapidtron, or upon any transfer of a majority of the ownership interests
of Rapidtron by one or more members in one or more transactions, or upon the
issuance of any other security interests of Rapidtron constituting a majority
of the outstanding securities immediately following such issuance. Instead,
subject to your right to terminate this Agreement pursuant to Section 9.3
above, the provisions of this Agreement shall be binding on and inure to the
benefit of Rapidtron's successors and assigns.
9.6.1 Upon acquisition, merger and/or any other business combination with
Rapidtron, you hereby agree that notwithstanding Section 9.3.1, if so
requested by the resulting board of directors, you will maintain your
management role within Rapidtron, as a "transitional period" to assist
incoming management in the proper performance of his duties. Said
"transitional period" shall not exceed 12 calendar months unless otherwise
mutually agreed, pursuant to the terms and conditions of this Agreement,
including compensation.
10. Remedies.
10.1 Injunctive Relief Regarding Confidentiality. You acknowledge and
agree that (i) the covenants and the restrictions contained in Sections 7 and
8 above are necessary, fundamental, and required for the protection of the
business of Rapidtron; (ii) such covenants relate to matters which are of a
special, unique, and extraordinary character that gives each of such
covenants a unique and extraordinary value; and (iii) a breach of any of such
covenants will result in irreparable harm and damages to Rapidtron which
cannot be adequately compensated by a monetary award. Accordingly, it is
expressly agreed that in addition to all other remedies available at law or
in equity, Rapidtron shall be entitled to seek injunctive or other equitable
relief to restrain or enjoin you from breaching any such covenant or to
specifically enforce the provisions of Sections 7 or 8 above.
10.2 No Limitation of Remedies. Notwithstanding the provisions set
forth in Section 10.1 of this Agreement or any other provision contained in
this Agreement, the parties hereby agree that no remedy conferred by any of
the specific provisions of this Agreement, including without limitation, this
Section 10, is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
10.3 No Setoff. Notwithstanding anything to the contrary set forth in
this Agreement, all payments paid by Rapidtron to you under this Agreement,
including, without limitation, the compensation under Section 6 above, shall
be made without setoff, deduction or counterclaim of any kind whatsoever.
11. Successors and Assigns. This Agreement is in the nature of a personal
services contract; and subject to Section 9.6 above, neither party shall
assign this Agreement without the prior written consent of the other party.
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors, permitted assigns, heirs and legal
representatives.
12. Governing Law. This Agreement shall be construed under and in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of law).
13. Waiver. The failure of any party to insist on strict compliance with
any of the terms, covenants, or conditions of this Agreement by any other
party shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or
any other times.
14. Notices. Any notice or other communication required or permitted
hereunder (each, a "Notice") shall be in writing, and shall be deemed to have
been given (a) two (2) days following deposit of such Notice in the United
States mail, certified, postage prepaid, return receipt requested, or (b)
upon receipt if delivered personally, or delivered by reputable, recognized
third party overnight delivery service or courier service or (c) the next
business day following receipt, if transmitted by facsimile (provided that
such facsimile is followed by the deposit of the original Notice, or a copy
thereof, in the United States mail, certified, postage prepaid, return
receipt requested, no later than the next business day following transmission
of such facsimile), addressed to the parties as follows:
Dermutz: Xxxxx Xxxxxxx
__________________
__________________
To Rapidtron: Rapidtron, Inc.
0000 Xxxxxx Xxxxxx, xxxxxxxx X
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile Number: 000-000-0000
with copies to: Xxxxxxx X. Xxx, Esq.
Xxx Xxxxxxx LLP
00000 Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx, XX 00000
Either party may require such Notices to be delivered and given to any
address different from or additional to the address set forth above, by
delivering Notice thereof to the other party pursuant to this Section.
15. Integration. This Agreement constitutes the entire agreement of the
parties hereto with respect to the engagement and retention of you by
Rapidtron and your services to Sub, and supersedes any and all prior and
contemporaneous agreements, whether oral or in writing, between the parties
hereto with respect to the subject matter hereof. Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied in this Agreement or such
addenda (or in other written agreements signed by the parties and dated the
date hereof), and that no other agreement, statement or promise not contained
in this Agreement or such addenda (or such other written agreements) shall be
valid or binding on either party.
16. Amendments. This Agreement may not be amended, modified, altered or
supplemented except by written agreement executed and delivered by the
parties hereto.
17. Survival of Certain Rights and Obligations. The rights and obligations
of the parties hereto pursuant to Sections 7, 8, 9, 9.5, and 10 of this
Agreement shall survive the termination of this Agreement.
18. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired
or invalidated in any way. If any court of competent jurisdiction holds any
provision of this Agreement to be invalid, void or unenforceable with respect
to any state, region or locality, such provision shall nevertheless continue
in full force and effect in all other states, regions and localities to which
such provision applies.
19. Further Assurances. The parties agree that, at any time and from time
to time during the Term, they will take any action and execute and deliver
any document which the other party reasonably requests in order to carry out
the purposes of this Agreement.
20. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover any and all reasonable attorneys' fees, expert witness
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
23. Incorporation. The recitals and exhibits to this Agreement are
incorporated herein and, by this reference, made a part hereof as if fully
set forth herein.
24. No Third Party Beneficiary. This Agreement is made and entered into
between the parties solely for the benefit of the parties, and not for the
benefit of any other third party or entity. No third party or entity shall
be deemed or considered a third party beneficiary of any covenant, promise or
other provision of this Agreement or have any right to enforce any such
covenant, promise or other provision against either or both parties.
[signatures follow on next page]
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
"Rapidtron"
RAPIDTRON, INC,
a Delaware corporation
By:
Xxxx Xxxxx, Chief Executive Officer and President
"You"
XXXXX XXXXXXX, an individual
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is dated and entered into effective
as of January 1, 2003 (the "Effective Date"), by and between RAPIDTRON, INC.,
a Delaware corporation ("Rapidtron"), and XXXXX XXXXXXX, an individual
("you" or "Meineke").
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants, provisions and terms set forth in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Rapidtron and Meineke agree as follows:
1. Term. Unless terminated earlier as provided in this Agreement,
Rapidtron employs Meineke for a term beginning on the Effective Date and
ending on December 31, 2004 (the "Term").
2. Title; Base Salary: Effective as of the date of this Agreement, you
will be employed as General Manager of Rapidtron and will earn a base salary
of $90,000.00 per annum through December 31, 2003. If Rapidtron is
"profitable" (as defined below) at the end of the calendar year 2003, you
will receive a bonus in the amount of $35,000.00 and your base salary will be
increased to $125,000.00 per year through December 31, 2004. If you do not
receive the foregoing increase in base salary for the calendar year 2004 and
Rapidtron is profitable and the end of the calendar year 2004, you will
receive a bonus in the amount of $35,000.00. Subject to the foregoing, base
salary will be payable on the same schedule and otherwise in accordance with
Rapidtron's normal practices for its senior executives. As used in this
Agreement, "profitable" shall mean Rapditron's EBITDA for the fiscal year
shall be at least $350,000.00.
3. Incentive Bonus. In addition to your base salary, you will be entitled
to earn incentive compensation during the Term, in an amount based on
Rapidtron Inc.'s Board approved Bonus Plan, as approved by unanimous consent
of the directors of Rapidtron, Inc., a Nevada corporation (formerly known as
The Furnishing Club, Inc)("RPDT").
4. Withholding. All payments under paragraphs 1 and 2 and other payments
and compensatory benefits will be subject to taxes and withholding in
accordance with applicable law.
5. Benefits.
a. Medical and Dental. You will be entitled to participate in the
Company's regular health insurance plan for employees, or a comparably priced
plan with 75% of the premium expense applicable to you paid by the Company
and 25% of such expense paid by you. You will be entitled to elect spousal
and dependent care coverage under such plan at your expense.
b. Vacation. You will be entitled to four (4) weeks of paid vacation time
per year of employment, such vacation to be scheduled at times that do not
materially interfere with the business of the Company. At no time will
benefits relating to unused vacation in excess of four (4) weeks be payable.
c. Stock Options. You shall be entitled to participate in all retirement
plans, profit sharing, stock option plans, stock appreciation rights, and
other such employee benefits, provided by Rapidtron and Rapidtron, Inc., a
Nevada corporation (formerly known as The Furnishing Club, Inc)("RPDT"), to
employees similarly situated. Subject to closing the Agreement and Plan of
Merger between RPDT and Rapidtron (the "Merger Agreement"), Rapidtron shall
cause RPDT to finalize and approve, a qualified stock option plan for its
executive officers, including you, to be implemented by July 31, 2003. You
shall receive stock options in accordance with the plan for at least 625,000
shares of RPDT's common stock with a conversion price of $1.00 per share, one-
half to be vested on January 1, 2004, and one-half to be vested on January 1,
2005; provided, however, such options shall vest immediately upon a change in
control (as defined below). You shall also be eligible to receive
additional options based upon the plan to be vested over a three (3) year
period beginning on the Effective Date hereof and to expire not less than
five (5) years after termination of this Agreement. The remaining terms
shall be subject to the plan to be adopted by RPDT's Board of Directors. As
used herein, the term "change of control" means the removal of you from your
current level of management as the result of any of the following: (i) the
acquisition of 20% or more of the common stock of RPDT, (ii) a change in the
majority of the Board of Directors of RPDT, (iii) any reorganization, merger,
or consolidation with Rapidtron or RPDT that results in either (i) or (ii)
above, (iv) sale of all or substantially all of the assets of Rapidtron, (v)
liquidation of Rapidtron, or (vi) dissolution of Rapidtron.
6. Reimbursement of Expenses. Rapidtron shall reimburse you for all
business-related expenses and costs actually incurred in the performance of
your duties under this Agreement, including, without limitation, the lodging
and travel costs and expenses necessitated by performance and the equipment
and airtime charges for a mobile telephone. Reimbursement of all such costs
and expenses shall be subject to reasonable policies and procedures
established from time to time by Rapidtron, including, without limitation,
completion of Rapidtron's expense reports to qualify for expense
reimbursement.
7. Confidentiality, Assignment of Inventions, and Non-Compete.
7.1 Proprietary Information. In the course of your engagement by
Rapidtron, you will continue to have access to confidential and proprietary
information regarding Rapidtron and its business, including, but not limited
to, information regarding Rapidtron's technologies, methods and techniques,
product information, specifications, technical drawings and designs, trade
secrets, know-how, sources of supply, product and market research data,
customer lists, marketing plans, and financial information regarding
Rapidtron and its operations. Such information shall be referred to
hereinafter as "Proprietary Information" and shall include any and all of the
information of the type described and shall also include any and all other
confidential and proprietary information relating to the business to be
conducted by Rapidtron, whether previously existing, now existing or arising
hereafter, whether conceived or developed by others or by you alone or with
others, and whether or not conceived or developed during regular working
hours. Proprietary Information which is released into the public domain
during the period of your engagement under this Agreement, provided the same
is not in the public domain as a consequence of disclosure directly or
indirectly by you in violation of this Agreement, shall not be subject to the
restrictions of this Section 7.1.
7.2 Non-Disclosure. You shall not disclose, directly or indirectly,
(except as your duties may require and except as required by law) any
Proprietary Information to any person other than Rapidtron, any employees of
Rapidtron who are authorized, at the time of such disclosure, to receive such
information, or such other persons to whom you have been specifically
instructed to make disclosure by the Board of Directors of Rapidtron and in
all such cases only to the extent required in the course of your service to
Rapidtron. At the termination of this Agreement, you shall deliver to
Rapidtron all notes, letters, documents, records, computer files, programs
and other media which may contain Proprietary Information which are then in
its possession or control and shall not retain or use any copies or summaries
thereof.
7.3 Assignment of Inventions. All ideas, inventions, and other
developments or improvements conceived or reduced to practice by you, alone
or with others, during the term of this Agreement, whether or not during
working hours, that are within the scope of the business of Rapidtron or RPDT
or that relate to or result from any of Rapidtron's or RPDT's work or
projects or the services provided by you to Rapidtron or RPDT pursuant to
this Agreement, shall be the exclusive property of Rapidtron or RPDT. You
agree to assist Rapidtron or RPDT during the term, at Rapidtron's or RPDT's
expense, to obtain patents and copyrights on any such ideas, inventions,
writings, and other developments, and agrees to execute all documents
necessary to obtain such patents and copyrights in the name of Rapidtron or
RPDT, including an assignment of any rights therein.
7.4 Covenant Not to Compete. During the term of this Agreement, you
shall not engage in any of the following competitive activities: (a) engaging
directly or indirectly in any business or activity substantially similar to
any business or activity engaged in (or proposed to be engaged in) by
Rapidtron or RPDT; (b) engaging directly or indirectly in any business or
activity competitive with any business or activity engaged in (or proposed to
be engaged in) by Rapidtron or RPDT; (c) soliciting or taking away any
employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor of Rapidtron or RPDT, or attempting to so
solicit or take away; (d) interfering with any contractual or other
relationship between Rapidtron or RPDT and any employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor; or (e) using, for the benefit of any person or entity other than
Rapidtron or RPDT, any Proprietary Information of Rapidtron or RPDT. The
foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement and shall extend, and shall remain enforceable
against you, for the period of one (1) year following the date this Agreement
is terminated. In addition, during the two-year period following such
expiration or earlier termination, you shall not make or permit the making of
any negative statement of any kind concerning Rapidtron or RPDT.
8. Indemnification. To the maximum extent permitted by law, Rapidtron shall
indemnify, defend (with counsel selected by you and reasonably acceptable to
Rapidtron) and hold harmless, you and your attorneys, successors and assigns,
and each of them (each a "Meineke Indemnitee"), from and against all claims,
losses, liabilities, damages, demands, actions, causes of actions, judgments,
settlements, costs and expenses of any nature whatsoever (including, without
limitation, reasonable attorneys' fees, expert witness fees, and costs
related thereto) (collectively, "Claims") which any such Meineke Indemnitee
may suffer or incur in connection with (i) a breach by Rapidtron of its
obligations hereunder, or (ii) the performance by you as an officer, director
or employee of Rapidtron, including, without limitation, your acts and
omissions as Chairman and Chief Executive Officer; provided, however, that
the indemnity obligations as set forth hereunder shall not extend to any
Claims arising or resulting solely from your gross negligence or willful
misconduct. Rapidtron's obligations to pay Claims hereunder shall be due and
payable as and when such Claims are incurred, including without limitation,
all legal fees and costs and other expenses, incurred by you in connection
with the defense against and settlement of any Claim. The indemnification
provided by this Section 8 shall be deemed cumulative, and not exclusive, of
any other rights to which you may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to
action in an official capacity and as to action in another capacity while
holding such office. Nothing in this section shall affect any right to
indemnification to which you may be entitled by contract or otherwise. To the
maximum extent permitted by law and to the extent reasonably affordable to
Rapidtron, Rapidtron shall procure, pay for and maintain standard form
directors' and officers' liability insurance with an insurance carrier and in
amounts reasonably acceptable to you.
9. Termination and Resignation.
9.1 Termination Upon Death. If you die during the Term, this Agreement
shall terminate. Upon such termination, (i) you shall be entitled to all
accrued and unpaid compensation including the Base Salary and the prorated
amount of the Incentive Bonus as of the date of death; and (ii) your heirs,
legal representatives and designated beneficiaries shall be entitled to any
and all insurance proceeds in connection with the insurance policies
maintained.
9.2 Termination Upon Permanent Disability. In the event of your
"Permanent Disability" (as hereinafter defined), Rapidtron may terminate this
Agreement effective upon thirty (30) days notice to you. For the purposes of
this Agreement, you shall be deemed to have suffered "Permanent Disability"
in the event that you become disabled by physical or mental illness or injury
to the extent that the Board of Directors of Rapidtron reasonably believes,
notwithstanding such reasonable accommodations as Rapidtron may make in
response to such disability, that you cannot carry out or perform
responsibilities, and such disability continues for a period of six (6)
consecutive months or three hundred sixty-five (365) days in any twenty-four
(24) month period, without regard to whether such three hundred sixty-five
(365) days are consecutive. In the event that Rapidtron terminates this
Agreement following your Permanent Disability, Rapidtron shall continue to
pay you (a) your Base Salary for twelve (12) months following the date of
such termination, (b) the Insurance Benefits set forth in Section 5 above for
twelve (12) months following the date of such termination, and (c) a prorated
Incentive Bonus through the date of your termination.
9.3 Resignation by Meineke.
9.3.1 You may immediately resign for cause at any time by written
notice to Rapidtron. For purposes of this Agreement, the term "cause" for
your resignation shall be (a) a breach by Rapidtron of any material covenant
or obligation hereunder; (b) the voluntary or involuntary dissolution of
Rapidtron; or (c) a "Change in Control" (as defined below) of Rapidtron. The
written notice given hereunder by you to Rapidtron shall specify in
reasonable detail the cause for resignation, and, in the case of the cause
described in (a) above, such resignation notice shall not be effective until
thirty (30) days after Rapidtron's receipt of such notice, during which time
Rapidtron shall have the right to respond to your notice and cure the breach
or other event giving rise to the resignation. In the event that Rapidtron
is able to cure, this Agreement shall continue in full force and effect. For
purposes of this Agreement, a "Change in Control" shall mean the occurrence
of any one of the following events: (i) any merger or consolidation in which
Rapidtron is not the surviving or resulting entity; (ii) any transfer of all
or substantially all of the assets of Rapidtron; (iii) the transfer of a
majority of the common stock or voting power of Rapidtron by one or more
shareholders in one or more transactions; or (iv) the issuance of stock in
Rapidtron constituting a change in control immediately following such
issuance.
9.4 Termination by Rapidtron.
9.4.1 Rapidtron may terminate this Agreement for cause at any
time by written notice to you. For purposes of this Agreement, the term
"cause" for termination by Rapidtron shall be (a) a conviction of or plea of
guilty or nolo contendere by you to a felony which could reasonably be
expected to have a material adverse effect on Rapidtron, its business, its
goodwill or its prospects; (b) the consistent refusal by you to perform your
material duties and obligations hereunder; or (c) your willful and
intentional misconduct in the performance of your material duties and
obligations. The written notice given hereunder by Rapidtron to you shall
specify in reasonable detail the cause for termination. In the case of a
termination for the cause described in (a) above, such termination shall be
effective upon receipt of the written notice. In the case of the causes
described in (b) and (c) above, such termination notice shall not be
effective until thirty (30) days after your receipt of such notice, during
which time you shall have the right to respond to Rapidtron's notice and cure
the breach or other event giving rise to the termination. In the event that
you are able to cure, this Agreement shall continue in full force and effect.
9.5 Effect of Termination. Upon any termination of this Agreement,
neither party shall have any further obligations thereafter arising under
this Agreement, except as provided in Section 17 below.
9.5.1 Upon your resignation without cause , or a termination of
this Agreement by Rapidtron with cause pursuant to Section 9.4 above,
Rapidtron shall immediately pay to you all accrued and unpaid compensation as
of the date of such termination. Thereafter, all compensation obligations of
Rapidtron under Section 6 shall cease.
9.5.2 Upon a resignation of this Agreement with cause by you
pursuant to Section 9.3.1 above, or a termination of this Agreement by
Rapidtron without cause, (a) Rapidtron shall immediately pay to you all
accrued and unpaid compensation as of the date of such termination; (b)
Rapidtron shall continue to pay the Base Salary through the period twelve
(12) months following the date of termination; (c) at the time of
termination, Rapidtron shall pay the Incentive Bonus for the calendar year of
termination as if you had continued to perform for the remainder of said
calendar year at the average rate of increase in Profits over the prior Term
of this Agreement, and (d) Rapidtron shall be required to buyout your common
stock at a price determined by the "Fair Market Value" (defined below), or
$2.00 per share, whichever is greater. As used herein "Fair Market Value"
shall mean the average daily trading price of the common stock during the
immediately preceding thirty (30) trading days.
9.6 Effect of Combination or Dissolution. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Rapidtron, or by
any merger or consolidation in which Rapidtron is not the surviving or
resulting entity, or any transfer of all or substantially all of the assets
of Rapidtron, or upon any transfer of a majority of the ownership interests
of Rapidtron by one or more members in one or more transactions, or upon the
issuance of any other security interests of Rapidtron constituting a majority
of the outstanding securities immediately following such issuance. Instead,
subject to your right to terminate this Agreement pursuant to Section 9.3
above, the provisions of this Agreement shall be binding on and inure to the
benefit of Rapidtron's successors and assigns.
9.6.1 Upon acquisition, merger and/or any other business combination with
Rapidtron, you hereby agree that notwithstanding Section 9.3.1, if so
requested by the resulting board of directors, you will maintain your
management role within Rapidtron, as a "transitional period" to assist
incoming management in the proper performance of his duties. Said
"transitional period" shall not exceed 12 calendar months unless otherwise
mutually agreed, pursuant to the terms and conditions of this Agreement,
including compensation.
10. Remedies.
10.1 Injunctive Relief Regarding Confidentiality. You acknowledge and
agree that (i) the covenants and the restrictions contained in Sections 7 and
8 above are necessary, fundamental, and required for the protection of the
business of Rapidtron; (ii) such covenants relate to matters which are of a
special, unique, and extraordinary character that gives each of such
covenants a unique and extraordinary value; and (iii) a breach of any of such
covenants will result in irreparable harm and damages to Rapidtron which
cannot be adequately compensated by a monetary award. Accordingly, it is
expressly agreed that in addition to all other remedies available at law or
in equity, Rapidtron shall be entitled to seek injunctive or other equitable
relief to restrain or enjoin you from breaching any such covenant or to
specifically enforce the provisions of Sections 7 or 8 above.
10.2 No Limitation of Remedies. Notwithstanding the provisions set
forth in Section 10.1 of this Agreement or any other provision contained in
this Agreement, the parties hereby agree that no remedy conferred by any of
the specific provisions of this Agreement, including without limitation, this
Section 10, is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
10.3 No Setoff. Notwithstanding anything to the contrary set forth in
this Agreement, all payments paid by Rapidtron to you under this Agreement,
including, without limitation, the compensation under Section 6 above, shall
be made without setoff, deduction or counterclaim of any kind whatsoever.
11. Successors and Assigns. This Agreement is in the nature of a personal
services contract; and subject to Section 9.6 above, neither party shall
assign this Agreement without the prior written consent of the other party.
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors, permitted assigns, heirs and legal
representatives.
12. Governing Law. This Agreement shall be construed under and in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of law).
13. Waiver. The failure of any party to insist on strict compliance with
any of the terms, covenants, or conditions of this Agreement by any other
party shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or
any other times.
14. Notices. Any notice or other communication required or permitted
hereunder (each, a "Notice") shall be in writing, and shall be deemed to have
been given (a) two (2) days following deposit of such Notice in the United
States mail, certified, postage prepaid, return receipt requested, or (b)
upon receipt if delivered personally, or delivered by reputable, recognized
third party overnight delivery service or courier service or (c) the next
business day following receipt, if transmitted by facsimile (provided that
such facsimile is followed by the deposit of the original Notice, or a copy
thereof, in the United States mail, certified, postage prepaid, return
receipt requested, no later than the next business day following transmission
of such facsimile), addressed to the parties as follows:
Meineke: Xxxxx Xxxxxxx
0 Xxxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
To Rapidtron: Rapidtron, Inc.
0000 Xxxxxx Xxxxxx, xxxxxxxx X
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile Number: 000-000-0000
with copies to: Xxxxxxx X. Xxx, Esq.
Xxx Xxxxxxx LLP
00000 Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx, XX 00000
Either party may require such Notices to be delivered and given to any
address different from or additional to the address set forth above, by
delivering Notice thereof to the other party pursuant to this Section.
15. Integration. This Agreement constitutes the entire agreement of the
parties hereto with respect to the engagement and retention of you by
Rapidtron and your services to Sub, and supersedes any and all prior and
contemporaneous agreements, whether oral or in writing, between the parties
hereto with respect to the subject matter hereof. Subject to closing under
the Merger Agreement, this Agreement shall supercede and replace that certain
Management Services Agreement, dated as of January 1, 2002, between Rapidtron
and Meineke Consulting, LLC, and as of January 1, 2003, neither party shall
have any further obligation under such Management Services Agreement. Each
party to this Agreement acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied in this
Agreement or such addenda (or in other written agreements signed by the
parties and dated the date hereof), and that no other agreement, statement or
promise not contained in this Agreement or such addenda (or such other
written agreements) shall be valid or binding on either party.
16. Amendments. This Agreement may not be amended, modified, altered or
supplemented except by written agreement executed and delivered by the
parties hereto.
17. Survival of Certain Rights and Obligations. The rights and obligations
of the parties hereto pursuant to Sections 7, 8, 9, 9.5, and 10 of this
Agreement shall survive the termination of this Agreement.
18. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired
or invalidated in any way. If any court of competent jurisdiction holds any
provision of this Agreement to be invalid, void or unenforceable with respect
to any state, region or locality, such provision shall nevertheless continue
in full force and effect in all other states, regions and localities to which
such provision applies.
19. Further Assurances. The parties agree that, at any time and from time
to time during the Term, they will take any action and execute and deliver
any document which the other party reasonably requests in order to carry out
the purposes of this Agreement.
20. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover any and all reasonable attorneys' fees, expert witness
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
23. Incorporation. The recitals and exhibits to this Agreement are
incorporated herein and, by this reference, made a part hereof as if fully
set forth herein.
24. No Third Party Beneficiary. This Agreement is made and entered into
between the parties solely for the benefit of the parties, and not for the
benefit of any other third party or entity. No third party or entity shall
be deemed or considered a third party beneficiary of any covenant, promise or
other provision of this Agreement or have any right to enforce any such
covenant, promise or other provision against either or both parties.
[signatures follow on next page]
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
"Rapidtron"
RAPIDTRON, INC,
a Delaware corporation
By:
Xxxx Xxxxx, Chief Executive Officer and President
"You"
XXXXX XXXXXXX, an individual
ACKNOWLEDGED AND AGREED AS TO SECTION 15
MEINEKE CONSULTING, LLC,
a California limited liability company
By:
Xxxxx Xxxxxxx, Manager
Exhibit B
Use of Proceeds
Exhibit C
REPLACEMENT
PROMISSORY NOTE
$________________
(Principal Amount)
Dated:
Executed at:
(City, Country)
FOR VALUE RECEIVED, RAPIDTRON, INC., a Delaware corporation ("Maker"), hereby
promises to pay to Holder, or its assignee, at Nominee - c/o
, or such address as may be designated in writing by any holder of this Note,
the sum of____________________ US Dollars and No Cents ($_______________).
The repayment of this Note (including principal and interest, if any) is due
in full on March 31, 2003, and thereafter upon demand.
This Note shall bear a non-compounded interest rate of ten percent (10%) per
annum beginning on the date hereof, and continuing until principal and
interest are fully paid.
TERMS OF REPAYMENT:
1. Pursuant to that certain Agreement and Plan of Merger, dated as of
January 17, 2003, among Rapidtron, Inc., a Nevada corporation, formerly known
as The Furnishing Club ("RPDT"); RTI Acquisition Subsidiary, Inc., a Nevada
corporation, and Maker (the "Merger Agreement"), this Replacement Promissory
Note (this "Note") is made in full replacement of that certain Promissory
Note dated __________ made by Maker payable to ______________________
("Holder"), or order, for the principal amount of $____________.
2. This Note may be prepaid in whole or in part without penalty.
3. Upon closing of Merger as contemplated by the Merger Agreement, the
entire outstanding balance of this Note, including all principal and interest
accrued, shall, ipso facto and without any action by the Holder, be converted
into restricted shares of common stock of RPDT ("Stock"), at a conversion
rate of $1.00 per share. This Note and the Stock issued upon conversion
hereof is and shall be issued under an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended. The Holder hereby
represents that it is acquiring this Note and the Stock hereunder or acquired
pursuant hereto for its own account, not as a nominee or agent, with the
present intention of holding such securities for purposes of investment, and
not with a view to the resale or distribution of any part thereof, and that
it has no intention of selling this Note or the Stock in a public
distribution in violation of the federal securities laws or any applicable
state securities laws. Holder acknowledges that the Stock will contain a
restrictive legend in accordance with Rule 144.
4. If the Merger Agreement is terminated and the Merger is abandoned,
Paragraph 3 of this Note shall no longer apply and this Note shall remain an
outstanding obligation payable by Maker to Holder in full on or before March
31, 2003.
5. Security Lien. The Maker of this Note hereby grants to the Holder a
security interest in any and all of Maker's assets, including but not limited
to, real property, inventory, receivables, vehicles, furniture, intellectual
property and equipment.
6. In the event of the failure to make any payment when due, the holder of
this Note may declare the entire principal balance and accrued interest
immediately due and payable. Any overdue payment shall bear interest at the
rate of twelve percent (12%), or at such lower rate mandated by law, per
annum until principal and interest are fully paid.
7. All parties to this Note, including the Maker and any endorser or
guarantors, if any, jointly and severally waive presentment, notice or
dishonor and diligence in collecting and all agree to remain fully obligated
under the terms of this Note even if, without notice, the time for payment is
extended; or the Note is renewed or modified; or one of the parties is
released or discharged; or the release or substitution of any collateral
given as security for the payment of the Note.
8. No course of dealing between the parties of this Note, and no delay on
the part of the Holder in exercising any rights hereunder, shall operate as a
waiver of the rights of the holder. No covenant, provision or Default
hereunder may be waived except by written instrument signed by the waiving
party, and no such waiver shall extend to or impair any obligation not
expressly waived.
9. If any provision herein is determined to be unlawful, it is hereby
agreed that this Note shall remain in full force and effect and shall be
construed as if the provision determined to be unlawful was never contained
herein and a reasonable provision shall be substituted therein. This
Agreement shall be construed and interpreted in accordance with the laws of
the State of Nevada.
10. If this Note is not paid promptly in accordance with its terms, the
Undersigned agrees to pay all costs of collection and enforcement, including,
but not limited to, private costs, court costs and reasonable attorney fees.
In the event that any judgment is obtained under this Note, the Undersigned
waive, to the extent permitted under the law, the benefit of any law
exempting their property, or any part of it.
[signatures begin on next page]
AGREED:
"MAKER"
RAPIDTRON, INC., a Delaware corporation
By:
Name:
Title:
"HOLDER"
__________________________________________
By:
Name:
Title:
"RPDT"
RAPIDTRON, INC., a Nevada corporation
By:
Name:
Title:
