AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of
February 2, 1999 among ROYAL PRECISION, INC., a Delaware corporation ("RP"),
COYOTE SPORTS, INC., a Nevada corporation ("CSI") and RP ACQUISITION CORP., a
Delaware corporation and a wholly owned subsidiary of CSI ("Merger Sub"),
evidences that, for and in consideration of the mutual covenants set forth
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
RECITALS
A. The Boards of Directors of CSI and Merger Sub and the Board of
Directors of and RP have approved the merger of Merger Sub into RP upon the
terms and subject to the conditions set forth herein (the "Merger") and have
determined that the Merger is advisable, fair to, and in the best interests of,
their respective shareholders.
B. For U.S. federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
C. Concurrently herewith, certain holders of voting stock of RP and
CSI, respectively, have entered into agreements ("Shareholder Agreements")
pursuant to which they agree to vote such stock beneficially owned by them in
favor of the transactions contemplated by this Agreement.
ARTICLE 1. THE TRANSACTION.
1.1. THE MERGER. Upon the terms and subject to the conditions hereof,
on the Effective Date (as defined in Section 1.2), Merger Sub shall be merged
with and into RP which shall be the surviving corporation in the Merger (the
"Surviving Corporation"), the separate existence of Merger Sub shall thereupon
cease, and the name of the Surviving Corporation shall by virtue of the Merger
remain "Royal Precision, Inc."
1.2. EFFECTIVE DATE OF THE MERGER. The Merger shall become effective
when a properly executed Certificate of Merger is duly filed with the Secretary
of State of the State of Delaware, which filing shall be made concurrently with
the closing of the transaction contemplated by this Agreement in accordance with
Section 1.12. When used in this Agreement, the term "Effective Date" shall mean
the date and time at which such Certificate of Merger is so filed or at such
time thereafter as is provided in such Certificate of Merger.
1.3. TAX-FREE REORGANIZATION. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code. In this regard, CSI represents that it presently intends, and that at the
Effective Date it will intend, to continue RP's historic business or use a
significant portion of RP's business assets in a business.
1.4. CONVERSION OF SECURITIES.
1.4.1. As of the Effective Date, by virtue of the Merger and
without any action on the part of any holder of any shares of RP's
Common Stock, $.001 par value ("RP Shares" or "RP Common Stock"):
(a) All shares of RP Common Stock which are held by
RP or any Subsidiary (as defined in Section 8.13) of RP shall
be canceled.
(b) Subject to Section 1.7, each remaining
outstanding share of RP Common Stock shall be converted into
that number of fully paid and nonassessable shares of the
Convertible Preferred Stock, $.001 par value, of CSI ("CSI
Preferred Stock"), having the rights and preferences set forth
in Exhibit 1.4.1 hereto, determined by dividing (i) the number
of shares of CSI's Common Stock, par value $.001 per share
("CSI Common Stock"), actually issued and outstanding as of
the Effective Date by (ii) the number of shares of RP Common
Stock actually issued and outstanding as of the Effective
Date, carried to four decimal places (the "Exchange Ratio").
(c) Each issued and outstanding share of Common
Stock, without par value, of Merger Sub ("Merger Sub Common
Stock") shall be converted into and become one fully paid and
nonassessable share of Common Stock, $.001 par value, of the
Surviving Corporation.
1.5. TERMS OF EXCHANGE. The manner of exchanging RP Common Stock for
CSI Preferred Stock in the Merger shall be as follows:
1.5.1. On the Effective Date, CSI shall make available to such
United States federally or state chartered commercial bank or trust
company having net capital of not less than $100,000,000 (or a
subsidiary thereof) as may be selected as exchange agent by CSI (the
"Exchange Agent"), for the benefit of each holder of RP Common Stock, a
sufficient number of certificates representing CSI Preferred Stock to
effect the delivery of CSI Preferred Stock required to be issued
pursuant to Section 1.4. CSI shall enter into an agreement (the
"Exchange Agent Agreement") with the Exchange Agent pursuant to which
the Exchange Agent shall be obligated to provide the services set forth
in Section 1.5.2.
1.5.2. The Exchange Agent Agreement shall provide that promptly
after the Effective Date, the Exchange Agent shall mail to each holder
of record (as shown on the books of RP's transfer agent as of the
Effective Date) of a certificate or certificates which immediately
prior to the Effective Date represented outstanding shares of RP
Common Stock (individually, a "Certificate" and collectively, the
"Certificates") (a) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (b) instructions for use in
effecting the surrender of the Certificates for exchange. Upon
surrender of Certificates for cancellation to the Exchange Agent,
together with such letter of transmittal duly executed and any other
required documents, the holder of such Certificates shall be entitled
to receive for each of the shares of RP Common Stock represented by
such Certificates the number of shares of CSI Preferred Stock into
which such shares of RP Common Stock are converted in the Merger and
the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, Certificates shall represent solely the right to receive
the number of shares of CSI Preferred Stock into which such shares of
RP Common Stock are converted in the Merger and any cash in lieu of
fractional shares of CSI Preferred Stock as contemplated by Section
1.7 with respect to each of the shares of RP Common Stock represented
thereby. The Exchange Agent shall not be entitled to vote or exercise
any rights of ownership with respect to the CSI Preferred Stock held
by it from time to time hereunder, except that it shall receive and
hold all dividends or other distributions paid or distributed with
respect to such CSI Preferred Stock for the account of the persons
entitled thereto.
1.5.3. Certificates surrendered for exchange by any Affiliate
(as defined in Section 5.9.1) shall not be exchanged for certificates
representing shares of CSI Preferred Stock until CSI has received the
written agreements from such Affiliate as provided in Section 5.9.2.
1.6. DIVIDENDS; TRANSFER TAXES. No dividends or other distributions
that are declared or made on CSI Preferred Stock will be paid to persons
entitled to receive certificates representing CSI Preferred Stock pursuant to
this Agreement until such persons surrender their Certificates representing RP
Common Stock. Upon such surrender, there shall be paid to the person in whose
name the certificates representing such CSI Preferred Stock shall be issued any
dividends or other distributions which shall have become payable with respect to
such CSI Preferred Stock in respect of a record date after the Effective Date.
In no event shall the person entitled to receive such dividends be entitled to
receive interest on such dividends. If any cash in lieu of fractional shares or
any certificate representing CSI Preferred Stock is to be paid to or issued in a
name other than that in which the Certificate surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such CSI Preferred Stock in a name other than that of the registered holder of
the Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto shall be liable
to a holder of shares of RP Common Stock for any shares of CSI Preferred Stock
or dividends thereon properly delivered to a public official pursuant to any
applicable escheat laws.
1.7. NO FRACTIONAL SHARES. No certificates or scrip representing less
than one share of CSI Preferred Stock shall be issued upon the surrender for
exchange of Certificates representing RP Common Stock pursuant to Section 1.5.2.
In lieu of any such fractional share, each holder of RP Common Stock who would
otherwise have been entitled to a fraction of a share of CSI Preferred Stock
upon surrender of Certificates for exchange pursuant to Section 1.5.2 shall be
paid upon such surrender cash (without interest) in an amount equal to (x) such
fractional interest multiplied by (y) the product of $6.00 multiplied by the
reciprocal of the Exchange Ratio. As soon as practicable after the determination
of the amount of cash to be paid to former stockholders of RP in lieu of any
fractional interests, CSI shall make available to the Exchange Agent, which
shall in turn make available in accordance with this Agreement, such amounts to
such former stockholders.
1.8. STOCK OPTIONS.
1.8.1. Each option or warrant to purchase RP Common Stock
issued pursuant to the Royal Precision, Inc. Stock Option Plan and the
FM Precision Golf Corp. 1997 Stock Option Plan, or otherwise which is
(a) set forth in the RP Disclosure Schedule (as hereinafter defined),
and (b) outstanding as of the Effective Date (individually, an "RP
Option" and, collectively, the "RP Options") shall be assumed by CSI
and converted into an option or warrant (or a substitute option shall
be granted) to purchase the number of shares of CSI Common Stock
(rounded to the nearest whole share) equal to the number of shares of
CSI Preferred Stock into which the number of shares of RP Common Stock
subject to such RP Option would have been converted pursuant to the
Merger (that is, the number of shares of RP Common Stock subject to
such RP Option multiplied by the Exchange Ratio), at an exercise price
per share of CSI Preferred Stock (rounded to the nearest xxxxx) equal
to the former exercise price per share of RP Common Stock under the RP
Option immediately prior to the Effective Date multiplied by the
reciprocal of the Exchange Ratio; provided, however, that in the case
of any RP Option to which Section 421 of the Code applies by reason of
its qualification under Section 422 of the Code, the conversion formula
shall be adjusted, if necessary, to comply with Section 424(a) of the
Code and the regulations issued thereunder. Except as otherwise
provided in the applicable plan or agreement granting the RP Options,
the duration, vesting and other terms of each new option to purchase
shares of CSI Common Stock shall be the same as the original RP Option
except that all references in the option agreement to RP shall be
deemed to be references to CSI. CSI and RP agree to take such action as
may be necessary to effectuate the foregoing provisions.
1.8.2. As soon as practicable after the Effective Date, CSI
shall deliver to each holder of an option to purchase CSI Common Stock
a notice that accurately reflects the changes to such option
contemplated by this Section 1.8.
1.9. STOCKHOLDER APPROVAL. Each of RP and CSI shall take all action
reasonably necessary, in accordance with applicable law and their respective
certificate or articles of incorporation and by-laws, to convene a special
meeting of the holders of RP Common Stock (the "RP Meeting") and a special
meeting of the holders of CSI Common Stock (the "CSI Meeting") as promptly as
practicable for the purpose of considering and taking action upon this
Agreement. Subject to Section 5.1, the Board of Directors of RP will recommend
that holders of RP Common Stock vote to approve the Merger and to adopt this
Agreement at the RP Meeting and the Board of Directors of CSI will recommend
that holders of CSI Common Stock vote to approve an increase in the number of
authorized shares of the CSI Preferred Stock and the issuance of CSI Preferred
Stock pursuant to the Merger at the CSI Meeting.
1.10. CLOSING OF RP'S TRANSFER BOOKS. At the Effective Date, the stock
transfer books of RP shall be closed and no transfer of shares of RP Common
Stock shall be made thereafter. In the event that, after the Effective Date,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for CSI Preferred Stock and/or cash as provided in Sections 1.4,
1.5, 1.6 and 1.7.
1.11. ASSISTANCE IN CONSUMMATION OF THE MERGER. Each of CSI, Merger Sub
and RP shall provide all reasonable assistance to, and shall cooperate with,
each other to bring about the consummation of the Merger as soon as practicable
in accordance with the terms and conditions of this Agreement. CSI shall cause
Merger Sub to perform all of its obligations in connection with this Agreement.
1.12. CLOSING. The closing of the transaction contemplated by this
Agreement shall take place (a) at the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP, New York, New York at 10:00 A.M. local time on the day which is not more
than one business day after the day on which the last of the conditions set
forth in Article 6 (other than those requiring an exchange of a certificate,
opinion or other document, or the taking of other action, at the closing) is
fulfilled or waived or (b) at such other time and place as CSI and RP shall
agree in writing.
1.13. ILLUSTRATIVE COMPUTATION. For the avoidance of doubt, if the
Exchange Ratio for purposes of Section 1.4.1(b) were to be determined on the
basis of the number of shares of CSI Common Stock and RP Common Stock stated to
be outstanding in Sections 3.4 and 4.4 hereof, the Exchange Ratio would be
1.0018 (that is, 5,677,692 divided by 5,667,375) and the reciprocal of the
Exchange Ratio would be .9982.
ARTICLE 2. SURVIVING CORPORATION.
2.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
RP as of the Effective Date shall be the Certificate of Incorporation of the
Surviving Corporation until duly amended by the stockholder of the Surviving
Corporation subsequent to the Effective Date.
2.2. BY-LAWS. The By-Laws of Merger Sub as in effect immediately prior
to the Effective Date shall be the By-Laws of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by law.
2.3. OFFICERS; BOARD OF DIRECTORS.
2.3.1. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or
appointed or until their earlier death, resignation or removal, in
accordance with the Surviving Corporation's Certificate of
Incorporation and ByLaws.
2.3.2. The officers of RP at the Effective Time and such other
persons as may be designated by CSI shall, from and after the Effective
Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed or until their earlier
death, resignation or removal, in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
2.4. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the Delaware General Corporation Law ("DGCL").
ARTICLE 3. REPRESENTATIONS OF CSI. CSI hereby represents and warrants to RP
that:
3.1. CSI DISCLOSURE SCHEDULE
3.1.1. The CSI Disclosure Schedule sets forth all of the
information concerning CSI, its Subsidiaries and the CSI Shares
required in this Article 3. To the extent any statement in this Article
3 is untrue, the CSI Disclosure Schedule sets forth the statements
necessary to make the statements in this Article 3 true. All
information and statements set forth in the CSI Disclosure Schedule
shall be deemed to supersede and correct the statements made in this
Article 3 and to be additional representations and warranties of CSI.
The CSI Disclosure Schedule sets forth all of the information and
statements required in numbered sections bearing the number of the
Section of this Agreement calling for such information and in the order
of such numbers in this Agreement.
3.1.2. CSI has delivered to RP complete and accurate copies of
(a) any written contract or other document referred to in the CSI
Disclosure Schedule or herein and (b) the CSI Reports referred to in
Section 3.7 of this Agreement.
3.2. EXISTENCE AND GOOD STANDING OF CSI. CSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as now being
conducted. CSI is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the character or
location of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified or licensed would not reasonably be expected to
have a material adverse effect on the consolidated business, financial condition
or results of operations of CSI and its Subsidiaries (a "CSI Material Adverse
Effect"). Each of CSI's Subsidiaries is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the state of its incorporation or formation, has the corporate or other power
and corporate or other authority to own its properties and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so licensed or qualified or to be
in good standing would not reasonably be expected to have, individually or in
the aggregate, a CSI Material Adverse Effect. Neither CSI nor any of its
Subsidiaries is in violation of any order of any court, governmental authority
or arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which CSI or any CSI Subsidiary or any of their respective
properties or assets is subject, except where such violation would not have,
individually or in the aggregate, a CSI Material Adverse Effect. CSI and its
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations in
connection with their business as now conducted, where the failure to obtain any
such items or to take any such action would reasonably be expected to have a CSI
Material Adverse Effect. The copies of the certificate or articles of
incorporation and By-Laws of CSI, Merger Sub and each other CSI Subsidiary
previously delivered to RP are true and correct. Neither CSI nor any of the CSI
Subsidiaries is in violation of any of the provisions of their restated articles
of incorporation or By-Laws.
3.3. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. Each of CSI and
Merger Sub has the requisite corporate power and corporate authority to execute
and deliver this Agreement and all agreements and documents contemplated hereby
and consummate the transactions contemplated hereby and thereby. Subject only to
the approval of the amendment of CSI's articles of incorporation and the
issuance of the CSI Preferred Stock pursuant to this Agreement and the
transaction contemplated hereby by the holders of a majority of the outstanding
CSI Shares, the consummation by CSI of the transaction contemplated hereby has
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of CSI, enforceable in accordance with their
respective terms subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
3.4. CAPITAL STOCK. CSI has an authorized capitalization consisting of
25,000,000 shares of Common Stock, par value $.001 per share, of which 5,677,692
shares are issued and outstanding, and 4,000,000 shares of preferred stock, par
value $.001 per share, of which 75,000 shares are issued and outstanding. On or
immediately prior to the Effective Date, CSI will have authorized capitalization
as set forth in Exhibit 3.4.1 (including the CSI Preferred Stock to be issued
pursuant to the Merger). Except as set forth in the CSI Disclosure Schedule, CSI
has no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of CSI on any matter.
All such outstanding shares have been and will be duly authorized and validly
issued and are and will be fully paid and non-assessable. Except as set forth in
the CSI Disclosure Schedule, there are, and at the Effective Date, there will be
no outstanding subscriptions, options, warrants, rights, calls, commitments,
conversion rights, convertible securities, rights of exchange, plans or other
agreements providing for the purchase, issuance or sale of any shares of the
capital stock of CSI by or to CSI, other than as contemplated by this Agreement.
3.5. SUBSIDIARIES. Except as set forth in the CSI Disclosure Schedule,
CSI owns each of the outstanding shares of capital stock of each of CSI's
Subsidiaries. Each of the outstanding shares of capital stock of each of CSI's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and except as set forth in the CSI Disclosure Schedule, is owned by CSI free and
clear of all liens, pledges, security interests, claims or other encumbrances.
The CSI Disclosure Schedule sets forth with respect to each CSI Subsidiary (a)
its name and jurisdiction of incorporation, (b) its authorized capital stock,
and (c) the number of issued and outstanding shares of capital stock. Except for
interests in the CSI Subsidiaries, neither CSI nor any CSI Subsidiary owns
directly or indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, joint venture, limited liability company,
business, trust or entity.
3.6. NO VIOLATIONS. The execution and delivery of this Agreement by
CSI and the consummation of the transaction contemplated hereby (a) will not
violate any provision of the articles of incorporation or by-laws of CSI or its
Subsidiaries, (b) will not violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of CSI or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which CSI or any of its
Subsidiaries is a party, or by which CSI or any of its Subsidiaries or any of
their properties is bound or affected, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect; (c) will not violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to CSI or any of
its Subsidiaries or any of their respective properties or assets (assuming
completion of the Regulatory Filings as defined in (d) below), except for
violations which would not reasonably be expected to have, individually or in
the aggregate, a CSI Material Adverse Effect, or (d) other than the filings
provided for in Section 1, filings under the Securities Exchange Act of 1934
(the "Exchange Act"), the Securities Act of 1933, as amended (the "Securities
Act") or applicable state securities and "Blue Sky" laws or filings in
connection with the maintenance of qualification to do business in other
jurisdictions (collectively, the "Regulatory Filings"), will not require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would reasonably be expected to have,
individually or in the aggregate, a CSI Material Adverse Effect.
3.7. SEC DOCUMENTS.
3.7.1. CSI has furnished RP with each registration statement,
Quarterly Report on Form 10-QSB, Report on Form 8-KSB, report, proxy
statement or information statement, including all exhibits thereto,
prepared by CSI since September 18, 1997, including, without
limitation, (a) its Annual Report on Form 10-KSB for its fiscal year
ended December 31, 1997 (the "CSI Balance Sheet Date") which includes
the consolidated balance sheets of CSI and its Subsidiaries (the "CSI
Balance Sheet") as of such date (the "CSI Balance Sheet Date") and
CSI's Quarterly Reports on Form 10- QSB, and Reports on Form 8-K filed
since the filing of such Annual Report and (b) its proxy statement for
its annual meeting of Stockholders held on May 9, 1998, each of (a)
and (b) in the form (including exhibits and any amendments thereto)
filed with the Securities and Exchange Commission (the "SEC") and the
items in (a) and (b), the "CSI Reports." As of their respective dates,
the CSI Reports (including, without limitation, any financial
statement or schedules included or incorporated by reference therein)
(i) were prepared in all material respects in accordance with the
applicable requirements of the Exchange Act, and the respective rules
and regulations thereunder, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading. The 1996 and 1997 consolidated financial statements of CSI
included in or incorporated by reference into the CSI Reports
(including the related notes and schedules) present fairly, in all
material respects the consolidated financial position of CSI and its
Subsidiaries as of December 31, 1997 and 1996 and the consolidated
results of their operations and their cash flows for such fiscal
periods, in conformity with generally accepted accounting principles
("GAAP"), consistently applied during the periods involved. Except as
and to the extent set forth on the CSI Balance Sheet, including all
notes thereto, or as set forth in the CSI Reports or the CSI
Disclosure Schedule, neither CSI nor any of its Subsidiaries has any
material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) whether or not required to be
reflected on, or reserved against in, a consolidated balance sheet of
CSI, prepared in accordance with GAAP, consistently applied, except
liabilities arising in the ordinary course of business since such date
which would not reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect.
3.8. LITIGATION. There is no action, suit or proceeding pending
against CSI or the CSI Subsidiaries, or, to the knowledge of CSI, overtly
threatened against CSI or its Subsidiaries or any of their respective properties
or assets, at law or in equity, or before or by any federal or state commission,
board, bureau, agency or instrumentality which would reasonably be expected to
have, individually or in the aggregate, a CSI Material Adverse Effect, or would
prevent or delay the consummation of the transaction contemplated by this
Agreement. Neither CSI nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, in the future would have a CSI Material
Adverse Effect or would prevent or delay the consummation of the transaction
contemplated hereby.
3.9. ABSENCE OF CERTAIN CHANGES. Since the CSI Balance Sheet Date,
each of CSI and its Subsidiaries has conducted its business only in the ordinary
course of such business and there has not been (a) any event or changes with
respect to CSI and its Subsidiaries (other than events or changes in general
economic conditions or developments affecting the industry generally) having,
individually or in the aggregate, a CSI Material Adverse Effect, (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock, (c) any material change in its accounting
principles, practices or methods, (d) any amendments or changes in the Amended
and Restated Articles of Incorporation or By-Laws of CSI, (e) any material
revaluation by CSI of any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business, (f) any sale of a material amount of property of CSI or its
Subsidiaries, except in the ordinary course of business, or (g) any increase in
the compensation or benefits or establishment of any bonus, insurance, severance
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of CSI or
any of the CSI Subsidiaries except in the ordinary course of business consistent
with past practice or except as required by applicable law.
3.10. TAX MATTERS.
Except as set forth in the CSI Disclosure Schedule:
3.10.1. For purposes of this Agreement "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental
charges, including, without limitation, all federal, state, local,
foreign and other income, franchise, profits, capital gains, capital
stock, transfer, sales, use, occupation, property, excise, severance,
windfall profits, stamp, license, payroll, withholding and other taxes,
assessments, charges, duties, fees, levies or other governmental
charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Return), and
all estimated taxes, deficiency assessments, additions to tax,
penalties and interest and shall include any liability for such amounts
as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify
any person or other entity.
3.10.2. Each of CSI and its Subsidiaries has timely filed or
caused to be timely filed all returns, statements, forms, declarations
and reports for Taxes ("Returns") which are required to be filed by, or
with respect to, any of them on or prior to the Effective Date (taking
into account all applicable extensions). The Returns have accurately
reflected and will accurately reflect all liability for Taxes of CSI
and its Subsidiaries for the periods covered thereby.
3.10.3. All Taxes and Tax liabilities of CSI and its
Subsidiaries for all taxable years or periods that end on or before the
Effective Date and, with respect to any taxable year or period
beginning before and ending after the Effective Date, the portion of
such taxable year or period ending on and including the Effective Date,
have been timely paid or will be timely paid in full on or prior to the
Effective Date or accrued and adequately disclosed and fully provided
for on the books and records of CSI in accordance with GAAP.
3.10.4. Complete and accurate copies of all CSI federal, state
and local income tax returns have been made available to RP.
3.10.5. Neither CSI nor any of its Subsidiaries has been the
subject of an audit or other examination of Taxes by the tax
authorities of any nation, state or locality nor has CSI or any of its
Subsidiaries received any notices from any taxing authority relating to
any issue which could affect the Tax liability of CSI or any of its
Subsidiaries. Neither CSI nor any of its Subsidiaries, as of the
Effective Date, (A) has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of CSI or
any of its Subsidiaries or (B) is presently contesting the Tax
liability of CSI or any of its Subsidiaries before any court, tribunal
or agency. Neither CSI nor any of its Subsidiaries has granted a
power-of-attorney relating to Tax matters to any person. All final
adjustments made by the Internal Revenue Service ("IRS") with respect
to any federal tax return of CSI or its Subsidiaries have been reported
for state and local income tax purposes to the relevant state or local
taxing authorities.
3.10.6. Neither CSI nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return provided
for under the law of the United States, any foreign jurisdiction or any
state or locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired (other than a Return
with respect to which CSI was the common parent).
3.10.7. All Taxes which CSI or any of its Subsidiaries is (or
was) required by law to withhold or collect have been duly withheld or
collected and have been timely paid over to the proper authorities to
the extent due and payable.
3.10.8. There are no Tax sharing, allocation, indemnification
or similar agreements in effect as between CSI or any predecessor or
affiliate thereof and any other party under which CSI or any of its
Subsidiaries could be liable for any Taxes or other claims of any party
other than of CSI and its Subsidiaries.
3.10.9. No requests for ruling or determination letters
relating to federal, state or local income taxes paid or payable by CSI
or any of its Subsidiaries are pending with any taxing authority.
3.10.10. (a) Neither CSI nor any CSI Subsidiary has agreed to
or is required to make any adjustment pursuant to Section 481 of the
Code or the corresponding tax laws of any nation, state or locality by
reason of a change in accounting method initiated by CSI or its
Subsidiaries or required by law, (b) CSI has no knowledge that the IRS
or any other taxing authority has proposed or purported to require any
such adjustment or change in accounting method and (c) CSI has no
knowledge or belief that any such adjustment under Section 481 of the
Code or the corresponding tax laws of any nation, state or locality
will be required of CSI or its Subsidiaries upon the completion of, or
by reason of, the transaction contemplated by this Agreement.
3.10.11. (a) There are no deferred intercompany transactions
between CSI and any of its Subsidiaries or between its Subsidiaries
which will or may result in the recognition of income upon the
consummation of the transaction contemplated by this Agreement, and (b)
there are no other transactions or facts existing with respect to CSI
and/or its Subsidiaries which by reason of the consummation of the
transaction contemplated by this Agreement will result in CSI and/or
its Subsidiaries recognizing income.
3.10.12. There are no Tax liens on any of the assets or
property of CSI or its Subsidiaries.
3.10.13. There are no contracts, agreements or plans entered
into by CSI or its Subsidiaries covering any person that individually
or collectively would require CSI or any of its Subsidiaries to make
any payments of any amount which would not be deductible by reason of
the provisions of Section 162(m) or Section 280G of the Code.
3.10.14. Neither CSI nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f) of the Code) owned
by it.
3.11. CERTAIN EMPLOYEE PLANS.
3.11.1. (a) "Benefit Plan" means any "employee benefit plan"
as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), any fringe benefit plan, any equity
compensation plan or arrangement (including without limitation, stock
option, restricted stock and stock purchase plans), any plan, policy or
arrangement for the provision of executive compensation, incentive
benefits, bonuses or severance benefits, any employment contract,
collective bargaining agreement, deferred compensation agreement, Code
section 125 cafeteria plan or split dollar arrangement, any
participation or similar agreement with a multi-employer pension fund,
or any other plan, policy, arrangement or scheme for the provision or
funding of employee benefits with respect to which an CSI or RP
Controlled Group Member in the past or present, directly or indirectly
maintained or maintains, sponsored or sponsors, or had or has any
liability or obligation.
(b) "CSI Controlled Group Member" means CSI and each other
person or entity required to be aggregated with CSI under Code section
414(b), (c), (m) or (o).
(c) "RP Controlled Group Member" means RP and each other
person or entity required to be aggregated with RP under Code section
414(b), (c), (m) or (o).
3.11.2. Each Benefit Plan maintained by any CSI Controlled
Group Member (the "CSI Benefit Plans") complies with, and has been
administered in accordance with, in all material respects, all
applicable requirements of law, except for instances of non-compliance
that would not reasonably be expected to have caused, individually or
in the aggregate, a CSI Material Adverse Effect. The CSI Benefit Plans
are listed in the CSI Disclosure Schedule and copies or descriptions of
all material Plans have previously been provided to RP.
3.11.3. With respect to each CSI Benefit Plan intended to
qualify under section 401(a) of the Code, (a) a favorable determination
letter has been issued by or an application is pending with the IRS
with respect to the qualification of each CSI Benefit Plan, and (b) no
"reportable event" or "prohibited transaction" (as such terms are
defined in ERISA and the Code) or termination has occurred under
circumstances which present a risk of material liability by any CSI
Controlled Group Member to any governmental entity or other person,
including an CSI Benefit Plan. Each CSI Benefit Plan which is subject
to Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code
has been maintained in compliance with the minimum funding standards of
ERISA and the Code and no such CSI Benefit Plan has incurred any
"accumulated funding deficiency" (as defined in Section 412 of the Code
and Section 302 of ERISA), whether or not waived. No CSI Controlled
Group Member directly or indirectly contributes to, has an obligation
to contribute to or has, or could be reasonably expected to have,
liability with respect to, and has not directly or indirectly
maintained, sponsored, contributed to or had an obligation to
contribute to at any time within the 10 year period ending on the date
of the Closing, any employee benefit plan which is a multi-employer
plan subject to the requirements of Subtitle E of Title IV of ERISA.
3.11.4. Except as required by Code section 4980B or 162 or
Part 6 of Subtitle B of Title I of ERISA, no CSI Controlled Group
Member provides any health, welfare or life insurance benefits to any
of its former or retired employees, which benefits would be material
either individually or in the aggregate to CSI.
3.12. LABOR MATTERS.
3.12.1. Except as set forth in the CSI Disclosure Schedule,
neither CSI nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to
the knowledge of CSI, overtly threatened against CSI or its
Subsidiaries relating to their business, except for any such proceeding
which would not reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect. To the knowledge of CSI,
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or overtly threatened
involving employees of CSI or any of its Subsidiaries.
3.12.2. CSI has delivered to RP copies of all employment
agreements, consulting agreements, severance agreements, bonus and
incentive plans, profit-sharing plans and other material agreements,
plans or arrangements with respect to compensation of the employees of
CSI and its Subsidiaries (the "CSI Compensation Arrangements"). The
Merger will not accelerate or otherwise give rise to payments pursuant
to the CSI Compensation Arrangements.
3.13. ENVIRONMENTAL LAWS AND REGULATIONS.
3.13.1. CSI and each of its Subsidiaries is in compliance in
all material respects with all applicable federal, state and local laws
and regulations of the United States and national and local laws and
regulations of the United Kingdom relating to pollution, hazardous
substances, or protection of human health or the environment
(collectively, "Environmental Laws") which compliance includes, but is
not limited to, the possession by CSI and its Subsidiaries of all
material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and
conditions thereof. Neither CSI nor any of its Subsidiaries has
received written notice of, or, to the knowledge of CSI, is the subject
of, any action, cause of action, claim, investigation, demand or
notice, including without limitation, non-compliance orders, warning
letters, or notices of violation, by any person or entity alleging
liability under or non-compliance with any Environmental Law (an "CSI
Environmental Claim"), nor to the knowledge of CSI is there any basis
for any CSI Environmental Claim that would reasonably be expected to
have, individually or in the aggregate, a CSI Material Adverse Effect.
To the knowledge of CSI there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance or give
rise to such liability in the future.
3.13.2. There are no CSI Environmental Claims, which would
reasonably be expected to have, individually or in the aggregate, a CSI
Material Adverse Effect, that are pending or, to the knowledge of CSI,
overtly threatened against CSI or any of its Subsidiaries or, to the
knowledge of CSI, against any person or entity whose liability for any
CSI Environmental Claim CSI or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
3.13.3. Neither CSI nor any CSI Subsidiary (a) has handled or
discharged, nor has it allowed or arranged for any third party to
handle or discharge, any hazardous substances to, at or upon: (i) any
location other than a site lawfully permitted to receive such hazardous
substances, (ii) any parcel of real property owned or leased by CSI or
any CSI Subsidiary, except in compliance with applicable Environmental
Laws; (iii) any site which, pursuant to CERCLA or any similar state law
or law of the U.K. (x) has been placed on the National Priorities List
or its state or U.K. equivalent, or (y) the Environmental Protection
Agency or any equivalent agency in the U.K. or the relevant state
agency has notified CSI that it has proposed or is proposing to place
on the National Priorities List or its state equivalent or equivalent
in the U.K.; or (b) has any knowledge that there has occurred or is
presently occurring a discharge, or threatened discharge, of any
hazardous substance on, into or beneath the surface of, or adjacent to,
any real property owned or leased by CSI or any CSI Subsidiary.
3.13.4. The CSI Disclosure Schedule identifies (a) all
environmental audits, assessments, or occupational health studies
undertaken by CSI or its agents on its behalf, or, to the knowledge of
CSI, undertaken by any governmental authority, or any third party,
relating to or affecting any real property owned or leased by CSI or
any CSI Subsidiary; (b) the results of any ground, water, soil, air or
asbestos monitoring undertaken by CSI or its agents on its behalf, or,
to the knowledge of CSI, undertaken by any governmental authority or
any third party, relating to or affecting any real property owned or
leased by CSI or any CSI Subsidiary; (c) all material written
communications between CSI and any governmental authority arising under
or related to Environmental Laws; and (d) all outstanding citations
issued under OSHA, or similar state or local statutes, laws,
ordinances, codes, rules, regulations, orders, rulings or decrees
relating to or affecting any real property owned or leased by CSI or
any CSI Subsidiary.
3.14. REAL PROPERTY.
3.14.1. CSI has delivered to RP either copies or fair and
accurate summaries (the "CSI Property Documents") of each of its
leases, subleases, deeds, material licenses or other material
agreements or instruments (and any amendments thereto) under which CSI
or any of its Subsidiaries owns, uses or occupies or has the right to
use or occupy, now or in the future, any real property (the "CSI Real
Estate Agreements"). Each CSI Real Estate Agreement is valid, binding
and in full force and effect, all rent and other sums and charges
payable by CSI and its Subsidiaries as tenants thereunder are current,
no termination event or condition or uncured default of a material
nature on the part of CSI or any such Subsidiary or, to the knowledge
of CSI, as to a landlord, exists under any CSI Real Estate Agreement,
except for any of the foregoing matters which would not reasonably be
expected to have, individually or in the aggregate, a CSI Material
Adverse Effect. The information contained in the CSI Property Documents
is true and correct in all material respects.
3.14.2. Except for any of the following matters which would
not reasonably be expected to have, individually or in the aggregate, a
CSI Material Adverse Effect:
(a) CSI has not granted, and to the best of CSI's
knowledge, no other person has granted, any leases, subleases,
licenses or other agreements granting to any person other than
CSI any right to possession, use, occupancy or enjoyment of
the property covered by the CSI Real Estate Agreements, or any
portion thereof, and
(b) CSI is not obligated under any option, right of
first refusal or any contractual right to purchase, acquire,
sell or dispose of any real property covered by the CSI Real
Estate Agreements.
3.14.3. None of the CSI Real Estate Agreements contains
continuous operating covenants, radius restrictions or provisions
requiring the consent of the landlord to the Merger or the assumption
of CSI's obligations under the CSI Real Estate Agreements in the manner
contemplated by this Agreement, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect.
3.15. LIMITATION ON BUSINESS CONDUCT. Neither CSI nor any of the CSI
Subsidiaries is a party to, or has any obligation under, any contract or
agreement, written or oral, which contains any covenants currently or
prospectively limiting in any material respect the freedom of CSI or any of the
CSI Subsidiaries to engage in any line of business or to compete with any entity
or which would prohibit the business of RP, CSI or any of their respective
Subsidiaries from being conducted in substantially the same manner as it was
conducted prior to the Merger.
3.16. TITLE TO PROPERTY. Each of CSI and each of the CSI Subsidiaries
owns the material properties and assets that it purports to own free and clear
of all liens, security interests, charges or encumbrances, except for any liens,
security interests, charges or encumbrances which arise in the ordinary course
of business (including mechanics' liens and other similar statutory liens) and
do not materially impair CSI's or any CSI Subsidiary's ownership or use of any
such properties or assets, or liens for taxes not yet due. The rights,
properties and assets presently owned, leased or licensed by CSI include all
rights, properties and assets necessary to permit CSI and the CSI Subsidiaries
to conduct their business in all material respects in the same manner as their
businesses have been conducted prior to the date hereof.
3.17. INSURANCE. CSI and its Subsidiaries maintain with respect to
their operations and their assets, in full force and effect, policies of
insurance in the ordinary course of business as is usual and customary for
businesses similarly situated to CSI. CSI has provided RP copies of all
insurance policies so maintained and all claims associated with its operations
and the operations of its Subsidiaries for the past 18 months.
3.18. INTELLECTUAL PROPERTY. Every material trade secret (including
know-how, inventions, designs and processes), patent, patent right, trademark,
trademark right, logo, service xxxx, trade name or copyright, or application
thereof, and licenses and rights with respect to the foregoing, used in
connection with the business of CSI and its Subsidiaries (the "CSI Intellectual
Property"), is protected by CSI in a manner which, under the circumstances, is
prudent and commercially reasonable, and owned by CSI or its Subsidiaries free
and clear of any liens, encumbrances, claims or restrictions whatsoever which
would have a CSI Material Adverse Effect, direct or indirect. There are no valid
grounds for any bona fide claims (i) to the effect that the business of CSI or
any of the CSI Subsidiaries infringes on any copyright, patent, trademark,
service xxxx or trade secret; (ii) against the use by CSI or any of the CSI
Subsidiaries, of any patents, patent rights, trademarks, trademark rights,
logos, trade names, service marks, trade secrets, copyrights, technology,
know-how or computer software programs and applications used in the business of
CSI or any of the CSI Subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or effectiveness of any of
the patents, patent rights, registered and material unregistered trademarks,
logos and service marks, registered copyrights, trade names and any applications
therefor owned by CSI or any of the CSI Subsidiaries or other trade secret
material to CSI or any of the CSI Subsidiaries; or (iv) challenging the license
or legally enforceable right to use of any third-party patents, patent rights,
trademarks, trademark rights, logos, service marks, trade names and copyrights
by CSI or any of the CSI Subsidiaries, except, in each case, for claims that, if
determined adversely to CSI, would not reasonably be expected to have,
individually or in the aggregate, a CSI Material Adverse Effect. Neither CSI nor
any of its Subsidiaries has granted to any other person the right to use the CSI
Intellectual Property, or any part thereof. CSI is not obligated or under any
liability whatsoever to make any payments by way of royalties, fees or otherwise
to any owner of, licensor of, or other claimant to, any patent, patent rights,
trademark, trademark rights, logo, service xxxx, trade name, trade name rights,
copyright or other intangible assets, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
3.19. CERTAIN CONTRACTS. CSI has delivered copies of each contract to
which CSI or any of its Subsidiaries is a party (i) calling for payments in
excess of $100,000 in the case of any contract or series of related contracts or
(ii) otherwise material to CSI or any of its Subsidiaries, or by which any of
their respective properties or assets are bound. CSI and its Subsidiaries, and
to CSI's knowledge the other parties thereto, are in compliance in all material
respects with all material terms of such contracts.
3.20. NO BROKERS. Neither CSI nor any CSI Subsidiary has entered into
any contract, arrangement or understanding with any person or firm which may
result in the obligation of CSI or RP or Merger Sub to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transaction
contemplated hereby, except that CSI has retained Xxxxxx Brothers as its
financial advisor and to render a fairness opinion as set forth herein. The
arrangements with Xxxxxx Brothers have been disclosed in writing to RP prior to
the date hereof.
3.21. CONFLICTS OF INTEREST. No officer, or director, or, to the
knowledge of CSI, no significant shareholder, employee or consultant of CSI or
any CSI Subsidiary, or any affiliate of such person has any direct or indirect
interest (except a passive investment in less than 5% of the publicly traded
stock of a public company) (a) in any corporation, partnership, proprietorship,
association, or other person or entity which does business with CSI or any CSI
Subsidiary, (b) in any property, asset or right which is used by CSI or any CSI
Subsidiary in the conduct of its business, or (c) in any contract to which CSI
is a party or by which CSI or any CSI Subsidiary may be bound nor are any
amounts owing to any such person by, or due to any such person from, CSI or any
CSI Subsidiary.
3.22. PERSONAL PROPERTY. CSI owns all of its material personal
property, including, without limitation, the material personal property
reflected in the CSI Balance Sheet, except for personal property disposed of in
the ordinary course of business since the CSI Balance Sheet Date, subject to no
mortgage, pledge, lien, charge, security interest, encumbrance or restriction,
except those which are shown and described in the CSI Balance Sheet or the notes
thereto. All personal properties purported to be leased by CSI are subject to
valid and effective leases.
3.23. TAKEOVER STATUTE. The Board of Directors of CSI has taken all
appropriate action so that no former shareholder of RP will be an "interested
stockholder" of CSI subject to Sections 78.438 and 78.439 of the Nevada General
Corporation Law (the "NGCL") by virtue of the transactions contemplated by this
Agreement.
3.24. DISCLOSURE. Neither CSI nor any CSI Subsidiary has knowingly
withheld from RP any material facts relating to CSI's and any CSI Subsidiary's
assets, business, operations, financial conditions, or prospects. No
representation or warranty in this Agreement contains any untrue statement of a
material fact.
3.25. STATUS AS REORGANIZATION.
3.25.1. CSI has no plan or intent to:
(a) Liquidate RP;
(b) Merge RP with or into another corporation;
(c) Sell or otherwise dispose of the stock of RP
except for transfers of stock to corporations "controlled"
(within the meaning of Section 368(c) of the Code) by CSI;
(d) Reacquire any of its stock issued in connection
with the Merger;
(e) Cause RP to issue additional shares of stock of
RP that would result in CSI losing "control" (within the
meaning of Section 368(c) of the Code) of RP;
(f) Cause RP to sell or otherwise dispose of any of
its assets or any assets of Merger Sub acquired in the Merger
except for dispositions made in the ordinary course of
business or transfers described in Section 368(a)(2)(C) of the
Code or described in Treasury Regulation Section
1.368-2(k)(2); or
(g) Take any other action that might otherwise cause
the Merger not to be treated as a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
3.25.2. Except as provided in this Agreement, each of CSI and
its stockholders will pay their respective expenses, if any, incurred
in connection with the Merger.
3.25.3. There is no intercorporate indebtedness existing
between CSI and RP, or between Merger Sub and RP, that was issued,
acquired or will be settled at a discount.
3.25.4. CSI and any of the major stockholders of CSI do not
own, nor have they owned during the past five years, any shares of
stock of RP.
3.25.5. Neither CSI nor Merger Sub is an "investment
company" (within the meaning of Sections 368(a)(2)(F)(iii) and (iv) of
the Code);
3.25.6. Merger Sub is being formed solely for the purpose of
merging with and into RP and, as of the Effective Date, will not have
had any existing operation, assets or liabilities (other than
liabilities for franchise taxes, if applicable, and liabilities under
this Agreement); and
3.25.7. CSI will, as of the Effective Date, own all of the
stock of Merger Sub.
ARTICLE 4. REPRESENTATIONS OF RP. RP hereby represents and warrants to CSI that:
4.1. RP DISCLOSURE SCHEDULE.
4.1.1. The RP Disclosure Schedule sets forth all of the
information concerning RP and its Subsidiaries and the RP Shares
required in this Article 4. To the extent any statement in this Article
4 is untrue, the RP Disclosure Schedule sets forth the statements
necessary to make the statements in this Article 4 true. All
information and statements set forth in the RP Disclosure Schedule
shall be deemed to supersede and correct the statements made in this
Article 4 and to be additional representations and warranties of RP.
The RP Disclosure Schedule sets forth all of the information and
statements required in numbered sections bearing the number of the
Section of this Agreement calling for such information and in the order
of such numbers in this Agreement.
4.1.2. RP has delivered to CSI complete and accurate copies of
(a) any written contract or other document referred to in the RP
Disclosure Schedule or herein and (b) the RP Reports referred to in
Section 4.7 of this Agreement.
4.2. EXISTENCE AND GOOD STANDING OF RP. RP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as now being
conducted. RP is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the character or
location of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified or licensed would not reasonably be expected to
have a material adverse effect on the consolidated business, financial condition
or results of operations of RP and its Subsidiaries (an "RP Material Adverse
Effect"). Each of RP's Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
has the corporate power and corporate authority to own its properties and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so licensed
or qualified or to be in good standing would not reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect. Neither RP nor
any of its Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which RP or any RP Subsidiary or any of their respective
properties or assets is subject, except where such violation would not have,
individually or in the aggregate, an RP Material Adverse Effect. RP and its
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations in
connection with their business as now conducted, where the failure to obtain any
such items or to take any such action would reasonably be expected to have an RP
Material Adverse Effect. The copies of the articles of incorporation and by-laws
of RP and each other RP Subsidiary previously delivered to CSI are true and
correct. Neither RP nor any of the RP Subsidiaries is in violation of any of the
provisions of its Amended and Restated Certificate of Incorporation or By-Laws.
4.3. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. RP has the
requisite corporate power and corporate authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby and consummate
the transactions contemplated hereby and thereby. Subject only to the approval
of this Agreement and the transaction contemplated hereby by the holders of a
majority of the outstanding RP Shares, the consummation by RP of the transaction
contemplated hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations of RP, enforceable in
accordance with their respective terms subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
4.4. CAPITAL STOCK. The authorized capital stock of RP consists of
50,000,000 shares of common stock and 5,000,000 shares of preferred stock, par
value $.001 per share. As of December 31, 1998, there were 5,667,375 shares of
common stock issued and outstanding none of which is held by RP or any
Subsidiary of RP and no shares of preferred stock issued and outstanding. Since
such date, no additional shares of capital stock of RP have been issued. RP has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of RP on any matter.
All such issued and outstanding RP Shares are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Other than as
contemplated by this Agreement or the RP Option Plans, there are not at the date
of this Agreement any outstanding subscriptions, options, warrants, rights,
calls, commitments, conversion rights, convertible securities, rights of
exchange, plans or other agreements providing for the purchase, issuance or sale
of any of the shares of the capital stock of RP by or to RP. As of December 31,
1998, 602,433 RP Shares were reserved for issuance and are issuable upon or
otherwise deliverable in connection with the exercise of outstanding options;
since that date, no options have been granted under the RP Option Plans or
otherwise and no new option plans have been authorized or adopted.
4.5. SUBSIDIARIES. Except as set forth in the RP Disclosure Schedules,
RP owns each of the outstanding shares of capital stock of each of RP's
Subsidiaries. All of the outstanding shares of capital stock of the RP
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and are owned by RP free and clear of all liens, pledges, security interests,
claims or other encumbrances. The RP Disclosure Schedule sets forth with respect
to each RP Subsidiary (a) its name and jurisdiction of incorporation, (b) its
authorized capital stock, and (c) the number of issued and outstanding shares of
capital stock. Except for interests in the RP Subsidiaries, neither RP nor any
RP Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, limited
liability company, business, trust or entity.
4.6. NO VIOLATIONS. The execution and delivery of this Agreement by RP
and the consummation of the transaction contemplated hereby (a) will not violate
any provision of the articles of incorporation or by-laws of RP or its
subsidiaries, (b) will not violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of RP or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which RP or any of its
subsidiaries is a party, or by which RP or any of its subsidiaries or any of
their properties is bound or affected, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, an RP Material Adverse Effect; (c) will not violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to RP or any of
its subsidiaries or any of their respective properties or assets (assuming
completion of the Regulatory Filings), except for violations which would not
reasonably be expected to have, individually or in the aggregate, an RP Material
Adverse Effect, or (d) other than the Regulatory Filings, will not require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect.
4.7. SEC DOCUMENTS. RP has furnished CSI each registration statement,
proxy statement or information statement, including all exhibits thereto,
prepared by RP since August 29, 1997, including, without limitation, (a) its
Annual Report on Form 10-K for its fiscal year ended May 31, 1998 (the "RP
Balance Sheet Date"), which includes the consolidated balance sheet for RP as of
such date (the "RP Balance Sheet") and RP's Quarterly Reports on Form 10-Q and
Reports on Form 8-K filed since the filing of such Annual Report and (b) its
proxy statement for its annual meeting of Stockholders held on October 1, 1998,
each of (a) and (b) in the form (including exhibits and any amendments thereto)
filed with the SEC and the items in (a) and (b), the "RP Reports." As of their
respective dates, the RP Reports (including, without limitation, any financial
statements or schedules included or incorporated by reference therein) (i) were
prepared in all material respects in accordance with the applicable requirements
of the Exchange Act, and the respective rules and regulations thereunder, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The 1997 and 1998 consolidated financial statements of RP and its
Subsidiaries included in or incorporated by reference into the RP Reports
(including the related notes and schedules) present fairly, in all material
respects, the consolidated financial position of RP at May 31, 1997 and 1998,
and the consolidated results of their operations and their cash flows such
fiscal years in conformity with GAAP. Except as and to the extent set forth on
the RP Balance Sheet, including all notes thereto, or as set forth in the RP
Reports or the RP Disclosure Schedule, neither RP nor any of its Subsidiaries
has any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) whether or not required to be reflected on,
or reserved against in, a consolidated balance sheet of RP prepared in
accordance with GAAP, except liabilities arising in the ordinary course of
business since such date which would not reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect.
4.8. LITIGATION. There is no action, suit or proceeding pending against
RP or the RP Subsidiaries, or, to the knowledge of RP, overtly threatened
against RP or its Subsidiaries or any of their respective properties or assets,
at law or in equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality which would reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect, or would
prevent or delay the consummation of the transaction contemplated by this
Agreement. Neither RP nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, in the future would have an RP Material
Adverse Effect or would prevent or delay the consummation of the transaction
contemplated hereby.
4.9. ABSENCE OF CERTAIN CHANGES. Since the RP Balance Sheet Date, each
of RP and the RP Subsidiaries has conducted its business only in the ordinary
course of such business and there has not been (a) any event or changes with
respect to RP and the RP Subsidiaries (other than events or changes in general
economic conditions or developments affecting the industry generally) having,
individually or in the aggregate, an RP Material Adverse Effect, (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock, (c) any material change in its accounting
principles, practices or methods, (d) any amendments or changes in the Amended
and Restated Certificate of Incorporation or By-Laws of RP, (e) any material
revaluation by RP of any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business, (f) any sale of a material amount of property of RP or its
Subsidiaries, except in the ordinary course of business, or (g) any increase in
the compensation or benefits or establishment of any bonus, insurance, severance
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of RP or any
of the RP Subsidiaries except in the ordinary course of business consistent with
past practice or except as required by applicable law.
4.10. TAX MATTERS.
Except as set forth in the RP Disclosure Schedule:
4.10.1. Each of RP and its Subsidiaries has timely filed or
caused to be timely filed all Returns which are required to be filed
by, or with respect to, any of them on or prior to the Effective Date
(taking into account all applicable extensions). The Returns have
accurately reflected and will accurately reflect all liability for
Taxes of RP and its Subsidiaries for the periods covered thereby.
4.10.2. All Taxes and Tax liabilities of RP and its
Subsidiaries for all taxable years or periods that end on or before the
Effective Date and, with respect to any taxable year or period
beginning before and ending after the Effective Date, the portion of
such taxable year or period ending on and including the Effective Date,
have been timely paid or will be timely paid in full on or prior to the
Effective Date or accrued and adequately disclosed and fully provided
for on the books and records of RP in accordance with GAAP.
4.10.3. Complete and accurate copies of all RP federal, state
and local income tax returns have been made available to CSI.
4.10.4. Neither RP nor any of its Subsidiaries has been the
subject of an audit or other examination of Taxes by the tax
authorities of any nation, state or locality nor has RP or any of its
Subsidiaries received any notices from any taxing authority relating to
any issue which could affect the Tax liability of RP or any of its
Subsidiaries. Neither RP nor any of its Subsidiaries, as of the
Effective Date, (A) has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of RP or any
of its Subsidiaries or (B) is presently contesting the Tax liability of
RP or any of its Subsidiaries before any court, tribunal or agency.
Neither RP nor any of its Subsidiaries has granted a power-of-attorney
relating to Tax matters to any person. All final adjustments made by
the IRS with respect to any federal tax return of RP or its
Subsidiaries have been reported for state and local income tax purposes
to the relevant state or local taxing authorities.
4.10.5. Neither RP nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return provided
for under the law of the United States, any foreign jurisdiction or any
state or locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired (other than a Return
with respect to which RP was the common parent).
4.10.6. All Taxes which RP or any of its Subsidiaries is (or
was) required by law to withhold or collect have been duly withheld or
collected and have been timely paid over to the proper authorities to
the extent due and payable.
4.10.7. There are no Tax sharing, allocation, indemnification
or similar agreements in effect as between RP or any predecessor or
affiliate thereof and any other party under which RP or any of its
Subsidiaries could be liable for any Taxes or other claims of any party
other than of RP and its Subsidiaries.
4.10.8. No requests for ruling or determination letters
relating to federal, state or local income taxes paid or payable by RP
or any of its Subsidiaries are pending with any taxing authority.
4.10.9. (a) Neither RP nor any RP Subsidiary has agreed to or
is required to make any adjustment pursuant to Section 481 of the Code
or the corresponding tax laws of any nation, state or locality by
reason of a change in accounting method initiated by RP or its
Subsidiaries or required by law, (b) RP has no knowledge that the IRS
or any other taxing authority has proposed or purported to require any
such adjustment or change in accounting method and (c) RP has no
knowledge or belief that any such adjustment under Section 481 of the
Code or the corresponding tax laws of any nation, state or locality
will be required of RP or its Subsidiaries upon the completion of, or
by reason of, the transaction contemplated by this Agreement.
4.10.10. (a) There are no deferred intercompany transactions
between RP and any of its Subsidiaries or between its Subsidiaries
which will or may result in the recognition of income upon the
consummation of the transaction contemplated by this Agreement, and (b)
there are no other transactions or facts existing with respect to RP
and/or its Subsidiaries which by reason of the consummation of the
transaction contemplated by this Agreement will result in RP and/or its
Subsidiaries recognizing income.
4.10.11. There are no Tax liens on any of the assets or
property of RP or its Subsidiaries.
4.10.12. There are no contracts, agreements or plans entered
into by RP or its Subsidiaries covering any person that individually or
collectively would require RP or any of its Subsidiaries to make any
payments of any amount which would not be deductible by reason of the
provisions of Section 162(m) or Section 280G of the Code.
4.10.13. Neither RP nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f) of the Code) owned
by it.
4.11. CERTAIN EMPLOYEE PLANS.
4.11.1. Each Benefit Plan maintained by any RP Controlled
Group Member (the "RP Benefit Plans") complies with, and has been
administered in accordance with, in all material respects, all
applicable requirements of law, except for instances of non-compliance
that would not reasonably be expected to have caused, individually or
in the aggregate, an RP Material Adverse Effect. The RP Benefit Plans
are listed in the RP Disclosure Schedule and copies or descriptions of
all material Plans have previously been provided to CSI.
4.11.2. With respect to each RP Benefit Plan intended to
qualify under Section 401(a) of the Code, (a) a favorable determination
letter has been issued by or an application is pending with the IRS
with respect to the qualification of each RP Benefit Plan and (b) no
"reportable event" or "prohibited transaction" (as such terms are
defined in ERISA and the Code) or termination has occurred under
circumstances which present a risk of material liability by any RP
Controlled Group Member to any governmental entity or other person,
including an RP Benefit Plan. Each RP Benefit Plan which is subject to
Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code has
been maintained in compliance with the minimum funding standards of
ERISA and the Code and no such RP Benefit Plan has incurred any
"accumulated funding deficiency" (as defined in Section 412 of the Code
and Section 302 of ERISA), whether or not waived. No RP Controlled
Group Member directly or indirectly contributes to, has an obligation
to contribute to or has or could be reasonably expected to have
liability with respect to, and has not directly or indirectly
maintained, sponsored, contributed to or had an obligation to
contribute to at any time within the 10 year period ending on the date
of the Closing, any employee benefit plan which is a multi-employer
plan subject to the requirements of Subtitle E of Title IV of ERISA.
4.11.3. Except as required by Code section 4980B or 162 or
Part 6 of Subtitle B of Title I of ERISA, no RP Controlled Group Member
provides any health, welfare or life insurance benefits to any of its
former or retired employees, which benefits would be material either
individually or in the aggregate to RP.
4.12. LABOR MATTERS.
4.12.1. Except as set forth in the RP Disclosure Schedule,
neither RP nor any of its Subsidiary is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to
the knowledge of RP, overtly threatened against RP or its Subsidiaries
relating to their business, except for any such proceeding which would
not reasonably be expected to have, individually or in the aggregate,
an RP Material Adverse Effect. To the knowledge of RP, there are no
organizational efforts with respect to the formation of a collective
bargaining unit presently being made or overtly threatened involving
employees of RP or any of its Subsidiaries.
4.12.2. RP has delivered to CSI copies of all employment
agreements, consulting agreements, severance agreements, bonus and
incentive plans, profit-sharing plans and other material agreements,
plans or arrangements with respect to compensation of the employees of
RP and its Subsidiaries (the "RP Compensation Arrangements"). The
Merger will not accelerate or otherwise give rise to payments pursuant
to the RP Compensation Arrangements.
4.13. ENVIRONMENTAL LAWS AND REGULATIONS.
4.13.1. RP and each of its Subsidiaries is in compliance in
all material respects with all applicable Environmental Laws which
compliance includes, but is not limited to, the possession by RP and
the RP Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Neither RP nor any of
its Subsidiaries has received written notice of, or, to the knowledge
of RP, is the subject of, any action, cause of action, claim,
investigation, demand or notice, including without limitation,
non-compliance orders, warning letters or notices of violation, by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an "RP Environmental Claim"), nor to the knowledge
of RP is there any basis for any RP Environmental Claim that would
reasonably be expected to have, individually or in the aggregate, an RP
Material Adverse Effect. To the knowledge of RP there are no
circumstances that are reasonably likely to prevent or interfere with
such material compliance or give rise to such liability in the future.
4.13.2. There are no RP Environmental Claims which would
reasonably be expected to have, individually or in the aggregate, an RP
Material Adverse Effect that are pending or, to the knowledge of RP,
overtly threatened against RP or any of its Subsidiaries or, to the
knowledge of RP, against any person or entity whose liability for any
RP Environmental Claim RP or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
4.13.3. Neither RP nor any RP Subsidiary (a) has handled or
discharged, nor has it allowed or arranged for any third party to
handle or discharge, any hazardous substances to, at or upon: (i) any
location other than a site lawfully permitted to receive such hazardous
substances, (ii) any parcel of real property owned or leased by RP or
any of its Subsidiaries, except in compliance with applicable
Environmental Laws; (iii) any site which, pursuant to CERCLA or any
similar state law (x) has been placed on the National Priorities List
or its state equivalent, or (y) the Environmental Protection Agency or
the relevant state agency has notified RP that it has proposed or is
proposing to place on the National Priorities List or its state
equivalent; or (b) has any knowledge that there has occurred or is
presently occurring a discharge, or threatened discharge, of any
hazardous substance on, into or beneath the surface of, or adjacent to,
any real property owned or leased by RP or the RP Subsidiaries.
4.13.4. The RP Disclosure Schedule identifies (a) all
environmental audits, assessments, or occupational health studies
undertaken by RP or its agents on its behalf, or, to the knowledge of
RP, undertaken by any governmental authority, or any third party,
relating to or affecting any real property owned or leased by RP or any
RP Subsidiary; (b) the results of any ground, water, soil, air or
asbestos monitoring undertaken by RP or its agents on its behalf, or,
to the knowledge of RP, undertaken by any governmental authority or any
third party, relating to or affecting any real property owned or leased
by RP or any RP Subsidiary; (c) all material written communications
between RP and any governmental authority arising under or related to
Environmental Laws; and (d) all outstanding citations issued under
OSHA, or similar state or local statutes, laws, ordinances, codes,
rules, regulations, orders, rulings or decrees relating to or affecting
any real property owned or leased by RP or the RP Subsidiaries.
4.14. REAL PROPERTY.
4.14.1. RP has delivered to CSI either copies or fair and
accurate summaries (the "RP Property Documents") of each of its leases,
subleases, deeds, material licenses or other material agreements or
instruments (and any amendments thereto) under which RP or any of its
Subsidiaries owns, uses or occupies or has the right to use or occupy,
now or in the future, any real property (the "RP Real Estate
Agreements"). Each RP Real Estate Agreement is valid, binding and in
full force and effect, all rent and other sums and charges payable by
RP and its Subsidiaries as tenants thereunder are current, no
termination event or condition or uncured default of a material nature
on the part of RP or any RP Subsidiary or, to the knowledge of RP, as
to a landlord, exists under any RP Real Estate Agreement, except for
any of the foregoing matters which would not reasonably be expected to
have, individually or in the aggregate, an RP Material Adverse Effect.
The information contained in the RP Property Documents is true and
correct in all material respects.
4.14.2. Except for any of the following matters which would
not reasonably be expected to have, individually or in the aggregate,
an RP Material Adverse Effect:
(a) RP has not granted, and to the best of RP's
knowledge, no other person has granted, any leases, subleases,
licenses or other agreements granting to any person other than
RP any right to possession, use, occupancy or enjoyment of the
property covered by the RP Real Estate Agreements, or any
portion thereof, and
(b) RP is not obligated under any option, right of
first refusal or any contractual right to purchase, acquire,
sell or dispose of any real property covered by the RP Real
Estate Agreements.
4.14.3. None of the RP Real Estate Agreements contains
continuous operating covenants, radius restrictions or provisions
requiring the consent of the landlord to the Merger or the assumption
of RP's obligations under the RP Real Estate Agreements in the manner
contemplated by this Agreement, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, an RP Material Adverse Effect.
4.15. LIMITATION ON BUSINESS CONDUCT. Neither RP nor any of the RP
Subsidiaries is a party to, or has any obligation under, any contract or
agreement, written or oral, which contains any covenants currently or
prospectively limiting in any material respect the freedom of RP or any of the
RP Subsidiaries to engage in any line of business or to compete with any entity
or which would prohibit the business of RP, CSI or any of their respective
Subsidiaries from being conducted in substantially the same manner as it was
conducted prior to the Merger.
4.16. TITLE TO PROPERTY. Each of RP and each of the RP Subsidiaries
owns the material properties and assets that it purports to own free and clear
of all liens, security interests, charges or encumbrances, except for any liens,
security interests, charges or encumbrances which arise in the ordinary course
of business (including mechanics' liens and other similar statutory liens) and
do not materially impair RP's or any RP Subsidiary's ownership or use of any
such properties or assets, or liens for taxes not yet due. The rights,
properties and assets presently owned, leased or licensed by RP include all
rights, properties and assets necessary to permit RP and the RP Subsidiaries to
conduct their business in all material respects in the same manner as their
businesses have been conducted prior to the date hereof.
4.17. INSURANCE. RP and the RP Subsidiaries maintain with respect to
their operations and their assets, in full force and effect, policies of
insurance in the ordinary course of business as is usual and customary for
businesses similarly situated to RP. RP has provided CSI copies of all insurance
policies so maintained and all claims associated with its operations and the
operations of its Subsidiaries since their incorporation.
4.18. INTELLECTUAL PROPERTY. Every material trade secret (including
know-how, inventions, designs and processes), patent, patent right, trademark,
trademark right, logo, service xxxx, trade name or copyright, or application
thereof, and licenses and rights with respect to the foregoing, used in
connection with the business of RP and its Subsidiaries, (the "RP Intellectual
Property"), is protected by RP in a manner which, under the circumstances, is
prudent and commercially reasonable and owned by RP or its Subsidiaries free and
clear of any liens, encumbrances, claims or restrictions whatsoever which would
have an RP Material Adverse Effect, direct or indirect. There are no valid
grounds for any bona fide claims (i) to the effect that the business of RP or
any of the RP Subsidiaries infringes on any copyright, patent, trademark,
service xxxx or trade secret; (ii) against the use by RP or any of the RP
Subsidiaries, of any patents, patent rights, trademarks, trademark rights,
logos, trade names, service marks, trade secrets, copyrights, technology,
know-how or computer software programs and applications used in the business of
RP or any of the RP Subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or effectiveness of any of
the patents, patent rights, registered and material unregistered trademarks,
logos and service marks, registered copyrights, trade names and any applications
therefor owned by RP or any of the RP Subsidiaries or other trade secret
material to RP or any of the RP Subsidiaries; or (iv) challenging the license or
legally enforceable right to use of any third-party patents, patent rights,
trademarks, trademark rights, logos, service marks, trade names and copyrights
by RP or any of the RP Subsidiaries, except, in each case, for claims that, if
determined adversely to RP, would not reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect. Neither RP nor
any of its Subsidiaries has granted to any other person the right to use the RP
Intellectual Property, or any part thereof. RP is not obligated or under any
liability whatsoever to make any payments by way of royalties, fees or otherwise
to any owner of, licensor of, or other claimant to, any patent, patent rights,
trademark, trademark rights, logo, service xxxx, trade name, trade name rights,
copyright or other intangible assets, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
4.19. CERTAIN CONTRACTS. RP has delivered copies of each contract to
which RP or any of its Subsidiaries is a party (i) calling for payments in
excess of $100,000 in the case of any contract or series of related contracts or
(ii) otherwise material to RP or any of its Subsidiaries, or by which any of
their respective properties or assets are bound. RP and its Subsidiaries, and to
RP's knowledge the other parties thereto, are in compliance in all material
respects with all material terms of such contracts.
4.20. NO BROKERS. Neither RP nor any RP Subsidiary has entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of RP or CSI or Merger Sub to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transaction
contemplated hereby, except that RP has retained NatCity Investments, Inc. and
Xxxxxxxx Xxxxxxx & Company, L.P. as its financial advisors and NatCity
Investments, Inc. to render a fairness opinion as set forth herein. The
arrangements with NatCity Investments, Inc. and Xxxxxxxx Xxxxxxx & Company, L.P.
have been disclosed in writing to CSI prior to the date hereof.
4.21. CONFLICTS OF INTEREST. No officer, or director, or, to the
knowledge of RP, no significant shareholder, employee or consultant of RP or any
RP Subsidiary, or any affiliate of such person has any direct or indirect
interest (except a passive investment in less than 5% of the publicly traded
stock of a public company) (a) in any corporation, partnership, proprietorship,
association, or other person or entity which does business with RP or any RP
Subsidiary, (b) in any property, asset or right which is used by RP or any RP
Subsidiary in the conduct of its business, or (c) in any contract to which RP is
a party or by which RP may or any RP Subsidiary be bound, nor are any amounts
owing to any such person by, or due to such person from, RP or any RP
Subsidiary.
4.22. PERSONAL PROPERTY. RP owns all of its material personal property,
including, without limitation, the material personal property reflected in the
RP Balance Sheet, except for personal property disposed of in the ordinary
course of business since the RP Balance Sheet Date, subject to no mortgage,
pledge, lien, charge, security interest, encumbrance or restriction, except
those which are shown and described in the RP Balance Sheet or the notes
thereto. All personal properties purported to be leased by RP are subject to
valid and effective leases.
4.23. TAKEOVER STATUTE. The Board of Directors of RP has taken all
appropriate action so that neither CSI nor Merger Sub will be an "interested
stockholder" of RP within the meaning of or subject to Section 203 of the DGCL.
4.24. DISCLOSURE. Neither RP nor any RP Subsidiary has knowingly
withheld from CSI any material facts relating to RP's and any RP Subsidiary's
assets, business, operations, financial conditions, or prospects. No
representation or warranty in this Agreement contains any untrue statement of a
material fact.
4.25. ADDITIONAL DISCLOSURE. Prior to and in connection with the
Merger, RP has no intention to redeem any RP Common Stock or make any
extraordinary distributions with respect thereto, and the persons that are
related to RP within the meaning of Temporary Treasury Regulation ss.
1.368-1T(e)(2)(ii) have not and will not acquire any RP Common Stock from any
holder thereof with consideration other than RP Common Stock.
(a) Following the Merger, RP intends to hold at least 90 percent of
the fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets held immediately prior to the Effective Date.
For purposes of this representation, amounts paid by RP to stockholders who
receive cash or other property pursuant to the Merger, amounts paid by RP to pay
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by RP immediately preceding the Effective Date,
will be included as assets of RP held immediately prior to the Effective Date.
(b) RP has no plan or intention to issue additional shares of its
stock (or securities, options, warrants or instruments giving the holder thereof
the right to acquire RP stock) that would (or if exercised would) result in CSI
losing control of RP within the meaning of Section 368(c) of the Code.
(c) RP will not assume any liabilities of Merger Sub (other than those
liabilities, if any, incurred by Merger Sub in the ordinary course of its
business) or acquire any assets of Merger Sub that are subject to liabilities
(other than those liabilities, if any, incurred by Merger Sub in the ordinary
course of its business).
(d) Following the Merger, RP intends to continue its historic business
or use a significant portion of its historic business assets in a business.
(e) Except as provided in this Agreement, each of RP and its
stockholders will pay their respective expenses, if any, incurred in connection
with the
Merger.
(f) There is no intercorporate indebtedness existing between CSI and
RP, or between Merger Sub and RP, that was issued, acquired or will be settled
at a discount.
(g) RP is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(h) On the date of the Merger, the fair market value of the assets of
RP will exceed the sum of its liabilities, plus the amount of liabilities, if
any, to which the assets are subject.
(i) RP is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(j) RP will not take any action that might otherwise cause the Merger
not to be treated as a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code.
ARTICLE 5. COVENANTS.
5.1. NO SOLICITATION BY RP. (a) RP shall not, directly or indirectly,
through any officer, director, employee, representative or agent of RP or any of
the RP Subsidiaries, solicit or encourage the initiation of (including by way of
furnishing information) any inquiries or proposals regarding any merger, sale of
assets, sale of shares of capital stock (including without limitation by way of
a tender offer) or similar transactions involving RP or any of the RP
Subsidiaries that if consummated would constitute an RP Alternative Transaction
(as defined in Section 7.4.2) (any of the foregoing inquiries or proposals being
referred to herein as an "RP Acquisition Proposal"). In addition, subject to the
other provisions of this Section 5.1(a) (including the following sentence), from
and after the date of this Agreement until the earlier of the Effective Time or
termination of this Agreement pursuant to its terms, RP and its subsidiaries
will not, and will instruct their officers, directors, employees,
representatives and agents not to, directly or indirectly, make or authorize any
public statement, recommendation or solicitation in support of, or commenting
positively regarding, any RP Acquisition Proposal made by any Person or group of
Persons (other than the Merger provided, that nothing in this Section 5.1 shall
prevent the Board of Directors of RP from taking and disclosing to RP's
stockholders a position contemplated by Rule 14d-9 and Rule 14e-2 promulgated
under the Exchange Act, with respect to any tender offer or from making such
disclosure to RP's stockholders (not constituting a recommendation or
solicitation), upon the advice of its independent outside legal counsel, as is
necessary to make under applicable law. Nothing contained in this Agreement
shall prevent the Board of Directors of RP from (i) furnishing information to a
third party which has made a bona fide RP Acquisition Proposal that the RP Board
of Directors reasonably determines in good faith contains the material terms of
an RP Superior Proposal (as defined below) not solicited in violation of this
Agreement, provided that such third party has executed an agreement with
confidentiality provisions substantially similar to those then in effect between
RP and CSI, or (ii) subject to compliance with the other terms of this Section
5.1, including Section 5.1(c), (A) considering and negotiating a bona fide RP
Acquisition Proposal that the RP Board of Directors has reasonably determined in
good faith is likely to constitute an RP Superior Proposal not solicited in
violation of this Agreement, or (B) recommending to its stockholders an RP
Acquisition Proposal that the RP Board of Directors reasonably determines in
good faith is a Superior Proposal and, in connection therewith, withdrawing or
modifying its recommendation of the Merger and the transactions contemplated
thereby (which action shall entitle CSI to terminate this Agreement pursuant to
Section 7.4.2 and to receive the CSI Expenses and CSI Fee, if applicable, as
defined in Section 5.13.2); provided that, as to each of clauses (i) and (ii),
(x) such actions occur at a time prior to approval of the Merger and this
Agreement at the RP Stockholders Meeting, and (y) the Board of Directors of RP
reasonably determines in good faith upon the advice of independent counsel that
it is required to do so in order to discharge properly its fiduciary duties. For
purposes of this Agreement, a "RP Superior Proposal" means any proposal made by
a third party to acquire, directly or indirectly, for consideration consisting
of cash and/or securities, all or a majority of the equity securities of RP
entitled to vote generally in the election of directors or all or substantially
all the assets of RP, on terms which the Board of Directors of RP reasonably
believes (i) (upon the advice of an independent financial advisor) to be more
favorable from a financial point of view to its stockholders than the Merger and
the transactions contemplated by this Agreement taking into account at the time
of determination any changes to the financial terms of this Agreement proposed
by CSI and (ii) to be more favorable to RP than the Merger and the transactions
contemplated by this Agreement after taking into account all pertinent factors
deemed relevant by the Board of Directors of RP under the laws of the State of
Delaware.
(b) RP shall immediately notify CSI after receipt of any RP
Acquisition Proposal, or any material modification of or amendment to any RP
Acquisition Proposal, or any request for nonpublic information relating to RP or
any of its subsidiaries in connection with an RP Acquisition Proposal or for
access to the properties, books or records of RP or any RP Subsidiary by any
person or entity that informs the Board of Directors of RP or such RP Subsidiary
that it is considering making, or has made, an RP Acquisition Proposal. Such
notice to CSI shall be made as soon as practicable orally and confirmed in
writing, if requested, and shall indicate the identity of the person making the
RP Acquisition Proposal or intending to make an RP Acquisition Proposal or
requesting non-public information or access to the books and records of RP, the
terms of any such RP Acquisition Proposal or material modification or amendment
to an RP Acquisition Proposal, and whether RP is providing or intends to provide
the person making the RP Acquisition Proposal with access to information
concerning RP as provided in Section 5.1(a). RP shall also immediately notify
CSI, as soon as practicable orally and confirmed in writing, if requested, if it
enters into negotiations concerning any RP Acquisition Proposal. In each case,
the notice to CSI required by this clause (b) may be limited to the extent that
the Board of Directors of RP reasonably determines in good faith upon the advice
of independent counsel that it is prohibited from giving such notice in order to
properly discharge its fiduciary duties.
(c) Unless this Agreement shall have been terminated in accordance
with its terms, neither RP nor the Board of Directors of RP shall withdraw or
modify, or propose to withdraw or modify, in a manner adverse to CSI, the
approval by such Board of Directors of this Agreement or the Merger.
(d) Without the prior written consent of CSI, RP and the Board of
Directors of RP shall not enter into any agreement with respect to, or otherwise
approve or recommend, or propose to approve or recommend, any RP Acquisition
Proposal or RP Alternative Transaction, unless the Merger Agreement is
terminated prior to or substantially simultaneously with such time pursuant to
Sections 7.1 or 7.2 or is terminated prior to such time by RP pursuant to
Section 7.3.
(e) RP shall immediately cease and cause to be terminated any existing
discussions or negotiations with any persons (other than CSI and Merger Sub)
conducted heretofore with respect to any of the foregoing. RP agrees not to
release any third party from the confidentiality and standstill provisions of
any agreement to which RP is a party.
(f) RP shall ensure that the officers and directors of RP and the RP
Subsidiaries and any investment banker or other advisor or representative
retained by RP are aware of the restrictions described in this Section 5.1.
(g) No action by the Board of Directors of RP expressly permitted by
this Section 5.1 shall constitute a breach or violation of any other provision
of this Agreement, provided that nothing in this Section 5.1 shall narrow the
obligations of RP under Section 5.4.1.
5.2 NO SOLICITATION BY CSI. (a) CSI shall not, directly or indirectly,
through any officer, director, employee, representative or agent of CSI or any
of the CSI Subsidiaries, solicit or encourage the initiation of (including by
way of furnishing information) any inquiries or proposals regarding any merger,
sale of assets, sale of shares of capital stock (including without limitation by
way of a tender offer) or similar transactions involving CSI or any of the CSI
Subsidiaries that if consummated would constitute a CSI Alternative Transaction
(as defined in Section 7.3.2) (any of the foregoing inquiries or proposals being
referred to herein as "CSI Acquisition Proposal"). In addition, subject to the
other provisions of this Section 5.2(a) (including the following sentence), from
and after the date of this Agreement until the earlier of the Effective Time or
termination of this Agreement pursuant to its terms, CSI and its subsidiaries
will not, and will instruct their officers, directors, employees,
representatives and agents not to, directly or indirectly, make or authorize any
public statement, recommendation or solicitation in support of or commenting
positively regarding, any CSI Acquisition Proposal made by any Person or group
of Persons (other than the Merger), provided, that nothing in this Section 5.2
shall prevent the Board of Directors of CSI from taking and disclosing to CSI's
stockholders a position contemplated by Rule 14d-9 and Rule 14e-2 promulgated
under the Exchange Act with respect to any tender offer or from making such
disclosure to stockholders (not constituting a recommendation or solicitation)
upon the advice of its independent outside legal counsel, as is necessary to
make under applicable law. Nothing contained in this Agreement shall prevent the
Board of Directors of CSI from (i) furnishing information to a third party which
has made a bona fide CSI Acquisition Proposal that the CSI Board of Directors
reasonably determines in good faith contains the material terms of a CSI
Superior Proposal (as defined below) not solicited in violation of this
Agreement, provided that such third party has executed an agreement with
confidentiality provisions substantially similar to those then in effect between
RP and CSI, or (ii) subject to compliance with the other terms of this Section
5.2 including Section 5.2 (c), (A) considering and negotiating a bona fide CSI
Acquisition Proposal that the CSI Board of Directors has reasonably determined
in good faith is likely to constitute a CSI Superior Proposal not solicited in
violation of this Agreement, or (B) or recommending to its stockholders a CSI
Acquisition Proposal that the CSI Board of Directors reasonably determines in
good faith is a Superior Proposal and, in connection therewith, withdrawing or
modifying its recommendation of the Merger and the transactions contemplated
thereby (which action shall entitle RP to terminate this Agreement pursuant to
Section 7.3.2 and to receive the RP Expenses and RP Fee, if applicable, as
defined in Section 5.13.3); provided that, as to each of clauses (i) and (ii),
(x) such actions occur at a time prior to approval of the Merger and this
Agreement at the CSI Stockholders Meeting, and (y) the Board of Directors of CSI
reasonably determines in good faith upon the advice of independent counsel that
it is required to do so in order to discharge properly its fiduciary duties. For
purposes of this Agreement, a "CSI Superior Proposal" means any proposal made by
a third party to acquire, directly or indirectly, for consideration consisting
of cash and/or securities, all or a majority of, the equity securities of CSI
entitled to vote generally in the election of directors or all or substantially
all the assets of CSI, on terms which the Board of Directors of CSI reasonably
believes (i) (upon the advice of an independent financial advisor) to be more
favorable from a financial point of view to its stockholders that the Merger and
the transactions contemplated by this Agreement taking into account at the time
of determination any changes to the financial terms of this Agreement proposed
by CSI and (ii) to be more favorable to CSI than the Merger and the transactions
contemplated by this Agreement after taking into account all pertinent factors
deemed relevant by the Board of Directors of CSI under the laws of the State of
Nevada.
(b) CSI shall immediately notify RP after receipt of any CSI
Acquisition Proposal, or any material modification of or amendment to any CSI
Acquisition Proposal, or any request for nonpublic information relating to RP or
any of its subsidiaries in connection with a CSI Acquisition Proposal or for
access to the properties, books or records of CSI or any CSI Subsidiary by any
person or entity that informs the Board of Directors of CSI or such CSI
Subsidiary that it is considering making, or has made, a CSI Acquisition
Proposal. Such notice to RP shall be made as soon as practicable orally and
confirmed in writing, if requested, and shall indicate the identity of the
person making the CSI Acquisition Proposal or intending to make a CSI
Acquisition Proposal or requesting non-public information or access to the books
and records of CSI, the terms of any such CSI Acquisition Proposal or material
modification or amendment to an CSI Acquisition Proposal, and whether CSI is
providing or intends to provide the person making the CSI Acquisition Proposal
with access to information concerning CSI as provided in Section 5.2(a). CSI
shall also immediately notify RP, as soon as practicable orally and confirmed in
writing, if requested, if it enters into negotiations concerning any CSI
Acquisition Proposal. In each case, the notice to RP required by this clause (b)
may be limited to the extent that the Board of Directors of CSI reasonably
determines in good faith upon the advice of independent counsel that it is
prohibited from giving such notice in order to properly discharge its fiduciary
duties.
(c) Unless this Agreement shall have been terminated in accordance
with its terms, neither CSI nor the Board of Directors of CSI shall withdraw or
modify, or propose to withdraw or modify, in a manner adverse to RP, the
approval by such Board of Directors of this Agreement or the Merger.
(d) Without the prior written consent of RP, CSI and the Board of
Directors of CSI shall not enter into any agreement with respect to, or
otherwise approve or recommend, or propose to approve or recommend, any CSI
Acquisition Proposal or CSI Alternative Transaction, unless the Merger Agreement
is terminated prior to or substantially simultaneously with such time pursuant
to Sections 7.1 or 7.2 or is terminated prior to such time by CSI pursuant to
Section 7.4.
(e) CSI shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than RP) conducted
heretofore with respect to any of the foregoing. CSI agrees not to release any
third party from the confidentiality and standstill provisions of any agreement
to which CSI is a party.
(f) CSI shall ensure that the officers and directors of CSI and the
CSI Subsidiaries and any investment banker or other advisor or representative
retained by CSI are aware of the restrictions described in this Section 5.2.
(g) No action by the Board of Directors of CSI expressly permitted by
this Section 5.2 shall constitute a breach or violation of any other provision
of this Agreement, provided that nothing in this Section 5.2 shall narrow the
obligations of CSI under Section 5.4.2.
5.3 CONDUCT OF BUSINESSES. Prior to the Effective Date, except as set
forth in the CSI Disclosure Schedule, the RP Disclosure Schedule or as
contemplated by any other portion of this Agreement, unless both parties have
consented in writing thereto, which consent will not be unreasonably withheld,
each party:
5.3.1 Shall, and shall cause each of its Subsidiaries to,
conduct its operations according to its usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
5.3.2 Shall use its reasonable efforts, and shall cause each
of its Subsidiaries to use its reasonable efforts, to preserve intact
its business organization and goodwill, keep available the services of
its officers and employees and maintain satisfactory relationships with
those persons having business relationships with it;
5.3.3 Except to the extent, if any, prohibited by applicable
law or binding confidentiality agreements with third parties, shall
confer on a regular basis with one or more representatives of the other
party to report operational matters of materiality and any proposals to
engage in material transactions;
5.3.4 Shall not amend its articles or certificate of
incorporation or by-laws (except to the extent the Articles of
Incorporation of CSI are amended to authorize the CSI Preferred Stock);
5.3.5 Shall promptly notify the other party of (a) any
material emergency or other material change in the condition (financial
or otherwise), of such party's or any Subsidiary's business,
properties, assets, liabilities, prospects or the normal course of its
businesses or in the operation of its properties, (b) any material
litigation or material governmental complaints, investigations or
hearings (or communications indicating that the same may be
contemplated), or (c) the breach in any material respect of any
representation or warranty or covenant contained herein;
5.3.6 Shall promptly deliver to the other party true and
correct copies of any report, statement or schedule filed by such party
with the SEC subsequent to the date of this Agreement;
5.3.7 Shall not (a) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement,
issue any shares of its capital stock, effect any stock split or
otherwise change its capitalization as it exists on the date hereof,
(b) grant, confer or award any option, warrant, conversion right or
other right not existing on the date hereof to acquire any shares of
its capital stock, (c) increase any compensation or enter into or amend
any employment severance, termination or similar agreement with any of
its present or future officers or directors, except for normal
increases in compensation to employees not earning more than $50,000 in
annual base compensation, consistent with past practice, and the
payment of cash bonuses to employees pursuant to and consistent with
existing plans or programs, nor (d) adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase plan) or
amend any existing employee benefit plan in any material respect,
except for changes which are less favorable to participants in such
plans or as may be required by applicable law;
5.3.8 Shall not (a) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock, (b) except in connection with the use of shares of
capital stock to pay the exercise price or tax withholding in
connection with stock-based RP Benefit Plans or as required or
otherwise contemplated by this Agreement (including any refinancing in
connection therewith), directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or capital stock of
any of its Subsidiaries, or make any commitment for any such action,
nor (c) split, combine or reclassify any of its capital stock;
5.3.9 Shall not, and shall not permit any of its Subsidiaries
to sell, lease or otherwise dispose of any of its assets (including
capital stock of Subsidiaries) which are material, individually or in
the aggregate, except in the ordinary course of business;
5.3.10 Shall not (a) incur or assume any long-term or
short-term debt or issue any debt securities except for borrowings
under existing lines of credit and indebtedness for working capital in
the ordinary course of business and refinancing of existing
indebtedness in the same amount and on substantially the same terms
(and except that either party may incur indebtedness for the payment of
expenses related to the transactions contemplated by this Agreement and
any financing therefor, provided such indebtedness does not include any
material prepayment penalty or equity component), (b) except for
obligations of wholly-owned Subsidiaries; assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, indirectly,
contingently or otherwise) for the obligations of any other person
except in the ordinary course of business consistent with past
practices in an amount not material to such party, taken as a whole,
(c) other than to wholly-owned Subsidiaries, make any loans, advances
or capital contributions to or investments in, any other person, (d)
pledge or otherwise encumber shares of capital stock of such party or
its Subsidiaries, nor (e) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to create any
material mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect to such asset;
5.3.11 Shall not acquire, sell, lease or dispose of any assets
outside the ordinary course of business or any assets which in the
aggregate are material to such party taken as a whole, or enter into
any commitment or transaction outside the ordinary course of business
consistent with past practice which would be material to such party
taken as a whole;
5.3.12 Except as may be required as a result of a change in law
or in GAAP, shall not change any of the accounting principles or
practices used by such party;
5.3.13 Shall not (a) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership, limited
liability company or other business organization or division thereof
or any equity interest therein, (b) enter into any contract or
agreement other than in the ordinary course of business consistent
with past practice which would be material to such party taken as a
whole, (c) authorize any new capital expenditure or expenditures
which, individually, is in excess of $25,000 or, in the aggregate, is
in excess of $150,000; provided, that none of the foregoing shall
limit any capital expenditure within the aggregate amount previously
authorized by such party's Board of Directors for capital expenditures
and written evidence thereof has been previously provided to the other
party, nor (d) enter into or amend any contract, agreement, commitment
or arrangement providing for the taking of any action which would be
prohibited hereunder;
5.3.14 Shall not (a) make any Tax election with respect to such
party or its Subsidiaries or settle or compromise any Tax liability
material to such party or its Subsidiaries taken as a whole or (b) file
or cause to be filed any amended Return or claims for refund with
respect to such party or its Subsidiaries;
5.3.15 Shall not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction of business liabilities reflected or reserved against in,
and contemplated by, the financial statements (or the notes thereto) of
such party or incurred in the ordinary course of business consistent
with past practice;
5.3.16 Shall not settle or compromise any pending or threatened
suit, action or claim relating to the transaction contemplated hereby;
5.3.17 Shall not adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or reorganization; or
5.3.18 Shall not take, or agree in writing or otherwise to
take, any of the actions described in Section 5.3.1 through 5.3.17 or
any action that would make any of the representations and warranties of
a party hereto contained in this Agreement untrue or incorrect as of
the date when made.
5.4 MEETINGS OF STOCKHOLDERS.
5.4.1 RP has received from NatCity Investments, Inc. its
opinion on the fairness to the holders of RP Shares, from a financial
point of view, of the terms of the Merger, pursuant to the terms of an
engagement letter presented to CSI. RP will take all action reasonably
necessary in accordance with applicable law and its Certificate of
Incorporation and By-laws to convene a meeting of its stockholders as
promptly as practicable to consider and vote upon the approval of this
Agreement and the transaction contemplated hereby. The Board of
Directors of RP shall recommend such approval and RP shall take all
reasonable lawful action to solicit such approval, including, without
limitation, timely mailing the Proxy Statement (as defined in Section
5.11); provided, however, that the Board of Directors of RP shall not
be required to make such recommendation if the Board of Directors of RP
reasonably determines in good faith, based as to legal matters on the
advice of outside legal counsel, that such action would violate its
fiduciary duties. CSI shall coordinate and cooperate with RP with
respect to the timing of such meeting and RP shall use its best efforts
to hold such meeting as soon as is practicable.
5.4.2 CSI has received from Xxxxxx Brothers its opinion on the
fairness to the holders of CSI Shares, from a financial point of view,
of the terms of the Merger, pursuant to the terms of an engagement
letter presented to RP. CSI will take all action reasonably necessary
in accordance with applicable law and its Articles of Incorporation and
By-laws to convene a meeting of its stockholders as promptly as
practicable to consider and vote upon the approval of this Agreement
and the transaction contemplated hereby. The Board of Directors of CSI
shall recommend such approval and CSI shall take all reasonable lawful
action to solicit such approval, including, without limitation, timely
mailing the Proxy Statement (as defined in Section 5.11); provided,
however, that the Board of Directors of CSI shall not be required to
make such recommendation if the Board of Directors of CSI reasonably
determines in good faith, based as to legal matters on the advice of
outside legal counsel, that such action would violate its fiduciary
duties. RP shall coordinate and cooperate with CSI with respect to the
timing of such meeting and CSI shall use its best efforts to hold such
meeting as soon as is practicable.
5.4.3 The Board of Directors of either CSI or RP may delay the
meeting of such party's stockholders required by this Section 5.4 for
no more than 30 days to the extent such Board of Directors reasonably
determines in good faith, based on the advice of outside legal counsel,
that it is required by its fiduciary duties to delay such meeting to
consider a bona fide Acquisition Proposal that such Board of Directors
reasonably determines in good faith contains the material terms of a
Superior Proposal received without violation of this Agreement
(provided that in such event the party which has so delayed such
meeting may not terminate this Agreement pursuant to Section 7.2(a)
until at least 5 days after the date on which such meeting is actually
held).
5.5 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, each party shall: (a) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Effective Date with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Date from, governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby, and (ii) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations; and (b) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transaction
contemplated by this Agreement. If, at any time after the Effective Date, any
further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of each party shall take all such
necessary action.
5.6 INSPECTION OF RECORDS; ACCESS. Except to the extent, if any,
prohibited by applicable law or binding confidentiality agreements with third
parties, from the date hereof to the Effective Date, each party shall allow all
designated officers, attorneys, accountants and other representatives of the
other party (the "Other Party's Representatives") access at all reasonable times
to all employees, stores, offices, warehouses, and other facilities and to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs, of such party and its
Subsidiaries; provided, however, the Other Party's Representatives shall use
their reasonable best efforts to avoid interfering with, hindering or otherwise
disrupting the employees of such party in the execution of their employment
duties during any visit to, or inspection of, such party's facilities.
5.7 PUBLICITY. The initial press release relating to this Agreement
shall be a joint press release and thereafter each party shall, subject to its
respective legal obligations (including requirements of stock exchanges and
other similar regulatory bodies), consult with each other, and use reasonable
efforts to agree upon the text of any press release, before issuing any such
press release or otherwise making public statements with respect to the
transaction contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities exchange
with respect thereto.
5.8 REGISTRATION STATEMENT/PROXY STATEMENT.
5.8.1 As promptly as practicable after the execution of this
Agreement, CSI and RP shall prepare and file with the SEC preliminary
proxy materials which shall constitute the preliminary Proxy Statement
(as defined in Section 5.11) and a preliminary prospectus with respect
to the CSI Preferred Stock to be issued in connection with the Merger.
As promptly as practicable after comments are received from the SEC
with respect to the preliminary proxy materials and after the
furnishing by RP and CSI of all information required to be contained
therein, RP shall file with the Commission the definitive Proxy
Statement and CSI shall file with the Commission the definitive Proxy
Statement and Registration Statement (as defined in Section 5.11) and
CSI and RP shall use all reasonable efforts to cause the Registration
Statement to become effective as soon thereafter as practicable.
5.8.2 CSI and RP shall make all necessary filings with respect
to the Merger under the Securities Act and the Exchange Act and the
rules and regulations thereunder, under applicable Blue Sky or similar
securities laws, and shall use all reasonable efforts to obtain
required approvals and clearances with respect thereto.
5.9 COMPLIANCE WITH THE SECURITIES ACT; RESALE PROSPECTUS
5.9.1 Prior to the Effective Date, RP shall deliver to CSI a
letter setting forth a true and complete list of persons whom the
Company believes may be deemed to be "affiliates" of RP as that term is
used in paragraphs (c) and (d) of Rule 145 under the Securities Act
(the "Affiliates").
5.9.2 RP shall use its reasonable best efforts to obtain as
promptly as practicable a written agreement from each person who is
identified as an Affiliate in the letter referred to in Section 5.9.1
above, in the form previously approved by the parties, that he or she
will not offer to sell, sell or otherwise dispose of any of the CSI
Preferred Stock (or CSI Common Stock issuable upon conversion thereof)
issued to him or her pursuant to the Merger, except in compliance with
Rule 145 under the Securities Act or another exemption from the
registration requirements of the Securities Act. RP shall deliver all
such written agreements obtained by it to CSI on or prior to the
Effective Date.
5.9.3 CSI shall use its reasonable best efforts to file with
the SEC as promptly as practicable following the Effective Date, and
cause to become effective, a registration statement for the purpose of
permitting the CSI Preferred Stock (or CSI Common Stock issuable upon
conversion thereof) issued to any such Affiliate to be resold by such
Affiliate, and to maintain such registration statement in effect until
such time as such Affiliates may resell such stock pursuant to an
applicable exemption therefrom.
5.10. TAKEOVER PROVISIONS INAPPLICABLE. RP agrees that it will not take
any action to render Section 203 of the DGCL applicable to the Merger and the
other transactions contemplated hereby, and CSI agrees that it will not take any
action to render Sections 78.438 and 78.439 the NGCL applicable to (x) the
acquisition of CSI Preferred Stock pursuant to the Merger or (y) the conversion
of the CSI Preferred Stock into the CSI Common Stock.
5.11. INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENTS,
ETC. Each of CSI, Merger Sub and RP agree that none of the information supplied
by it for inclusion in (a) the Registration Statement to be filed with the SEC
by CSI on Form S-4 under the Securities Act for the purpose of registering
shares of CSI Preferred Stock to be issued in the Merger (the "Registration
Statement") and all other documents required to be filed by CSI with the SEC and
(b) the prospectus/proxy statement of RP and CSI (the "Proxy Statement") to be
mailed to the stockholders of RP and CSI in connection with the Merger will, in
the case of the Proxy Statement or any amendments or supplements thereto, at the
time of mailing of the Proxy Statement or any amendments or supplements thereto,
and at the time of the RP Meeting to be held in connection with the Merger and
the CSI meeting to be held in connection with the Merger, or, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Date, 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. CSI and Merger Sub agree that the Registration Statement will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations promulgated thereunder. RP and CSI agree that the
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. Each of
CSI and RP agrees to make all reasonable representations and covenants in
connection with the opinions of counsel, if any, required to be attached to the
Registration Statement and Proxy Statement with respect to the correctness of
the discussion therein as to the material federal income tax consequences of the
Merger.
5.12. FURTHER ACTION. Each party hereto shall, subject to the
fulfillment at or before the Effective Date of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
5.13. FEES AND EXPENSES.
5.13.1 Except as provided below in this Section 5.13, if the
Merger is not effected, all costs and expenses incurred in connection
with this Agreement and in the transaction contemplated hereby shall be
paid by the party incurring such expense except that (a) to the extent
that the RP Fee or the CSI Fee (each as defined below) is not payable,
RP and CSI each agree to pay 50% of all printing expenses incurred by
either party in connection with the Registration Statement and the
Proxy Statement and (b) as provided in Section 5.13.2 or 5.13.3, as
applicable, below.
5.13.2 If this Agreement is terminated by RP pursuant to
Section 7.3.3 or this Agreement is terminated by CSI pursuant to
Section 7.4.2, RP shall pay to CSI an amount equal to CSI's and Merger
Sub's actual, reasonable and documented expenses (including without
limitation financing therefor) incurred after January 18, 1999 and on
or prior to the termination date of this Agreement relating to the
transactions contemplated by this Agreement (the "CSI Expenses"),
provided that RP shall not be responsible for any CSI Expenses in
excess of $1,000,000 in the aggregate. If during the 365 day period
immediately following the termination of this Agreement, RP shall enter
into a transaction which would constitute an RP Alternative Transaction
with or involving an RP Third Party who directly or indirectly
initiated or otherwise had any contact with RP with respect to any such
transaction prior to the termination of this Agreement, RP will pay to
CSI, in addition to the CSI Expenses, a fee equal to $750,000 (the "CSI
Fee"), and, if RP enters into such a transaction following a
termination of this Agreement pursuant to Section 7.2(b), RP shall also
then pay to CSI the CSI Expenses to the extent, if any, that such CSI
Expenses were not otherwise due and payable at the time of such
termination.
5.13.3 If this Agreement is terminated by CSI pursuant to
Section 7.4.3 or this Agreement is terminated by RP pursuant to Section
7.3.2, CSI shall pay to RP an amount equal to RP's actual, reasonable
and documented expenses (including without limitation financing
therefor) incurred after January 18, 1999 and on or prior to the
termination date of this Agreement relating to the transactions
contemplated by this Agreement (the "RP Expenses"), provided that CSI
shall not be responsible for any RP Expenses in excess of $1,000,000 in
the aggregate. If during the 365 day period immediately following the
termination of this Agreement, CSI shall enter into a transaction which
would constitute an CSI Alternative Transaction with or involving a CSI
Third Party who directly or indirectly initiated or otherwise had any
contact with CSI with respect to any such transaction prior to the
termination of this Agreement, CSI will pay to RP, in addition to the
RP Expenses, a fee equal to $750,000 (the "RP Fee"), and, if CSI enters
into such a transaction following a termination of this Agreement
pursuant to Section 7.2(c), CSI shall also then pay to RP the RP
Expenses to the extent, if any, that such RP Expenses were not
otherwise due and payable at the time of such termination.
5.13.4 If this Agreement is terminated pursuant to Section
7.2(a) because the condition set forth in Section 6.1.7 has not been
satisfied despite the reasonable best efforts of RP to cooperate in
satisfying such condition, CSI shall pay the RP Expenses to the extent
incurred prior to notice from CSI to RP that such condition will not
be, or is not likely to be, satisfied.
5.13.5 Any CSI or RP Fee and/or CSI or RP Expenses payable
pursuant to Section 5.13.2, 5.13.3 or 5.13.4 as the case may be, shall
be paid in immediately available funds within five business days after
a demand for payment following the first to occur of any of the events
described in Section 5.13.2, 5.13.3 or 5.13.4, as the case may be, and
entitling a party to payment; provided that, in no event shall RP or
CSI, as the case may be, be required to pay such Fee and/or Expenses
to the entities entitled thereto, if, immediately prior to the
termination of this Agreement, the entity entitled to receive such Fee
and/or Expenses was in material breach of its obligations under this
Agreement (and such breach, if curable, was not cured within 30 days
after written notice of such breach is given to such entity by the
other party).
5.14 STOCKHOLDERS' AGREEMENT; VOTING AGREEMENTS. (a) Simultaneously
with the execution of this Agreement CSI is entering into (i) a Stockholder
Agreement with certain stockholders or prospective stockholders of CSI
identified in Exhibit 5.14(a)(i) hereto providing for the election of directors
of CSI and (ii) Voting Agreements pursuant to which certain stockholders of RP
identified in Exhibit 5.14(a)(ii) hereto agree to vote all shares of RP Common
Stock over which they have voting power in favor of the Merger and the
transactions contemplated hereby. (b) Simultaneously with the execution of this
Agreement, RP is entering into Voting Agreements pursuant to which certain
stockholders of CSI identified in Exhibit 5.14(b) hereto agree to vote all
shares of CSI Common Stock over which they have power in favor of the Merger and
the transactions contemplated hereby.
5.15 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. CSI
agrees that at all times after the Effective Date, it will and shall cause the
Surviving Corporation to, for not less than six years, indemnify each person who
is a director or officer of RP on the date hereof (individually an "Indemnified
Party" and collectively the "Indemnified Parties"), with respect to any claim,
liability, loss, damage, judgment, fine, penalty, amount paid in settlement or
compromise, cost or expense, including reasonable fees and expenses of legal
counsel ("Indemnified Liability"), to the extent such Indemnified Party would
have been indemnified pursuant to RP's articles of incorporation or by-laws as
in effect as of the date hereof, based in whole or in part on, or arising in
whole or in part out of, any matter existing or occurring at or prior to the
Effective Date whether commenced, asserted or claimed before or after the
Effective Date, and shall advance expenses to such Indemnified Party to the
extent such Indemnified Party would have been advanced expenses pursuant to RP's
articles of incorporation or by-laws as in effect as of the date hereof. CSI
shall, and shall cause the Surviving Corporation to, maintain in effect for not
less than six years after the Effective Date, the current policies of directors'
and officers' liability insurance maintained by RP on the date hereof (provided
that CSI may substitute therefor policies having at least the same coverage and
containing terms and conditions which are no less advantageous to the persons
currently covered by such policies as insured) with respect to matters existing
or occurring on or prior to the Effective Date.
5.16 RP STOCK PLANS. CSI agrees to file a registration statement with
respect to any RP stock option plan, to the extent that such filings are
required to enable holders of options granted under Section 1.8.1 to freely
exercise such options and (except for holders who may be deemed to be affiliates
of CSI) to freely sell shares acquired by the exercise of such options (assuming
such shares would be freely salable pursuant to an effective registration
statement covering such plans). Nothing set forth herein shall require CSI to
register such exercises on any form other than Form S-8. On and after the
Effective Date, CSI will assume and discharge all obligations of RP with respect
to registration rights agreements disclosed on the RP Disclosure Schedule.
5.17 REORGANIZATION. The parties hereto intend to adopt this Agreement
and the transactions contemplated hereby as a plan of reorganization under
Section 368(a) of the Code. No party hereto, without the consent of the other
parties hereto, will take any action that could reasonably be expected to cause
the Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code. Each of the parties shall report the Merger for income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
(and any comparable state or local statute).
ARTICLE 6. CONDITIONS.
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of the following conditions:
6.1.1. This Agreement and the transaction contemplated hereby
shall have been approved in the manner required by applicable law or by
applicable regulations of any stock exchange or other regulatory body
and by the holders of the issued and outstanding shares of capital
stock of each of RP and CSI entitled to vote thereon.
6.1.2. None of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction which
prohibits the consummation of the transaction contemplated by this
Agreement or has a material adverse effect on a party hereto (including
the requirement that either party divest any material portion of its
assets). In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to have any
such injunction lifted.
6.1.3. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board
or other regulatory body required in connection with the execution,
delivery and performance of this Agreement shall have been obtained or
made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Date and except
where the failure to have obtained or made any such consent
authorization, order, approval, filing or registration would not have a
CSI Material Adverse Effect or an RP Material Adverse Effect following
the Effective Date.
6.1.4. The CSI Common Stock issuable upon conversion of the
CSI Preferred Stock shall have been listed or approved for listing upon
notice of issuance on the NASDAQ National Market System, if qualified,
or otherwise quoted on NASDAQ.
6.1.5. The Registration Statement shall have been declared
effective.
6.1.6. All applicable Blue Sky laws shall have been complied
with.
6.1.7. CSI shall have received sufficient financing to satisfy
ongoing working capital needs of CSI and RP following the Transaction
and to refinance existing indebtedness of both companies (and their
respective Subsidiaries to the extent applicable) on terms
substantially no less favorable than the terms of the most current
proposals therefor furnished by CSI to RP prior to the date of this
Agreement, or otherwise reviewed and approved by each party in good
faith.
6.2. CONDITIONS TO OBLIGATION OF RP TO EFFECT THE MERGER. The
obligation of RP to effect the Merger shall be subject to the fulfillment at or
prior to the Closing of the following conditions:
6.2.1. CSI shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing and the representations and warranties of CSI
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct in all material respects (or, to the
extent any such representation is qualified by reference to materiality
or to a CSI Material Adverse Effect, is entirely true and correct) as
of the Closing Date, and RP shall have received a certificate of the
President or a Vice President of CSI, dated the Closing Date,
certifying to such effect.
6.2.2. From the date of this Agreement through the Effective
Date, there shall not have occurred any change in the financial
condition, business, operations or prospects of CSI and its
Subsidiaries, taken as a whole, that would reasonably be expected to
have a CSI Material Adverse Effect.
6.2.3 RP shall have received a certificate from the Secretary
of CSI and Merger Sub, in form and substance reasonably satisfactory to
RP certifying the adoption of resolutions by the Board of Directors and
stockholders of CSI in favor of this Agreement, the Merger and the
transactions contemplated by this Agreement.
6.2.4 There shall have been no change of applicable law after
the date hereof as a result of which the Merger will fail to qualify as
a tax-free reorganization within the meaning of Section 368(a) of the
Code.
6.3. CONDITIONS TO OBLIGATION OF CSI TO EFFECT THE MERGER. The
obligations of CSI to effect the Merger shall be subject to the fulfillment at
or prior to the Closing of the following conditions:
6.3.1. RP shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing and the representations and warranties of RP
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct in all material respects (or, to the
extent any such representation is qualified by reference to materiality
or to an RP Material Adverse Effect, is entirely true and correct) as
of the Closing Date, and CSI shall have received a certificate of the
President or a Vice President of RP, dated the Closing Date, certifying
to such effect;
6.3.2. From the date of this Agreement through the Effective
Date, there shall not have occurred any change in the financial
condition, business, operations or prospects of RP and the RP
Subsidiaries, taken as a whole, that would reasonably be likely to have
an RP Material Adverse Effect.
6.3.3 CSI shall have received a certificate from the Secretary
of RP, in form and substance reasonably satisfactory to CSI certifying
the adoption of resolutions by the RP Board of Directors and
stockholders in favor of this Agreement, the Merger and the
transactions contemplated by this Agreement.
6.3.4 RP shall take all actions necessary to amend the FM
Precision Golf Manufacturing Corp 401(k) Plan (the "401(k) Plan") to
restrict eligibility to participate in the 401(k) Plan, effective no
later than the Closing Date, to employees of RP, by replacing the
standardized prototype form of plan with a non-standardized prototype
form of plan, in form and substance reasonably satisfactory to CSI.
ARTICLE 7. TERMINATION.
7.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Date, before
or after the approval of this Agreement by the stockholders of RP and CSI, by
the mutual consent of the parties hereto.
7.2. TERMINATION BY EITHER RP OR CSI. This Agreement may be terminated
and the Merger may be abandoned by action of the Board of Directors of either RP
or CSI if: (a) the Merger shall not have been consummated on or before 120 days
after the date of this Agreement; (b) RP's stockholders have voted against the
approval required by Section 6.1.1 at a meeting duly convened therefor or at an
adjournment thereof; (c) CSI's shareholders have voted against the approval
required by Section 6.1.1 at a meeting duly convened therefor or at an
adjournment thereof; (d) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transaction contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement pursuant to this
clause (d) shall have used all reasonable efforts to remove such injunction,
order or decree; and provided, in the case of a termination pursuant to clause
(a) above, that the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure referred to in said
clause.
7.3. TERMINATION BY RP. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Date, before or after
the adoption and approval by the stockholders of RP referred to in Section
6.1.1, by action of the Board of Directors of RP, if :
7.3.1 (a) There has been a breach by CSI of any
representation or warranty contained in this Agreement which would
reasonably be expected to have a CSI Material Adverse Effect, or (b)
there has been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of CSI, which breach is not
curable or, if curable, is not cured within 30 days after written
notice of such breach is given by RP to CSI.
7.3.2 Whether or not permitted to do so by this Agreement,
the Board of Directors of CSI or CSI shall (i) withdraw, modify or
change its approval or recommendation of this Agreement or the Merger
in a manner adverse to RP, (ii) approve or recommend to the
stockholders of CSI a CSI Acquisition Proposal or CSI Alternative
Transaction, (iii) approve or recommend that the stockholders of CSI
tender their shares in any tender or exchange offer that is a CSI
Alternative Transaction or (iv) take any position or make any
disclosures to CSI's stockholders permitted pursuant to Section 5.2
which has the effect of any of the foregoing. As used herein, "CSI
Alternative Transaction" means any of (i) a transaction pursuant to
which any person (or group of persons) other than CSI or its
affiliates (a "CSI Third Party") acquires or would acquire beneficial
ownership or the right to acquire beneficial ownership of more than
50% of the outstanding shares of any class of equity securities of
CSI, whether from CSI or pursuant to a tender offer or exchange offer
or otherwise, (ii) a merger or other business combination involving
CSI pursuant to which any CSI Third Party acquires more than 50% of
the outstanding equity securities of CSI or the entity surviving such
merger or business combination (iii) any transaction pursuant to which
any CSI Third Party acquires control of assets of CSI (including for
this purpose the outstanding equity securities of any of the CSI
Subsidiaries and securities of the entity surviving any merger or
business combination to which any of the CSI Subsidiaries is a party)
or any of the CSI Subsidiaries having a fair market value (as
determined by the Board of Directors of CSI in good faith) equal to
more than 20% of the fair market value of all the assets of CSI and
the CSI Subsidiaries, taken as a whole, immediately prior to such
transaction or (iv) any other consolidation, business combination,
recapitalization or similar transaction involving CSI or any of the
CSI Subsidiaries, other than the transactions contemplated by this
Agreement; provided, however, that the term CSI Alternative
Transaction shall not include any acquisition of securities by a
broker dealer in connection with a bona fide public offering of such
securities.
7.3.3 The Board of Directors of RP has received an RP
Superior Proposal and the Board of Directors of RP reasonably
determines in good faith (upon the advice of independent outside
counsel) that a failure to terminate this Agreement and enter into an
agreement to effect such RP Superior Proposal would constitute a
breach of its fiduciary duties; provided that this Agreement shall not
be terminated pursuant to this Section 7.3.3 unless simultaneously
with such termination, RP enters into a definitive acquisition, merger
or similar agreement to effect the RP Superior Proposal.
7.4. TERMINATION BY CSI. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Date by action of the
Board of Directors of CSI, if:
7.4.1. (a) There has been a breach by RP of any
representation or warranty contained in this Agreement which would
have or would be reasonably likely to have an RP Material Adverse
Effect, or (b) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of RP,
which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by CSI to RP
7.4.2. Whether or not permitted to do so by this Agreement,
the Board of Directors of RP or RP shall (i) withdraw, modify or
change its approval or recommen dation of this Agreement or the Merger
in a manner adverse to CSI, (ii) approve or recommend to the
stockholders of RP an RP Acquisition Proposal or RP Alternative
Transaction, (iii) approve or recommend that the stockholders of RP
tender their shares in any tender or exchange offer that is an RP
Alternative Transaction or (iv) take any position or make any
disclosures to RP's stockholders permitted pursuant to Section 5.1
which has the effect of any of the foregoing. As used herein, "RP
Alternative Transaction" means any of (i) a transaction pursuant to
which any person (or group of persons) other than CSI or its
affiliates (an "RP Third Party") acquires or would acquire beneficial
ownership or the right to acquire beneficial ownership of more than
50% of the outstanding shares of any class of equity securities of RP,
whether from RP or pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger or other business combination involving RP
pursuant to which any RP Third Party acquires more than 50% of the
outstanding equity securities of RP or the entity surviving such
merger or business combination (iii) any transaction pursuant to which
any RP Third Party acquires or would acquire control of assets of RP
(including for this purpose the outstanding equity securities of any
of the RP Subsidiaries and securities of the entity surviving any
merger or business combination to which any of the RP Subsidiaries is
a party) or any of the RP Subsidiaries having a fair market value (as
determined by the Board of Directors of RP in good faith) equal to
more than 20% of the fair market value of all the assets of RP and the
RP Subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any other consolidation, business combination,
recapitalization or similar transaction involving RP or any of the RP
Subsidiaries, other than the transactions contemplated by this
Agreement; provided, however, that the term RP Alternative Transaction
shall not include any acquisition of securities by a broker dealer in
connection with a bona fide public offering of such securities.
7.4.3 The Board of Directors of CSI has received a CSI
Superior Proposal and the Board of Directors of CSI reasonably
determines in good faith (upon the advice of independent outside
counsel) that a failure to terminate this Agreement and enter into an
agreement to effect CSI Superior Proposal would constitute a breach of
its fiduciary duties; provided that this agreement shall not be
terminated pursuant to this Section 7.4.3 unless simultaneously with
such termination CSI enters into a definitive acquisition, merger or
similar agreement to effect the CSI Superior Proposal.
7.5. EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article 7, all obligations of the parties hereto shall terminate, except the
obligations of the parties pursuant to Sections 5.11, 5.13, and this 7.5 and
Article 8 and the Confidentiality Agreement referred to in Section 8.4.
Moreover, in the event of termination of this Agreement pursuant to Section 7.3
or 7.4, nothing herein shall prejudice the ability of the non-breaching party
from seeking damages from the other party for any breach of this Agreement,
including without limitation, attorneys' fees and the right to pursue any remedy
at law or in equity.
7.6. EXTENSION; WAIVER. At any time prior to the Effective Date, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties made to such party contained herein or in
any document to be delivered pursuant hereto, and (c) waive compliance with any
of the agreements or conditions for the benefit of such party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by or on
behalf of the party granting such extension or waiver.
ARTICLE 8. GENERAL PROVISIONS.
8.1. NONSURVIVAL, REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall be deemed to the extent expressly provided herein to be
conditions to the Merger and shall not survive the Merger.
8.2. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to RP: If to CSI:
Royal Precision, Inc. Coyote Sports, Inc.
00000 Xxxxx Xxxxxx Xxxx 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
Attn: Chairman of the Board Attn: President
or to such other address as any party shall specify by written notice so given
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.3. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors, and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4. ENTIRE AGREEMENT. This Agreement, the Exhibits, the CSI
Disclosure Schedule, the RP Disclosure Schedule, the Confidentiality Agreement
dated November 16, 1997, between RP and CSI and any documents delivered by the
parties in connection herewith constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
During the term of this Agreement, the Confidentiality Agreement may not be
terminated by either party thereto.
8.5. AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the RP Merger by the
stockholders of RP and CSI, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed by or on behalf of each of the
parties hereto.
8.6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws.
8.7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies of
this Agreement, each of which may be signed by less than all of the parties
hereto, but together all such copies are signed by all of the parties hereto.
8.8. HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.9. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.10. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
giving such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
8.12. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court having jurisdiction of
the matter, this being in addition to any other remedy to which they may be
entitled at law or in equity.
8.13. SUBSIDIARIES. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner.
8.14 KNOWLEDGE. When references are made in this Agreement to any
representation or warranty being "to the knowledge" of CSI or RP, or similar
language, "knowledge" shall mean (a) the actual knowledge of any director or
senior executive officer of such party or (b) such knowledge as any director or
senior executive officer of such party could reasonably be expected to have
following a reasonably comprehensive investigation of the matter subject to such
representation or warranty.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
COYOTE SPORTS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
RP ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title:
ROYAL PRECISION, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
Exhibit 1.4.1
Certificate of Designation
Exhibit 3.4.1
Capital Stock of CSI
25,000,000 shares of Common Stock, par value $.001 per share
_______ shares of CSI Preferred Stock, par value $.001 per share*
* Subject to the Exchange Ratio in the Merger.
Exhibit 5.14(a)(i)
Stockholder Agreement Signatories
Xxxxx X. Xxxxxx
Xxx X. Xxxxxxxxxxx
Paragon Coyote Texas, Ltd.
Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx Charitable Remainder Trust #3
Xxxxx X. Xxxxxxxx
Xxxxxxxx Xxxxxxx & Company, L.P.
Xxxxxxx X. Xxxxxx
Exhibit 5.14(a)(ii)
RP Voting Agreement Signatories
Xxxxxxx X. Xxxxxx
Xxxxxxxx Xxxx
Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx Charitable Remainder Trust #3
Xxxxxxxx Xxxxxxx & Company, L.P.
Xxxxx X. Xxxxxxxx
Xxxxx Xxxxxxx
Xxxxxx X. Xxxxxxxx
Exhibit 5.14(b)
CSI Voting Agreement Signatories
Paragon Coyote Texas, Ltd.
Xxxxx X. Xxxxxx
Xxx X. Xxxxxxxxxxx
TABLE OF CONTENTS
Page
ARTICLE 1. THE TRANSACTION....................................................1
1.1. THE MERGER...............................................................1
1.2. EFFECTIVE DATE OF THE MERGER.............................................1
1.3. TAX-FREE REORGANIZATION .................................................1
1.4. CONVERSION OF SECURITIES ................................................2
1.5. TERMS OF EXCHANGE .......................................................2
1.6. DIVIDENDS; TRANSFER TAXES ...............................................3
1.7. NO FRACTIONAL SHARES ....................................................3
1.8. STOCK OPTIONS ...........................................................4
1.9. STOCKHOLDER APPROVAL ....................................................4
1.10. CLOSING OF RP'S TRANSFER BOOKS .........................................4
1.11. ASSISTANCE IN CONSUMMATION OF THE MERGER ...............................5
1.12. CLOSING ................................................................5
1.13. ILLUSTRATIVE COMPUTATION ...............................................5
ARTICLE 2. SURVIVING CORPORATION..............................................5
2.1. CERTIFICATE OF INCORPORATION ............................................5
2.2. BY-LAWS .................................................................5
2.3. OFFICERS; BOARD OF DIRECTORS ............................................5
2.4. EFFECTS OF THE MERGER ...................................................5
ARTICLE 3. REPRESENTATIONS OF CSI.............................................6
3.1. CSI DISCLOSURE SCHEDULE .................................................6
3.2. EXISTENCE AND GOOD STANDING OF CSI ......................................6
3.3. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT .........................7
3.4. CAPITAL STOCK ...........................................................7
3.5. SUBSIDIARIES ............................................................7
3.6. NO VIOLATIONS ...........................................................7
3.7. SEC DOCUMENTS ...........................................................8
3.8. LITIGATION ..............................................................9
3.9. ABSENCE OF CERTAIN CHANGES ..............................................9
3.10. TAX MATTERS ...........................................................10
3.11. CERTAIN EMPLOYEE PLANS ................................................12
3.12. LABOR MATTERS .........................................................13
3.13. ENVIRONMENTAL LAWS AND REGULATIONS ....................................13
3.14. REAL PROPERTY .........................................................14
3.15. LIMITATION ON BUSINESS CONDUCT ........................................15
3.16. TITLE TO PROPERTY .....................................................15
3.17. INSURANCE .............................................................16
3.18. INTELLECTUAL PROPERTY .................................................16
3.19. CERTAIN CONTRACTS .....................................................16
3.20. NO BROKERS ............................................................16
3.21. CONFLICTS OF INTEREST .................................................17
3.22. PERSONAL PROPERTY .....................................................17
3.23. TAKEOVER STATUTE ......................................................17
3.24. DISCLOSURE ............................................................17
3.25. STATUS AS REORGANIZATION ..............................................17
ARTICLE 4. REPRESENTATIONS OF RP.............................................18
4.1. RP DISCLOSURE SCHEDULE .................................................18
4.2. EXISTENCE AND GOOD STANDING OF RP ......................................19
4.3. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT ........................19
4.4. CAPITAL STOCK ..........................................................20
4.5. SUBSIDIARIES ...........................................................20
4.6. NO VIOLATIONS ..........................................................20
4.7. SEC DOCUMENTS ..........................................................21
4.8. LITIGATION .............................................................21
4.9. ABSENCE OF CERTAIN CHANGES .............................................22
4.10. TAX MATTERS ...........................................................22
4.11. CERTAIN EMPLOYEE PLANS ................................................24
4.12. LABOR MATTERS .........................................................25
4.13. ENVIRONMENTAL LAWS AND REGULATIONS ....................................25
4.14. REAL PROPERTY .........................................................26
4.15. LIMITATION ON BUSINESS CONDUCT ........................................27
4.16. TITLE TO PROPERTY .....................................................27
4.17. INSURANCE .............................................................27
4.18. INTELLECTUAL PROPERTY .................................................27
4.19. CERTAIN CONTRACTS .....................................................28
4.20. NO BROKERS ............................................................28
4.21. CONFLICTS OF INTEREST .................................................28
4.22. PERSONAL PROPERTY .....................................................29
4.23. TAKEOVER STATUTE ......................................................29
4.24. DISCLOSURE ............................................................29
4.25. ADDITIONAL DISCLOSURE .................................................29
ARTICLE 5. COVENANTS.........................................................30
5.1. NO SOLICITATION BY RP ..................................................30
5.2 NO SOLICITATION BY CSI .................................................32
5.3 CONDUCT OF BUSINESSES ..................................................34
5.4 MEETINGS OF STOCKHOLDERS ...............................................37
5.5 FILINGS; OTHER ACTION ..................................................38
5.6 INSPECTION OF RECORDS; ACCESS ..........................................38
5.7 PUBLICITY ..............................................................38
5.8 REGISTRATION STATEMENT/PROXY STATEMENT .................................39
5.9 COMPLIANCE WITH THE SECURITIES ACT; RESALE PROSPECTUS ..................39
5.10. TAKEOVER PROVISIONS INAPPLICABLE ......................................41
5.11. INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENTS, ETC. ....41
5.12. FURTHER ACTION ........................................................41
5.13. FEES AND EXPENSES .....................................................41
5.14. STOCKHOLDERS' AGREEMENT; VOTING AGREEMENTS ............................43
5.15. DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION ................43
5.16. RP STOCK PLANS ........................................................43
5.17. REORGANIZATION ........................................................43
ARTICLE 6. CONDITIONS........................................................44
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER .............44
6.2. CONDITIONS TO OBLIGATION OF RP TO EFFECT THE MERGER ....................45
6.3. CONDITIONS TO OBLIGATION OF CSI TO EFFECT THE MERGER ...................45
ARTICLE 7. TERMINATION.......................................................46
7.1. TERMINATION BY MUTUAL CONSENT ..........................................46
7.2. TERMINATION BY EITHER RP OR CSI ........................................46
7.3. TERMINATION BY RP ......................................................46
7.4. TERMINATION BY CSI .....................................................47
7.5. EFFECT OF TERMINATION AND ABANDONMENT ..................................48
7.6. EXTENSION; WAIVER ......................................................49
ARTICLE 8. GENERAL PROVISIONS................................................49
8.1. NONSURVIVAL, REPRESENTATIONS AND WARRANTIES ............................49
8.2. NOTICES ................................................................49
8.3. ASSIGNMENT; BINDING EFFECT; BENEFIT ....................................49
8.4. ENTIRE AGREEMENT .......................................................50
8.5. AMENDMENT ..............................................................50
8.6. GOVERNING LAW ..........................................................50
8.7. COUNTERPARTS ...........................................................50
8.8. HEADINGS ...............................................................50
8.9. INTERPRETATION .........................................................50
8.10. WAIVERS ...............................................................50
8.11. SEVERABILITY ..........................................................51
8.12. ENFORCEMENT OF AGREEMENT ..............................................51
8.13. SUBSIDIARIES ..........................................................51
8.14. KNOWLEDGE .............................................................51
AGREEMENT AND PLAN OF MERGER
AMONG
ROYAL PRECISION, INC.,
COYOTE SPORTS, INC. AND
RP ACQUISITION CORP.
Dated as of February 2, 1999
