EXHIBIT 2.3
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
ENGINEERING ANIMATION, INC.,
SHELL BEAVER L.L.C.,
and
TECHNOLOGY COMPANY VENTURES, L.L.C.
_____________________
Dated as of November 12, 1997
_____________________
TABLE OF CONTENTS
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
ARTICLE I. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3. EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.4. EFFECTS OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . .2
1.5. CERTIFICATE OF FORMATION AND OPERATING AGREEMENT . . . . . . . . .2
1.6. MANAGERS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . .2
1.7. SUB MEMBERSHIP INTEREST. . . . . . . . . . . . . . . . . . . . . .2
1.8. ACCOUNTING CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II. CONVERSION AND EXCHANGE OF MEMBER INTERESTS . . . . . . . . . .2
2.1. CONVERSION OF VENTURES MEMBERSHIP INTERESTS. . . . . . . . . . . .2
2.2. EXCHANGE OF VENTURES MEMBERSHIP INTERESTS. . . . . . . . . . . . .3
ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING RTI. . . . . . . . . .4
3.1. CORPORATE ORGANIZATION . . . . . . . . . . . . . . . . . . . . . .4
3.2. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.3. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.4. COMPLIANCE WITH APPLICABLE LAW . . . . . . . . . . . . . . . . . .5
3.5. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . .5
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . .5
3.7. LEGAL PROCEEDINGS AND RESTRICTIONS . . . . . . . . . . . . . . . .5
3.8. TAXES AND TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . .6
3.9. EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . .8
3.10. EMPLOYMENT AND LABOR RELATIONS . . . . . . . . . . . . . . . . . .10
3.11. CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.12. UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . . .11
3.13. ENVIRONMENTAL LIABILITY. . . . . . . . . . . . . . . . . . . . . .11
3.14. TANGIBLE ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . .12
3.15. REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.16. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . .13
3.17. INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.18. NOTES AND ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . .14
3.19. BANK ACCOUNTS AND POWERS OF ATTORNEY . . . . . . . . . . . . . . .14
3.20. GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.21. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.22. SERVICE CONTRACTS AND WARRANTIES . . . . . . . . . . . . . . . . .14
i
3.23. CERTAIN RELATIONSHIPS. . . . . . . . . . . . . . . . . . . . . . .15
3.24. PPM/INFORMATION STATEMENT INFORMATION. . . . . . . . . . . . . . .15
3.25. CERTAIN CUSTOMER RELATIONSHIPS . . . . . . . . . . . . . . . . . .15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF VENTURES. . . . . . . . . . .15
4.1. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.2. OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.3. AUTHORITY; NO VIOLATION. . . . . . . . . . . . . . . . . . . . . .16
4.4. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . .16
4.5. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
4.6. COMPLIANCE WITH APPLICABLE LAW . . . . . . . . . . . . . . . . . .17
4.7. LEGAL PROCEEDINGS AND RESTRICTIONS . . . . . . . . . . . . . . . .17
4.8. UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . . .17
4.9. PPM/INFORMATION STATEMENT INFORMATION. . . . . . . . . . . . . . .17
4.10. BROKER'S FEES. . . . . . . . . . . . . . . . . . . . . . . . . . .17
4.11. NO ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . . . . .17
4.12. TAXES AND RETURNS. . . . . . . . . . . . . . . . . . . . . . . . .18
4.13. NO DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF EAI . . . . . . . . . . . . .19
5.1. CORPORATE ORGANIZATION . . . . . . . . . . . . . . . . . . . . . .19
5.2. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . .19
5.3. AUTHORITY; NO VIOLATION. . . . . . . . . . . . . . . . . . . . . .20
5.4. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . .20
5.5. SEC REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.6. COMPLIANCE WITH APPLICABLE LAW . . . . . . . . . . . . . . . . . .21
5.7. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . .21
5.8. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . .21
5.9. PPM/INFORMATION STATEMENT INFORMATION. . . . . . . . . . . . . . .21
5.10. OWNERSHIP OF SUB; NO PRIOR ACTIVITIES. . . . . . . . . . . . . . .21
5.11. BROKER'S FEES. . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.12. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE VI. COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . .22
6.1. CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. . . . . . . . . .22
6.2. VENTURES FORBEARANCES. . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . .23
7.1. REGULATORY AND OTHER MATTERS . . . . . . . . . . . . . . . . . . .23
7.2. ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . . .23
7.3. MEMBERS' APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . .24
7.4. NNM LISTING. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
7.5. AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ii
7.6. ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . .24
7.7. ADVICE OF CHANGES. . . . . . . . . . . . . . . . . . . . . . . . .24
7.8. TAKEOVER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . .24
7.9. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE VIII. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . .25
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER . . . .25
8.2. CONDITIONS TO OBLIGATIONS OF EAI AND SUB TO EFFECT THE MERGER. . .26
8.3. CONDITIONS TO OBLIGATIONS OF VENTURES. . . . . . . . . . . . . . .27
ARTICLE IX. TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . .28
9.1. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
9.2. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . .28
9.3. AMENDMENT; EXTENSION; WAIVER . . . . . . . . . . . . . . . . . . .29
ARTICLE X. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . .29
10.1. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
10.2. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
10.3. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . .30
10.4. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . .30
10.5. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . .31
10.6. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . .31
10.7. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . .31
10.8. PUBLICITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
10.9. ASSIGNMENT; THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . .31
10.10. KNOWLEDGE AND AWARENESS. . . . . . . . . . . . . . . . . . . . . .31
10.11. CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . .31
10.12. POOLING OF INTERESTS ACCOUNTING. . . . . . . . . . . . . . . . . .32
EXHIBITS
A - Registration Rights Agreement
B - Affiliates Letter
iii
INDEX OF DEFINED TERMS
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . Section 1.3
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Delaware Secretary . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . Art. III
DLLCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
EAI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
EAI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
EAI Stock Value . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . Section 3.13(e)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
ERISA Affiliates . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(f)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.5
Exchange Consideration . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.5
Governmental Authority . . . . . . . . . . . . . . . . . . . . . Section 4.4
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . Section 3.13(e)
HSR Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Indemnifying Person. . . . . . . . . . . . . . . . . . . . . . . Section 9.2
Intellectual Property . . . . . . . . . . . . . . . . . . . . . Section 3.16
Interim Financial Statements . . . . . . . . . . . . . . . . . . Section 3.5
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(b)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.11(d)
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.1
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . Section 3.1(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
1997 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
NNM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
OLLCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Oregon Secretary . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.2(a)
PPM/Information Statement . . . . . . . . . . . . . . . . . . . Section 3.24
Primary Customers . . . . . . . . . . . . . . . . . . . . . . . Section 3.25
Requisite Regulatory Approvals . . . . . . . . . . . . . . . . . Section 8.1(a)
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8(c)
RTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
RTI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(b)
RTI Contracts . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.11
RTI Financial Statements . . . . . . . . . . . . . . . . . . . . Section 3.5
RTI Options . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
iv
RTI Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.5
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(a)
Takeover Proposal . . . . . . . . . . . . . . . . . . . . . . . Section 7.8(b)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8(c)
Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Ventures Membership Interests. . . . . . . . . . . . . . . . . . Section 2.1(a)
v
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of November 12,
1997 (the "Agreement"), by and among ENGINEERING ANIMATION, INC., a Delaware
corporation ("EAI"), SHELL BEAVER L.L.C., a Delaware limited liability company
whose sole member is EAI ("Sub"), and TECHNOLOGY COMPANY VENTURES, L.L.C., an
Oregon limited liability company ("Ventures").
WHEREAS, Ventures is the majority shareholder of Rosetta Technologies,
Inc., an Oregon corporation ("RTI");
WHEREAS, EAI desires to acquire all of the outstanding shares of stock of
RTI held by Ventures solely in exchange for voting stock of EAI;
WHEREAS, the Board of Directors of EAI and the Boards of Managers of Sub
and Ventures have determined that it is in the best interests of their
respective companies and members and stockholders to consummate the business
combination provided for in this Agreement in which, subject to the terms and
conditions set forth herein, Ventures shall merge with and into Sub (the
"Merger");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as part of a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and to establish certain conditions to
the Merger;
WHEREAS, the parties entered into an Agreement and Plan of Merger dated
October 29, 1997, which they now wish to amend and restate to modify the
registration rights of Ventures members who will receive stock of EAI pursuant
to the Merger; and
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties agree as follows:
ARTICLE I.
THE MERGER
1.1. THE MERGER. Subject to the terms and conditions of this Agreement, in
accordance with the Oregon Limited Liability Company Act (the "OLLCA") and
Delaware Limited Liability Company Act (the "DLLCA"), at the Effective Time (as
hereinafter defined) of the Merger, Ventures shall merge with and into Sub and
Sub shall be the surviving limited liability company in the Merger. Upon
consummation of the Merger, the separate existence of Ventures shall terminate.
Pursuant to Treasury Regulations Section 301.7701-3(b)(ii), Sub shall be
disregarded as an entity separate from EAI, and the parties shall, pursuant to
Section 84-111, 1984-2 C.B. 88, treat the Merger as (a) a transfer by Ventures
to Sub of all of its assets consisting of shares of RTI common stock in exchange
for EAI common stock, followed by (b) a
liquidating distribution from Ventures to its members of all of the EAI
common stock received by Ventures pursuant to the Merger.
1.2. CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m., at the
offices of Xxxxxxx, Carton & Xxxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx,
not later than five business days after the satisfaction or waiver of the latest
to occur of the conditions set forth in Article VIII, unless extended by mutual
agreement of the parties (the "Closing Date").
1.3. EFFECTIVE TIME. The Merger shall become effective as set forth in the
articles of merger (the "Articles of Merger") and the certificate of merger (the
"Certificate of Merger"), which shall be filed with the Secretary of State of
the State of Oregon (the "Oregon Secretary") and the Secretary of State of the
State of Delaware (the "Delaware Secretary") on the Closing Date pursuant to the
OLLCA and the DLLCA. The term "Effective Time" shall be the date and time when
the Merger becomes effective, as set forth in the Articles of Merger and the
Certificate of Merger.
1.4. EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in the OLLCA and the DLLCA, as the case may be.
1.5. CERTIFICATE OF FORMATION AND OPERATING AGREEMENT. Subject to the
terms and conditions of this Agreement, at the Effective Time of the Merger, the
certificate of formation and Operating Agreement of Sub shall be the certificate
of formation and Operating Agreement of Sub as the surviving limited liability
company in the Merger until thereafter amended in accordance with applicable
law.
1.6. MANAGERS AND OFFICERS. The managers and officers of Sub immediately
prior to the Effective Time of the Merger shall continue as the managers and
officers of Sub as the surviving limited liability company in the Merger, unless
and until thereafter changed in accordance with the DLLCA and Sub's certificate
of formation and Operating Agreement.
1.7. SUB MEMBERSHIP INTEREST. At the Effective Time of the Merger, EAI's
membership interest in Sub shall remain outstanding and shall not be affected by
the Merger.
1.8. ACCOUNTING CONSEQUENCES. EAI, Sub and Ventures intend that the Merger
be accounted for as a pooling of interests pursuant to Opinion No. 16 of the
Accounting Principles Board.
ARTICLE II.
CONVERSION AND EXCHANGE OF MEMBER INTERESTS
2.1. CONVERSION OF VENTURES MEMBERSHIP INTERESTS. At the Effective Time of
the Merger, by virtue of the Merger and without any action on the part of EAI,
Sub, Ventures or any member of Ventures:
2
(a) The membership interests in Ventures (the "Ventures Membership
Interests") shall be converted into the right to receive an aggregate number of
whole shares of the common stock, par value $.01 per share, of EAI (the "EAI
Common Stock") (the "Exchange Consideration") determined as follows: the
membership interests shall be exchanged for that number of shares of EAI Common
Stock equal to the product obtained by multiplying (i) $25,550,000 divided by
the average of the high and low per share sale price of the EAI Common Stock, as
reported on the Nasdaq Stock Market National Market ("NNM") for each of the date
hereof and the two immediately preceding trading days, as reported in the NNM
listings published in THE WALL STREET JOURNAL (the "EAI Stock Value"), BY
(ii) 6,753,166 (or such other number of shares of common stock, par value $.001
per share, of RTI (the "RTI Common Stock") owned by Ventures immediately prior
to the Effective Time of the Merger) divided by the sum of the total number of
shares of RTI Common Stock outstanding immediately prior to the Effective Time
plus the number of shares of RTI Common Stock issuable upon the exercise of all
outstanding options to purchase RTI Common Stock (the "RTI Options") outstanding
immediately prior to the Effective Time. EAI will allocate the Exchange
Consideration among the members of Ventures in accordance with the liquidation
provisions of the Ventures' Operating Agreement as instructed by Ventures. No
fractional shares of EAI Common Stock shall be issued, and in lieu thereof, each
holder of a Ventures membership interest who otherwise would be entitled to
receive a fractional share of EAI Common Stock will instead receive one
additional whole share of EAI Common Stock.
(b) The Ventures Membership Interests converted into EAI Common Stock
pursuant to this Article shall no longer be outstanding and shall automatically
be canceled and cease to exist at the Effective Time of the Merger. If, prior
to the Effective Time, the outstanding shares of EAI Common Stock or RTI Common
Stock shall have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in capitalization, then an
appropriate and proportionate adjustment shall be made to the Exchange
Consideration.
2.2. EXCHANGE OF VENTURES MEMBERSHIP INTERESTS. (a) At the Effective Time
of the Merger, in accordance with and subject to other provisions of this
Agreement, each member of Ventures shall receive, automatically and without any
further action on such member's part, in exchange for such member's Ventures
Membership Interest a certificate representing that number of whole shares of
EAI Common Stock to which such member shall have become entitled. Upon such
exchange, the Ventures Membership Interest shall forthwith be canceled.
(b) If any certificate representing shares of EAI Common Stock is to be
issued in a name other than that of the Ventures member, it shall be a condition
of the issuance thereof that the person requesting such exchange shall pay to
EAI in advance any transfer or other taxes required by reason thereof, or shall
establish to the satisfaction of EAI that such tax has been paid or is not
payable.
3
ARTICLE III.
REPRESENTATIONS AND WARRANTIES REGARDING RTI
Except as disclosed by Ventures in the disclosure schedule delivered pursuant to
this Agreement (the "Disclosure Schedule"), Ventures represents and warrants to
EAI as follows:
3.1. CORPORATE ORGANIZATION. (a) RTI and the entities listed in
Section 3.1(b) of the Disclosure Schedule which are designated as subsidiaries
in such Section ("Subsidiaries") are each a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, which is set forth in Section 3.1(b) of the Disclosure Schedule.
RTI and each Subsidiary have the corporate power and authority to own or lease
all of their respective properties and assets and to carry on their respective
business as it is now being conducted, and are duly licensed or qualified to do
business and are in good standing in each jurisdiction in which the nature of
the business conducted by them or the character or location of the properties
and assets owned or leased by them makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would not
have a material adverse effect on the business, properties, profits, operations
or financial condition (a "Material Adverse Effect") of RTI. Correct and
complete copies of the Articles of Incorporation and By-Laws of RTI and the
charter documents and by-laws of each Subsidiary, as in effect on the date of
this Agreement, have been made available to EAI by RTI. For the purposes of
this Article III, each reference to RTI shall also include each Subsidiary,
unless the context requires otherwise.
(b) Except as set forth in Section 3.1(b) of the Disclosure Schedule, RTI
does not own of record or beneficially, directly or indirectly, (i) any shares
of outstanding capital stock or securities convertible into capital stock of any
other corporation or (ii) any participating interest in any partnership, limited
liability company, joint venture or other non-corporate business.
(c) The minute books of RTI accurately reflect in all material respects
all actions taken by the boards of directors, including committees thereof, and
the shareholders of RTI.
3.2. CAPITALIZATION. The authorized capital stock of RTI consists of
25,000,000 shares of RTI Common Stock, of which 9,874,975 shares are issued and
outstanding. The name and address of record of each record holder of RTI Common
Stock and the number of shares owned by each, and the name and address of record
of each holder of an RTI Option and the number of shares of RTI Common Stock
which such holder may purchase, are set forth in Section 3.2 of the Disclosure
Schedule. No shares of RTI Common Stock are held in RTI's treasury and no
shares of RTI Common Stock are reserved for issuance other than those shares
reserved for issuance under the RTI Options. All of the issued and outstanding
shares of RTI Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights. Other than the RTI
Options listed in Section 3.2 of the Disclosure Schedule, RTI does not have and
is not bound by any outstanding subscriptions, options, convertible securities,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of its capital stock.
3.3. REPORTS. RTI has timely filed all reports, registrations and
statements required to be filed since January 1, 1995 with any Governmental
Authority, and has paid all fees and
4
assessments due and payable in connection therewith, except where failure to
so file or pay, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on RTI. No Governmental Authority
has initiated any proceeding or, to the knowledge of Ventures, investigation
into the business or operations of RTI.
3.4. COMPLIANCE WITH APPLICABLE LAW. RTI holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business and
has complied with and is not in default under any law, statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction of any
Governmental Authority applicable to RTI, except where failure to so hold or
such default, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on RTI.
3.5. FINANCIAL STATEMENTS. RTI has previously provided EAI with correct
and complete copies of the following (collectively, the "RTI Financial
Statements"): (a) the balance sheets of RTI as of June 30, 1997 and 1996, and
the related statements of income and retained earnings and cash flows for the
fiscal years ended June 30, 1997 and 1996, in each case accompanied by the audit
report of Xxxxxx Xxxxxxxx LLP, independent public accountants with respect to
RTI, and (b) the unaudited balance sheets of RTI as of September 30, 1997 and
the related unaudited statements of income for the period then ended (the
"Interim Financial Statements"). The RTI Financial Statements fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments customary in nature and amount), the financial position of RTI as of
the dates thereof, and the results of operations and cash flows of RTI for the
respective fiscal periods or as of the respective dates thereof. Each of the
RTI Financial Statements, including the notes thereto, has been, or will be,
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved. The books and records of RTI
have been, and are being, maintained in accordance with all applicable legal and
accounting requirements.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since June 30, 1997, (i)
RTI has not incurred any material liability that is not disclosed in the
Interim Financial Statements, (ii) no event has occurred which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on RTI, and (iii) RTI has carried on its business in the ordinary and
usual course.
(b) Except as set out in Section 3.6 of the Disclosure Schedule, since
June 30, 1997, RTI has not (i) increased the salaries, wages, or other
compensation, or pensions, fringe benefits or other perquisites payable to any
director, executive officer or employee, or (ii) granted any severance or
termination pay, or (iii) paid or accrued any bonuses or commissions, or
(iv) suffered any strike, work stoppage, slowdown, or other labor disturbance
which could, either individually or in the aggregate, result in a Material
Adverse Effect on RTI.
3.7. LEGAL PROCEEDINGS AND RESTRICTIONS (a) There are no actions, suits,
proceedings, claims or investigations pending, or to the knowledge of Ventures,
threatened against or directly and materially affecting RTI at law or in equity
or before any Governmental Authority.
5
(b) There is no judgment, order, writ, decree, injunction or regulatory
restriction imposed upon RTI or its assets which has had, or would reasonably be
expected to have, a Material Adverse Effect on RTI.
3.8. TAXES AND TAX RETURNS.
(a) (i) RTI (which term for purposes of this Section 3.8 shall include
former subsidiaries of RTI for periods during which they were owned) has
timely filed (when due or prior to the expiration of any extension of the
time to file) correct and complete Returns in respect of Taxes required to
be filed; all Taxes shown on such Returns or otherwise known by RTI to be
due or payable have been timely paid; no adjustment relating to any such
Return has been proposed in writing by any Governmental Authority, except
proposed adjustments that have been resolved prior to the date hereof; and
there are no outstanding summons, subpoenas or written requests for
information with respect to any such Returns or the Taxes reflected
thereon. To Ventures' knowledge there is no basis for imposing any
additional Taxes on RTI other than the Taxes shown on such Returns. There
are no outstanding waivers or agreements extending the statute of
limitations for any period with respect to any Tax to which RTI may be
subject and RTI is not under audit by any Governmental Authority for any
Tax. There are no Tax liens on any assets of RTI other than liens for
Taxes not yet due or payable;
(ii) RTI has paid, on the basis of RTI's good faith estimate of the
required installments, all estimated Taxes required to be paid under
Section 6655 of the Code or any comparable provision of state, local or
foreign law; and all Taxes which shall be due and payable for any period or
portion thereof ending on or prior to the Closing Date shall have been paid
or shall be reflected on RTI's books as an accrued Tax liability, either
current or deferred. The amount of such Tax liabilities as of September 30,
1997 shall be set forth in Section 3.8 of the Disclosure Schedule. All
Taxes required to be withheld, collected or deposited by RTI during any
taxable period for which the applicable statute of limitations on
assessment remains open have been timely withheld, collected or deposited
and, to the extent required, have been paid to the relevant Governmental
Authority;
(iii) For each taxable period for which the statute of limitations
on assessment or collection remains open, RTI has not (A) been either a
common parent corporation or a member corporation of an affiliated group of
corporations filing a consolidated Federal income tax return, or
(B) acquired any corporation that filed a consolidated Federal income tax
return with any other corporation that was not also acquired by RTI; and no
other entity that was included in the filing of a Return with RTI on a
consolidated, combined, or unitary basis has left RTI's consolidated,
combined or unitary group in a taxable year for which the statute of
limitations on assessment remains open. RTI has not been at any time a
member of any partnership, limited liability company or joint venture or
the holder of a beneficial interest in any trust for any period for which
the statute of limitations for any Tax potentially applicable as a result
of such membership or holding has not expired;
6
(iv) No consent under Section 341(f) of the Code has been filed with
respect to RTI; and
(v) There is no significant difference on the books of RTI between
the amounts of the book basis and the tax basis of assets (net of
liabilities) that is not accounted for by an accrual on the books for
Federal income tax purposes.
(b) RTI:
(i) Does not have any property that is or will be required to be
treated as being owned by another person under the provisions of
Section 168(f)(8) of the Code (as in effect prior to amendment by the Tax
Reform Act of 1986) or is "tax-exempt use property" within the meaning of
Section 168 of the Code;
(ii) Does not have any Tax sharing or allocation agreement or
arrangement (written or oral), does not owe any amount pursuant to any Tax
sharing or allocation agreement or arrangement, and will not have any
liability in respect to any Tax sharing or allocation agreement or
arrangement with respect to any entity that has been sold or disposed of;
(iii) Was not acquired in a qualified stock purchase under
Section 338(d)(3) of the Code and no elections under Section 338(g) of the
Code, protective carryover basis elections, offset prohibition elections or
other deemed or actual elections under Section 338 are applicable to RTI;
(iv) Is not and has not been subject to the provisions of
Section 1503(d) of the Code related to "dual consolidated loss" rules;
(v) Is not a party to any agreement, contract or arrangement that
would result, individually or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code
by reason of the Merger;
(vi) Does not have any income reportable for a period ending after the
Closing Date but attributable to an installment sale occurring in or a
change in accounting method made for a period ending on or prior to the
Closing Date which resulted in a deferred reporting of income from such
transaction or from such change in accounting method (other than a deferred
intercompany transaction), or deferred gain or loss arising out of any
deferred intercompany transaction;
(vii) Does not have any unused net operating loss, unused net
capital loss, unused tax credit, or excess charitable contribution for
Federal income tax purposes, except as set out in the Disclosure Schedule;
(viii) Is not a United States real property holding corporation as
defined in Section 897 of the Code; and
7
(ix) No withholding of Taxes by EAI or Sub will be required in this
transaction under Sections 3406 or 1445 of the Code or any other provision
of the Code or state, local or foreign law.
(c) For purposes of this Agreement:
(i) "Returns" means any and all returns, reports, information returns
and information statements with respect to Taxes required to be filed with
any Governmental Authority, including consolidated, combined and unitary
tax returns.
(ii) "Tax" or "Taxes" means any and all taxes, charges, fees, levies,
and other governmental assessments and impositions of any kind, payable to
any Governmental Authority, including income, franchise, net worth,
profits, gross receipts, minimum alternative, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social security,
Medicare, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, customs duties, imposts, charges, levies
or other similar assessments of any kind, and interest, penalties and
additions to tax imposed with respect thereto.
3.9. EMPLOYEE BENEFITS.
(a) Section 3.9 of the Disclosure Schedule sets forth a list of each
pension, profit-sharing, thrift or 401(k), disability, medical, dental, health,
life (including any individual life insurance policy), death benefit, group
insurance or any other welfare plan, bonus, incentive, deferred compensation,
stock purchase, stock option, severance plan, salary continuation, vacation,
holiday, sick leave, fringe benefit, personnel policy, or similar plan, trust,
program, policy, commitment or arrangement whether or not covered by Employee
Retirement and Income Security Act of 1974, as amended ("ERISA") and whether or
not funded or insured and whether written or oral maintained or contributed to
by RTI or any ERISA Affiliate (as hereinafter defined) during the past three
years and pursuant to which RTI has or could have any on-going liability
(hereinafter referred to as the "RTI Plans").
(b) RTI has made available to EAI, to the extent applicable to the
particular RTI Plan, correct and complete copies of (i) each RTI Plan document,
amendments thereto and board resolutions adopting such plans and amendments,
(ii) each current summary plan description, (iii) any and all material
agreements, insurance policies and other documents related to any RTI Plan,
(iv) the most recent determination letter from the Internal Revenue Service (the
"IRS") for each RTI Plan, and (v) the three most recent Annual Reports -
Form 5500 (including accompanying schedules) and summary annual reports for each
RTI Plan.
(c) (i) Except as disclosed in Section 3.9 of the Disclosure Schedule,
each RTI Plan and RTI have at all times complied in all material respects with
the applicable requirements of ERISA, the Code and any other applicable law
(including regulations and rulings thereunder), and the RTI Plans have at all
times been properly administered in all material respects in accordance with all
such laws and with their terms, (ii) each of the RTI Plans intended to be
8
"qualified" within the meaning of Code Section 401(a) is so qualified and, to
the knowledge of Ventures, no facts exist that could reasonably be expected to
affect adversely such "qualified" status (other than the failure to adopt
amendments required to maintain an Employee Plan's tax-qualified status but for
which the remedial amendment period of Code Section 401(b) has not expired as of
the Closing Date), (iii) no RTI Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), for current or
former employees following their retirement or other termination of service,
other than coverage mandated by applicable law, including, but not limited to,
Code Section 4980B(f) and ERISA Sections 601 through 609, (iv) there has not
occurred nor, to the knowledge of Ventures, is any person contractually bound to
enter into any non-exempt "prohibited transaction" within the meaning of Code
Section 4975 or ERISA Section 406 that could result in any civil penalty under
ERISA Section 502(i) or a tax under Code Section 4975, (v) RTI has not engaged
in a transaction which could subject it to either a civil penalty under ERISA
Section 409 or a tax under Code Section 4976, (vi) there are no pending or, to
the knowledge of Ventures, threatened claims (other than routine claims for
benefits) with respect to any RTI Plan by, on behalf of or against RTI, any of
the RTI Plans or any trusts related thereto, (vii) RTI has made or caused to be
made on a timely basis any and all contributions, premiums and other amounts due
and owing under the terms of any RTI Plan or as otherwise required by applicable
law, (viii) RTI has in all material respects complied with Code Section 4980B
and other applicable laws concerning the continuation of employer-provided
health benefits following a termination of employment or any other event that
would otherwise terminate such coverage, (ix) neither RTI nor any ERISA
Affiliate has at any time maintained, administered or contributed to any plan
subject to ERISA Title IV, and (x) neither RTI nor any ERISA Affiliate has at
any time participated in, made contributions to or had any other liability with
respect to a "multiemployer plan" under ERISA Section 4001(a)(3), a "multiple
employer plan" under Code Section 413(c), or a "multiple employer welfare
arrangement" under ERISA Section 3(40).
(d) Except as disclosed in Section 3.9 of the Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director, officer or employee of RTI,
(ii) increase any benefits otherwise payable under any RTI Plan, (iii) result in
any acceleration of the time of payment or vesting of any such benefits other
than the acceleration of vesting of the RTI Options, or (iv) impair the rights
of RTI under any RTI Plan.
(e) There are no actions, claims, investigations or audits pending or, to
Ventures' knowledge, threatened with respect to any RTI Plan (other than claims
for benefits in the ordinary course) that will create any liability or
obligation for Sub as the surviving limited liability company in the Merger with
respect to any RTI Plan participant, beneficiary, alternate payee or other
claimant, or with respect to any Governmental Authority, including, but not
limited to, the IRS, the Department of Labor and the Pension Benefit Guaranty
Corporation.
(f) For purposes of this Agreement, "ERISA Affiliate" means RTI and
(i) any corporation that is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Code of which RTI is a member,
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within
9
the meaning of Section 414(c) of the Code of which RTI is a member; and (iii)
any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Code of which RTI, any corporation described in clause
(i) above or any trade or business described in clause (ii) above is a member.
3.10. EMPLOYMENT AND LABOR RELATIONS. To the knowledge of Ventures, no
executive, key employee or group of employees has any plans to terminate its or
their employment with RTI. There are no charges, complaints, investigations or
litigation currently pending, or to the knowledge of Ventures threatened (and to
the knowledge of Ventures there is no basis therefor which could be reasonably
expected to have a Material Adverse Effect on RTI), against RTI, relating to
alleged employment discrimination, unfair labor practices, equal pay
discrimination, affirmative action noncompliance, occupational safety and
health, breach of employment contract, employee benefit matters, wrongful
discharge or other employment-related matters. There are no outstanding orders
or charges against RTI under any applicable occupational safety and health laws
in any jurisdiction in which RTI conducts business, other than routine actions
which, individually or in the aggregate, are not material to RTI. All levies,
assessments and penalties made against RTI pursuant to any applicable workers'
compensation legislation in any jurisdiction in which RTI conducts business have
been paid by RTI, other than such levies, assessments and penalties which,
individually or in the aggregate, are not material to RTI. RTI is not a party
to any contracts with any labor union or employee association nor has RTI made
commitments to or conducted negotiations with any labor union or employee
association with respect to any future contracts. Ventures is not aware of any
current attempts to organize or establish any labor union or employee
association with respect to any employees of RTI, and there is no existing or
pending certification of any such union with regard to a bargaining unit.
3.11. CONTRACTS. Section 3.11 of the Disclosure Schedule lists or
describes the following contracts, agreements, licenses, permits, arrangements,
commitments or understandings (whether written or oral) which are currently in
effect or which will, without any further action on the part of RTI become
effective in the future, to which RTI is a party (collectively, the "RTI
Contracts"):
(a) any agreement for the lease of personal property or real property to
or from any person or entity that individually involves an expenditure by the
lessee of in excess of $10,000 in any one year;
(b) any agreement for the purchase, sale or distribution of products,
materials, commodities, supplies or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over a
period of more than one year or involve consideration payable by any party in
excess of $10,000 in any one year;
(c) any agreement creating, governing or providing for an investment or
participation in a partnership, limited liability company or joint venture;
(d) any agreement under which RTI has created, incurred, assumed or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, or under which RTI has
10
imposed any liens, pledges, charges, encumbrances or security interests of
any kind (collectively, "Liens") on any of its assets;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with any director, officer, employee or shareholder of
RTI or any of their affiliates;
(g) any pension, profit sharing, thrift or 401(k), bonus, incentive,
deferred compensation, stock purchase, stock option, severance, salary
continuation or other plan or arrangement for the benefit of current or former
directors, officers or employees;
(h) any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis;
(i) any agreement relating to any Intellectual Property (as that term is
defined in Section 3.16) used by RTI in the conduct of its business, or that is
licensed by RTI for use by others;
(j) any agreement under which the consequences of a default, termination,
non-renewal or acceleration would have a Material Adverse Effect on RTI; or
(k) any other agreement the performance of which involves consideration
payable by any party in excess of $10,000 in any one year.
RTI has made available to EAI a correct and complete copy of each RTI
Contract. Except as set forth in Section 3.11 of the Disclosure Schedule,
(i) each RTI Contract is legal, valid, binding, enforceable and in full force
and effect, (ii) the consummation of the Merger will not cause a breach or
termination of any RTI Contract nor effect a change in any of the terms of any
RTI Contract, (iii) RTI is not, and, to Ventures' knowledge, no other party is,
in breach or default of any RTI Contract and no event has occurred which with
notice or lapse of time, or both, would constitute a breach or default that
would result in or permit termination, modification or acceleration under any
RTI Contract, and (iv) RTI has not, and, to Ventures' knowledge, no other party
has, repudiated any provision of any RTI Contract.
3.12. UNDISCLOSED LIABILITIES. Except for liabilities (i) that are
fully reflected or reserved against on the June 30, 1997 balance sheet of RTI
(the "1997 Balance Sheet") or (ii) that were incurred in the ordinary course of
business consistent with past practice since June 30, 1997, or (iii) that are
fully reflected or reserved against in the Interim Financial Statements, RTI has
not incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due).
3.13. ENVIRONMENTAL LIABILITY.
(a) RTI has not received any notice, and Ventures does not otherwise have
knowledge, of any claim, and no proceeding has been instituted raising any
claim, against RTI or
11
any of the real properties now or formerly owned, leased or operated by RTI
or other assets of RTI, alleging any damage to the environment or violation
of any Environmental Laws;
(b) Ventures does not have knowledge of any facts which would give rise to
any claim, public or private, of violation of Environmental Laws or damage to
the environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by RTI or to other assets
of RTI or their use;
(c) RTI has not stored or released any Hazardous Materials on real
properties now or formerly owned, leased or operated by it or disposed of any
Hazardous Materials, in each case in a manner contrary to any Environmental
Laws; and
(d) All buildings on all real properties now owned, leased or operated by
RTI are in compliance with applicable Environmental Laws, except where the
failure to comply would not reasonably be expected to result in a Material
Adverse Effect on RTI.
(e) For purposes of this Agreement,
(i) "Environmental Laws" means any and all Federal, state, county,
local and foreign laws, statutes, codes, ordinances, rules, regulations,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or governmental restrictions relating to pollution and
the protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public
systems; and
(ii) "Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances, the removal of which, as of the
date hereof, may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or
filtration of which is restricted or prohibited by any Environmental Law
(including asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
3.14. TANGIBLE ASSETS. RTI has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, shown on the 1997 Balance Sheet or acquired after the date
thereof, except for properties and assets disposed of in the ordinary course of
business, free and clear of all Liens. RTI owns or leases pursuant to a RTI
Contract all buildings, machinery, equipment and other tangible assets material
to the conduct of its business as presently conducted. Each such tangible asset
is free from defects (patent and latent) other than defects that do not
individually or in the aggregate materially impair its value or intended use,
has been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. Section 3.14 of the Disclosure
Schedule contains a schedule of such tangible assets owned or leased by RTI that
have a value in excess of $10,000.
3.15. REAL PROPERTY. RTI does not own any real property. Section 3.15
of the Disclosure Schedule lists and describes briefly all real property leased
or subleased to RTI. RTI
12
has made available to EAI correct and complete copies of each such lease and
sublease. Except as set forth in Section 3.15 of the Disclosure Schedule:
(a) each such lease or sublease is legal, valid, binding, enforceable and
in full force and effect;
(b) the consummation of the transactions contemplated hereby will neither
cause the termination of each such lease or sublease nor effect a change in any
of its terms;
(c) RTI is not, and, to the knowledge of Ventures, no other party to such
lease or sublease is, in breach or default, and no event has occurred which,
with notice or lapse of time, or both, would constitute a breach or default that
would permit termination, modification or acceleration thereunder;
(d) neither RTI nor, to the knowledge of Ventures, any other party to each
such lease or sublease has repudiated or disputed any provision thereof;
(e) there are no oral agreements in effect as to each such lease or
sublease;
(f) to the knowledge of Ventures, the representations and warranties set
forth in clauses (a) through (e) above are true and correct with respect to the
lease underlying each such sublease; and
(g) RTI has not assigned, transferred, conveyed, mortgaged, deeded in
trust or encumbered any interest in any leasehold or subleasehold.
3.16. INTELLECTUAL PROPERTY. (a) Section 3.16 of the Disclosure
Schedule identifies each patent, trademark, service xxxx, trade name, assumed
name, copyright, trade secret, license to or from third parties with respect to
any of the foregoing, applications to register or registrations of any of the
foregoing or other intellectual property rights which are owned or used by or
have been issued to RTI (collectively the "Intellectual Property"). RTI has
made available correct and complete copies of all patents, trademarks,
copyrights, registrations, licenses, permits, agreements and applications
related to the Intellectual Property to EAI and correct and complete copies of
all other written documentation evidencing ownership of or the right to use each
such item. Except as set forth in Section 3.16 of the Disclosure Schedule:
(i) RTI possesses all right, title and interest in and to the
Intellectual Property, free and clear of any Lien or other restriction;
(ii) the legality, validity, enforceability, ownership or use of the
Intellectual Property is not currently being challenged, nor to the
knowledge of Ventures is RTI subject to any such challenge;
(iii) RTI has taken all necessary action to maintain and protect
the Intellectual Property and will continue to maintain those rights prior
to the Closing so as not to affect materially the validity or enforcement
of the rights set forth in Section 3.16 of the Disclosure Schedule; and
13
(iv) the Intellectual Property will be owned or available for use by
RTI on identical terms and conditions immediately subsequent to the Closing
and the transactions contemplated by this Agreement will have no Material
Adverse Effect on RTI's rights, title and interest in and to any of the
rights set forth in Section 3.16 of the Disclosure Schedule.
(b) To the knowledge of Ventures, (i) RTI has not interfered with,
infringed upon or misappropriated any intellectual property rights of third
parties, nor is RTI currently interfering with, infringing upon,
misappropriating or otherwise coming into conflict with any intellectual
property rights of third parties, and (ii) no third party has, in the past three
years, interfered with, infringed upon or misappropriated any Intellectual
Property rights of RTI that would result in a Material Adverse Effect on RTI,
nor is any third party currently interfering with, infringing upon,
misappropriating or otherwise coming into conflict with any Intellectual
Property rights of RTI.
3.17. INVENTORY. No material portion of the inventory of RTI is unfit
for the purpose for which it was procured, or is obsolete, expired, damaged or
defective. Substantially all of the inventory of RTI consists of items of a
quantity and quality which are usable and salable in the ordinary course of
business.
3.18. NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of RTI are reflected properly on RTI's books and records, are not subject to any
setoff or counterclaim, are current and collectible, subject only to the reserve
for bad debts established in accordance with the past practice of RTI.
3.19. BANK ACCOUNTS AND POWERS OF ATTORNEY. Section 3.19 of the
Disclosure Schedule sets forth a list of all accounts, borrowing resolutions and
deposit boxes maintained by RTI at any bank or other financial institution and
the names of the persons authorized to effect transactions in such accounts and
pursuant to such resolutions and with access to such boxes. There are no
outstanding powers of attorney executed on behalf of RTI.
3.20. GUARANTIES. RTI is not a guarantor or otherwise is liable for
any indebtedness, liability or other obligation of any other person or entity.
3.21. INSURANCE. Section 3.21 of the Disclosure Schedule lists each
insurance policy and self-insurance arrangement to which RTI is a party, a named
insured or otherwise the beneficiary of, specifying the insurer, type of
insurance, policy number and pending claims thereunder with respect to RTI. The
coverage provided by each of such policies is in an amount, and of a type
sufficient for the business presently conducted and proposed to be conducted by
RTI. RTI is in substantial compliance with all conditions contained in such
policies.
3.22. SERVICE CONTRACTS AND WARRANTIES. Except as set out in
Section 3.22 of the Disclosure Schedule, RTI is not a party to any service
contract pursuant to which services are provided by RTI to a third party.
Section 3.22 of the Disclosure Schedule includes copies of the standard terms
and conditions of all product warranties and service or maintenance contracts
granted or entered into by RTI.
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3.23. CERTAIN RELATIONSHIPS. No shareholder, director, officer or, to
Ventures' knowledge, employee of RTI (i) is, or controls, or is an employee of
any competitor, supplier, customer or lessor or lessee of RTI, or (ii) is
indebted to RTI in an amount in excess of $1,000 in any individual case, or
(iii) owns any asset, tangible or intangible, which is used in the business of
RTI, other than assets that are immaterial in value; and RTI has not entered
into any transaction (including the furnishing of goods or services) with any
shareholder, director, officer, employer or other affiliate, except on terms and
conditions no less favorable to RTI than would be obtained in a comparable
arm's-length transaction with a third party.
3.24. PPM/INFORMATION STATEMENT INFORMATION. None of the written
information to be supplied by RTI for inclusion in the private placement
memorandum and information statement contemplated by this Agreement (the
"PPM/Information Statement") will, at the time the PPM/Information Statement is
mailed to Ventures members, at any time it is amended or supplemented, or at the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
3.25. CERTAIN CUSTOMER RELATIONSHIPS. Section 3.25 of the Disclosure
Schedule contains an accurate list of RTI's ten largest customers for the
fifteen month period ending September 30, 1997 (the "Primary Customers"),
together with the total dollar amount of all products purchased by such Primary
Customers from RTI during such period. RTI has not received any notice and does
not otherwise have knowledge that any Primary Customer intends to reduce the
volume or dollar amount of the products it purchases from RTI.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF VENTURES
Except as disclosed by Ventures in the Disclosure Schedule, Ventures
represents and warrants to EAI as follows:
4.1. ORGANIZATION. (a) Ventures is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Oregon and shall become a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. Ventures
has the power and authority to own its assets and to carry on its business as
now conducted and is, and will be on the Closing Date, in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character of its assets makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect on Ventures. Correct and complete copies of the certificate of
formation, the Operating Agreement and other governing documents of Ventures, as
in effect on the date of this Agreement, have been made available to EAI by
Ventures.
(b) Other than the 6,753,166 shares of RTI Common Stock owned by Ventures,
Ventures does not own of record or beneficially, directly or indirectly, (i) any
shares of capital stock or securities convertible into capital stock of any
corporation or (ii) any participating
15
interest in any partnership, limited liability company, joint venture or
other non-corporate business.
4.2. OWNERS. The name, the address of record and the total dollar amount
of the capital account of each Ventures member is set forth in Section 4.2 of
the Disclosure Schedule. Ventures does not have and is not bound by any
outstanding subscriptions, options, convertible securities, warrants, calls,
commitments or agreements of any character calling for the purchase or issuing
of any Ventures Membership Interest.
4.3. AUTHORITY; NO VIOLATION. (a) Ventures has the power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Managers of Ventures. Except for the adoption of this
Agreement by the members of Ventures, no other proceedings on the part of
Ventures are necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Ventures and, assuming due authorization and execution
by EAI and Sub, constitutes a valid and binding obligation of Ventures,
enforceable against Ventures in accordance with its terms.
(b) The execution and delivery of this Agreement by Ventures, the
consummation by Ventures of the transactions contemplated hereby, and the
compliance by Ventures with the terms or provisions hereof, shall not
(i) violate any provision of the certificate of formation or the Operating
Agreement of Ventures, (ii) violate any law, statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Ventures
or any of its properties or assets, or (iii) violate, conflict with, breach any
provision of or result in the loss of any benefit or the increase in the amount
of any liability or obligation under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of, accelerate the performance required by, or result in the
creation of any Liens upon any of the properties or assets of Ventures under any
note, bond, mortgage, indenture, deed of trust, license, lease, contract,
agreement or other instrument or obligation to which Ventures is a party, or by
which it or any of its properties or assets may be bound or affected, except
where such violation, conflict, breach, loss, increase, default, termination,
acceleration or Lien which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Ventures.
4.4. CONSENTS AND APPROVALS. Except for (i) the Notification and Report
Form under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX
Xxxxxx") and the expiration of the waiting period thereunder, (ii) the filing of
the Articles of Merger and the Certificate of Merger with the Oregon Secretary
and the Delaware Secretary, respectively, pursuant to the OLLCA and the DLLCA,
and (iii) the approval of this Agreement by the members of Ventures, no consent,
approval or authorization of, or withholding of objection on the part of, or
filing, registration or qualification with, or notice to (collectively, the
"Consents") any court, administrative agency, commission or other governmental
authority or instrumentality, whether Federal, state, local or foreign (each a
"Governmental Authority"), or any third party are necessary in connection with
the execution and delivery by Ventures of this Agreement and the
16
consummation by Ventures of the Merger and the other transactions
contemplated by this Agreement.
4.5. REPORTS. Ventures has timely filed all reports, registrations and
statements required to be filed since January 1, 1995 with any Governmental
Authority, and has paid all fees and assessments due and payable in connection
therewith, except where failure to so file or pay, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Ventures. No Governmental Authority has initiated any proceeding or, to the
knowledge of Ventures, investigation into the business or operations of
Ventures.
4.6. COMPLIANCE WITH APPLICABLE LAW. Ventures holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business and has complied with and is not in default under any law, statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
of any Governmental Authority applicable to Ventures, except where failure to so
hold or such default, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Ventures.
4.7. LEGAL PROCEEDINGS AND RESTRICTIONS. (a) There are no actions, suits,
proceedings, claims or investigations pending, or to the knowledge of Ventures,
threatened against or directly and materially affecting Ventures at law or in
equity or before any Governmental Authority.
(b) There is no judgment, order, writ, decree, injunction or regulatory
restriction imposed upon Ventures or its assets which has had, or could
reasonably be expected to have, a Material Adverse Effect on Ventures.
4.8. UNDISCLOSED LIABILITIES. Ventures has no liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due).
4.9. PPM/INFORMATION STATEMENT INFORMATION. None of the written
information to be supplied by Ventures for inclusion in the PPM/Information
Statement will, at the time the PPM/Information Statement is mailed to the
members of Ventures, at any time it is amended or supplemented, or at the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
4.10. BROKER'S FEES. Neither Ventures nor, to the knowledge of
Ventures, any of its managers, officers, employees or affiliate or any other
person has employed any person or entity as a broker, finder or agent or
incurred any liability for any broker's fees, finder's fees or other commission
in connection with the Merger or the related transactions contemplated by this
Agreement.
4.11. NO ACTIVITIES. Ventures was formed for the sole purpose of
acquiring and holding RTI Common Stock. As of the date hereof and the Effective
Time of the Merger, Ventures has not and will not have incurred, directly or
indirectly, through any affiliate, any obligations or liabilities or engaged in
any business activities of any type or kind whatsoever or entered into any
agreement or arrangement with any person, except for this Agreement and the
transactions contemplated hereby, and owns no assets other than RTI Common
Stock.
17
4.12. TAXES AND RETURNS.
(a) (i) Ventures (which term for purposes of this Section 4.12 shall
include any former subsidiaries of Ventures for periods during which they
were owned) has timely filed (when due or prior to the expiration of any
extension of the time to file) correct and complete Returns in respect of
Taxes required to be filed; all Taxes shown on such Returns or otherwise
known by Ventures to be due or payable have been timely paid; no adjustment
relating to any such Return has been proposed in writing by any
Governmental Authority, except proposed adjustments that have been resolved
prior to the date hereof; and there are no outstanding summons, subpoenas
or written requests for information with respect to any such Returns or the
Taxes reflected thereon. To Ventures' knowledge there is no basis for
imposing any additional Taxes on it other than the Taxes shown on such
Returns. There are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which
Ventures may be subject and Ventures is not under audit by any Governmental
Authority for any Tax. There are no Tax liens on any assets of Ventures
other than liens for Taxes not yet due or payable;
(ii) Ventures has paid, on the basis of Ventures' good faith estimate
of the required installments, all estimated Taxes required to be paid under
Section 6655 of the Code or any comparable provision of state, local or
foreign law; and all Taxes which shall be due and payable for any period or
portion thereof ending on or prior to the Closing Date shall have been paid
or shall be reflected on Ventures' books as an accrued Tax liability,
either current or deferred. The amount of such Tax liabilities as of
September 30, 1997 shall be set forth in Section 4.12 of the Disclosure
Schedule. All Taxes required to be withheld, collected or deposited by
Ventures during any taxable period for which the applicable statute of
limitations on assessment remains open have been timely withheld, collected
or deposited and, to the extent required, have been paid to the relevant
Governmental Authority;
(iii) Since its formation, Ventures has been properly classified
as a partnership for federal, state and local income tax purposes and has
filed its income tax returns as a partnership. Ventures has not been at
any time a member of any partnership, limited liability company or joint
venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax potentially applicable as
a result of such membership or holding has not expired;
(iv) There is no significant difference on the books of Ventures
between the amounts of the book basis and the tax basis of assets (net of
liabilities) that is not accounted for by an accrual on the books for
Federal income tax purposes.
(b) Ventures:
(i) Does not have any Tax sharing or allocation agreement or
arrangement (written or oral), does not owe any amount pursuant to any Tax
sharing or allocation agreement or arrangement, and will not have any
liability in respect to any Tax sharing or
18
allocation agreement or arrangement with respect to any entity that has
been sold or disposed of;
(ii) Is not a party to any agreement, contract or arrangement that
would result, individually or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code
by reason of the Merger;
(iii) Will not owe any federal, state or local taxes as a result
of the merger into Sub; and
(iv) No withholding of Taxes by EAI or Sub will be required in this
transaction under Sections 3406 or 1445 of the Code or any other provision
of the Code or state, local or foreign law and Ventures will provide any
required certificates to avoid any such withholding.
4.13. NO DISCLOSURE. No representation or warranty by Ventures
contained in this Agreement (including the Representations and Warranties
relating to RTI set forth in Article III hereof, the Disclosure Schedule and the
Exhibits referred to herein), or in any certificate furnished or to be furnished
by Ventures to EAI in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to make the statements herein or
therein not misleading.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF EAI
EAI represents and warrants to Ventures as follows:
5.1. CORPORATE ORGANIZATION. EAI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. EAI has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on EAI and its
subsidiaries, taken as a whole. Correct and complete copies of the Certificate
of Incorporation and By-Laws of EAI, as in effect as of the date of this
Agreement, have been made available to Ventures by EAI.
5.2. CAPITALIZATION. The authorized capital stock of EAI consists of
20,000,000 shares of EAI Common Stock, of which as of September 30, 1997,
5,759,234 shares were issued and outstanding, and 20,000,000 shares of preferred
stock, $.01 par value per share, none of which is issued and outstanding. As of
September 30, 1997, no shares of EAI Common Stock were held in EAI's treasury.
As of September 30, 1997, there were 2,099,522 shares of EAI Common Stock
reserved for issuance under EAI stock options, including 1,352,477 shares of EAI
Common Stock reserved for issuance under options outstanding as of September 30,
1997. All of the issued and outstanding shares of EAI Common Stock have been
duly authorized and
19
validly issued and are fully paid, nonassessable and free of preemptive
rights. The shares of EAI Common Stock to be issued pursuant to the Merger
will be duly authorized and validly issued and, at the Effective Time, all
such shares will be fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
5.3. AUTHORITY; NO VIOLATION. (a) EAI has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of EAI. No other corporate
proceedings on the part of EAI are necessary to approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by EAI and, assuming due authorization and
execution by Ventures, constitutes a valid and binding obligation of EAI,
enforceable against EAI in accordance with its terms.
(b) The execution and delivery of this Agreement by EAI, the consummation
by EAI of the transactions contemplated hereby, and the compliance by EAI with
the terms or provisions hereof, will not (i) violate any provision of the
Certificate of Incorporation or By-Laws of EAI, (ii) violate any law, statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to EAI or any of its properties or assets, or (iii) violate, conflict
with, breach any provision of or result in the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any Lien upon any of the
properties or assets of EAI under any note, bond, mortgage, indenture, deed of
trust, license, lease, contract, agreement or other instrument or obligation to
which EAI is a party, or by which it or any of its properties or assets may be
bound or affected.
5.4. CONSENTS AND APPROVALS. Except for (i) the HSR Filing and the
expiration of the waiting period thereunder, (ii) the filing of the Articles of
Merger and the Certificate of Merger with the Oregon Secretary and Delaware
Secretary, respectively, pursuant to the OLLCA and the DLLCA, (iii) such filings
and approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of the
shares of EAI Common Stock pursuant to this Agreement, and (iv) the filings and
authorizations necessary to list the shares of EAI Common Stock issued pursuant
to this Agreement on the NNM, no Consents from any Governmental Authority or
any third party are necessary in connection with the execution and delivery by
EAI or Sub of this Agreement and the consummation by EAI and Sub of the Merger
and the other transactions contemplated by this Agreement.
5.5. SEC REPORTS. The annual report on Form 10-K of EAI for the fiscal
year ended December 31, 1996, as filed under the Securities Exchange Act of 1934
("Exchange Act"), and all other reports and proxy statements filed or required
to be filed by EAI subsequent to such report (the "SEC Reports"), have been duly
and timely filed by EAI, complied as to form with all requirements under the
Exchange Act, were true and correct in all material respects as of the dates at
which the information was furnished, and contained no untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading.
20
5.6. COMPLIANCE WITH APPLICABLE LAW. EAI holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business and
has complied with and is not in default under any law, statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction of any
Governmental Authority applicable to EAI, except where failure to so hold or
such default, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on EAI.
5.7. FINANCIAL STATEMENTS. The EAI financial statements set forth in the
SEC Reports fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments customary in nature and amount), the financial
position of EAI as of the dates thereof, and the results of operations and cash
flows of EAI for the respective fiscal periods or as of the respective dates
thereof. Each of the EAI financial statements set forth in the SEC Reports,
including the notes thereto, has been, or will be, prepared in accordance with
GAAP consistently applied during the periods involved.
5.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in a report
filed under the Exchange Act or as set forth on the Disclosure Schedule, since
December 31, 1996, (i) EAI has not incurred any material liability that is not
disclosed in the EAI financial statements and (ii) no event has occurred which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on EAI.
5.9. PPM/INFORMATION STATEMENT INFORMATION. None of the information that
EAI will include or incorporate by reference in the PPM/Information Statement
will, at the time the PPM/Information Statement is mailed to the Ventures
members, at any time it is amended or supplemented, or at the Closing Date,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. Notwithstanding the foregoing, EAI makes no representation or
warranty with respect to statements made in the PPM/Information Statement based
on written information supplied by Ventures or RTI specifically for inclusion
therein.
5.10. OWNERSHIP OF SUB; NO PRIOR ACTIVITIES.
(a) Sub was formed for the purpose of engaging in the transactions
contemplated by this Agreement; is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware;
and has the power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
(b) As of the Effective Time of the Merger, EAI will be the sole member of
Sub. As of such Effective Time, there will be no options, warrants or other
rights (including registration rights), agreements, arrangements or commitments
to which Sub is a party of any character relating to the membership interest in,
or other equity interests in, Sub or obligating Sub to grant, issue or sell any
membership interest in, or other equity interests in, Sub, by sale, lease,
license or otherwise. There are no obligations, contingent or otherwise, of Sub
to repurchase, redeem or otherwise acquire any membership interest in Sub.
21
(c) As of the date hereof and the Effective Time of the Merger, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement or except as
disclosed to Ventures, Sub has not and will not have incurred, directly or
indirectly, through any affiliate, any obligations or liabilities or engaged in
any business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.n.
5.11. BROKER'S FEES. Neither EAI nor, to the knowledge of EAI, any of
its directors, officers or employees has employed any person or entity as a
broker, finder or agent or incurred any liability for any broker's fees,
finder's fees or other commission in connection with the Merger or the related
transactions contemplated by this Agreement.
5.12. DISCLOSURE. No representation or warranty by EAI contained in
this Agreement (including the Disclosure Schedule and the Exhibits referred to
herein), or in any certificate furnished or to be furnished by EAI to Ventures
in connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make the statements herein or therein not misleading.
ARTICLE VI.
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time of the Merger, except as
expressly contemplated or permitted by this Agreement, Ventures shall (i) not
conduct any business, incur any liability or otherwise operate other than to
hold the RTI Common Stock it owns, (ii) not knowingly take any action that would
prevent or impede the Merger for qualifying for "pooling of interests"
accounting treatment, or would prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code, and (iii) not
knowingly take any action which would adversely affect or delay the ability of
Ventures, Sub or EAI to obtain any necessary approvals of any Governmental
Authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement.
6.2. VENTURES FORBEARANCES. During the period from the date of this
Agreement to the Effective Time of the Merger, except as expressly contemplated
or permitted by this Agreement, Ventures shall not, without the prior written
consent of EAI:
(a) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets to any other individual, partnership, limited liability
company, corporation or other entity (collectively, "Person"), or cancel or
release any indebtedness or claims owed to or held by Ventures or by any Person,
except in the ordinary course of business consistent with past practice;
(b) make any investment in any Person by purchase of securities,
contributions to capital, property transfers, or purchase of any property or
assets of any other Person;
22
(c) except for transactions in the ordinary course of business consistent
with past practice, enter into or terminate any agreement, or change any terms
in any existing agreement, other than renewals or changes in immaterial terms
thereof;
(d) increase in any manner the compensation or fringe benefits of any of
its managers other than in the ordinary course of business consistent with past
practice, pay any pension or retirement allowance not required by any existing
plan or agreement to any of the foregoing, or become a party to, amend or commit
itself to, any pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any of the
foregoing;
(e) settle any claim, action or proceeding involving money damages; or
(f) take any action that is intended or may reasonably be expected to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or (ii) any of the
conditions to the Merger set forth in Article VIII not being satisfied or
(iii) any violation of any provision of this Agreement, except, in each case, as
may be required by applicable law.
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. REGULATORY AND OTHER MATTERS (a) EAI, with the cooperation of
Ventures and RTI, shall promptly prepare the PPM/Information Statement.
Ventures shall, and shall cause RTI to, upon request, furnish EAI with all
information or documents concerning Ventures and RTI and their respective
directors, managers, officers, members and shareholders and such other matters
as may be reasonably necessary or advisable in connection with the
PPM/Information Statement. EAI shall also use its reasonable efforts to obtain
all necessary state securities law or "Blue Sky" qualifications, permits and
approvals required to carry out the transactions contemplated by this Agreement,
and Ventures shall, and shall cause RTI to, furnish all information concerning
Ventures and RTI and the members of Ventures and the holders of RTI Common Stock
as may be reasonably requested by EAI in connection with such qualifications,
permits and approvals.
(b) The parties shall cooperate with each other and use their best efforts
to prepare and file promptly all necessary documentation to effect all
applications, notices, petitions and filings, including the HSR Filing, and to
obtain as promptly as practicable all Consents of Governmental Authorities and
third parties which are necessary or advisable to consummate the Merger and the
other transactions contemplated by this Agreement, and the parties shall keep
each other apprised of the status of matters relating to completion of the
transactions contemplated herein.
7.2. ACCESS TO INFORMATION. Upon reasonable notice, Ventures shall cause
RTI to afford to the officers, employees, accountants, counsel and other
representatives of EAI reasonable access during normal business hours during the
period prior to the Effective Time of the Merger to all of RTI's books and
records, properties and contracts, and, during such period,
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Ventures shall cause RTI to make available to EAI all information concerning
its business, assets and personnel as EAI may reasonably request.
7.3. MEMBERS' APPROVAL. Ventures shall seek the necessary approval from
its members of this Agreement and the Merger as required by its certificate of
formation, its Operating Agreement and OLLCA, as soon as reasonably practicable
after the PPM/Information Statement is mailed.
7.4. NNM LISTING. EAI shall cause the shares of EAI Common Stock to be
issued in the Merger to be approved for listing on the NNM, subject to official
notice of issuance, prior to the Effective Time of the Merger.
7.5. AFFILIATES. Prior to the Effective Time of the Merger, Ventures shall
obtain from each member a written agreement substantially in the form attached
as EXHIBIT B.
7.6. ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest Sub with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
proper officers, managers and directors of each party to this Agreement shall
take all such necessary or advisable action.
7.7. ADVICE OF CHANGES. Ventures shall promptly advise EAI of any change
or event which is likely to have a Material Adverse Effect on Ventures or RTI,
as the case may be, or which Ventures believes would or would be reasonably
likely to cause or constitute a material breach of any of its representations,
warranties or covenants contained herein. EAI shall promptly advise Ventures of
any change or event which is likely to have a Material Adverse Effect on EAI or
which EAI believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein.
7.8. TAKEOVER PROPOSALS. (a) Ventures agrees that from and after its
execution of this Agreement through the Effective Time of the Merger, it shall
not, and it shall instruct its managers and officers and all investment bankers,
attorneys or other advisors or representatives retained by it not to,
(i) solicit or encourage the submission of any Takeover Proposal (as hereinafter
defined), (ii) participate in any discussions or negotiations regarding, or
furnish to any third party any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, a Takeover Proposal, (iii) make or authorize any statement or
recommendation in support of any Takeover Proposal, or (iv) enter into any
agreement with respect to any Takeover Proposal.
(b) For purposes of this Agreement, "Takeover Proposal" means any proposal
or offer for a merger, consolidation or other business combination involving
Ventures or any proposal or offer to acquire a material equity interest in, or a
substantial portion of the assets of, Ventures, other than by EAI as
contemplated by this Agreement.
(c) Ventures shall be entitled to furnish a copy of this Section 7.8 to
any third party who expresses an interest in making a Takeover Proposal after
the execution of this Agreement.
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(d) Ventures agrees that it shall not vote its shares of RTI Common Stock
in favor of any transaction between RTI and any third party other than EAI or
one of its subsidiaries or affiliates that constitutes (i) a merger,
consolidation or other business combination involving RTI, or (ii) the
acquisition by such a third party of a material equity interest in, or a
substantial portion of the assets of, RTI.
7.9. TAX MATTERS. (a) Ventures will use its best efforts to provide EAI
information as to the adjusted tax basis of the RTI Common Stock it owns.
(b) The members of Ventures shall be responsible for and shall pay any
Taxes due from them or Ventures (or any successor) as a result of the Merger.
The members of Ventures shall be responsible for filing any required Returns for
Ventures for all periods ending on or before the Closing Date.
ARTICLE VIII.
CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) APPROVALS AND CONSENTS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(b) NNM LISTING. The shares of EAI Common Stock which shall be issued to
the members of Ventures upon consummation of the Merger shall have been
authorized for listing on the NNM, subject to official notice of issuance.
(c) BLUE SKY. EAI shall have received all state securities or "Blue Sky"
permits and other authorizations necessary to issue the shares of EAI Common
Stock pursuant to this Agreement and the Merger.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or
decree issued by any Governmental Authority or other legal restraint or
prohibition preventing, or material legal action relating to, the consummation
of the Merger or any of the other transactions contemplated by this Agreement
shall be in effect. No law, statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits, materially restricts or makes illegal
the consummation of the Merger or the other transactions contemplated by this
Agreement.
(e) FEDERAL TAX OPINION. Ventures and its members shall have received an
opinion of Xxxxxx Xxxxxxxx LLP in form and substance reasonably satisfactory to
them on or about the date that is two business days prior to the date the
PPM/Information Statement is first mailed to
25
members of Ventures, substantially to the effect that the discussion in the
PPM/Information Statement under the caption "The Merger--Certain Federal
Income Tax Consequences" insofar as it relates to matters of federal income
tax law is a fair and accurate summary of such matters and such opinion shall
not have been withdrawn or modified in any material respect on the Closing
Date. In rendering such opinion, Xxxxxx Xxxxxxxx LLP may require and rely
upon representations contained in certificates of officers, managers, members
or shareholders of EAI, Sub and Ventures, which certificates shall have been
executed and delivered to Xxxxxx Xxxxxxxx LLP at such times as reasonably
requested in connection with its delivery of an opinion with respect to the
Merger.
(f) REGISTRATION RIGHTS AGREEMENT. EAI and each member of Ventures shall
have entered into a Registration Rights Agreement substantially in the form of
EXHIBIT A hereto.
(g) VENTURES MEMBER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been unanimously approved by the members of
Ventures.
8.2. CONDITIONS TO OBLIGATIONS OF EAI AND SUB TO EFFECT THE MERGER. The
obligation of EAI and Sub to effect the Merger is also subject to the
satisfaction or waiver by EAI at or prior to the Effective Time of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Ventures set forth in this Agreement that are qualified with reference to a
Material Adverse Effect or materiality shall be true and correct, and the
representations and warranties of Ventures that are not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date. EAI shall have received a certificate signed on behalf of
Ventures by its principal officers to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF VENTURES. Ventures shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and EAI shall have received a
certificate signed on behalf of Ventures by its principal officers to such
effect.
(c) AFFILIATES AGREEMENTS. EAI shall have received executed letter
agreements substantially in the form attached as EXHIBIT B from each member of
Ventures.
(d) POOLING OF INTERESTS LETTERS. EAI shall have received (i) from
Ernst & Young, LLP a letter dated on or about the date that is two business days
prior to the date the PPM/Information Statement is first mailed to members of
Ventures, in form and substance acceptable to EAI, to the effect that the
business combination to be effected by the Merger will qualify for accounting as
a "pooling of interests" by EAI for purposes of its consolidated financial
statements under GAAP and applicable rules and regulations of the Securities and
Exchange Commission, and (ii) from Xxxxxx Xxxxxxxx LLP a letter dated on or
about the date that is two business days prior to the date the PPM/Information
Statement is first mailed to members of Ventures, in form and substance
acceptable to EAI, to the effect that Ventures may be a party to a business
combination that will qualify for accounting as a "pooling of interests"
26
by EAI for purposes of its consolidated financial statements under GAAP and
applicable rules and regulations of the Securities and Exchange Commission,
and such letters shall not have been withdrawn or modified in any material
respect on the Closing Date. No action shall have been taken or proposed by
any Governmental Authority, and no statute, rule, regulation or order shall
have been enacted, promulgated, issued or proposed by any Governmental
Authority that would prevent EAI from accounting for the business combination
to be effected by the Merger as a pooling of interests.
(e) LEGAL OPINION; CLOSING CERTIFICATES. EAI shall have received from
Venture Counsel P.C. or Xxxxxxx Coie, counsel to Ventures, an opinion reasonably
acceptable to EAI and its counsel, together with such customary closing
documents and certificates as EAI or its counsel shall reasonably request.
(f) MATERIAL ADVERSE CHANGE. There shall not have occurred any change
which would constitute a Material Adverse Effect on Ventures or RTI.
8.3. CONDITIONS TO OBLIGATIONS OF VENTURES. The obligation of Ventures to
effect the Merger is also subject to the satisfaction or waiver by Ventures at
or prior to the Effective Date of the Merger of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
EAI set forth in this Agreement that are qualified with a reference to
materiality shall be true and correct, and the representations and warranties of
EAI that are not so qualified shall be true and correct in all material
respects, in each case, as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date. Ventures shall
have received a certificate signed on behalf of EAI by the Chief Executive
Officer or the Chief Financial Officer of EAI to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF EAI. EAI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Ventures shall have received a
certificate signed on behalf of EAI by the Chief Executive Officer or the Chief
Financial Officer of EAI to such effect.
(c) LEGAL OPINION; CLOSING CERTIFICATES. Ventures shall have received
from Xxxxxxx, Carton & Xxxxxxx, special counsel to EAI, an opinion reasonably
acceptable to Ventures and its counsel, together with such customary closing
documents and certificates as Ventures or its counsel shall reasonably request.
(d) MATERIAL ADVERSE CHANGE. There shall not have occurred any change
which would constitute a Material Adverse Effect on EAI and its subsidiaries,
taken as a whole.
ARTICLE IX.
TERMINATION AND AMENDMENT
9.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the
members of Ventures:
27
(a) by mutual consent of Ventures and EAI in a written instrument, if the
Board of Directors or Managers of each so determines by a vote of a majority of
the members of its entire Board;
(b) by either the Board of Managers of Ventures or the Board of Directors
of EAI, if any Governmental Authority which must grant a Requisite Regulatory
Approval has denied approval of the Merger, or any Governmental Authority of
competent jurisdiction shall have issued an order permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement;
(c) by either the Board of Managers of Ventures or the Board of Directors
of EAI (PROVIDED that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), if
(x) there shall have been a material breach of any of the representations or
warranties or any of the covenants or agreements set forth in this Agreement on
the part of the other party, which breach is not cured within 30 days following
written notice to the party committing such breach, or which breach, by its
nature or timing, cannot be cured prior to December 31, 1997, (y) the Closing
shall not have occurred on or before December 31, 1997; PROVIDED, HOWEVER, that
neither the Board of Managers nor the Board of Directors shall be entitled to
terminate the Agreement pursuant to this clause (y) if the reason the Closing
has not occurred by such date is because any Governmental Authority which must
grant a Requisite Regulatory Approval has failed to act or some similar event
beyond the control of both parties shall not have occurred by such date, or
(z) the Closing shall not have occurred on or before March 31, 1998;
PROVIDED, HOWEVER, if the members of Ventures shall have refused to approve the
Merger, then this Agreement shall automatically be terminated as of the date of
such failure to approve without further action of any of the parties hereto and,
within two days of such termination, Ventures shall pay to EAI $250,000 as
reimbursement for EAI's out-of-pocket expenses incurred in connection with the
transactions contemplated by this Agreement (for which EAI shall not be required
to account), unless EAI is otherwise reimbursed.
9.2. EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Ventures or EAI as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect, and none of Ventures, EAI, Sub or any
of their directors, managers or officers shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated
hereby, except that (i) Sections 10.1, the final proviso clause of Section 9.1
and this Section 9.2 shall survive any termination of this Agreement, and
(ii) notwithstanding anything to the contrary contained in this Agreement,
neither Ventures nor EAI shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
9.3. AMENDMENT; EXTENSION; WAIVER. At any time prior to the Effective Time
of the Merger, the parties hereto, by action taken or authorized by their
respective Board of Directors or Managers, may, to the extent legally allowed,
(i) amend any term or provision of this Agreement, (ii) extend the time for the
performance of any of the obligations or other acts of the parties hereto,
(iii) waive any inaccuracies in the representations and warranties contained
herein or in
28
any document delivered pursuant hereto and (iv) waive compliance with any of
the agreements or conditions contained herein; PROVIDED, HOWEVER, that after
any approval of the transactions contemplated by this Agreement by the
members of Ventures, there may not be, without further approval of such
members, any amendment, extension or waiver of this Agreement which reduces
the amount or changes the form of the consideration to be delivered to such
members hereunder other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such amendment, extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party, but such amendment, extension or waiver or failure to
insist on strict compliance with any obligation, covenant, agreement or
condition in this Agreement shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
ARTICLE X.
GENERAL PROVISIONS
10.1. EXPENSES. Except as set forth in the final proviso clause of
Section 9.1, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense.
10.2. NOTICES. All notices and other required communications hereunder
shall be in writing and shall be deemed given: if delivered personally, when so
delivered; if telecopied, on the date telecopied (PROVIDED there is written
confirmation of receipt and a confirming notice or communication is delivered in
the manner set forth herein); if mailed by registered or certified mail (postage
prepaid and return receipt requested), on the date five days after deposit in
the mail; or if delivered by overnight courier (with written confirmation of
delivery to such courier), on the next business after such delivery, in each
case to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to EAI, to:
Engineering Animation, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxx, Xxxxxx Xxxx 00000
Attention: Xxxxx X. Xxxx
Vice President of Administration, General Counsel and Secretary
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
29
and
(b) if to Ventures, to:
Technology Company Ventures, L.L.C.
c/o Rosetta Technologies, Inc.
00000 X.X. Xxxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Fax: (000) 000-0000
with copies to:
Venture Counsel P.C.
0000 X.X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
and
Xxxxxxx Coie
0000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx-Xxxx
Fax: (000) 000-0000
10.3. INTERPRETATION. When a reference is made in this Agreement to
Sections, Schedules or Exhibits, such reference shall be to a Section of or
Schedule or Exhibit to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." No provision of this Agreement shall be construed to require EAI,
Sub, Ventures or any of their respective affiliates to take any action which
would violate any applicable law, rule or regulation.
10.4. COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement.
10.5. ENTIRE AGREEMENT. This Agreement (including the Disclosure
Schedule, Exhibits, documents and instruments referred to herein) constitutes
the entire agreement of the parties and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
30
10.6. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law which would result in the application of any other
law.
10.7. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
10.8. PUBLICITY. Except as otherwise required by applicable law or the
rules of the NNM, neither Ventures nor EAI shall, nor shall they permit any of
their respective affiliates to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, the transactions contemplated by this Agreement
without the prior consent of the other party, which consent shall not be
unreasonably withheld.
10.9. ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement
nor any of the rights, interests or obligations set forth herein shall be
assigned by either of the parties (whether by operation of law or otherwise)
without the prior written consent of the other party. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns. This
Agreement (including the Disclosure Schedule, Exhibits, documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
10.10. KNOWLEDGE AND AWARENESS. As used in this Agreement, "knowledge"
or "awareness" of any entity means the actual knowledge or awareness of such
entity's directors, managers, officers, shareholders or members who are active
in the business of the entity and other persons exercising supervisory
authority.
10.11. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumptions or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any Federal, state,
county, local or foreign law or statute shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.
10.12. POOLING OF INTERESTS ACCOUNTING. In the event that EAI or
Ventures becomes aware of any provisions of this Agreement which would prevent
the Merger from being accounted for as a pooling of interests, such parties
shall negotiate in good faith with a view toward amending this Agreement in a
manner which would permit the Merger to be accounted for as a pooling of
interests.
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IN WITNESS WHEREOF, EAI, Sub and Ventures have caused this AMENDED AND
RESTATED AGREEMENT AND PLAN OF MERGER to be executed by their respective
officers thereunto duly authorized as of the date first above written.
ENGINEERING ANIMATION, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer, President and Treasurer
SHELL BEAVER L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer, President and Treasurer
TECHNOLOGY COMPANY VENTURES, L.L.C.
By: /s/ Xxxx X. Xxxxx
--------------------------------
Xxxx X. Xxxxx
Manager
AGREED TO WITH RESPECT TO SECTION 7.9:
JFJ VENTURES, L.L.C.
By: /s/ Xxxx X. Xxxxx
--------------------------------
Xxxx X. Xxxxx
Co-Manager
MIKEN, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
President
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