ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 1, 2000
BETWEEN
ZEBRAMART.COM, INC.
AND
ROYAL ACQUISITIONS, INC.
TABLE OF CONTENTS
ARTICLE 1. The Merger 4
Section 1.1. The Merger 4
Section 1.2. Effective Time 4
Section 1.3. Closing of the Merger 4
Section 1.4. Effects of the Merger 4
Section 1.5. Board of Directors and Officers of ZMRT 5
Section 1.6. Conversion of Shares 5
Section 1.7. Exchange of Certificates 5
Section 1.8. Taking of Necessary Action; Further Action 6
ARTICLE 2. Representations and Warranties of ZMRT 6
Section 2.1. Organization and Qualification 6
Section 2.2. Capitalization of ZMRT 6
Section 2.3.Authority Relative to this Agreement; Recommendation. 7
Section 2.4. SEC Reports; Financial Statements 7
Section 2.5. Information Supplied 7
Section 2.6. Consents and Approvals; No Violations 7
Section 2.7. No Default 7
Section 2.8. No Undisclosed Liabilities; Absence of Changes 8
Section 2.9. Litigation 8
Section 2.10. Compliance with Applicable Law 8
Section 2.11. Employee Benefit Plans; Labor Matters 8
Section 2.12. Environmental Laws and Regulations 9
Section 2.13. Tax Matters 10
Section 2.14. Title To Property 10
Section 2.15. Intellectual Property 10
Section 2.16. Insurance 10
Section 2.17. Vote Required 11
Section 2.18. Tax Treatment 11
Section 2.19. Affiliates 11
Section 2.20. Certain Business Practices 11
Section 2.21. Insider Interests 11
Section 2.22. Opinion of Financial Adviser 11
Section 2.23. Brokers 11
Section 2.24. Disclosure 11
Section 2.25. No Existing Discussion 11
Section 2.26. Material Contracts 11
ARTICLE 3. Representations and Warranties of RAI. 12
Section 3.1. Organization and Qualification 12
Section 3.2. Capitalization of RAI 12
Section 3.3.Authority Relative to this Agreement; Recommendation 13
Section 3.4. SEC Reports; Financial Statements 13
Section 3.5. Information Supplied 14
Section 3.6. Consents and Approvals; No Violations 14
Section 3.7. No Default 14
Section 3.8 No Undisclosed Liabilities; Absence of Changes 14
Section 3.9. Litigation 15
Section 3.10. Compliance with Applicable Law 15
Section 3.11. Employee Benefit Plans; Labor Matters 15
Section 3.12. Environmental Laws and Regulations 16
Section 3.13. Tax Matters 16
Section 3.14. Title to Property 16
Section 3.15. Intellectual Property 17
Section 3.16. Insurance 17
Section 3.17. Vote Required 17
Section 3.18. Tax Treatment 17
Section 3.19. Affiliates 17
Section 3.20. Certain Business Practices 17
Section 3.21. Insider Interests 17
Section 3.22. Opinion of Financial Adviser 17
Section 3.23. Brokers 18
Section 3.24. Disclosure 18
Section 3.25. No Existing Discussions 18
Section 3.26. Material Contracts 18
ARTICLE 4. Covenants 18
Section 4.1. Conduct of Business of ZMRT 18
Section 4.2. Conduct of Business of RAI 20
Section 4.3. Preparation of 8-K 21
Section 4.4. Other Potential Acquirers 21
Section 4.5. Meetings of Stockholders 21
Section 4.6. NASD OTC:BB Listing 21
Section 4.7. Access to Information 21
Section 4.8. Additional Agreements; Reasonable Efforts. 22
Section 4.9. Indemnification 22
Section 4.10. Notification of Certain Matters 23
ARTICLE 5. Conditions to Consummation of the Merger
Section 5.1. Conditions to each Party's Obligation to Effect the Merger 23
Section 5.2. Conditions to the Obligations of ZMRT 23
Section 5.3. Conditions to the Obligations of RAI 24
ARTICLE 6. Termination; Amendment; Waiver 24
Section 6.1. Termination 24
Section 6.2. Effect of Termination 25
Section 6.3. Fees and Expenses 25
Section 6.4. Amendment 25
Section 6.5. Extension; Waiver 25
ARTICLE 7. Miscellaneous 25
Section 7.1. Nonsurvival of Representations and Warranties 25
Section 7.2. Entire Agreement; Assignment 25
Section 7.3. Validity 26
Section 7.4. Notices 26
Section 7.5. Governing Law 26
Section 7.6. Descriptive Headings 26
Section 7.7. Parties in Interest 26
Section 7.8. Certain Definitions 26
Section 7.9. Personal Liability 27
Section 7.10. Specific Performance 27
Section 7.11. Counterparts 27
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of March
1, 2000, is between ZEBRAMART.COM, INC., a Nevada corporation ("ZMRT"), and
ROYAL ACQUISITIONS, INC., a Nevada corporation ("RAI").
Whereas, the Boards of Directors of ZMRT and RAI each have, in light of
and subject to the terms and conditions set forth herein, (i) determined that
the Merger (as defined below) is fair to their respective stockholders and in
the best interests of such stockholders and (ii) approved the Merger in
accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, ZMRT and RAI desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
Now, therefore, in consideration of the promises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, ZMRT and RAI hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the State of Nevada (the
"NGCL"), RAI shall be merged with and into ZMRT (as defined below) (the
''Merger`). Following the Merger, ZMRT shall continue as the surviving
corporation (the "Successor Corporation"), shall continue to be governed by
the laws of the jurisdiction of its incorporation or organization and the
separate corporate existence of RAI shall cease. Prior to the Effective Time,
the parties hereto shall mutually agree as to the name of the Successor
Corporation; however, initially the Successor Corporation shall be named
ZEBRAMART.COM, INC., a Nevada corporation. The Merger is intended to qualify
as a tax-free reorganization under Section 368 of the Code as relates to the
non-cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by each of RAI and ZMRT, and
thereafter the Merger Certificate reflecting the Merger shall be delivered to
the Secretary of State of the State of Nevada for filing pursuant to the NGCL
on the Closing Date (as defined in Section 1.3). The Merger shall become
effective at such time as a properly executed and certified copy of the
Merger Certificate is duly filed by the Secretary of State of the State of
Nevada in accordance with the NGCL or such later time as the parties may
agree upon and set forth in the Merger Certificate (the time at which the
Merger becomes effective shall be referred to herein as the "Effective
Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Sperry Young & Stoecklein, 1850 E.
Flamingo Rd., Suite 111, Las Vegas, Nevada, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
privileges, powers of RAI shall vest in the Successor Corporation, and all
debts, liabilities and duties of RAI shall become the debts, liabilities and
duties of the Successor Corporation.
Section 1.5. Board of Directors and Officers of ZMRT. At or prior to the
Effective Time, each of RAI and ZMRT agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of ZMRT to remain the same
Section 1.6. Conversion of Shares. At the Effective Time, each share of
common stock, par value $.001 per share of RAI (individually a "RAI Share"
and collectively, the "RAI Shares") issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action
on the part of RAI, ZMRT, or the holder thereof, be converted into and shall
become fully paid and nonassessable ZMRT common shares determined by issuing
one (1) share of ZMRT common share for every 2.5 shares of RAI.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, ZMRT shall enter into an agreement
with, and shall deposit with, Sperry Young & Stoecklein, or such other agent
or agents as may be satisfactory to ZMRT and RAI (the "Exchange Agent'), for
the benefit of the holders of RAI Shares, for exchange through the Exchange
Agent in accordance with this Article I: (i) certificates representing the
appropriate number of ZMRT Shares to be issued to holders of RAI Shares
issuable pursuant to Section 1.6 in exchange for outstanding RAI Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding RAI Shares (the "Certificates") whose shares were converted into
the right to receive ZMRT Shares pursuant to Section 1.6: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as RAI and ZMRT may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing ZMRT Shares. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of transmittal,
duly executed, and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefore a certificate
representing that number of whole ZMRT Shares, which such holder has the
right to receive pursuant to the provisions of this Article I, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of RAI Shares which are not registered in the transfer
records of RAI, a certificate representing the proper number of ZMRT Shares
may be issued to a transferee if the Certificate representing such RAI Shares
is presented to the Exchange Agent accompanied by all documents required by
the Exchange Agent or ZMRT to evidence and effect such transfer and by
evidence that any applicable stock transfer or other taxes have been paid.
Until surrendered as contemplated by this Section 1.7, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing ZMRT Shares as
contemplated by this Section 1.7.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to ZMRT Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the ZMRT Shares represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
(d) In the event that any Certificate for RAI Shares or ZMRT Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange therefore, upon the making of an affidavit of that fact by the
holder thereof such ZMRT Shares and cash in lieu of fractional ZMRT Shares,
if any, as may be required pursuant to this Agreement; provided, however,
that ZMRT or the Exchange Agent, may, in its respective discretion, require
the delivery of a suitable bond, opinion or indemnity.
(e) All ZMRT Shares issued upon the surrender for exchange of RAI Shares
in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such RAI Shares. There shall be
no further registration of transfers on the stock transfer books of RAI of
the RAI Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates of RAI are presented to ZMRT
for any reason, they shall be canceled and exchanged as provided in this
Article I.
(f) No fractional ZMRT Shares shall be issued in the Merger, but in lieu
thereof each holder of RAI Shares otherwise entitled to a fractional ZMRT
Share shall, upon surrender of its, his or her Certificate or Certificates,
be entitled to receive an additional share to round up to the nearest round
number of shares.
Section 1.8. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, RAI or ZMRT reasonably determines that any deeds,
assignments, or instruments or confirmations of transfer are necessary or
desirable to carry out the purposes of this Agreement and to vest ZMRT with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of RAI, the officers and directors of ZMRT and RAI are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary or desirable action.
ARTICLE 2
Representations and Warranties of ZMRT
Except as set forth on the Disclosure Schedule delivered by ZMRT to RAI
(the "ZMRT Disclosure Schedule"), ZMRT hereby represents and warrants to RAI
as follows:
Section 2.1. Organization and Qualification.
(a) ZMRT is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, has 300 or
more round lot (100 or more shares) stockholders and has all requisite power
and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not have a Material Adverse Effect (as defined below) on ZMRT. When
used in connection with ZMRT, the term "Material Adverse Effect" means any
change or effect (i) that is or is reasonably likely to be materially adverse
to the business, results of operations, condition (financial or otherwise) or
prospects of ZMRT, other than any change or effect arising out of general
economic conditions unrelated to any business in which ZMRT is engaged, or
(ii) that may impair the ability of ZMRT to perform its obligations hereunder
or to consummate the transactions contemplated hereby.
(b) ZMRT has heretofore delivered to RAI accurate and complete copies of
the Certificate of Incorporation and Bylaws (or similar governing documents),
as currently in effect, of ZMRT. Except as set forth on Schedule 2.1 of the
ZMRT Disclosure Schedule, ZMRT is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect on ZMRT.
Section 2.2. Capitalization of ZMRT.
(a) The authorized capital stock of ZMRT consists of Five Hundred
Million (500,000,000) Authorized Shares of Common Stock, $0.00001 par value,
291,460,897 Common shares are issued and outstanding as of February 1, 2000,
and held by 300 or more round lot (100 or more shares) stockholders. Pursuant
to the Merger Agreement ZMRT will issue 2,000,000 shares of 144 restricted
common stock to the stockholder of RAI. All of the outstanding ZMRT Shares
have been duly authorized and validly issued, and are fully paid,
nonassessable and free of preemptive rights. Except as set forth herein, as
of the date hereof, there are no outstanding (i) shares of capital stock or
other voting securities of ZMRT, (ii) securities of ZMRT convertible into or
exchangeable for shares of capital stock or voting securities of ZMRT, (iii)
options or other rights to acquire from ZMRT, except as set forth in 2.2(a)
of the Disclosure Schedule, and, no obligations of ZMRT to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of ZMRT, and (iv) equity equivalents,
interests in the ownership or earnings of ZMRT or other similar rights
(collectively, "ZMRT Securities"). As of the date hereof, except as set forth
on Schedule 2.2(a) of the ZMRT Disclosure Schedule there are no outstanding
obligations of ZMRT or its subsidiaries to repurchase, redeem or otherwise
acquire any ZMRT Securities or stockholder agreements, voting trusts or other
agreements or understandings to which ZMRT is a party or by which it is bound
relating to the voting or registration of any shares of capital stock of
ZMRT. For purposes of this Agreement, ''Lien" means, with respect to any
asset (including, without limitation, any security) any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(b) The ZMRT Shares constitute the only class of equity securities of
ZMRT registered or required to be registered under the Exchange Act.
(c) ZMRT does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation. ZMRT
has all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of ZMRT (the "ZMRT Board") and no other corporate
proceedings on the part of ZMRT are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by ZMRT and constitutes a valid,
legal and binding agreement of ZMRT, enforceable against ZMRT in accordance
with its terms.
Section 2.4. SEC Reports; Financial Statements. ZMRT is not required to
file forms, reports and documents with the SEC.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by ZMRT for inclusion or incorporation by reference in
connection with the Merger will at the date presented to stockholder of RAI
and at the times of the meeting or meetings of stockholders of ZMRT to be
held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act
of 1916, as amended (the ''HSR Act''), the rules of the National Association
of Securities Dealers, Inc. ("NASD"), the filing and recordation of the
Merger Certificate as required by the NGCL, and as set forth on Schedule 2.6
of the ZMRT Disclosure Schedule no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by ZMRT of
this Agreement or the consummation by ZMRT of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not
have a Material Adverse Effect on ZMRT.
Except as set forth in Section 2.6 of the ZMRT Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by ZMRT nor
the consummation by ZMRT of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
ZMRT, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which ZMRT is a party or by which any of its properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, law, statute,
rule or regulation applicable to ZMRT or any of its properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults
which would not have a Material Adverse Effect on ZMRT.
Section 2.7. No Default. Except as set forth in Section 2.7 of the ZMRT
Disclosure Schedule, ZMRT is not in breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or provision
of (i) its Certificate of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which ZMRT is now a
party or by which any of its respective properties or assets may be bound or
(iii) any order, writ injunction, decree, law, statute, rule or regulation
applicable to ZMRT or any of its respective properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults that would not
have a Material Adverse Effect on ZMRT. Except as set forth in Section 2.7 of
the ZMRT Disclosure Schedule, each note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which ZMRT
is now a party or by which its respective properties or assets may be bound
that is material to ZMRT and that has not expired is in full force and effect
and is not subject to any material default thereunder of which ZMRT is aware
by any party obligated to ZMRT thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed in the December 31, 1999 unaudited financial
statements, none of ZMRT or its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of ZMRT and its consolidated
subsidiaries (including the notes thereto) or which would have a Material
Adverse Effect on ZMRT. Except as disclosed by ZMRT, none of ZMRT or its
subsidiaries has incurred any liabilities of any nature, whether or not
accrued, contingent or otherwise, which could reasonably be expected to have,
and there have been no events, changes or effects with respect to ZMRT or its
subsidiaries having or which could reasonably be expected to have, a Material
Adverse Effect on ZMRT. Except as and to the extent disclosed by ZMRT there
has not been (i) any material change by ZMRT in its accounting methods,
principles or practices (other than as required after the date hereof by
concurrent changes in generally accepted accounting principles), (ii) any
revaluation by ZMRT of any of its assets having a Material Adverse Effect on
ZMRT, including, without limitation, any write-down of the value of any
assets other than in the ordinary course of business or (iii) any other
action or event that would have required the consent of any other party
hereto pursuant to Section 4.2 of this Agreement had such action or event
occurred after the date of this Agreement.
Section 2.9. Litigation. Except as set forth in Schedule 2.9 of the ZMRT
Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of ZMRT, threatened against ZMRT
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on ZMRT or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by ZMRT,
none of ZMRT or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on
ZMRT or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as disclosed by
ZMRT, ZMRT and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "ZMRT Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not have a Material Adverse Effect on ZMRT.
Except as disclosed by ZMRT, ZMRT and its subsidiaries are in compliance with
the terms of the ZMRT Permits, except where the failure so to comply would
not have a Material Adverse Effect on ZMRT. Except as disclosed by ZMRT, the
businesses of ZMRT and its subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 2.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have
a Material Adverse Effect on ZMRT. Except as disclosed by ZMRT no
investigation or review by any Governmental Entity with respect to ZMRT or
its subsidiaries is pending or, to the knowledge of ZMRT, threatened, nor, to
the knowledge of ZMRT, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which ZMRT reasonably
believes will not have a Material Adverse Effect on ZMRT.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the ZMRT Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by ZMRT or any entity required to be aggregated with ZMRT pursuant
to Section 414 of the Code (each, a "ZMRT Employee Plan"), no event has
occurred and to the knowledge of ZMRT, no condition or set of circumstances
exists in connection with which ZMRT could reasonably be expected to be
subject to any liability which would have a Material Adverse Effect on ZMRT.
(b) (i) No ZMRT Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each ZMRT Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the ZMRT Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any ZMRT Stock Options, together with the number of ZMRT Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the ZMRT
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. ZMRT has furnished RAI with complete
copies of the plans pursuant to which the ZMRT Stock Options were issued.
Other than the automatic vesting of ZMRT Stock Options that may occur without
any action on the part of ZMRT or its officers or directors, ZMRT has not
taken any action that would result in any ZMRT Stock Options that are
unvested becoming vested in connection with or as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) ZMRT has made available to RAI (i) a description of the terms of
employment and compensation arrangements of all officers of ZMRT and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating ZMRT to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of ZMRT who have executed a non-competition agreement with ZMRT and
a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of ZMRT with
or relating to its employees, except programs and policies required to be
maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of ZMRT with or relating to its employees which contain
change in control provisions all of which are set forth in Section 2.11(d) of
the ZMRT Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any ZMRT Employee
Plan or any agreement or arrangement disclosed under this Section 2.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of ZMRT,
threatened, between ZMRT and any of their employees, which controversies have
or could reasonably be expected to have a Material Adverse Effect on ZMRT.
Neither ZMRT nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by ZMRT or any of its subsidiaries (and neither ZMRT nor any of its
subsidiaries has any outstanding material liability with respect to any
terminated collective bargaining agreement or labor union contract), nor does
ZMRT know of any activities or proceedings of any labor union to organize any
of its or employees. ZMRT has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof, by or with respect to any of its
employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as disclosed by ZMRT, (i) ZMRT is in material compliance with
all applicable federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that would not have a Material Adverse Effect on
ZMRT, which compliance includes, but is not limited to, the possession by
ZMRT of all material permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof; (ii) ZMRT has not received written notice of, or, to the
knowledge of ZMRT, is the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability
under or non-compliance with any Environmental Law (an ''Environmental
Claim") that could reasonably be expected to have a Material Adverse Effect
on ZMRT; and (iii) to the knowledge of ZMRT, there are no circumstances that
are reasonably likely to prevent or interfere with such material compliance
in the future.
(b) Except as publicly disclosed by ZMRT, there are no Environmental
Claims which could reasonably be expected to have a Material Adverse Effect
on ZMRT that are pending or, to the knowledge of ZMRT, threatened against
ZMRT or, to the knowledge of ZMRT, against any person or entity whose
liability for any Environmental Claim ZMRT has or may have retained or
assumed either contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the ZMRT Disclosure Schedule:
(i) ZMRT has filed or has had filed on its behalf in a timely manner (within
any applicable extension periods) with the appropriate Governmental Entity
all income and other material Tax Returns (as defined herein) with respect to
Taxes (as defined herein) of ZMRT and all Tax Returns were in all material
respects true, complete and correct; (ii) all material Taxes with respect to
ZMRT have been paid in full or have been provided for in accordance with GAAP
on ZMRT's most recent balance sheet which is part of the ZMRT SEC Documents.
(iii) there are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any federal, state, local or foreign
income or other material Tax Returns required to be filed by or with respect
to ZMRT; (iv) to the knowledge of ZMRT none of the Tax Returns of or with
respect to ZMRT is currently being audited or examined by any Governmental
Entity; and (v) no deficiency for any income or other material Taxes has been
assessed with respect to ZMRT which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. ZMRT has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on ZMRT; and, to ZMRT's knowledge, all leases pursuant to which ZMRT
leases from others real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of ZMRT, under any of such leases, any existing material default or
event of default (or event which with notice of lapse of time, or both, would
constitute a default and in respect of which ZMRT has not taken adequate
steps to prevent such a default from occurring) except where the lack of such
good standing, validity and effectiveness, or the existence of such default
or event, would not have a Material Adverse Effect on ZMRT.
Section 2.15. Intellectual Property.
(a) ZMRT owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefore that are
material to its business as currently conducted (the "ZMRT Intellectual
Property Rights").
(b) The validity of the ZMRT Intellectual Property Rights and the title
thereto of ZMRT is not being questioned in any litigation to which ZMRT is a
party.
(c) Except as set forth in Section 2.15(c) of the ZMRT Disclosure
Schedule, the conduct of the business of ZMRT as now conducted does not, to
ZMRT's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any ZMRT
Intellectual Property Rights.
(d) ZMRT has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where ZMRT has elected to rely on
patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. ZMRT currently maintains general liability and
other business insurance.
Section 2.17. Vote Required. Approval of this Agreement and Plan of
Merger by the Stockholders of ZMRT is not required pursuant to current Nevada
law.
Section 2.18. Tax Treatment. Neither ZMRT nor, to the knowledge of ZMRT,
any of its affiliates has taken or agreed to take action that would prevent
the Merger from constituting a reorganization qualifying under the provisions
of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for the directors and executive
officers of ZMRT, each of whom is listed in Section 2.19 of the ZMRT
Disclosure Schedule, there are no persons who, to the knowledge of ZMRT, may
be deemed to be affiliates of ZMRT under Rule 1-02(b) of Regulation S-X of
the SEC (the "ZMRT Affiliates").
Section 2.20. Certain Business Practices. None of ZMRT or any directors,
officers, agents or employees of ZMRT has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended (the "FCPA"), or (iii) made any other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of
the ZMRT Disclosure Schedule, neither any officer or director of ZMRT has any
interest in any material property, real or personal, including without
limitation, any computer software or ZMRT Intellectual Property Rights, used
in or pertaining to the business of ZMRT, expect for the ordinary rights of a
stockholder or employee stock optionholder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the ZMRT Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of ZMRT Shares.
Section 2.23. Brokers. No broker, finder or investment banker (other
than the ZMRT Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to RAI) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of ZMRT.
Section 2.24. Disclosure. No representation or warranty of ZMRT in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to RAI pursuant hereto or in connection herewith
contains, as of the date of such representation, warranty or instrument, or
will contain any untrue statement of a material fact or, at the date thereof,
omits or will omit to state a material fact necessary to make any statement
herein or therein, in light of the circumstances under which such statement
is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, ZMRT is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
Section 2.26. Material Contracts.
(a) ZMRT has delivered or otherwise made available to RAI true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which ZMRT is a
party affecting the obligations of any party thereunder) to which ZMRT is a
party or by which any of its properties or assets are bound that are,
material to the business, properties or assets of ZMRT taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of ZMRT taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without limitation,
any contract to which ZMRT is a party involving employees of ZMRT); (ii)
licensing, publishing, merchandising or distribution agreements; (iii)
contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets or stock or otherwise entered
into since December 31, 1999; (vi) contracts or agreements with any
Governmental Entity. and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 4.1 hereof, the "ZMRT Contracts"). ZMRT is
not a party to or bound by any severance, golden parachute or other agreement
with any employee or consultant pursuant to which such person would be
entitled to receive any additional compensation or an accelerated payment of
compensation as a result of the consummation of the transactions contemplated
hereby.
(b) Each of the ZMRT Contracts is valid and enforceable in accordance
with its terms, and there is no default under any ZMRT Contract so listed
either by ZMRT or, to the knowledge of ZMRT, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by ZMRT or, to the knowledge of
ZMRT, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on ZMRT.
(c) No party to any such ZMRT Contract has given notice to ZMRT of or
made a claim against ZMRT with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be expected
to have a Material Adverse Effect on ZMRT.
ARTICLE 3
Representations and Warranties of RAI
Except as set forth on the Disclosure Schedule delivered by RAI to ZMRT
(the "RAI Disclosure Schedule"), RAI hereby represents and warrants to ZMRT
as follows:
Section 3.1. Organization and Qualification.
(a) Each of RAI and its subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Material Adverse Effect (as
defined below) on RAI. When used in connection with RAI, the term "Material
Adverse Effect'' means any change or effect (i) that is or is reasonably
likely to be materially adverse to the business, results of operations,
condition (financial or otherwise) or prospects of RAI and its subsidiaries,
taken as a whole, other than any change or effect arising out of general
economic conditions unrelated to any businesses in which RAI and its
subsidiaries are engaged, or (ii) that may impair the ability of RAI to
consummate the transactions contemplated hereby.
(b) RAI has heretofore delivered to ZMRT accurate and complete copies of
the Certificate of Incorporation and Bylaws (or similar governing documents),
as currently in effect, of RAI. Each of RAI and its subsidiaries is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect on RAI.
Section 3.2. Capitalization of RAI.
(a) As of March 1, 2000, the authorized capital stock of RAI consists
of; (i) Twenty Million (20,000,000) RAI common Shares, $.001 par value, of
which 5,000,000 common Shares are issued and outstanding, and (ii) Five
Million (5,000,000) RAI preferred shares, $.001 par value, and no preferred
shares are issued and outstanding. All of the outstanding RAI Shares have
been duly authorized and validly issued, and are fully paid, nonassessable
and free of preemptive rights.
(b) Except as set forth in Section 3.2(b) of the RAI Disclosure
Schedule, RAI is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the RAI Disclosure
Schedule, between December 31, 1999 and the date hereof, no shares of RAI's
capital stock have been issued and no RAI Stock options have been granted.
Except as set forth in Section 3.2(a) above, as of the date hereof, there are
no outstanding (i) shares of capital stock or other voting securities of RAI,
(ii) securities of RAI or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of RAI, (iii) options or
other rights to acquire from RAI or its subsidiaries, or obligations of RAI
or its subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of RAI, or (iv) equity equivalents, interests in the ownership or
earnings of RAI or its subsidiaries or other similar rights (collectively,
"RAI Securities"). As of the date hereof, there are no outstanding
obligations of RAI or any of its subsidiaries to repurchase, redeem or
otherwise acquire any RAI Securities. There are no stockholder agreements,
voting trusts or other agreements or understandings to which RAI is a party
or by which it is bound relating to the voting or registration of any shares
of capital stock of RAI.
(d) Except as set forth in Section 3.2(d) of the RAI Disclosure
Schedule, there are no securities of RAI convertible into or exchangeable
for, no options or other rights to acquire from RAI, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of RAI.
(e) The RAI Shares constitute the only class of equity securities of RAI
or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the RAI Disclosure
Schedule, RAI does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) RAI has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of RAI (the "RAI Board"), and no other corporate
proceedings on the part of RAI are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 3.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding RAI Shares. This Agreement has
been duly and validly executed and delivered by RAI and constitutes a valid,
legal and binding agreement of RAI, enforceable against RAI in accordance
with its terms.
(b) The RAI Board has resolved to recommend that the stockholders of RAI
approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements.
(a) RAI has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since December 31, 1999, each
of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms, reports
and documents were filed. RAI has heretofore delivered or promptly will
deliver prior to the Effective Date to RAI, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits), (i) its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999, (ii) all
definitive proxy statements relating to RAI's meetings of stockholders
(whether annual or special) held since December 31, 1999, if any, and (iii)
all other reports or registration statements filed by RAI with the SEC since
December 31, 1999 (all of the foregoing, collectively, the "RAI SEC
Reports"). None of such RAI SEC Reports, including, without limitation, any
financial statements or schedules included or incorporated by reference
therein, contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements of RAI included in the RAI SEC Reports fairly
present, in conformity with generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto), the
financial position of RAI as of the dates thereof and its results of
operations and changes in financial position for the periods then ended. All
material agreements, contracts and other documents required to be filed as
exhibits to any of the RAI SEC Reports have been so filed.
(b) RAI has heretofore made available or promptly will make available to
ZMRT a complete and correct copy of any amendments or modifications which are
required to be filed with the SEC but have not yet been filed with the SEC,
to agreements, documents or other instruments which previously had been filed
by RAI with the SEC pursuant to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by RAI for inclusion or incorporation by reference to the 8-K
will, at the time the 8-K is filed with the SEC and at the time it becomes
effective under the Securities Act, 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.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the RAI Disclosure Schedule, and for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
RAI of this Agreement or the consummation by RAI of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on RAI.
Neither the execution, delivery and performance of this Agreement by RAI
nor the consummation by RAI of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
RAI or any of RAI's subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which RAI or any of RAI's subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to RAI or any of RAI's subsidiaries or
any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which would not have a Material
Adverse Effect on RAI.
Section 3.7. No Default. None of RAI or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which RAI or any of its subsidiaries is now a party or by which
any of them or any of their respective properties or assets may be bound or
(iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to RAI, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on RAI. Each note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which RAI or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or assets
may be bound that is material to RAI and its subsidiaries taken as a whole
and that has not expired is in full force and effect and is not subject to
any material default thereunder of which RAI is aware by any party obligated
to RAI or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the RAI Disclosure Schedule and except as and to
the extent publicly disclosed by RAI in the RAI SEC Reports, as of December
31, 1999, RAI does not have any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by
generally accepted accounting principles to be reflected on a balance sheet
of RAI (including the notes thereto) or which would have a Material Adverse
Effect on RAI. Except as publicly disclosed by RAI, since December 31, 1999,
RAI has not incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which could reasonably be expected to have, and
there have been no events, changes or effects with respect to RAI having or
which reasonably could be expected to have, a Material Adverse Effect on RAI.
Except as and to the extent publicly disclosed by RAI in the RAI SEC Reports
and except as set forth in Section 2.8 of the RAI Disclosure Schedule, since
December 31, 1999, there has not been (i) any material change by RAI in its
accounting methods, principles or practices (other than as required after the
date hereof by concurrent changes in generally accepted accounting
principles), (ii) any revaluation by RAI of any of its assets having a
Material Adverse Effect on RAI, including, without limitation, any write-down
of the value of any assets other than in the ordinary course of business or
(iii) any other action or event that would have required the consent of any
other party hereto pursuant to Section 4.1 of this Agreement had such action
or event occurred after the date of this Agreement.
Section 3.9. Litigation. Except as publicly disclosed by RAI in the RAI
SEC Reports, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of RAI, threatened against RAI or any of its
subsidiaries or any of their respective properties or assets before any
Governmental Entity which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on RAI or could reasonably be
expected to prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by RAI in the
RAI SEC Reports, RAI is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on RAI
or could reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as publicly
disclosed by RAI in the RAI SEC Reports, RAI holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the `'RAI
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which would not have a Material Adverse
Effect on RAI. Except as publicly disclosed by RAI in the RAI SEC Reports,
RAI is in compliance with the terms of the RAI Permits, except where the
failure so to comply would not have a Material Adverse Effect on RAI. Except
as publicly disclosed by RAI in the RAI SEC Reports, the business of RAI is
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity except that no representation or warranty is made in this
Section 2.10 with respect to Environmental Laws (as defined in Section 2.12
below) and except for violations or possible violations which do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on RAI. Except as publicly disclosed by RAI in the
RAI SEC Reports, no investigation or review by any Governmental Entity with
respect to RAI is pending or, to the knowledge of RAI, threatened, nor, to
the knowledge of RAI, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which RAI reasonably
believes will not have a Material Adverse Effect on RAI.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by RAI, any of its subsidiaries or any entity
required to be aggregated with RAI or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "RAI Employee Plan"), no event has occurred
and, to the knowledge of RAI, no condition or set of circumstances exists in
connection with which RAI or any of its subsidiaries could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on RAI.
(b) (i) No RAI Employee Plan is or has been subject to Title IV of ERISA
or Section 412 of the Code; and (ii) each RAI Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the RAI Disclosure Schedule sets forth a true and
complete list, as of the date of this Agreement, of each person who holds any
RAI Stock Options, together with the number of RAI Shares which are subject
to such option, the date of grant of such option, the extent to which such
option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 3.11(c) of the RAI
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. RAI has furnished ZMRT with complete
copies of the plans pursuant to which the RAI Stock Options were issued.
Other than the automatic vesting of RAI Stock Options that may occur without
any action on the part of RAI or its officers or directors, RAI has not taken
any action that would result in any RAI Stock Options that are unvested
becoming vested in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) RAI has made available to ZMRT (i) a description of the terms of
employment and compensation arrangements of all officers of RAI and a copy of
each such agreement currently in effect; (ii) copies of all agreements with
consultants who are individuals obligating RAI to make annual cash payments
in an amount exceeding $60,000; (iii) a schedule listing all officers of RAI
who have executed a non-competition agreement with RAI and a copy of each
such agreement currently in effect; (iv) copies (or descriptions) of all
severance agreements, programs and policies of RAI with or relating to its
employees, except programs and policies required to be maintained by law; and
(v) copies of all plans, programs, agreements and other arrangements of the
RAI with or relating to its employees which contain change in control
provisions.
(e) Except as disclosed in Section 3.11(e) of the RAI Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any RAI Employee
Plan or any agreement or arrangement disclosed under this Section 3.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of RAI
threatened, between RAI or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on RAI. Neither RAI nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by RAI or any of its
subsidiaries (and neither RAI nor any of its subsidiaries has any outstanding
material liability with respect to any terminated collective bargaining
agreement or labor union contract), nor does RAI know of any activities or
proceedings of any labor union to organize any of its or any of its
subsidiaries' employees. RAI has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof by or with respect to any of its or any
of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by RAI, (i) each of RAI and its subsidiaries is
in material compliance with all Environmental Laws, except for non-compliance
that would not have a Material Adverse Effect on RAI, which compliance
includes, but is not limited to, the possession by RAI and its subsidiaries
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (ii) none of RAI or its subsidiaries has received written notice of,
or, to the knowledge of RAI, is the subject of, any Environmental Claim that
could reasonably be expected to have a Material Adverse Effect on RAI; and
(iii) to the knowledge of RAI, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in the future.
(b) Except as disclosed by RAI, there are no Environmental Claims which
could reasonably be expected to have a Material Adverse Effect on RAI that
are pending or, to the knowledge of RAI, threatened against RAI or any of its
subsidiaries or, to the knowledge of RAI, against any person or entity whose
liability for any Environmental Claim RAI or its subsidiaries has or may have
retained or assumed either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
RAI Disclosure Schedule: (i) RAI and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of RAI and each of its
subsidiaries and all Tax Returns were in all material respects true, complete
and correct; (ii) all material Taxes with respect to RAI and each of its
subsidiaries have been paid in full or have been provided for in accordance
with GAAP on RAI's most recent balance sheet which is part of the RAI SEC
Documents; (iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to RAI or its subsidiaries; (iv) to the knowledge of RAI none of the
Tax Returns of or with respect to RAI or any of its subsidiaries is currently
being audited or examined by any Governmental Entity; and (v) no deficiency
for any income or other material Taxes has been assessed with respect to RAI
or any of its subsidiaries which has not been abated or paid in full.
Section 3.14. Title to Property. RAI and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually or in the aggregate,
would not have a Material Adverse Effect on RAI; and, to RAI's knowledge, all
leases pursuant to which RAI or any of its subsidiaries lease from others
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
RAI, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which RAI or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material
Adverse Effect on RAI.
Section 3.15. Intellectual Property.
(a) Each of RAI and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefore that are material to its business as currently
conducted (the "RAI Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the RAI Disclosure
Schedule the validity of the RAI Intellectual Property Rights and the title
thereto of RAI or any subsidiary, as the case may be, is not being questioned
in any litigation to which RAI or any subsidiary is a party.
(c) The conduct of the business of RAI and its subsidiaries as now
conducted does not, to RAI's knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any RAI Intellectual Property Rights.
(d) Each of RAI and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where RAI has elected to rely on patent or copyright protection in lieu
of trade secret protection.
Section 3.16. Insurance. RAI currently does not maintain general
liability and other business insurance.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding RAI Shares is the only vote of the
holders of any class or series of RAI's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither RAI nor, to the knowledge of RAI,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of RAI, each of whom is listed in Section 3.19 of the RAI Disclosure
Schedule, there are no persons who, to the knowledge of RAI, may be deemed to
be affiliates of RAI under Rule 1-02(b) of Regulation S-X of the SEC (the
"RAI Affiliates").
Section 3.20. Certain Business Practices. None of RAI, any of its
subsidiaries or any directors, officers, agents or employees of RAI or any of
its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the FCPA, or (iii) made any other unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the RAI Disclosure Schedule, no officer or director of RAI has any interest
in any material property, real or personal, including without limitation, any
computer software or RAI Intellectual Property Rights, used in or pertaining
to the business of RAI or any subsidiary, except for the ordinary rights of a
stockholder or employee stock optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the RAI Board a written opinion to the effect that,
as of such date, the exchange ratio contemplated by the Merger is fair to the
holders of RAI Shares.
Section 3.23. Brokers. No broker, finder or investment banker (other
than the RAI Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to ZMRT) is entitled to any brokerage, finders or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of RAI.
Section 3.24. Disclosure. No representation or warranty of RAI in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to ZMRT pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, RAI is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
Section 3.26. Material Contracts.
(a) RAI has delivered or otherwise made available to ZMRT true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which RAI is a
party affecting the obligations of any party thereunder) to which RAI or any
of its subsidiaries is a party or by which any of their properties or assets
are bound that are, material to the business, properties or assets of RAI and
its subsidiaries taken as a whole, including, without limitation, to the
extent any of the following are, individually or in the aggregate, material
to the business, properties or assets of RAI and its subsidiaries taken as a
whole, all: (i) employment, product design or development, personal services,
consulting, non-competition, severance, golden parachute or indemnification
contracts (including, without limitation, any contract to which RAI is a
party involving employees of RAI); (ii) licensing, publishing, merchandising
or distribution agreements; (iii) contracts granting rights of first refusal
or first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise. (vi) contracts or agreements with any
Governmental Entity; and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 5.2 hereof, the 'RAI Contracts"). Neither RAI
nor any of its subsidiaries is a party to or bound by any severance, golden
parachute or other agreement with any employee or consultant pursuant to
which such person would be entitled to receive any additional compensation or
an accelerated payment of compensation as a result of the consummation of the
transactions contemplated hereby.
(b) Each of the RAI Contracts is valid and enforceable in accordance
with its terms, and there is no default under any RAI Contract so listed
either by RAI or, to the knowledge of RAI, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by RAI or, to the knowledge of
RAI, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on RAI.
(c) No party to any such RAI Contract has given notice to RAI of or made
a claim against RAI with respect to any breach or default thereunder, in any
such case in which such breach or default could reasonably be expected to
have a Material Adverse Effect on RAI.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of ZMRT. Except as contemplated by this
Agreement or as described in Section 4.1 of the ZMRT Disclosure Schedule,
during the period from the date hereof to the Effective Time, ZMRT will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.1 of the
ZMRT Disclosure Schedule, prior to the Effective Time, ZMRT will not, without
the prior written consent of RAI:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of ZMRT (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of ZMRT; or (v) mortgage or pledge any of its material assets, or
create or suffer to exist any material Lien thereupon (other than tax Liens
for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent ZMRT from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 1999 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 1999 in amounts previously disclosed to RAI (to the extent that such
compensation increases and new or amended bonus arrangements do not result in
a material increase in benefits or compensation expense to ZMRT);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to ZMRT; (iii) authorize any new
capital expenditure or expenditures which, individually is in excess of
$1,000 or, in the aggregate, are in excess of $5,000; provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to ZMRT;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
ZMRT;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of RAI. Except as contemplated by this
Agreement or as described in Section 4.2 of the RAI Disclosure Schedule
during the period from the date hereof to the Effective Time, RAI will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.2 of the
RAI Disclosure Schedule, prior to the Effective Time, RAI will not, without
the prior written consent of ZMRT:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, recapitalization or other reorganization of RAI
(other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of RAI or its subsidiaries; or (v) mortgage or pledge any of its material
assets, or create or suffer to exist any material Lien thereupon (other than
tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent RAI or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 1999 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 1999 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to RAI);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to RAI; (iii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $1,000 or,
in the aggregate, are in excess of $5,000: provided, however that none of the
foregoing shall limit any capital expenditure required pursuant to existing
contracts;
(k) make any tax election or settle or compromise any income tax
liability material to RAI and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
RAI;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the RAI contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K. RAI and ZMRT shall promptly prepare
and file with the SEC an 8-K disclosing this merger.
Section 4.4. Other Potential Acquirers.
(a) RAI, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. RAI shall take all action
necessary, in accordance with the respective General Corporation Law of its
respective state, and its respective certificate of incorporation and bylaws,
to duly call, give notice of, convene and hold a meeting of its stockholders
as promptly as practicable, to consider and vote upon the adoption and
approval of this Agreement and the transactions contemplated hereby. The
stockholder votes required for the adoption and approval of the transactions
contemplated by this Agreement. RAI will, through its Boards of Directors,
recommend to their respective stockholders approval of such matters
Section 4.6. NASD OTC:BB Listing. The parties shall use all reasonable
efforts to cause the ZMRT Shares, subject to Rule 144, to be traded on the
Over-The-Counter Bulletin Board (OTC:BB).
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, ZMRT will give RAI
and its authorized representatives, and RAI will give ZMRT and its authorized
representatives, reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of itself and
its subsidiaries, will permit the other party to make such inspections as
such party may reasonably require and will cause its officers and those of
its subsidiaries to furnish the other party with such financial and operating
data and other information with respect to the business and properties of
itself and its subsidiaries as the other party may from time to time
reasonably request.
(b) Between the date hereof and the Effective Time, ZMRT shall furnish
to RAI, and RAI will furnish to ZMRT, within 25 business days after the end
of each quarter, quarterly statements prepared by such party in conformity
with its past practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the 8-K, any filings that
may be required under the HSR Act, and any amendments to any thereof; (ii)
obtaining consents of all third parties and Governmental Entities necessary,
proper or advisable for the consummation of the transactions contemplated by
this Agreement; (iii) contesting any legal proceeding relating to the Merger
and (iv) the execution of any additional instruments necessary to consummate
the transactions contemplated hereby. Subject to the terms and conditions of
this Agreement, RAI and ZMRT agree to use all reasonable efforts to cause the
Effective Time to occur as soon as practicable after the stockholder votes
with respect to the Merger. In case at any time after the Effective Time any
further action is necessary to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall take all such
necessary action.
Section 4.9. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, ZMRT shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
''Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) ZMRT shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to ZMRT, promptly after statements therefore are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its certificate of incorporation or
bylaws, (ii) ZMRT will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the NGCL and
ZMRT's certificate of incorporation or bylaws shall be made by independent
counsel mutually acceptable to ZMRT and the Indemnified Party; provided,
however, that ZMRT shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of professional conduct,
c conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) In the event ZMRT or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of ZMRT shall assume the obligations set
forth in this Section 4.9.
(c) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification now existing in favor of the employees,
agents, directors or officers of ZMRT and RAI and their subsidiaries with
respect to their activities as such prior to the Effective Time, as provided
in ZMRT's and RAI's certificate of incorporation or bylaws, in effect on the
date thereof or otherwise in effect on the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less
than six years from the Effective Time.
(d) The provisions of this Section 4.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.10. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.10 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of RAI;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of ZMRT and RAI;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of ZMRT. The obligation of
ZMRT to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of RAI contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on RAI) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing RAI
shall have delivered to ZMRT a certificate to that effect;
(b) each of the covenants and obligations of RAI to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing RAI shall have delivered to ZMRT a certificate to that
effect;
(d) RAI shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit the Merger as
relates to any obligation, right or interest of RAI under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would
not, in the reasonable opinion of ZMRT, individually or in the aggregate,
have a Material Adverse Effect on RAI;
(e) there shall have been no events, changes or effects with respect to
RAI or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on RAI; and
Section 5.3. Conditions to the Obligations of RAI. The respective
obligations of RAI to effect the Merger are subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) the representations of ZMRT contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on ZMRT) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing ZMRT
shall have delivered to RAI a certificate to that effect;
(b) each of the covenants and obligations of ZMRT to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing ZMRT shall have delivered to RAI a certificate to that
effect;
(c) there shall have been no events, changes or effects with respect to
ZMRT having or which could reasonably be expected to have a Material Adverse
Effect on ZMRT.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by ZMRT's or RAI's
stockholders:
(a) by mutual written consent of ZMRT and RAI;
(b) by RAI or ZMRT if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by February 28, 2000; provided, however, that no party
may terminate this Agreement pursuant to this clause (ii) if such party's
failure to fulfill any of its obligations under this Agreement shall have
been the reason that the Effective Time shall not have occurred on or before
said date;
(c) by ZMRT if (i) there shall have been a breach of any representation
or warranty on the part of RAI set forth in this Agreement, or if any
representation or warranty of RAI shall have become untrue, in either case
such that the conditions set forth in Section 5.2(a) would be incapable of
being satisfied by February 28, 2000 (or as otherwise extended), (ii) there
shall have been a breach by RAI of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on RAI or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and RAI, as the case may be, has not cured such breach within 20 business
days after notice by ZMRT thereof, provided that ZMRT has not breached any of
its obligations hereunder, (iii) ZMRT shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders; or (iv) ZMRT shall have convened a
meeting of its Board of Directors to vote upon the Merger and shall have
failed to obtain the requisite vote;
(d) by RAI if (i) there shall have been a breach of any representation
or warranty on the part of ZMRT set forth in this Agreement, or if any
representation or warranty of ZMRT shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by February 28, 2000 (or as otherwise extended), (ii) there
shall have been a breach by ZMRT of its covenants or agreements hereunder
having a Material Adverse Effect on ZMRT or materially adversely affecting
(or materially delaying) the consummation of the Merger, and ZMRT, as the
case may be, has not cured such breach within twenty business days after
notice by RAI thereof, provided that RAI has not breached any of its
obligations hereunder, (iii) the ZMRT Board shall have recommended to ZMRT's
stockholders a Superior Proposal, (iv) the ZMRT Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or the
Merger, or hold a stockholders' meeting to vote upon the Merger, or shall
have adopted any resolution to effect any of the foregoing, (v) RAI shall
have convened a meeting of its stockholders to vote upon the Merger and shall
have failed to obtain the requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in this
Section 6.3, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken by
ZMRT and RAI at any time before or after approval of the Merger by the
stockholders of ZMRT and RAI (if required by applicable law) but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to RAI:
Royal Acquisitions, Inc.
1850 East Flamingo Rd. Suite 111
Las Vegas, Nevada 89119
with a copy to:
Donald J. Stoecklein
Sperry Young & Stoecklein
1850 East Flamingo Rd. Suite 111
Las Vegas, Nevada 89119
(702) 792-2590
(702) 794-0744
if to ZMRT:
David Kenner
Chief Executive Officer
zebramart.com, Inc.
10 Piedmont Center
Suite 900
Atlanta, GA 30305
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19 and
3.19 a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge'' or "known'' means, with respect to any matter in
question, if an executive officer of ZMRT or RAI or its subsidiaries, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of ZMRT, RAI or any other person,
means any corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which ZMRT, RAI or
any such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or
more of the capital stock, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of ZMRT, RAI or any officer, director,
employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
ZEBRAMART.COM, INC.
By:/s/ David Kenner
Name: David Kenner
Title: President
ROYAL ACQUISITIONS, INC.
By:/s/ ANthony DeMint
Name: Anthony N. DeMint
Title: President
ZMRT DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended Articles/Bylaws
Schedule 2.2(a) Options, Stock Preference Rights See Footnotes to Unaudited
12/31/99 financial statements.
Schedule 2.6 Consents & Approvals None Provided
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation None Exist
Schedule 2.10 Compliance with Applicable Law None
Schedule 2.11 Employee Benefit Plans None Provided
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required None Required
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates David Kenner
Roger Haggerty
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest See 2.19
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business None Provided
RAI DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as in
Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals Provided
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Applicable Law Not Applicable - full
disclosed in 10KSB
Schedule 3.11 Employee Benefit Plans Section 3.11( c)No Options Exist
Section 3.11(e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property None Exist
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Anthony N. DeMint
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 3.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended & Restated Articles