EXHIBIT 10.23
DISTRIBUTION AGREEMENT
by and among
▇▇▇▇▇▇▇▇ RESTAURANTS INC.
▇▇▇▇▇▇▇▇ FRESH COOKING, INC.
and
▇▇▇▇▇▇▇▇ HEALTH CARE, INC.
MARCH 2, 1996
TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS................................................ 1
SECTION 1.1. General........................................ 1
SECTION 1.2. References; Interpretation..................... 8
ARTICLE II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN
COVENANTS.................................................. 8
SECTION 2.1. The Distribution and Other Transactions........ 8
(a) Certain Transactions................................... 8
(b) Stock Dividends to MRI................................. 8
(c) Charters; Bylaws....................................... 8
(d) Directors; Officers.................................... 9
(e) Certain Licenses and Permits........................... 9
(f) Transfer of Agreements................................. 9
(g) Operating Agreement.................................... 10
(h) Reincorporation of MRI; Reverse Stock Split............ 10
(i) Delivery of Shares to Transfer Agent................... 10
(j) Other Transactions..................................... 11
SECTION 2.2. Certain Financial and Other Arrangements....... 11
(a) Intercompany Accounts.................................. 11
(b) Operations in Ordinary Course.......................... 11
SECTION 2.3. Certain Indebtedness; Balance Sheets........... 12
SECTION 2.4. Assumption and Satisfaction of Liabilities;
Management Responsibility for Shared
Liabilities; Rights and Assets Relating to
Shared Liabilities............................. 12
SECTION 2.5. Resignations................................... 13
SECTION 2.6. Further Assurances............................. 13
SECTION 2.7. No Representations or Warranties............... 13
SECTION 2.8. Guarantees..................................... 14
SECTION 2.9. Witness Services............................... 14
SECTION 2.10. Certain Post-Distribution Transactions......... 14
SECTION 2.11. Directors and Officers Liability Insurance..... 15
SECTION 2.12. Insurance...................................... 15
SECTION 2.13. Transfers Not Effected Prior to the
Distribution; Transfers Deemed Effective as
of the Distribution Date....................... 15
SECTION 2.14. Ancillary Agreements........................... 16
ARTICLE III. INDEMNIFICATION............................................ 16
SECTION 3.1. Indemnification by RTI......................... 16
SECTION 3.2. Indemnification by MFCI........................ 16
SECTION 3.3. Indemnification by MHCI........................ 16
SECTION 3.4. Limitations on Indemnification Obligations..... 16
SECTION 3.5. Procedures for Indemnification................. 17
(a) Third Party Claims (other than in respect of
Shared Liabilities).................................... 17
(b) Third Party Claims in Respect of Shared Liabilities.... 18
SECTION 3.6. Indemnification Payments...................... 20
SECTION 3.7. Other Adjustments............................. 20
SECTION 3.8. Survival of Indemnities....................... 21
ARTICLE IV. ACCESS TO INFORMATION..................................... 21
SECTION 4.1. Provision of Corporate Records................ 21
SECTION 4.2. Access to Information......................... 21
SECTION 4.3. Reimbursement; Other Matters.................. 22
SECTION 4.4. Confidentiality............................... 22
ARTICLE V. INSURANCE................................................. 23
SECTION 5.1. Policies and Rights Included Within Assets.... 23
SECTION 5.2. Post-Distribution Date Claims................. 23
SECTION 5.3. Administration; Other Matters................. 24
(a) Exceeding Policy Limits............................... 25
(b) Allocation of Insurance Proceeds...................... 25
SECTION 5.4. Agreement for Waiver of Conflict and Shared
Defense....................................... 26
SECTION 5.5. Cooperation................................... 26
ARTICLE VI. DISPUTE RESOLUTION........................................ 26
ARTICLE VII. MISCELLANEOUS............................................. 27
SECTION 7.1. Complete Agreement; Construction.............. 27
SECTION 7.2. Counterparts.................................. 27
SECTION 7.3. Survival of Agreements........................ 27
SECTION 7.4. Notices....................................... 27
SECTION 7.5. Waivers....................................... 28
SECTION 7.6. Amendments.................................... 28
SECTION 7.7. Assignment.................................... 28
SECTION 7.8. Successors and Assigns........................ 29
SECTION 7.9. Termination................................... 29
SECTION 7.10. Subsidiaries.................................. 29
SECTION 7.11. Third Party Beneficiaries..................... 29
SECTION 7.12. Attorney Fees................................. 29
SECTION 7.13. Title and Headings............................ 29
SECTION 7.14. Schedules..................................... 29
SECTION 7.15. Specific Performance.......................... 30
SECTION 7.16. GOVERNING LAW................................. 30
SECTION 7.17. Consent to Jurisdiction....................... 30
SECTION 7.18. Severability.................................. 30
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DISTRIBUTION AGREEMENT dated as of March 2, 1996, among ▇▇▇▇▇▇▇▇
RESTAURANTS INC., a Delaware corporation ("MRI"), ▇▇▇▇▇▇▇▇ FRESH
COOKING, INC., a Georgia corporation ("MFCI"), and ▇▇▇▇▇▇▇▇ HEALTH
CARE, INC., a Georgia corporation ("MHCI").
WHEREAS, the Board of Directors of MRI has determined that it is
appropriate and desirable to distribute to the holders of shares of common
stock, par value $0.01 per share, of MRI (the "MRI Common Stock") all the
outstanding shares of common stock of MFCI (the "MFCI Common Shares") and all
the outstanding shares of common stock of MHCI (the "MHCI Common Shares");
WHEREAS, the Board of Directors of MRI has determined that it is
appropriate and desirable to reincorporate MRI in Georgia by merging MRI into
Ruby Tuesday (Georgia), Inc., a wholly-owned subsidiary of MRI ("RTI-Georgia"),
and to merge Ruby Tuesday, Inc., a Delaware corporation ("RTI-Delaware") and
wholly-owned subsidiary of MRI, into RTI-Georgia substantially simultaneously,
with the surviving corporation to be a Georgia corporation known as Ruby
Tuesday, Inc. ("RTI");
WHEREAS, each of MRI, MFCI and MHCI has determined that it is necessary and
desirable to allocate and assign responsibility for those liabilities in respect
of the activities of the businesses of such entities on the Distribution Date
(as defined herein) and those liabilities in respect of other businesses and
activities of MRI and its former subsidiaries and other matters; and
WHEREAS, each of MRI, MFCI and MHCI has determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
such distribution and to set forth other agreements that will govern certain
other matters following the distributions;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. General. As used in this Agreement, the following terms
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shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the person
specified.
"Allocation Memorandum" shall mean that certain Memorandum from ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to the Chief Financial Officers of each of RTI,
MHCI and MFCI regarding the Allocation of Certain Liabilities Post-Spin-Off
dated March 2, 1996.
"Ancillary Agreements" shall mean all of the written agreements,
instruments, understandings, assignments or other arrangements (other than this
Agreement) entered into in connection with the transactions contemplated hereby,
including, without limitation, the Transfer and Assumption Instruments, the
Employee Benefits Matters Agreement, the Tax Allocation Agreement, the
Intellectual Property Agreements, the Purchasing Agreements and the Operating
Agreement.
"Claims Administration" shall mean the processing of claims made under the
Company Policies, including, without limitation, the reporting of claims to the
insurance carriers, management and defense of claims to the insurance carriers,
management and defense of claims and providing for appropriate releases upon
settlement of claims.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
"Commission" shall mean the Securities and Exchange Commission.
"Company Policies" shall mean all Policies, current or past, which are or
at any time were maintained by or on behalf of or for the benefit or protection
of MRI, MFCI or MHCI or any of their respective predecessors or Subsidiaries
which relate to any Shared Liability, the MRI Business, the MFCI Business or the
MHCI Business, or current or past directors, officers, employees or agents of
any of the foregoing Businesses.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record of shares of MRI Common Stock as of the Distribution Record
Date of (i) the MFCI Common Shares owned by MRI on the basis of one MFCI Common
Share for each four outstanding shares of MRI Common Stock and (ii) the MHCI
Common Shares owned by MRI on the basis of one MHCI Common Share for each three
outstanding shares of MRI Common Stock.
"Distribution Date" shall mean such date as may hereafter be determined by
MRI's Board of Directors as the date of which the Distribution shall be
effected.
"Distribution Record Date" shall mean such date as may hereafter be
determined by MRI's Board of Directors as the record date for the Distribution.
"E&Y" shall mean Ernst & Young, LLP.
"Effective Time" shall mean the effective time of the Distribution on the
Distribution Date, which time shall be simultaneous with the effective time of
the reincorporation of MRI in Georgia.
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"Employee Benefits Matters Agreement" shall mean the Agreement Respecting
Employee Benefits Matters dated as of March 2, 1996, among MRI, MFCI and MHCI.
"Indemnifiable Losses" shall mean any and all losses, liabilities, claims,
damages, demands, costs or expenses (including, without limitation, attorneys'
fees and any and all out-of-pocket expenses) whatsoever reasonably incurred in
investigating, preparing for or defending against any Actions or potential
Actions.
"Indemnifying Party" shall have the meaning as defined in Section 3.4.
"Indemnitee" shall have the meaning as defined in Section 3.4.
"Insurance Administration" shall mean, with respect to each Company Policy,
the accounting for premiums, defense costs, indemnity payments, deductibles and
retentions, as appropriate, under the terms and conditions of each of the
Company Policies; and the report to excess insurance carriers of any losses or
claims which may cause the per-occurrence, per claim or aggregate limits of any
Company Policy to be exceeded, and the distribution of Insurance Proceeds as
contemplated by this Agreement.
"Insurance Proceeds" shall mean those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of an
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost of reserve or similar
item paid or held by or for the benefit of such insured.
"Insured Claims" shall mean those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Company
Policies, whether or not subject to deductibles, co-insurance, uncollectability
or premium adjustments, but only to the extent that such Liabilities are within
applicable Company Policy limits, including aggregates.
"Intellectual Property Agreements" shall mean the License Agreement between
MFCI and MHCI and the License Agreement between RTI and MHCI, each dated as of
March 2, 1996.
"Liabilities" shall mean any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including, without
limitation, those debts, liabilities and obligations arising under any law,
rule, regulation, Action, threatened Action, order or consent decree of any
court, any governmental or other regulatory or administrative agency or
commission or any award of any arbitration tribunal, and those arising under any
contract, guarantee, commitment or undertaking.
"MFCI" shall mean ▇▇▇▇▇▇▇▇ Fresh Cooking, Inc., a Georgia corporation.
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"MFCI Assets" shall mean, collectively, all the rights and assets of MRI
and its Subsidiaries relating to the MFCI Business, including, without
limitation, (i) the assets included on the balance sheet of MFCI (a wholly-owned
business of MRI) as of December 2, 1995, prepared by E&Y and not disposed of in
the ordinary course of business, (ii) any assets acquired by MRI, MFCI or any of
their respective Subsidiaries relating to the MFCI Business from December 3,
1995, to the Distribution Date and not disposed of in the ordinary course of
business, and (iii) rights to the Company Policies to the extent set forth in
Article V hereof.
"MFCI Business" shall mean the family dining restaurant business conducted
by MRI, MFCI and their respective Subsidiaries and successors.
"MFCI Common Stock" shall mean the common stock, $.01 par value per share,
of MFCI.
"MFCI Indemnitees" shall mean MFCI, each Affiliate of MFCI, each of their
respective directors, officers, employees and agents and each of the heirs,
executors, successors and assigns of any of the foregoing.
"MFCI Liabilities" shall mean, collectively, (i) Liabilities included on
the balance sheet of MFCI (a wholly-owned business of MRI) as of December 2,
1995, prepared by E&Y, and any Liabilities of the same kind or nature incurred
by MRI, MFCI or any of their respective Subsidiaries relating to the MFCI
Business from December 3, 1995, to the Effective Time, (ii) all the Liabilities
of MFCI and its Subsidiaries, if any, under this Agreement and any of the
Ancillary Agreements, (iii) all the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, at or following the
Effective Time) to the extent the Liabilities arise out of or in connection with
or otherwise relate to the management or conduct before or after the Effective
Time of the MFCI Business, and (iv) all those Liabilities allocated solely to
MFCI as set forth in the Allocation Memorandum (the Liabilities listed in
clauses (i) through (iv) above being collectively referred to as the "True MFCI
Liabilities") and (v) one-third (1/3) of the amount of all Shared Liabilities,
unless otherwise allocated in the Allocation Memorandum.
"MHCI" shall mean ▇▇▇▇▇▇▇▇ Health Care, Inc., a Georgia corporation.
"MHCI Assets" shall mean, collectively, all the rights and assets of MHCI
and its Subsidiaries relating to the MHCI Business, including, without
limitation, (i) the assets included on the balance sheet of MHCI (a wholly-owned
business of MRI) as of December 2, 1995, prepared by E&Y and not disposed of in
the ordinary course of business, (ii) any assets acquired by MRI, MHCI or any of
their respective Subsidiaries relating to the MHCI Business from December 3,
1995, to the Distribution Date and not disposed of in the ordinary course of
business, (iii) all the outstanding capital stock or other interests of MRI in
the Subsidiaries listed on Schedule 1.1(a) and (iv) rights to the Company
Policies to the extent set forth in Article V hereof.
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"MHCI Business" shall mean the health care food and nutrition services
business conducted by MRI, MHCI and their respective Subsidiaries and
successors.
"MHCI Common Stock" shall mean the common stock, $.01 par value per share,
of MHCI.
"MHCI Indemnitees" shall mean MHCI, each Affiliate of MHCI, each of their
respective directors, officers, employees and agents and each of the heirs,
executors, successors and assigns of any of the foregoing.
"MHCI Liabilities" shall mean, collectively, (i) the Liabilities included
on the balance sheet of MHCI as of December 2, 1995, prepared by E&Y, and any
Liabilities of the same kind or nature incurred by MRI, MHCI or any of their
respective Subsidiaries relating to the MHCI Business from December 3, 1995, to
the Effective Time, (ii) all the Liabilities of MHCI and its Subsidiaries, if
any, under this Agreement and any of the Ancillary Agreements and (iii) all the
Liabilities of the parties hereto or their respective Subsidiaries (whenever
arising whether prior to, at or following the Effective Time) to the extent the
Liabilities arise out of or in connection with or otherwise relate to the
management or conduct before or after the Effective Time of the MHCI Business,
(iv) all those Liabilities allocated solely to MHCI as set forth in the
Allocation Memorandum, and (v) $27,098,000 principal amount of the indebtedness
outstanding at the Effective Time under the MRI Credit Facility (the Liabilities
listed in clauses (i) through (v) above being collectively referred to as the
"True MHCI Liabilities") and (vi) one-third (1/3) of the amount of all other
Shared Liabilities, unless otherwise allocated in the Allocation Memorandum.
"MRI" shall mean ▇▇▇▇▇▇▇▇ Restaurants Inc., a Delaware corporation.
"MRI Common Stock" shall mean the common stock, $.01 par value per share,
of MRI.
"MRI Credit Facility" shall mean that certain Credit Agreement dated as of
September 30, 1994 among MRI, SunTrust Bank, Atlanta (formerly known as Trust
Company Bank) as Agent and Administrative Agent and the lenders named therein.
"MRT Purchasing" shall mean MRT Purchasing, LLC, a Georgia limited
liability company, organized to act as purchasing agent for MRI and its
Subsidiaries.
"Operating Agreement" shall mean the Operating Agreement of MRT Purchasing
dated October 30, 1995, as amended March 2, 1996, by and among MRI, MFCI, MHCI
and RTI-Delaware.
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
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"Policies" shall mean insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts), including, without
limitation, primary, excess and umbrella policies, comprehensive general
liability policies, fiduciary liability, automobile, aircraft, property and
casualty, workers' compensation and employee dishonesty insurance policies and
bonds and captive insurance company arrangements, together with the rights,
benefits and privileges thereunder.
"Proxy Statement" shall mean the Proxy Statement sent to the holders of
shares of MRI Common Stock in connection with the Distribution, including any
amendment or supplement thereto.
"Purchasing Agreements" shall mean those certain amendments to long-term
purchasing agreements between MRI and suppliers entered into in connection with
the transactions contemplated hereby in order to assign benefits and assume
liabilities thereunder among MRI, MFCI and MHCI.
"RTI" shall mean (i) Ruby Tuesday, Inc., a Georgia corporation and the
legal successor to MRI after the reincorporation of MRI in Georgia and its
merger with RTI-Delaware, or (ii) MRI, after giving effect to the transactions
contemplated by Section 2.1 hereof or as if such transactions had occurred, in
each case as the context requires.
"RTI Assets" shall mean, collectively, all the rights and assets of RTI and
its Subsidiaries other than the MHCI Assets and the MFCI Assets, including,
without limitation, (i) all the outstanding capital stock or other interests of
RTI in Subsidiaries of MRI listed on Schedule 1.1(b) and (ii) rights to the
Company Policies to the extent set forth in Article V hereof.
"RTI Common Stock" shall mean the common stock, $.01 par value per share,
of RTI.
"RTI Business" shall mean the specialty restaurant business conducted by
MRI, RTI-Delaware, RTI and their respective Subsidiaries and successors,
including, without limitation, the Ruby Tuesday, Tia's and Mozzarella's Cafe
restaurant business.
"RTI Indemnitees" shall mean RTI, each Affiliate of RTI, each of their
respective directors, officers, employees and agents and each of their heirs,
executors, successors and assigns of any of the foregoing.
"RTI Liabilities" shall mean collectively, (i) the Liabilities included on
the unaudited consolidated balance sheet of MRI as of December 2, 1995, prepared
by E&Y, and any Liabilities of the same kind or nature incurred by MRI or any of
its Subsidiaries relating to the RTI Business from December 3, 1995, to the
Effective Time, (ii) all the Liabilities of RTI and its Subsidiaries under this
Agreement and any of the Ancillary Agreements, (iii) all the Liabilities of the
parties hereto or their respective Subsidiaries (whenever arising whether prior
to, at or following the Effective Time) to the extent the Liabilities arise out
of or in connection with or
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otherwise relate solely to the management or conduct before or after the
Effective Time of the RTI Business, (iv) all those Liabilities allocated solely
to RTI as set forth in the Allocation Memorandum, and (v) all the indebtedness
outstanding at the Effective Time under the (A) MRI Credit Facility less
$27,098,000 and (B) AmSouth Bank line of credit in favor of MRI (the Liabilities
listed in clauses (i) through (iv) above being collectively referred to as the
"True RTI Liabilities") and (vi) one-third (1/3) of the amount of all Shared
Liabilities, unless otherwise allocated in the Allocation Memorandum.
"Reverse Stock Split" shall mean the reverse stock split of shares of MRI
Common Stock held by holders of record as of the Distribution Record Date to be
effected in connection with the reincorporation of MRI in Georgia on the basis
of one RTI Common Share for each two outstanding shares of MRI Common Stock.
"Shared Liability" means any Liability of the parties hereto or their
respective Subsidiaries (whether arising prior to, at or following the Effective
Time) which arises out of or is in connection with or otherwise relates to the
management or conduct prior to the Effective Time of the businesses of MRI and
its Subsidiaries and (i) is not a True RTI Liability, True MFCI Liability or
True MHCI Liability or (ii) the responsibility for which is allocated among RTI,
MFCI and MHCI in the Allocation Memorandum. Shared Liability includes, without
limitation, Shared Liabilities listed on Schedule 1.1(c) hereto.
"Subsidiary" shall mean any corporation, partnership or other entity of
which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
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trustee).
"Tax" shall mean all Federal, state, local and foreign taxes and
assessments of any kind, including all interest, penalties and additions imposed
with respect to such amounts.
"Tax Allocation Agreement" shall mean the Amended and Restated Tax
Allocation and Indemnification Agreement dated as of March 2, 1996, among MRI,
MFCI, MHCI and the other Subsidiaries of MRI named therein.
"Third Party Claim" shall have the meaning as defined in Section 3.5.
"Transfer Agent" shall mean AmSouth Bank of Alabama.
"Transfer and Assumption Instruments" shall mean, collectively, the
Transfer and Assumption Agreement dated as of January 1, 1996 between MRI and
MFCI, the Transfer and Assumption Agreements dated as of January 1, 1996 between
MRI and MHCI and the various agreements, instruments and other documents to be
entered into between or among MRI, MFCI
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and MHCI to effect the transfer of assets and the assumption of Liabilities in
the manner contemplated by this Agreement, including, without limitation, real
estate transfer documents and leases.
"True MFCI Liabilities" shall have the meaning as defined under "MFCI
Liabilities."
"True MHCI Liabilities" shall have the meaning as defined under "MHCI
Liabilities."
"True RTI Liabilities" shall have the meaning as defined under "RTI
Liabilities."
SECTION 1.2. References; Interpretation. References to a "Schedule" are,
--------------------------
unless otherwise specified, to one of the Schedules attached to this Agreement,
and references to a "Section" are, unless otherwise specified, to one of the
Sections of this Agreement.
ARTICLE II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
SECTION 2.1. The Distribution and Other Transactions.
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(a) Certain Transactions. On or prior to the Distribution Date:
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(i) MRI shall, on behalf of itself and its Subsidiaries, transfer
to MFCI all of MRI's and its Subsidiaries' right, title and interest in the MFCI
Assets.
(ii) MRI shall, on behalf of itself and its Subsidiaries, transfer
to MHCI all of MRI's and its Subsidiaries' right, title and interest in the MHCI
Assets.
(b) Stock Dividends to MRI. On or prior to the Distribution Date:
----------------------
(i) MFCI shall issue to MRI as a stock dividend a number of MFCI
Common Shares as required to effect the Distribution, as certified by the
Transfer Agent. In connection therewith MRI shall deliver to MFCI for
cancellation the share certificate currently held by it representing MFCI Common
Shares.
(ii) MHCI shall issue to MRI as a stock dividend a number of MHCI
Common Shares as required to effect the Distribution, as certified by the
Transfer Agent. In connection therewith MRI shall deliver to MHCI for
cancellation the share certificate currently held by it representing MHCI Common
Shares.
(c) Charters; Bylaws. On or prior to the Distribution Date:
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(i) All necessary actions shall have been taken to provide for the
adoption of the form of Articles of Incorporation and Bylaws filed by MFCI with
the Commission.
(ii) All necessary actions shall have been taken to provide for
the adoption of the form of Articles of Incorporation and Bylaws filed by MHCI
with the Commission.
(iii) All necessary actions shall have been taken to provide for
the adoption of the form of Articles of Incorporation and Bylaws attached as
Annex B and Annex C, respectively, to the Proxy Statement filed by MRI with the
Commission.
(d) Directors; Officers. On or prior to the Distribution Date, MRI,
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as the sole shareholder of MFCI, MHCI and RTI, (i) shall have taken all
necessary action by written consent to elect to the Board of Directors of MFCI,
the Board of Directors of MHCI and the Board of Directors of RTI the individuals
identified in the Proxy Statement as directors of MFCI and MHCI and RTI,
respectively, effective upon the Distribution, and (ii) shall have caused the
directors of MFCI, MHCI and RTI to elect as officers of MFCI, MHCI and RTI the
individuals identified in the Proxy Statement as the officers of MFCI, MHCI and
RTI, respectively, effective upon the Distribution.
(e) Certain Licenses and Permits. On or prior to the Distribution
----------------------------
Date or as soon as reasonably practicable thereafter, all transferrable
licenses, permits and authorizations issued by governmental or regulatory
entities which relate to the MFCI Business or the MHCI Business but which are
held in the name of MRI or any of its Subsidiaries (other than MFCI or MHCI or
any of their respective Subsidiaries), or any of their respective employees,
officers, directors, stockholders, agents, or otherwise, on behalf of MFCI (or
its Subsidiaries) or MHCI (or its Subsidiaries), as applicable, shall be duly
and validly transferred by MRI to MFCI (or its Subsidiaries) or MHCI (or its
Subsidiaries), as applicable.
(f) Transfer of Agreements.
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(i) MRI hereby agrees that on or prior to the Distribution Date or
as soon as reasonably practicable thereafter, subject to the limitations set
forth in this Section 2.1(f), it will, and it will cause its Subsidiaries (other
than MFCI or MHCI or any of their respective Subsidiaries) to, assign, transfer
and convey to MFCI or MHCI, as applicable, all of MRI's or such Subsidiary's
respective right, title and interest in and to any and all agreements that
relate exclusively to the MFCI Business or MHCI Business, as applicable, to the
extent such agreements were not previously so transferred.
(ii) Subject to the provisions of this Section 2.1(f) and except
as any Ancillary Agreement may otherwise provide, any agreement to which any of
the parties hereto or any of their Subsidiaries is a party that inures to the
benefit of more than one of the RTI
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Business, MFCI Business and MHCI Business shall be assigned in part so that each
party shall be entitled to the rights and benefits inuring to its business under
such agreement.
(iii) The assignee of any agreement assigned, in whole or in part,
hereunder (an "Assignee") shall assume and agree to pay, perform, and fully
discharge all obligations of the assignor under such agreement or, in the case
of a partial assignment under Section 2.1 and except as any Ancillary Agreement
may otherwise provide, such Assignee's related portion of such obligations as
determined in accordance with the terms of the relevant agreement, where
determinable on the face thereof, and otherwise as determined in accordance with
the practice of the parties (or other predecessors) prior to the Distribution.
(iv) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any agreement, in
whole or in part, or any rights thereunder if the agreement to assign or attempt
to assign, without the consent of a third party, would constitute a breach
thereof or in any way adversely affect the rights of the Assignee thereof;
provided, however, that the provisions of Section 2.13 shall be applicable
thereto.
(g) Operating Agreement. On or before the Distribution Date, MFCI and
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MHCI will become members of MRT Purchasing and, in connection therewith, MRI,
MFCI and MHCI shall, and MRI shall cause RTI-Delaware to, enter into an amended
and restated operating agreement setting forth the terms upon which MRT
Purchasing shall act as the purchasing agent for MRI, MFCI and MHCI.
(h) Reincorporation of MRI; Reverse Stock Split.
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(i) MRI shall enter into an Agreement and Plan of Merger with RTI
pursuant to which MRI shall be reincorporated in Georgia effective as of the
Distribution Date.
(ii) MRI shall cause RTI and RTI-Delaware to enter into an
Agreement and Plan of Merger pursuant to which RTI-Delaware shall merge into RTI
effective as of the Distribution Date.
(iii) MRI shall take any other action necessary to effectuate the
Reverse Stock Split contemplated by the Proxy Statement.
(i) Delivery of Shares to Transfer Agent. MRI shall deliver to the
------------------------------------
Transfer Agent the share certificates representing the MFCI Common Shares and
the MHCI Common Shares issued to MRI by MFCI and MHCI, respectively, pursuant to
Section 2.1(b) as well as the RTI Common Shares and shall instruct the Transfer
Agent to distribute, on or as soon as practicable following the Distribution
Date, such Common Shares to holders of record of shares of MRI Common Stock on
the Distribution Record Date as further contemplated by the Proxy Statement and
herein. MFCI and MHCI shall provide all share certificates that the Transfer
-10-
Agent shall require in order to effect the Distribution and RTI shall provide
all share certificates that the Transfer Agent shall require in order to effect
the Reverse Stock Split.
(j) Other Transactions. On or prior to the Distribution Date, each of
------------------
MRI, MFCI and MHCI shall have consummated those other transactions in connection
with the Distribution that are contemplated by (i) the Proxy Statement, (ii) the
ruling request submission by MRI to the Internal Revenue Service dated October
18, 1995, as subsequently amended December 29, 1995 and February 10, 1996, and
(iii) the no action letter by MRI to the Commission dated November 3, 1995, and
which are not specifically referred to in subparagraphs (a)-(i) above.
SECTION 2.2. Certain Financial and Other Arrangements.
----------------------------------------
(a) Intercompany Accounts.
---------------------
(i) Without limiting the terms of Section 2.3, all intercompany
receivables, payables and loans (other than receivables, payables and loans
otherwise specifically provided for in any of the Ancillary Agreements or
hereunder), including, without limitation, in respect of any cash balances, any
cash balances representing deposited checks or drafts for which only a
provisional credit has been allowed or any cash held in any centralized cash
management system, between MFCI or any of its Subsidiaries, on the one hand, and
RTI or any of its Subsidiaries, on the other hand, shall, as of the Effective
Time, be settled, capitalized or converted into ordinary trade accounts, in each
case as may be agreed in writing by duly authorized representatives of RTI and
MFCI.
(ii) Without limiting the terms of Section 2.3, all intercompany
receivables, payables and loans (other than receivables, payables and loans
otherwise specifically provided for in any of the Ancillary Agreements or
hereunder), including, without limitation, in respect of any cash balances, any
cash balances representing deposited checks or drafts for which only a
provisional credit has been allowed or any cash held in any centralized cash
management system, between MHCI or any of its Subsidiaries on the one hand, and
RTI or any of its Subsidiaries, on the other hand, shall, as of the Effective
Time, be settled, or converted into ordinary trade accounts, in each case as may
be agreed in writing by duly authorized representatives of RTI and MHCI.
(b) Operations in Ordinary Course. Each of RTI, MFCI and MHCI
-----------------------------
covenants and agrees that, except as otherwise provided in any Ancillary
Agreement, during the period from the date of this Agreement through the
Distribution Date, it will, and will cause any entity that is a Subsidiary of
such party at any time during such period to, conduct its business in a manner
substantially consistent with current and past operating practices and in the
ordinary course, including, without limitation, with respect to the payment and
administration of accounts payable and the administration of accounts
receivable, the purchase of the capital assets and equipment and the management
of inventories.
-11-
SECTION 2.3. Certain Indebtedness; Balance Sheets.
------------------------------------
(a) MRI, MFCI and MHCI each agrees to use its commercially reasonable
efforts to achieve an allocation of consolidated indebtedness of MRI which is
consistent with that reflected in the capital structure of each of MRI (RTI
after the Distribution), MFCI and MHCI set forth in its historical financial
statements included with the Proxy Statement.
(b) As soon as practicable after the date hereof (and whether or not
after the Effective Time), MRI shall cause to be prepared and shall deliver to
the parties hereto balance sheets of each of RTI, MFCI and MHCI as of March 2,
1996, prepared consistent with generally accepted accounting principles, this
Agreement, and accounting practices of MRI, which balance sheets shall, absent
manifest error, constitute the balance sheets of such companies as of such date,
respectively.
SECTION 2.4. Assumption and Satisfaction of Liabilities; Management
------------------------------------------------------
Responsibility for Shared Liabilities; Rights and Assets Relating to Shared
---------------------------------------------------------------------------
Liabilities.
-----------
(a) Except as otherwise specifically set forth in any Ancillary
Agreement, from and after the Effective Time, (i) RTI shall, and shall cause its
Subsidiaries to, assume, pay, perform and discharge all RTI Liabilities as and
when due, (ii) MFCI shall, and shall cause its Subsidiaries to, assume, pay,
perform and discharge all MFCI Liabilities as and when due, and (iii) MHCI
shall, and shall cause its Subsidiaries to, assume, pay, perform and discharge
all MHCI Liabilities as and when due.
(b) The parties acknowledge that various claims and administrative
matters may arise from time to time in respect of Shared Liabilities and that it
would be in the best interests of the parties hereto to designate responsibility
for managing and administering Shared Liabilities to one party, which party
shall be RTI, unless otherwise provided in an Ancillary Agreement. All out-of-
pocket costs and expenses (including, without limitation, reasonable attorneys'
fees and all expenses whatsoever reasonably incurred) incurred by or on behalf
of the party with such management and administrative responsibility shall be
shared among the parties in the same proportions in which the related Shared
Liability is shared.
(c) The parties hereto shall be entitled to share in any rights and
assets (including, without limitation, recoveries, claims, rights of subrogation
and proceeds of asset sales) that relate to Shared Liabilities in the same
proportion as the designated responsibility of the parties with respect to such
Shared Liabilities.
(d) (i) To the extent that for whatever reason RTI fails, refuses or
is unable to pay any RTI Liabilities and as result thereof MFCI or MHCI is
legally obligated or required to pay such RTI Liabilities, then such RTI
Liabilities shall be deemed Shared Liabilities hereunder as to MFCI and MHCI and
shared one-half each.
-12-
(ii) To the extent that for whatever reason MFCI fails, refuses or
is unable to pay any MFCI Liabilities and as result thereof RTI or MHCI is
legally obligated or required to pay such MFCI Liabilities, then such MFCI
Liabilities shall be deemed Shared Liabilities hereunder as to RTI and MHCI and
shared one-half each.
(iii) To the extent that for whatever reason MHCI fails, refuses
or is unable to pay any MFCI Liabilities and as result thereof RTI or MFCI is
legally obligated or required to pay such MHCI Liabilities, then such MHCI
Liabilities shall be deemed Shared Liabilities hereunder as to RTI and MFCI and
shared one-half each.
SECTION 2.5. Resignations.
------------
(a) RTI shall cause all its officers to resign, effective as of the
Effective Time, from all positions as directors or officers of MFCI or as
officers or directors of any Subsidiary of MFCI in which they serve. MFCI shall
cause all its officers to resign, effective as of the Effective Time, from all
positions as directors or officers of RTI or as officers or directors of any
Subsidiary of RTI in which they serve.
(b) RTI shall cause all its officers to resign, effective as of the
Effective Time, from all positions as directors or officers of MHCI or as
officers or directors of any Subsidiary of MHCI in which they serve. MHCI shall
cause all its officers to resign, effective as of the Effective Time, from all
positions as directors or officers of RTI or as directors or officers of any
Subsidiary of RTI in which they serve.
SECTION 2.6. Further Assurances. In case at any time after the Effective
------------------
Time any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement and the Ancillary Agreements, the proper officers of
each party to this Agreement shall take all such necessary action. Without
limiting the foregoing, RTI, MFCI and MHCI shall use their commercially
reasonable efforts to obtain all required consents and approvals, to enter into
all amendatory agreements and to make all filings and applications that may be
required for the consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements, including, without limitation, all applicable
governmental and regulatory filings.
SECTION 2.7. No Representations or Warranties. Each of the parties hereto
--------------------------------
understands and agrees that, except as otherwise expressly provided, no party
hereto is, in this Agreement or in any other agreement or document contemplated
by this Agreement or otherwise, making any representation or warranty
whatsoever, including, without limitation, as to title, value or legal
sufficiency. It is also agreed and understood that all assets either
transferred to or retained by the parties, as the case may be, shall be "as is,
where is" and that (subject to Section 2.6) the party to which such assets are
to be transferred hereunder shall bear economic and legal risk that any
conveyances of such assets shall prove to be insufficient or that such party's
or any Subsidiary's title to any such assets shall be other than good and
marketable and free from encumbrances. Similarly, each party hereto understands
and agrees that no party hereto in this
-13-
Agreement or in any other agreement or document contemplated by this Agreement
or otherwise, is representing or warranting in any way that the obtaining of any
amendatory agreements and the making of any filing or applications contemplated
by this Agreement will satisfy the provisions of any or all applicable
agreements or the requirements of any or all applicable laws or judgments, it
being agreed and understood that the party to which any assets are transferred
shall bear the economic and legal risk that any necessary consents or approvals
are not obtained or that any requirements or laws or judgments are not complied
with.
SECTION 2.8. Guarantees. Except as otherwise specified in any Ancillary
----------
Agreement and the guaranty by MHCI and MFCI of the MRI Credit Facility, each of
RTI, MFCI and MHCI shall use its commercially reasonable best efforts to have,
on or prior to the Distribution Date, or as soon as practicable thereafter, (i)
RTI and any of its Subsidiaries removed as guarantor of or obligor for any True
MFCI Liability or True MHCI Liability; (ii) MFCI removed as a guarantor of or
obligor for any True RTI Liability or True MHCI Liability or (iii) MHCI removed
as a guarantor of or obligor for any True RTI liability or True MFCI Liability,
in each case, without the requirement that it pay any additional consideration
in connection with obtaining the same.
SECTION 2.9. Witness Services. At all times from and after the
----------------
Distribution Date, each of RTI, MFCI and MHCI shall use their commercially
reasonable efforts to make available to the other, upon reasonable written
request, its and its Subsidiaries' officers, directors, employees and agents as
witnesses to the extent that (a) such persons may reasonable be required in
connection with the prosecution or defense of any Action in which the requesting
party may from time to time be involved and (b) there is no conflict in the
Action between the requesting party and RTI, MFCI or MHCI, as applicable. A
party providing witness services to the other party under this Section shall be
entitled to receive from the recipient of such services, upon the presentation
of invoices therefor, payments for such amounts, relating to supplies,
disbursements and other out-of-pocket expenses and direct and indirect costs of
employees who are witnesses, as may be reasonably incurred in providing such
witness services.
SECTION 2.10. Certain Post-Distribution Transactions.
--------------------------------------
(a)(i) RTI shall comply with and otherwise not take action
inconsistent with each representation, covenant and statement made, or to be
made, to the Internal Revenue Service in connection with the request by MRI for
a revenue ruling in respect of the Distribution or to MRI's tax counsel in
connection with such firm's rendering an opinion to MRI, MFCI and MHCI as to
certain tax aspects of the Distribution and (ii) until one year after the
Distribution Date, RTI will maintain its status as a company engaged in the
active conduct of a trade or business, as defined in Section 355(b) of the Code.
(b)(i) MFCI shall comply with and otherwise not take action
inconsistent with each representation, covenant and statement made, or to be
made, to the Internal Revenue Service in connection with the request by MRI for
a revenue ruling in respect of the Distribution
-14-
or to MRI's tax counsel in connection with such firm's rendering an opinion to
MRI, MFCI and MHCI as to certain tax aspects of the Distribution and (ii) until
one year after the Distribution Date, MFCI will maintain its status as a company
engaged in the active conduct of a trade or business, as defined in Section
355(b) of the Code.
(c)(i) MHCI shall comply with and otherwise not take action
inconsistent with each representation, covenant and statement made, or to be
made, to the Internal Revenue Service in connection with the request by MRI for
a revenue ruling in respect of the Distribution or to MRI's tax counsel in
connection with such firm's rendering an opinion to MRI, MFCI and MHCI as to
certain tax aspects of the Distribution and (ii) until one year after the
Distribution Date, MHCI will maintain its status as a company engaged in the
active conduct of a trade or business, as defined in Section 355(b) of the Code.
SECTION 2.11. Directors and Officers Liability Insurance. RTI agrees
------------------------------------------
that, from and after the Effective Time to the seventh anniversary of the
Distribution Date, it will maintain in full force and effect any Company
Policies providing directors and officers liability insurance ("D&O Insurance
Policies") (or, through the purchase of an alternative policy, the full benefits
and coverage of such D&O Insurance Policies) and shall not amend the terms of
such policies in a manner adverse to any persons covered by such insurance. The
cost of such insurance shall constitute a Shared Liability. The provisions of
this Section 2.11 are intended for the benefit of, and shall be enforced by,
each of the persons covered by the D&O Insurance Policies.
SECTION 2.12. Insurance. Except as contemplated by Article V and Section
---------
2.11 hereof, any and all coverage of MFCI, MHCI and their respective
Subsidiaries under Company Policies has terminated or will terminate (and will
not be replaced by MRI) no later than the Effective Time.
SECTION 2.13. Transfers Not Effected Prior to the Distribution; Transfers
-----------------------------------------------------------
Deemed Effective as of the Distribution Date. To the extent that any transfers
--------------------------------------------
contemplated by this Article II shall not have been consummated on or prior to
the Distribution Date, the parties shall cooperate to effect such transfers as
promptly following the Distribution Date as shall be practicable. Nothing
herein shall be deemed to require the transfer of any assets or the assumption
of any Liabilities which by their terms or operation of law cannot be
transferred; provided, however, that the parties hereto and their respective
-------- -------
Subsidiaries shall cooperate to seek to obtain any necessary consents or
approvals for the transfer of all assets and Liabilities contemplated to be
transferred pursuant to this Article II. In the event that any such transfer of
assets or Liabilities has not been consummated, from and after the Distribution
Date the party retaining such asset or Liability shall hold such asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto) or retain such Liability for the account of the party by
whom such Liability is to be assumed pursuant hereto, as the case may be, and
take such other action as may be reasonably requested by the party to whom such
asset is to be transferred, or by whom such Liability is to be assumed, as the
case may be, in order to place such party, insofar as is reasonably possible, in
the same position as would have existed
-15-
had such asset or Liability been transferred as contemplated hereby. As and
when any such asset or Liability becomes transferable, such transfer shall be
effected forthwith. The parties agree that, as of the Distribution Date, each
party hereto shall be deemed to have acquired complete and sole beneficial
ownership over all of the assets held by it, together with all rights, powers
and privileges incident thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Liabilities, and all
duties, obligations and responsibilities incident thereto, which such party is
entitled to acquire or required to assume pursuant to the terms of this
Agreement.
SECTION 2.14. Ancillary Agreements. Prior to the Distribution Date, each
--------------------
of MRI, MFCI and MHCI shall enter into, and/or (where applicable) shall cause
their respective Subsidiaries to enter into, the Ancillary Agreements and any
other agreements in respect of the Distribution reasonably necessary or
appropriate in connection with the transactions contemplated hereby and thereby.
ARTICLE III. INDEMNIFICATION
SECTION 3.1. Indemnification by RTI. Except as otherwise specifically set
----------------------
forth in any provision of this Agreement or of any Ancillary Agreement, RTI
shall indemnify, defend and hold harmless the MFCI Indemnitees and the MHCI
Indemnitees from and against any and all Indemnifiable Losses of the MFCI
Indemnitees and the MHCI Indemnitees, respectively, arising out of, by reason of
or otherwise in connection with (i) the RTI Liabilities or (ii) the breach by
RTI of any provision of this Agreement or any Ancillary Agreement.
SECTION 3.2. Indemnification by MFCI. Except as otherwise specifically
-----------------------
set forth in any provision of this Agreement or of any Ancillary Agreement, MFCI
shall indemnify, defend and hold harmless the RTI Indemnitees and the MHCI
Indemnitees from and against any and all Indemnifiable Losses of the RTI
Indemnitees and the MHCI Indemnitees, respectively, arising out of, by reason of
or otherwise in connection with (i) the MFCI Liabilities or (ii) the breach by
MFCI of any provision of this Agreement or any Ancillary Agreement.
SECTION 3.3. Indemnification by MHCI. Except as otherwise specifically
-----------------------
set forth in any provision of this Agreement or of any Ancillary Agreement, MHCI
shall indemnify, defend and hold harmless the RTI Indemnitees and the MFCI
Indemnitees from and against any and all Indemnifiable Losses of the RTI
Indemnitees and the MFCI Indemnitees, respectively, arising out of, by reason of
or otherwise in connection with (i) the MHCI Liabilities or (ii) the breach by
MHCI of any provision of this Agreement or any Ancillary Agreement.
SECTION 3.4. Limitations on Indemnification Obligations. The amount that
------------------------------------------
any party (an "Indemnifying Party") is or may be required to pay to any other
person (an "Indemnitee") pursuant to Section 3.1, Section 3.2 or Section 3.3, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered by or on behalf of such Indemnitee
in respect of the related Indemnifiable Loss. If an Indemnitee
-16-
shall have received the payment required by this Agreement from an Indemnifying
Party in respect of an Indemnifiable Loss and shall subsequently receive
Insurance Proceeds or other amounts in respect of such Indemnifiable Loss, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
of such Insurance Proceeds or other amounts actually received, up to the
aggregate amount of any payments received from such Indemnifying Party pursuant
to this Agreement in respect of such Indemnifiable Loss.
SECTION 3.5. Procedures for Indemnification.
------------------------------
(a) Third Party Claims (other than in respect of Shared Liabilities).
----------------------------------------------------------------
If a claim or demand is made against an Indemnitee by any person who is not a
party to this Agreement (a "Third Party Claim") as to which such Indemnitee is
entitled to indemnification pursuant to this Agreement, such Indemnitee shall
notify the Indemnifying Party in writing, and in reasonable detail, of the Third
Party Claim promptly (and in any event within 20 business days) after receipt by
such Indemnitee of written notice of the Third Party Claim; provided, however,
-------- -------
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure (except that the Indemnifying
Party shall not be liable for any expenses incurred during the period in which
the Indemnitee failed to give such notice). Thereafter, the Indemnitee shall
deliver to the Indemnifying Party, promptly (and in any event within 20 business
days) after the Indemnitee's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnitee relating to the
Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitee
therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
--------
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall control such defense. The Indemnifying Party shall be liable for
the fees and expenses of counsel employed by the Indemnitee for any period
during which the Indemnifying Party has failed to assume the defense thereof
(other than during the period prior to the time the Indemnitee shall have given
notice of the Third Party Claim as provided above). If the Indemnifying Party
so elects to assume the defense of any Third Party Claim, all of the Indemnitees
shall cooperate with the Indemnifying Party in the defense or prosecution
thereof.
If the Indemnifying Party acknowledges in writing liability for
indemnification of a Third Party Claim, then in no event will the Indemnitee
admit any liability with respect to, or settle, compromise or discharge, any
Third Party Claim without the Indemnifying Party's prior written
-17-
consent; provided, however, that the Indemnitee shall have the right to settle,
-------- -------
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for indemnification of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim and releases the Indemnitee completely in connection with
such Third Party Claim and that would not otherwise adversely affect the
Indemnitee; provided, however, that the Indemnitee may refuse to agree to any
-------- -------
such settlement, compromise or discharge if the Indemnitee agrees that the
Indemnifying Party's indemnification obligation with respect to such Third Party
Claim shall not exceed the amount that would have been required to be paid by or
on behalf of the Indemnifying Party in connection with such settlement,
compromise or discharge.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against the Indemnitee which the
Indemnitee reasonably determines, after conferring with its counsel, cannot be
separated from any related claim for money damages. If such equitable relief or
other relief portion of the Third Party Claim can be so separated from that for
money damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.
This Section 3.5(a) shall govern all claims under this Article III for
indemnification against Third Party Claims except Third Party Claims in respect
of Shared Liabilities, as to which Section 3.5(b) shall govern.
(b) Third Party Claims in Respect of Shared Liabilities. If a Third
---------------------------------------------------
Party Claim in respect of a Shared Liability is made against an Indemnitee, such
Indemnitee shall notify the Indemnifying Parties in writing, and in reasonable
detail, of the Third Party Claim promptly (and in any event within 20 business
days) after receipt by such Indemnitee of written notice of the Third Party
Claim; provided, however, that failure to give such notification shall not
-------- -------
affect the indemnification provided hereunder except to the extent an
Indemnifying Party shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Parties shall not be liable for any
expenses incurred during the period in which the Indemnitee failed to give such
notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Parties,
promptly (and in any event within 20 business days) after the Indemnitee's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnitee relating to the Third Party Claim.
-18-
Each Indemnifying Party shall be entitled to participate in the defense of
such Third Party Claim subject to the following provisions of this paragraph.
Without limiting the terms of Section 3.1, Section 3.2 or Section 3.3 hereof,
RTI (the "Managing Party") shall have management and administrative
responsibility in respect of the Third Party Claim against the Indemnitee unless
a different party is designated in an Ancillary Agreement to have management
responsibility for the Shared Liability (in which case the party so designated
shall be the "Managing Party"). Such management and administrative
responsibility shall entail the defense of such Third Party Claim, negotiation
with claimants and potential claimants (subject to the limitations in the
following paragraph) and other reasonably related activities. If the
Indemnifying Parties acknowledge in writing their respective obligations to
indemnify the Indemnitee for the Third Party Claim to the extent contemplated by
this Agreement, and an Indemnifying Party is the Managing Party, such
Indemnifying Party may assume the defense thereof with counsel selected by such
Indemnifying Party; provided that such counsel is not reasonably objected to by
--------
the Indemnitee or any other Indemnifying Party. The legal or other expenses in
respect of a Third Party Claim incurred by or on behalf of any person other than
the Managing Party shall not be Indemnifiable Losses for purposes of this
Agreement; provided, however, the Indemnifying Parties shall be liable for fees
-------- -------
and expenses of counsel employed by the Indemnitee for any period during which
an Indemnifying Party, in its capacity as Managing Party, has failed to assume
the defense thereof (other than during the period prior to the time the
Indemnitee shall have given notice of such Third Party Claim as provided above),
but only to the extent contemplated by the final paragraph of this Section
3.5(b). The Managing Party shall control the defense of such Third Party Claim,
although the Indemnitee (if not the Managing Party) shall have the right to
participate in such defense and to employ counsel, at its own expense, separate
from the counsel employed by the Managing Party. All of the Indemnitees and
each Indemnifying Party shall cooperate with the Managing Party and each other
in the defense or prosecution of such Third Party Claim.
If each of the Indemnifying Parties acknowledges in writing liability for
such Third Party Claim to the extent contemplated by this Agreement, then in no
event will any Indemnitee admit any liability with respect to, or settle,
compromise or discharge, any such Third Party Claim without each of the
Indemnifying Party's prior written consent; provided, however, that the
-------- -------
Indemnitee shall have the right to settle, compromise or discharge such Third
Party Claim without the consent of the Indemnifying Parties if the Indemnitee
releases each of the Indemnifying Parties from their respective indemnification
obligation hereunder with respect to such Third Party Claim and such settlement,
compromise or discharge would not otherwise adversely affect the Indemnifying
Parties. If the Indemnifying Parties acknowledge in writing liability for
indemnification of such Third Party Claim, an Indemnitee will agree to any
settlement, compromise or discharge of such Third Party Claim that the Managing
Party may recommend and that by its terms obligates the Indemnifying Parties to
pay the full amount of the liability in connection with such Third Party Claim
and releases the Indemnitee completely in connection with such Third Party Claim
(or portion thereof, as applicable) and that would not otherwise adversely
affect the Indemnitee; provided, however, that the Indemnitee may refuse to
-------- -------
agree to any such settlement, compromise or discharge if the Indemnitee agrees
that each of the
-19-
Indemnifying Party's indemnification obligations with respect to such Third
Party Claim shall not exceed the amount that would have been required to be paid
by or on behalf of such Indemnifying Party in connection with such settlement,
compromise or discharge.
Notwithstanding the foregoing, an Indemnifying Party shall not be entitled
to assume the defense of such Third Party Claim (and shall be liable for the
fees and expenses of counsel incurred by an Indemnitee in defending such Third
Party Claim to the extent contemplated by this Agreement) if the Third Party
Claim seeks an order, injunction or other equitable relief or relief for other
than money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its counsel, cannot be separated from any
related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, an Indemnifying Party shall be entitled to assume the defense of the
portion relating to money damages as contemplated above.
Legal and other expenses incurred in connection with each such Third Party
Claim which are Indemnifiable Losses shall be shared by the parties in the same
proportions in which the related Shared Liability is shared.
SECTION 3.6. Indemnification Payments. Indemnification required by this
------------------------
Article III shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
SECTION 3.7. Other Adjustments.
-----------------
(a) The amount of any Indemnifiable Loss shall be (i) increased to
take into account any net Tax cost actually incurred by the Indemnitee arising
from any payments received from the Indemnifying Party (grossed up for such
increase) and (ii) reduced to take account of any net Tax benefit actually
realized by the Indemnitee arising from the incurrence or payment of any such
Indemnifiable Loss. In computing the amount of such Tax cost or Tax benefit,
the Indemnitee shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
of any payment with respect to an Indemnifiable Loss or the incurrence or
payment of any Indemnifiable Loss.
(b) In addition to any adjustments required pursuant to Section 3.4
hereof or clause (a) of this Section 3.7, if the amount of any Indemnifiable
Loss shall, at any time subsequent to the payment required by this Agreement, be
reduced by recovery, settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall promptly be repaid by the
Indemnitee to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Loss.
-20-
SECTION 3.8. Survival of Indemnities. The obligations of RTI, MFCI and
-----------------------
MHCI under this Article III shall survive the sale or other transfer by any of
them of any assets or businesses or the assignment by any of them of any
Liabilities, with respect to any Indemnifiable Loss of any Indemnitee related to
such assets, businesses or Liabilities and shall be binding on the successors
and assigns of all, or substantially all, of their respective assets and
business.
ARTICLE IV. ACCESS TO INFORMATION
SECTION 4.1. Provision of Corporate Records.
------------------------------
(a) Unless otherwise specified in the procedures set forth in Schedule
4.3(b) hereto, after the Distribution Date, upon the prior written request by
MFCI or MHCI for specific and identified agreements, documents, books, records
or files (collectively, "Records") relating to or affecting MFCI or MHCI, as
applicable, RTI shall arrange, as soon as reasonably practicable following the
receipt of such request, for the provision of appropriate copies of such Records
(or the originals thereof if the party making the request has a reasonable need
for such originals) in the possession of RTI or any of its Subsidiaries, but
only to the extent such items are not already in the possession of the
requesting party.
(b) Unless otherwise specified in the procedures set forth in Schedule
4.3(b) hereto, after the Distribution Date, upon the prior written request by
RTI or MHCI for specific and identified Records relating to or affecting RTI or
MHCI, as applicable, MFCI shall arrange, as soon as reasonably practicable
following the receipt of such request, for the provision of appropriate copies
of such Records (or the originals thereof if the party making the request has a
reasonable need for such originals) in the possession of MFCI or any of its
Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
(c) Unless otherwise specified in the procedures set forth in Schedule
4.3(b) hereto, after the Distribution Date, upon the prior written request by
RTI or MFCI for specific and identified Records relating to or affecting RTI or
MFCI, as applicable, MHCI shall arrange, as soon as reasonably practicable
following the receipt of such request, for the provision of appropriate copies
of such Records (or the originals thereof if the party making the request has a
reasonable need for such originals) in the possession of MHCI or any of its
Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
SECTION 4.2. Access to Information.
---------------------
(a) Unless otherwise specified in the procedures set forth in Schedule
4.3(b) hereto, from and after the Distribution Date, each of RTI, MFCI and MHCI
shall afford to the other and its authorized accountants, counsel and other
designated representatives reasonable access during normal business hours,
subject to appropriate restrictions for classified, privileged or confidential
information, to the personnel, properties, books and records of such party and
its Subsidiaries insofar as such access is reasonably required by the other
party.
-21-
(b) For a period of five years following the Distribution Date, each
of RTI, MFCI and MHCI shall provide to the other, promptly upon request, all
documents that shall be filed by it and by any of its respective Subsidiaries
with the Commission pursuant to the periodic and interim reporting requirements
of the Securities Exchange Act of 1934, and the rules and regulations of the
Commission promulgated thereunder.
SECTION 4.3. Reimbursement; Other Matters.
----------------------------
(a) Except to the extent otherwise contemplated by any Ancillary
Agreement, a party providing Records or access to information to another party
under this Article IV shall be entitled to receive from the recipient, upon the
presentation of invoices therefor, payments for such amounts, relating to
supplies, disbursements and other out-of-pocket expenses, as may be reasonably
incurred in providing such Records or access to information.
(b) The parties hereto shall comply with those document retention
policies as shall be set forth in Schedule 4.3(b) hereto or established and
agreed to in writing by their respective authorized officers on or prior to the
Distribution Date in respect of Records and related matters.
SECTION 4.4. Confidentiality. Each of (a) RTI and its Subsidiaries, (b)
---------------
MFCI and its Subsidiaries and (c) MHCI and its Subsidiaries shall not use or
permit the use of (without the prior written consent of the others) and shall
hold, and shall cause its consultants and advisors to hold, in strict
confidence, all information concerning the other parties in its possession, its
custody or under its control (except to the extent that (i) such information has
been in the public domain through no fault of such party or (ii) such
information has been later lawfully acquired from other sources by such party or
(iii) this Agreement or any other Ancillary Agreement or any other agreement
entered into pursuant hereto permits the use or disclosure of such information)
to the extent such information (A) relates to the period up to the Effective
Time, (B) relates to any Ancillary Agreement or (C) is obtained in the course of
performing pursuant to any Ancillary Agreement, and each party shall not
(without the prior written consent of the other) otherwise release or disclose
such information to any other person, except such party's auditors and
attorneys, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by law and such
party has used commercially reasonable efforts to consult with the other
affected party or parties prior to such disclosure. To the extent that a party
hereto is compelled by judicial or administrative process to disclose such
information under circumstances in which any evidentiary privilege would be
available, such party agrees to assert such privilege in good faith prior to
making such disclosure. Each of the parties hereto agrees to consult with each
relevant other party in connection with any such judicial or administrative
process, including, without limitation, in determining whether any privilege is
available, and further agrees to allow each such relevant party and its counsel
to participate in any hearing or other proceeding (including, without
limitations, any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.
-22-
ARTICLE V. INSURANCE
SECTION 5.1. Policies and Rights Included Within Assets.
------------------------------------------
(a) The MFCI Assets shall include any and all rights of an insured
party under each of the Company Policies, subject to the terms of such Company
Policies and any limitations or obligations of MFCI contemplated by this Article
V, specifically including rights of indemnity and the right to be defended by or
at the expense of the insurer, with respect to all claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses incurred or
claimed to have been incurred prior to the Distribution Date by any party in or
in connection with the conduct of the MFCI Business or, to the extent any claim
is made against MFCI or any of its Subsidiaries, the conduct of the RTI Business
or the MHCI Business, and which claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses may arise out of an insured or
insurable occurrence under one or more of such Company Policies; provided,
--------
however, that nothing in this clause shall be deemed to constitute (or to
-------
reflect) an assignment of such Company Policies, or any of them, to MFCI.
(b) The MHCI Assets shall include any and all rights of an insured
party under each of the Company Policies, subject to the terms of such Company
Policies and any limitations or obligations of MHCI contemplated by this Article
V, specifically including rights of indemnity and the right to be defended by or
at the expense of the insurer, with respect to all claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses incurred or
claimed to have been incurred prior to the Distribution Date by any party in or
in connection with the conduct of the MHCI Business or, to the extent any claim
is made against MHCI or any of its Subsidiaries, the conduct of the RTI Business
or the MFCI Business, and which claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses may arise out of an insured or
insurable occurrence under such Company Policies; provided, however, that
-------- -------
nothing in this clause shall be deemed to constitute (or to reflect) an
assignment of such Company Policies, or any of them, to MHCI.
SECTION 5.2. Post-Distribution Date Claims.
-----------------------------
(a) If, subsequent to the Distribution Date, any person shall assert a
claim against MFCI or any of its Subsidiaries (including, without limitation,
where MFCI or its Subsidiaries are joint defendants with other persons) with
respect to any claim, suit, action, proceeding, injury, loss, liability, damage
or expense incurred or claimed to have been incurred prior to the Distribution
Date in or in connection with the conduct of the MFCI Business, and which claim,
suit, action, proceeding, injury, loss, liability, damage or expense may arise
out of an insured or insurable occurrence under one or more of the Company
Policies, RTI shall, at the time such claim is asserted, to the extent any such
Company Policy may require that Insurance Proceeds thereunder be collected
directly by the party against whom the Insured Claim is asserted, be deemed to
designate, without need of further documentation, MFCI as the agent and
attorney-in-fact to assert and to collect any related Insurance Proceeds under
such Company
-23-
Policy, and shall further be deemed to assign, without need of further
documentation, to MFCI any and all rights of an insured party under such Company
Policy with respect to such asserted claim, specifically including rights of
indemnity and the right to be defended by or at the expense of the insurer and
the right to any applicable Insurance Proceeds thereunder; provided, however,
-------- -------
that nothing in this Section 5.2(a) shall be deemed to constitute (or to
reflect) an assignment of the Company Policies, or any of them, to MFCI.
(b) If, subsequent to the Distribution Date, any person shall assert a
claim against MHCI or any of its Subsidiaries (including, without limitation,
where MHCI or its Subsidiaries are joint defendants with other persons) with
respect to any claim, suit, action, proceeding, injury, loss, liability, damage
or expense incurred or claimed to have been incurred prior to the Distribution
Date in or in connection with the conduct of the MHCI Business, and which claim,
suit, action, proceeding, injury, loss, liability, damage or expense may arise
out of an insured or insurable occurrence under one or more of the Company
Policies, RTI shall, at the time such claim is asserted, to the extent such
Company Policy may require that Insurance Proceeds thereunder be collected
directly by the party against whom the Insured Claim is asserted, be deemed to
designate, without need of further documentation, MHCI as the agent and
attorney-in-fact to assert and to collect any related Insurance Proceeds under
such Company Policy, and shall further be deemed to assign, without need of
further documentation, to MHCI any and all rights of an insured party under such
Company Policy with respect to such asserted claim, specifically including
rights of indemnity and the right to be defended by or at the expense of the
insurer and the right to any applicable Insurance Proceeds thereunder; provided,
--------
however, that nothing in this Section 5.2(b) shall be deemed to constitute (or
-------
to reflect) an assignment of such Company Policies, or any of them, to MHCI.
SECTION 5.3. Administration; Other Matters. Except as otherwise provided
-----------------------------
in Section 5.2 hereof, from and after the Distribution Date RTI shall be
responsible for (i) Insurance Administration of the Company Policies and (ii)
Claims Administration under such Company Policies with respect to RTI
Liabilities, MFCI Liabilities and MHCI Liabilities; provided that the retention
--------
of such responsibilities by RTI is in no way intended to limit, inhibit or
preclude any right to insurance coverage for any Insured Claim of a named
insured under such Policies as contemplated by the terms of this Agreement; and
provided further that RTI's retention of the administrative responsibilities for
-------- -------
the Company Policies shall not relieve the party submitting any Insured Claim of
the primary responsibility for reporting such Insured Claim accurately,
completely and in a timely manner. RTI may discharge its administrative
responsibilities under this Section 5.3 by contracting for the provision of
services by independent parties. Subject to the indemnification provisions of
Article III, each of the parties hereto shall administer and pay any costs
relating to defending its respective Insured Claims under Company Policies to
the extent such defense costs are not covered under such Policies and shall be
responsible for obtaining or reviewing the appropriateness of releases upon
settlement of its respective Insured Claims under Company Policies.
-24-
(a) Exceeding Policy Limits. Where MFCI Liabilities, MHCI Liabilities
-----------------------
or RTI Liabilities are specifically covered under the Company Policies for
periods prior to the Distribution Date, or under any such Company Policy
covering claims made after the Distribution Date with respect to an occurrence
prior to the Distribution Date, then from and after the Distribution Date MFCI,
MHCI and RTI-Delaware may claim coverage for Insured Claims under each such
applicable Company Policy as and to the extent that such insurance is available
up to the full extent of the applicable limits of liability, if any, of such
Company Policy (and may receive any Insurance Proceeds with respect thereto as
contemplated by Section 5.2 or Section 5.3(c) hereof), subject to the terms of
this Section 5.3(b). In the event that the total loss payables of Insured
Claims by MFCI, MHCI and RTI shall have exhausted the limits of liability, if
any, under a Company Policy which is not further covered by an umbrella or
excess umbrella policy, taking into account defense costs to the extent such
costs are applied against such limits of such Policy, then a party that has
utilized more than one-third of the limits of liability under such Company
Policy (a "benefitted party") shall indemnify the other parties which utilized
less than one-third of such limits of liability, if any, (a "nonexceeding
party") for any subsequent claim by a nonexceeding party (including, without
limitation, defense costs related to such claim) arising out of an insured or
insurable occurrence under such Company Policy which would have been an Insured
Claim but for the fact that the limits of such Company Policy were exceeded, up
to the difference between one-third of the limits of liability, if any, under
such Company Policy and the amount of such limits of liability, if any
(excluding defense costs to the extent such costs are not applied against the
fixed dollar coverage limits) actually utilized by the nonexceeding party (the
"maximum reimbursement amount"). Each of the parties agrees to use commercially
reasonable efforts to maximize available coverage under those Company Policies
applicable to it, and to take all commercially reasonable steps to recover from
all other responsible parties in respect of an Insured Claim to the extent it is
a benefitted party or would become a benefitted party as a result of an Insured
Claim. Each nonexceeding party shall submit to each benefitted party the same
information and documentation that it would have been required to submit to the
insurance carrier under the applicable Company Policy within the same time
frames provided for in such Company Policy, and each benefitted party shall,
within 30 days of receipt of documentation supporting such claim, either pay
such claim or give written notice denying the claim to the nonexceeding party.
(b) Allocation of Insurance Proceeds. Except as otherwise provided in
--------------------------------
Section 5.2, Insurance Proceeds received with respect to claims, costs and
expenses under the Company Policies shall be paid to RTI, which shall thereafter
administer the Company Policies by paying the Insurance Proceeds, as
appropriate, to RTI with respect to RTI Liabilities, to MFCI with respect to
MFCI Liabilities and to MHCI with respect to MHCI Liabilities. Payment of the
allocable portions of indemnity costs of Insurance Proceeds resulting from such
Policies will be made by RTI to the appropriate party upon receipt from the
insurance carrier. In the event that the aggregate limits on any Company
Policies are exceeded by the aggregate outstanding Insured Claims by two or more
of the relevant parties hereto, such parties shall agree on an equitable
allocation of Insurance Proceeds based upon their respective bona fide claims.
The parties agree to use commercially reasonable efforts to maximize available
coverage under
-25-
those Company Policies applicable to it, and to take all commercially reasonable
steps to recover from all other responsible parties in respect of an Insured
Claim to the extent coverage limits under a Company Policy have been exceeded or
would be exceeded as a result of such Insured Claim.
SECTION 5.4. Agreement for Waiver of Conflict and Shared Defense. In the
---------------------------------------------------
event that Insured Claims of more than one of the parties hereto exist relating
to the same occurrence, the relevant parties shall jointly defend and waive any
conflict of interest necessary to the conduct of the joint defense. Nothing in
this Section 5.4 shall be construed to limit or otherwise alter in any way the
obligations of the parties to this Agreement, including those created by this
Agreement, by operation of law or otherwise.
SECTION 5.5. Cooperation. The parties agree to use their commercially
-----------
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement.
ARTICLE VI. DISPUTE RESOLUTION
In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, including, without limitation, any
claim based on contract, tort, statute or constitution (collectively, "Agreement
Disputes"), the party asserting the Agreement Dispute shall give written notice
to all other parties of the existence and nature of such Agreement Dispute.
Thereafter, the general counsels of the relevant parties shall negotiate in good
faith for a period no less than 60 days after the date of the notice in an
attempt to settle such Agreement Dispute. If after such reasonable period such
general counsels are unable to settle such Agreement Dispute (and in no event
before the 60 days have elapsed from the date of the notice), any party hereto
may commence arbitration by giving written notice to all other parties that such
Agreement Dispute has been referred to the American Arbitration Association for
arbitration in accordance with the provisions of this Article.
All Agreement Disputes shall be settled by arbitration in Atlanta, Georgia,
before a single arbitrator in accordance with the rules of the American
Arbitration Association (the "Rules"). The arbitrator shall be selected by the
mutual agreement of all parties, but if they do not so agree within twenty (20)
days after the date of the notice of arbitration referred to above, the
selection shall be made pursuant to the Rules from the panels of arbitrators
maintained by the American Arbitration Association. The arbitrator shall be an
individual with substantial professional experience with regard to resolving or
settling sophisticated commercial disputes.
Any award rendered by the arbitrator shall be conclusive and binding upon
the parties hereto; provided, however, that any such award shall be accompanied
by a written opinion of the arbitrator giving the reasons for the award. This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the arbitrator in accordance herewith shall be final
-26-
and binding and there shall be no right of appeal therefrom. The parties agree
to comply with any award made in any such arbitration proceedings that has
become final in accordance with the Rules, and agree to the entry of a judgment
in any jurisdiction upon any award rendered in such proceedings becoming final
under the Rules.
In his award the arbitrator shall allocate, in his discretion, among the
parties to the arbitration all costs of the arbitration, including, without
limitation, the fees and expenses of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the parties. Absent such an
allocation by the arbitrator, each party shall pay its own expenses of
arbitration, and the expenses of the arbitrator shall be equally shared.
Nothing contained in this Article shall prevent the parties from settling
any Agreement Dispute by mutual agreement at any time.
ARTICLE VII. MISCELLANEOUS
SECTION 7.1. Complete Agreement; Construction. This Agreement, including
--------------------------------
the Schedules and the Ancillary Agreements shall constitute the entire agreement
between the parties with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter. In the event of any inconsistency between this Agreement
and any Schedule hereto, the Schedule shall prevail. In the event and to the
extent that there shall be a conflict between the provisions of this Agreement
and the provisions of an Ancillary Agreement, such Ancillary Agreement shall
control; provided, however, that the provisions of this Agreement shall govern
in the event of and to the extent of any conflict between the provisions of this
Agreement and the provisions of that certain Transfer and Assumption Agreement
between MRI and MFCI, that certain Transfer and Assumption Agreement between MRI
and MHCI, each dated as of January 1, 1996, and the Tax Allocation Agreement.
SECTION 7.2. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 7.3. Survival of Agreements. Except as otherwise contemplated by
----------------------
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
SECTION 7.4. Notices. All notices and other communications hereunder
-------
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following address (or at such other addresses for a party as shall
-27-
be specified by like notice) and will be deemed given on the date on which such
notice is received:
To RTI:
Ruby Tuesday, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President, General Counsel and Secretary
To MFCI:
▇▇▇▇▇▇▇▇ Fresh Cooking, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, General Counsel and Secretary
To MHCI:
▇▇▇▇▇▇▇▇ Health Care, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, General Counsel and Secretary
SECTION 7.5. Waivers. The failure of either party to require strict
-------
performance by the other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
SECTION 7.6. Amendments. Subject to the terms of Section 7.9 hereof,
----------
this Agreement may not be modified or amended except by an agreement in writing
signed by the parties.
SECTION 7.7. Assignment. This Agreement shall be assignable in whole in
----------
connection with a merger or consolidation or the sale of all or substantially
all the assets of a party hereto. Otherwise this Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the others, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall be
void.
-28-
SECTION 7.8. Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
SECTION 7.9. Termination. This Agreement (including, without limitation,
-----------
Section 2.11 and Article III hereof) may be terminated and the Distribution may
be amended, modified or abandoned at any time prior to the Distribution by and
in the sole discretion of MRI without the approval of MFCI or MHCI or the
shareholders of MRI. In the event of such termination, no party shall have any
liability of any kind to any other party or any other person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties; provided, however, that Section 2.11 and Article
-------- -------
III shall not be terminated or amended after the Distribution in respect of the
third party beneficiaries thereto without the consent of such persons.
SECTION 7.10. Subsidiaries. Each of the parties hereto shall cause to be
------------
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party or
by any entity that is contemplated to be a Subsidiary of such party on and after
the Distribution Date.
SECTION 7.11. Third Party Beneficiaries. Except as provided in Section
-------------------------
2.11 relating to directors and officers liability insurance and in Article III
relating to Indemnitees, this Agreement is solely for the benefit of the parties
hereto and their respective Subsidiaries and Affiliates and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement.
SECTION 7.12. Attorney Fees. Except as contemplated by an arbitrator's
-------------
decision pursuant to Article VI hereof, a party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other parties hereto for and
against all out-of-pocket expenses, including, without limitation, reasonable
legal fees, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement. The payment of such expenses is
in addition to any other relief to which such other party may be entitled
hereunder or otherwise.
SECTION 7.13. Title and Headings. Titles and headings to sections herein
------------------
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.14. Schedules. The Schedules shall be construed with and as an
---------
integral part of this Agreement to the same extent as if the same had been set
forth verbatim herein.
-29-
SECTION 7.15. Specific Performance. Each of the parties hereto
--------------------
acknowledges that there is no adequate remedy at law for failure by such parties
to comply with the provisions of this Agreement and that such failure would
cause immediate harm that would not be adequately compensable in damages, and
therefore agree that their agreements contained herein may be specifically
enforced without the requirement of posting a bond or other security, in
addition to all other remedies available to the parties hereto under this
Agreement.
SECTION 7.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO
CONTRACTS EXECUTED IN AND TO BE PERFORMED IN THAT STATE.
SECTION 7.17. Consent to Jurisdiction. Without limiting the provisions of
-----------------------
Article VI hereof, each of the parties irrevocably submits to the exclusive
jurisdiction of (a) the Superior Court of ▇▇▇▇▇▇ County, Georgia, and (b) The
United States District Court for the Northern District of Georgia, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Northern District of Georgia or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Superior Court of ▇▇▇▇▇▇ County. Each of the parties further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Georgia with respect to any
matters to which it has submitted to jurisdiction in this Section 7.17. Each of
the parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Superior Court of ▇▇▇▇▇▇ County,
Georgia, or (ii) the United States District Court for the Northern District of
Georgia, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 7.18. Severability. In the event any one or more of the
------------
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
-30-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
▇▇▇▇▇▇▇▇ RESTAURANTS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Title: Senior Vice President, General
Counsel and Secretary
-------------------------------
▇▇▇▇▇▇▇▇ FRESH COOKING, INC.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------
▇▇▇▇▇▇▇▇ HEALTH CARE, INC.
By: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------
-31-
Schedule 1.1(a)
MHCI Subsidiaries
Custom Management Corporation
Custom Management Corporation of Pennsylvania
▇▇▇▇▇▇▇▇ Custom Management Corporation of Pennsylvania
▇▇▇▇ ▇. ▇▇▇▇ & Associates, Inc.
Marcorp Diversified, Inc.
▇▇▇▇▇▇▇▇'▇ Healthcare of Texas, Inc.
Schedule 1.1(b)
RTI Subsidiaries
Ruby Tuesday, Inc. (a Delaware corporation)
Ruby Tuesday (Georgia), Inc. (a Georgia corporation)
Tias, Inc.
▇▇▇▇▇▇▇▇ International, Inc.
Jezebel, Inc.
SRD of Wisconsin, Inc.
Jubilee, Inc.
▇▇▇▇▇, Inc.
Orpah, Inc.
▇▇▇▇▇▇▇▇ of New Jersey, Inc.
Ruby Tuesday of Columbia, Inc.
LW Beverage Co., Inc.
Ruby Tuesday of Salisbury, Inc.
Free Race Mall Rest., ▇.▇.
▇▇▇▇▇ Permit Co., Inc.
Tia's Club-▇▇▇▇▇▇, Inc.
Tia's Club-Lewisville, Inc.
Tia's Club-Carrollton, Inc.
Tia's Club-Plano, Inc.
Tia's Club-Red Bird, Inc.
Tia's Club-Mesquite, Inc.
Tia's Club-▇▇▇▇▇▇▇▇▇▇, Inc.
Schedule 1.1(c)
Shared Liabilities
Liabilities relating to:
1. Securities Matters; and
2. the Operation of Corporate Headquarters;
Schedule 4.3(b)
Document Retention Policies
---------------------------
Period of
Description of Record Retention (Years)*
--------------------- ------------------
General Records:
---------------
Certificate of Incorporation Permanent
Charter Permanent
By-Laws (including all amendments) Permanent
Minutes of Board of Directors' Meetings Permanent
Minutes of Stockholder Meetings Permanent
Stock Certificate Books and Transfer Records Permanent
Deeds Permanent
Abstracts of Title Permanent
Title Insurance Policies Permanent
Contracts and Agreements - Terminated 5 Years
Dividend Checks 5 Years
Government Contracts and Subcontracts - Terminated 3 Years
Leases 6 Years (after expiration
or termination)
Patents and Trademarks Permanent
Mortgages - Settled 6 Years (after settlement)
Options - Expired 3 Years (after expiration)
Options - Exercised Permanent
Notes - Cancelled 6 Years
Audit Reports Permanent
Contracts with Employees - Terminated 6 Years
Contracts with Brokers and Distributors - Terminated 3 Years
Surety Bonds - Expired 3 Years
Fidelity Bonds of Employees 3 Years (after expiration)
Insurance policies - Terminated 3 Years
Miscellaneous Correspondence 3 Years
Federal and State Income Tax Returns Permanent
* If there are pending examinations or cases, or extensions or waivers of the
statute of limitations with respect thereto, the recommended retention period
should be considered accordingly. The retention periods set forth herein are
subject in all respects to the policies for Record Maintenance under Federal Law
attached as Appendix A which the parties shall also comply with. In the event
of a conflict between the retention periods set forth in this schedule and in
Appendix A for any particular document, the longer shall be applicable.
Document Retention Policies (Cont'd)
------------------------------------
Period of
Description of Record Retention (Years)
--------------------- -----------------
General Accounting:
------------------
General Ledger Permanent
Cash Receipts Journal Permanent
Cash Disbursements Journal Permanent
Fruit Purchases Journal Permanent
Growers' Ledger Permanent
Fruit Ledger Permanent
Voucher Register or Purchases Journal Permanent
Journal Vouchers Permanent
General Journal Permanent
Audit Reports Permanent
Auditors' adjusting entries Permanent
Supporting schedules and data for journal entries Permanent
Bank statements and reconciliations 6 Years
Cancelled voucher or general fund checks 6 Years
Cancelled payroll checks 6 Years
Cancelled fruit purchase checks 6 Years
Duplicate copies of checks 3 Years
Deposit books and slips 6 Years
Daily cash position reports 1 Year
Sales invoices 3 Years
Accounts receivable ledger cards:
Collected accounts 3 Years
Uncollected accounts 3 Years
Notes and contracts receivable:
Collected 3 Years
Uncollected 5 Years
Shipping bills of lading 2 Years
Freight bills and statements 3 Years
Shipping reports 3 Years
Export declarations 4 Years
Sales correspondence 3 Years
Sales jackets and documents 3 Years
Sales bulletins and price lists 3 Years
Sales subsidiary 3 Years
Claim files - Settled 3 Years
Contracts with customers - Terminated 3 Years
Vendor invoices and credits 3 Years
Receiving reports 3 Years
-36-
Document Retention Policies (Cont'd)
------------------------------------
Period of
Description of Record Retention (Years)
--------------------- -----------------
General Accounting: (Cont'd)
------------------
Purchase orders - Completed 3 Years
Contracts with vendors - Terminated 3 Years
Accounts payable ledger cards 3 Years
Advertising orders and contracts - Terminated 3 Years
Employee travel expense reports 6 Years
Fruit purchased and handled supplies statements 3 Years
Shop and maintenance department work orders and/or
expense distributions 3 Years
Cost production and job summary records 3 Years
Cost reports and statements 3 Years
Physical inventory records 6 Years
Fixed asset records - After asset disposal 3 Years
Security deposit receipts - After refunded 3 Years
Expense distributions 3 Years
Financial statements - Internal (including work papers) 6 Years
Payroll and Personnel:
---------------------
Payroll Register or Journal 6 Years
Individual employee earnings records 5 Years
Time cards, time sheets and piecework sheets 3 Years
Federal and State quarter and annual payroll reports 4 Years
W-4 Forms - Inactive 4 Years
Mailed and returned W-2 copies 3 Years
Payroll expense distributions 3 Years
Employee history records - Inactive 4 Years
Group insurance reports and records 6 Years
Accident reports 6 Years
Retirement and pension plan records Permanent
Manufacturing and Processing:
----------------------------
Fruit receipts and box records Permanent
Fruit receipt reports 3 Years
Fruit elimination reports 3 Years
Warehouse reports 3 Years
Production reports 3 Years
Internal reports for budgets, comparisons,
expense analysis, etc. 3 Years
-37-