===============================================================================
AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇▇▇▇▇ AMERICAN CORPORATION,
RICHMONT MARKETING SPECIALISTS INC.
and
THE STOCKHOLDERS OF
RICHMONT MARKETING SPECIALISTS INC.
Dated as of April 28, 1999
===============================================================================
TABLE OF CONTENTS
Page
ARTICLE 1. THE MERGER.................................................................... 2
1.1 The Merger.................................................................... 2
1.2 The Closing................................................................... 2
1.3 Effective Time................................................................ 2
1.4 Ancillary Agreements.......................................................... 2
1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation.......... 3
1.6 Board of Directors of Surviving Corporation................................... 3
1.7 Officers of Surviving Corporation............................................. 4
1.8 Change of Name................................................................ 4
ARTICLE 2. EXCHANGE OF STOCK............................................................. 4
2.1 Outstanding Common Stock of ▇▇▇▇▇▇▇........................................... 4
2.2 Conversion of RMSI Stock...................................................... 4
2.3 Lost or Stolen Certificates................................................... 7
2.4 Dissenters' Rights............................................................ 7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF RMSI........................................ 8
3.1 Existence; Good Standing; Authority; Compliance With Law...................... 8
3.2 Authorization, Validity and Effect of Agreements.............................. 9
3.3 Capital Stock of RMSI......................................................... 10
3.4 Real Property................................................................. 10
3.5 Contracts..................................................................... 12
3.6 Transactions with Interested Persons.......................................... 13
3.7 Employee Benefit Programs..................................................... 13
3.8 Intentionally Omitted......................................................... 16
3.9 No Payments to Employees, Officers and Directors.............................. 16
3.10 Taxes......................................................................... 16
3.11 Tax-Free Treatment............................................................ 18
3.12 Proxy Statement............................................................... 18
3.13 SEC Documents................................................................. 18
3.14 No Brokers.................................................................... 19
3.15 Litigation.................................................................... 19
3.16 Absence of Certain Changes.................................................... 19
3.17 Disclosure.................................................................... 19
3.18 Undisclosed Liabilities....................................................... 20
3.19 Customers and Principals...................................................... 20
3.20 Receivables................................................................... 20
3.21 Definition of RMSI's Knowledge................................................ 20
3.22 Ownership of ▇▇▇▇▇▇▇ Common Stock............................................. 20
(i)
Page
----
ARTICLE 4. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE RMSI STOCKHOLDERS.............. 21
4.1 Investment Representations...................................................... 21
4.2 Registration.................................................................... 21
4.3 Ownership of ▇▇▇▇▇▇▇ Common Stock............................................... 22
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇....................................... 22
5.1 Existence; Good Standing; Authority; Compliance With Law........................ 22
5.2 Authorization, Validity and Effect of Agreements................................ 23
5.3 Capital Stock of ▇▇▇▇▇▇▇........................................................ 24
5.4 Real Property................................................................... 25
5.5 Contracts....................................................................... 26
5.6 Transactions with Interested Persons............................................ 27
5.7 Employee Benefit Programs....................................................... 27
5.8 Intentionally Omitted........................................................... 29
5.9 No Payments to Employees, Officers and Directors................................ 29
5.10 Taxes........................................................................... 29
5.11 Tax-Free Treatment.............................................................. 31
5.12 Proxy Statement................................................................. 31
5.13 SEC Documents................................................................... 31
5.14 No Brokers...................................................................... 32
5.15 Litigation...................................................................... 32
5.16 Absence of Certain Changes...................................................... 32
5.17 Disclosure...................................................................... 32
5.18 Undisclosed Liabilities......................................................... 33
5.19 Customers and Principals........................................................ 33
5.20 Receivables..................................................................... 33
5.21 Definition of ▇▇▇▇▇▇▇'▇ Knowledge............................................... 33
5.22 Opinion of Financial Advisor.................................................... 33
ARTICLE 6. COVENANTS....................................................................... 34
6.1 Acquisition Proposals........................................................... 34
6.2 Conduct of Businesses........................................................... 36
6.3 Meeting of Stockholders......................................................... 39
6.4 Filings; Other Action........................................................... 39
6.5 Access to Information........................................................... 40
6.6 Publicity....................................................................... 41
6.7 Proxy Statement................................................................. 41
6.8 Listing Application............................................................. 42
6.9 Further Action.................................................................. 42
6.10 Affiliates of RMSI.............................................................. 43
6.11 Expenses........................................................................ 43
6.12 Notice of Default............................................................... 43
(ii)
Page
----
6.13 Filings Under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act............................................. 44
6.14 Tax-Free Treatment.............................................................. 44
6.15 Nonsolicitation................................................................. 44
6.16 Financing....................................................................... 45
6.17 RMSI Employees.................................................................. 45
6.18 Exchange Offer Registration Statement........................................... 45
6.19 Option Registration Statement................................................... 46
6.20 Ancillary Agreements............................................................ 46
6.21 Spousal Consent................................................................. 47
ARTICLE 7. CONDITIONS...................................................................... 47
7.1 Conditions to Each Party's Obligation to Effect the Merger...................... 47
7.2 Conditions to Obligations of RMSI to Effect the Merger.......................... 48
7.3 Conditions to Obligation of ▇▇▇▇▇▇▇ to Effect the Merger........................ 49
ARTICLE 8. TERMINATION; AMENDMENT; WAIVER.................................................. 50
8.1 Termination..................................................................... 50
8.2 Effect of Termination........................................................... 51
8.3 Extension; Waiver............................................................... 51
ARTICLE 9. GENERAL PROVISIONS.............................................................. 52
9.1 Nonsurvival of Representations, Warranties and Agreements....................... 52
9.2 Notices......................................................................... 52
9.3 Assignment; Binding Effect; Benefit............................................. 53
9.4 Entire Agreement................................................................ 53
9.5 Amendment....................................................................... 54
9.6 Governing Law................................................................... 54
9.7 Counterparts.................................................................... 54
9.8 Headings........................................................................ 54
9.9 Interpretation.................................................................. 54
9.10 Waivers......................................................................... 54
9.11 Incorporation................................................................... 55
9.12 Severability.................................................................... 55
9.13 Enforcement of Agreement........................................................ 55
9.14 Certain Definitions............................................................. 55
(iii)
Page
----
EXHIBITS
Exhibit A Certificate of Merger
Exhibit B-1 Form of ▇▇▇▇▇▇▇ Voting Agreement
Exhibit B-2 Form of RMSI Voting Agreement
Exhibit C-1 Form of Charter Amendment for Changes to Board of Directors
Exhibit C-2 Form of Charter Amendment for Name Change
Exhibit D Form of Affiliate Letter
Exhibit E Form of SMART Cancellation Consent
Exhibit F Form of Spousal Consent
Exhibit G Form of Post-Merger Voting Agreement
Exhibit H Form of Advisory Agreement
Exhibit I-1 Registration Rights Agreement for RMSI Stockholders
Exhibit I-2 Form of Registration Rights Agreement for ▇▇▇▇▇▇▇ Stockholders
SCHEDULES
Schedule 7.2(g) List of ▇▇▇▇▇▇▇ Required Consents
Schedule 7.3(i) List of RMSI Required Consents
Schedule 6.2(a)(xiii) Pending Transactions
(iv)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), is made and entered
into as of April 28, 1999, by and among ▇▇▇▇▇▇▇ American Corporation, a Delaware
corporation ("▇▇▇▇▇▇▇"), Richmont Marketing Specialists Inc., a Delaware
corporation ("RMSI"), and MS Acquisition Limited, a Texas limited partnership,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
(collectively, the "RMSI Stockholders").
RECITALS
WHEREAS, the boards of directors of ▇▇▇▇▇▇▇ and RMSI have each determined
that it is advisable and in the best interests of their respective stockholders
to consummate, and have approved, the business combination transaction provided
for herein in which RMSI would merge with and into ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ would be
the surviving corporation (the "Merger");
WHEREAS, the boards of directors of ▇▇▇▇▇▇▇ and RMSI, respectively, have
determined that the Merger is in the best interests of their respective
companies and presents an opportunity for their respective companies to achieve
long-term strategic and financial benefits, and accordingly have agreed to
effect the transactions provided for herein upon the terms and subject to the
conditions set forth herein;
WHEREAS, contemporaneously with the execution of this Agreement, the RMSI
Stockholders are entering into an agreement with ▇▇▇▇▇▇▇ in which they have
agreed to vote their shares of common stock, par value $.01 per share, of RMSI
("RMSI Common Stock") subject to the terms contained therein;
WHEREAS, contemporaneously with the execution of this Agreement, Monroe &
Company II, LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Management
Stockholders"), are entering into an agreement with RMSI in which they have
agreed to vote their shares of common stock, par value $.01 per share, of
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇ Common Stock") and their shares of restricted common stock,
par value $.01 per share, of ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇ Restricted Common Stock"),
subject to the terms contained therein; and
WHEREAS, ▇▇▇▇▇▇▇, RMSI and the RMSI Stockholders desire to make certain
representations, warranties and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE 1. THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
----------
at the Effective Time (as hereinafter defined), RMSI shall be merged with and
into ▇▇▇▇▇▇▇ in accordance with this Agreement, and the separate corporate
existence of RMSI shall thereupon cease. ▇▇▇▇▇▇▇ shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effect specified in Section 259 of the
Delaware General Corporation Law (the "DGCL"). It is intended that the Merger
will qualify as a reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). All of the parties to this Agreement
agree to report the Merger, for all purposes, in a manner which is consistent
with the preceding sentence.
1.2 The Closing. Subject to the terms and conditions of this Agreement,
-----------
the closing of the Merger (the "Closing") shall take place at the offices of
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, Exchange Place, Boston, Massachusetts, at 10:00
a.m., local time, on the date which is the first business day immediately
following the day on which the last of the conditions set forth in Article 7
shall be fulfilled or waived in accordance herewith, or at such other time, date
or place as the parties hereto may agree. Unless the parties shall otherwise
agree, the parties shall use their reasonable best efforts to cause the Closing
to occur as soon as possible after the meetings of stockholders of RMSI and
▇▇▇▇▇▇▇ held pursuant to Section 6.3. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all of the conditions to the Merger set forth in
--------------
Article 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 8, the parties
hereto shall promptly cause a Certificate of Merger satisfying the requirements
of the DGCL and in substantially the form attached hereto as Exhibit A (the
---------
"Certificate of Merger"), to be properly executed, verified and delivered for
filing in accordance with the DGCL on the Closing Date. The Merger shall become
effective upon the filing of the Certificate of Merger with the office of the
Secretary of State of the State of Delaware in accordance with the DGCL or at
such later time which the parties hereto shall have agreed upon and designated
in such filing in accordance with applicable law as the effective time of the
Merger (the "Effective Time").
1.4 Ancillary Agreements. As an inducement to ▇▇▇▇▇▇▇ and RMSI to enter
--------------------
into this Agreement, the following agreements are being executed
contemporaneously with the execution of this Agreement: the voting agreement
dated as of the date hereof by and among ▇▇▇▇▇▇▇ and the each of the RMSI
Stockholders in the form attached hereto as Exhibit B-1 (the "RMSI Voting
-----------
Agreement") and the voting agreement by and among RMSI and each of the
Management Stockholders in the form attached hereto as Exhibit B-2 (the "▇▇▇▇▇▇▇
-----------
Voting Agreement"). In addition, ▇▇▇▇▇▇▇ agrees to use commercially reasonable
efforts to obtain a Voting Agreement in the form attached hereto as Exhibit B-2
-----------
from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1984 Revocable Trust and the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1991 Charitable Remainder Unitrust.
2
1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation.
--------------------------------------------------------------------
(a) Charter. The Second Amended and Restated Certificate of
-------
Incorporation of ▇▇▇▇▇▇▇ in effect immediately prior to the Effective Time shall
be the certificate of incorporation of the Surviving Corporation, as amended as
provided in Sections 1.6(b) and 1.8 of this Agreement and until duly amended in
accordance with applicable law and such certificate of incorporation (the
"Surviving Corporation Charter").
(b) Bylaws. The bylaws of ▇▇▇▇▇▇▇ in effect immediately prior to the
------
Effective Time shall be the bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law, the Surviving Corporation Charter and
such bylaws.
1.6 Board of Directors of Surviving Corporation.
-------------------------------------------
(a) As of the Effective Time, the number of directors of ▇▇▇▇▇▇▇
shall be fixed at nine (9). As of the Effective Time, four (4) of the directors
of ▇▇▇▇▇▇▇ shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ (the foregoing four (4) individuals being referred to
herein collectively as the "▇▇▇▇▇▇▇ Designees"). As of the Effective Time, the
remaining five (5) directors of ▇▇▇▇▇▇▇ shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and one (1) individual (the "Independent
Director") designated by RMSI prior to the Effective Time who shall not be an
employee of either RMSI or ▇▇▇▇▇▇▇ and shall otherwise be reasonably acceptable
to ▇▇▇▇▇▇▇ (the foregoing five (5) individuals being referred to herein
collectively as the "RMSI Designees").
(b) At the Effective Time, the Second Amended and Restated
Certificate of Incorporation of ▇▇▇▇▇▇▇ shall be amended as set forth in Exhibit
-------
C-1 attached hereto (the "Board Amendment") so that the Board of Directors of
---
▇▇▇▇▇▇▇ shall be divided into three (3) classes, and the directors of each class
of the Board of Directors of ▇▇▇▇▇▇▇ shall be as follows (subject to the
provisions of this Section 1.6):
Class Designee Term Expires
------- -------------------- ------------
I ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2000
I ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 2000
I ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 2000
II ▇▇▇▇ ▇. ▇▇▇▇▇▇ 2001
II ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2001
II ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III 2001
III ▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002
III ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002
III Independent Director 2002
3
(c) ▇▇▇▇▇▇▇ and RMSI agree that in the event that any ▇▇▇▇▇▇▇
Designee is unable or otherwise fails to serve, for any reason, as a director of
▇▇▇▇▇▇▇ at the Effective Time, ▇▇▇▇▇▇▇ shall have the right to designate another
individual to serve as a director of ▇▇▇▇▇▇▇ at the Effective Time in place of
such ▇▇▇▇▇▇▇ Designee (or if a vacancy shall be deemed to have occurred in
respect thereof, ▇▇▇▇▇▇▇ shall have the right to fill such vacancy,
notwithstanding any other provision to the contrary contained herein); provided,
--------
however, that such individual shall be reasonably satisfactory to RMSI. ▇▇▇▇▇▇▇
-------
and RMSI shall each cause such designee of ▇▇▇▇▇▇▇ to be elected to the Board of
Directors of ▇▇▇▇▇▇▇ at the Effective Time in place of such ▇▇▇▇▇▇▇ Designee.
(d) ▇▇▇▇▇▇▇ and RMSI agree that in the event that any RMSI Designee
is unable or otherwise fails to serve, for any reason, as a director of ▇▇▇▇▇▇▇
at the Effective Time, RMSI shall have the right to designate another individual
to serve as a director of ▇▇▇▇▇▇▇ at the Effective Time in place of such RMSI
Designee (or if a vacancy shall be deemed to have occurred in respect thereof,
RMSI shall have the right to fill such vacancy, notwithstanding any other
provision to the contrary contained herein); provided, however, that such
-------- -------
individual shall be reasonably satisfactory to ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ and RMSI shall
each cause such designee of RMSI to be elected to the Board of Directors of
▇▇▇▇▇▇▇ at the Effective Time in place of such RMSI Designee.
1.7 Officers of Surviving Corporation. At the Effective Time, the
---------------------------------
officers of ▇▇▇▇▇▇▇ shall include, but not be limited to, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
who shall be Chairman of the Board of Directors, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who shall be
Chief Executive Officer and President, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who shall be Chief
Operating Officer, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, who shall be Chief Financial Officer,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, who shall be Executive Vice President--Sales, and ▇▇▇▇▇▇▇
▇▇▇▇, who shall be an Executive Vice President--New Business Development.
1.8 Change of Name. At the Effective Time, Article I of the Second
--------------
Amended and Restated Certificate of Incorporation of ▇▇▇▇▇▇▇ shall be amended to
change the name of the Surviving Corporation to "Marketing Specialists
Corporation" as set forth in Exhibit C-2 attached hereto.
-----------
ARTICLE 2. EXCHANGE OF STOCK
2.1 Outstanding Common Stock of ▇▇▇▇▇▇▇. At and after the Effective Time,
-----------------------------------
each share of ▇▇▇▇▇▇▇ Common Stock outstanding immediately prior to the
Effective Time shall remain outstanding.
2.2 Conversion of RMSI Stock.
------------------------
(a) The maximum aggregate number of shares of ▇▇▇▇▇▇▇ Common Stock
issuable to the holders of RMSI Common Stock in the Merger shall be 6,705,551.
At the
4
Effective Time, each share of RMSI Common Stock issued and outstanding
immediately prior to the Effective Time (other than those shares of RMSI Common
Stock to be canceled pursuant to Section 2.2(c) below and except as otherwise
provided in Section 2.4 below with respect to Dissenting Shares (as defined
below)) shall, by virtue of the Merger and without any action on the part of
▇▇▇▇▇▇▇ or RMSI or the holders of any of the securities of either of such
corporations, be converted into that number of fully paid and nonassessable
shares of ▇▇▇▇▇▇▇ Common Stock equal to the quotient (the "Exchange Ratio")
obtained by dividing (i) 6,705,551 by (ii) the total number of shares of RMSI
Common Stock issued and outstanding immediately prior to the Effective Time;
provided, however, that no fractional shares of ▇▇▇▇▇▇▇ Common Stock shall be
-------- -------
issued pursuant hereto. In lieu of the issuance of any fractional shares of
▇▇▇▇▇▇▇ Common Stock pursuant to this Agreement, each holder of RMSI Common
Stock upon surrender of a certificate representing ownership of RMSI Common
Stock for exchange shall be paid an amount in cash (without interest), rounded
to the nearest cent, determined by multiplying (i) the average closing price of
▇▇▇▇▇▇▇ Common Stock on the Nasdaq National Market on the five (5) trading days
immediately preceding the second day prior to the Closing Date by (ii) the
fractional amount of the shares which such holder would otherwise be entitled to
receive under this Article 2. The term "Merger Consideration" shall mean the
total number of shares of ▇▇▇▇▇▇▇ Common Stock to be issued to holders of RMSI
Common Stock in the Merger, together with the total amount of cash delivered in
lieu of fractional shares pursuant to this Section 2.2(a).
(b) As a result of the Merger and without any action on the part of
the holders thereof, all shares of RMSI Common Stock shall cease to be
outstanding, shall be canceled and retired and shall cease to exist and each
holder of a certificate (a "Certificate" and, collectively, the "Certificates")
representing any shares of RMSI Common Stock (other than those shares of RMSI
Common Stock to be canceled pursuant to Section 2.2(c) below and except as
otherwise provided in Section 2.4 below with respect to Dissenting Shares (as
defined below)) shall thereafter cease to have any rights with respect to such
shares of RMSI Common Stock, except, without interest, such holder's
proportionate share of the Merger Consideration in accordance with Section
2.2(a) upon the surrender of such Certificate.
(c) Each share of RMSI Common Stock issued and held in RMSI's
treasury or owned by ▇▇▇▇▇▇▇ immediately prior to the Effective Time, if any, by
virtue of the Merger shall cease to be outstanding, shall be canceled and
retired and shall cease to exist and no payment of any consideration shall be
made with respect thereto.
(d) At the Effective Time, the stock transfer books of RMSI shall be
closed, and there shall be no further registration of transfers of shares of
RMSI Common Stock thereafter on the records of RMSI. If, after the Effective
Time, Certificates are presented for transfer, they shall be canceled against
delivery of the Merger Consideration as hereinabove provided and the holder of
such Certificates shall also be entitled to receive any and all dividends and
distributions (whether in the form of cash, stock or otherwise) payable in
respect of the Merger Consideration with a record date after the Effective Time
and prior to the cancellation of such Certificates. Certificates surrendered for
exchange by any person constituting an
5
"affiliate" of RMSI for purposes of Rule 145, as such rule may be amended from
time to time ("Rule 145"), of the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged until ▇▇▇▇▇▇▇ has received an affiliate letter in the form attached
hereto as Exhibit D (the "Affiliate Letter") from such person.
---------
(e) At the Effective Time, and subject to the consent of the holder
thereof, RMSI's obligations with respect to each senior management appreciation
right (collectively, the "SMARTs") outstanding immediately prior to the
Effective Time shall be canceled and, in exchange therefor, the holders of such
SMARTs shall be entitled to receive incentive options to purchase shares of
▇▇▇▇▇▇▇ Common Stock issued pursuant to ▇▇▇▇▇▇▇'▇ Amended and Restated 1998
Stock Option and Incentive Plan (such plan, the "▇▇▇▇▇▇▇ Option Plan," and such
options, the "Rollover Options") upon the surrender and cancellation of the
agreements representing their SMARTs and delivery of an instrument substantially
in the form attached hereto as Exhibit E, by which such holder represents its
---------
good title to such SMART and agrees to its cancellation upon the terms hereof
("SMART Cancellation Consent"). Each Rollover Option shall be an "incentive
stock option" within the meaning of Section 422(b) of the Code (the "qualified
options"). No interest shall accrue with respect to any of the SMARTs. Each
Rollover Option shall (i) be exercisable for that number of whole shares of
▇▇▇▇▇▇▇ Common Stock equal to the product of the number of SMARTs held by such
holder immediately prior to the Effective Time multiplied by the greater of (x)
the quotient obtained by dividing (A) 405,000 by (B) the total number of SMARTs
issued and outstanding immediately prior to the Effective Time (the "SMART
Ratio"), and (y) the product of (A) the SMART Ratio and (B) the quotient
obtained by dividing (1) the lesser of (a) the Fair Market Value (defined below)
of the ▇▇▇▇▇▇▇ Common Stock as of the Effective Time, and (b) $20.00, by (2)
$13.50, and rounding the resulting number to the nearest whole number of shares
of the ▇▇▇▇▇▇▇ Common Stock, (ii) be vested or vest with respect to 20% of the
shares underlying such option on each anniversary of the original date of grant
of the corresponding SMARTs, and be fully vested upon the fifth anniversary of
the original date of grant of the corresponding SMARTs, (iii) have a per share
exercise price equal to the greater of (x) Fair Market Value (defined below) of
the ▇▇▇▇▇▇▇ Common Stock as of the Effective Time, and (y) $13.50, and (iv)
otherwise be in substantially the form customarily used for option grants under
the ▇▇▇▇▇▇▇ Option Plan. In the event that any holder of SMARTs shall not have
executed a SMART Cancellation Consent prior to the Effective Time, such SMART
shall remain outstanding and be an obligation of the Surviving Corporation. In
addition, at the Effective Time, ▇▇▇▇▇▇▇ shall issue non-qualified options to
purchase 167,500 shares of the ▇▇▇▇▇▇▇ Common Stock under the ▇▇▇▇▇▇▇ Option
Plan to ▇▇▇▇ ▇. ▇▇▇▇▇▇ and non-qualified options to purchase 55,833 shares of
▇▇▇▇▇▇▇ Common Stock under the ▇▇▇▇▇▇▇ Option Plan to each of ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "New Options"). Each New Option will
(i) vest with respect to 20% of the shares underlying such option on each
anniversary of the date of grant and be fully vested upon the fifth anniversary
of the date of grant and (ii) have a per share exercise price equal to the
greater of (x) Fair Market Value of the ▇▇▇▇▇▇▇ Common Stock as of the Effective
Time, and (y) $13.50. The parties acknowledge that, pursuant to the terms of
the ▇▇▇▇▇▇▇ Option Plan, each of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
and the Independent Director shall be granted non-qualified options to purchase
20,000 shares of ▇▇▇▇▇▇▇ Common Stock on the fifth
6
day following the Closing Date (the "Director Options") in addition to the New
Options. Each Director Option will (i) vest with respect to 20% of the shares
underlying such option on each anniversary of the date of grant and be fully
vested upon the fifth anniversary of the date of grant and (ii) have an exercise
price per share equal to Fair Market Value of the ▇▇▇▇▇▇▇ Common Stock as of the
date of grant. ▇▇▇▇▇▇▇ shall reserve for issuance the number of shares of
▇▇▇▇▇▇▇ Common Stock that will become issuable upon the exercise of such
Rollover Options, New Options and the Director Options pursuant to this Section
2.2(e) and shall cause a valid registration statement (such as Form S-8 or other
appropriate form) to be in effect to cover the issuance of shares of ▇▇▇▇▇▇▇
Common Stock upon the exercise of the Rollover Options, the New Options and the
Director Options (the "Option Registration Statement"). ▇▇▇▇▇▇▇ shall seek
stockholder approval to the extent required to reserve additional shares for
issuance upon the exercise of that number of Rollover Options, New Options and
Director Options, in the aggregate, in excess of the total number of shares
available for issuance under the ▇▇▇▇▇▇▇ Option Plan as of the date hereof (the
"▇▇▇▇▇▇▇ Option Approval"). For the purposes of this section, "Fair Market
Value" on any given date means the last reported sale price at which ▇▇▇▇▇▇▇
Common Stock is traded on the date immediately preceding such given date or, if
no ▇▇▇▇▇▇▇ Common Stock is traded on such date, the next preceding date on which
▇▇▇▇▇▇▇ Common Stock was traded, as reflected on the principal stock exchange
or, if applicable, any other national stock exchange on which the ▇▇▇▇▇▇▇ Common
Stock is traded or admitted to trading.
(f) All Merger Consideration issued or paid, as the case may be, upon
the surrender for exchange of Certificates representing shares of RMSI Common
Stock in accordance with the terms of this Article 2 shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
shares of RMSI Common Stock exchanged for Merger Consideration theretofore
represented by such Certificates.
2.3 Lost or Stolen Certificates. In the event any Certificate shall have
---------------------------
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by ▇▇▇▇▇▇▇, the posting by such person of a bond in such reasonable
amount as ▇▇▇▇▇▇▇ may direct as indemnity against any claim that may be made
against it with respect to such Certificate, ▇▇▇▇▇▇▇ will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration to which
such person is entitled under Section 2.2(a).
2.4 Dissenters' Rights.
------------------
(a) Subject to the RMSI Voting Agreement, notwithstanding anything in
this Agreement to the contrary and unless otherwise provided by applicable law,
shares of RMSI Common Stock that are issued and outstanding immediately prior to
the Effective Time and that are owned by RMSI Stockholders who in accordance
with Section 262 of the DGCL have properly exercised and perfected their rights
of appraisal, shall not be converted into the right to receive the Merger
Consideration, unless and until such RMSI Stockholders shall have failed to
perfect or shall have effectively withdrawn or lost their right of appraisal and
payment under
7
applicable law. If any such RMSI Stockholder shall have failed to perfect or
shall have effectively withdrawn or lost such right of appraisal, each share of
RMSI Common Stock held by such RMSI Stockholder shall thereupon be deemed to
have been converted into the right to receive and become exchangeable for, at
the Effective Time, the Merger Consideration pursuant to Section 2.2 hereof.
Holders of shares of RMSI Common Stock who become entitled pursuant to the
provisions of the DGCL to payment for such shares under the provisions thereof
shall receive payment from the Surviving Corporation and such shares shall be
canceled.
(b) RMSI shall give ▇▇▇▇▇▇▇ (i) prompt notice of any demands for
appraisal received by RMSI, withdrawals of such demands, and any other
instruments served in connection with such demands pursuant to the DGCL and
received by RMSI and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL consistent with
the obligations of RMSI thereunder. RMSI shall not, except with the prior
written consent of ▇▇▇▇▇▇▇, (x) make any payment with respect to any demands for
appraisal, (y) offer to settle or settle any such demands or (z) waive any
failure to timely deliver a written demand for appraisal in accordance with the
DGCL.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF RMSI
As a material inducement to ▇▇▇▇▇▇▇ to enter into this Agreement and
consummate the transactions contemplated hereby, except as set forth in the
disclosure letter delivered at or prior to the execution hereof to ▇▇▇▇▇▇▇ (the
"RMSI Disclosure Letter"), RMSI hereby represents and warrants to ▇▇▇▇▇▇▇ as
follows; provided, however, that (i) none of the representations and warranties
-------- -------
contained in this Article 3 reflect any matter relating to any of the entities,
assets, businesses or operations acquired or to be acquired by RMSI or any RMSI
Subsidiary in connection with any of the pending or completed acquisitions
disclosed on Schedule 6.2(a)(xiii) hereto (the "RMSI Acquisition Matters") and
(ii) no RMSI Acquisition Matter will in any event constitute or be deemed to
constitute a breach of any of the representations or warranties contained in
this Article 3.
3.1 Existence; Good Standing; Authority; Compliance With Law.
--------------------------------------------------------
(a) RMSI is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. RMSI is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
licensed or qualified could not have a material adverse effect on the combined
business, assets, results of operations or financial condition of RMSI and the
RMSI Subsidiaries taken as a whole (a "RMSI Material Adverse Effect"). RMSI has
all requisite corporate power and authority to own, operate, lease and encumber
its properties and carry on its business as now conducted or proposed to be
conducted.
8
(b) Each RMSI Subsidiary is a corporation or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted or proposed to be conducted, and, is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not have a RMSI Material Adverse Effect. Except
as set forth in Section 3.1(b) of the RMSI Disclosure Letter, all of the
outstanding shares of capital stock of, or partnership or other equity interests
in, each RMSI Subsidiary are owned beneficially and of record by RMSI free of
any lien, restriction or encumbrance and such shares, partnership interests or
other equity interests have been duly and validly issued and are outstanding,
fully paid and non-assessable. Except as set forth in Section 3.1(b) of the
RMSI Disclosure Letter, there are no outstanding options, warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional shares of
capital stock of any class, or partnership or other equity interests in, any of
the RMSI Subsidiaries, or outstanding warrants, options or other rights to
acquire any such convertible securities.
(c) Copies of the certificate of incorporation or other charter
documents and bylaws (and in each case, all amendments thereto) of RMSI as they
exist on the date hereof have been delivered or made available to ▇▇▇▇▇▇▇ and
its counsel. All such copies are true, correct and complete and no amendments
thereto are pending. None of RMSI or any of the RMSI subsidiaries are in
violation of their respective certificates of incorporation or bylaws.
3.2 Authorization, Validity and Effect of Agreements. RMSI has the
------------------------------------------------
requisite power and authority to enter into the transactions contemplated hereby
and to execute and deliver this Agreement and the ▇▇▇▇▇▇▇ Voting Agreement. The
Board of Directors of RMSI has unanimously approved and declared advisable this
Agreement, the Merger, and the other documents and transactions contemplated by
this Agreement. The execution by RMSI of this Agreement and the ▇▇▇▇▇▇▇ Voting
Agreement and the consummation of the transactions contemplated by this
Agreement and the ▇▇▇▇▇▇▇ Voting Agreement have been duly authorized by all
requisite corporate action on the part of RMSI and no other action on the part
of RMSI is required in connection therewith (except for stockholder approval).
This Agreement and the ▇▇▇▇▇▇▇ Voting Agreement constitute the valid and legally
binding obligations of RMSI, enforceable against RMSI, in accordance with their
respective terms. The execution, delivery and performance by RMSI of this
Agreement and each such agreement, document and instrument
(a) does not and will not violate any provision of the certificate of
incorporation or bylaws of RMSI, as applicable;
(b) does not and will not violate any laws of the United States, or
any state or other jurisdiction applicable to RMSI or require RMSI to obtain any
approval, consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) that has
9
not been obtained or made, except for the filing of the Certificate of Merger
with the Secretary of State of Delaware and except as contemplated by Section
6.13 of this Agreement; and
(c) except as set forth in Section 3.2 of the RMSI Disclosure Letter,
does not and will not (A) result in a breach of, constitute a default under,
accelerate any obligation under, or give rise to a right of termination of any
indenture or loan or credit agreement or any other material agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which RMSI is a party
or by which the property of RMSI is bound or affected, except for such breaches,
defaults, accelerations or rights of termination which, individually or in the
aggregate, could not reasonably be expected to have a RMSI Material Adverse
Effect or hinder the consummation of the transaction contemplated by this
Agreement, or (B) result in the creation or imposition of any mortgage, pledge,
lien, security interest or other charge or encumbrance on any of RMSI's assets
or its capital stock.
3.3 Capital Stock of RMSI. The authorized capital stock of RMSI consists
---------------------
of 1,000,000 shares of RMSI Common Stock of which 137,635 shares are issued and
outstanding and no shares are held in treasury. The authorized capital stock of
RMSI does not include any preferred stock. As of the date hereof, all of the
outstanding shares of RMSI Common Stock have been duly and validly issued and
are fully paid and non-assessable. Except as disclosed in Section 3.3 of the
RMSI Disclosure Letter, there are no outstanding options, warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale by RMSI of, or outstanding securities convertible into, any additional
shares of capital stock of any class of RMSI or outstanding warrants, options or
other rights to acquire any such convertible securities or stock appreciation
rights or other instrument whose value is derived from the capital stock of
RMSI, except for that certain warrant dated October 7, 1997 and held by ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇ Warrant"). Except as set forth in Section 3.3 of the
RMSI Disclosure Letter, there are no voting trusts, voting agreements, proxies
or other agreements, instruments or undertakings with respect to the voting of
RMSI Common Stock to which RMSI or, to RMSI's knowledge, any of its stockholders
is a party. The RMSI Stockholders own of record all of the issued and
outstanding shares of capital stock of RMSI, in the amounts set forth in Section
3.3 of the RMSI Disclosure Letter, except for the ▇▇▇▇▇▇▇▇ Warrant.
3.4 Real Property.
-------------
(a) Title. RMSI and each of the RMSI Subsidiaries has good, clear,
-----
record and marketable title to all of the real property owned by RMSI or any of
the RMSI Subsidiaries (referred to in this Section as the "Owned Real
Property"), free and clear of all easements, covenants, restrictions, leases,
mortgages, liens, assessments, claims, rights, judgments, encroachments or other
matters affecting title (collectively, "Encumbrances"), other than:
10
(i) easements, covenants, restrictions and similar
encumbrances that do not materially interfere with the use
of the Owned Real Property as currently used and improved,
(ii) minor encroachments that do not materially adversely
affect the value or use of the Owned Real Property as
currently used and improved and that could be removed
without material cost, and
(iii) liens for Taxes (as defined in Section 3.10) not yet due
or delinquent or being contested in good faith by
appropriate means and statutory liens arising in the
ordinary course of business by operation of law that are
not yet due or delinquent.
((i), (ii) and (iii) are collectively referred to as "Permitted Encumbrances"),
except as set forth in Section 3.4 of the RMSI Disclosure Letter. To the
knowledge of RMSI, the lessors of all of the real property leased by RMSI or any
of the RMSI Subsidiaries (referred to in this Section as the "Leased Real
Property", and together with the Owned Real Property, the "Real Property") have
good, clear, record and marketable title to the Leased Real Property, and RMSI
and the RMSI Subsidiaries have good, clear, record and marketable title to
enforceable leasehold interests in the Leased Real Property, in each case free
and clear of all Encumbrances other than Permitted Encumbrances, subject only to
the right of reversion of the lessor, except as set forth in Section 3.4 of the
RMSI Disclosure Letter.
(b) Status of Leases. Each of the leases of the Real Property has
----------------
been duly authorized and executed by RMSI and is in full force and effect,
except where the failure to be so would not have an RMSI Material Adverse
Effect. To the knowledge of RMSI, each of said leases has been duly authorized
and executed by the other party to each of said leases. Neither RMSI nor any of
the RMSI Subsidiaries is in default under any material provision of any such
said lease, nor has any event occurred which, with notice or the passage of
time, or both, would give rise to such a default. To the knowledge of RMSI, the
other party to each of said leases is not in default under any material
provision of any such lease and there is no event which, with notice or the
passage of time, or both, would give rise to such a default.
(c) Consents. Except as set forth in Section 3.4 of the RMSI
--------
Disclosure Letter, (i) no consent or approval is required with respect to the
transactions contemplated by this Agreement from the other parties to any lease
of Leased Real Property, from the holder of any Encumbrance on any Owned Real
Property, and (ii) no filing with any regulatory authority is required in
connection with the Real Property, and to the extent that any such consents,
approvals or filings are required, RMSI will use commercially reasonable efforts
to obtain or complete them before the Closing.
(d) Condition of Real Property. Except as set forth in Section 3.4 of
--------------------------
the RMSI Disclosure Letter, there are no material defects in the physical
condition of any land, buildings or improvements constituting part of the Real
Property, including without limitation,
11
structural elements, mechanical systems, parking and loading areas, and all such
buildings and improvements are in good operating condition and repair.
(e) Compliance with the Law. To the best of RMSI's knowledge, neither
-----------------------
RMSI nor any RMSI Subsidiary has received any notice from any governmental
authority of any violation of any law, ordinance, regulation, license, permit or
authorization issued with respect to any Real Property and no such violation
exists, in either case, which could reasonably be expected to have a RMSI
Material Adverse Effect. All improvements located on or constituting part of
the Real Property and their use and operation by RMSI and the RMSI Subsidiaries
are in compliance in all material respects with all applicable laws, ordinances,
regulations, licenses, permits and authorizations, except as set forth in
Section 3.4 of the RMSI Disclosure Letter. No approval or consent to the
transactions contemplated by this Agreement is required of any governmental
authority with jurisdiction over any aspect of the Real Property or its use or
operations, except where the failure to obtain such approval or consent would
not have a RMSI Material Adverse Effect. Neither RMSI nor any RMSI Subsidiary
has received any notice of any material real estate tax deficiency or assessment
which has not been satisfied or is aware of any proposed material deficiency,
claim or assessment with respect to any of the Real Property, or any pending or
threatened condemnation thereof.
3.5 Contracts. Except as set forth in Section 3.5 of the RMSI Disclosure
---------
Letter, neither RMSI nor any of the RMSI Subsidiaries is in default under any
RMSI Material Contract or has any knowledge of conditions or facts which, with
notice or the passage of time, or both, would give rise to such a default,
except for such defaults which, individually or in the aggregate, could not
reasonably be expected to have a RMSI Material Adverse Effect. To the knowledge
of RMSI, no third party under any RMSI Material Contract is in default
thereunder and there is no event which, with notice or the passage of time, or
both, would give rise to such a default. Except as set forth in Section 3.5 of
the RMSI Disclosure Letter, each RMSI Material Contract has been duly authorized
and executed by RMSI, is in full force and effect and is enforceable by RMSI in
accordance with its terms, except where the failure to be so would not have an
RMSI Material Adverse Effect. For purposes of this Agreement, the term "RMSI
Material Contract" shall include the following:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) any employment contract or contract for services which is not
terminable within 30 days by RMSI or an RMSI Subsidiary without liability for
any penalty or severance payment;
(c) any contract or agreement under which, as of the date of this
Agreement, RMSI or any of the RMSI Subsidiaries has unpaid obligations of
$100,000 or more, except contracts and agreements specifically disclosed
elsewhere under this Agreement;
12
(d) any contract or agreement involving more than $100,000 of unpaid
obligations of RMSI or any of the RMSI Subsidiaries as of the date of this
Agreement which, by its terms, does not terminate or is not terminable without
penalty by RMSI or an RMSI Subsidiary or their successors within one year after
the date hereof;
(e) any contract or agreement for the sale or lease of its products or
services not made in the ordinary course of business;
(f) any contract containing covenants limiting the freedom of RMSI or
any of the RMSI Subsidiaries to compete in any line of business or with any
person or entity other than as is standard in the food brokerage industry;
(g) any contract or agreement for the purchase of any fixed asset for
a price in excess of $100,000 whether or not such purchase is in the ordinary
course of business;
(h) any license agreement (as licensor or licensee);
(i) any indenture, mortgage, promissory note, loan agreement, guaranty
or other agreement or commitment for the borrowing of money not otherwise
disclosed in the RMSI SEC Report (including, if applicable, a description on any
prepayment penalties or similar obligations); or
(j) any contract or agreement with any officer, employee, director or
stockholder of RMSI or any of the RMSI Subsidiaries or with any persons or
organizations controlled by or affiliated with any of them.
3.6 Transactions with Interested Persons. Except as disclosed in the RMSI
------------------------------------
SEC Report (as hereinafter defined) or as set forth in Section 3.6 of the RMSI
Disclosure Letter hereto, neither RMSI, nor any affiliate of RMSI, (i) owns
directly or indirectly on an individual or joint basis any material interest in,
or serves as an officer or director or in another similar capacity of, any
competitor or supplier of RMSI or any of the RMSI Subsidiaries, or any
organization which has a material contract or arrangement with RMSI or any of
the RMSI Subsidiaries or (ii) has directly or indirectly engaged in any
transaction involving any lease or transfer any material (measured at the time
of such transaction or as of the date hereof) cash, property or rights to or
from RMSI or any of the RMSI Subsidiaries from, to or for the benefit of any
affiliate of RMSI or any of the RMSI Subsidiaries.
3.7 Employee Benefit Programs.
-------------------------
(a) Section 3.7 of the RMSI Disclosure Letter sets forth a list of
every material and significant Employee Program that is currently maintained by
RMSI or an Affiliate of RMSI ("RMSI Affiliate") ("RMSI Employee Programs").
13
(b) Each RMSI Employee Program which has been intended to qualify
under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the IRS regarding its qualification under
such section and except as disclosed in Section 3.7 of the RMSI Disclosure
Letter has, in fact, been qualified under the applicable section of the Code
from the effective date of such RMSI Employee Program through and including the
Closing Date (or, if earlier, the date that such RMSI Employee Program was
terminated). No event or omission has occurred which would cause any such
Employee Program to lose its qualification under the applicable Code section.
(c) Neither RMSI nor any RMSI Affiliate knows, nor should any of them
reasonably know, of any material failure of any party to comply with any laws
applicable with respect to the RMSI Employee Programs. With respect to any RMSI
Employee Program, there has been no (i) "prohibited transaction," as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Code Section 4975, (ii) material failure to comply with any
-----
provision of ERISA, other applicable law, or any agreement, or (iii) non-
deductible contribution, which, in the case of any of (i), (ii), or (iii), could
subject RMSI or any RMSI Affiliate to material liability either directly or
indirectly (including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties, or taxes, or any
other loss or expense. No litigation or governmental administrative proceeding
(or investigation) or other proceeding (other than those relating to routine
claims for benefits) is pending or, to the knowledge of RMSI, threatened with
respect to any such RMSI Employee Program.
(d) Except as disclosed in Section 3.7 of the RMSI Disclosure Letter,
during the last 3 years, neither RMSI nor any RMSI Affiliate (i) has maintained
any Employee Program which has been subject to title IV of ERISA or Code Section
412 (a "RMSI Title IV Plan"), including, but not limited to, any Multiemployer
Plan, (ii) has provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by part 6
of subtitle B of title I of ERISA), or has promised to provide such post-
termination benefits, for a period of longer than 12 months or (iii) has
provided health care or any other non-pension benefits to any individuals who
were previously employed by entities acquired by RMSI prior to the date of this
Agreement for a period of longer than 12 months.
(e) With respect to each RMSI Employee Program, complete and correct
copies of the following documents (if applicable to such RMSI Employee Program)
have previously been delivered or made available to ▇▇▇▇▇▇▇: (i) all documents
embodying or governing such RMSI Employee Program, and any funding medium for
the RMSI Employee Program (including, without limitation, trust agreements) as
they may have been amended to the date hereof; (ii) the most recent IRS
determination or approval letter with respect to such RMSI Employee Program
under Code Section 401(a) or 501(c)(9), and any applications for determination
or approval subsequently filed with the IRS; (iii) the three most recently filed
IRS Forms 5500, with all applicable schedules and accountants' opinions attached
thereto; (iv) the three most recent actuarial valuation reports completed with
respect to such RMSI Employee Program; (v) the summary plan description for such
RMSI Employee Program (or
14
other descriptions of such RMSI Employee Program provided to employees) and all
modifications thereto; (vi) any insurance policy (including any fiduciary
liability insurance policy or fidelity bond) related to such RMSI Employee
Program; (vii) any registration statement or other filing made pursuant to any
federal or state securities law and (viii) all correspondence to and from any
state or federal agency within the last three years.
(f) Each RMSI Employee Program may be amended, terminated, or
otherwise modified by RMSI to the greatest extent permitted by applicable law,
including the elimination of any and all future benefit accruals under any RMSI
Employee Program and no condition exists which would limit the right of RMSI or
the RMSI Affiliate to so amend, terminate or otherwise modify such RMSI Employee
Program.
(g) For purposes of this Section and Section 5.7:
(i) "Employee Program" means (A) all employee benefit plans
----------------
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(40)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (B) material stock option or equity-based plans, bonus or
incentive award plans, severance pay policies or agreements, deferred
compensation agreements, supplemental income arrangements, vacation plans, and
all other material employee benefit plans, agreements, and arrangements not
described in (A) above, including without limitation, any arrangement intended
to comply with Section 120, 125, 127 or 129 of the Code. In the case of an
Employee Program funded through a trust described in Code Section 401(a) or an
organization described in Code Section 501(c)(9), each reference to such
Employee Program shall include a reference to such trust or organization.
(ii) An entity "maintains" an Employee Program if such entity
---------
sponsors, contributes to, or provides benefits under such Employee Program, or
has any obligation (by agreement or under applicable law) to contribute to or
provide benefits under such Employee Program, or if such Employee Program
provides benefits to or otherwise covers employees of such entity (or their
spouses, dependents, or beneficiaries).
(iii) An entity is an "Affiliate" of a person if it would have
---------
ever been considered a single employer under ERISA Section 4001(b) or part of
the same "controlled group" as such person for purposes of ERISA Section
302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or non-pension)
------------------
employee benefit plan to which more than one unaffiliated employer contributes
and which is maintained pursuant to one or more collective bargaining
agreements.
(h) No liability under Title IV or Section 302 of ERISA has been
incurred by RMSI or any RMSI Affiliate that has not been satisfied in full and
no condition exists that
15
presents a material risk to RMSI or any RMSI Affiliate of incurring any such
liability, other than liability for premiums due to the Pension Benefit Guaranty
Corporation (the "PBGC") (which premiums have been paid when due).
(i) The PBGC has not instituted proceedings to terminate any RMSI
Title IV Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
(j) With respect to each RMSI Title IV Plan, the present value of
accrued benefits under such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such plan's
actuary with respect to such plan, did not exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable to such
accrued benefits.
(k) No RMSI Title IV Plan or any trust established there under has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each RMSI Title IV Plan ended prior to the
Closing Date.
(l) No amounts payable under the RMSI Employee Programs will fail
to be deductible for federal income tax purposes by virtue of Section 162(a)(1),
162(m) or 280G of the Code.
3.8 Intentionally Omitted
---------------------
3.9 No Payments to Employees, Officers and Directors. Section 3.9 of the
------------------------------------------------
RMSI Disclosure Letter contains a true and complete list of all arrangements,
agreements or plans pursuant to which any cash or non-cash payments or other
obligation will become payable, accelerate the time of payment or vesting or
increase any amount currently payable (and the maximum aggregate amount which
may be payable thereunder) to each employee, officer or director of RMSI or any
RMSI Subsidiary as a result of the Merger (assuming no termination of service).
3.1 Taxes. Except as set forth in Section 3.10 of the RMSI Disclosure
-----
Letter:
(a) RMSI and each of the RMSI Subsidiaries have timely filed all
income and other material Tax Returns required to be filed by them through the
date hereof in a manner correct and complete in all material respects and have
timely paid or caused to be paid all Taxes shown as due on such Tax Returns and
all income and other material Taxes otherwise required to be paid by them
through the date hereof whether disputed or not.
(b) On or before the Closing Date, RMSI and each of the RMSI
Subsidiaries shall have paid all income and other material Taxes (whether or not
shown on any Tax Return) required to be paid by them on or before the Closing
Date whether disputed or not and shall have accrued or made full, adequate and
complete provision on their books as required by U.S.
16
generally accepted accounting principles ("GAAP") for all income and other
material Taxes (whether or not shown on any Tax Return) not required to be paid
by them on or before the Closing Date.
(c) No Tax Authority is now asserting or, to the best knowledge of
RMSI, threatening to assert against RMSI or any of the RMSI Subsidiaries any
deficiency or claim for Taxes. No claim for unpaid income taxes or for other
unpaid material Taxes has become a lien or encumbrance of any kind against any
material asset of RMSI or any of the RMSI Subsidiaries except for statutory
liens for such Taxes that are not yet due. Neither RMSI nor any of the RMSI
Subsidiaries has entered into a closing agreement pursuant to Section 7121 of
the Code after December 31, 1990.
(d) RMSI and the RMSI Subsidiaries have previously delivered or
made available to ▇▇▇▇▇▇▇ complete and accurate copies of (1) all audit reports,
revenue agent reports, requests for letter rulings, letter rulings, technical
advice memoranda and similar documents issued by all Tax Authorities relating to
Taxes, (2) all income Tax Returns filed by RMSI or any of the RMSI Subsidiaries
with respect to taxable periods beginning after December 31, 1990 and (3) any
closing agreements (and any exhibits thereto) entered into by RMSI or any of the
RMSI Subsidiaries as of the date hereof. RMSI will deliver or make available to
▇▇▇▇▇▇▇ any documents mentioned in the preceding sentence that become available
to RMSI or any of the RMSI Subsidiaries after the date hereof and on or before
the Closing Date.
(e) There has not been any audit of any tax return filed by RMSI or
any of the RMSI Subsidiaries with respect to any taxable year beginning after
December 31, 1990, no such audit is in progress, and neither RMSI nor any of the
RMSI Subsidiaries has been notified by any Tax Authority that any such audit is
contemplated or pending. Neither RMSI nor any of the RMSI Subsidiaries has
requested or received an extension of time with respect to any date on which a
tax return was or is to be filed by RMSI or any of the RMSI Subsidiaries and
there is no extension, waiver or agreement for the extension of time for the
assessment or payment of any Taxes owed (or alleged to be owed) by RMSI or any
of the RMSI Subsidiaries.
(f) No power of attorney has been granted by or with respect to
RMSI or any of the RMSI Subsidiaries with respect to any matter relating to
Taxes.
(g) There are no agreements or understandings relating to Taxes
between RMSI or any of the RMSI Subsidiaries and any other party affecting or
which could affect RMSI or any of the RMSI Subsidiaries by which RMSI or any of
the RMSI Subsidiaries will be bound after the Closing Date or which could affect
the computation of Taxes by RMSI or any of the RMSI Subsidiaries.
(h) For purposes of this Agreement, all references (1) to the
"Code" shall include any similar provisions of state, local or foreign law, (2)
"Taxes" shall include all federal, state, local, foreign, and other taxes,
including without limitation, income taxes, estimated taxes, alternative minimum
taxes, excise taxes, sales taxes, use taxes, value-added
17
taxes, gross receipts taxes, franchise taxes, capital stock taxes, employment
and payroll-related taxes, withholding taxes, stamp taxes, transfer taxes,
windfall profit taxes, environmental taxes and property taxes, whether or not
measured in whole or in part by net income, and all deficiencies, interest,
fines, penalties and other additions to tax, (3) "Tax Returns" shall mean all
returns, reports, declarations, information, estimates, schedules, filings and
documents (including any related or supporting information) filed or required by
any Tax Authority to be filed with respect to Taxes, including, without
limitation, all information returns, claims for refund, amended returns,
declarations of estimated tax and requests for extensions of time to file any
item described in this paragraph, and (4) "Tax Authority" shall mean the
Internal Revenue Service and any other state, local or foreign governmental
authority responsible for the collection or administration of Taxes.
3.11 Tax-Free Treatment. Neither RMSI nor any of the RMSI Subsidiaries has
------------------
taken or caused to be taken any action which would cause the Merger to fail to
qualify as a Reorganization under Section 368(a) of the Code.
3.12 Proxy Statement. On the date the Proxy Statement (as defined in
---------------
Section 6.7 hereof) is mailed to ▇▇▇▇▇▇▇'▇ stockholders, none of the information
supplied in writing by or on behalf of RMSI for inclusion in the Proxy Statement
will be false or misleading with respect to any material fact or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the stockholders' meeting or the solicitation of
proxies therefore which has become false or misleading. Notwithstanding the
foregoing, RMSI makes no representation or warranty with respect to information
supplied by ▇▇▇▇▇▇▇ or any of its affiliates or representatives in writing for
inclusion in the Proxy Statement.
3.13 SEC Documents. As of its date of filing, RMSI's registration
-------------
statement on Form S-4, as amended by Amendment No. 1, in the form filed with the
SEC on April 20, 1999 (the "RMSI SEC Report"), except as disclosed in Section
3.13 of the RMSI Disclosure Letter, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the parties
-------- -------
hereto acknowledge that the RMSI SEC Report does not contain any information or
disclosure relating to this Agreement and the transactions contemplated thereby,
including the Merger. There is no material fact existing today directly
relating to the business, operations or condition of RMSI (other than facts
which relate to general economic trends or conditions or general conditions
affecting the industries in which RMSI or the RMSI Subsidiaries operate) that is
reasonably likely to have a RMSI Material Adverse Effect, that has not been set
forth in the RMSI SEC Report or the RMSI Disclosure Letter; provided that the
loss of, or a reduction in revenues from, one or more customers or principals
shall be deemed not to have a RMSI Material Adverse Effect; provided, further,
that, notwithstanding the foregoing proviso, a loss of, or reduction in revenues
from, any customers or principals, individually or in the aggregate,
18
which results in a reduction in the annual revenues of RMSI and ▇▇▇▇▇▇▇ taken on
a consolidated pro forma basis of more than $25 million (a "Material Customer
Loss"), shall be deemed to have an RMSI Material Adverse Effect. For the purpose
of determining a Material Customer Loss, annual revenues, shall mean commission
revenues plus gross margin on sales with respect to businesses in which sales
are accounted for in a manner other than commission revenues. A true and
complete copy of the RMSI SEC Report has been delivered to ▇▇▇▇▇▇▇. Each of the
consolidated balance sheets of RMSI included in or incorporated by reference
into the RMSI SEC Report (including the related notes and schedules) fairly
presents the consolidated financial position of RMSI and RMSI Subsidiaries as of
its date and each of the consolidated statements of income, retained earnings
and cash flows of RMSI included in or incorporated by reference into the RMSI
SEC Report (including any related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows, as the case may be, of
RMSI and the RMSI Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except, in the case of the unaudited statements, as permitted by Form
10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
3.14 No Brokers. Except as disclosed in Section 3.14 of the RMSI
----------
Disclosure Letter, neither RMSI nor any RMSI Subsidiary has entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of such entity, RMSI or ▇▇▇▇▇▇▇ to pay any finder's fees,
brokerage or agent's commissions, advisory fee or other like payments relating
to or in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
3.15 Litigation. There is no litigation or governmental or administrative
----------
proceeding, arbitration or investigation pending or, to the knowledge of RMSI,
threatened against RMSI or the RMSI Subsidiaries which, either individually or
in the aggregate, is reasonably likely to have an RMSI Material Adverse Effect,
or which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
3.16 Absence of Certain Changes. Except as disclosed in Section 3.16 of
--------------------------
the RMSI Disclosure Letter, since December 31, 1998, there has not been any
change in the financial condition, properties, assets, liabilities, business or
operations of RMSI, which change by itself or in conjunction with all other such
changes, whether or not arising in the ordinary course of business, has had a
RMSI Material Adverse Effect; provided that the loss of, or reduction in
revenues from, one or more customers or principals shall be deemed not to have a
RMSI Material Adverse Effect under any provision of this Agreement, unless the
loss of, or reduction in revenues from, such customers or principals,
individually or in the aggregate, constitute a Material Customer Loss;
3.17 Disclosure. Subject to the terms thereof, the representations,
----------
warranties and statements contained or referred to in this Agreement and in the
certificates, exhibits and the
19
RMSI Disclosure Letter delivered by RMSI pursuant to this Agreement (including
the RMSI SEC Report) to ▇▇▇▇▇▇▇ do not contain any untrue statement of a
material fact, and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
3.18 Undisclosed Liabilities. Except as and to the extent reflected,
-----------------------
reserved against or otherwise specifically disclosed in the RMSI SEC Report and
the RMSI Disclosure Letter, neither RMSI nor any RMSI Subsidiary has any
liabilities or obligations of any kind required to be disclosed in accordance
with GAAP applied on a basis consistent with past practice, whether accrued,
absolute, known or unknown, asserted or unasserted, contingent or otherwise
which could reasonably be expected to have, individually or in the aggregate, a
RMSI Material Adverse Effect.
3.19 Customers and Principals. Except as disclosed in Section 3.19 of the
------------------------
RMSI Disclosure Letter, as of the date hereof, RMSI has no knowledge of (i) any
loss since December 31, 1998 or any currently threatened loss of any material
customer or principal, other than losses or threatened losses arising out of,
resulting from or relating to the execution or consummation of this Agreement or
the transactions contemplated thereby, or (ii) any pending bankruptcy filing,
insolvency or material adverse change in the financial position of any material
customer or principal.
3.20 Receivables. All of RMSI's accounts receivable arose from bona fide
-----------
transactions in the ordinary course of business, are valid and collectible
obligations of the respective makers thereof and were not and are not subject to
any offset or counter-claim, except for the amount reserved for doubtful
accounts set forth on (i) prior to the availability of RMSI's consolidated
unaudited financial statements for the quarter ended March 31, 1999, RMSI's
consolidated audited financial statements for the year ended December 31, 1998,
and (ii) after RMSI's consolidated unaudited financial statements for the
quarter ended March 31, 1999 become available, RMSI's consolidated unaudited
financial statements for the quarter ended March 31, 1999 (the "RMSI
Financials"). RMSI's accounts receivable are reflected on the RMSI Financials
in accordance with GAAP applied on a basis consistent with past practice. Since
the date of the RMSI Financials, there have not been any material write-offs as
uncollectible of any of RMSI's accounts receivable, except for write-offs in the
ordinary course of business and consistent with past practice.
3.21 Definition of RMSI's Knowledge. As used in this Agreement, the phrase
------------------------------
"to the knowledge of RMSI" or "to the best knowledge of RMSI" (or words of
similar import) means the actual knowledge of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
3.22 Ownership of ▇▇▇▇▇▇▇ Common Stock. Except as set forth in Section
---------------------------------
3.22 of the RMSI Disclosure Letter, neither RMSI nor, to the knowledge of RMSI,
any RMSI Stockholder or any of their affiliates owns, beneficially or of record,
any shares of ▇▇▇▇▇▇▇
20
Common Stock, any option to acquire or sell any shares of ▇▇▇▇▇▇▇ Common Stock,
or any warrants, rights, commitments, preemptive rights or agreements of any
kind for the acquisition or sale of, any shares of ▇▇▇▇▇▇▇ Common Stock, and is
not a party to any voting trusts, voting agreement, proxies or other agreements,
instruments or undertakings with respect to the voting of ▇▇▇▇▇▇▇ Common Stock,
except for the Post-Merger Voting Agreement.
ARTICLE 4. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE RMSI STOCKHOLDERS
Each RMSI Stockholder hereby severally represents and warrants to ▇▇▇▇▇▇▇
that with respect to such RMSI Stockholder's receipt of ▇▇▇▇▇▇▇ Common Stock
hereunder:
4.1 Investment Representations. Such RMSI Stockholder is acquiring the
--------------------------
▇▇▇▇▇▇▇ Common Stock for its own account, for investment, and not with a view to
any "distribution" thereof within the meaning of the Securities Act. The
jurisdiction of residence of such RMSI Stockholder is the State of Texas and the
offer and sale of the ▇▇▇▇▇▇▇ Common Stock to such RMSI Stockholder will take
place in such jurisdiction. Such RMSI Stockholder is an "accredited investor"
as defined in the Securities Act and is knowledgeable and experienced in the
making of investments of the type involved in the acquisition of the ▇▇▇▇▇▇▇
Common Stock pursuant to the Agreement, is able to bear the economic risk of
loss of its investment in ▇▇▇▇▇▇▇, has been granted the opportunity to
investigate the affairs of ▇▇▇▇▇▇▇ and to ask questions of its officers and
employees, and has availed itself of such opportunity either directly or through
its authorized representative. Such RMSI Stockholder has received and reviewed
a copy of this Agreement and all exhibits, schedules and appendices hereto
(including without limitation the ▇▇▇▇▇▇▇ Disclosure Letter) as well as copies
of the ▇▇▇▇▇▇▇ SEC Report.
4.2 Registration. Such RMSI Stockholder understands that because the
------------
▇▇▇▇▇▇▇ Common Stock issued as part of the Merger Consideration has not been
registered under the Securities Act or securities or "blue sky" laws of any
jurisdiction, he cannot dispose of any or all of the shares of such ▇▇▇▇▇▇▇
Common Stock unless such shares of ▇▇▇▇▇▇▇ Common Stock are subsequently
registered under the Securities Act or exemptions from such registration are
available. Such RMSI Stockholder acknowledges and understands that, except as
provided in the Registration Rights Agreement (as defined in Section 7.2(e)),
he, she or it has no independent right to require ▇▇▇▇▇▇▇ to register the
▇▇▇▇▇▇▇ Common Stock. Such RMSI Stockholder further understands that ▇▇▇▇▇▇▇
may, as a condition to the transfer of any of the ▇▇▇▇▇▇▇ Common Stock issued in
the Merger, require that the request for transfer be accompanied by an opinion
of counsel as described below. Such RMSI Stockholder understands that each
certificate representing the ▇▇▇▇▇▇▇ Common Stock issued in the Merger will bear
a legend in substantially the form provided below (in addition to any legend
required under applicable state securities laws).
THE SHARES REPRESENTED HEREBY HAVE BEEN
ACQUIRED BY THE HOLDER NAMED HEREON FOR HIS
21
OWN ACCOUNT FOR INVESTMENT; AND SUCH
SECURITIES MAY NOT BE PLEDGED, SOLD OR IN ANY
OTHER WAY TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
IN EFFECT AT THAT TIME, OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT.
4.3 Ownership of ▇▇▇▇▇▇▇ Common Stock. Except as set forth on Section 4.3
---------------------------------
of the RMSI Disclosure Letter, neither such RMSI Stockholder nor any of his or
its respective family members or affiliates own, beneficially or of record, any
shares of ▇▇▇▇▇▇▇ Common Stock, any option to acquire or sell any shares of
▇▇▇▇▇▇▇ Common Stock, or any warrants, rights, commitments, preemptive rights or
agreements of any kind for the acquisition or sale of, any shares of ▇▇▇▇▇▇▇
Common stock, and is not a party to any voting trusts, voting agreement, proxies
or other agreements, instruments or undertakings with respect to the voting of
▇▇▇▇▇▇▇ Common Stock, except for the Post-Merger Voting Agreement.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
As a material inducement to RMSI to enter into this Agreement and
consummate the transactions contemplated hereby, except as set forth in the
disclosure letter delivered at or prior to the execution hereof to RMSI (the
"▇▇▇▇▇▇▇ Disclosure Letter"), ▇▇▇▇▇▇▇ hereby represents and warrants to RMSI as
follows; provided, however, that (i) none of the representations and warranties
-------- -------
contained in this Article 5 reflect any matter relating to any of the entities,
assets, businesses or operations acquired or to be acquired by ▇▇▇▇▇▇▇ or any
▇▇▇▇▇▇▇ Subsidiary in connection with any of the pending or completed
acquisitions disclosed on Schedule 6.2(a)(xiii) hereto (the "▇▇▇▇▇▇▇ Acquisition
Matters") and (ii) no ▇▇▇▇▇▇▇ Acquisition Matter will in any event constitute or
be deemed to constitute a breach of any of the representations or warranties
contained in this Article 5.
5.1 Existence; Good Standing; Authority; Compliance With Law.
--------------------------------------------------------
(a) ▇▇▇▇▇▇▇ is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. ▇▇▇▇▇▇▇ is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so licensed or qualified could not have a material adverse effect
on the combined business, assets, results of operations or financial condition
of ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries taken as a whole (a "▇▇▇▇▇▇▇ Material
Adverse Effect"). ▇▇▇▇▇▇▇ has all requisite corporate power and authority to
own, operate, lease and encumber its properties and carry on its business as now
conducted or proposed to be conducted.
22
(b) Each ▇▇▇▇▇▇▇ Subsidiary is a corporation or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted or proposed to be conducted, and, except
as set forth on Section 5.1 of the ▇▇▇▇▇▇▇ Disclosure Letter, is duly qualified
to do business and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not have a ▇▇▇▇▇▇▇ Material Adverse Effect.
Except as set forth in Section 5.1(b) of the ▇▇▇▇▇▇▇ Disclosure Letter, all of
the outstanding shares of capital stock of, or partnership or other equity
interests in, each ▇▇▇▇▇▇▇ Subsidiary are owned beneficially and of record by
▇▇▇▇▇▇▇ free of any lien, restriction or encumbrance and such shares,
partnership interests or other equity interests have been duly and validly
issued and are outstanding, fully paid and non-assessable. There are no
outstanding options, warrants, rights, commitments, preemptive rights or
agreements of any kind for the issuance or sale of, or outstanding securities
convertible into, any additional shares of capital stock of any class, or
partnership or other equity interests in, any of the ▇▇▇▇▇▇▇ Subsidiaries, or
outstanding warrants, options or other rights to acquire any such convertible
securities.
(c) Copies of the certificate of incorporation or other charter
documents and by-laws (and in each case, all amendments thereto) of ▇▇▇▇▇▇▇ as
they exist on the date hereof have been delivered or made available to RMSI and
its counsel. All such copies are true, correct and complete and no amendments
thereto are pending. ▇▇▇▇▇▇▇ is not in violation of its certificate of
incorporation or bylaws.
5.2 Authorization, Validity and Effect of Agreements. ▇▇▇▇▇▇▇ has the
------------------------------------------------
requisite power and authority to enter into the transactions contemplated hereby
and to execute and deliver this Agreement and the RMSI Voting Agreement. The
Board of Directors of ▇▇▇▇▇▇▇ has unanimously approved and declared advisable
this Agreement, the Merger, and the other documents and transactions
contemplated by this Agreement. A committee comprised of the independent
directors of the Board of Directors of ▇▇▇▇▇▇▇ (the "Special Committee") has
recommended to the ▇▇▇▇▇▇▇ Board of Directors the advisability of entering into
this Agreement. The execution by ▇▇▇▇▇▇▇ of this Agreement and the RMSI Voting
Agreement and the consummation of the transactions contemplated by this
Agreement and the RMSI Voting Agreement have been duly authorized by all
requisite corporate action on the part of ▇▇▇▇▇▇▇ and no other action on the
part of ▇▇▇▇▇▇▇ is required in connection therewith (except for stockholder
approval). Except for stockholder approval, ▇▇▇▇▇▇▇ has taken all actions
necessary to permit the Merger, this Agreement, the Voting Agreements and the
other documents, instruments and transactions contemplated by this Agreement to
be executed and consummated in accordance with and permitted by the provisions
of Section 203 of the DGCL, including, without limitation, the approval of the
Merger, this Agreement, the Voting Agreements and the other documents,
instruments and transactions contemplated by this Agreement by the Board of
Directors of ▇▇▇▇▇▇▇ prior the execution of this Agreement, the Voting
Agreements and the other documents, instruments and transactions contemplated by
this
23
Agreement. This Agreement, the RMSI Voting Agreement and the other documents
contemplated by the Agreement constitute the valid and legally binding
obligations of ▇▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇▇, in accordance with their
respective terms. The execution, delivery and performance by ▇▇▇▇▇▇▇ of this
Agreement and each such agreement, document and instrument
(a) does not and will not violate any provision of the certificate
of incorporation or bylaws of ▇▇▇▇▇▇▇, as applicable;
(b) does not and will not violate any laws of the United States, or
any state or other jurisdiction applicable to ▇▇▇▇▇▇▇ or require ▇▇▇▇▇▇▇ to
obtain any approval, consent or waiver of, or make any filing with, any person
or entity (governmental or otherwise) that has not been obtained or made, except
for the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware, a proxy statement with the U.S. Securities and Exchange
Commission and except as contemplated by Section 6.13 of this Agreement; and
(c) except as set forth in Section 5.2 of the ▇▇▇▇▇▇▇ Disclosure
Letter, does not and will not (A) result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture or loan or credit agreement or any other material agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which
▇▇▇▇▇▇▇ is a party or by which the property of ▇▇▇▇▇▇▇ is bound or affected,
except for such breaches, defaults, accelerations or rights of termination
which, individually or in the aggregate, could not reasonably be expected to
have a ▇▇▇▇▇▇▇ Material Adverse Effect or hinder the consummation of the
transaction contemplated by this Agreement, or (B) result in the creation or
imposition of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of ▇▇▇▇▇▇▇'▇ assets or its capital stock.
5.3 Capital Stock of ▇▇▇▇▇▇▇. The authorized capital stock of ▇▇▇▇▇▇▇
------------------------
consists of (i) 1,000,000 shares of preferred stock, par value $.01 per share,
of which none are outstanding, (ii) 50,000,000 shares of ▇▇▇▇▇▇▇ Common Stock of
which 7,172,300 shares are outstanding and no shares are held in treasury and
(iii) 4,000,000 shares of Restricted Common Stock of which 335,700 shares are
outstanding and no shares are held in treasury. As of the date hereof, all of
the outstanding shares of ▇▇▇▇▇▇▇ Common Stock have been duly and validly issued
and are fully paid and non-assessable. Except as disclosed in Section 5.3 of
the ▇▇▇▇▇▇▇ Disclosure Letter, there are no outstanding options, warrants,
rights, commitments, preemptive rights or agreements of any kind for the
issuance or sale by ▇▇▇▇▇▇▇ of, or outstanding securities convertible into, any
additional shares of capital stock of any class of ▇▇▇▇▇▇▇ or outstanding
warrants, options or other rights to acquire any such convertible securities or
stock appreciation rights or other instrument whose value is derived from the
capital stock of ▇▇▇▇▇▇▇. Except as set forth in Section 5.3 of the ▇▇▇▇▇▇▇
Disclosure Letter, there are no voting trusts, voting agreements, proxies or
other agreements, instruments or undertakings with respect to the voting of
▇▇▇▇▇▇▇ Common Stock to which ▇▇▇▇▇▇▇ or, to ▇▇▇▇▇▇▇'▇ knowledge, any of its
stockholders is a party.
24
5.4 Real Property.
-------------
(a) Title. ▇▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇▇ Subsidiaries has good,
-----
clear, record and marketable title to all of the real property owned by ▇▇▇▇▇▇▇
or any of the ▇▇▇▇▇▇▇ Subsidiaries (referred to in this Section as the "Owned
Real Property"), free and clear of all Encumbrances, other than Permitted
Encumbrances, except as set forth in Section 5.4 of the ▇▇▇▇▇▇▇ Disclosure
Letter. To the knowledge of ▇▇▇▇▇▇▇, the lessors of all of the real property
leased by ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries (referred to in this
Section as the "Leased Real Property", and together with the Owned Real
Property, the "Real Property") have good, clear, record and marketable title to
the Leased Real Property, and ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries have good,
clear, record and marketable title to enforceable leasehold interests in the
Leased Real Property, in each case free and clear of all Encumbrances other than
Permitted Encumbrances, subject only to the right of reversion of the lessor,
except as set forth in Section 5.4 of the ▇▇▇▇▇▇▇ Disclosure Letter.
(b) Status of Leases. Each of the leases of the Real Property has
----------------
been duly authorized and executed by ▇▇▇▇▇▇▇ and is in full force and effect,
except where the failure to be so would not have a ▇▇▇▇▇▇▇ Material Adverse
Effect. To the knowledge of ▇▇▇▇▇▇▇, each of said leases has been duly
authorized and executed by the other party to each of said leases. Neither
▇▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇▇ Subsidiaries is in default under any material
provision of any such said lease, nor has any event occurred which, with notice
or the passage of time, or both, would give rise to such a default. To the
knowledge of ▇▇▇▇▇▇▇, the other party to each of said leases is not in default
under any material provision of any such lease and there is no event which, with
notice or the passage of time, or both, would give rise to such a default.
(c) Consents. Except as set forth in Section 5.4 of the ▇▇▇▇▇▇▇
--------
Disclosure Letter, (i) no consent or approval is required with respect to the
transactions contemplated by this Agreement from the other parties to any lease
of Leased Real Property, from the holder of any Encumbrance on any Owned Real
Property, and (ii) no filing with any regulatory authority is required in
connection with the Real Property, and to the extent that any such consents,
approvals or filings are required, ▇▇▇▇▇▇▇ will use commercially reasonable
efforts to obtain or complete them before the Closing.
(d) Condition of Real Property. Except as set forth in Section 5.4
--------------------------
of the ▇▇▇▇▇▇▇ Disclosure Letter, there are no material defects in the physical
condition of any land, buildings or improvements constituting part of the Real
Property, including without limitation, structural elements, mechanical systems,
parking and loading areas, and all such buildings and improvements are in good
operating condition and repair.
(e) Compliance with the Law. To the best of ▇▇▇▇▇▇▇'▇ knowledge,
-----------------------
neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary has received any notice from any
governmental authority of any violation of any law, ordinance, regulation,
license, permit or authorization issued with respect to any Real Property and no
such violation exists, in either case, which could reasonably be expected to
have a ▇▇▇▇▇▇▇ Material Adverse Effect. All improvements located
25
on or constituting part of the Real Property and their use and operation by
▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries are in compliance in all material respects
with all applicable laws, ordinances, regulations, licenses, permits and
authorizations, except as set forth in Section 5.4 of the ▇▇▇▇▇▇▇ Disclosure
Letter. No approval or consent to the transactions contemplated by this
Agreement is required of any governmental authority with jurisdiction over any
aspect of the Real Property or its use or operations, except where the failure
to obtain such approval or consent would not have a ▇▇▇▇▇▇▇ Material Adverse
Effect. Neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary has received any notice of
any material real estate tax deficiency or assessment which has not been
satisfied or is aware of any proposed material deficiency, claim or assessment
with respect to any of the Real Property, or any pending or threatened
condemnation thereof.
5.5 Contracts. Except as set forth in Section 5.5 of the ▇▇▇▇▇▇▇
---------
Disclosure Letter, neither ▇▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇▇ Subsidiaries is in
default under any ▇▇▇▇▇▇▇ Material Contract or has any knowledge of conditions
or facts which, with notice or the passage of time, or both, would give rise to
such a default, except for such defaults which, individually or in the
aggregate, could not reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse
Effect. To the knowledge of ▇▇▇▇▇▇▇, no third party under any ▇▇▇▇▇▇▇ Material
Contract is in default thereunder and there is no event which, with notice or
the passage of time, or both, would give rise to such a default. Except as set
forth in Section 5.5 of the ▇▇▇▇▇▇▇ Disclosure Letter, each ▇▇▇▇▇▇▇ Material
Contract has been duly authorized and executed by ▇▇▇▇▇▇▇, is in full force and
effect and is enforceable by ▇▇▇▇▇▇▇ in accordance with its terms, except where
the failure to be so would not have a ▇▇▇▇▇▇▇ Material Adverse Effect. For
purposes of this Agreement, the term "▇▇▇▇▇▇▇ Material Contract" shall include
the following:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) any employment contract or contract for services which is not
terminable within 30 days by ▇▇▇▇▇▇▇ or an ▇▇▇▇▇▇▇ Subsidiary without liability
for any penalty or severance payment;
(c) any contract or agreement under which, as of the date of this
Agreement, ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries has unpaid obligations of
$100,000 or more, except contracts and agreements specifically disclosed
elsewhere under this Agreement;
(d) any contract or agreement involving more than $100,000 of
unpaid obligations of ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries as of the date
of this Agreement which, by its terms, does not terminate or is not terminable
without penalty by ▇▇▇▇▇▇▇ or an ▇▇▇▇▇▇▇ Subsidiary or their successors within
one year after the date hereof;
(e) any contract or agreement for the sale or lease of its products
or services not made in the ordinary course of business;
26
(f) any contract containing covenants limiting the freedom of
▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries to compete in any line of business or
with any person or entity other than as is standard in the food brokerage
industry;
(g) any contract or agreement for the purchase of any fixed asset
for a price in excess of $100,000 whether or not such purchase is in the
ordinary course of business;
(h) any license agreement (as licensor or licensee);
(i) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money not
otherwise disclosed in the ▇▇▇▇▇▇▇ SEC Reports (including, if applicable, a
description on any prepayment penalties or similar obligations); or
(j) any contract or agreement with any officer, employee, director
or stockholder of ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries or with any persons
or organizations controlled by or affiliated with any of them.
5.6 Transactions with Interested Persons. Except as disclosed in the
------------------------------------
▇▇▇▇▇▇▇ SEC Report (as hereinafter defined) or as set forth in Section 5.6 of
the ▇▇▇▇▇▇▇ Disclosure Letter hereto, neither ▇▇▇▇▇▇▇, nor any affiliate of
▇▇▇▇▇▇▇, (i) owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director or in another similar
capacity of, any competitor or supplier of ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇
Subsidiaries, or any organization which has a material contract or arrangement
with ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries or (ii) has directly or
indirectly engaged in any transaction involving any lease or transfer of any
material (measured at the time of such transaction or as of the date hereof)
cash, property or rights to or from ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries
from, to or for the benefit of any affiliate of ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇
Subsidiaries.
5.7 Employee Benefit Programs.
-------------------------
(a) Section 5.7 of the ▇▇▇▇▇▇▇ Disclosure Letter sets forth a list
of every material and significant Employee Program that is currently maintained
by ▇▇▇▇▇▇▇ or an Affiliate of ▇▇▇▇▇▇▇ (a "▇▇▇▇▇▇▇ Affiliate") ("▇▇▇▇▇▇▇ Employee
Programs").
(b) Each ▇▇▇▇▇▇▇ Employee Program which has been intended to
qualify under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the IRS regarding its qualification under
such section and except as disclosed in Section 5.7 of the ▇▇▇▇▇▇▇ Disclosure
Letter has, in fact, been qualified under the applicable section of the Code
from the effective date of such ▇▇▇▇▇▇▇ Employee Program through and including
the Closing Date (or, if earlier, the date that such ▇▇▇▇▇▇▇ Employee Program).
No event or omission has occurred which would cause any such ▇▇▇▇▇▇▇ Employee
Program to lose its qualification under the applicable Code section.
27
(c) Neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Affiliate knows, nor should any
of them reasonably know, of any material failure of any party to comply with any
laws applicable with respect to the ▇▇▇▇▇▇▇ Employee Programs. With respect to
any ▇▇▇▇▇▇▇ Employee Program, there has been no (i) "prohibited transaction," as
defined in Section 406 of ERISA or Code Section 4975, (ii) material failure to
-----
comply with any provision of ERISA, other applicable law, or any agreement, or
(iii) non-deductible contribution, which, in the case of any of (i), (ii), or
(iii), could subject ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Affiliate to material liability
either directly or indirectly (including, without limitation, through any
obligation of indemnification or contribution) for any damages, penalties, or
taxes, or any other loss or expense. No litigation or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or, to the knowledge
of ▇▇▇▇▇▇▇, threatened with respect to any such ▇▇▇▇▇▇▇ Employee Program.
(d) Except as disclosed in Section 5.7 of the ▇▇▇▇▇▇▇ Disclosure
Letter, during the last 3 years, neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Affiliate (i)
has maintained any Employee Program which has been subject to title IV of ERISA
or Code Section 412 (a "▇▇▇▇▇▇▇ Title IV Plan"), including, but not limited to,
any Multiemployer Plan, (ii) has provided health care or any other non-pension
benefits to any employees after their employment is terminated (other than as
required by part 6 of subtitle B of title I of ERISA), or has promised to
provide such post-termination benefits, for a period longer than 12 months or
(iii) has provided health care or any other non-pension benefits to any
individuals who were previously employed by entities acquired by ▇▇▇▇▇▇▇ prior
to the date of this Agreement for a period longer than 12 months.
(e) With respect to each ▇▇▇▇▇▇▇ Employee Program, complete and
correct copies of the following documents (if applicable to such ▇▇▇▇▇▇▇
Employee Program) have previously been delivered to RMSI: (i) all documents
embodying or governing such ▇▇▇▇▇▇▇ Employee Program, and any funding medium for
the ▇▇▇▇▇▇▇ Employee Program (including, without limitation, trust agreements)
as they may have been amended to the date hereof; (ii) the most recent IRS
determination or approval letter with respect to such ▇▇▇▇▇▇▇ Employee Program
under Code Section 401(a) or 501(c)(9), and any applications for determination
or approval subsequently filed with the IRS; (iii) the three most recently filed
IRS Forms 5500, with all applicable schedules and accountants' opinions attached
thereto; (iv) the three most recent actuarial valuation reports completed with
respect to such ▇▇▇▇▇▇▇ Employee Program; (v) the summary plan description for
such ▇▇▇▇▇▇▇ Employee Program (or other descriptions of such ▇▇▇▇▇▇▇ Employee
Program provided to employees) and all modifications thereto; (vi) any insurance
policy (including any fiduciary liability insurance policy or fidelity bond)
related to such ▇▇▇▇▇▇▇ Employee Program; (vii) any registration statement or
other filing made pursuant to any federal or state securities law and (viii) all
correspondence to and from any state or federal agency within the last three
years.
(f) Each ▇▇▇▇▇▇▇ Employee Program may be amended, terminated, or
otherwise modified by ▇▇▇▇▇▇▇ to the greatest extent permitted by applicable
law, including the elimination of any and all future benefit accruals under any
▇▇▇▇▇▇▇ Employee Program and, except as disclosed on Section 5.7 of the ▇▇▇▇▇▇▇
Disclosure Letter, no condition exists which
28
would limit the right of ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Affiliate to so amend, terminate
or otherwise modify such ▇▇▇▇▇▇▇ Employee Program.
(g) No liability under Title IV or Section 302 of ERISA has been
incurred by ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Affiliate that has not been satisfied in full
and no condition exists that presents a material risk to ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇
Affiliate of incurring any such liability, other than liability for premiums due
to the PBGC (which premiums have been paid when due).
(h) The PBGC has not instituted proceedings to terminate any
▇▇▇▇▇▇▇ Title IV Plan and no condition exists that presents a material risk that
such proceedings will be instituted.
(i) Except as disclosed in Section 5.7 of the ▇▇▇▇▇▇▇ Disclosure
Letter, with respect to each ▇▇▇▇▇▇▇ Title IV Plan, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan, did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.
(j) No ▇▇▇▇▇▇▇ Title IV Plan or any trust established there under
has incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each ▇▇▇▇▇▇▇ Title IV Plan ended prior to the
Closing Date.
(k) No amounts payable under the ▇▇▇▇▇▇▇ Employee Programs will
fail to be deductible for federal income tax purposes by virtue of Section
162(a)(1), 162(m) or 280G of the Code.
5.8 Intentionally Omitted
---------------------
5.9 No Payments to Employees, Officers and Directors. Section 5.9 of the
------------------------------------------------
▇▇▇▇▇▇▇ Disclosure Letter contains a true and complete list of all arrangements,
agreements or plans pursuant to which any cash or non-cash payments or other
obligation will become payable, accelerate the time of payment or vesting or
increase any amount currently payable (and the maximum aggregate amount which
may be payable thereunder) to each employee, officer or director of ▇▇▇▇▇▇▇ or
any ▇▇▇▇▇▇▇ Subsidiary as a result of the Merger (assuming no termination of
service).
5.10 Taxes. Except as set forth in Section 5.10 of the ▇▇▇▇▇▇▇ Disclosure
-----
Letter:
(a) ▇▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇▇ Subsidiaries have timely filed
all income and other material Tax Returns required to be filed by them through
the date hereof in a manner correct and complete in all material respects and
have timely paid or caused to be paid all Taxes
29
shown as due on such Tax Returns and all income and other material Taxes
otherwise required to be paid by them through the date hereof whether disputed
or not.
(b) On or before the Closing Date, ▇▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇▇
Subsidiaries shall have paid all income and other material Taxes (whether or not
shown on any Tax Return) required to be paid by them on or before the Closing
Date whether disputed or not and shall have accrued or made full, adequate and
complete provision on their books as required by GAAP for all income and other
material Taxes (whether or not shown on any Tax Return) not required to be paid
by them on or before the Closing Date.
(c) No Tax Authority is now asserting or, to the best knowledge of
▇▇▇▇▇▇▇, threatening to assert against ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇
Subsidiaries any deficiency or claim for Taxes. No claim for unpaid income
taxes or for other unpaid material Taxes has become a lien or encumbrance of any
kind against any material asset of ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries
except for statutory liens for such Taxes that are not yet due. Neither ▇▇▇▇▇▇▇
nor any of the ▇▇▇▇▇▇▇ Subsidiaries has entered into a closing agreement
pursuant to Section 7121 of the Code after December 31, 1990.
(d) ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries have previously delivered
or made available to RMSI complete and accurate copies of (1) all audit reports,
revenue agent reports, requests for letter rulings, letter rulings, technical
advice memoranda and similar documents issued by all Tax Authorities relating to
Taxes, (2) all income Tax Returns filed by ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇
Subsidiaries with respect to taxable periods beginning after December 31, 1990
and (3) any closing agreements (and any exhibits thereto) entered into by
▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries as of the date hereof. ▇▇▇▇▇▇▇ will
deliver or make available to RMSI any documents mentioned in the preceding
sentence that become available to ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries
after the date hereof and on or before the Closing Date.
(e) There has not been any audit of any tax return filed by ▇▇▇▇▇▇▇
or any of the ▇▇▇▇▇▇▇ Subsidiaries with respect to any taxable year beginning
after December 31, 1990, no such audit is in progress, and neither ▇▇▇▇▇▇▇ nor
any of the ▇▇▇▇▇▇▇ Subsidiaries has been notified by any Tax Authority that any
such audit is contemplated or pending. Neither ▇▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇▇
Subsidiaries has requested or received an extension of time with respect to any
date on which a tax return was or is to be filed by ▇▇▇▇▇▇▇ or any of the
▇▇▇▇▇▇▇ Subsidiaries and there is no extension, waiver or agreement for the
extension of time for the assessment or payment of any Taxes owed (or alleged to
be owed) by ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries.
(f) No power of attorney has been granted by or with respect to
▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries with respect to any matter relating
to Taxes.
(g) There are no agreements or understandings relating to Taxes
between ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries and any other party affecting
or which could affect ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries by which
▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries
30
will be bound after the Closing Date or which could affect the computation of
Taxes by ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries.
5.11 Tax-Free Treatment. Neither ▇▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇▇
------------------
Subsidiaries has taken or caused to be taken any action which would cause the
Merger to fail to qualify as a Reorganization under Section 368(a) of the Code.
5.12 Proxy Statement. On the date the Proxy Statement (as defined in
---------------
Section 6.7 hereof) is mailed to ▇▇▇▇▇▇▇'▇ stockholders, none of the information
supplied in writing by or on behalf of ▇▇▇▇▇▇▇ for inclusion in the Proxy
Statement will be false or misleading with respect to any material fact or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the stockholders' meeting or the
solicitation of proxies therefore which has become false or misleading.
Notwithstanding the foregoing, ▇▇▇▇▇▇▇ makes no representation or warranty with
respect to information supplied by RMSI or any of its affiliates or
representatives in writing for inclusion in the Proxy Statement.
5.13 SEC Documents. As of the date it was declared effective by the SEC,
-------------
▇▇▇▇▇▇▇'▇ Registration Statement on Form S-1 (Registration No. 333-53419), as
amended (the "S-1"), (i) complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. As of its date of filing, ▇▇▇▇▇▇▇'▇ Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 filed with the SEC on March 31, 1999
(the "▇▇▇▇▇▇▇ SEC Report") (i) complied as to form in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the parties hereto acknowledge that the
-------- -------
▇▇▇▇▇▇▇ SEC Report does not contain any information or disclosure relating to
this Agreement and the transactions contemplated thereby, including the Merger.
There is no material fact existing today directly relating to the business,
operations or condition of ▇▇▇▇▇▇▇ (other than facts which relate to general
economic trends or conditions or general conditions affecting the industries in
which ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Subsidiaries operate) that is reasonably likely to
have a ▇▇▇▇▇▇▇ Material Adverse Effect, that has not been set forth in the
▇▇▇▇▇▇▇ SEC Report or the ▇▇▇▇▇▇▇ Disclosure Letter; provided that the loss of,
or a reduction in revenues from, one or more customers or principals shall be
deemed not to have a ▇▇▇▇▇▇▇ Material Adverse Effect, unless the loss of, or
reductions in revenues from, such customers or principals, individually or in
the aggregate, constitute a Material Customer Loss. A true and complete copy of
the ▇▇▇▇▇▇▇ SEC Report has been delivered to RMSI. Each of the consolidated
balance sheets of ▇▇▇▇▇▇▇ included in or incorporated by reference into the
▇▇▇▇▇▇▇ SEC Report and the S-1 (including the related notes and schedules)
fairly presents the consolidated
31
financial position of ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries as of its date and
each of the consolidated statements of income, retained earnings and cash flows
of ▇▇▇▇▇▇▇ included in or incorporated by reference into the ▇▇▇▇▇▇▇ SEC Report
and the S-1 (including any related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows, as the case may be, of
▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except, in the case of the unaudited statements, as permitted by Form
10-Q pursuant to Section 13 or 15(d) of the Exchange Act.
5.14 No Brokers. Except as disclosed in Section 5.14 of the ▇▇▇▇▇▇▇
----------
Disclosure Letter, neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary has entered into
any contract, arrangement or understanding with any person or firm which may
result in the obligation of such entity, RMSI or ▇▇▇▇▇▇▇ to pay any finder's
fees, brokerage or agent's commissions, advisory fee or other like payments
relating to or in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby.
5.15 Litigation. There is no litigation or governmental or
----------
administrative proceeding, arbitration or investigation pending or, to the
knowledge of ▇▇▇▇▇▇▇, threatened against ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Subsidiaries
which, either individually or in the aggregate, is reasonably likely to have a
▇▇▇▇▇▇▇ Material Adverse Effect on ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries taken as
a whole, or which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
5.16 Absence of Certain Changes. Except as disclosed in Section 5.16 of
--------------------------
the ▇▇▇▇▇▇▇ Disclosure Letter, since December 31, 1998 there has not been any
change in the financial condition, properties, assets, liabilities, business or
operations of ▇▇▇▇▇▇▇, which change by itself or in conjunction with all other
such changes, whether or not arising in the ordinary course of business, has had
a ▇▇▇▇▇▇▇ Material Adverse Effect; provided that no decrease in the reported
price of ▇▇▇▇▇▇▇ Common Stock shall in any event constitute a ▇▇▇▇▇▇▇ Material
Adverse Effect under any provision of this Agreement; provided further that the
loss of, or a reduction in revenues from, one or more customers or principals
shall be deemed not to have a ▇▇▇▇▇▇▇ Material Adverse Effect under any
provision of this Agreement, unless the loss of, or reduction in revenues from,
such customers or principals, individually or in the aggregate, constitute a
Material Customer Loss.
5.17 Disclosure. The representations, warranties and statements
----------
contained or referred to in this Agreement and in the certificates, exhibits and
the ▇▇▇▇▇▇▇ Disclosure Letter delivered by ▇▇▇▇▇▇▇ pursuant to this Agreement
(including the ▇▇▇▇▇▇▇ SEC Report) to RMSI do not contain any untrue statement
of a material fact, and, when taken together, do not omit to state a material
fact required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
32
5.18 Undisclosed Liabilities. Except as and to the extent reflected,
-----------------------
reserved against or otherwise specifically disclosed in the ▇▇▇▇▇▇▇ SEC Report
and the ▇▇▇▇▇▇▇ Disclosure Letter, neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary
has any liabilities or obligations of any kind required to be disclosed in
accordance with GAAP applied on a basis consistent with past practice, whether
accrued, absolute, known or unknown, asserted or unasserted, contingent or
otherwise which could reasonably be expected to have, individually or in the
aggregate, a ▇▇▇▇▇▇▇ Material Adverse Effect.
5.19 Customers and Principals. Except as disclosed in Section 5.16 of the
------------------------
▇▇▇▇▇▇▇ Disclosure Letter, as of the date hereof, ▇▇▇▇▇▇▇ has no knowledge of
(i) any loss since December 31, 1998 or any currently threatened loss of any
material customer or principal, other than losses or threatened losses arising
out of, resulting from or relating to the execution or consummation of this
Agreement or the transactions contemplated thereby, or (ii) any pending
bankruptcy filing, insolvency or material adverse change in the financial
position of any material customer or principal.
5.20 Receivables. All of ▇▇▇▇▇▇▇'▇ accounts receivable arose from bona
-----------
fide transactions in the ordinary course of business, are valid and collectible
obligations of the respective makers thereof and were not and are not subject to
any offset or counter-claim, except for the amount reserved for doubtful
accounts set forth on (i) prior to the availability of ▇▇▇▇▇▇▇'▇ consolidated
unaudited financial statements for the quarter ended March 31, 1999, ▇▇▇▇▇▇▇'▇
consolidated audited financial statements for the year ended December 31, 1998,
and (ii) after ▇▇▇▇▇▇▇'▇ consolidated unaudited financial statements for the
quarter ended March 31, 1999 become available, ▇▇▇▇▇▇▇'▇ consolidated unaudited
financial statements for the quarter ended March 31, 1999 (the "▇▇▇▇▇▇▇
Financials"). ▇▇▇▇▇▇▇'▇ accounts receivable are reflected on the ▇▇▇▇▇▇▇
Financials in accordance with GAAP (as defined herein) applied on a basis
consistent with past practice. Since the date of the ▇▇▇▇▇▇▇ Financials, there
have not been any material write-offs as uncollectible of any of ▇▇▇▇▇▇▇'▇
accounts receivable, except for write-offs in the ordinary course of business
and consistent with past practice.
5.21 Definition of ▇▇▇▇▇▇▇'▇ Knowledge. As used in this Agreement, the
---------------------------------
phrase "to the knowledge of ▇▇▇▇▇▇▇" or "to the best knowledge of ▇▇▇▇▇▇▇" (or
words of similar import) means the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
5.22 Opinion of Financial Advisor. The Special Committee has received the
----------------------------
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gull, its financial advisor, substantially to
the effect that the Merger is fair to ▇▇▇▇▇▇▇ from a financial point of view, a
copy of which will be provided to RMSI.
33
ARTICLE 6. COVENANTS
6.1 Acquisition Proposals.
---------------------
(a) RMSI represents and warrants that it has terminated any
discussions or negotiations relating to, or that may reasonably be expected to
lead to, any Acquisition Proposal (as defined below). From and after the date
hereof until the termination of this Agreement, RMSI shall not, nor shall it
permit any of the RMSI Subsidiaries to, nor shall it authorize or permit any
officer, director, employee, agent, advisor or representative of RMSI or any of
the RMSI Subsidiaries to, directly or indirectly (i) solicit, initiate or
encourage the submission of, any inquiries, proposals or offers from any person
relating to an Acquisition Proposal, (ii) enter into any agreement with respect
to any Acquisition Proposal, or (iii) enter into, engage in, or participate or
continue in, any discussions or negotiations regarding, or furnish to any person
any information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or would reasonably be
expected to lead to, any Acquisition Proposal.
(b) ▇▇▇▇▇▇▇ represents and warrants that it has terminated any
discussions or negotiations relating to, or that may reasonably be expected to
lead to, any Acquisition Proposal (as defined below). From and after the date
hereof until the termination of this Agreement, ▇▇▇▇▇▇▇ shall not, nor shall it
permit any of the ▇▇▇▇▇▇▇ Subsidiaries to, nor shall it authorize or permit any
officer, director, employee, agent, advisor or representative of ▇▇▇▇▇▇▇ or any
of the ▇▇▇▇▇▇▇ Subsidiaries to, directly or indirectly (i) solicit, initiate or
encourage the submission of, any inquiries, proposals or offers from any person
relating to an Acquisition Proposal, (ii) enter into any agreement with respect
to any Acquisition Proposal, or (iii) enter into, engage in, or participate or
continue in, any discussions or negotiations regarding, or furnish to any person
any information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or would reasonably be
expected to lead to, any Acquisition Proposal. Notwithstanding anything to the
contrary in this Agreement, ▇▇▇▇▇▇▇ may (A) furnish information to, or
participate in discussions or negotiations with, any person or entity that makes
bona fide, written, unsolicited Acquisition Proposal for which financing, to the
extent required to consummate the Acquisition Proposal, is then fully and
unconditionally committed in writing or is, in the good faith judgment of the
▇▇▇▇▇▇▇ Board of Directors, likely to be obtained, with respect to ▇▇▇▇▇▇▇ if
the Board of Directors of ▇▇▇▇▇▇▇ determines in good faith (i) after receiving
the advice of outside counsel and (ii) after receiving the advice of the
financial advisor to the directors that such Acquisition Proposal, if accepted,
is reasonably likely to be completed, taking into account all legal, financial,
regulatory and other aspects of the Acquisition Proposal and the person making
the Acquisition Proposal and that would, if consummated, result in a transaction
more favorable to ▇▇▇▇▇▇▇'▇ stockholders from a financial point of view than the
transaction contemplated by this Agreement (any such Acquisition Proposal, a
"Superior Proposal"); provided, however, that prior to ▇▇▇▇▇▇▇'▇ furnishing such
-------- -------
information or participating in such discussions or negotiations, such person or
entity shall have executed a confidentiality and standstill agreement with
▇▇▇▇▇▇▇ having terms substantially similar to those contained in that certain
34
exclusivity/confidentiality agreement, dated March 10, 1999 between ▇▇▇▇▇▇▇ and
RMSI (the "Confidentiality Agreement"), and (B) comply with Rules 14d-9 and 14e-
2 promulgated under the Exchange Act with respect to an Acquisition Proposal.
(c) As used herein, the term "Acquisition Proposal" shall mean, with
respect to any person, any proposal or offer for a (i) merger, consolidation or
similar transaction involving such person, (ii) sale, lease or other
disposition, directly or indirectly, by merger, consolidation, share exchange or
otherwise, of any assets of such person or their subsidiaries representing 15%
or more of the consolidated assets of such person and their subsidiaries, (iii)
issue, sale or other disposition of (including by way of merger, consolidation,
share exchange or any similar transaction) securities (or options, rights or
warrants to purchase, or securities convertible into, such securities)
representing 15% or more of the votes attached to the outstanding securities of
such person, (iv) transaction in which any person shall acquire beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the
right to acquire beneficial ownership, or any "group" (as such term is defined
under the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 15% or more of the outstanding
shares of such person's capital stock or (v) recapitalization, restructuring,
liquidation or dissolution with respect to such person or their subsidiaries;
provided, however, that the term "Acquisition Proposal" shall not include the
Merger and the transactions contemplated thereby.
(d) ▇▇▇▇▇▇▇ and RMSI shall immediately advise the other party orally
and in writing of any Acquisition Proposal made to it or made after the date
hereof, including the terms thereof and any changes thereto and any termination
thereof, or any inquiry, proposal or discussion regarding any such Acquisition
Proposal, the identity of the person making such Acquisition Proposal or
inquiry, proposal or discussion, the material terms thereof. After the receipt
by ▇▇▇▇▇▇▇ of an Acquisition Proposal, ▇▇▇▇▇▇▇ shall, unless prohibited by law
from doing so, keep RMSI informed on a current basis of the status of any such
inquiry, proposal or discussion.
(e) Prior to the vote on this Agreement at the ▇▇▇▇▇▇▇ Stockholders
Meeting, the Board of Directors of ▇▇▇▇▇▇▇, at any time 48 hours following
notification to RMSI of ▇▇▇▇▇▇▇'▇ intention to do so and only if ▇▇▇▇▇▇▇ shall
have otherwise complied with its obligations under this Section 6.1, may
withdraw or modify its approval or recommendation of the Merger, terminate this
Agreement, and cause ▇▇▇▇▇▇▇ to enter into any agreement with respect to a
Superior Proposal, provided it shall pay or cause to be paid to RMSI the
Termination Amount. If ▇▇▇▇▇▇▇ shall have notified RMSI of its intent to enter
into an agreement with respect to a Superior Proposal in compliance with the
preceding sentence, and has otherwise complied with that sentence, ▇▇▇▇▇▇▇ may
enter into an agreement with respect to such Superior Proposal (with the person
making the Superior Proposal and on terms no less favorable than those specified
in the notification to RMSI) after the expiration of such 48 hour period.
35
6.2 Conduct of Businesses.
---------------------
(a) Conduct by ▇▇▇▇▇▇▇ and RMSI. Prior to the Effective Time, unless
---------------------------
the other party has consented in writing thereto or unless otherwise
specifically permitted by this Agreement and except for those matters set forth
in Schedule 6.2 attached hereto, ▇▇▇▇▇▇▇ and RMSI:
------------
(i) shall use their respective reasonable best efforts, and
shall cause each of their respective subsidiaries to use their reasonable
best efforts, to preserve intact their business organizations and goodwill
and keep available the services of their respective executive officers and
material employees, their customers and principals and others having
business relations with ▇▇▇▇▇▇▇ or RMSI, as applicable;
(ii) shall confer on a regular basis with one or more
representatives of the other party to report on material operational
matters and any proposals to engage in material transactions;
(iii) shall promptly notify the other party of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects or the
normal course of their businesses or in the operation of their properties,
any material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the breach
in any material respect of any representation or warranty contained herein;
(iv) shall promptly deliver to the other party true and correct
copies of any report, statement or schedule filed by or with respect to it
with the SEC subsequent to the date of this Agreement and copies of all
correspondence with the SEC relating thereto;
(v) shall, and shall cause each of their respective
subsidiaries to, conduct its operations according to their usual, regular
and ordinary course in substantially the same manner as heretofore
conducted and refrain from changing or introducing any method of financial
or tax accounting, management or operations except in the ordinary course
of business and consistent with past practices, subject to clauses (vi)-
(xix) below;
(vi) shall not amend their respective certificate of
incorporation or bylaws, and shall cause each of their respective
subsidiaries not to amend their charter, bylaws, joint venture documents,
partnership agreements or equivalent documents;
(vii) shall not (A) issue any shares of its capital stock,
effect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction, (B) grant, confer or award
any option, warrant, conversion right or other right not existing on the
date hereof to acquire any shares of its capital stock or grant any stock
36
appreciation rights, (C) increase any compensation, other than in the
ordinary course of business consistent with past practice, or enter into or
amend any employment agreement with any of their present or future officers
or directors, or (D) adopt any new employee benefit plan (including any
stock option, stock appreciation right, stock benefit or stock purchase
plan) or amend any of their benefit plans in any material respect, except
for changes which are not more favorable to participants in such plans or
are otherwise required to comply with applicable law;
(viii) shall not (A) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of its
capital stock, or (B) directly or indirectly redeem, purchase or otherwise
acquire any shares of their respective capital stock or capital stock of
any or their respective subsidiaries, or make any commitment for any such
action;
(ix) shall not, and shall cause all of their respective
subsidiaries not to, sell, lease or otherwise dispose of, or agree to the
sale, lease or other disposition of any of their assets or properties which
are material, individually or in the aggregate, or any of the capital stock
of, or partnership or other interests owned by, ▇▇▇▇▇▇▇, RMSI or any of
their subsidiaries except in the ordinary course of business;
(x) shall not, and shall not authorize or give any of their
respective subsidiaries consent to, make any loans, advances or capital
contributions to, or investments in, any other person other than loans and
advances to employees relating to the incurrence of expenses in the
ordinary course consistent with past practices;
(xi) shall not, and shall not permit any of their respective
subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of RMSI included in the RMSI SEC Report or of ▇▇▇▇▇▇▇
included in the ▇▇▇▇▇▇▇ SEC Reports, as applicable, or incurred in the
ordinary course of business consistent with past practice or entered into
in accordance with this Agreement or the settlement of claims and
litigation in the ordinary course of business;
(xii) shall not, and shall cause all of their respective
subsidiaries not to, enter into any commitment not provided for in their
respective capital expenditure budgets which may result in total payments
or liability by it in excess of $100,000 per year (provided, however, that
nothing contained in this clause (xii) shall permit ▇▇▇▇▇▇▇ or RMSI, as
applicable, or any of their respective subsidiaries to take any action
prohibited by the other provisions of this Section 6.2), other than
commitments for expenses of attorneys, accountants and investment bankers
incurred in connection with
37
the transactions contemplated by this Agreement or, if and to the extent
consistent with this Agreement, any Acquisition Proposal; and
(xiii) shall not, and shall cause all of their respective
subsidiaries not to, engage in any discussions relating to, make any
proposal or offer relating to, or enter into any agreement with respect to,
any acquisition or purchase by ▇▇▇▇▇▇▇ or RMSI, as applicable, or any of
their respective subsidiaries of all or a significant portion of the assets
of, or any capital stock or other equity interest in, any entity, or any
merger, consolidation, business combination or similar transaction
involving ▇▇▇▇▇▇▇ or RMSI, as applicable, or any of their respective
subsidiaries, other than in connection with the pending transactions listed
on Schedule 6.2(a)(xiii) contained in their respective Disclosure Letters;
---------------------
(xiv) shall not, and shall cause all of their respective
subsidiaries not to, make any purchase of any product, asset or property
other than in the ordinary course of business, or mortgage, pledge, subject
to a lien or otherwise encumber any of its properties or assets other than
in the ordinary course of business, other than in connection with the
pending transactions listed on Schedule 6.2(a)(xiii) contained in their
---------------------
respective Disclosure Letters;
(xv) shall not, and shall cause all of their respective
subsidiaries not to, incur any contingent liability as a guarantor or
otherwise with respect to the obligations of others, or incur any other
indebtedness or contingent or fixed obligations or liabilities except in
the ordinary course of business;
(xvi) shall not, and shall cause all of their respective
subsidiaries not to, make any change in the compensation payable or to
become payable to any of their respective officers, employees, agents or
independent contractors other than increases in the ordinary course of
business consistent with past practices, provided that no compensation
payable to any of ▇▇▇▇▇▇▇'▇ or RMSI's officers, employees, agents, or
independent contractors shall be increased by more than 5% of the
compensation received by such person for the calendar year ending December
31, 1998;
(xvii) shall have, and shall cause all of their respective
subsidiaries to have, in effect and maintain at all times all insurance of
the kind and in the amount it currently carries or equivalent insurance
with any substitute insurers approved in writing by the other party;
(xviii) shall permit, and shall cause all of their respective
subsidiaries to permit the other party and its authorized representatives
to have full access to all its properties, assets, records, Tax Returns,
contracts and documents and furnish to the other party or its authorized
representatives such financial and other information with respect to its
business or properties as the other party may from time to time reasonably
request; and
38
(xix) shall not, and shall cause all of their respective
subsidiaries not to, make any material Tax elections, settle or
compromise any Tax liability with any Taxing Authority or file any
amended Tax Return or claim for refund.
Any request for consent of ▇▇▇▇▇▇▇ under this Section 6.2 shall be
directed to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at the address set forth for ▇▇▇▇▇▇▇ in Section
9.2 hereof, with copies to ▇▇▇▇▇▇ ▇. Cable, P.C. at the address set forth for
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP set forth in Section 9.2 hereof. Any request for
consent of RMSI under this Section 6.2 shall be directed to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
at the address set forth for RMSI in Section 9.2 hereof, with copies to ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Esq. at the address set forth for Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP set forth in Section 9.2 hereof.
6.3 Meeting of Stockholders. Promptly following execution of this
-----------------------
Agreement, each of ▇▇▇▇▇▇▇ and RMSI will take all action necessary in accordance
with applicable law and their respective charter and bylaws to convene a meeting
of their respective stockholders as promptly as practicable to consider and vote
upon the approval of this Agreement and the consummation of the transactions
contemplated hereby. The Board of Directors of each of ▇▇▇▇▇▇▇ and RMSI has
recommended that their respective stockholders approve this Agreement and the
transactions contemplated hereby and each of ▇▇▇▇▇▇▇ and RMSI shall use their
reasonable best efforts to obtain such approval, including, without limitation,
by timely mailing the Proxy Statement (as defined in Section 6.7 hereof) to
▇▇▇▇▇▇▇'▇ stockholders; provided, however, that nothing contained in this
-------- -------
Section 6.3 shall prohibit the Board of Directors of ▇▇▇▇▇▇▇ from changing such
recommendation or using their reasonable best efforts to obtain such approval if
the Board of Directors of ▇▇▇▇▇▇▇ has determined in good faith, after
consultation with and in reliance upon the advice of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇
LLP, or another nationally recognized firm selected by ▇▇▇▇▇▇▇, that the failure
to do so would be a violation of such Board of Directors' fiduciary duties to
its stockholders under applicable law. It shall be a condition to the mailing
of the Proxy Statement that (i) ▇▇▇▇▇▇▇ shall have received a "comfort" letter
from Ernst & Young, L.L.P., independent public accountants for RMSI, dated as of
a date within two business days before the date on which the Proxy Statement,
with respect to the financial statements of RMSI included or incorporated in the
Proxy Statement is first mailed to stockholders, in form and substance
reasonably satisfactory to ▇▇▇▇▇▇▇, and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
proxy statements similar to the Proxy Statement; and (ii) RMSI shall have
received a "comfort" letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public
accountants for ▇▇▇▇▇▇▇, dated as of a date within two business days before the
date on which the Proxy Statement, with respect to the financial statements of
▇▇▇▇▇▇▇ included or incorporated in the Proxy Statement is first mailed to
stockholders, in form and substance reasonably satisfactory to RMSI, and
customary in scope and substance for "comfort" letters delivered by independent
public accountants in connection with proxy statements similar to the Proxy
Statement.
6.4 Filings; Other Action. Subject to the terms and conditions herein
---------------------
provided, RMSI and ▇▇▇▇▇▇▇ shall: (a) use all reasonable best efforts to
cooperate with one another in (i)
39
determining which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are required to
be obtained prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states, and foreign jurisdictions
and any third parties in connection with the execution and delivery of this
Agreement and the other agreements contemplated hereby (the "Ancillary
Agreements") and the consummation of the transactions contemplated by such
agreements and (ii) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations; (b) use all reasonable best
efforts to obtain in writing any consents required from third parties to
effectuate the Merger and the transactions contemplated hereby and by the
Ancillary Agreements, including without limitation the required consents set
forth on Schedule 7.3(g), in form and substance reasonably satisfactory to each
---------------
of RMSI and ▇▇▇▇▇▇▇; and (c) use all reasonable best efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement, and the other Ancillary Agreements.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement or the Ancillary
Agreements, the proper officers and directors of ▇▇▇▇▇▇▇ and RMSI shall take all
such necessary action. ▇▇▇▇▇▇▇ and RMSI shall cooperate with all reasonable
requests of the other parties hereto and their counsel in connection with the
consummation of the transactions contemplated hereby.
6.5 Access to Information.
---------------------
(a) Upon reasonable notice to the other, ▇▇▇▇▇▇▇ and RMSI shall
(and shall cause their respective subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the others,
reasonable access, during normal business hours during the period from the date
hereof to the Effective Time, to all its properties, books, contracts,
commitments and records and permit such persons to make such inspections as they
may reasonably require, and during such period, ▇▇▇▇▇▇▇ and RMSI shall (and
cause their respective subsidiaries to) furnish promptly to the others all
information concerning its business, properties, personnel and accountants as
the others may reasonably request.
(b) RMSI agrees that, unless and until the Closing has been
consummated, RMSI and their officers, directors, agents and representatives will
hold in strict confidence, and will not use, any confidential or proprietary
data or information obtained from ▇▇▇▇▇▇▇ with respect to its business or
financial condition except for the purpose of evaluating, negotiating and
completing the transaction contemplated hereby. Information that (i) is or
becomes generally available to the public as a result of disclosure by ▇▇▇▇▇▇▇
or its representatives, (ii) was available to RMSI on a non-confidential basis
prior to its disclosure to RMSI by ▇▇▇▇▇▇▇, (iii) becomes available to RMSI on a
non-confidential basis from a source other than ▇▇▇▇▇▇▇ or its representatives
provided that such source is not bound by a confidentiality Agreement with
▇▇▇▇▇▇▇ or its representatives or (iv) was developed by RMSI independently and
without any use of information provided by or obtained from ▇▇▇▇▇▇▇ shall not be
deemed confidential or proprietary information for purposes of this agreement.
If the transaction contemplated by this Agreement is not consummated, RMSI will
return to ▇▇▇▇▇▇▇
40
(or certify that they have destroyed) all copies of such data and information,
including but not limited to financial information, customer lists, business and
corporate records, worksheets, test reports, Tax Returns, lists, memoranda, and
other documents prepared by or made available to RMSI in connection with the
transaction.
(c) ▇▇▇▇▇▇▇ agrees that, unless and until the Closing has been
consummated, ▇▇▇▇▇▇▇ and their officers, directors, agents and representatives
will hold in strict confidence, and will not use, any confidential or
proprietary data or information obtained from RMSI with respect to its business
or financial condition except for the purpose of evaluating, negotiating and
completing the transaction contemplated hereby. Information that (i) is or
becomes generally available to the public as a result of disclosure by RMSI or
its representatives, (ii) was available to ▇▇▇▇▇▇▇ on a non-confidential basis
prior to its disclosure to ▇▇▇▇▇▇▇ by RMSI, (iii) becomes available to ▇▇▇▇▇▇▇
on a non-confidential basis from a source other than RMSI or its representatives
provided that such source is not bound by a confidentiality agreement with RMSI
or its representatives or (iv) was developed by ▇▇▇▇▇▇▇ independently and
without any use of information provided by or obtained from RMSI shall not be
deemed confidential or proprietary information for purposes of this Agreement.
If the transaction contemplated by this Agreement is not consummated, ▇▇▇▇▇▇▇
will return to RMSI (or certify that they have destroyed) all copies of such
data and information, including but not limited to financial information,
customer lists, business and corporate records, worksheets, test reports, Tax
Returns, lists, memoranda, and other documents prepared by or made available to
▇▇▇▇▇▇▇ in connection with the transaction.
6.6 Publicity. ▇▇▇▇▇▇▇ and RMSI shall consult with each other before
---------
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Ancillary Agreements, or any transaction contemplated
hereby and thereby and shall not issue any such press release or make any such
public statement without the prior consent of the other parties, which consent
shall not be unreasonably withheld; provided, however, that a party may, without
-------- -------
the prior consent of the other parties, issue such press release or make such
public statement as may be required (i) in the opinion of counsel under any
applicable law or regulation or pursuant to the rules of any exchange or the
NASDAQ National Market or (ii) in response to any legal process, including,
without limitation, any interrogatories, documents subpoena or civil
investigative demand.
6.7 Proxy Statement. ▇▇▇▇▇▇▇ shall prepare and file with the SEC (with
---------------
appropriate requests for confidential treatment, unless the parties hereto
otherwise agree) under the Exchange Act, a proxy statement and form of proxies
(such proxy statement and form of proxy, together with any amendments to
supplements thereto, the "Proxy Statement") relating to the stockholder meeting
of ▇▇▇▇▇▇▇ and the vote of the stockholders of ▇▇▇▇▇▇▇ with respect to this
Agreement (the "▇▇▇▇▇▇▇ Stockholders Meeting"). ▇▇▇▇▇▇▇ and RMSI will cause the
Proxy Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Each of ▇▇▇▇▇▇▇, on the one hand, and RMSI, on the other hand,
shall furnish all information about itself and its business and operations and
all necessary financial information to the other as the other may reasonably
41
request in connection with the preparation of the Proxy Statement. ▇▇▇▇▇▇▇ shall
use its reasonable best efforts, and RMSI will cooperate with them, to have the
Proxy Statement cleared with the SEC as promptly as practicable. Each of ▇▇▇▇▇▇▇
and RMSI, agrees promptly to correct any information provided by it for use in
the Proxy Statement if and to the extent that such information shall have become
false or misleading in any material respect, and each of the parties hereto
further agrees to take all steps necessary to amend or supplement the Proxy
Statement and to cause the Proxy Statement as so amended or supplemented to be
filed with the SEC and to be disseminated to ▇▇▇▇▇▇▇'▇ stockholders, in each
case as and to the extent required by applicable federal and state securities
laws and the DGCL. Each of ▇▇▇▇▇▇▇ and RMSI agrees that the information provided
by it for inclusion in the Proxy Statement and each amendment or supplement
thereto, at the time of mailing thereof, will not include any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of ▇▇▇▇▇▇▇ and
RMSI will advise the other parties, and deliver copies (if any) to them,
promptly after receipt thereof, of (i) any request by or correspondence or
communication from the SEC with respect to the Proxy Statement (ii) any
responses thereto and (iii) notice of the time when the Proxy Statement has been
cleared or any supplement or amendment has been filed, the issuance of any stop
order.
6.8 Listing Application. ▇▇▇▇▇▇▇ and RMSI shall cooperate and promptly
-------------------
prepare and submit to the Nasdaq National Market all reports, applications and
other documents that may be necessary or desirable to enable all of the shares
of ▇▇▇▇▇▇▇ Common Stock issuable in the Merger or that will be reserved for
issuance at the Effective Time to be listed for trading on the Nasdaq National
Market. Each of ▇▇▇▇▇▇▇ and RMSI shall furnish all information about itself and
its business and operation and all necessary financial information to the other
as the other may reasonably request in connection with the such Nasdaq National
Market listing process. Each of ▇▇▇▇▇▇▇ and RMSI agree promptly to correct any
information provided by it for use in the Nasdaq National Market listing process
if and to the extent that such information shall have become false or misleading
in any material respect. Each of ▇▇▇▇▇▇▇ and RMSI will advise and deliver
copies (if any) to the other parties, promptly after it receives notice thereof,
of any request by the Nasdaq National Market for amendment of any submitted
materials or comments thereon and responses thereto or requests by the Nasdaq
National Market for additional information.
6.9 Further Action. Each party hereto shall, subject to the fulfillment
--------------
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may reasonably be required to effect the Merger and the
transactions contemplated by this Agreement, and the Ancillary Agreements. In
connection with the Closing, RMSI and each RMSI Subsidiary shall use its
reasonable best efforts to deliver to ▇▇▇▇▇▇▇ such deeds, bills of sale,
assignments, certificates, affidavits, indemnities and other agreements and
documents as are reasonably required to effectuate consummation of the
transactions described herein.
42
6.1 Affiliates of RMSI.
------------------
(a) RMSI shall use its reasonable best efforts to deliver or cause to
be delivered to ▇▇▇▇▇▇▇, prior to the Closing Date, from each of the RMSI
Stockholders ("Affiliates"), an Affiliate Letter in the form attached hereto as
Exhibit ▇. ▇▇▇▇▇▇▇ shall be entitled to place legends as specified in such
---------
affiliate letters on the certificates evidencing any shares to be received by
such Affiliates pursuant to the terms of this Agreement and to issue appropriate
stop transfer instructions to the transfer agent for the shares, consistent with
the terms of such affiliate letters.
(b) ▇▇▇▇▇▇▇ shall file the reports required to be filed by it under
the Exchange Act and the rules and regulations adopted by the SEC thereunder,
and shall take such further action as any Affiliate of RMSI may reasonably
request, all to the extent required from time to time to enable such Affiliate
to sell shares received by such Affiliate in the Merger without registration
under the Securities Act pursuant to (i) Rule 145(d)(1) or (ii) any successor
rule or regulation hereafter adopted by the SEC.
6.11 Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby shall be paid by the party incurring such expenses, except that (a)
the filing fees in connection with the filing of the Proxy Statement with the
SEC, (b) the filing fee in connection with the listing of the shares of ▇▇▇▇▇▇▇
Common Stock issuable in the Merger and issuable upon exercise of the Rollover
Options and the New Options on the Nasdaq National Market, if any, (c) the
expenses incurred for printing the Proxy Statement, and (d) the filing fee in
connection with the filing(s), if any, under the HSR Act, shall be shared
equally by RMSI, on the one hand, and ▇▇▇▇▇▇▇, on the other hand. All costs and
expenses for professional services rendered in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements including, but not
limited to, investment banking and legal services ("Professional Expenses"),
will be paid by each party incurring such costs and expenses. Notwithstanding
anything in this Agreement to the contrary, in the event that the Merger is
consummated, all costs and expenses incurred by ▇▇▇▇▇▇▇, RMSI and the RMSI
Stockholders in connection with this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby (including, without limitation,
any and all Professional Expenses) shall be paid by the Surviving Corporation;
provided, however, that the Surviving Corporation shall not be obligated to pay
-------- -------
any expenses incurred by ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ or ▇▇. ▇▇▇▇ in an
amount not to exceed $10,000 in the aggregate.
6.12 Notice of Default.
-----------------
(a) Promptly upon the occurrence of, or promptly upon RMSI becoming
aware of the impending or threatened occurrence of, any event which would cause
or constitute a breach or default, or would have caused or constituted a breach
or default had such event occurred or been known to the RMSI prior to the date
hereof, of any of the representations, warranties or covenants of RMSI contained
in or referred to in this Agreement, the RMSI
43
Disclosure Letter or in any Exhibit referred to in this Agreement, RMSI shall
give detailed written notice thereof to ▇▇▇▇▇▇▇ and RMSI shall use its best
efforts to prevent or promptly remedy the same.
(b) Promptly upon the occurrence of, or promptly upon ▇▇▇▇▇▇▇ becoming
aware of the impending or threatened occurrence of, any event which would cause
or constitute a breach or default, or would have caused or constituted a breach
or default had such event occurred or been known to the ▇▇▇▇▇▇▇ prior to the
date hereof, of any of the representations, warranties or covenants of ▇▇▇▇▇▇▇
contained in or referred to in this Agreement, the ▇▇▇▇▇▇▇ Disclosure Letter or
in any Exhibit referred to in this Agreement, ▇▇▇▇▇▇▇ give detailed written
notice thereof to RMSI and ▇▇▇▇▇▇▇ shall use its best efforts to prevent or
promptly remedy the same.
6.13 Filings Under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as practicable, each of
-----------------------------------
▇▇▇▇▇▇▇ and RMSI shall, if required, file with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
--- ---------
Division") a premerger notification form and any supplemental information (other
--------
than privileged information) which may be requested in connection therewith
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, which filings and supplemental
information will comply in all material respects with the requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Each of ▇▇▇▇▇▇▇ and RMSI shall cooperate fully with the
other in connection with the preparation of any such filings and shall use their
respective best efforts to respond to any requests for supplemental information
from the FTC or the Antitrust Division and to obtain early termination of any
waiting period applicable to the Merger under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Any and
all filing fees required to be paid in connection with the premerger
notification pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall be borne and paid by
one half by ▇▇▇▇▇▇▇ and one half by RMSI.
6.14 Tax-Free Treatment. Neither ▇▇▇▇▇▇▇ nor RMSI nor any of the ▇▇▇▇▇▇▇
------------------
Subsidiaries nor any of the RMSI Subsidiaries shall take or cause to be taken
any action, whether before or after Closing, which would cause the Merger to
fail to qualify as a reorganization under Section 368(a) of the Code.
6.15 Nonsolicitation. Prior to the Effective Time and, in the event that
---------------
this Agreement is terminated for any reason, for a period of one (1) year
following the Effective Time, neither ▇▇▇▇▇▇▇ nor RMSI nor any of the ▇▇▇▇▇▇▇
Subsidiaries nor any of the RMSI Subsidiaries shall directly, or indirectly,
solicit for employment or hire any employee of the other party, or any of their
respective subsidiaries, with whom such party has had contact or who became
known to such party in connection with the Merger; provided, however, that the
-------- -------
foregoing provision shall not prohibit (i) the employment of an employee who
contacts the hiring party of his or her own initiative and without any direct or
indirect solicitation by such hiring party or (ii) general advertisement in
newspapers or other periodicals in the ordinary course of business.
44
6.16 Financing.
---------
(a) RMSI and ▇▇▇▇▇▇▇ agree to use commercially reasonable efforts to
refinance their existing senior debt and credit facilities with Chase Manhattan
Bank and First Union National Bank, respectively (the "Senior Debt"), to the
extent required, on terms which are commercially reasonable based upon the
business, operations and financial condition of RMSI and ▇▇▇▇▇▇▇ (including any
potential Tax liability of RMSI or the Surviving Corporation incurred in
connection with the consummation of the Merger (the "Relevant Factors")) at the
time, as determined independently by ▇▇▇▇▇▇▇ and RMSI in their respective good
faith judgment.
(b) ▇▇▇▇▇▇▇ agrees to use commercially reasonable efforts to assume
RMSI's 10 1/8% Senior Subordinated Notes due 2007 (the "RMSI Notes") and RMSI
and ▇▇▇▇▇▇▇ will if necessary, use commercially reasonable efforts to obtain any
consents or waivers required to permit the assumption of the RMSI Notes by
▇▇▇▇▇▇▇; provided, however, that if ▇▇▇▇▇▇▇ and RMSI mutually agree to
-------- -------
repurchase and refinance the RMSI Notes, ▇▇▇▇▇▇▇ and RMSI shall use commercially
reasonable efforts to consummate such repurchase and refinancing on terms which
are commercially reasonable based upon the Relevant Factors at the time, as
determined independently by ▇▇▇▇▇▇▇ and RMSI in their respective good faith
judgment.
(c) ▇▇▇▇▇▇▇ agrees to use commercially reasonable efforts to assist
RMSI in completing the exchange offer relating to, and registration of, the RMSI
Notes, including assisting RMSI in the preparation of pro forma financial
statements and providing RMSI with any other information reasonably required to
complete the exchange offer and the registration of the RMSI Notes.
6.17 RMSI Employees. Each employee of RMSI who was an employee of RMSI
--------------
immediately prior to the Closing shall (i) be entitled to participate in the
▇▇▇▇▇▇▇ Employee Programs (or any similar or successor program) to the same
extent as similarly situated employees of ▇▇▇▇▇▇▇, (ii) shall receive credit for
such employee's past service with RMSI as of the Closing for all purposes under
such plans and programs, (iii) to the extent permitted under the terms of such
plans and programs, not to be subject to any waiting periods or limitations on
benefits for pre-existing conditions and shall be given credit for amounts paid
under corresponding plans during the appropriate period prior to the Closing and
(iv) shall be given credit for all accrued but unused vacation time credited to
such employee as of the Closing. Notwithstanding the foregoing, nothing
contained in this Section 6.19 shall confer any rights, remedies, obligations or
liabilities upon any party other than the parties hereto.
6.18 Exchange Offer Registration Statement. RMSI shall use reasonable best
-------------------------------------
efforts to take all actions necessary, including without limitation, preparing
and filing any additional amendments to its Registration Statement on Form S-4
initially filed on March 10, 1999 (the "RMSI Registration Statement") relating
to the RMSI Notes, to have the RMSI Registration Statement declared effective
with the SEC under the Securities Act and to consummate the exchange offer
contemplated therein as promptly as practicable thereafter and prior to the
45
Effective Time. RMSI will cause the RMSI Registration Statement to comply as to
form in all material respects with the applicable provisions of the Securities
Act and the rules and regulations thereunder. Each of ▇▇▇▇▇▇▇, on the one hand,
and RMSI, on the other hand, shall furnish all information about itself and its
business and operations and all necessary financial information to the other as
the other may reasonably request in connection with the preparation of the RMSI
Registration Statement. RMSI shall use its reasonable best efforts, and ▇▇▇▇▇▇▇
will cooperate with them, to have the RMSI Registration Statement declared
effective by the SEC as promptly as practicable but in any event prior to the
Effective Time. Each of ▇▇▇▇▇▇▇ and RMSI agrees promptly to correct any
information provided by it for use in the RMSI Registration Statement if and to
the extent that such information shall have become false or misleading in any
material respect, and each of the parties hereto further agrees to take all
steps necessary to amend or supplement the RMSI Registration Statement and to
cause the RMSI Registration Statement as so amended or supplemented to be filed
with the SEC and to be disseminated to the holders of the RMSI Notes. Each of
▇▇▇▇▇▇▇ and RMSI agrees that the information provided by it in writing for
inclusion in the RMSI Registration Statement and each amendment or supplement
thereto, at the time of mailing thereof, will not include any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of ▇▇▇▇▇▇▇ and
RMSI will advise the other party, and deliver copies (if any) to them, promptly
after receipt thereof, of (i) any request by or correspondence or communication
from the SEC with respect to the RMSI Registration Statement, (ii) any
responses thereto and (iii) notice of the time when the RMSI Registration
Statement has been declared effective or any supplement or amendment has been
filed, the issuance of any stop order.
6.19 Option Registration Statement. ▇▇▇▇▇▇▇ shall prepare and file with
-----------------------------
the SEC under the Securities Act the Option Registration Statement relating to
the registration of shares of ▇▇▇▇▇▇▇ Common Stock issuable upon the exercise of
the Rollover Options, the New Options and the Director Options. ▇▇▇▇▇▇▇ and
RMSI will cause the Option Registration Statement to comply as to form in all
material respects with the applicable provisions of the Securities Act and the
rules and regulations thereunder. ▇▇▇▇▇▇▇ shall use its reasonable best efforts
to have the Option Registration Statement declared effective as promptly as
practicable following the Effective Time.
6.20 Ancillary Agreements. The parties shall use their reasonable best
--------------------
efforts (i) to enter into a voting agreement in the form attached hereto as
Exhibit D (the "Post-Merger Voting Agreement") by and among each of the RMSI
---------
Stockholders, Monroe & Company, LLC, and JLM Management Company, LLC, (ii) to
obtain an executed SMART Cancellation Consent from each holder of SMARTs and the
agreements representing such holder's SMARTs, (iii) enter into an advisory
agreement in the form attached hereto as Exhibit F (the "Joint Advisory
Agreement") by and among ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Company, LLC and Richmont Capital
Partners I, L.P. and (iv) to enter into the Registration Rights Agreement (as
defined in Section 7.2(e)).
46
6.21 Spousal Consent. RMSI, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ shall use their
---------------
respective best efforts to obtain, no later than seventy-two hours following the
date hereof, a consent in substantially the form attached hereto as Exhibit F
---------
from the spouses of each of ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇.
ARTICLE 7. CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligation of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived, in whole or in part by the parties hereto, to the extent permitted by
applicable law:
(a) Stockholder Approvals. This Agreement and the Merger shall have
---------------------
been approved and adopted by the requisite vote of the stockholders of RMSI and
this Agreement, the Merger and the Board Amendment shall have been approved and
adopted by the requisite vote of the stockholders of ▇▇▇▇▇▇▇.
(b) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All required filings under the ▇▇▇▇-▇▇▇▇▇-
-----------------
▇▇▇▇▇▇ Act shall have been completed and all applicable time limitations under
such Act shall have expired without a request for further information by the
relevant federal authorities under such Act, or in the event of such a request
for further information, the expiration of all applicable time limitations under
the Act shall have occurred without the objection of such federal authorities.
(c) Listing. ▇▇▇▇▇▇▇ shall have obtained the approval for the
-------
listing of the shares issuable in the Merger on the Nasdaq National Market,
subject to official notice of issuance.
(d) Refinancing. (a) The Senior Debt shall have been refinanced to
-----------
the extent required on terms which are commercially reasonable based upon the
Relevant Factors at the time, as determined independently by ▇▇▇▇▇▇▇ and RMSI in
their respective good faith judgment, (b) (i) ▇▇▇▇▇▇▇ shall have assumed the
RMSI Notes, (ii) ▇▇▇▇▇▇▇ and RMSI shall have obtained any consents or waivers
required for ▇▇▇▇▇▇▇ to assume the RMSI Notes on commercially reasonable terms
as determined independently by both RMSI and ▇▇▇▇▇▇▇ in their respective good
faith judgment and ▇▇▇▇▇▇▇ shall have assumed the RMSI Notes, or (iii) the RMSI
Notes shall have been repurchased and refinanced on terms which are commercially
reasonable based upon the Relevant Factors at the time, as determined
independently by ▇▇▇▇▇▇▇ and RMSI in their respective good faith judgment ((a)
and (b) together, the "Financing"), and (c) after giving effect to the Merger
and the Financing, RMSI and ▇▇▇▇▇▇▇, on a consolidated pro forma basis, shall
have available funds to pay all expenses relating to the consummation of the
Merger.
47
(e) Ancillary Agreements. The Post-Merger Voting Agreement and the
--------------------
Joint Advisory Agreement shall have been entered into by the parties thereto.
(f) No Injunction. No United States federal or state court of
-------------
competent jurisdiction or other governmental entity shall have issued a final
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger.
7.2 Conditions to Obligations of RMSI to Effect the Merger. The
------------------------------------------------------
obligation of RMSI to effect the Merger and the other transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, unless waived by RMSI:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of ▇▇▇▇▇▇▇ contained in this Agreement qualified as to materiality or
▇▇▇▇▇▇▇ Material Adverse Effect shall be true and correct in all respects and
the representations and warranties of ▇▇▇▇▇▇▇ contained in this Agreement that
are not so qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Effective Time as though
made on and as of the Effective Time, and RMSI shall have received a
certificate, dated the Closing Date, signed on behalf of ▇▇▇▇▇▇▇ by the
President of ▇▇▇▇▇▇▇ to the foregoing effect; provided, however, that (A)
-------- -------
representations and warranties expressly made as of an earlier date need only be
true and correct in all material respects as of such earlier date, (B) no
decrease in the reported price of ▇▇▇▇▇▇▇ Common Stock, and no loss of any
customers or principals shall be taken into account when determining the truth
or accuracy of any representation or warranty, except to the extent that the
loss of such customers or principals, individually or in the aggregate,
constitute a Material Customer Loss.
(b) Performance of Obligations. ▇▇▇▇▇▇▇ shall have performed or
--------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by ▇▇▇▇▇▇▇ at or prior to the
Closing.
(c) Certificate from Officers. ▇▇▇▇▇▇▇ shall have delivered to RMSI
-------------------------
a certificate of its respective President or Chief Financial Officer dated the
Closing Date to the effect that the statements set forth in paragraphs (a) and
(b) above with respect to ▇▇▇▇▇▇▇ in this Section 7.2 are true and correct.
(d) Opinion of Counsel. RMSI shall have received the opinion of
------------------
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, or another nationally recognized law
firm selected by RMSI, subject to customary conditions and qualifications
(including reliance, in part, on a certificate from an authorized officer of
each of ▇▇▇▇▇▇▇ and RMSI (collectively, the "Tax Certificates") to the effect
that the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code, which opinion shall not have been withdrawn or modified in
any material respect.
48
(e) Registration Rights. ▇▇▇▇▇▇▇ and the RMSI Stockholders and shall
-------------------
have entered into a registration rights agreement in the form attached hereto as
Exhibit I-1 (the "Registration Rights Agreement").
-----------
(f) Consents. ▇▇▇▇▇▇▇ shall have obtained the consents set forth on
--------
Schedule 7.2(g) hereto in a form satisfactory to RMSI.
(g) Option Approval. ▇▇▇▇▇▇▇ shall have obtained the ▇▇▇▇▇▇▇ Option
---------------
Approval from the stockholders of ▇▇▇▇▇▇▇ to the extent necessary.
7.3 Conditions to Obligation of ▇▇▇▇▇▇▇ to Effect the Merger. The
--------------------------------------------------------
obligations of ▇▇▇▇▇▇▇ to effect the Merger and the other transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, unless waived by ▇▇▇▇▇▇▇:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of RMSI contained in this Agreement qualified as to materiality or
RMSI Material Adverse Effect and in Section 3.22 shall be true and correct in
all respects and the representations and warranties of RMSI contained in this
Agreement that are not so qualified (except for the representations in Section
3.22) shall be true and correct in all material respects, in each case as of the
date of this Agreement and as of the Effective Time as though made on and as of
the Effective Time, and ▇▇▇▇▇▇▇ shall have received a certificate, dated the
Closing Date, signed on behalf of RMSI by the President of RMSI to the foregoing
effect; provided, however, that (A) representations and warranties expressly
-------- -------
made as of an earlier date need only be true and correct in all material
respects as of such earlier date, and (B) the loss of any customer or principal
shall not be taken into account when determining the truth or accuracy of any
representation or warranty, except to the extent that the loss of such customers
or principals, individually or in the aggregate, constitute a Material Customer
Loss.
(b) Performance of Obligations. RMSI shall have performed or
--------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by RMSI, at or prior to the
Closing.
(c) Certificate from Officers. RMSI shall have delivered to ▇▇▇▇▇▇▇
-------------------------
a certificate of the Chairman of the Board, the President or the Chief Financial
Officer of RMSI dated the Closing Date to the effect that the statements set
forth in paragraphs (a) and (b) above in this Section 7.3 are true and correct.
(d) Opinion of Counsel. ▇▇▇▇▇▇▇ shall have received the opinion of
------------------
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, or another nationally recognized law firm selected
by ▇▇▇▇▇▇▇, subject to customary conditions and qualifications (including
reliance, in part, on the Tax Certificates (as defined in Section 7.2(d) to the
effect that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code), which opinion shall not have been withdrawn or
modified in any material respect.
49
(e) Consents. RMSI shall have obtained the consents set forth on
--------
Schedule 7.3(g) hereto in a form satisfactory to ▇▇▇▇▇▇▇.
---------------
(f) Registration Rights Agreement. ▇▇▇▇▇▇▇ and certain stockholders
-----------------------------
of ▇▇▇▇▇▇▇ attached hereto as Exhibit I-2.
-----------
ART TERMINATION; AMENDMENT; WAIVER
8.1 Termination. This Agreement may be terminated and abandoned at any
-----------
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of RMSI and ▇▇▇▇▇▇▇:
(a) by mutual written consent of ▇▇▇▇▇▇▇ and RMSI;
(b) by ▇▇▇▇▇▇▇ or RMSI, if any United States federal or state court of
competent jurisdiction or other governmental entity shall have issued a final
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable, provided that the
party seeking to terminate shall have used its best efforts to appeal such
order, decree, ruling or other action;
(c) by RMSI, if ▇▇▇▇▇▇▇ has failed to perform in any material respect
any of its obligations required to be performed by it under this Agreement and
such failure continues for more than 30 days after notice unless failure to so
perform has been caused by or results from a breach of this Agreement by RMSI;
(d) by ▇▇▇▇▇▇▇, if RMSI shall have failed to perform in any material
respect any of its obligations required to be performed by it under this
Agreement and such failure continues for more than 30 days after notice unless
failure to so perform has been caused by or results from a breach of this
Agreement by ▇▇▇▇▇▇▇;
(e) (i) by RMSI, if the Board of Directors of ▇▇▇▇▇▇▇ or the Special
Committee withdraws or modifies in a manner adverse to RMSI its approval or
recommendation of the Merger, or (ii) by ▇▇▇▇▇▇▇ or RMSI, if the Board of
Directors of ▇▇▇▇▇▇▇, or any independent or special committee of the Board of
Directors of ▇▇▇▇▇▇▇ formed for the purpose of evaluating a Superior Proposal,
recommends a Superior Proposal as provided in Section 6.1(e);
(f) by either ▇▇▇▇▇▇▇ or RMSI, if this Agreement and the transactions
contemplated hereby shall have failed to receive the requisite vote for approval
and adoption by the stockholders of ▇▇▇▇▇▇▇ upon the holding of a duly convened
stockholder meeting; or
(g) by either ▇▇▇▇▇▇▇ or RMSI, if the Merger shall not have been
consummated on or before December 31, 1999 (other than due to the failure of the
party
50
seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed by it at or prior to the Effective Time).
8.2 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement by either RMSI or
▇▇▇▇▇▇▇ as provided in Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of RMSI or
▇▇▇▇▇▇▇, other than the provisions of Sections 6.5(b), 6.5(c), 6.6, 6.11, 6.15,
8.2, 8.3 and 9.4 and the last sentence of Section 9.3. Nothing contained in this
Section 8.2 shall relieve any party for any willful breach of the
representations, warranties, covenants or agreements set forth in this Agreement
or any RMSI Voting Agreement or ▇▇▇▇▇▇▇ Voting Agreement.
(b) If ▇▇▇▇▇▇▇ or RMSI terminates this Agreement pursuant to Section
8.1(e), then ▇▇▇▇▇▇▇ shall pay to RMSI an amount in cash equal to $2,500,000
plus out-of-pocket costs and expenses, in connection with this Agreement and the
transactions contemplated hereby, including without limitation Professional
Expenses (the "Termination Amount"). Payment of such Termination Amount shall
be RMSI's exclusive remedy relating to such termination and, upon ▇▇▇▇▇▇▇'▇
payment of such amount, RMSI shall have no right to any further damages.
(c) If at any time prior to or within one year after termination of
this Agreement pursuant to Section 8.1(f), ▇▇▇▇▇▇▇ enters into an agreement
relating to a Post-Termination Acquisition Proposal (as hereinafter defined)
with a person other than RMSI or ▇▇▇▇▇▇▇'▇ Board of Directors recommends or
resolves to recommend to ▇▇▇▇▇▇▇'▇ stockholders approval or acceptance of a
Post-Termination Acquisition Proposal with a person other than RMSI, then, upon
the entry into such agreement or the making of such recommendation or
resolution, ▇▇▇▇▇▇▇ shall pay to RMSI the Termination Amount which amount shall
be reduced by any monies previously paid by ▇▇▇▇▇▇▇ to RMSI pursuant to this
Section 8.2. Payment of such Termination Amount shall be RMSI's exclusive
remedy relating to such termination and, upon ▇▇▇▇▇▇▇'▇ payment of such amount,
RMSI shall have no right to any further damages. For purposes of this
Agreement, "Post-Termination Acquisition Proposal" shall mean, with respect to
any person, any Acquisition Proposal made after the termination of this
Agreement.
(d) At any time prior to or within one year after termination of this
Agreement, ▇▇▇▇▇▇▇ shall not enter into any agreement relating to a Post-
Termination Acquisition Proposal with a Person other than RMSI unless such
agreement provides that such Person shall, upon the execution of such agreement,
pay any Termination Amount otherwise due RMSI under this Section 8.2.
8.3 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the first sentence of
51
Section 9.5, waive compliance with any of the agreements or conditions contained
in this Agreement; provided, however, that if either party waives in writing any
inaccuracies in the representations or warranties contained in this Agreement or
any breaches thereof, or the sole remedy of such party (the "Determining Party")
shall be to consummate the Merger; provided, further, that whether or not the
Merger is consummated, the Determining Party may not seek any damages or other
payments from the other party hereto arising out of or relating to any such
inaccuracies or breaches. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
ARTicle 9. GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. All
---------------------------------------------------------
representations, warranties and agreements in this Agreement shall not survive
the Merger; provided, however, that the agreements contained in Article 2, and
-------- -------
Sections 6.5, 6.9, 6.11, 6.17, 6.19, 8.3 and this Article 9 shall survive the
Merger.
9.2 Notices. Any notice required to be given hereunder shall be in
-------
writing and shall be sent by facsimile transmission (confirmed by any of the
methods that follow), courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
If to ▇▇▇▇▇▇▇:
-------------
▇▇▇▇▇▇▇ American Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With copies to:
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Cable, P.C.
52
If to RMSI:
----------
Richmont Marketing Specialists Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
With copies to:
Richmont Capital Partners I, L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
and:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Simon, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
9.3 Assignment; Binding Effect; Benefit. Neither this Agreement nor any
-----------------------------------
of the rights, interests or obligations hereunder shall be assigned prior to the
Closing by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Article 2 and Sections 6.9 and 6.11, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.4 Entire Agreement. This Agreement (including all exhibits and
----------------
schedules hereto), the Ancillary Agreements, the RMSI Disclosure Letter and the
▇▇▇▇▇▇▇ Disclosure Letter and any documents expressly identified in this
Agreement as having been delivered by the parties in connection herewith
including, without limitation, the ▇▇▇▇▇▇▇ SEC Report and the RMSI SEC Report,
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
partes with respect thereto except that the Confidentiality Agreement shall
remain in effect and shall be binding upon the parties hereto and thereto in
accordance with their respective terms; provided, however, to the extent, any of
the terms of the Confidentiality Agreement are
53
inconsistent with this Agreement or any of the Ancillary Agreements, this
Agreement and such Ancillary Agreements shall be controlling. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
9.5 Amendment. This Agreement may be amended by the parties hereto, by
---------
action taken by their respective boards of directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of ▇▇▇▇▇▇▇ and the stockholders of RMSI, but after any such
stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
9.6 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws. RMSI and ▇▇▇▇▇▇▇ hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of the State of
Delaware and of the United States of America located in the State of Delaware
(the "Delaware Courts") for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in such courts), waive any objection to
the laying of venue of any such litigation in the Delaware Courts and agree not
to plead or claim in any Delaware Court that such litigation brought therein has
been brought in any inconvenient forum.
9.7 Counterparts. This Agreement may be executed by the parties hereto
------------
in separate counterparts, each of which so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
9.8 Headings. Headings of the Articles and Sections of this Agreement
--------
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
9.9 Interpretation. In this Agreement, unless the context otherwise
--------------
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
9.10 Waivers. Except as provided in this Agreement, no action taken
-------
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver
54
by any party hereto of a breach of any provision hereunder shall not operate or
be construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
9.11 Incorporation. The RMSI Disclosure Letter, the ▇▇▇▇▇▇▇ Disclosure
-------------
Letter and all Exhibits attached hereto and thereto and referred to herein and
therein are hereby incorporated herein and made a part hereof for all purposes
as if fully set forth herein.
9.12 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.13 Enforcement of Agreement. The parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions and other equitable remedies to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any Delaware Court, this being in addition to any other remedy to which they are
entitled at law or in equity. Any requirements for the securing or posting of
any bond with respect to such remedy are hereby waived by each of the parties
hereto.
9.14 Certain Definitions.
-------------------
(a) As used in this Agreement, the term "▇▇▇▇▇▇▇ Subsidiary" or
"▇▇▇▇▇▇▇ Subsidiaries" when used with respect to any party means any
corporation, partnership, joint venture, business trust or other entity, of
which such party directly or indirectly owns or controls at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization or a majority
of the economic interest in such entity.
(b) As used in this Agreement, the term "RMSI Subsidiary" or "RMSI
Subsidiaries" means when used with respect to any party means any corporation,
partnership, joint venture, business trust or other entity, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization or a majority of the economic interest in
such entity.
55
(c) As used in this Agreement, the word "person" means an
individual, a corporation, a partnership, an association, a joint-stock company,
a trust, a limited liability company, any unincorporated organization or any
other entity.
(d) As used in this Agreement, the word "affiliate" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
(e) As used in this Agreement, the phrase "transactions
contemplated by this Agreement" shall include without limitation, each act and
transaction to be performed or completed under this Agreement or any of the
Ancillary Agreements by any party hereto or thereto.
[remainder of page intentionally left blank]
56
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
▇▇▇▇▇▇▇ AMERICAN CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief Executive Officer
RICHMONT MARKETING SPECIALISTS INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
S-1
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
RMSI STOCKHOLDERS:
MS ACQUISITION LIMITED
By: MS Acquisition Corporation, its
General Partner
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
S-2
================================================================================
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇▇▇▇▇ AMERICAN CORPORATION,
RICHMONT MARKETING SPECIALISTS INC.
and
THE STOCKHOLDERS OF
RICHMONT MARKETING SPECIALISTS INC.
Dated as of July ___, 1999
================================================================================
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER (the "Merger
Agreement") dated April 28, 1999, by and among ▇▇▇▇▇▇▇ American Corporation, a
Delaware corporation ("▇▇▇▇▇▇▇"), Richmont Marketing Specialists Inc., a
Delaware corporation ("RMSI"), and MS Acquisition Limited, a Texas limited
partnership, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ (collectively, the "RMSI Stockholders") is made and entered into as of July
___, 1999. Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Merger Agreement.
RECITALS
WHEREAS, the parties entered into the Merger Agreement providing for the
statutory merger of the two companies and desire to amend the agreement to
restructure certain of the conditions to the parties' obligations to consummate
the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE 1. Section 1.6(b) of the Merger Agreement is amended in its entirety to
read as follows:
"(a) Following the merger, the Board of Directors of ▇▇▇▇▇▇▇ shall
have the following committees, with the following individuals (or their
designated replacement pursuant to Section 1.6(c) or (d)) serving on such
committees:
Audit Committee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Independent Director
Compensation Committee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Independent Director"
ARTICLE 2. Section 1.8 of the Merger Agreement is hereby deleted in its
entirety.
ARTICLE 3. Article 6 of the Merger Agreement is amended to add the following
Sections 6.22 and 6.23.
"6.22 Board Amendment. ▇▇▇▇▇▇▇ shall use its reasonable best efforts
---------------
to obtain stockholder approval of an amendment to the Second Amended and
Restated Certificate of Incorporation of ▇▇▇▇▇▇▇ in the form set forth in
Exhibit C-1 attached hereto (the "Board Amendment") so that, immediately
-----------
following the Effective Time, the Board of Directors of ▇▇▇▇▇▇▇ shall be divided
into three (3) classes, and the directors of each class of the Board of
Directors of ▇▇▇▇▇▇▇ shall be as follows (subject to the provisions of Section
1.6):
Class Designee Term Expires
----- -------- ------------
I ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2000
I ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 2000
I ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 2000
II ▇▇▇▇ ▇. ▇▇▇▇▇▇ 2001
II ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2001
II ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III 2001
III ▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002
III ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002
III Independent Director 2002
6.23 Change of Name. ▇▇▇▇▇▇▇ shall use its reasonable best efforts to
--------------
obtain stockholder approval of an amendment to Article I of the Second Amended
and Restated Certificate of Incorporation of ▇▇▇▇▇▇▇ in the from set forth in
Exhibit C-2 attached hereto, which would change the name of the Surviving
-----------
Corporation to "Marketing Specialists Corporation"."
ARTICLE 4. Section 7.1(a) shall be amended in its entirety to read as follows:
"7.1(a) Stockholder Approvals. This Agreement and the Merger shall have
---------------------
been adopted by the requisite vote of the stockholders of RMSI and either (i)
the Board Amendment shall have been approved and adopted by the requisite vote
of the stockholders of ▇▇▇▇▇▇▇ or (ii) subject to the consummation of the
Merger, the size of the ▇▇▇▇▇▇▇ Board shall have been increased to nine (9) and
the resulting vacancies shall be filled with Messrs. Pedersen, Byrd, ▇▇▇▇▇▇,
▇▇▇▇▇▇ and the Independent Director."
ARTICLE 5. Exhibit A to the Merger Agreement is amended in its entirety to be
in the form attached as Exhibit A to this Amendment.
ARTICLE 6. Except as modified by this Amendment, all other terms and conditions
of the Merger Agreement, as in effect prior to the execution of this Amendment,
shall remain in full force and effect and the same are hereby reaffirmed and
ratified as if fully set forth herein.
2
[SIGNATURE PAGE TO AMENDMENT NO. 1
TO AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, the parties have executed this Amendment and caused the
same to be duly delivered on their behalf on the day and year first written
above.
▇▇▇▇▇▇▇ AMERICAN CORPORATION
By: __________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
RICHMONT MARKETING SPECIALISTS INC.
By: __________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
S-1
[SIGNATURE PAGE TO AMENDMENT NO. 1
TO AGREEMENT AND PLAN OF MERGER]
RMSI STOCKHOLDERS:
MS ACQUISITION LIMITED
By: MS Acquisition Corporation, its
General Partner
By: ________________________________
▇▇▇▇ ▇▇▇▇▇▇
Vice President
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
S-2