Exhibit 2.1
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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
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TABLE OF CONTENTS
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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)
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ARTICLE 4. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE RMSI STOCKHOLDERS.... 21
4.1 Investment............................................................ 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)
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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)
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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,
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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,
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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
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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
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"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
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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
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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 "▇▇▇▇▇▇▇
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Voting Agreement"). In addition, ▇▇▇▇▇▇▇ agrees to use commercially reasonable
efforts to obtain a Voting Agreement in the form attached hereto as Exhibit B-2
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from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1984 Revocable Trust and the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1991 Charitable Remainder Unitrust.
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1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation.
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(a) Charter. The Second Amended and Restated Certificate of
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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
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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.
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(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
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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
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I ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2000
I ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 2000
I ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 2000
II ▇▇▇▇ ▇. ▇▇▇▇▇▇ 2001
II ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2001
II ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III 2001
III ▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002
III ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002
III Independent Director 2002
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(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,
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however, that such individual shall be reasonably satisfactory to RMSI. ▇▇▇▇▇▇▇
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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
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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
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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
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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.
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ARTICLE 2. EXCHANGE OF STOCK
2.1 Outstanding Common Stock of ▇▇▇▇▇▇▇. At and after the Effective Time,
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each share of ▇▇▇▇▇▇▇ Common Stock outstanding immediately prior to the
Effective Time shall remain outstanding.
2.2 Conversion of RMSI Stock.
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(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
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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
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"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.
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(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
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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).
3.10 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 ▇▇▇▇▇▇▇ Common Stock, any option to acquire or sell any shares of
▇▇▇▇▇▇▇
20
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
30
by which ▇▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇▇ Subsidiaries 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
6.10 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.
-----------
ARTICLE 8. 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
EXHIBIT A
---------
CERTIFICATE OF MERGER OF
RICHMONT MARKETING SPECIALISTS INC.
INTO
▇▇▇▇▇▇▇ AMERICAN CORPORATION
The undersigned corporation organized and existing under and by virtue of
the General Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
Richmont Marketing Specialists Inc. Delaware
▇▇▇▇▇▇▇ American Corporation Delaware
SECOND: That an Agreement and Plan of Merger between the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent corporations in accordance with the requirements of Section
251 of the General Corporation Law of Delaware.
THIRD: That ▇▇▇▇▇▇▇ American Corporation shall be the surviving
corporation. The Certificate of Incorporation of ▇▇▇▇▇▇▇ American Corporation
shall be amended in the merger to change the name of the corporation to
Marketing Specialists Corporation.
FOURTH: That the Certificate of Incorporation of ▇▇▇▇▇▇▇ American
Corporation, with the amendments set forth in Exhibit A attached hereto, shall
---------
constitute the Certificate of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement and Plan of Merger is on file at the
principal place of business of the surviving corporation, the address of which
is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SIXTH: That a copy of the Agreement and Plan of Merger will be furnished
by the surviving corporation, on request and without cost, to any stockholder of
any constituent corporation.
Dated: _________ __, 1999
▇▇▇▇▇▇▇ AMERICAN CORPORATION,
a Delaware Corporation
___________________________________
By:
Its:
EXHIBIT A TO CERTIFICATE OF MERGER
1. Article I of the Certificate is hereby deleted in its entirety and replaced
with the following:
NAME
----
The name of the Corporation is Marketing Specialists Corporation.
2. Section 3 of Article VI of the Certificate is hereby deleted in its
entirety and replaced with the following:
Section 3. Terms of Directors.
------------------------------
The number of Directors of the Corporation shall be fixed by resolution
duly adopted from time to time by the Board of Directors. The Directors, other
than those who may be elected by the holders of any series of Undesignated
Preferred Stock of the Corporation, shall be classified, with respect to the
term for which they severally hold office, into three classes, as nearly equal
in number as possible, as provided in this Article VI.3. The initial Class I
Directors shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇.
The initial Class II Directors shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III. The initial Class III Directors shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ______________. The initial Class I Directors shall serve
for a term expiring at the annual meeting of stockholders to be held following
the Corporation's 1999 fiscal year, the initial Class II Directors shall serve
for a term expiring at the annual meeting of stockholders to be held following
the Corporation's 2000 fiscal year and the initial Class III Directors shall
serve for a term expiring at the annual meeting of stockholders to be held
following the Corporation's 2001 fiscal year. At each annual meeting of
stockholders, the successor or successors of the class of Directors whose term
expires at that meeting (other than Directors elected by any series of
Undesignated Preferred Stock) shall be elected by a plurality of the votes cast
at such meeting and shall hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of their election.
The Directors elected to each class (other than Directors elected by any series
of Undesignated Preferred Stock) shall hold office until their successors are
duly elected and qualified or until their earlier resignation or removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV of this Second Amended and Restated Certificate of Incorporation, the
holders of any one or more series of Undesignated Preferred Stock shall have the
right, voting separately as a series or together with holders of other such
series, to elect Directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of this Second Amended and Restated
Certificate of Incorporation and any certificate of designations applicable
thereto, and such Directors so elected shall not be divided into classes
pursuant to this Section 3.
During any period when the holders of any series of Undesignated Preferred
Stock have the right to elect additional Directors as provided for or fixed
pursuant to the provisions of Article IV hereof, then upon commencement and for
the duration of the period during which such right continues: (i) the then
otherwise total authorized number of Directors of the Corporation shall
automatically be increased by such specified number of Directors, and the
holders of such Undesignated Preferred Stock shall be entitled to elect the
additional Directors so provided for or fixed pursuant to said provisions,
and (ii) each such additional Director shall serve until such Director's
successor shall have been duly elected and qualified, or until such Director's
right to hold such office terminates pursuant to said provisions, whichever
occurs earlier, subject to such Director's earlier death, disqualification,
resignation or removal. Except as otherwise provided by the Board in the
resolution or resolutions establishing such series, whenever the holders of any
series of Undesignated Preferred Stock having such right to elect additional
Directors are divested of such right pursuant to the provisions of such stock,
the terms of office of all such additional Directors elected by the holders of
such stock, or elected to fill any vacancies resulting from the death,
resignation, disqualification or removal of such additional Directors, shall
forthwith terminate and the total and authorized number of Directors of the
Corporation shall be reduced accordingly.
EXHIBIT B-1
-----------
Form of
-------
VOTING AGREEMENT FOR RMSI STOCKHOLDERS
--------------------------------------
VOTING AGREEMENT dated as of April __, 1999 (the "Agreement") between
▇▇▇▇▇▇▇ American Corporation, a Delaware corporation ("▇▇▇▇▇▇▇") each of MS
Acquisition Limited, a Texas limited partnership, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (collectively, the "Holders").
Richmont Marketing Specialists Inc., a Delaware corporation (the
"Company"), ▇▇▇▇▇▇▇ and the Holders, propose to enter into an Agreement and Plan
of Merger dated as of April ___, 1999 (the "Merger Agreement"), pursuant to
which the Company would be merged with and into ▇▇▇▇▇▇▇ (the "Merger"), and each
outstanding share of capital stock of the Company would be converted into shares
of common stock, par value $.01 per share, of ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇ Common Stock");
As a condition of its entering into the Merger Agreement, ▇▇▇▇▇▇▇ has
requested the Holders to agree, and the Holders have agreed, to enter into this
Agreement; and
NOW, THEREFORE, the parties hereto agree as follows:
1. Representations and Warranties of the Holders. Each Holder represents
---------------------------------------------
and warrants to ▇▇▇▇▇▇▇ as follows:
(a) Ownership of Securities. The Holder is the record and (except, in
the case of ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇, for any interest of the spouses of such
Holders arising under applicable community property laws) beneficial owner of
the number of shares of Company Capital Stock set forth on the signature page to
this Agreement (the "Existing Securities," and, together with any shares of
Company Capital Stock or other securities of the Company hereafter acquired by
the Holder, the "Subject Securities"). Other than as disclosed in the RMSI
Disclosure Letter (as such term is defined in the Merger Agreement), the Holder
does not own any capital stock or other securities of the Company (including any
options, warrants, rights, commitments, preemptive right or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into any
shares of capital stock, of any class, of the Company, 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 Company
Capital Stock) on the date of this Agreement other than the Existing Securities.
The Holder has sole voting power and sole power to issue instructions with
respect to the voting of the Existing Securities, sole power of disposition,
sole power of exercise or conversion and the sole power to demand appraisal
rights, in each case with respect to all of the Existing Securities. On the
date of the special meeting of stockholders of the Company or, if applicable, on
the effective date of the written consent in lieu of a meeting, at which or
pursuant to which the Merger and the Merger Agreement are to be considered, will
have sole
voting power and sole power to issue instructions with respect to the voting of
all of the Subject Securities, sole power of disposition, sole power of exercise
or conversion and the sole power to demand appraisal rights, in each case with
respect to all of the Subject Securities.
(b) Power; Binding Agreement. The Holder has full power and
authority to enter into and perform all of the Holder's obligations under this
Agreement. If Holder is an entity, the execution by Holder of this Agreement
and the performance of its obligations hereunder have been duly authorized by
all necessary corporate or partnership action on the part of Holder and no other
action on the part of Holder is required in connection therewith. This Agreement
has been duly and validly executed and delivered by the Holder and constitutes a
valid and binding agreement of the Holder, enforceable against the Holder in
accordance with its terms.
(c) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Holder and the consummation
by the Holder of the transactions contemplated hereby and neither the execution
and delivery of this Agreement by the Holder nor the consummation by the Holder
of the transactions contemplated hereby nor compliance by the Holder with any of
the provisions hereof shall conflict with or result in any breach of any
applicable organizational documents of the Company applicable to the Holder or,
if applicable, any organizational documents of the Holder (including without
limitation any charter documents or partnership agreement), result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third-party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Holder is a party or by which the
Holder's properties or assets may be bound or violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Holder or any of the Holder's properties or assets. The Holder expressly
waives any rights or conflicts under the Stockholders Agreement by and among the
Holders and Marketing Specialists Sales Corporation dated as of October 7, 1997
which may arise by the execution of this Agreement by the Holder or any other
stockholder of the Company and hereby acknowledges and consents in all respects
to the execution of this Agreement by all such stockholders.
(d) No Liens. The Existing Securities are now and, at all times during
the term hereof, the Subject Securities will be held by the Holder, or by a
nominee or custodian for the benefit of such Holder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except for
any encumbrances arising hereunder and that certain Amended and Restated Warrant
Agreement among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and certain stockholders of the Company.
2
2. Agreement to Vote Shares. At every meeting of the stockholders of the
------------------------
Company called with respect to any of the following, and at every postponement
or adjournment thereof, and on every action or approval by written consent of
the stockholders of the Company with respect to any of the following, each
Holder agrees that it shall vote all of the Subject Securities that it owns
beneficially and of record on the record date of any such vote: (i) in favor of
the Merger, the execution and delivery of the Merger Agreement and the approval
of the terms thereof and each of the other transactions contemplated by the
Merger Agreement and (ii) against the following actions (other than the Merger
and the transactions contemplated by the Merger Agreement): (1) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries; (2) a
sale, lease or transfer of a material amount of assets of the Company or any of
its subsidiaries or a reorganization, recapitalization, dissolution or
liquidation of the Company or any of its subsidiaries (it being understood that
the nomination and/or election of the Independent Director (as defined in the
Merger Agreement) to the Board of Directors of the Company prior to the
consummation of the Merger will not violate this clause); (3) (a) any change in
the majority of the board of directors of the Company or any of its
subsidiaries; (b) any material change in the present capitalization of the
Company or any of its subsidiaries or any amendment of the Certificate of
Incorporation or similar governing document of the Company or any of its
subsidiaries; (c) any other material change in the corporate structure or
business of the Company or any of its subsidiaries; or (d) any other action,
which, in the case of each of the matters referred to in clauses (a), (b), (c)
or (d) above, is intended, or could reasonably be expected, to impede, interfere
with, delay, postpone, discourage or materially adversely affect the
contemplated economic benefits to ▇▇▇▇▇▇▇ of the Merger or the transactions
contemplated by the Merger Agreement or this Agreement.
3. IRREVOCABLE PROXY. EACH OF THE HOLDERS HEREBY GRANTS TO, AND APPOINTS
-----------------
▇▇▇▇▇▇▇ AND THE CHIEF EXECUTIVE OFFICER OF ▇▇▇▇▇▇▇ AND THE CHIEF FINANCIAL
OFFICER OF ▇▇▇▇▇▇▇, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF ▇▇▇▇▇▇▇, AND
ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF ▇▇▇▇▇▇▇, AND
ANY OTHER DESIGNEE OF ▇▇▇▇▇▇▇, EACH OF THEM INDIVIDUALLY, THE HOLDER'S PROXY AND
ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN
CONSENT WITH RESPECT TO THE HOLDER'S SUBJECT SECURITIES IN ACCORDANCE WITH
SECTION 2 HEREOF. THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE, AND EACH HOLDER WILL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER
INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND
HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY IT WITH RESPECT TO THE SUBJECT
SECURITIES.
4. Representations and Warranties of ▇▇▇▇▇▇▇.
-----------------------------------------
(a) Power; Binding Agreement. ▇▇▇▇▇▇▇ has full corporate power and
authority to enter into and perform all of its obligations under this Agreement.
The execution
3
by ▇▇▇▇▇▇▇ of this Agreement and the performance of its obligations hereunder
have been duly authorized by all necessary corporate action on the part of
▇▇▇▇▇▇▇ and no other action on the part of ▇▇▇▇▇▇▇ is required in connection
therewith. This Agreement has been duly and validly executed and delivered by
▇▇▇▇▇▇▇ and constitutes a valid and binding agreement of ▇▇▇▇▇▇▇, enforceable
against ▇▇▇▇▇▇▇ in accordance with its terms.
(b) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by ▇▇▇▇▇▇▇ and the consummation by
▇▇▇▇▇▇▇ of the transactions contemplated hereby and neither the execution and
delivery of this Agreement by ▇▇▇▇▇▇▇ nor the consummation by ▇▇▇▇▇▇▇ of the
transactions contemplated hereby nor compliance by ▇▇▇▇▇▇▇ with any of the
provisions hereof shall conflict with or result in any breach of any
organizational documents applicable to ▇▇▇▇▇▇▇ or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third-party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which ▇▇▇▇▇▇▇ is a party or by which ▇▇▇▇▇▇▇'▇
properties or assets may be bound or violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to ▇▇▇▇▇▇▇ or
any of ▇▇▇▇▇▇▇'▇ properties or assets.
5. Covenants of the Holder. Each of the Holders hereby agree and
-----------------------
covenant that:
(a) Restriction on Transfer, Proxies and Noninterference. The Holder
shall not, directly or indirectly: (i) except pursuant to the terms of the
Merger Agreement offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition of,
any or all of the Subject Securities; (ii) except as contemplated by this
Agreement and the Merger Agreement, grant any proxies or powers of attorney,
deposit any such Subject Securities into a voting trust or enter into a voting
agreement with respect to any of the Subject Securities; or (iii) take any
action that would make any representation or warranty contained herein untrue or
incorrect or have the effect of preventing, restricting or disabling such Holder
from performing its obligations under this Agreement.
(b) Waiver of Appraisal Rights. Each of the Holders hereby
irrevocably waives any appraisal rights that he, she, or it may have, including,
without limitation, under Section 262 of the DGCL, as amended, with respect to
the Merger or any of the transactions contemplated in the Merger Agreement.
6. Assignment; Benefits. The rights (but not the obligations) of ▇▇▇▇▇▇▇
--------------------
hereunder may be assigned, in whole or in part, to any direct wholly-owned
subsidiary of ▇▇▇▇▇▇▇, to the extent and for so long as it remains a direct
wholly-owned subsidiary of ▇▇▇▇▇▇▇. Other than as permitted in the preceding
sentence, this Agreement may not be assigned by any party
4
hereto without the prior written consent of the other party. This Agreement
shall be binding upon, and shall inure to the benefit of, the Holder, ▇▇▇▇▇▇▇
and their respective successors and permitted assigns.
7. 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) to the address of such party set forth on the signature pages hereto 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.
8. Specific Performance. The parties hereto agree that irreparable harm
--------------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
9. Amendment. This Agreement may not be amended or modified, except by an
---------
instrument in writing signed by or on behalf of each of the parties hereto. This
Agreement may not be waived by either party hereto, except by an instrument in
writing signed by or on behalf of the party granting such waiver.
10. Governing Law; Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by, construed and enforced in accordance with the laws of the State of
Delaware, without regard to its rules regarding conflict of laws. The parties
hereto hereby irrevocably and unconditionally consent to and submit to the
exclusive jurisdiction of the courts of the State of Delaware for any actions,
suits or proceedings arising out of or relating to this Agreement, the
transactions contemplated hereby or any document referred to herein (and the
parties agree not to commence any action, suit or proceeding related thereto
except in such courts), and further agree that service of any process, summons,
notice or document by U.S. registered mail to the respective addresses set forth
on the signature pages hereto shall be effective service of process for any such
action, suit or proceeding brought against any party in any such court. The
parties irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the courts of the State of Delaware or the
United States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in any inconvenient forum.
11. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
5
12. Defined Terms. Terms used herein but not otherwise defined shall have
-------------
the meanings set forth in the Merger Agreement.
13. Termination. This Agreement shall terminate upon the earlier of (i)
-----------
the consummation of the Merger or (ii) the termination of the Merger Agreement
pursuant to its terms. Upon any termination of this Agreement, this Agreement
shall thereupon become void and of no further force and effect, and there shall
be no liability in respect of this Agreement or of any transactions contemplated
hereby or by the Merger Agreement on the part of any party hereto or any of its
directors, officers, partners, stockholders, employees, agents, advisors,
representatives or affiliates; provided, however, that nothing herein shall
-------- -------
relieve any party from any liability for such party's willful breach of this
Agreement; and provided further that nothing herein shall limit, restrict,
----------------
impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
[Remainder of this Page Intentionally Left Blank]
6
[VOTING AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written above.
▇▇▇▇▇▇▇ AMERICAN CORPORATION
By:
----------------------------------
Name:
Title:
Address:
-------
----------------------------------
----------------------------------
----------------------------------
STOCKHOLDERS:
MS ACQUISITION LIMITED
By:
----------------------------------
Name:
Title:
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-1
[VOTING AGREEMENT SIGNATURE PAGE]
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-2
[VOTING AGREEMENT SIGNATURE PAGE]
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-3
EXHIBIT B-2
-----------
Form of
-------
VOTING AGREEMENT FOR CERTAIN ▇▇▇▇▇▇▇ STOCKHOLDERS
-------------------------------------------------
VOTING AGREEMENT dated as of April __, 1999 (the "Agreement") between
Richmont Marketing Specialists Inc., a Delaware corporation (the "Company"), and
Monroe & Company II, LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively the
"Holders").
The Company, ▇▇▇▇▇▇▇ American Corporation, a Delaware corporation
("▇▇▇▇▇▇▇"), and MS Acquisition Limited, a Texas limited partnership, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ propose to enter
into an Agreement and Plan of Merger dated as of April ___, 1999 (the "Merger
Agreement"), pursuant to which the Company would be merged (the "Merger") with
and into ▇▇▇▇▇▇▇, and each outstanding share of capital stock of the Company
would be converted into shares of common stock, par value $.01 per share, of
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇ Common Stock");
As a condition of its entering into the Merger Agreement, the Company has
requested the Holders to agree, and the Holders have agreed, to enter into this
Agreement; and
Prior to the date hereof, the Company and the Holders had no agreement,
arrangement or understanding (as defined in Section 203 of the Delaware General
Corporation Law (the "DGCL")) for the purpose of acquiring, holding, voting or
disposing of shares of capital stock, of any class or series, of ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇ Capital Stock").
NOW, THEREFORE, the parties hereto agree as follows:
1. Representations and Warranties of the Holders. Each Holder represents
---------------------------------------------
and warrants to ▇▇▇▇▇▇▇ as follows:
(a) Ownership of Securities. The Holder is the record and beneficial
owner of the number of shares of ▇▇▇▇▇▇▇ Capital Stock set forth on the
signature page to this Agreement (the "Existing Securities," and, together with
any shares of ▇▇▇▇▇▇▇ Capital Stock or other securities of ▇▇▇▇▇▇▇ hereafter
acquired by the Holder, the "Subject Securities"). Other than as disclosed in
the RMSI Disclosure Letter (as such term is defined in the Merger Agreement),
the Holder does not own any capital stock or other securities of ▇▇▇▇▇▇▇
(including any options, warrants, rights, commitments, preemptive right or
agreements of any kind for the issuance or sale of, or outstanding securities
convertible into any 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) on the date of this Agreement other than
the Existing Securities. The Holder has sole voting power and sole power to
issue instructions with respect to the voting of the Existing Securities, sole
power of disposition, sole power of exercise or
conversion and the sole power to demand appraisal rights, in each case with
respect to all of the Existing Securities. On the date of the meeting of
stockholders of ▇▇▇▇▇▇▇ or, if applicable, on the effective date of the written
consent in lieu of a meeting, at which or pursuant to which the Merger and the
Merger Agreement are to be considered, will have sole voting power and sole
power to issue instructions with respect to the voting of all of the Subject
Securities, sole power of disposition, sole power of exercise or conversion and
the sole power to demand appraisal rights, in each case with respect to all of
the Subject Securities.
(b) Power; Binding Agreement. The Holder has full power and
authority to enter into and perform all of the Holder's obligations under this
Agreement. If Holder is an entity, the execution by Holder of this Agreement
and the performance of its obligations hereunder have been duly authorized by
all necessary corporate or partnership action on the part of Holder and no other
action on the part of Holder is required in connection therewith. This Agreement
has been duly and validly executed and delivered by the Holder and constitutes a
valid and binding agreement of the Holder, enforceable against the Holder in
accordance with its terms.
(c) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Holder and the consummation
by the Holder of the transactions contemplated hereby and neither the execution
and delivery of this Agreement by the Holder nor the consummation by the Holder
of the transactions contemplated hereby nor compliance by the Holder with any of
the provisions hereof shall conflict with or result in any breach of any
applicable organizational documents of ▇▇▇▇▇▇▇ applicable to the Holder or, if
applicable, any organizational documents of the Holder (including without
limitation any charter documents or partnership agreement), result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third-party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Holder is a party or by which the
Holder's properties or assets may be bound or violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Holder or any of the Holder's properties or assets.
(d) No Liens. The Existing Securities are now and, at all times during
the term hereof, the Subject Securities will be held by the Holder, or by a
nominee or custodian for the benefit of such Holder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except for
any encumbrances arising hereunder.
2. Agreement to Vote Shares. At every meeting of the stockholders of
------------------------
▇▇▇▇▇▇▇ called with respect to any of the following, and at every postponement
or adjournment thereof, and on every action or approval by written consent of
the stockholders of ▇▇▇▇▇▇▇ with respect
2
to any of the following, each Holder agrees that it shall vote all of the
Subject Securities that it owns beneficially and of record on the record date of
any such vote: (i) in favor of the Merger, the execution and delivery of the
Merger Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement and (ii) against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (1) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving ▇▇▇▇▇▇▇ or any of its
subsidiaries; (2) a sale, lease or transfer of a material amount of assets of
▇▇▇▇▇▇▇ or any of its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of ▇▇▇▇▇▇▇ or any of its subsidiaries; (3) (a) any
change in the majority of the board of directors of ▇▇▇▇▇▇▇ or any of its
subsidiaries; (b) any material change in the present capitalization of ▇▇▇▇▇▇▇
or any of its subsidiaries or any amendment of the Certificate of Incorporation
or similar governing document of ▇▇▇▇▇▇▇ or any of its subsidiaries; (c) any
other material change in the corporate structure or business of ▇▇▇▇▇▇▇ or any
of its subsidiaries; or (d) any other action, which, in the case of each of the
matters referred to in clauses (a), (b), (c) or (d) above, is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, discourage
or materially adversely affect the contemplated economic benefits to the Company
of the Merger or the transactions contemplated by the Merger Agreement or this
Agreement.
3. IRREVOCABLE PROXY. EACH OF THE HOLDERS HEREBY GRANTS TO, AND APPOINTS
-----------------
THE COMPANY AND THE CHIEF EXECUTIVE OFFICER OF THE COMPANY AND THE CHIEF
FINANCIAL OFFICER OF THE COMPANY, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF
▇▇▇▇▇▇▇, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF
THE COMPANY, AND ANY OTHER DESIGNEE OF THE COMPANY, EACH OF THEM INDIVIDUALLY,
THE HOLDER'S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO
VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT TO THE HOLDER'S SUBJECT SECURITIES
IN ACCORDANCE WITH SECTION 2 HEREOF. THIS PROXY IS COUPLED WITH AN INTEREST AND
SHALL BE IRREVOCABLE, AND EACH HOLDER WILL TAKE SUCH FURTHER ACTION OR EXECUTE
SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS
PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY IT WITH RESPECT TO THE
SUBJECT SECURITIES.
4. Representations and Warranties of the Company.
---------------------------------------------
(a) Power; Binding Agreement. The Company has full corporate power
and authority to enter into and perform all of its obligations under this
Agreement. The execution by the Company of this Agreement and the performance
of its obligations hereunder have been duly authorized by all necessary
corporate action on the part of the Company and no other action on the part of
the Company is required in connection therewith. This Agreement has been duly
and validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
3
(b) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and neither
the execution and delivery of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof shall conflict with or result in any
breach of any organizational documents applicable to the Company or result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third-party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Company is a party or by which the
Company's properties or assets may be bound or violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Company or any of the Company's properties or assets.
5. Covenants of the Holder. Each of the Holders hereby agree and
-----------------------
covenant that:
(a) Restriction on Transfer, Proxies and Noninterference. The Holder
shall not, directly or indirectly: (i) except pursuant to the terms of the
Merger Agreement offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of the Subject Securities, except
that Monroe & Company II, LLC may distribute its Subject Securities to its
members so long as such distributees agree to be bound by the terms of this
Agreement; (ii) except as contemplated by this Agreement and the Merger
Agreement, grant any proxies or powers of attorney, deposit any such Subject
Securities into a voting trust or enter into a voting agreement with respect to
any of the Subject Securities; or (iii) take any action that would make any
representation or warranty contained herein untrue or incorrect or have the
effect of preventing, restricting or disabling such Holder from performing its
obligations under this Agreement.
6. Assignment; Benefits. Other than as permitted in the preceding
--------------------
sentence, this Agreement may not be assigned by any party hereto without the
prior written consent of the other party. This Agreement shall be binding upon,
and shall inure to the benefit of, the Holder, the Company and their respective
successors and permitted assigns. Any distributee of Subject Securities in
accordance with Section 5(a)(i) hereof shall be deemed to be a "Holder" for
purposes of this Agreement.
7. 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 to the address of such party set forth on the signature pages
hereto or to such other address as any party shall specify by written notice
shall be deemed to have been delivered as of the date so delivered.
4
8. Specific Performance. The parties hereto agree that irreparable harm
--------------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
9. Amendment. This Agreement may not be amended or modified, except by an
---------
instrument in writing signed by or on behalf of each of the parties hereto. This
Agreement may not be waived by either party hereto, except by an instrument in
writing signed by or on behalf of the party granting such waiver.
10. Governing Law; Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by, construed and enforced in accordance with the laws of the State of
Delaware, without regard to its rules regarding conflict of laws. The parties
hereto hereby irrevocably and unconditionally consent to and submit to the
exclusive jurisdiction of the courts of the State of Delaware for any actions,
suits or proceedings arising out of or relating to this Agreement, the
transactions contemplated hereby or any document referred to herein (and the
parties agree not to commence any action, suit or proceeding related thereto
except in such courts), and further agree that service of any process, summons,
notice or document by U.S. registered mail to the respective addresses set forth
on the signature pages hereto shall be effective service of process for any such
action, suit or proceeding brought against any party in any such court. The
parties irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the courts of the State of Delaware or the
United States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in any inconvenient forum.
11. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
12. Defined Terms. Terms used herein but not otherwise defined shall have
-------------
the meanings set forth in the Merger Agreement.
13. Termination. This Agreement shall terminate upon the earlier of (i)
-----------
the consummation of the Merger or (ii) the termination of the Merger Agreement
pursuant to its terms. Upon any termination of this Agreement, this Agreement
shall thereupon become void and of no further force and effect, and there shall
be no liability in respect of this Agreement or of any transactions contemplated
hereby or by the Merger Agreement on the part of any party hereto or any of its
directors, officers, partners, stockholders, employees, agents, advisors,
representatives or affiliates; provided, however, that nothing herein shall
-------- -------
relieve any
5
party from any liability for such party's willful breach of this
Agreement; and provided further that nothing herein shall limit, restrict,
----------------
impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
[Remainder of this Page Intentionally Left Blank]
6
[VOTING AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written above.
RICHMONT MARKETING SPECIALISTS INC.
By:
---------------------------------
Name:
Title:
Address:
-------
---------------------------------
---------------------------------
---------------------------------
STOCKHOLDERS:
MONROE & COMPANY II, LLC
By:
---------------------------------
Name:
Title:
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
S-1
[VOTING AGREEMENT SIGNATURE PAGE]
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
S-2
[VOTING AGREEMENT SIGNATURE PAGE]
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
--------------------------
Number of Shares:
---------------
Address:
-------
---------------------------------
---------------------------------
---------------------------------
S-3
EXHIBIT C-1
-----------
FORM OF ▇▇▇▇▇▇▇ CHARTER AMENDMENT FOR BOARD OF DIRECTORS
2. Section 3 of Article VI of the Certificate is hereby deleted in its
entirety and replaced with the following:
Section 3. Terms of Directors.
------------------------------
The number of Directors of the Corporation shall be fixed by resolution
duly adopted from time to time by the Board of Directors. The Directors, other
than those who may be elected by the holders of any series of Undesignated
Preferred Stock of the Corporation, shall be classified, with respect to the
term for which they severally hold office, into three classes, as nearly equal
in number as possible, as provided in this Article VI.3. The initial Class I
Directors shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇.
The initial Class II Directors shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III. The initial Class III Directors shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ______________. The initial Class I Directors shall serve
for a term expiring at the annual meeting of stockholders to be held following
the Corporation's 1999 fiscal year, the initial Class II Directors shall serve
for a term expiring at the annual meeting of stockholders to be held following
the Corporation's 2000 fiscal year and the initial Class III Directors shall
serve for a term expiring at the annual meeting of stockholders to be held
following the Corporation's 2001 fiscal year. At each annual meeting of
stockholders, the successor or successors of the class of Directors whose term
expires at that meeting (other than Directors elected by any series of
Undesignated Preferred Stock) shall be elected by a plurality of the votes cast
at such meeting and shall hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of their election.
The Directors elected to each class (other than Directors elected by any series
of Undesignated Preferred Stock) shall hold office until their successors are
duly elected and qualified or until their earlier resignation or removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV of this Second Amended and Restated Certificate of Incorporation, the
holders of any one or more series of Undesignated Preferred Stock shall have the
right, voting separately as a series or together with holders of other such
series, to elect Directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of this Second Amended and Restated
Certificate of Incorporation and any certificate of designations applicable
thereto, and such Directors so elected shall not be divided into classes
pursuant to this Section 3.
During any period when the holders of any series of Undesignated Preferred
Stock have the right to elect additional Directors as provided for or fixed
pursuant to the provisions of Article IV hereof, then upon commencement and for
the duration of the period during which such right continues: (i) the then
otherwise total authorized number of Directors of the Corporation shall
automatically be increased by such specified number of Directors, and the
holders of such Undesignated Preferred Stock shall be entitled to elect the
additional Directors so provided for or fixed pursuant to said provisions, and
(ii) each such additional Director shall serve until such Director's successor
shall have been duly elected and qualified, or until such Director's right to
hold such office terminates pursuant to said provisions, whichever occurs
earlier, subject to such Director's earlier death, disqualification, resignation
or removal. Except as otherwise provided by the Board in the resolution or
resolutions establishing such series, whenever the holders of any series of
Undesignated Preferred Stock having
such right to elect additional Directors are divested of such right pursuant to
the provisions of such stock, the terms of office of all such additional
Directors elected by the holders of such stock, or elected to fill any vacancies
resulting from the death, resignation, disqualification or removal of such
additional Directors, shall forthwith terminate and the total and authorized
number of Directors of the Corporation shall be reduced accordingly.
EXHIBIT C-2
-----------
FORM OF ▇▇▇▇▇▇▇ CHARTER AMENDMENT FOR NAME CHANGE
1. Article I of the Certificate is hereby deleted in its entirety and replaced
with the following:
NAME
----
The name of the Corporation is Marketing Specialists Corporation.
EXHIBIT D
---------
FORM OF AFFILIATE LETTER
------------------------
▇▇▇▇▇▇▇ American Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Richmont Marketing Specialists Inc., a Delaware corporation
("RMSI"), as the term "affiliate" is (i) defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), or (ii) used in and for purposes
of Accounting Series, Releases 130 and 135, as amended, of the Commission.
Pursuant to the terms of the Agreement and Plan of Merger dated as of ________,
1999 (the "Agreement"), by and among RMSI and ▇▇▇▇▇▇▇ American Corporation, a
Delaware corporation ("▇▇▇▇▇▇▇"), RMSI will be merged with and into ▇▇▇▇▇▇▇ (the
"Merger").
As a result of the Merger, I may receive shares of Common Stock, par value
$.01 per share, of ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ Common Stock") in exchange for shares
owned by me of common stock, par value $.01 per share, of RMSI ("RMSI Common
Stock").
I represent, warrant and covenant to ▇▇▇▇▇▇▇ that in the event I receive
any ▇▇▇▇▇▇▇ Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
▇▇▇▇▇▇▇ Common Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed the
requirements of such documents and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of the ▇▇▇▇▇▇▇ Common Stock to the extent
I felt necessary, with my counsel or counsel for RMSI.
C. I have been advised that the issuance of ▇▇▇▇▇▇▇ Common Stock to me
pursuant to the Merger has not been registered with the Commission under the
Act. I have also been advised that, because at the time the Merger was
submitted for a vote of the stockholders of RMSI, I may be deemed to have been
an affiliate of RMSI and the distribution by me of the ▇▇▇▇▇▇▇ Common Stock has
not been registered under the Act, I may not sell, transfer or otherwise dispose
of the ▇▇▇▇▇▇▇ Common Stock issued to me in the Merger or upon conversion unless
(i) such sale, transfer or other disposition has been registered under the Act,
(ii) such sale, transfer or other disposition is made in conformity with Rule
145 promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to
▇▇▇▇▇▇▇, or a "no action" letter obtained by the undersigned from the staff of
the Commission, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that ▇▇▇▇▇▇▇ is under no obligation to register the sale,
transfer or other disposition of the ▇▇▇▇▇▇▇ Common Stock by me or on my behalf
under the Act or, except as expressly set forth in the Agreement, to take any
other action necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that stop transfer instructions will be given to
▇▇▇▇▇▇▇'▇ transfer agent with respect to the ▇▇▇▇▇▇▇ Common Stock and that there
will be placed on the certificates for the ▇▇▇▇▇▇▇ Common Stock issued to me, or
any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AFFILIATE
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND ▇▇▇▇▇▇▇, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF ▇▇▇▇▇▇▇."
F. I also understand that unless the transfer by me of my ▇▇▇▇▇▇▇ Common
Stock has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, ▇▇▇▇▇▇▇ reserves the right to put the following legend
on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW
TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT."
G. I have set forth below the exact numbers of RMSI Common Stock which I
own of record only, beneficially only and of record and beneficially.
H. My ownership is free and clear of any security interest, lien,
encumbrance, charge, equity, claim or restriction whatsoever, except as set
forth below and as may be imposed by reason of the Act or the Rules and
Regulations thereunder.
It is understood and agreed that the legend set forth in paragraphs E and F
above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or this Agreement.
It is understood and agreed that such legends and the stop orders referred to
above will be removed if (i) one year shall have elapsed from the date the
undersigned acquired the ▇▇▇▇▇▇▇ Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the ▇▇▇▇▇▇▇
Common Stock received in the Merger and the provisions of Rule 145(d)(3) are
then applicable to the undersigned, or (iii) ▇▇▇▇▇▇▇ has received either an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to ▇▇▇▇▇▇▇, or a "no action" letter obtained by the undersigned from the staff
of the Commission, to the effect that the restrictions imposed by Rule 145 under
the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on my part that I
am an "affiliate" of RMSI as described in the first paragraph of this letter or
as a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
Very truly yours,
___________________________________
[Name of RMSI Stockholder]
RMSI Common Stock Owned
Beneficially and of Record: _______
Accepted this ____ day of _____, 1999.
▇▇▇▇▇▇▇ AMERICAN CORPORATION
By:
___________________________________
Name:
Title:
EXHIBIT E
---------
FORM OF SMART CANCELLATION
--------------------------
[Richmont Marketing Specialists Inc. Letterhead]
_________, 1999
To Holders of Senior Management Appreciation Rights:
As you may know, Richmont Marketing Specialists Inc. (the "Company") and
its stockholders have entered into an Agreement and Plan of Merger dated as of
________ __, 1999 (the "Merger Agreement") with ▇▇▇▇▇▇▇ American Corporation
("▇▇▇▇▇▇▇") pursuant to which the Company will merge with and into ▇▇▇▇▇▇▇ (the
"Merger"). The Merger of the Company with ▇▇▇▇▇▇▇ will affect the Senior
Management Appreciation Rights (sometimes referred to herein as the "Rights")
which you have been granted under the Company's Incentive Plan, in the manner
described below.
Pursuant to the provisions of the Merger Agreement and the Company's
Incentive Plan, upon the consummation of the Merger, you may hereby elect to
have each of your outstanding Senior Management Appreciation Rights cancelled in
exchange for a qualified incentive stock option to acquire ▇▇▇▇▇▇▇ common stock
(a "Replacement Option"), subject to any applicable taxes or withholding
requirements. The terms of the Replacement Option will be primarily designed to
preserve the benefit of your Rights and will, for example, give you vesting
credit with respect to the period since the initial grant of your Rights.
▇▇▇▇▇▇▇'▇ common stock is listed on the NASDAQ National Market under the symbol
"MERK."
Under certain circumstances, the consummation of the Merger and the
transactions contemplated thereby may cause a Change of Control (as defined in
the Company's Incentive Plan) which would otherwise entitle you to receive an
amount in cash equal to the value of your Rights at such time, as determined by
an independent appraiser retained by the Company. It is the Company's belief
that as of the date set forth above there has been no material appreciation in
the value of your Rights since the date of grant. Upon execution of this
agreement you agree to surrender your Rights in exchange for the Replacement
Option and hereby waive any right that you may have to any cash payment which
may be otherwise payable pursuant to your surrendered Rights. Should you
decline to execute this Agreement and the Merger was not to cause a Change of
Control, your SMARTs would remain outstanding and ▇▇▇▇▇▇▇ would assume the
obligations relating to your SMARTs.
According to our records, you are the holder of the Senior Management
Appreciation Rights described on Schedule A attached hereto. Following our
----------
receipt of your signature to this letter, as of the date of the merger, your
Rights will be cancelled in exchanged for the Replacement Option as described
above. In consideration of that cancellation you will receive the Replacement
Option. The attached schedule also contains a description of the formula which
will be used to determine the number of shares of ▇▇▇▇▇▇▇ common stock subject
to the Replacement Option and the per-share exercise price of the Replacement
Options. We have
also attached a form of option agreement which sets forth the other terms of
your Replacement Option, including the vesting schedule for the Replacement
Option, under ▇▇▇▇▇▇▇'▇ Amended and Restated 1998 Stock Option and Incentive
Plan.
Please acknowledge the receipt of this letter by signing it in the space
provided below and returning it in the enclosed envelope, by no later than
__________, 1999. Your signature will constitute consent to the cancellation of
the Senior Management Appreciation Rights as described above and the
corresponding grant of the Replacement Option. Should you have any questions
regarding your Senior Management Appreciation Rights or would like more details
regarding the conversion, please contact [Insert appropriate HR contact].
Sincerely,
----------------------------------
[name]
[title]
----------------------------------
[holder]
Number of Rights:
2
Schedule A
----------
Senior Management Appreciation Rights
-------------------------------------
Our records indicate that you are the holder of [insert number of Rights] Senior
Management Appreciation Rights of the Company.
Conversion Formula
------------------
Upon the merger, your Rights will be converted to the Replacement Option
pursuant to the following formula:
Number of Shares of ▇▇▇▇▇▇▇ Common Stock Underlying the Replacement Option: Your
Replacement Option will be exercisable for that number of shares of ▇▇▇▇▇▇▇
common stock arrived at by multiplying the number of Rights you hold by the
greater of (x) the SMART Ratio, which is determined by dividing (A) 405,000 by
(B) the total number of Senior Management Appreciation Rights outstanding as of
the consummation of the merger (8,997 are outstanding as of today and the
Company does not intend to issue any more), 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 (as defined in the Merger Agreement) of ▇▇▇▇▇▇▇ common stock as of
the effective time of the merger and (b) $20.00, by (2) $13.50.
Exercise Price of the Replacement Options: Your replacement option will have an
exercise price per share of ▇▇▇▇▇▇▇ common stock equal to the greater of (i)
fair market value of ▇▇▇▇▇▇▇ common stock as of the effective time of the
merger, and (ii) $13.50.
3
EXHIBIT F
---------
Form of
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SPOUSAL CONSENT
---------------
The undersigned hereby represents that she is the wife of _________
("Spouse"), which Spouse is a party to (i) that certain Agreement and Plan of
Merger dated as of April 28, 1999 (the "Merger Agreement") by and among ▇▇▇▇▇▇▇
American Corporation ("▇▇▇▇▇▇▇") and Richmont Marketing Specialists Inc.
("Richmont") and the other parties thereto and (ii) that certain Voting
Agreement for RMSI Stockholders dated as of April 28, 1999 by and among ▇▇▇▇▇▇▇,
MS Acquisition Limited, a Texas limited partnership, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the "Voting Agreement"). The
undersigned acknowledges and agrees that the undersigned has received adequate
notice of the transactions contemplated by the Merger Agreement, has read the
Merger Agreement and Voting Agreement and understands all of the provisions
thereof. The undersigned hereby consents to the transactions contemplated by
the Merger Agreement and Voting Agreement, including, without limitation, the
Merger (as defined in the Merger Agreement) and the conversion of the RMSI
Common Stock (as defined in the Merger Agreement) into the right to receive
▇▇▇▇▇▇▇ Common Stock (as defined in the Merger Agreement) on the terms and
conditions set forth in the Merger Agreement. The undersigned has been informed
that the undersigned is entitled to seek the advice of an attorney of his or her
own choosing in connection with the Merger Agreement and this Spousal Consent,
and has either sought and obtained the advice of such counsel or has declined to
do so.
Date:
----------------------
---------------------------------
Name
SPOUSAL CONSENT
The undersigned hereby represents that she is the wife of _________
("Spouse"), which Spouse is a party to (i) that certain Agreement and Plan of
Merger dated as of April 28, 1999 (the "Merger Agreement") by and among ▇▇▇▇▇▇▇
American Corporation ("▇▇▇▇▇▇▇") and Richmont Marketing Specialists Inc.
("Richmont") and the other parties thereto and (ii) that certain Voting
Agreement for RMSI Stockholders dated as of April 28, 1999 by and among ▇▇▇▇▇▇▇,
MS Acquisition Limited, a Texas limited partnership, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the "Voting Agreement"). The
undersigned acknowledges and agrees that the undersigned has received adequate
notice of the transactions contemplated by the Merger Agreement, has read the
Merger Agreement and Voting Agreement and understands all of the provisions
thereof. The undersigned hereby consents to the transactions contemplated by
the Merger Agreement and Voting Agreement, including, without limitation, the
Merger (as defined in the Merger Agreement) and the conversion of the RMSI
Common Stock (as defined in the Merger Agreement) into the right to receive
▇▇▇▇▇▇▇ Common Stock (as defined in the Merger Agreement) on the terms and
conditions set forth in the Merger Agreement. The undersigned hereby releases
any and all claims the undersigned may have against ▇▇▇▇▇▇▇ or Richmont or any
of their respective affiliates arising under the Merger Agreement and, upon the
effectiveness of the Merger, releases all rights and claims the undersigned may
have relating to any RMSI Common Stock. The undersigned has been informed that
the undersigned is entitled to seek the advice of an attorney of his or her own
choosing in connection with the Merger Agreement and this Spousal Consent, and
has either sought and obtained the advice of such counsel or has declined to do
so.
Date:
----------------------
---------------------------------
Name
EXHIBIT G
---------
Form of
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POST-MERGER VOTING AGREEMENT
----------------------------
VOTING AGREEMENT dated as of April __, 1999 (the "Agreement") by and among
MS Acquisition Limited, a Texas limited partnership, (the "Nominating
Stockholder") ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ (together with the Nominating Stockholder, the "Richmont Stockholders"),
Monroe & Company, LLC, a Delaware limited liability company and JLM Management
Company, LLC, a ______ limited liability company (together with Monroe &
Company, LLC, "Monroe"). The Richmont Stockholders and Monroe collectively shall
be referred to herein as the "Stockholders."
WHEREAS, it is contemplated that Richmont Marketing Specialists Inc., a
Delaware corporation ("Richmont"), will merge with and into ▇▇▇▇▇▇▇ American
Corporation, a Delaware corporation ("▇▇▇▇▇▇▇") pursuant to an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement," and such
merger, the "Merger");
WHEREAS, the Richmont Stockholders own of record all of the issued and
outstanding shares of common stock, par value $.01 per share, of Richmont, which
in connection with the Merger will be converted into an aggregate of up to
6,705,551 shares of common stock, par value $.01 per share, of ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇
Common Stock");
WHEREAS, Monroe has the right to vote an aggregate of _______ shares of
▇▇▇▇▇▇▇ Common Stock;
WHEREAS, the execution and delivery of this Agreement is a condition to the
consummation of the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
1. Voting Agreement. Following the consummation of the Merger, at any
----------------
time that nominees for the election to the Board of Directors of ▇▇▇▇▇▇▇ are
submitted to the stockholders of ▇▇▇▇▇▇▇, or a proposal to remove any incumbent
member of the Board of Directors of ▇▇▇▇▇▇▇ is submitted to such stockholders,
the parties hereto agree to vote, or cause to be voted, all Voting Securities
(defined below) then held by such party, whether beneficially or of record, or
any Voting Securities over which such party exercises voting control, in favor
of the nominees designated in writing by the Nominating Stockholders. For the
purpose of this agreement, "Voting Securities" shall mean any and all shares of
capital stock of ▇▇▇▇▇▇▇, of any class or series, which shall have the right at
any time to vote in the election of ▇▇▇▇▇▇▇'▇ directors, including without
limitation shares of ▇▇▇▇▇▇▇ Common Stock.
2. Designation of Nominees. The Nominating Stockholder hereby designates
-----------------------
the following individuals as nominees for election to the Board of Directors of
▇▇▇▇▇▇▇: ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
___________________. In the event that any of the foregoing at any time are
unable to serve out their terms, resign from the Board of Directors of ▇▇▇▇▇▇▇
or decline to be nominated for election or reelection, then the Nominating
Stockholders shall have the right to designate in writing a replacement nominee;
provided, however, that such replacement nominee shall be reasonably
-------- -------
satisfactory to Monroe.
3. Representations and Warranties of the Stockholders. As of the date
--------------------------------------------------
hereof, each Stockholder represents and warrants to the other Stockholders as
follows:
(a) Ownership of Securities. The Stockholder is the record and
beneficial owner of, or exercises voting control of, the number of shares of
Voting Securities of ▇▇▇▇▇▇▇ set forth on the signature page to this Agreement
(the "Existing Securities"). The Holder has sole voting power and sole power to
issue instructions with respect to the voting of the Existing Securities, sole
power of disposition and the sole power of exercise or conversion, in each case
with respect to all of the Existing Securities. As of the date hereof, the
Stockholder will have sole voting power and sole power to issue instructions
with respect to the voting of all of the Existing Securities, sole power of
disposition and the sole power of exercise or conversion, in each case with
respect to all of the Existing Securities.
(b) Power; Binding Agreement. The Stockholder has full power and
authority to enter into and perform all of the Stockholder's obligations under
this Agreement. If Stockholder is an entity, the execution by Stockholder of
this Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate or partnership action on the part of
Stockholder and no other action on the part of Stockholder is required in
connection therewith. This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes a valid and binding agreement of
the Stockholder, enforceable against the Stockholder in accordance with its
terms.
(c) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Stockholder and the
consummation by the Stockholder of the transactions contemplated hereby, other
than filings which may be required pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, and
neither the execution and delivery of this Agreement by the Stockholder nor the
consummation by the Stockholder of the transactions contemplated hereby nor
compliance by the Stockholder with any of the provisions hereof shall conflict
with or result in any breach of any applicable organizational documents of
▇▇▇▇▇▇▇ applicable to the Stockholder or, if applicable, any organizational
documents of the Stockholder (including without limitation any charter documents
or partnership agreement), result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
third-party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any
2
kind to which the Stockholder is a party or by which the Stockholder's
properties or assets may be bound or violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to the
Stockholder or any of the Stockholder's properties or assets.
4. Assignment; Benefits. This Agreement may not be assigned by any party
--------------------
hereto without the prior written consent of each of the other parties. This
Agreement shall be binding upon, and shall inure to the benefit of, each of the
signatories hereto and their respective successors and permitted assigns.
5. 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) to the address of such party set forth on the signature pages hereto 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.
6. Specific Performance. The parties hereto agree that irreparable harm
--------------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
7. Amendment. This Agreement may not be amended or modified, except by an
---------
instrument in writing signed by or on behalf of each of the parties hereto. This
Agreement may not be waived by any party hereto, except by an instrument in
writing signed by or on behalf of the party granting such waiver.
8. Governing Law. This Agreement shall be governed by, construed and
-------------
enforced in accordance with the laws of the State of Delaware, without regard to
its rules regarding conflict of laws.
9. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
10. Termination. This Agreement shall commence on the date hereof and
-----------
shall terminate upon the earliest to occur of: (i) the date on which the
Nominating Stockholder and Messrs. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ cease to own in
the aggregate at least 35% of the total outstanding shares of Voting Securities
of ▇▇▇▇▇▇▇, or (ii) the date on which the Stockholders cease to own, or have the
right to exercise voting control over, shares of Voting Securities of ▇▇▇▇▇▇▇
representing more than 50% of the total voting power of all outstanding Voting
Securities of ▇▇▇▇▇▇▇.
3
[VOTING AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written above.
MS ACQUISITION LIMITED
By:
---------------------------------
Name:
Title:
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-1
[VOTING AGREEMENT SIGNATURE PAGE]
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-2
[VOTING AGREEMENT SIGNATURE PAGE]
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-3
[VOTING AGREEMENT SIGNATURE PAGE]
MONROE & COMPANY, LLC
By:
---------------------------------
Name:
Title:
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
JLM MANAGEMENT COMPANY, LLC
By:
---------------------------------
Name:
Title:
Existing Securities:
-------------------
Class:
---------------------------
Number of Shares:
----------------
Address:
-------
----------------------------------
----------------------------------
----------------------------------
S-4
EXHIBIT H
---------
FORM OF ADVISORY AGREEMENT
--------------------------
▇▇▇▇▇▇▇ American Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_______, 1999
Monroe & Company, LLC
▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Richmont Capital Partners I, L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Gentlemen:
This letter agreement ("Agreement") confirms the terms and conditions of
the exclusive engagement of Monroe & Company, LLC, a Delaware limited liability
company ("Monroe"), and Richmont Capital Partners I, L.P., a Delaware limited
partnership ("Richmont," and together with Monroe, the "Consultants"), by
▇▇▇▇▇▇▇ American Corporation, a Delaware corporation ("MAC" or the "Company"),
to render certain business consulting, financial advisory and investment banking
services to MAC on an exclusive basis in connection with possible Transactions
and consulting projects. This Agreement supersedes and replaces all prior
consulting and/or advisory agreements by and between Monroe and MAC and by and
between Richmont and Richmont Marketing Specialists Inc., a Delaware corporation
("RMSI"), and is being executed in connection with the merger of RMSI with and
into MAC (the "Current Transaction"). For the purposes of this Agreement,
"Transaction" means any merger, consolidation, reorganization, business
combination, joint venture or other transaction pursuant to which the Company
(a) is acquired by, or combined with, a third party or (b) acquires all or a
portion of the assets or capital stock of a third party (a "Prospective Target")
or (c) enters into a joint venture agreement with a third party, in each case in
a single transaction or a series of transactions; provided, however, that
-------- -------
"Transaction" does not include the Current Transaction and that nothing herein
shall prevent any payment of monies owed to either Consultant in connection with
the Current Transaction under any agreement replaced or superseded by this
Agreement. In addition, a "Transaction" includes, but is not limited to, either
Consultant acting as an exclusive private placement agent on behalf of the
Company in
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________, 1999
Page 2
connection with the arrangement of a senior credit facility for the
Company from a lending institution.
1. Services. Each of the Consultants agrees to perform the following
--------
services throughout the term of this Agreement:
(a) Review historical and projected financial and operating
information of MAC;
(b) Build a financial model to be used for analytical purposes,
including acquisition reviews and financial projections;
(c) Identify and seek out strategic acquisitions and joint ventures,
both domestic and abroad, consistent with MAC's strategic objectives as the
same may be established from time to time by MAC's Board of Directors;
(d) Advise and assist MAC as to the financial aspects and structure of
any proposed Transaction and assist in negotiating the terms thereof;
(e) Advise and assist MAC in the negotiation of any documentation
relating to a Transaction, which would include but not be limited to
letters of intent and definitive agreements;
(f) Prepare a memorandum describing MAC and the proposed capital
structure of MAC in connection with arranging a senior credit facility;
(g) Assist and advise MAC with respect to the negotiation of any
documentation relating to a senior credit facility;
(h) Prepare communications and engage in discussions on behalf of MAC
in connection with public relations and Wall Street analyst requirements;
(i) Assist in the development of a database which captures relevant
operations data to be used in connection with evaluating principal
conflicts and business opportunities;
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________, 1999
Page 3
(j) Assist in various business endeavors including, but not limited
to, endeavors with principals, retailers, food service providers, and
private label opportunities; and
(k) Assist MAC on an on-going basis as to the restructuring of its
organization including departments, personnel and functions.
2. Fees. MAC agrees to pay the Consultants for their services in the
----
Aggregate as follows:
(a) A financial advisory fee ("Advisory Fee") equal to (i) 5% of the
Consideration (as defined below) paid up to $1 million, plus (ii) 4% of the
Consideration paid in excess of $1 million and up to $2 million, plus (iii)
3% of the Consideration paid in excess of $2 million and up to $3 million,
plus (iv) 2% of the Consideration paid in excess of $3 million and up to $4
million, plus (y) 1% of the Consideration paid in excess of $4 million.
(b) Private placement fee ("Private Placement Fee") equal to three
quarters of one percent (0.75%) of the principal amount committed under any
senior credit facility. An additional fee shall be payable upon increases
in such amount or upon refinancings with a new lender during the term of
this Agreement. Such additional fee shall be equal to three quarters of
one percent (.75%) of the principal amount upon a refinancing with a new
lender or one half of one percent (.50%) of the incremental principal
amount authorized by the same lender.
(c) Consulting fees ("Consulting Fees") based on projects and fee
schedules to be mutually agreed upon by the Consultants and a majority of
the independent directors, (not including ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇) of MAC.
Notwithstanding the foregoing, in the event that the aggregate amount of
all Advisory Fees, Private Placement Fees and Consulting Fees paid or payable to
the Consultants in any fiscal year are less than $1,000,000, the Company agrees
to pay the Consultants, in addition to such fees, the difference between the
fees otherwise payable and $1,000,000 by fiscal year end. All fees in connection
with Sections 2(a) and (b) above shall be paid to the Consultants in cash at the
closing of the relevant Transaction. All other Consulting Fees shall be payable
on a monthly basis as services are rendered. An Advisory Fee shall be payable to
the Consultants
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________, 1999
Page 4
for Transactions entered into by the Company during the term of this Agreement
and within 6 months after the expiration of such term. Any fees paid pursuant to
this Agreement shall be split equally between Monroe and Richmont.
In the context of this Agreement, "Consideration" means the value of all
cash, securities, assumption of debt of the Prospective Target and any other
forms of payment to the Prospective Target pursuant to a Transaction, including
the total of all interest-bearing indebtedness including long term debt,
payments for noncompete agreements and earn-out obligations and other
obligations of the Prospective Target that are assumed or refinanced by MAC in
connection with the closing of a Transaction. The term "Consideration"
expressly includes any payments for noncompete agreements and excess employment
compensation to the existing shareholders and employees of a Prospective Target.
If all or any portion of the Consideration payable in connection with any
Transaction includes contingent future payments, then MAC shall pay to the
Consultants a mutually agreed upon amount based upon the discounted value of
such contingent future payments.
If the Company requests the assistance of either Consultant in arranging
any transaction or the undertaking of any consulting project that is not
otherwise covered by the provisions of this Agreement and such Consultant agrees
to pursue such a transaction or consulting project, MAC agrees to pay such
Consultant mutually acceptable compensation taking into account among other
things, the results obtained and the custom and practice among investment
bankers and consultants acting in similar transactions or consulting
assignments. The Consultant will not perform any services which it believes are
not covered by the provisions of this Agreement, unless the Consultant agrees to
the nature and scope of such services and is authorized to do so by the Company
in a written document that specifies the agreed-upon additional compensation for
such services.
3. Expense Reimbursement. The Company agrees to reimburse each
---------------------
Consultant for all of its reasonable out-of-pocket expenses actually incurred in
connection with the performance of its activities under the terms of this
Agreement. Reasonable out-of-pocket expenses include, but are not limited to,
costs such as printing, telephone, courier services, direct computer expenses,
legal and accounting expenses, accommodations and travel. All such fees,
expenses and costs will be billed monthly and shall be payable upon the
Company's receipt of the applicable invoice. The parties' obligations under
this section shall survive the termination or expiration of this Agreement.
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________, 1999
Page 5
4. Term; Exclusivity. The term of the Consultants engagement hereunder
-----------------
as the Company's exclusive financial advisors shall commence on the date hereof
and shall expire on the third anniversary of the date hereof. During the term
of this Agreement, the Consultants shall have the exclusive right to represent
the Company in connection with specific services described in Section 1.
Moreover, the Company will be required to use the Consultants in connection with
all Transactions contemplated by it during the term of this Agreement and shall
pay the Consultants for its services pursuant to Section 2 hereof. The
Consultants, on the other hand, shall be free to perform such services for any
other party or parties at any time during and after the term of this Agreement.
5. Indemnity. In addition to the fees and reimbursement of expenses
---------
provided for above, the parties agree to the indemnification provisions set
forth as Annex A hereto, which are incorporated herein by reference and shall be
-------
deemed to be included in this Section 5. The parties' obligations under this
Section 5 shall survive the termination or expiration of this Agreement.
6. Information. The Company shall furnish, or cause to be furnished, to
-----------
the Consultants all information reasonably requested by the Consultants for the
purpose of rendering services hereunder (all such information being the
"Information"). In addition, the Company agrees to make available to the
Consultants upon request from time to time the officers, directors, accountants,
counsel and other advisors of the Company. The Company recognizes and confirms
that the Consultants (a) will use and rely on the Information and on information
available from generally recognized public sources in performing the services
contemplated by this Agreement without having independently verified the same;
and (b) does not assume responsibility for the accuracy or completeness of the
Information and such other information.
The Company agrees that all information furnished to the Consultants in
connection with this Agreement shall be accurate in all material respects at the
time provided and that if such information, in whole or in part, becomes
materially inaccurate, misleading or incomplete during the term of the
Consultants engagement hereunder, the Company shall promptly so advise the
Consultants in writing and correct any such inaccuracy or omission.
7. Disclosure. Each party agrees that, except as compelled by law, it
----------
will not disclose services or advice to be provided by the Consultants under
this Agreement or any Information publicly or to any third party, without the
approval of the other party. It is understood that the existence and terms of
this Agreement will be disclosed under the
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________, 1999
Page 6
Company's reports and filings under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. Notwithstanding the above, upon
the completion of a Transaction, the Consultants shall be permitted to publicize
the services it provided in connection with such Transaction.
8. Governing Law: Amendments. This Agreement shall be governed by and
--------------------------
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to conflict of law principles thereof. This Agreement may
not be amended or modified except in writing signed by all parties hereto.
9. Successors. This Agreement and all rights, liabilities and
----------
obligations hereunder shall be binding upon and inure to the benefit of each
party's successors but may not be assigned without the prior written approval of
the other party which shall not be unreasonably withheld.
10. No Brokers. The Company represents and warrants to the Consultants
----------
that there is no other person or entity that is entitled to a finder's fee or
any type of brokerage commission in connection with the transactions
contemplated by this Agreement as a result of any agreement or understanding
with such person or entity which creates an interest in the compensation payable
to the Consultants hereunder or impairs the Consultants' interest in such
compensation. The Company agrees to indemnify and hold harmless the Consultants
from and against any actions, suits, claims, costs, expenses, losses and
liabilities arising out of any breach of the foregoing sentence.
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________, 1999
Page 7
Very truly yours,
▇▇▇▇▇▇▇ AMERICAN CORPORATION
By: _________________________________
Name:
Title:
Agreed to and accepted as of
the ____ day of _________, 1999
MONROE & COMPANY, LLC
By:_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Manager
RICHMONT CAPITAL PARTNERS I, L.P.
By: J.R. Investments Corp.,
Its General Partner
By:_________________________________
Name:
Title:
ANNEX A
The Company agrees to indemnify each of the Consultants, its members,
managers, employees, directors, officers, agents, affiliates and each person, if
any, who controls it within the meaning of either Section 20 of the Securities
Exchange Act of 1934, as amended, or Section 15 of the Securities Act of 1933,
as amended, (each such person, including each of the Consultants, is referred to
as an "Indemnified Party") from and against any losses, claims, damages and
liabilities, joint or several (including all legal or other expenses reasonably
incurred by any Indemnified Party in connection with the preparation for or
defense of any threatened or pending claim, action or proceeding, whether or not
resulting in any liability) ("Damages"), to which such Indemnified Party, in
connection with its services or arising out of its engagement hereunder, may
become subject under any applicable Federal or state law or otherwise, including
but not limited to liability (i) caused by or arising out of an untrue statement
or an alleged untrue statement of a material fact or the omission or the alleged
omission to state a material fact necessary in order to make a statement not
misleading in light of the circumstances under which it was made, (ii) caused by
or arising out of any act or failure to act or (iii) arising out of the
Consultants' engagement or the rendering by any Indemnified Party of its
services under this Agreement; provided, however, that the Company will not be
-------- -------
liable to the Indemnified Party hereunder to the extent that any Damages are
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from the gross negligence, bad faith or willful misconduct of the
Indemnified Party seeking indemnification hereunder.
These indemnification provisions shall be in addition to any liability
which the Company may otherwise have to any Indemnified Party.
If for any reason, other than a final non-appealable judgment finding an
Indemnified Party liable for Damages for its gross negligence, bad faith or
willful misconduct, the foregoing indemnity is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless, then the Company
shall contribute to the amount paid or payable by an Indemnified Party as a
result of such Damages in such proportion as is appropriate to reflect not only
the relative benefits received by the Company and its stockholders on the one
hand and the Consultants on the other, but also the relative fault of the
Company and the Indemnified Party as well as any relevant equitable
considerations, subject to the limitation that in no event shall the total
contribution of all Indemnified Parties to all such Damages exceed the total
amount of fees actually received and retained by the Consultants hereunder.
Promptly after receipt by the Indemnified Party of notice of any claim or
of the commencement of any action in respect of which indemnity may be sought,
the Indemnified Party will notify the Company in writing of the receipt or
commencement thereof and the Company shall have the right to assume the defense
of such claim or action (including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of fees and expenses of
such counsel), provided that the Indemnified Party shall have the right to
control its defense if, in the opinion of its counsel, the Indemnified Party's
defense is unique or separate to it as the case may be as opposed to a defense
pertaining to the Company. In any
event, the Indemnified Party shall have the right to retain counsel reasonably
satisfactory to the Company, at the Company's expense, to represent the
Indemnified Party in any claim or action in respect of which indemnity may be
sought and agrees to cooperate with the Company and the Company's counsel in the
defense of such claim or action, it being understood, however, that the Company
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or action in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys, for
all the Indemnified Parties unless the defense of one Indemnified party is
unique or separate from that of another Indemnified Party subject to the same
claim or action. In the event that the Company does not promptly assume the
defense of a claim or action, the Indemnified Party shall have the right to
employ counsel reasonably satisfactory to the Company, at the Company's expense,
to defend such claim or action. The omission by an Indemnified Party to promptly
notify the Company of the receipt or commencement of any claim or action in
respect of which indemnity may be sought will relieve the Company from any
liability the Company may have to such Indemnified Party only to the extent that
such a delay in notification materially prejudices the Company's defense of such
claim or action. The Company shall not be liable for any settlement of any
such claim or action effected without its written consent, which shall not be
unreasonably withheld or delayed. Any obligation pursuant to this Annex A shall
-------
survive the termination or expiration of this Agreement.
EXHIBIT I-1
FORM OF REGISTRATION RIGHTS AGREEMENT
FOR THE RSMI STOCKHOLDERS
-------------------------
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of __________,
1999, by and among ▇▇▇▇▇▇▇ American Corporation, a Delaware corporation (the
"Company"), and each of the holders named on the signature pages hereto
(collectively, the "Holders" and each individually, a "Holder"). This Agreement
supercedes and replaces in its entirety that certain Registration Rights
Agreement, dated as of October 7, 1997 by and between Richmont Marketing
Specialists Inc. and MS Acquisition Limited (the "1997 Registration Rights
Agreement").
The parties hereby agree as follows:
Section 1. Definitions.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"Business Day" means any day other than a day on which banks are authorized
------------
or required to be closed in the State of New York.
"Commission" means the Securities and Exchange Commission.
----------
"Common Shares" means the _________ shares of Common Stock received by the
-------------
Holders pursuant to the Merger Agreement, together with any shares of Common
Stock or any other class of capital stock of the Company received in respect of
such shares, by stock split, stock dividend, exchange, recapitalization,
reclassification or otherwise, and any shares owned by a Holder during the term
of this Agreement.
"Common Stock" means the common stock, par value $.0l per share, of the
------------
Company.
"Company" has the meaning set forth in the preamble and shall include the
-------
Company's successors by merger, acquisition, reorganization or otherwise.
"Controlling Persons" has the meaning set forth in Section 8(a).
-------------------
"Damages" has the meaning set forth in Section 8(a).
-------
"Demand Registration Statement" has the meaning set forth in Section 2(a).
-----------------------------
"Demand Threshold" shall have the meaning set forth in Section 2(a).
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
------------
time to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"Holder" has the meaning set forht in the preamble and shall include any
------
assignee, successor or transferee who agrees to be bound by the terms of this
agreement to the same extent as any such Holder.
"Initiating Holders" shall have the meaning set forth in Section 2(a).
------------------
"Merger Agreement" means the Agreement and Plan of Merger, dated _________,
----------------
1999, among the Company, RMSI and the other parties thereto.
"▇▇▇▇▇▇▇ Agreement" means the Registration Rights Agreement dated as of
-----------------
December 18, 1998 by and among the Company and the former stockholders of
▇▇▇▇▇▇▇ Enterprises, Inc., a Massachusetts corporation.
"Monroe Agreement" means the Registration Rights Agreement dated as of the
----------------
date of this Agreement by and among the Company, Monroe & Company, LLC, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and the other stockholders of the Company named therein.
"Person" means any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, and by all other
amendments and supplements to the prospectus, including post-effective
amendments, and in each case including all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
2
"Registrable Securities" means the Common Shares except for (i) Common
----------------------
Shares the sale of which is covered by a Registration Statement that has been
declared effective under the Securities Act and (ii) Common Shares which cease
to be outstanding.
"Registration Expenses" has the meaning set forth in Section 6.
---------------------
"Registration Statement" means any registration statement of the Company
----------------------
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such registration statement,
including post-effective amendments, in each case including the Prospectus, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Requesting Holder" shall mean any Holder requesting registration of
-----------------
Registrable Securities pursuant to Section 2 or Section 3 hereof.
"RCP" means Richmont Capital Partners I, L.P.
---
"Richmont Party" means MS Acquisition Limited, a Texas limited partner
--------------
ship, and Richmont Capital Partners I, L.P., a Delaware limited partnership, and
any of their affiliates or partners.
"RMSI" means Richmont Marketing Specialists Inc., a Delaware corporation.
----
"Securities Act" means the Securities Act of 1933, as amended from time to
--------------
time, or any successor statute, and the rules and regulations of the Commission
promulgated thereunder.
"Selling Stockholders" has the meaning set forth in Section 2(a).
--------------------
"Suspension Notice" has the meaning set forth in Section 5.
-----------------
"Suspension Period" has the meaning set forth in Section 5.
-----------------
3
Section 2. Demand Registrations.
--------------------
(a) On any six (6) occasions after the date which is one hundred eighty
(180) days after the date of the execution of this Agreement, subject to the
conditions set forth in this Agreement, one or more Holders holding at least
forty percent (40%) of the Registrable Securities then held by all Holders (the
"Demand Threshold") may request (the "Initiating Holders") that the Company
cause to be filed with the Commission and cause to become effective a
registration statement (a "Demand Registration Statement") under the Securities
Act relating to the sale by such Holders of their Registrable Securities in
accordance with the terms hereof; provided, however, that until the first
-------- -------
anniversary of the date hereof, only a Richmont Party can make any such demand;
and provided further that any Richmont Party may request the Company to file and
-------- -------
cause to become effective a Demand Registration Statement if such request is for
the registration of all of such Richmont Party's Registrable Securities,
notwithstanding the fact that such Richmont Party's Registrable Securities are
less than the Demand Threshold. Upon receipt of any such request, the Company
shall give written notice of such proposed registration to all Holders of
Registrable Securities. Such Holders shall have the right, by giving written
notice to the Com pany within fifteen (15) business days after such notice
referred to in the preceding sentence has been given by the Company, to elect to
have included in the Demand Registration Statement such of their Registrable
Securities as each Holder may request in such notice of election. Thereupon,
the Company shall as soon as practi cable thereafter cause such Demand
Registration Statement to be filed and declared effective by the Commission for
all Registrable Securities which the Company has been requested to register.
The Company shall in no event be obligated to effect under this Section 2 more
than six (6) demand registrations. If the managing underwriter of an
underwritten offering with respect to which registration has been requested by
any Holder pursuant to this Section 2 has advised the Company that, in such
underwriter's good faith judgment, the number of securities to be sold in such
offering by the Company and persons other than the Company (collectively,
"Selling Stockholders") is greater than the number which can be offered without
adversely affecting such offering, then the Company may reduce the number of
securities to be included in such offering to a number deemed satisfactory by
the managing under writer, provided, however, that the securities to be
-------- -------
excluded shall be determined in the following order of priority: first,
securities held by any Selling Stockholder not having contractual, incidental
registration rights; second, securities held by any Selling Stockholder (not
including the Holders) participating in such offering pursuant to the exercise
of contractual piggyback registration rights (other than pursuant to the ▇▇▇▇▇▇▇
Agreement or the Monroe Agreement), as determined on a
4
pro rata basis (based upon the aggregate number of securities held by such
Selling Stockholders); third, securities the Company proposes to sell and other
securities of the Company included in such registration and; fourth, securities
held by any Holder participating in such registration pursuant to the exercise
of the demand registration rights set forth in this Section 2, and any Selling
Stockholder participating in such offering pursuant to the exercise of piggyback
registration rights under the ▇▇▇▇▇▇▇ Agreement or the Monroe Agreement, as
determined on a pro rata basis (based upon the aggregate number of securities
held by such Holders or Selling Stockholders, as the case may be).
(b) If a requested registration pursuant to this Section 2 involves an
underwritten offering, the underwriter or underwriters thereof shall be selected
by the Holders of at least a majority (by number of shares) of the Registrable
Securities as to which registration has been requested; provided, however, that
-------- -------
if any Richmont Party is an Initiating Holder, then such underwriter or
underwriters shall be selected by the Richmont Party (or, if more than one
Richmont Party, by the Richmont Party requesting the registration of the largest
number of Registrable Securities).
Section 3. Piggy-back Registrations.
------------------------
(a) If at any time or times after the date hereof the Company shall
determine to register under the Securities Act any shares of Common Stock (other
than in connection with a registration on Form S-4 or S-8 (or then equivalent
forms) or a registration statement filed in connection with an exchange offer or
offering of securities solely to the Company's existing securityholders), then
the Company shall promptly give written notice of such proposed registration to
the Holders (but in no event less than thirty (30) days prior to the anticipated
effective date of the registra tion statement). If within twenty (20) days
after the receipt of such notice the Company receives a written request from any
Holder for the inclusion in such, registration of some or all of the Registrable
Securities held by such Holder (which request shall specify the number of
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof), the Company shall use all commercially
reasonable efforts to cause such Registrable Securities to be included in such
registration on the same terms and conditions as any similar securities of the
Company or any other securityholder included therein and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. The Company may withdraw a registration under
this Section 3 at any time prior to the time it becomes effective, provided that
5
the Company shall give prompt notice of such withdrawal to the Holders which
requested to be included in such registration.
(b) Notwithstanding the foregoing, if counsel to the Company determines
that the form of Registration Statement for any such registration by the Company
does not permit the registration of Registrable Securities, such counsel shall
deliver to the Holders an opinion stating (i) that such form does not permit the
registration of Registrable Securities and (ii) that the use of a form
permitting the registration of Registrable Securities would not be commercially
feasible. Such opinion shall be delivered to the Holders no less than thirty
(30) days prior to the anticipated effective date of the Registration Statement
and the Company shall not be obligated to register Registrable Securities of any
Holder in such Registration Statement pursuant to this Section 3.
(c) In connection with any offering under this Section 3 involving an
underwriting, the Company shall not be required to include a Holder's
Registrable Securities in the underwritten offering unless such Holder accepts
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by the Company. If the managing underwriter of an
underwritten offering with respect to which registration has been requested by
any Holder pursuant to this Section 3 has advised the Company in writing that,
in such underwriter's good faith judgment, the number of securities to be sold
in such offering by Selling Stockholders is greater than the number which can be
offered without adversely affecting such offering, then the Company may reduce
the number of securities to be included in such offering for the accounts of
Selling Stockholders (including the Holders) to a number deemed satisfactory by
the managing underwriter, provided, however, that the securities to be excluded
-------- -------
shall be determined in the following order of priority: first, securities held
by any Selling Stockholder not having contractual, incidental registration
rights; and second, securities held by any Selling Stockholder (including the
Holders) participat ing in such offering pursuant to the exercise of
contractual piggyback registration rights and in the case of the Monroe
Agreement, pursuant to the exercise of demand registration rights, as determined
on a pro rata basis (based upon the aggregate number of securities held by such
Selling Stockholders).
(d) Each Holder hereby agrees that such Holder may not participate in any
underwritten offering hereunder unless such Holder (i) agrees to sell such
Holder's Registrable Securities on the basis provided in the underwriting
arrangements for such offering, and (ii) completes and executes all customary
6
questionnaires, powers of attorney, indemnities, underwriting agreements and
other docu ments reasonably required under the terms of the underwriting
arrangements.
Section 4. Registration Procedures.
-----------------------
In connection with the obligations of the Company to register Registrable
Securities pursuant to the terms and conditions of this Agreement:
(a) the Company shall, as expeditiously as possible, prepare and file with
the Commission a Registration Statement on the appropriate form under the
Securities Act, which form shall comply as to form in all materials respects
with the requirements of the applicable form and include all financial
statements required by the Commission to be filed therewith; provided, however,
-------- -------
that in the case of a Registration Statement filed pursuant to Section 2 hereof,
that the form of such Registration Statement shall be reasonably acceptable to
the Holders of more than 50% of the Registrable Securities to be so registered;
(b) the Company shall (i) prepare and file with the Commission such
amendments and post-effective amendments to any Registration Statement as may be
necessary to keep such Registration Statement effective until the earlier of (A)
one hundred eighty (180) days following the effectiveness of such Registration
Statement; provided, however, that such 180-day period shall be extended by the
-------- -------
number of days for which any Suspension Period is in effect during the
effectiveness of such Registration Statement, or (B) the completion of the
proposed offering of Registrable Securities pursuant to such Registration
Statement, (ii) cause the pro spectus included in such Registration Statement
to be supplemented by any required prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act, and
(iii) comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities covered by such
Registration Statement. A registration requested pursuant to Section 2 shall
not be deemed to have been effected (and therefore not requested for purposes of
Section 2) (i) unless a Registration Statement with respect thereto has become
effective, provided that a registration which does not become effective after
--------
the Company has filed a Registration Statement with respect thereto solely by
reason of the refusal to proceed of the Initiating Holders (other than a refusal
to proceed based upon the advice of counsel relating to a matter with respect to
the Company) shall be deemed to have been effected by the Company at the request
of such Initiating Holders unless the Initiating Holders shall have elected to
pay all Registration Expenses in connection
7
with such registration, (ii) if, after it has become effective, such
registration becomes subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, or (iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by such Initiating
Holders;
(c) the Company shall furnish to any Holder, without charge, such number of
conformed copies of any Registration Statement and any post-effective amendment
thereto and such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto, as such Holder may
reasonably request in order to facilitate the sale of such Holder's Registrable
Securities;
(d) the Company shall use its best efforts to register or qualify the
Registrable Securities covered by any Registration Statement under such other
securities or "blue sky" laws of such states of the United States as any Holder
or underwriter reasonably requests; provided, however, that the Company shall
-------- -------
not be required (i) to qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 4(d),
(ii) to file any general consent to service of process, or (iii) to subject
itself to taxation in any jurisdiction where it would not otherwise be subject
to taxation;
(e) the Company shall promptly notify each Holder of the happening of any
event which any statement made in any Registration Statement or related
Prospectus untrue or which requires the making of any changes in such
Registration Statement or Prospectus so that it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly following
expiration of any Suspen sion Period, the Company shall prepare and file with
the Commission and furnish a supplement or amendment to such Prospectus so that,
as thereafter deliverable to the purchasers of Registrable Securities, such
Prospectus will 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 therein, in light of the circumstances under which they were made,
not misleading;
(f) the Company shall use its best efforts to prevent the issuance of any
order suspending the effectiveness of any Registration Statement, and, if one
8
is issued, the Company shall use its best efforts to obtain the withdrawal of
such order as promptly as practicable;
(g) the Company shall use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(h) the Company shall furnish to each seller of Registrable Securities and
each Requesting Holder a signed counterpart, addressed to such seller, such
Requesting Holder and the underwriters, if any, of:
(X) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(Y) a "comfort" letter (or, in the case of any such Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration
state ment (and, if such registration includes an underwritten public
offer ing, a letter of like kind dated the date of the closing under
the under writing agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the ac
countants' letter, with respect to events subsequent to the date of such
▇▇▇▇▇ cial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities (with, in the case of an
"agreed upon procedure" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35) and, in the case of
the accountants' letter, such other financial matters, and, in the case of
the legal opinion, such other legal matters, as such seller or such
Requesting Holder (or the underwriters, if any) may reasonably request;
9
(i) the Company shall notify the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm such advice
in writing promptly thereafter:
(V) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;
(W) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(X) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;
(Y) if at any time the representations and warranties of the
Company made as contemplated by this Agreement cease to be true and
correct; and
(Z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any juris
diction or the initiation or threat of any proceeding for such
purpose;
(j) the Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than eighteen
(18) months, beginning with the first day of the Company's first full calendar
quarter after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder, and will furnish to each such seller and each
Requesting Holder at least five (5) business days prior to the filing thereof a
copy of any amendment or supplement to such registration statement or prospectus
and shall not file any thereof to which any such seller or any Requesting Holder
shall have reasonably objected on the grounds that
10
such amendment or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations thereunder;
(k) the Company shall provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(l) the Company shall enter into such agreements and take such other
actions as sellers of such Registrable Securities holding more than 50% of the
shares so to be sold shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(m) the Company shall use its best efforts to list all Registrable
Securities covered by such registration statement on any securities exchange on
which any of the securities of the same class as the Registrable Securities are
then listed; and
(n) the Company shall use its best efforts to provide a CUSIP number for
the Registrable Securities, not later than the effective date of the registra
tion statement.
The Company will not file any registration statement or amendment thereto
or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the registration statement) to which the Holders of at least a majority of the
Registrable Securities covered by such registration statement or the underwriter
or underwriters, if any, shall reasonably object, provided that the Company may
--------
file such document in a form required by law or upon the advice of its counsel.
Section 5. Suspension Period.
-----------------
Each Holder, upon receipt of any notice (a "Suspension Notice") from the
Company of the happening of any event of the kind described in Section 4(e) or
of any event which, in the Company's reasonable business judgment and good faith
judgment, could become such an event, shall immediately discontinue disposition
of the Registrable Securities pursuant to the Registration Statement covering
such Registrable Securities until such Holder has received copies of the
supplemented or
11
amended Prospectus contemplated by Section 4(e) (the period from the date on
which such Holder receives a Suspension Notice to the date on which such Holder
receives copies of the supplemented or amended Prospectus is referred to herein
as the "Suspension Period"). If so directed by the Company, each Holder will
deliver to the Company all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities that
is current at the time of receipt of such notice. In the event that the Company
shall give any Suspension Notice, the Company shall use commercially reasonable
efforts and take such actions as are reasonably necessary to end the Suspension
Period as promptly as practicable.
Section 6. Registration Expenses.
---------------------
Subject to the proviso below, any all expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
Commission and securities exchange registration and filing fees, reasonable fees
and expenses of one legal counsel for the Holders, fees and expenses incurred in
connec tion with state securities or "blue sky" laws, printing expenses, fees
and expenses incurred in connection with the listing of the Registrable
Securities and fees and disbursements of counsel for the Company and of the
independent certified public accountants of the Company (all such expenses being
herein called "Registration Expenses"), will be borne by the Company; provided,
--------
however, that Registration Expenses shall not include (a) underwriting discounts
-------
and commissions and transfer taxes, if any, relating to the sale or disposition
of Registrable Securities, or (b) any fees or expenses of any counsel,
accountants or other persons retained or employed by the Holders (other than the
fees and expenses of one legal counsel as provided above).
Section 7. Underwritten Offerings
----------------------
(a) Requested Underwritten Offerings. If requested by the underwriters for
--------------------------------
any underwritten offering by Holders of Registrable Securities pursuant to a
registration requested under Section 2, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company, each such
Holder and the underwriters, and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
this type,
12
including, without limitation, indemnities. The Holders of the Registrable
Securities will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof, provided that nothing herein
--------
contained shall diminish the foregoing obligations of the Company. The Holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such under writers shall
also be made to and for the benefit of such Holders of Registrable Securities
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Holders of Registrable Securities. Any such Holder of
Registra ble Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations and warranties contained in writing furnished by such Holder
expressly for use in such registration statement or agreements regarding such
Holder, such Holder's Registra ble Securities and such Holder's intended method
of distribution and any other representation required by law or to make any
agreements with the Company or the underwriters with respect to indemnification
of any Person or the contribution obligations of any Person that would impose
any obligation beyond or inconsistent with the provisions of this Agreement.
(b) Incidental Underwritten Offerings. If the Company at any time proposes
---------------------------------
to register any of its securities under the Securities Act as contem plated by
Section 3 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Holder of Registrable
Securities as provided in Section 3, use its best efforts to arrange for such
underwrit ers to include all the Registrable Securities to be offered and sold
by such Holder among the securities to be distributed by such underwriters. The
Holders of Regis trable Securities to be distributed by such underwriters shall
be parties to the under writing agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such Holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holders of Registrable Securities. Any such Holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
13
agreements regarding such Holder, such Holder's Registrable Securities and
such Holder's intended method of distribution and any other representation
required by law or to make any agreements with the Company or the underwriters
with respect to indemni fication of any Person or the contribution obligations
of any Person that would impose any obligation beyond or inconsistent with the
terms of this Agreement.
(c) Holdback Agreements.
-------------------
(i) Each Holder of Registrable Securities agrees by acquisition
of such Registrable Securities, if and to the extent so required by the
managing underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
other wise dispose of any securities of the Company, during the 7 days
prior to and the 90 days after any underwritten registration pursuant to
Section 2 or 3 has become effective, except as part of such underwritten
registration, whether or not such Holder participates in such registration,
provided that the foregoing restrictions shall not apply with regard to any
--------
Richmont Party in a distribu tion of Registrable Securities to its
partners or to the transfer to any affiliate of such Persons or to any
other transferee in a private transaction not requir ing registration
under the Securities Act, or to any bona fide pledge of such Registrable
Securities, provided that such affiliate or other transferee and/or lender
or creditor acknowledges in writing that it is bound by the provisions of
this Section 7(c). Each Holder of Registrable Securities agrees that the
Company may instruct its transfer agent to place stop transfer notations in
its records to enforce this Section 7(c).
(ii) The Company agrees (X) if so required by the manag ing
underwriter not to sell, make any short sale of, loan, grant any option for
the purchase of, effect any public sale or distribution of or otherwise
dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven
days prior to and the 90 days after any underwritten registration pursuant
to Section 2 or 3 has become effective, except as part of such underwritten
registration and except pursuant to registrations on Form ▇-▇, ▇-▇, or any
successor or similar forms thereto, and (Y) to cause each holder of its
securities purchased from the Company at any time after the date of this
Agreement (other than in a public offering) to agree not to sell, make any
short sale of, loan, ▇▇▇▇ any option for the purchase of, effect any public
sale or distribution of or otherwise dispose of such securities during such
period.
14
(d) Participation in Underwritten Offerings. No Person may
---------------------------------------
participate in any underwritten offering hereunder unless such person (i) agrees
to sell such Person's securities on the basis provided in any underwriting
arrange ments approved, subject to the terms and conditions hereof, by the
Company and the Holders of a majority of Registrable Securities to be included
in such underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or
other agreement in connection with such offering) shall require any Holder of
Registrable Securities to make any representations or warran ties to or
agreements with the Company or the underwriters other than representa tions and
warranties contained in a writing furnished by such Holder expressly for use in
the related registration statement or agreements regarding such Holder, such
Holder's registrable Securities and such Holder's intended method of
distribution and any other representation required by law or to make any
agreements with the Company or the underwriters with respect to indemnification
of any Person or the contribution obligations of any Person that would impose
any obligation beyond or inconsistent with the provisions of this Agreement.
Section 8. Indemnification and Contribution.
--------------------------------
(a) Indemnification by the Company. The Company agrees to indemnify and
------------------------------
hold harmless, to the full extent permitted by law, each Holder, its officers,
directors, trustees, employees, agents, successors and assigns and each Person,
if any, which controls such Holder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, (collectively,
"Controlling Persons"), from and against all losses, claims, damages,
liabilities and expenses (including without limitation any legal or other fees
and expenses reasonably incurred by any Holder or any such Controlling Person in
connection with defending or investigating any action or claim in respect
thereof) (collectively, "Damages") to which any of them may become subject under
the Securities Act or otherwise, insofar as such Damages arise out of or are
based upon (i) any untrue or alleged untrue statement of material fact contained
in any Registration Statement (including any related preliminary or final
Prospectus) pursuant to which Registrable Securities were registered under the
Securities Act, or (ii) any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
Damages arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or
15
omission based upon information furnished in writing to the Company by such
Holder expressly for use therein.
(b) Indemnification by the Holders. Each Holder agrees to indemnify and
------------------------------
hold harmless, to the full extent permitted by law, the Company, its directors,
officers, employees and agents and each Controlling Person of the Company, from
and against any and all Damages to which any of them may become subject under
the Securities Act or otherwise to the same extent as the foregoing indemnity
from the Company to such Holder, but only to the extent such Damages arise out
or are based upon any untrue statement or omission or alleged untrue statement
or omission based upon information furnished to the Company in writing by such
Holder expressly for use in any Registration Statement. In no event shall the
liability of any Holder for indemnification under this Section 8(b) in its
capacity as such (and not in such Holder's capacity as an officer or director of
the Company) exceed the proceeds received by such Holder from the sale of
Registrable Securities under such Registra tion Statement.
(c) Indemnification Procedures. In case any proceeding (including any
--------------------------
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to either paragraph (a) or (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall retain counsel reasonably satisfactory to the
indemnified party to repre sent the indemnified party and any others the
indemnifying party may designate in such proceedings and shall pay the fees and
disbursements of such counsel relating to such proceeding. The failure or delay
of an indemnified party to notify the indemni fying party with respect to a
particular proceeding shall not relieve the indemnifying party from any
obligation or liability which it may have pursuant to this Agreement if the
indemnifying party is not prejudiced by such failure or delay. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party. The indemnifying party shall not be liable for any
settlement of any proceed ing without its written consent. No indemnifying
party shall, without the prior written consent of any indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which such indemnified party is a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an uncondi tional release of such indemnified
party from all liability on all claims that are the subject matter of such
proceeding.
16
(d) Contribution. To the extent that the indemnification provided for in
------------
paragraph (a) or (b) of this Section 8 is held by a court of competent
jurisdiction to be unavailable to an indemnified party in respect of any
Damages, then each indem nified party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such Damages (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand, and each Holder on the other, from the offering of
the Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Holders, on the
other, in connection with the statements or omissions which resulted in such Dam
ages, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Holders on the other hand shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
If indemnification is available under paragraph (a) or (b) of this Section
8, the indemnifying parties shall indemnify each indemnified party to the full
extent provided in such paragraphs without regard to the relative benefits to
or relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 8(d).
The Company and each Holder agrees that it would not be just or equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
--- ----
allocation or by any other method of allocation that does not take account of
the equitable consid erations referred to herein. The amount paid or payable
by an indemnified party as a result of the Damages referred to in this Section 8
shall be deemed to include any legal or other expenses reasonably incurred (and
not otherwise reimbursed) by such indemnified party in connection with
investigating or defending any such action or claim. In no event shall any
Holder be required to contribute an amount under this Section 8(d) in excess of
the proceeds received by such Holder from the sale of Registrable Securities
under the relevant Registration Statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
17
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
Section 9. Information Furnished by Holders.
--------------------------------
Each Holder shall furnish to the Company such information regarding such
Holder and such Holder's intended method of distribution of the Registrable
Securi ties as the Company may from time to time reasonably request in writing
in order to comply with the Securities Act and the provisions of this Agreement.
Each Holder agrees (a) to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by the Holder to the
Company or of the occurrence of any event, in either case as a result of which
any Prospectus contains or would contain an untrue statement of a material fact
regarding the Holder or the Holder's intended method of distribution of the
Registrable Securities or omits or would omit to state any material fact
regarding the Holder or the Holder's intended method of distribution of the
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and (b) to promptly furnish to the Company any additional information required
to correct and update any previously furnished information or required so that
the Prospectus shall not contain, with respect to the Holder or the Holder's
intended method of distribution of the Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or neces sary to make the statements therein not misleading in
light of the circumstances then existing.
Section 10. "Most Favored Nations" Election.
------------------------------
In the event that after the date of this Agreement, but prior to its
termination, the Company enters into an agreement with any Holder of shares of
its Common Stock whereby such Holder is granted registration rights with respect
to such shares (a "Subsequent Agreement"), then the Company shall
(a) provide each Holder of Registrable Securities a copy of such agree ment
promptly after its execution, and
(b) offer each such Holder of Registrable Securities an opportunity to
elect to enter into an agreement with the Company whereby such Holder of
Registra ble Securities, in lieu of its rights hereunder, shall be entitled to
the registration rights equivalent to those described in the Subsequent
Agreement.
18
A Holder of Registrable Securities shall have 20 days after the date on
which notice of such event is deemed to have been given by the Company pursuant
to the provisions of Section 11(b) of this Agreement, to notify the Company in
writing of its election to terminate its rights under this Agreement and, in
lieu thereof, to enter into a new agreement containing registration rights
equivalent to those contained in the Subsequent Agreement. Such new agreement
shall be executed promptly after receipt of such notice by the Company.
Section 11. Miscellaneous
-------------
(a) Amendments and Waivers. The provisions of this Agreement, including
----------------------
the provisions of this sentence, may not be amended, modified or supple mented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of the Holders of a
majority in interest of the Registrable Securities then outstanding.
(b) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by registered or certified mail (return
receipt re quested), postage prepaid or courier to the parties at their
respective addresses set forth on the signature pages hereof (or at such other
address for any party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt thereof).
All such notices and communications shall be deemed to have been received: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and on the next
Business Day if timely delivered to a courier guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
-----------------------
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any transferee of any Holder shall acquire
Registrable Securities in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
19
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law.
(g) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(h) Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression of their agreement and is intended to be the complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(i) Further Assurances. Each party shall cooperate and take such action as
------------------
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
(j) Rule 144. The Company shall timely file any reports required to be
--------
filed by it under the Securities Act and the Exchange Act to the extent required
from time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act pursuant to the exemption provided by Rule
144 under the Securities Act. Upon request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
20
(k) Termination of 1997 Registration Rights Agreement. MS Acquisition
-------------------------------------------------
Limited and Richmont Marketing Specialists Inc. hereby terminate the 1997 Regis
tration Rights Agreement and agree that none of such parties shall have any
further rights or obligations thereunder.
[End of text]
21
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the day and year first above written.
▇▇▇▇▇▇▇ American Corporation
By:
----------------------------------
Name:
Title:
Address:
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▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
HOLDERS:
MS Acquisition Limited
By: MS Acquisition Corp.
its General Partner
By:
----------------------------------
Name:
Title:
Address:
-------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
-------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
22
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
-------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
-------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address:
-------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
23
EXHIBIT I-2
-----------
FORM OF
-------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
FOR CERTAIN ▇▇▇▇▇▇▇ STOCKHOLDERS
--------------------------------
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of ___________,
1999, by and among ▇▇▇▇▇▇▇ American Corporation, a Delaware corporation (the
"Company"), and each of the holders named on the signature pages hereto
(collectively, the "Holders" and each individually, a "Holder"). This Agreement
supersedes and replaces in its entirety the Registration Rights Agreement dated
as of May 18, 1998 by and among the Company, Monroe & Company II, LLC, a
Delaware limited liability company, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "1998
Registration Rights Agreement").
The parties hereby agree as follows:
Section 1. Definitions.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"Business Day" means any day other than a day on which banks are authorized
------------
or required to be closed in the State of New York.
"Commission" means the Securities and Exchange Commission.
----------
"Common Shares" means the _______ shares of Common Stock held by the
-------------
Holders as of the date of this Agreement, together with any shares of Common
Stock or any other class of capital stock of the Company received in respect of
such shares, by stock split, stock dividend, exchange, recapitalization,
reclassification or otherwise, together with any other shares of Common Stock
held by the holders during the term of this Agreement.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company and the restricted common stock, par value $.01 per share, of the
Company.
"Company" has the meaning set forth in the preamble and shall include the
-------
Company's successors by merger, acquisition, reorganization or otherwise.
"Controlling Persons" has the meaning set forth in Section 8(a).
-------------------
"Damages" has the meaning set forth in Section 8(a).
-------
"Demand Registration Statement" has the meaning set forth in Section 2(a).
-----------------------------
1
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
------------
time to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"Holder" has the meaning set forth in the preamble and shall include any
------
assignee, successor or transferee in accordance with the provisions of Section
11(c) hereof.
"Initiating Holders" shall have the meaning set forth in Section 2(a).
------------------
"▇▇▇▇▇▇▇ Agreement" means the Registration Rights Agreement dated as of
-----------------
December 18, 1998 by and among the Company and the former stockholders of
▇▇▇▇▇▇▇ Enterprises, Inc., a Massachusetts corporation.
"Person" means any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, and by all other
amendments and supplements to the prospectus, including post-effective
amendments, and in each case including all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"Registrable Securities" means the Common Shares except for (i) Common
----------------------
Shares the sale of which is covered by a Registration Statement that has been
declared effective under the Securities Act and (ii) Common Shares which cease
to be outstanding.
"Registration Expenses" has the meaning set forth in Section 6.
---------------------
"Registration Statement" means any registration statement of the Company
----------------------
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such registration statement,
including post-effective amendments, in each case including the Prospectus, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Requesting Holder" means any Holder requesting registration of Registrable
-----------------
Securities pursuant to Section 2 or Section 3 hereof.
"Richmont Agreement" means the Registration Rights Agreement dated as of
------------------
the date of this Agreement by and among the Company and the former stockholders
of Richmont Marketing Specialists Inc., a Delaware corporation.
2
"Securities Act" means the Securities Act of 1933, as amended from time to
--------------
time, or any successor statute, and the rules and regulations of the Commission
promulgated thereunder.
"Selling Stockholders" has the meaning set forth in Section 2(a).
--------------------
"Suspension Notice" has the meaning set forth in Section 5.
-----------------
"Suspension Period" has the meaning set forth in Section 5.
-----------------
Section 2. Demand Registrations.
--------------------
(a) On any two (2) occasions after the date of this Agreement, subject to
the conditions set forth in this Agreement, including without limitation the
conditions set forth in Section 2(b) below, one or more Holders holding at least
forty percent (40%) of the Registrable Securities then held by all Holders may
request (the "Initiating Holders") that the Company cause to be filed with the
Commission and cause to become effective a registration statement (a "Demand
Registration Statement") under the Securities Act relating to the sale by such
Holders of their Registrable Securities in accordance with the terms hereof.
Upon receipt of any such request, the Company shall give written notice of such
proposed registration to all Holders of Registrable Securities. Such Holders
shall have the right, by giving written notice to the Company within fifteen
(15) business days after such notice referred to in the preceding sentence has
been given by the Company, to elect to have included in the Demand Registration
Statement such of their Registrable Securities as each Holder may request in
such notice of election. Thereupon, the Company shall as soon as practicable
thereafter cause such Demand Registration Statement to be filed and declared
effective by the Commission for all Registrable Securities which the Company has
been requested to register. The Company shall in no event be obligated to
effect under this Section 2 more than two (2) demand registrations. If the
managing underwriter of an underwritten offering with respect to which
registration has been requested by any Holder pursuant to this Section 2 has
advised the Company that, in such underwriter's good faith judgment, the number
of securities to be sold in such offering by the Company and persons other than
the Company (collectively, "Selling Stockholders") is greater than the number
which can be offered without adversely affecting such offering, then the Company
may reduce the number of securities to be included in such offering to a number
deemed satisfactory by the managing underwriter, provided, however, that the
-------- -------
securities to be excluded shall be determined in the following order of
priority: first, securities held by any Selling Stockholder not having
contractual, incidental registration rights; second, securities held by any
Selling Stockholder (not including the Holders) participating in such offering
pursuant to the exercise of contractual piggyback registration rights (other
than pursuant to the ▇▇▇▇▇▇▇ Agreement or the Richmont Agreement), as determined
on a pro rata basis (based upon the aggregate number of securities held by such
Selling Stockholders); third, securities the Company proposes to sell and other
securities of the Company included in such registration; fourth, securities held
by (i) any Selling Stockholder participating in such offering
3
pursuant to the exercise of piggyback registration rights under the ▇▇▇▇▇▇▇
Agreement or the Richmont Agreement and (ii) any Holder participating in such
registration pursuant to the exercise of the demand registration rights set
forth in this Section 2, as determined on a pro rata basis (based upon the
aggregate number of securities held by such Selling Stockholders and such
Holders).
(b) If a requested registration pursuant to this Section 2 involves an
underwritten offering, the underwriter or underwriters thereof shall be selected
by the Holders of at least a majority (by number of shares) of the Registrable
Securities as to which registration has been requested.
Section 3. Piggy-back Registrations.
------------------------
(a) If at any time or times after the date hereof the Company shall
determine to register under the Securities Act any shares of Common Stock (other
than in connection with a registration on Form S-4 or S-8 (or then equivalent
forms) or a registration statement filed in connection with an exchange offer or
offering of securities solely to the Company's existing securityholders), then
the Company shall promptly give written notice of such proposed registration to
the Holders (but in no event less than thirty (30) days prior to the anticipated
effective date of the registration statement). If within twenty (20) days after
the receipt of such notice the Company receives a written request from any
Holder for the inclusion in such registration of some or all of the Registrable
Securities held by such Holder (which request shall specify the number of
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof), the Company shall use all commercially
reasonable efforts to cause such Registrable Securities to be included in such
registration on the same terms and conditions as any similar securities of the
Company or any other securityholder included therein and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. The Company may withdraw a registration under
this Section 3 at any time prior to the time it becomes effective, provided that
the Company shall give prompt notice of such withdrawal to the Holders which
requested to be included in such registration.
(b) Notwithstanding the foregoing, if counsel to the Company determines
that the form of Registration Statement for any such registration by the Company
does not permit the registration of Registrable Securities, such counsel shall
deliver to the Holders an opinion stating (i) that such form does not permit the
registration of Registrable Securities and (ii) that the use of a form
permitting the registration of Registrable Securities would not be commercially
feasible. Such opinion shall be delivered to the Holders no less than thirty
(30) days prior to the anticipated effective date of the Registration Statement
and the Company shall not be obligated to register Registrable Securities of any
Holder in such Registration Statement pursuant to this Section 3.
(c) In connection with any offering under this Section 3 involving an
underwriting, the Company shall not be required to include a Holder's
Registrable Securities in the
4
underwritten offering unless such Holder accepts the terms of the underwriting
as agreed upon between the Company and the underwriters selected by the Company.
If the managing underwriter of an underwritten offering with respect to which
registration has been requested by any Holder pursuant to this Section 3 has
advised the Company in writing that, in such underwriter's good faith judgment,
the number of securities to be sold in such offering by Selling Stockholders is
greater than the number which can be offered without adversely affecting such
offering, then the Company may reduce the number of securities to be included in
such offering for the accounts of Selling Stockholders (including the Holders)
to a number deemed satisfactory by the managing underwriter, provided, however,
-------- -------
that the securities to be excluded shall be determined in the following order of
priority: first, securities held by any Selling Stockholder not having
contractual, incidental registration rights; and second, securities held by any
Selling Stockholder (including the Holders) participating in such offering
pursuant to the exercise of contractual piggyback registration rights, as
determined on a pro rata basis (based upon the aggregate number of securities
held by such Selling Stockholders).
(d) Each Holder hereby agrees that such Holder may not participate in any
underwritten offering hereunder unless such Holder (i) agrees to sell such
Holder's Registrable Securities on the basis provided in the underwriting
arrangements for such offering, and (ii) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of the underwriting
arrangements.
Section 4. Registration Procedures.
-----------------------
In connection with the obligations of the Company to register Registrable
Securities pursuant to the terms and conditions of this Agreement:
(a) The Company shall, as expeditiously as possible, prepare and file
with the Commission a Registration Statement on the appropriate form under
the Securities Act, which form shall comply as to form in all materials
respects with the requirements of the applicable form and include all
financial statements required by the Commission to be filed therewith;
provided, however, that in the case of a Registration Statement filed
-------- -------
pursuant to Section 2 hereof, that the form of such Registration Statement
shall be reasonably acceptable to the Holders of more than 50% of the
Registrable Securities to be so registered;
(b) The Company shall (i) prepare and file with the Commission such
amendments and post-effective amendments to any Registration Statement as
may be necessary to keep such Registration Statement effective until the
earlier of (A) one hundred eighty (180) days following the effectiveness of
such Registration Statement; provided, however, that such 180-day period
shall be extended by the number of days for which any Suspension Period is
in effect during the effectiveness of such
5
Registration Statement, or (B) the completion of the proposed offering of
Registrable Securities pursuant to such Registration Statement, (ii) cause
the prospectus included in such Registration Statement to be supplemented
by any required prospectus supplement, and, as so supplemented, to be filed
pursuant to Rule 424 under the Securities Act and (iii) comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all Registrable Securities covered by such Registration
Statement. A registration requested pursuant to Section 2 shall not be
deemed to have been effected (and therefore not requested for purposes of
Section 2) (i) unless a Registration Statement with respect thereto has
become effective, provided that a registration which does not become
--------
effective after the Company has filed a Registration Statement with respect
thereto solely by reason of the refusal to proceed of the Initiating
Holders (other than a refusal to proceed based upon the advice of counsel
relating to a matter with respect to the Company) shall be deemed to have
been effected by the Company at the request of such Initiating Holders
unless the Initiating Holders shall have elected to pay all Registration
Expenses in connection with such registration, (ii) if, after it has become
effective, such registration becomes subject to any stop order, injunction
or other order or requirement of the Commission or other governmental
agency or court for any reason, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into
in connection with such registration are not satisfied, other than by
reason of some act or omission by such Initiating Holders;
(c) The Company shall furnish to any Holder, without charge, such
number of conformed copies of any Registration Statement and any post-
effective amendment thereto and such number of copies of the Prospectus
(including each preliminary Prospectus) and any amendments or supplements
thereto, as such Holder may reasonably request in order to facilitate the
sale of such Holder's Registrable Securities;
(d) The Company shall use its best reasonable efforts to register or
qualify the Registrable Securities covered by any Registration Statement
under such other securities or "blue sky" laws of such states of the United
States as any Holder or underwritter reasonably requests; provided,
--------
however, that the Company shall not be required (i) to qualify generally to
-------
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 4(d), (ii) to file any general consent to
service of process, or (iii) to subject itself to taxation in any
jurisdiction where it would not otherwise be subject to taxation;
(e) The Company shall promptly notify each Holder of the happening of
any event which makes any statement made in any Registration Statement or
related Prospectus untrue or which requires the making of any changes in
such Registration Statement or Prospectus so that it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and promptly following expiration of any Suspension Period, the Company
shall prepare and file with the Commission and furnish a supplement or
amendment to
6
such Prospectus so that, as thereafter deliverable to the purchasers of
Registrable Securities, such Prospectus will 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 therein, in light of
the circumstances under which they were made, not misleading;
(f) The Company shall use its best reasonable efforts to prevent the
issuance of any order suspending the effectiveness of any Registration
Statement, and, if one is issued, the Company shall use its best reasonable
efforts to obtain the withdrawal of such order as promptly as practicable;
(g) the Company shall use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(h) the Company shall furnish to each seller of Registrable Securities
and each Requesting Holder a signed counterpart, addressed to such seller,
such Requesting Holder and the underwriters, if any, of:
(X) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(Y) a "comfort" letter (or, in the case of any such Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, a letter of like kind dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities (with, in the case of an
"agreed upon procedure" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35) and, in the case of
the accountants' letter, such other financial matters, and, in the case of
the legal opinion, such other legal matters, as such seller or such
Requesting Holder (or the underwriters, if any) may reasonably request;
7
(i) the Company shall notify the Holders of Registrable Securities and
the managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(V) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;
(W) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(X) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;
(Y) if at any time the representations and warranties of the
Company made as contemplated by this Agreement cease to be true and
correct; and
(Z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(j) the Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but not more
than eighteen (18) months, beginning with the first day of the Company's
first full calendar quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder, and will furnish to
each such seller and each Requesting Holder at least five (5) business days
prior to the filing thereof a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any thereof to
which any such seller or any Requesting Holder shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Securities Act or of
the rules or regulations thereunder;
(k) the Company shall provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the effective
date of such registration statement;
(l) the Company shall enter into such agreements and take such other
actions as sellers of such Registrable Securities holding more than 50% of
the shares so to be
8
sold shall reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(m) the Company shall use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed; and
(n) the Company shall use its best efforts to provide a CUSIP number
for the Registrable Securities, not later than the effective date of the
registration statement.
The Company will not file any registration statement or amendment thereto
or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the registration statement) to which the Holders of at least a majority of the
Registrable Securities covered by such registration statement or the underwriter
or underwriters, if any, shall reasonably object, provided that the Company may
--------
file such document in a form required by law or upon the advice of its counsel.
Section 5. Suspension Period.
-----------------
Each Holder, upon receipt of any notice (a "Suspension Notice") from the
Company of the happening of any event of the kind described in Section 4(e) or
of any event which, in the Company's reasonable business judgment and good faith
judgment, could become such an event, shall immediately discontinue disposition
of the Registrable Securities pursuant to the Registration Statement covering
such Registrable Securities until such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section 4(e) (the period from
the date on which such Holder receives a Suspension Notice to the date on which
such Holder receives copies of the supplemented or amended Prospectus is
referred to herein as the "Suspension Period"). If so directed by the Company,
each Holder will deliver to the Company all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities that is current at the time of receipt of such notice.
In the event that the Company shall give any Suspension Notice, the Company
shall use commercially reasonable efforts and take such actions as are
reasonably necessary to end the Suspension Period as promptly as practicable.
Section 6. Registration Expenses.
---------------------
Subject to the proviso below, any and all expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation Commission and securities exchange registration and filing fees,
reasonable fees and expenses of one legal counsel for the Holders, fees and
expenses incurred in connection with compliance with state securities or "blue
sky" laws, printing expenses, fees and expenses incurred in connection with the
listing of the Registrable Securities and fees and disbursements of counsel for
the Company and of the independent certified public accountants of the Company
(all such expenses being
9
herein called "Registration Expenses"), will be borne by the Company;
provided, however, that Registration Expenses shall not include (a) underwriting
-------- -------
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities or (b) any fees or expenses of any
counsel, accountants or other persons retained or employed by the Holders (other
than the fees and expenses of one legal counsel as provided above).
Section 7. Underwritten Offerings
----------------------
(a) Requested Underwritten Offerings. If requested by the underwriters
--------------------------------
for any underwritten offering by Holders of Registrable Securities pursuant to a
registration requested under Section 2, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company, each such
Holder and the underwriters, and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
this type, including, without limitation, indemnities. The Holders of the
Registrable Securities will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof, provided that nothing herein
--------
contained shall diminish the foregoing obligations of the Company. The Holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such Holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Holders of Registrable Securities. Any such Holder of
Registrable Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations and warranties contained in writing furnished by such Holder
expressly for use in such registration statement or agreements regarding such
Holder, such Holder's Registrable Securities and such Holder's intended method
of distribution and any other representation required by law or to make any
agreements with the Company or the underwriters with respect to indemnification
of any Person or the contribution obligations of any Person that would impose
any obligation beyond or inconsistent with the provisions of this Agreement.
(b) Incidental Underwritten Offerings. If the Company at any time proposes
---------------------------------
to register any of its securities under the Securities Act as contemplated by
Section 3 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Holder of Registrable
Securities as provided in Section 3, use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such Holder among the securities to be distributed by such underwriters. The
Holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such Holders of Registrable Securities and that any or all of
the conditions precedent to the
10
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holders of Registrable Securities. Any such
Holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Holder, such Holder's Registrable Securities and such Holder's intended method
of distribution and any other representation required by law or to make any
agreements with the Company or the underwriters with respect to indemnification
of any Person or the contribution obligations of any Person that would impose
any obligation beyond or inconsistent with the terms of this Agreement.
(c) Holdback Agreements.
-------------------
(i) Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities, if and to the extent so required by the
managing underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of any securities of the Company, during the 7 days prior
to and the 90 days after any underwritten registration pursuant to Section
2 or 3 has become effective, except as part of such underwritten
registration, whether or not such Holder participates in such registration,
provided that the foregoing restrictions shall not apply with regard to any
--------
entity controlled by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in a distribution of Registrable
Securities to its partners or members or to the transfer to any affiliate
of such entity or to any other transferee in a private transaction not
requiring registration under the Securities Act, or to any bona fide pledge
of such Registrable Securities, provided that such affiliate or other
transferee and/or lender or creditor acknowledges in writing that it is
bound by the provisions of this Section 7(c). Each Holder of Registrable
Securities agrees that the Company may instruct its transfer agent to place
stop transfer notations in its records to enforce this Section 7(c).
(ii) The Company agrees (X) if so required by the managing underwriter
not to sell, make any short sale of, loan, grant any option for the
purchase of, effect any public sale or distribution of or otherwise dispose
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities during the seven days prior to and
the 90 days after any underwritten registration pursuant to Section 2 or 3
has become effective, except as part of such underwritten registration and
except pursuant to registrations on Form ▇-▇, ▇-▇, or any successor or
similar forms thereto, and (Y) to cause each holder of its securities
purchased from the Company at any time after the date of this Agreement
(other than in a public offering) to agree not to sell, make any short sale
of, loan, ▇▇▇▇ any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of such securities during such period.
(d) Participation in Underwritten Offerings. No Person may participate in
---------------------------------------
any underwritten offering hereunder unless such person (i) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved, subject to the terms and conditions hereof, by the Company and the
Holders of a majority of Registrable Securities to be
11
included in such underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or other
agreement in connection with such offering) shall require any Holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations and
warranties contained in a writing furnished by such Holder expressly for use in
the related registration statement or agreements regarding such Holder, such
Holder's registrable Securities and such Holder's intended method of
distribution and any other representation required by law or to make any
agreements with the Company or the underwriters with respect to indemnification
of any Person or the contribution obligations of any Person that would impose
any obligation beyond or inconsistent with the provisions of this Agreement.
Section 8. Indemnification and Contribution.
--------------------------------
(a) Indemnification by the Company. The Company agrees to indemnify and
------------------------------
hold harmless, to the full extent permitted by law, each Holder, its officers,
directors, trustees, employees, agents, successors and assigns and each Person,
if any, which controls such Holder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, (collectively,
"Controlling Persons"), from and against all losses, claims, damages,
liabilities and expenses (including without limitation any legal or other fees
and expenses reasonably incurred by any Holder or any such Controlling Person in
connection with defending or investigating any action or claim in respect
thereof) (collectively, "Damages") to which any of them may become subject under
the Securities Act or otherwise, insofar as such Damages arise out of or are
based upon (i) any untrue or alleged untrue statement of material fact contained
in any Registration Statement (including any related preliminary or final
Prospectus) pursuant to which Registrable Securities were registered under the
Securities Act, or (ii) any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
Damages arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in writing
to the Company by such Holder expressly for use therein.
(b) Indemnification by the Holders. Each Holder agrees to indemnify and
------------------------------
hold harmless, to the full extent permitted by law, the Company, its directors,
officers, employees and agents and each Controlling Person of the Company, from
and against any and all Damages to which any of them may become subject under
the Securities Act or otherwise to the same extent as the foregoing indemnity
from the Company to such Holder, but only to the extent such Damages arise out
or are based upon any untrue statement or omission or alleged untrue statement
or omission based upon information furnished to the Company in writing by such
Holder expressly for use in any Registration Statement. In no event shall the
liability of any Holder for indemnification under this Section 8(b) in its
capacity as such (and not in such Holder's capacity as an officer or director of
the Company) exceed the proceeds received by such Holder from the sale of
Registrable Securities under such Registration Statement.
12
(c) Indemnification Procedures. In case any proceeding (including any
--------------------------
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to either paragraph (a) or (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceedings and shall pay the fees and
disbursements of such counsel relating to such proceeding. The failure or delay
of an indemnified party to notify the indemnifying party with respect to a
particular proceeding shall not relieve the indemnifying party from any
obligation or liability which it may have pursuant to this Agreement if the
indemnifying party is not prejudiced by such failure or delay. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent. No
indemnifying party shall, without the prior written consent of any indemnified
party (which consent shall not be unreasonably withheld), effect any settlement
of any pending or threatened proceeding in respect of which such indemnified
party is a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on all claims that are the subject
matter of such proceeding.
(d) Contribution. To the extent that the indemnification provided for in
------------
paragraph (a) or (b) of this Section 8 is held by a court of competent
jurisdiction to be unavailable to an indemnified party in respect of any
Damages, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such Damages (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand, and each Holder on the other, from the offering of
the Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Holders, on the
other, in connection with the statements or omissions which resulted in such
Damages, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Holders on the other hand shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
If indemnification is available under paragraph (a) or (b) of this Section
8, the indemnifying parties shall indemnify each indemnified party to the full
extent provided in such paragraphs without regard to the relative benefits to or
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 8(d).
13
The Company and each Holder agrees that it would not be just or equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
--- ----
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the Damages referred to in this Section 8
shall be deemed to include any legal or other expenses reasonably incurred (and
not otherwise reimbursed) by such indemnified party in connection with
investigating or defending any such action or claim. In no event shall any
Holder be required to contribute an amount under this Section 8(d) in excess of
the proceeds received by such Holder from the sale of Registrable Securities
under the relevant Registration Statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
Section 9. Information Furnished by Holders.
--------------------------------
Each Holder shall furnish to the Company such information regarding such
Holder and such Holder's intended method of distribution of the Registrable
Securities as the Company may from time to time reasonably request in writing in
order to comply with the Securities Act and the provisions of this Agreement.
Each Holder agrees (a) to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by the Holder to the
Company or of the occurrence of any event, in either case as a result of which
any Prospectus contains or would contain an untrue statement of a material fact
regarding the Holder or the Holder's intended method of distribution of the
Registrable Securities or omits or would omit to state any material fact
regarding the Holder or the Holder's intended method of distribution of the
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and (b) to promptly furnish to the Company any additional information required
to correct and update any previously furnished information or required so that
the Prospectus shall not contain, with respect to the Holder or the Holder's
intended method of distribution of the Registrable Securities, an 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 not misleading in
light of the circumstances then existing.
Section 10. "Most Favored Nations" Election.
------------------------------
In the event that after the date of this Agreement, but prior to its
termination, the Company enters into an agreement with any Holder of shares of
its Common Stock whereby such Holder is granted registration rights with respect
to such shares (a "Subsequent Agreement"), then the Company shall
(a) provide each Holder of Registrable Securities a copy of such agreement
promptly after its execution, and
14
(b) offer each such Holder of Registrable Securities an opportunity to
elect to enter into an agreement with the Company whereby such Holder of
Registrable Securities, in lieu of its rights hereunder, shall be entitled to
the registration rights equivalent to those described in the Subsequent
Agreement.
A Holder of Registrable Securities shall have 20 days after the date on
which notice of such event is deemed to have been given by the Company pursuant
to the provisions of Section 11(b) of this Agreement, to notify the Company in
writing of its election to terminate its rights under this Agreement and, in
lieu thereof, to enter into a new agreement containing registration rights
equivalent to those contained in the Subsequent Agreement. Such new agreement
shall be executed promptly after receipt of such notice by the Company.
Section 11. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Agreement, including
----------------------
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of the Holders of a
majority in interest of the Registrable Securities then outstanding.
(b) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by registered or certified mail (return
receipt requested), postage prepaid or courier to the parties at their
respective addresses set forth on the signature pages hereof (or at such other
address for any party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt thereof).
All such notices and communications shall be deemed to have been received: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and on the next
Business Day if timely delivered to a courier guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any transferee of any Holder shall acquire
Registrable Securities in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
received the benefits hereof.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be
15
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law.
(g) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(h) Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression of their agreement and is intended to be the complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(i) Further Assurances. Each party shall cooperate and take such action as
------------------
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
(j) Rule 144. The Company shall timely file any reports required to be
--------
filed by it under the Securities Act and the Exchange Act to the extent required
from time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act pursuant to the exemption provided by Rule
144 under the Securities Act. Upon request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
(k) Termination of 1998 Registration Rights Agreement. The Company, Monroe
-------------------------------------------------
& Company II, LLC and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ hereby terminate the 1998 Registration
Rights Agreement and agree that none of such parties shall have any further
rights or obligations thereunder.
[End of text]
16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the day and year first above written.
▇▇▇▇▇▇▇ AMERICAN CORPORATION
By:
----------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[HOLDERS]