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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
MARKETING SPECIALISTS CORPORATION f/k/a
MERKERT AMERICAN CORPORATION
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(Name of Issuer)
Common Stock,
Par Value $.01 Per Share
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(Title of Class and Securities)
590080107
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(CUSIP Number of Class of Securities)
Ronald D. Pedersen
17855 North Dallas Parkway
Suite 200
Dallas, Texas 75827
(972)349-6200
Copy to:
J. Gregory Holloway, Esq.
Andrews & Kurth L.L.P.
1717 Main Street
Suite 3700
Dallas, Texas 75201
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 18, 1999
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(Date of Event Which Requires
Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Statement because of Rule
13d-1(b)(3) or (4), check the following: [ ]
Check the following box if a fee is being paid with this Statement: [ ]
Page 1 of 10
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SCHEDULE 13D
CUSIP No. 590080107
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Ronald D. Pedersen
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) [ ]
(b) [X]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
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(7) SOLE VOTING POWER
1,259,017
NUMBER OF SHARES ---------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 6,300,285
REPORTING ---------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
1,259,017
---------------------------------------------
(10) SHARED DISPOSITIVE POWER
None
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,559,302
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
54.5%
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(14) TYPE OF REPORTING PERSON
IN
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This statement on Schedule 13D is being filed pursuant to Rule
13d-1 of the Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Act") by Ronald D. Pedersen, a citizen of the State of Texas,
with respect to the common stock, par value $.01 per share (the "Common Stock"),
of Marketing Specialists Corporation, formerly known as Merkert American
Corporation, a Delaware corporation (the "Company").
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock of the Company. The
address of the principal executive office of the Company is 490 Turnpike Street,
Canton, Massachusetts, 02021.
Item 2. Identity and Background
(a) Pursuant to Rule 13d-1 of Regulation 13D-G of the General Rules and
Regulations under the Act, this statement is being filed on behalf of Ronald D.
Pedersen (the "Reporting Person").
The Reporting Person hereby disclaims beneficial ownership of the
6,300,285 shares of Common Stock which are the subject of the Post-Merger Voting
Agreement described herein, and the filing of this statement shall not be
construed as an admission that the Reporting Person is, for purposes of Section
13(d) of the Act, the beneficial owner of any such shares of Common Stock. The
Reporting Person disclaims membership in any group with respect to the
Post-Merger Voting Agreement.
(b) The Reporting Person resides at 3601 Beverly Drive, Dallas, Texas
75205.
(c) The Reporting Person is Chairman of the Board of Directors of the
Company. His principal business address is 17855 North Dallas Parkway, Dallas,
Texas, 75827. The Reporting Person also holds executive positions in several
subsidiaries of the Company, including Marketing Specialists Sales Company
(d)-(e) The Reporting Person has not, during the last five years, (i)
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
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subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) The reporting person is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
The Merger
Pursuant to the terms of that certain Agreement and Plan of Merger,
dated as of April 28, 1999, by and among Richmont Marketing Specialists Inc., a
Delaware corporation ("RMSI"), the Reporting Person, the other stockholders of
RMSI named therein and the Company (the "Merger Agreement"), RMSI was merged
with and into the Company (the "Merger"). The Merger was consummated on August
18, 1999.
At the time of the Merger, the shareholders of RMSI exchanged each of
their shares of common stock of RMSI for 48.7198 shares of common stock of the
Company. The Reporting Person owned 25,842 shares of RMSI before the Merger, and
received 1,259,017 shares of Common Stock of the Company in exchange for his
shares of RMSI.
The Post-Merger Voting Agreement
Pursuant to the terms of that certain Voting Agreement, dated as of
August 18, 1999 (the "Post-Merger Voting Agreement"), by and among MS
Acquisition Ltd. ("MS Acquisition"), Ronald D. Pedersen, Bruce A. Butler, Gary
R. Guffey, Jeffrey A. Watt, JLM Management Company, LLC ("JLM") and Monroe &
Company, LLC ("Monroe & Company"), the parties to the Post-Merger Voting
Agreement have agreed to vote their respective owned shares of Common Stock in
favor of five nominees to the board of directors of the Company that are
designated in writing by MS Acquisition, provided that such nominees are
reasonably acceptable to JLM and Monroe & Company.
Excluding the 1,259,017 shares of Common Stock which the Reporting
Person received in the Merger and which are owned directly and of record by the
Reporting Person, the shares subject to the Post-Merger Voting Agreement are as
follows:
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<TABLE>
<CAPTION>
Shares of
Owner of Record Common Stock
--------------- ------------
<S> <C>
MS Acquisition Ltd. 4,023,330
Bruce A. Butler 301,721
Gary R. Guffey 301,721
Jeffrey A. Watt 819,759
Monroe & Company, LLC 415,210
JLM Management Company, LLC 438,544
---------
Total 6,300,285
</TABLE>
The Post-Merger Voting Agreement will terminate upon the earlier to
occur of: (a) the date on which MS Acquisition Ltd. and Messrs. Pedersen, Butler
and Guffey cease to own in the aggregate at least 35% of the total outstanding
shares of the Company or (b) the date on which all of the parties to the
agreement cease to own, or have the right to exercise voting control over,
shares of the Company representing more that 50% of the total voting power of
all outstanding voting securities of the Company.
Other than as set forth above, the Reporting Person possesses no rights
or powers to vote, direct the voting of, dispose or direct the disposition of
the 6,300,285 shares of common stock that are the subject of the Post-Merger
Voting Agreement. The Reporting Person disclaims membership in any group with
respect to the Post-Merger Voting Agreement. The Reporting Person disclaims
beneficial ownership of any shares of Common Stock subject to the Post-Merger
Voting Agreement, other than the 1,259,017 shares of Common Stock owned by the
Reporting Person.
Item 4. Purpose of Transactions.
The Merger
The Merger of RMSI into the Company was effected to create a national
food brokerage company with the resources to represent a wide array of
manufacturers' products to customers operating in different distribution
channels throughout the United States. The Merger is intended to result in
significant cost savings and operating efficiencies arising out of the combined
company's increased size and overlapping support and administrative systems.
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The Post-Merger Voting Agreement
The Post-Merger Voting Agreement was entered into in connection with
the Merger of RMSI into the Company. The purpose of entering into the Post-
Merger Voting Agreement was to facilitate the Merger, and to grant the right to
MS Acquisition to appoint five of the nine initial directors of the Company
following the Merger, one of whom shall be an independent director whose
appointment shall be reasonably acceptable to JLM and Monroe & Company.
The Post-Merger Voting Agreement will terminate upon the earlier to
occur of: (a) the date on which MS Acquisition Ltd. and Messrs. Pedersen, Butler
and Guffey cease to own in the aggregate at least 35% of the total outstanding
shares of the Company or (b) the date on which all of the parties to the
agreement cease to own, or have the right to exercise voting control over,
shares of the Company representing more that 50% of the total voting power of
all outstanding voting securities of the Company.
The Reporting Person may buy or sell additional shares of Common Stock
in the open market, pursuant to the Registration Rights Agreement (described in
Item 6 hereof) or otherwise on such terms and at such times as the Reporting
Person considers desirable. Any decision by the Reporting Person to increase,
decrease or dispose of its position in the Company would be based upon factors,
including but not limited to, the business of the Company, the price of the
shares of Common Stock, the terms and conditions of the transaction and
prevailing market conditions.
Except as set forth above, the Reporting Person has no present plans or
proposals that relate to or would result in any of the actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D. The Reporting Person
disclaims membership in any group with respect to the Post-Merger Voting
Agreement.
Item 5. Interest in the Securities of the Issuer.
(a) The aggregate number of shares of the Common Stock which the
Reporting Person may be deemed to beneficially own under Rule 13d-3 of the Act
is 7,559,302, which constitutes approximately 54.5% of the 13,877,848 shares of
such Common Stock outstanding as of August 18, 1999.
(b) The Reporting Person possesses the sole power to vote or direct the
vote of, and the sole power to dispose of or direct the disposition of,
1,259,017 shares of Common Stock, which constitutes approximately 9.1% of the
13,877,848 shares of such Common Stock outstanding as of August 18, 1999.
Page 6 of 10
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The Reporting Person possesses the shared power to vote or direct the
vote of 6,300,285 shares of Common Stock, which constitutes approximately 45.4%
of the 13,877,848 shares of such Common Stock outstanding as of August 18, 1999.
However, the Reporting Person disclaims beneficial ownership of the
6,300,285 shares of Common Stock which are subject to the Post-Merger Voting
Agreement. Other than with respect to the rights created under the Post-Merger
Voting Agreement, the Reporting Person possesses no powers, rights or privileges
with respect to such 6,300,285 shares of Common Stock. All other powers, rights
and privileges with respect to such shares of Common Stock (including the right
to vote on all matters unrelated to the election of directors and the right to
receive and the power to direct the receipt of dividends from, and the proceeds
from the sale of, such securities) remain with the record owners of such shares
of Common Stock.
(c) As described in Items 3 and 4 of this Schedule 13D, the Reporting
Person entered into the Merger Agreement on April 28, 1999. The Post-Merger
Voting Agreement was entered into on August 18, 1999, and the Reporting Person
received 1,259,017 shares of Common Stock in the Merger on August 18, 1999.
These transactions were consummated within the last sixty (60) days.
(d) Other than with respect to the rights granted under the Post-
Merger Voting Agreement, the Reporting Person possesses no powers, rights or
privileges with respect to the 6,300,285 shares of Common Stock that are owned
by the parties (other than the Reporting Person) to the Post-Merger Voting
Agreement. All other powers, rights and privileges with respect to such shares
remain with such other parties to the Voting Agreement, including the right to
vote on all matters unrelated to the election of directors and the right to
receive and the power to direct the receipt of dividends from, and the proceeds
from the sale of, such securities.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
The Reporting Person is a party to the Post-Merger Voting Agreement. In
addition to the right with respect to the Common Stock granted under such
agreement, the Reporting Person possesses voting rights with respect to
223,800 shares of the Company's restricted common stock, which is convertible,
in certain instances, on a 1:1 basis into shares of Common Stock. As
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a result of such Voting Rights, the Reporting Person may be deemed as possessing
the shared power to vote or to direct the vote of (and as a result, may, under
Rule 13d-3 under the Act, be deemed the beneficial owner of) such shares of
restricted common stock. However, the Reporting Person disclaims beneficial
ownership of such shares of restricted common stock, and other than with respect
to the rights granted under the Post-Merger Voting Agreement, the Reporting
Person possesses no powers, rights or privileges with respect to such restricted
common stock. All other powers, rights and privileges with respect to such
restricted common stock remain with the other parties (other than the Reporting
Person) to the Voting Agreement, including the right to vote on all matters
unrelated to the election of directors, as well as the right to receive and the
power to direct the receipt of dividends from, and the proceeds from the sale
of, such securities.
The Reporting Person is also a party to that certain Registration
Rights Agreement, dated as of August 18, 1999 (the "Registration Rights
Agreement"), by and among the Company and MS Acquisition, Ronald D. Pedersen,
Bruce A. Butler, Gary R. Guffey and Jeffrey A. Watt (collectively, the "Former
RMSI Shareholders"). Under the terms of the Registration Rights Agreement, the
Reporting Person and the other Former RMSI Shareholders are granted certain
demand and piggyback registration rights in respect of the Common Stock of the
Company received in the Merger. After 180 days following the date of the
Registration Rights Agreement, one or more of the holders of at least 40% of the
Common Stock received by the Former RMSI Shareholders in the Merger may require
the Company to file a registration statement covering the resale of the shares
of such Common Stock on up to six occasions. The cost of these registrations
will be borne by the Company.
The Reporting Person is a party to the Merger Agreement.
Item 7. Material Filed as Exhibits.
<TABLE>
<S> <C>
Exhibit I - - Agreement and Plan of Merger, dated as of April 28, 1999,
by and among Merkert American Corporation, Richmont
Marketing Specialists Inc., MS Acquisition Ltd., Ronald
D. Pedersen, Bruce A. Butler, Gary R. Guffey and Jeffrey
A. Watt.
Exhibit II - - Form of Certificate of Merger and Exhibit A to Certificate
of Merger.
Exhibit III - - Post-Merger Voting Agreement, by and among MS Acquisition
Ltd., Ronald D. Pedersen, Bruce A. Butler, Gary R.
Guffey, Jeffrey A. Watt, Monroe & Company, LLC and JLM
Management Company, LLC.
Exhibit IV - - Registration Rights Agreement, by and among Merkert
American Corporation, MS Acquisition Limited, Bruce A.
Butler, Gary R. Guffey, Ronald D. Pedersen and Jeffrey A.
Watt.
</TABLE>
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
August 18, 1999 /s/ Ronald D. Pedersen
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(Date) (Signature)
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INDEX TO EXHIBITS
<TABLE>
Exhibit No. Description
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<S> <C>
I - - Agreement and Plan of Merger, dated as of April 28, 1999,
by and among Merkert American Corporation, Richmont
Marketing Specialists Inc., MS Acquisition Ltd., Ronald
D. Pedersen, Bruce A. Butler, Gary R. Guffey and Jeffrey
A. Watt.
II - - Form of Certificate of Merger and Exhibit A to Certificate
of Merger.
III - - Post-Merger Voting Agreement, by and among MS Acquisition
Ltd., Ronald D. Pedersen, Bruce A. Butler, Gary R.
Guffey, Jeffrey A. Watt, Monroe & Company, LLC and JLM
Management Company, LLC.
IV - - Registration Rights Agreement, by and among Merkert
American Corporation, MS Acquisition Limited, Bruce A.
Butler, Gary R. Guffey, Ronald D. Pedersen and Jeffrey A.
Watt.
</TABLE>
Page 10 of 10
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EXHIBIT I
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
MERKERT 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
<TABLE>
<CAPTION>
Page
<S> <C> <C>
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 Merkert.......................................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 Merkert Common Stock........................................20
</TABLE>
(i)
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 4. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE RMSI
STOCKHOLDERS.............................................................21
4.1 Investment Representations...............................................21
4.2 Registration.............................................................21
4.3 Ownership of Merkert Common Stock........................................22
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF MERKERT................................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 Merkert.................................................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 Merkert's 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
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
6.13 Filings Under Hart-Scott-Rodino 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 Merkert 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
</TABLE>
(iii)
<PAGE> 5
EXHIBITS
Exhibit A Certificate of Merger
Exhibit B-1 Form of Merkert 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 Merkert
Stockholders
SCHEDULES
Schedule 7.2(g) List of Merkert Required Consents
Schedule 7.3(i) List of RMSI Required Consents
Schedule 6.2(a)(xiii) Pending Transactions
(iv)
<PAGE> 6
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 Merkert American Corporation, a
Delaware corporation ("Merkert"), Richmont Marketing Specialists Inc., a
Delaware corporation ("RMSI"), and MS Acquisition Limited, a Texas limited
partnership, Ronald D. Pedersen, Bruce A. Butler, Gary R. Guffey and Jeffrey A.
Watt (collectively, the "RMSI Stockholders").
RECITALS
WHEREAS, the boards of directors of Merkert 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 Merkert
and Merkert would be the surviving corporation (the "Merger");
WHEREAS, the boards of directors of Merkert 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 Merkert 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, Joseph T. Casey, Glenn F. Gillam, Douglas H. Holstein, Gerald
R. Leonard, Sidney D. Rogers, Jr. and Thomas R. Studer (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
Merkert ("Merkert Common Stock") and their shares of restricted common stock,
par value $.01 per share, of Merkert ("Merkert Restricted Common Stock"),
subject to the terms contained therein; and
WHEREAS, Merkert, 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:
<PAGE> 7
ARTICLE 1. THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as hereinafter defined), RMSI shall be merged with and
into Merkert in accordance with this Agreement, and the separate corporate
existence of RMSI shall thereupon cease. Merkert shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effect specified in Section 259 of the
Delaware General Corporation Law (the "DGCL"). It is intended that the Merger
will qualify as a reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). All of the parties to this Agreement
agree to report the Merger, for all purposes, in a manner which is consistent
with the preceding sentence.
1.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place at the offices of
Goodwin, Procter & Hoar 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
Merkert held pursuant to Section 6.3. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all of the conditions to the Merger set forth in
Article 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 8, the parties
hereto shall promptly cause a Certificate of Merger satisfying the requirements
of the DGCL and in substantially the form attached hereto as Exhibit A (the
"Certificate of Merger"), to be properly executed, verified and delivered for
filing in accordance with the DGCL on the Closing Date. The Merger shall become
effective upon the filing of the Certificate of Merger with the office of the
Secretary of State of the State of Delaware in accordance with the DGCL or at
such later time which the parties hereto shall have agreed upon and designated
in such filing in accordance with applicable law as the effective time of the
Merger (the "Effective Time").
1.4 Ancillary Agreements. As an inducement to Merkert and RMSI to enter
into this Agreement, the following agreements are being executed
contemporaneously with the execution of this Agreement: the voting agreement
dated as of the date hereof by and among Merkert and the each of the RMSI
Stockholders in the form attached hereto as Exhibit B-1 (the "RMSI Voting
Agreement") and the voting agreement by and among RMSI and each of the
Management Stockholders in the form attached hereto as Exhibit B-2 (the "Merkert
Voting Agreement"). In addition, Merkert agrees to use commercially reasonable
efforts to obtain a Voting Agreement in the form attached hereto as Exhibit B-2
from Eugene F. Merkert, the Eugene F. Merkert 1984 Revocable Trust and the
Eugene F. Merkert 1991 Charitable Remainder Unitrust.
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<PAGE> 8
1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(a) Charter. The Second Amended and Restated Certificate of
Incorporation of Merkert 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 Merkert in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law, the Surviving Corporation Charter and
such bylaws.
1.6 Board of Directors of Surviving Corporation.
(a) As of the Effective Time, the number of directors of Merkert
shall be fixed at nine (9). As of the Effective Time, four (4) of the directors
of Merkert shall be Gerald R. Leonard, Edward P. Grace III, James L. Monroe and
James A. Schlindwein (the foregoing four (4) individuals being referred to
herein collectively as the "Merkert Designees"). As of the Effective Time, the
remaining five (5) directors of Merkert shall be John P. Rochon, Nick G. Bouras,
Timothy M. Byrd and Ronald D. Pedersen 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 Merkert and shall otherwise be reasonably acceptable
to Merkert (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 Merkert shall be amended as set forth in Exhibit
C-1 attached hereto (the "Board Amendment") so that the Board of Directors of
Merkert shall be divided into three (3) classes, and the directors of each class
of the Board of Directors of Merkert shall be as follows (subject to the
provisions of this Section 1.6):
<TABLE>
<CAPTION>
Class Designee Term Expires
----- -------- ------------
<S> <C> <C>
I Ronald D. Pedersen 2000
I Timothy M. Byrd 2000
I James A. Schlindwein 2000
II Nick G. Bouras 2001
II Gerald R. Leonard 2001
II Edward P. Grace III 2001
III John P. Rochon 2002
III James L. Monroe 2002
III Independent Director 2002
</TABLE>
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<PAGE> 9
(c) Merkert and RMSI agree that in the event that any Merkert
Designee is unable or otherwise fails to serve, for any reason, as a director of
Merkert at the Effective Time, Merkert shall have the right to designate another
individual to serve as a director of Merkert at the Effective Time in place of
such Merkert Designee (or if a vacancy shall be deemed to have occurred in
respect thereof, Merkert shall have the right to fill such vacancy,
notwithstanding any other provision to the contrary contained herein); provided,
however, that such individual shall be reasonably satisfactory to RMSI. Merkert
and RMSI shall each cause such designee of Merkert to be elected to the Board of
Directors of Merkert at the Effective Time in place of such Merkert Designee.
(d) Merkert 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 Merkert
at the Effective Time, RMSI shall have the right to designate another individual
to serve as a director of Merkert at the Effective Time in place of such RMSI
Designee (or if a vacancy shall be deemed to have occurred in respect thereof,
RMSI shall have the right to fill such vacancy, notwithstanding any other
provision to the contrary contained herein); provided, however, that such
individual shall be reasonably satisfactory to Merkert. Merkert and RMSI shall
each cause such designee of RMSI to be elected to the Board of Directors of
Merkert at the Effective Time in place of such RMSI Designee.
1.7 Officers of Surviving Corporation. At the Effective Time, the
officers of Merkert shall include, but not be limited to, Ronald D. Pedersen,
who shall be Chairman of the Board of Directors, Gerald R. Leonard, who shall be
Chief Executive Officer and President, Bruce A. Butler, who shall be Chief
Operating Officer, Joseph T. Casey, who shall be Chief Financial Officer,
Douglas H. Holstein, who shall be Executive Vice President--Sales, and Jeffrey
Hill, who shall be an Executive Vice President--New Business Development.
1.8 Change of Name. At the Effective Time, Article I of the Second
Amended and Restated Certificate of Incorporation of Merkert shall be amended to
change the name of the Surviving Corporation to "Marketing Specialists
Corporation" as set forth in Exhibit C-2 attached hereto.
ARTICLE 2. EXCHANGE OF STOCK
2.1 Outstanding Common Stock of Merkert. At and after the Effective
Time, each share of Merkert Common Stock outstanding immediately prior to the
Effective Time shall remain outstanding.
2.2 Conversion of RMSI Stock.
(a) The maximum aggregate number of shares of Merkert Common Stock
issuable to the holders of RMSI Common Stock in the Merger shall be 6,705,551.
At the
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<PAGE> 10
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
Merkert 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 Merkert 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 Merkert Common Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional shares of
Merkert 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
Merkert 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 Merkert 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 Merkert 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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<PAGE> 11
"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 Merkert has received an affiliate letter in the form attached
hereto as Exhibit D (the "Affiliate Letter") from such person.
(e) At the Effective Time, and subject to the consent of the holder
thereof, RMSI's obligations with respect to each senior management appreciation
right (collectively, the "SMARTs") outstanding immediately prior to the
Effective Time shall be canceled and, in exchange therefor, the holders of such
SMARTs shall be entitled to receive incentive options to purchase shares of
Merkert Common Stock issued pursuant to Merkert's Amended and Restated 1998
Stock Option and Incentive Plan (such plan, the "Merkert Option Plan," and such
options, the "Rollover Options") upon the surrender and cancellation of the
agreements representing their SMARTs and delivery of an instrument substantially
in the form attached hereto as Exhibit E, by which such holder represents its
good title to such SMART and agrees to its cancellation upon the terms hereof
("SMART Cancellation Consent"). Each Rollover Option shall be an "incentive
stock option" within the meaning of Section 422(b) of the Code (the "qualified
options"). No interest shall accrue with respect to any of the SMARTs. Each
Rollover Option shall (i) be exercisable for that number of whole shares of
Merkert 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 Merkert 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 Merkert 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 Merkert 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 Merkert 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, Merkert shall issue non-qualified options to
purchase 167,500 shares of the Merkert Common Stock under the Merkert Option
Plan to John P. Rochon and non-qualified options to purchase 55,833 shares of
Merkert Common Stock under the Merkert Option Plan to each of Nick G. Bouras,
Timothy M. Byrd and Thomas Reynolds (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 Merkert Common Stock as of the Effective
Time, and (y) $13.50. The parties acknowledge that, pursuant to the terms of the
Merkert Option Plan, each of John P. Rochon, Nick G. Bouras, Timothy M. Byrd and
the Independent Director shall be granted non-qualified options to purchase
20,000 shares of Merkert Common
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<PAGE> 12
Stock on the fifth 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 Merkert
Common Stock as of the date of grant. Merkert shall reserve for issuance the
number of shares of Merkert 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 Merkert Common Stock upon the exercise of the Rollover Options, the
New Options and the Director Options (the "Option Registration Statement").
Merkert 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 Merkert Option Plan as
of the date hereof (the "Merkert Option Approval"). For the purposes of this
section, "Fair Market Value" on any given date means the last reported sale
price at which Merkert Common Stock is traded on the date immediately preceding
such given date or, if no Merkert Common Stock is traded on such date, the next
preceding date on which Merkert Common Stock was traded, as reflected on the
principal stock exchange or, if applicable, any other national stock exchange on
which the Merkert 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 Merkert, the posting by such person of a bond in such
reasonable amount as Merkert may direct as indemnity against any claim that may
be made against it with respect to such Certificate, Merkert 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
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<PAGE> 13
payment under 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 Merkert (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 Merkert, (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 Merkert 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 Merkert (the
"RMSI Disclosure Letter"), RMSI hereby represents and warrants to Merkert 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.
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<PAGE> 14
(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 Merkert 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 Merkert 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 Merkert Voting
Agreement and the consummation of the transactions contemplated by this
Agreement and the Merkert 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 Merkert 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
<PAGE> 15
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
William B. Robinson (the "Robinson 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 Robinson 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:
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<PAGE> 16
(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,
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<PAGE> 17
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;
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(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").
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(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 Merkert: (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
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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
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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.
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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 Merkert 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
Merkert 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
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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 Merkert's 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 Merkert 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,
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which results in a reduction in the annual revenues of RMSI and Merkert 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 Merkert. 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 Merkert 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
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RMSI Disclosure Letter delivered by RMSI pursuant to this Agreement (including
the RMSI SEC Report) to Merkert 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 Nick G. Bouras, Timothy M.
Byrd, Ronald D. Pedersen or Bruce A. Butler.
3.22 Ownership of Merkert 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 Merkert
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Common Stock, any option to acquire or sell any shares of Merkert Common Stock,
or any warrants, rights, commitments, preemptive rights or agreements of any
kind for the acquisition or sale of, any shares of Merkert 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 Merkert 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
Merkert that with respect to such RMSI Stockholder's receipt of Merkert Common
Stock hereunder:
4.1 Investment Representations. Such RMSI Stockholder is acquiring the
Merkert 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 Merkert 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 Merkert Common
Stock pursuant to the Agreement, is able to bear the economic risk of loss of
its investment in Merkert, has been granted the opportunity to investigate the
affairs of Merkert 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 Merkert Disclosure Letter) as well as copies of the Merkert SEC
Report.
4.2 Registration. Such RMSI Stockholder understands that because the
Merkert 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 Merkert
Common Stock unless such shares of Merkert 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 Merkert to register the
Merkert Common Stock. Such RMSI Stockholder further understands that Merkert
may, as a condition to the transfer of any of the Merkert 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 Merkert 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).
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THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER
NAMED HEREON FOR HIS 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 Merkert 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 Merkert Common Stock, any option to acquire or sell any shares of
Merkert Common Stock, or any warrants, rights, commitments, preemptive rights or
agreements of any kind for the acquisition or sale of, any shares of Merkert
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
Merkert Common Stock, except for the Post-Merger Voting Agreement.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF MERKERT
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
"Merkert Disclosure Letter"), Merkert 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 Merkert or any
Merkert Subsidiary in connection with any of the pending or completed
acquisitions disclosed on Schedule 6.2(a)(xiii) hereto (the "Merkert Acquisition
Matters") and (ii) no Merkert 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) Merkert is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Merkert 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 Merkert and the Merkert Subsidiaries taken as a whole (a "Merkert Material
Adverse Effect"). Merkert has all
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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.
(b) Each Merkert 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 Merkert 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 Merkert Material Adverse Effect.
Except as set forth in Section 5.1(b) of the Merkert Disclosure Letter, all of
the outstanding shares of capital stock of, or partnership or other equity
interests in, each Merkert Subsidiary are owned beneficially and of record by
Merkert 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 Merkert 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 Merkert 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. Merkert is not in violation of its certificate of
incorporation or bylaws.
5.2 Authorization, Validity and Effect of Agreements. Merkert 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 Merkert 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 Merkert (the "Special Committee") has
recommended to the Merkert Board of Directors the advisability of entering into
this Agreement. The execution by Merkert 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 Merkert and no other action on the
part of Merkert is required in connection therewith (except for stockholder
approval). Except for stockholder approval, Merkert 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
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Agreements and the other documents, instruments and transactions contemplated by
this Agreement by the Board of Directors of Merkert prior the execution of this
Agreement, the Voting Agreements and the other documents, instruments and
transactions contemplated by this Agreement. This Agreement, the RMSI Voting
Agreement and the other documents contemplated by the Agreement constitute the
valid and legally binding obligations of Merkert, enforceable against Merkert,
in accordance with their respective terms. The execution, delivery and
performance by Merkert 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 Merkert, as applicable;
(b) does not and will not violate any laws of the United States,
or any state or other jurisdiction applicable to Merkert or require Merkert 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 Merkert 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
Merkert is a party or by which the property of Merkert 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 Merkert 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 Merkert's assets or its capital stock.
5.3 Capital Stock of Merkert. The authorized capital stock of Merkert
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 Merkert 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 Merkert Common Stock have been duly and validly issued
and are fully paid and non-assessable. Except as disclosed in Section 5.3 of the
Merkert Disclosure Letter, there are no outstanding options, warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale by Merkert of, or outstanding securities convertible into, any additional
shares of capital stock of any class of Merkert 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
Merkert. Except as set forth in Section 5.3 of the Merkert Disclosure Letter,
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there are no voting trusts, voting agreements, proxies or other agreements,
instruments or undertakings with respect to the voting of Merkert Common Stock
to which Merkert or, to Merkert's knowledge, any of its stockholders is a party.
5.4 Real Property.
(a) Title. Merkert and each of the Merkert Subsidiaries has good,
clear, record and marketable title to all of the real property owned by Merkert
or any of the Merkert 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 Merkert Disclosure
Letter. To the knowledge of Merkert, the lessors of all of the real property
leased by Merkert or any of the Merkert 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 Merkert and the Merkert 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 Merkert Disclosure Letter.
(b) Status of Leases. Each of the leases of the Real Property has
been duly authorized and executed by Merkert and is in full force and effect,
except where the failure to be so would not have a Merkert Material Adverse
Effect. To the knowledge of Merkert, each of said leases has been duly
authorized and executed by the other party to each of said leases. Neither
Merkert nor any of the Merkert 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 Merkert, 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 Merkert
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, Merkert 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 Merkert 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.
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(e) Compliance with the Law. To the best of Merkert's knowledge,
neither Merkert nor any Merkert 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 Merkert Material Adverse Effect. All improvements located on or
constituting part of the Real Property and their use and operation by Merkert
and the Merkert 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 Merkert 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 Merkert Material Adverse Effect. Neither Merkert nor
any Merkert 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 Merkert
Disclosure Letter, neither Merkert nor any of the Merkert Subsidiaries is in
default under any Merkert 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 Merkert Material Adverse
Effect. To the knowledge of Merkert, no third party under any Merkert 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 Merkert Disclosure Letter, each Merkert Material
Contract has been duly authorized and executed by Merkert, is in full force and
effect and is enforceable by Merkert in accordance with its terms, except where
the failure to be so would not have a Merkert Material Adverse Effect. For
purposes of this Agreement, the term "Merkert 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 Merkert or an Merkert Subsidiary without liability
for any penalty or severance payment;
(c) any contract or agreement under which, as of the date of this
Agreement, Merkert or any of the Merkert 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 Merkert or any of the Merkert Subsidiaries as of the date
of this Agreement
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which, by its terms, does not terminate or is not terminable without penalty by
Merkert or an Merkert 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
Merkert or any of the Merkert 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 Merkert 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 Merkert or any of the Merkert 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
Merkert SEC Report (as hereinafter defined) or as set forth in Section 5.6 of
the Merkert Disclosure Letter hereto, neither Merkert, nor any affiliate of
Merkert, (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 Merkert or any of the Merkert
Subsidiaries, or any organization which has a material contract or arrangement
with Merkert or any of the Merkert 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 Merkert or any of the Merkert Subsidiaries
from, to or for the benefit of any affiliate of Merkert or any of the Merkert
Subsidiaries.
5.7 Employee Benefit Programs.
(a) Section 5.7 of the Merkert Disclosure Letter sets forth a list
of every material and significant Employee Program that is currently maintained
by Merkert or an Affiliate of Merkert (a "Merkert Affiliate") ("Merkert Employee
Programs").
(b) Each Merkert 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
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approval letter from the IRS regarding its qualification under such section and
except as disclosed in Section 5.7 of the Merkert Disclosure Letter has, in
fact, been qualified under the applicable section of the Code from the effective
date of such Merkert Employee Program through and including the Closing Date
(or, if earlier, the date that such Merkert Employee Program). No event or
omission has occurred which would cause any such Merkert Employee Program to
lose its qualification under the applicable Code section.
(c) Neither Merkert nor any Merkert 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 Merkert Employee Programs. With respect to
any Merkert 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 Merkert or any Merkert 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 Merkert, threatened with respect to any such Merkert Employee Program.
(d) Except as disclosed in Section 5.7 of the Merkert Disclosure
Letter, during the last 3 years, neither Merkert nor any Merkert Affiliate (i)
has maintained any Employee Program which has been subject to title IV of ERISA
or Code Section 412 (a "Merkert 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 Merkert prior
to the date of this Agreement for a period longer than 12 months.
(e) With respect to each Merkert Employee Program, complete and
correct copies of the following documents (if applicable to such Merkert
Employee Program) have previously been delivered to RMSI: (i) all documents
embodying or governing such Merkert Employee Program, and any funding medium for
the Merkert 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 Merkert 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 Merkert Employee Program; (v) the summary plan description for
such Merkert Employee Program (or other descriptions of such Merkert 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 Merkert Employee Program; (vii) any registration statement or
other filing made
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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 Merkert Employee Program may be amended, terminated, or
otherwise modified by Merkert to the greatest extent permitted by applicable
law, including the elimination of any and all future benefit accruals under any
Merkert Employee Program and, except as disclosed on Section 5.7 of the Merkert
Disclosure Letter, no condition exists which would limit the right of Merkert or
the Merkert Affiliate to so amend, terminate or otherwise modify such Merkert
Employee Program.
(g) No liability under Title IV or Section 302 of ERISA has been
incurred by Merkert or any Merkert Affiliate that has not been satisfied in full
and no condition exists that presents a material risk to Merkert or any Merkert
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
Merkert 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 Merkert Disclosure
Letter, with respect to each Merkert 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 Merkert 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 Merkert Title IV Plan ended prior to the
Closing Date.
(k) No amounts payable under the Merkert 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 Merkert 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
Merkert or any Merkert Subsidiary as a result of the Merger (assuming no
termination of service).
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5.10 Taxes. Except as set forth in Section 5.10 of the Merkert
Disclosure Letter:
(a) Merkert and each of the Merkert 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, Merkert and each of the Merkert
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
Merkert, threatening to assert against Merkert or any of the Merkert
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 Merkert or any of the Merkert Subsidiaries except
for statutory liens for such Taxes that are not yet due. Neither Merkert nor any
of the Merkert Subsidiaries has entered into a closing agreement pursuant to
Section 7121 of the Code after December 31, 1990.
(d) Merkert and the Merkert 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 Merkert or any of the Merkert
Subsidiaries with respect to taxable periods beginning after December 31, 1990
and (3) any closing agreements (and any exhibits thereto) entered into by
Merkert or any of the Merkert Subsidiaries as of the date hereof. Merkert will
deliver or make available to RMSI any documents mentioned in the preceding
sentence that become available to Merkert or any of the Merkert 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
Merkert or any of the Merkert Subsidiaries with respect to any taxable year
beginning after December 31, 1990, no such audit is in progress, and neither
Merkert nor any of the Merkert Subsidiaries has been notified by any Tax
Authority that any such audit is contemplated or pending. Neither Merkert nor
any of the Merkert 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 Merkert
or any of the Merkert 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 Merkert or any of the Merkert Subsidiaries.
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(f) No power of attorney has been granted by or with respect to
Merkert or any of the Merkert Subsidiaries with respect to any matter relating
to Taxes.
(g) There are no agreements or understandings relating to Taxes
between Merkert or any of the Merkert Subsidiaries and any other party affecting
or which could affect Merkert or any of the Merkert Subsidiaries by which
Merkert or any of the Merkert Subsidiaries will be bound after the Closing Date
or which could affect the computation of Taxes by Merkert or any of the Merkert
Subsidiaries.
5.11 Tax-Free Treatment. Neither Merkert nor any of the Merkert
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 Merkert's stockholders, none of the information
supplied in writing by or on behalf of Merkert 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, Merkert 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, Merkert's 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, Merkert's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 filed with the SEC on March 31, 1999
(the "Merkert 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
Merkert 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 Merkert (other than facts which relate to general
economic trends or conditions or general conditions affecting the
industries in which Merkert or the Merkert Subsidiaries operate) that is
reasonably likely to have a Merkert Material Adverse Effect, that has not been
set forth in the Merkert SEC Report or the Merkert Disclosure Letter; provided
that the loss of, or a reduction in revenues from,
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one or more customers or principals shall be deemed not to have a Merkert
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 Merkert SEC Report has
been delivered to RMSI. Each of the consolidated balance sheets of Merkert
included in or incorporated by reference into the Merkert SEC Report and the S-1
(including the related notes and schedules) fairly presents the consolidated
financial position of Merkert and the Merkert Subsidiaries as of its date and
each of the consolidated statements of income, retained earnings and cash flows
of Merkert included in or incorporated by reference into the Merkert 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
Merkert and the Merkert 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 Merkert
Disclosure Letter, neither Merkert nor any Merkert 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 Merkert 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 Merkert, threatened against Merkert or the Merkert Subsidiaries
which, either individually or in the aggregate, is reasonably likely to have a
Merkert Material Adverse Effect on Merkert and the Merkert 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 Merkert Disclosure Letter, since December 31, 1998 there has not been any
change in the financial condition, properties, assets, liabilities, business or
operations of Merkert, 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 Merkert Material Adverse Effect; provided that no decrease in the reported
price of Merkert Common Stock shall in any event constitute a Merkert 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 Merkert 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.
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5.17 Disclosure. The representations, warranties and statements
contained or referred to in this Agreement and in the certificates, exhibits and
the Merkert Disclosure Letter delivered by Merkert pursuant to this Agreement
(including the Merkert 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.
5.18 Undisclosed Liabilities. Except as and to the extent reflected,
reserved against or otherwise specifically disclosed in the Merkert SEC Report
and the Merkert Disclosure Letter, neither Merkert nor any Merkert 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 Merkert Material Adverse Effect.
5.19 Customers and Principals. Except as disclosed in Section 5.16 of
the Merkert Disclosure Letter, as of the date hereof, Merkert 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 Merkert'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 Merkert's consolidated
unaudited financial statements for the quarter ended March 31, 1999, Merkert's
consolidated audited financial statements for the year ended December 31, 1998,
and (ii) after Merkert's consolidated unaudited financial statements for the
quarter ended March 31, 1999 become available, Merkert's consolidated unaudited
financial statements for the quarter ended March 31, 1999 (the "Merkert
Financials"). Merkert's accounts receivable are reflected on the Merkert
Financials in accordance with GAAP (as defined herein) applied on a basis
consistent with past practice. Since the date of the Merkert Financials, there
have not been any material write-offs as uncollectible of any of Merkert's
accounts receivable, except for write-offs in the ordinary course of business
and consistent with past practice.
5.21 Definition of Merkert's Knowledge. As used in this Agreement, the
phrase "to the knowledge of Merkert" or "to the best knowledge of Merkert" (or
words of similar import) means the actual knowledge of Gerald R. Leonard, James
L. Monroe, Joseph T. Casey or Sidney D. Rogers.
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5.22 Opinion of Financial Advisor. The Special Committee has received
the opinion of Tucker Anthony Cleary Gull, its financial advisor, substantially
to the effect that the Merger is fair to Merkert from a financial point of view,
a copy of which will be provided to RMSI.
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) Merkert 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, Merkert shall not, nor shall it
permit any of the Merkert Subsidiaries to, nor shall it authorize or permit any
officer, director, employee, agent, advisor or representative of Merkert or any
of the Merkert 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, Merkert 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
Merkert Board of Directors, likely to be obtained, with respect to Merkert if
the Board of Directors of Merkert 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 Merkert's stockholders from a financial point of view than the
transaction contemplated by this
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Agreement (any such Acquisition Proposal, a "Superior Proposal"); provided,
however, that prior to Merkert's furnishing such information or participating in
such discussions or negotiations, such person or entity shall have executed a
confidentiality and standstill agreement with Merkert having terms substantially
similar to those contained in that certain exclusivity/confidentiality
agreement, dated March 10, 1999 between Merkert 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) Merkert 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 Merkert of an Acquisition Proposal, Merkert 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 Merkert
Stockholders Meeting, the Board of Directors of Merkert, at any time 48 hours
following notification to RMSI of Merkert's intention to do so and only if
Merkert 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 Merkert 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 Merkert 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,
Merkert may enter into an agreement with respect to such Superior Proposal (with
the person making the Superior Proposal and on terms
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no less favorable than those specified in the notification to RMSI) after the
expiration of such 48 hour period.
6.2 Conduct of Businesses.
(a) Conduct by Merkert 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, Merkert 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 Merkert 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;
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(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 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,
Merkert, 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 Merkert included in the Merkert 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
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Merkert 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 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 Merkert 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 Merkert 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 Merkert's 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
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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
(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 Merkert under this Section 6.2 shall be
directed to Gerald R. Leonard at the address set forth for Merkert in Section
9.2 hereof, with copies to Stuart M. Cable, P.C. at the address set forth for
Goodwin, Procter & Hoar LLP set forth in Section 9.2 hereof. Any request for
consent of RMSI under this Section 6.2 shall be directed to Ronald D. Pedersen
at the address set forth for RMSI in Section 9.2 hereof, with copies to Eileen
Nugent Simon, Esq. at the address set forth for Skadden, Arps, Slate, Meagher &
Flom LLP set forth in Section 9.2 hereof.
6.3 Meeting of Stockholders. Promptly following execution of this
Agreement, each of Merkert 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 Merkert and RMSI has
recommended that their respective stockholders approve this Agreement and the
transactions contemplated hereby and each of Merkert 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
Merkert's stockholders; provided, however, that nothing contained in this
Section 6.3 shall prohibit the Board of Directors of Merkert from changing such
recommendation or using their reasonable best efforts to obtain such approval if
the Board of Directors of Merkert has determined in good faith, after
consultation with and in reliance upon the advice of Goodwin, Procter & Hoar
LLP, or another nationally recognized firm selected by Merkert, 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) Merkert 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 Merkert, 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 Arthur Andersen LLP, independent public
accountants for Merkert, dated as of a date within two business days before the
date on which the Proxy Statement, with respect to the financial statements of
Merkert 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
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"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 Merkert shall: (a) use all reasonable best efforts to
cooperate with one another in (i) 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 Merkert; 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 Merkert and RMSI shall take all
such necessary action. Merkert 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, Merkert 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, Merkert 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 Merkert 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 Merkert
or its representatives, (ii) was available to RMSI on a non-confidential basis
prior to its disclosure to RMSI by Merkert, (iii) becomes available to RMSI on a
non-confidential basis from a source
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other than Merkert or its representatives provided that such source is not bound
by a confidentiality Agreement with Merkert or its representatives or (iv) was
developed by RMSI independently and without any use of information provided by
or obtained from Merkert 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 Merkert (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) Merkert agrees that, unless and until the Closing has been
consummated, Merkert 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 Merkert on a non-confidential basis
prior to its disclosure to Merkert by RMSI, (iii) becomes available to Merkert
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 Merkert 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, Merkert
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
Merkert in connection with the transaction.
6.6 Publicity. Merkert 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. Merkert 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 Merkert and the vote of the stockholders of Merkert with respect
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to this Agreement (the "Merkert Stockholders Meeting"). Merkert 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 Merkert, 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 Proxy Statement. Merkert 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 Merkert 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 Merkert's stockholders, in each
case as and to the extent required by applicable federal and state securities
laws and the DGCL. Each of Merkert 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 Merkert 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. Merkert 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 Merkert 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 Merkert 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 Merkert 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 Merkert 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
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reasonable best efforts to deliver to Merkert 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.
6.10 Affiliates of RMSI.
(a) RMSI shall use its reasonable best efforts to deliver or cause
to be delivered to Merkert, prior to the Closing Date, from each of the RMSI
Stockholders ("Affiliates"), an Affiliate Letter in the form attached hereto as
Exhibit D. Merkert 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) Merkert 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 Merkert
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 Merkert, 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 Merkert, 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 Mr. Pedersen, Mr. Butler, Mr. Guffey or Mr. Watt in an
amount not to exceed $10,000 in the aggregate.
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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
Disclosure Letter or in any Exhibit referred to in this Agreement, RMSI shall
give detailed written notice thereof to Merkert and RMSI shall use its best
efforts to prevent or promptly remedy the same.
(b) Promptly upon the occurrence of, or promptly upon Merkert
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
Merkert prior to the date hereof, of any of the representations, warranties or
covenants of Merkert contained in or referred to in this Agreement, the Merkert
Disclosure Letter or in any Exhibit referred to in this Agreement, Merkert give
detailed written notice thereof to RMSI and Merkert shall use its best efforts
to prevent or promptly remedy the same.
6.13 Filings Under Hart-Scott-Rodino Act. As soon as practicable, each
of Merkert 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 Hart-Scott-Rodino Act, which filings and
supplemental information will comply in all material respects with the
requirements of the Hart-Scott-Rodino Act. Each of Merkert 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 Hart-Scott-Rodino Act. Any and all filing fees required to be paid in
connection with the premerger notification pursuant to the Hart-Scott-Rodino Act
shall be borne and paid by one half by Merkert and one half by RMSI.
6.14 Tax-Free Treatment. Neither Merkert nor RMSI nor any of the
Merkert 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 Merkert nor RMSI nor any of the Merkert
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
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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.
6.16 Financing.
(a) RMSI and Merkert 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 Merkert (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 Merkert and RMSI in their respective good
faith judgment.
(b) Merkert agrees to use commercially reasonable efforts to
assume RMSI's 10 1/8% Senior Subordinated Notes due 2007 (the "RMSI Notes") and
RMSI and Merkert will if necessary, use commercially reasonable efforts to
obtain any consents or waivers required to permit the assumption of the RMSI
Notes by Merkert; provided, however, that if Merkert and RMSI mutually agree to
repurchase and refinance the RMSI Notes, Merkert 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 Merkert and RMSI in their respective good faith
judgment.
(c) Merkert 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
Merkert Employee Programs (or any similar or successor program) to the same
extent as similarly situated employees of Merkert, (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.
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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 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 Merkert, 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 Merkert 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 Merkert 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 Merkert 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
Merkert 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. Merkert shall prepare and file with
the SEC under the Securities Act the Option Registration Statement relating to
the registration of shares of Merkert Common Stock issuable upon the exercise of
the Rollover Options, the New Options and the Director Options. Merkert 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. Merkert 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
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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 Merkert, Monroe & 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)).
6.21 Spousal Consent. RMSI, Mr. Butler and Mr. Guffey 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 Mr. Butler and Mr. Guffey.
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 Merkert.
(b) Hart-Scott-Rodino. All required filings under the
Hart-Scott-Rodino 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. Merkert 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 Merkert and RMSI in
their respective good faith judgment, (b) (i) Merkert shall have assumed the
RMSI Notes, (ii) Merkert and RMSI shall have obtained any consents or waivers
required for Merkert to assume the RMSI Notes on commercially reasonable terms
as determined independently by both RMSI and Merkert in their respective good
faith judgment and Merkert 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 Merkert and RMSI in their respective good faith judgment ((a)
and (b) together, the
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"Financing"), and (c) after giving effect to the Merger and the Financing, RMSI
and Merkert, on a consolidated pro forma basis, shall have available funds to
pay all expenses relating to the consummation of the Merger.
(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 Merkert contained in this Agreement qualified as to materiality or
Merkert Material Adverse Effect shall be true and correct in all respects and
the representations and warranties of Merkert 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 Merkert by the
President of Merkert 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 Merkert 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. Merkert 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 Merkert at or prior to the
Closing.
(c) Certificate from Officers. Merkert 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 Merkert in this Section 7.2 are true and correct.
(d) Opinion of Counsel. RMSI shall have received the opinion of
Skadden, Arps, Slate, Meagher & Flom 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 Merkert and RMSI (collectively, the "Tax Certificates") to the effect
that the Merger will qualify as a reorganization within the meaning of
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Section 368(a) of the Code, which opinion shall not have been withdrawn or
modified in any material respect.
(e) Registration Rights. Merkert 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. Merkert shall have obtained the consents set forth on
Schedule 7.2(g) hereto in a form satisfactory to RMSI.
(g) Option Approval. Merkert shall have obtained the Merkert Option
Approval from the stockholders of Merkert to the extent necessary.
7.3 Conditions to Obligation of Merkert to Effect the Merger. The
obligations of Merkert 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 Merkert:
(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 Merkert 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 Merkert
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. Merkert shall have received the opinion of
Goodwin, Procter & Hoar LLP, or another nationally recognized law firm selected
by Merkert, subject to customary conditions and qualifications (including
reliance, in part, on the
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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.
(e) Consents. RMSI shall have obtained the consents set forth on
Schedule 7.3(g) hereto in a form satisfactory to Merkert.
(f) Registration Rights Agreement. Merkert and certain stockholders
of Merkert 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 Merkert:
(a) by mutual written consent of Merkert and RMSI;
(b) by Merkert 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 Merkert 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 Merkert, 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 Merkert;
(e) (i) by RMSI, if the Board of Directors of Merkert or the
Special Committee withdraws or modifies in a manner adverse to RMSI its approval
or recommendation of the Merger, or (ii) by Merkert or RMSI, if the Board of
Directors of Merkert, or any independent or special committee of the Board of
Directors of Merkert formed for the purpose of evaluating a Superior Proposal,
recommends a Superior Proposal as provided in Section 6.1(e);
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(f) by either Merkert 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 Merkert upon the holding of a
duly convened stockholder meeting; or
(g) by either Merkert 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 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
Merkert 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
Merkert, 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 Merkert Voting Agreement.
(b) If Merkert or RMSI terminates this Agreement pursuant to
Section 8.1(e), then Merkert 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
Merkert's 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), Merkert enters into an agreement
relating to a Post- Termination Acquisition Proposal (as hereinafter defined)
with a person other than RMSI or Merkert's Board of Directors recommends or
resolves to recommend to Merkert's 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, Merkert shall pay to RMSI the Termination Amount which amount shall
be reduced by any monies previously paid by Merkert 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 Merkert's 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, Merkert 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
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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
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 Merkert:
Merkert American Corporation
490 Turnpike Street
Canton, MA 02021
Attn: Gerald R. Leonard
With copies to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Stuart M. Cable, P.C.
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If to RMSI:
Richmont Marketing Specialists Inc.
17855 North Dallas Parkway
Dallas, Texas 75287
Attn: Nancy Jagielski, Esq.
With copies to:
Richmont Capital Partners I, L.P.
17855 North Dallas Parkway
Dallas, Texas 75287
Attn: Nick G. Bouras
and:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue, 46th Floor
New York, New York 10022
Attn: Eileen Nugent 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
Merkert Disclosure Letter and any documents expressly identified in this
Agreement as having been delivered by the parties in connection herewith
including, without limitation, the Merkert 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
parties with respect thereto except that the Confidentiality Agreement shall
remain in effect and shall
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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 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 Merkert 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 Merkert 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
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representations, warranties, covenants or agreements contained in this
Agreement. The waiver 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 Merkert 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 "Merkert Subsidiary" or
"Merkert 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
<PAGE> 61
(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
<PAGE> 62
[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.
MERKERT AMERICAN CORPORATION
By: /s/ Gerald R. Leonard
------------------------------------
Name: Gerald R. Leonard
Title: President & Chief Executive
Officer
RICHMONT MARKETING SPECIALISTS INC.
By: /s/ Ronald D. Pedersen
------------------------------------
Name: Ronald D. Pedersen
Title: President and Chief Executive
Officer
S-1
<PAGE> 63
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
RMSI STOCKHOLDERS:
MS ACQUISITION LIMITED
By: MS Acquisition Corporation, its
General Partner
By: /s/ Nick Bouras
------------------------------------
Name: Nick Bouras
Title: Vice President
/s/ Ronald D. Pedersen
----------------------------------------
Ronald D. Pedersen
/s/ Bruce A. Butler
----------------------------------------
Bruce A. Butler
/s/ Gary R. Guffey
----------------------------------------
Gary R. Guffey
/s/ Jeffrey A. Watt
----------------------------------------
Jeffrey A. Watt
S-2
<PAGE> 1
EXHIBIT II
EXHIBIT A
CERTIFICATE OF MERGER OF
RICHMONT MARKETING SPECIALISTS INC.
INTO
MERKERT 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
Merkert 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 Merkert American Corporation shall be the surviving
corporation. The Certificate of Incorporation of Merkert 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 Merkert 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 490 Turnpike Street, Canton, MA 02021.
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
MERKERT AMERICAN CORPORATION,
a Delaware Corporation
-----------------------------
By:
Its:
<PAGE> 2
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 Ronald D. Pedersen, Timothy M. Byrd and James A. Schlindwein.
The initial Class II Directors shall be Nick G. Bouras, Gerald R. Leonard and
Edward P. Grace III. The initial Class III Directors shall be John P. Rochon,
James L. Monroe 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
<PAGE> 3
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.
<PAGE> 1
EXHIBIT III
POST-MERGER VOTING AGREEMENT
VOTING AGREEMENT dated as of August 18, 1999 (the "Agreement") by and
among MS Acquisition Limited, a Texas limited partnership, (the "Nominating
Stockholder") Ronald D. Pedersen, Bruce A. Butler, Gary R. Guffey, Jeffrey A.
Watt (together with the Nominating Stockholder, the "Richmont Stockholders"),
Monroe & Company, LLC, a Delaware limited liability company and JLM Management
Company, LLC, a Delaware 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 Merkert American
Corporation, a Delaware corporation ("Merkert") 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 Merkert
("Merkert Common Stock");
WHEREAS, Monroe has the right to vote an aggregate of 853,754 shares
of Merkert Common Stock and 223,800 shares of restricted Merkert 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 Merkert are
submitted to the stockholders of Merkert, or a proposal to remove any incumbent
member of the Board of Directors of Merkert 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 up to five 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 Merkert, of any class or series, which shall have
the right at any time to vote in the election of Merkert's directors, including
without limitation shares of Merkert Common Stock.
2. Designation of Nominees. The Nominating Stockholder hereby
designates the following individuals as nominees for election to the Board of
Directors of Merkert: John P. Rochon, Nick G. Bouras, Timothy M. Byrd, Ronald
D. Pedersen and Michael J. Merriman.
<PAGE> 2
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 Merkert 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 Merkert 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 Merkert 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 kind to which the Stockholder is a party or by which the
Stockholder's properties or assets
2
<PAGE> 3
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. Pedersen, Butler and Guffey cease to own in
the aggregate at least 35% of the total outstanding shares of Voting Securities
of Merkert, 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
Merkert representing more than 50% of the total voting power of all outstanding
Voting Securities of Merkert.
3
<PAGE> 4
[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: MSSC Acquisition Corporation,
its General Partner
By:/s/ Nick G. Bouras
----------------------------------
Name: Nick G. Bouras
Title: Vice President
Existing Securities:
--------------------
Class: Common
Number of Shares: 4,023,330
Address:
--------
17855 North Dallas Parkway
Suite 200
Dallas, Texas 75827
S-1
<PAGE> 5
[VOTING AGREEMENT SIGNATURE PAGE]
/s/ Ronald D. Pedersen
----------------------------------
Ronald D. Pedersen
Existing Securities:
--------------------
Class: Common
Number of Shares: 1,259,017
Address:
--------
3601 Beverly Drive
Dallas, Texas 75205
/s/ Bruce A. Butler
----------------------------------
Bruce A. Butler
Existing Securities:
--------------------
Class: Common
Number of Shares: 301,721
Address:
--------
7329 Paul Calle Drive
Plano, Texas 75025
/s/ Gary R. Guffey
----------------------------------
Gary R. Guffey
Existing Securities:
--------------------
Class: Common
Number of Shares: 301,721
Address:
--------
17 Overhill Drive
Tropy Club, Texas 26262
S-2
<PAGE> 6
[VOTING AGREEMENT SIGNATURE PAGE]
/s/ Jeffrey A. Watt
----------------------------------
Jeffrey A. Watt
Existing Securities:
--------------------
Class: Common
Number of Shares: 819,759
Address:
--------
6006 Kettering Court
Dallas, Texas 75248
S-3
<PAGE> 7
[VOTING AGREEMENT SIGNATURE PAGE]
MONROE & COMPANY, LLC
By:/s/ James L. Monroe
----------------------------------
Name: James L. Monroe
Title:
Existing Securities:
-------------------
Class: Common Stock/ Restr. ComStk
---------------------------
Number of Shares: 415,210/ 11,900
----------------
Address:
--------
8 Cedar Street
Woburne, Massachusetts 01801
JLM MANAGEMENT COMPANY, LLC
By:/s/ James L. Monroe
------------------------------
Name: James L. Monroe
Title:
Existing Securities:
--------------------
Class: Common Stock/ Restr. ComStk
---------------------------
Number of Shares: 438,544/ 11,900
-----------------
Address:
--------
8 Cedar Street
Woburne, Massachusetts 01801
S-4
<PAGE> 1
EXHIBIT IV
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of August 18,
1999, by and among Merkert 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 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 6,705,551 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).
<PAGE> 2
"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 forth 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 April
28, 1999, among the Company, RMSI and the other parties thereto.
"Merkert Agreement" means the Registration Rights Agreement dated as of
December 18, 1998 by and among the Company and the former stockholders of
Merkert 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,
Gerald R. Leonard 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
<PAGE> 3
"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
<PAGE> 4
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 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
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 Merkert Agreement or the Monroe
Agreement), as determined on a
4
<PAGE> 5
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 Merkert 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 security holders), 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
5
<PAGE> 6
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) participating 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
questionnaires,
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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 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
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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 Suspension 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
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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 statement (and, if such
registration includes an underwritten public offering, 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 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;
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(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
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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
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
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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 connection 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,
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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
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 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
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<PAGE> 14
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 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 distribution 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 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 S-4, S-8, 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, gant any option for the purchase of, effect any public sale
or distribution of or otherwise dispose of such securities during such
period.
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(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 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
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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.
(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 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.
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(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 indemnified 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 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
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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
(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.
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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
receive the benefits hereof.
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(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
<PAGE> 21
(k) Termination of 1997 Registration Rights Agreement. MS Acquisition
Limited and Richmont Marketing Specialists Inc. hereby terminate the 1997
Registration Rights Agreement and agree that none of such parties shall have any
further rights or obligations thereunder.
[End of text]
21
<PAGE> 22
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the day and year first above written.
MERKERT AMERICAN CORPORATION
By: /s/ Gerald R. Leonard
----------------------------------------
Name: Gerald R. Leonard
Title: CEO and President
Address:
490 Turnpike Street
Canton, Massachusetts 02021
HOLDERS:
MS ACQUISITION LIMITED
By: MS Acquisition Corp.
its General Partner
By: /s/ Nick G. Bouras
----------------------------------------
Name: Nick G. Bouras
Title: Vice President
Address:
17855 North Dallas Parkway
Suite 200
Dallas, Texas 75287
/s/ Bruce A. Butler
-------------------------------------------------
BRUCE A. BUTLER
Address:
17855 North Dallas Parkway
Suite 200
Dallas, Texas 75287
<PAGE> 23
/s/ Gary R. Guffey
-------------------------------------------------
GARY R. GUFFEY
Address:
17 Overhill Drive
Trophy Club, Texas 26262
/s/ Ronald D. Pedersen
-------------------------------------------------
RONALD D. PEDERSEN
Address:
17855 North Dallas Parkway
Suite 200
Dallas, Texas 75287
/s/ Jeffrey A. Watt
-------------------------------------------------
JEFFREY A. WATT
Address:
6006 Kettering Court
Dallas, Texas 75827
