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EXHIBIT 2
SHAREHOLDERS OPTION AGREEMENT
This SHAREHOLDERS OPTION AGREEMENT (this "Agreement"), dated
November 9, 1998, by and among American Express Company, a New York corporation
("Holder"), and the shareholders of Rockford Industries, Inc., a California
corporation (the "Company"), listed on the signature page hereto (each a
"Shareholder" and collectively the "Shareholders").
WITNESSETH THAT:
WHEREAS, concurrently herewith Holder, RXP Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of Holder
("Newco"), and Company are entering into a Plan and Agreement of Merger (the
"Merger Agreement") pursuant to which Holder would, subject to the terms and
conditions set forth therein, acquire all of the capital stock of the Company
on a fully diluted basis for consideration of approximately $11.88 per share
(the "Merger"); and
WHEREAS, the transaction is expected to be structured as a
tax-free reorganization for shares of Holder capital stock; and
WHEREAS, each Shareholder owns of record the number of shares
of common stock, without par value, of the Company ("Common Stock") set forth
opposite such Shareholder's name on Schedule A hereto (all of such shares being
referred to herein, whether with respect to a particular Shareholder or
collectively with respect to all Shareholders, and giving effect to Section 15
hereof, as the "Shares"); and
WHEREAS, the Shareholders desire to induce Holder to proceed
with the Merger and enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, Holder's willingness to enter into the Merger
Agreement and the sum of $100, and such other valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Grant of Option. Each of the Shareholders hereby grants to Holder an
irrevocable and continuing option (the "Option") to purchase all of the Shares
owned by him for a per share price
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equal to $11.88 (the "Purchase Price"); provided, however, if Holder, Newco and
the Company consummate the Merger after the purchase of the Shares upon
exercise of the Option and pursuant thereto Holder pays to the shareholders of
the Company as Merger consideration a per share price greater than $11.88 per
share (the "Holder Price"), on the Effective Date of the Merger Holder will pay
each of the Shareholders an additional amount equal to the product of (x) the
difference between the Holder Price and the Purchase Price multiplied by (y)
the number of such Shareholder's Shares purchased upon exercise of the Option.
2. Exercise of Option. Holder may exercise the Option, in whole, at any
time following the occurrence of a First Date for Exercise (as defined below).
Upon any exercise of the Option, Holder shall deliver a written notice to each
of the Shareholders and to U.S. Trust Company of California, as escrow agent
(the "Escrow Agent") under the Escrow Agreement, dated as of the date hereof,
among Holder, the Shareholders and the Escrow Agent (the "Escrow Agreement") of
its intention to exercise the Option (the "Notice"), specifying a time, place
and date for the closing (the "Closing"), which shall occur as soon as
practicable, but not later than three (3) business days from the date of the
Notice; provided, however, that (a) if any approvals under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") or
otherwise shall be required with respect to such exercise, then the Closing
shall be the later of the date specified in the Notice or the next business day
following the date on which such approvals shall have been obtained, and (b) if
any Shareholder shall fail to perform his obligations hereunder, Holder may (i)
exercise the Option only with respect to the Shares held by those Shareholders
who have performed their respective obligations hereunder or (ii) withdraw the
Notice and decline to exercise the Option with respect to the Shares without
prejudice to its right to exercise the Option at any time thereafter during the
term of this Agreement. As used herein, the "First Date for Exercise" shall
mean the earliest to occur of any of the following events:
(i) any person shall have commenced (as such term is defined in
Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), or shall have filed a
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to, a tender
offer or exchange offer to purchase any shares of Common
Stock such that, upon consummation of such offer, such person
would own or control 10% or more of the then outstanding
Common Stock;
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(ii) the Company, without having received Holder's prior written
consent, shall (A) have authorized, recommended, proposed or
publicly announced an intention to authorize, recommend or
propose, or shall have entered into or publicly announced an
intention to enter into, an agreement with any person (other
than Holder, Newco or any other subsidiary of Holder) to (1)
effect a merger, consolidation, combination, reorganization,
share exchange, joint venture involving an equity control
event (as defined below) or similar transaction involving the
Company or any subsidiary of the Company, (2) directly or
indirectly sell, lease or otherwise transfer or dispose of,
or agree to sell, lease or otherwise transfer or dispose of,
assets of the Company or its subsidiaries representing 10% or
more of the consolidated assets of the Company and its
subsidiaries or (3) directly or indirectly issue, sell or
otherwise transfer or dispose of or agree to issue, sell or
otherwise transfer or dispose of (including, without
limitation, by way of merger, consolidation, reorganization,
share exchange, dividend, distribution or any similar
transaction) securities representing 10% or more of the
voting power of the Company (any of the foregoing an
"Acquisition Transaction"), or (B) directly or indirectly
have otherwise taken any action including, without
limitation, responding to, or entering into discussions or
negotiations, in respect of an Acquisition Transaction or an
Acquisition Proposal (as defined in the Merger Agreement)
made by any party other than Holder;
(iii) any person or group (as such term is defined under the
Exchange Act) shall have acquired beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act) or
the right to acquire beneficial ownership of, or any group
shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 10% or more of the
then outstanding Common Stock (other than any person or group
that, at the date hereof, beneficially owns or has the right
to acquire beneficial ownership of 10% or more of the
outstanding shares of Common Stock) (an "equity control
event"); or
(iv) any person other than Holder shall have made an Acquisition
Proposal to the Company or its shareholders and such proposal
shall have been publicly announced
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(the events described in the preceding clauses (i), (ii),
(iii) and (iv) are collectively and individually hereinafter
referred to as an "Acquisition Event").
3. Payment and Delivery of Certificates. Concurrent with the execution of
this Agreement, the Shareholders shall deliver to the Escrow Agent the
certificates representing the Shares, duly endorsed in blank for transfer, or
accompanied by duly executed stock powers in blank, in each case with
signatures guaranteed by a national bank or trust company or a member firm of
the New York Stock Exchange, Inc. At any Closing hereunder, the Escrow Agent
shall promptly deliver to Holder the Shares with respect to which the Option
has been exercised and, simultaneously with the proper surrender by Escrow
Agent to Holder of the Shares to be purchased by Holder, Holder shall deliver
to the Escrow Agent a wire transfer of immediately available funds equal to the
aggregate Purchase Price.
4. Sharing of Gain. If (i) Holder exercises the Option and the Merger is
not consummated, and (ii) within one year from the date Holder exercised the
Option Holder sells all or substantially all of the Shares to another Person in
connection with an Acquisition Event involving the Company and any party other
than a wholly owned subsidiary of Holder at a price per share above $13.38 (the
"Measuring Price"), Holder will pay each of the Shareholders an amount equal to
fifty percent (50%) of the product of (x) the difference between the sales
price per share paid to Holder for the shares of Common Stock of the Company
sold by Holder in such Acquisition Event and the Measuring Price multiplied by
(y) the number of Shares sold by such Shareholder to Holder pursuant to the
exercise of the Option.
5. Representations and Warranties of the Shareholders. Each Shareholder
represents and warrants (such representations and warranties being deemed
repeated at any Closing at which Shares of such Shareholder are purchased)
that:
5.1 Ownership of Shares. Such Shareholder is the record owner of the
number of Shares listed opposite his name on Schedule A hereto; except as set
forth on Schedule B hereto, such Shareholder does not own beneficially or of
record any other capital stock of the Company; such Shares are validly issued,
fully paid and nonassessable, with no personal liability attaching to the
ownership thereof; and such Shares are owned by such Shareholder free and clear
of any pledges, liens, security interests, adverse claims, assessments, options,
equities, charges or encumbrances with respect to the ownership of or right to
vote or dispose of such Shares.
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5.2 Transfer of Title. The sale by such Shareholder of his Shares
and the delivery by Escrow Agent of the certificates representing such Shares
to Holder pursuant hereto will transfer to Holder good and valid title to such
Shares free and clear of all pledges, liens, security interests, adverse
claims, assessments, options, equities, charges and encumbrances whatsoever,
and with no proxies or restrictions on the voting rights or other incident of
record or beneficial ownership pertaining thereto (other than the proxy being
granted pursuant to Section 7 of this Agreement).
5.3 Authority; Due Execution; Enforceability. Such Shareholder has
the full right, power, capacity and authority to enter into this Agreement; and
this Agreement has been duly and validly executed and delivered by such
Shareholder and constitutes a legal, valid and binding obligation of such
Shareholder enforceable against him in accordance with its terms.
5.4 No Conflicts. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
with or without giving of notice or the passage of time, (a) violate any
judgment, award, decree, injunction or order of any court, arbitrator or
governmental agency applicable to such Shareholder or such Shareholder's
property or assets or any federal or state law, statute or regulation, or (b)
conflict with, result in the breach of any provision of or constitute a
violation of or default under any agreement or instrument to which such
Shareholder is a party or by which such Shareholder or such Shareholder's
property or assets may be bound.
6. Covenants of the Shareholders. Each Shareholder hereby covenants and
agrees that:
6.1 Bring-Down of Representations. During the term hereof such
Shareholder will not enter into any transaction, take any action or by inaction
permit any event to occur that would result in any of the representations or
warranties of such Shareholder herein contained not being true and correct at
and as of (a) the time immediately after the occurrence of such transaction,
action or event or (b) the date of any Closing of the purchase of Shares.
Without limiting the generality of the foregoing, each Shareholder covenants
and agrees that such Shareholder will not sell, transfer, pledge, assign or
otherwise convey or dispose of, or enter into any contract, option, agreement
or other arrangement or understanding with respect to the sale, transfer,
pledge, assignment, conveyance or other disposition of, any Shares, other than
to or in favor of Holder or Holder's assignee, or in connection with the Merger
or an Acquisition Transaction between the Company and Holder, Newco or another
subsidiary of Holder (a "Holder Acquisition Transaction").
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6.2 Surrender of Shares. Concurrent with the execution of this
Agreement, each Shareholder will execute an Escrow Agreement authorizing the
Escrow Agent to take the actions contemplated by this Agreement on behalf of
the Shareholders and will surrender the certificates representing his Shares to
the Escrow Agent to be held pursuant to the Escrow Agreement. Each Shareholder
agrees that the Company may instruct the transfer agent for the Common Stock to
place a stop transfer order against any attempt to transfer the Shares except
in accordance with the Escrow Agreement and this Agreement.
7. Irrevocable Proxy and Release; Agreement to Vote Shares.
(a) Each Shareholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Shares and hereby irrevocably appoints Holder, during the term
of this Agreement, as proxy for such Shareholder to vote (or refrain from
voting) in any manner as Holder, in its sole discretion, may see fit, all of
the Shares of such Shareholder for such Shareholder and in such Shareholder's
name, place and stead, at any annual, special or other meeting or action of the
shareholders of the Company or at any adjournment thereof or pursuant to any
consent of shareholders of the Company in lieu of a meeting or otherwise, with
respect to any issue brought before shareholders of the Company. The parties
acknowledge and agree that, except as specifically provided for in Section 7(c)
hereof, neither Holder, nor Holder's successors, assigns, subsidiaries,
divisions, employees, officers, directors, shareholders, agents and affiliates
shall owe any duty to, whether in law or otherwise, or incur any liability of
any kind whatsoever, including without limitation, with respect to any and all
claims, losses, demands, causes of action, costs, expenses (including
reasonable attorney's fees) and compensation of any kind or nature whatsoever
to any Shareholder in connection with, as a result of or otherwise relating to
any vote (or refrain from voting) by Holder of the Shares subject to the
irrevocable proxy hereby granted to Holder at any annual, special or other
meeting or action or the execution of any consent of the shareholders of the
Company. If the issue on which Holder is voting pursuant to the irrevocable
proxy is the proposal to approve the Merger and the Merger Agreement, Holder
shall vote for such proposal or give its consent, as applicable.
(b) Notwithstanding the foregoing grant to Holder of the
irrevocable proxy, in the event Holder elects not to exercise its rights to
vote the Shares pursuant to the irrevocable proxy, upon the request of Holder
each Shareholder agrees to vote all of his Shares during the term of this
Agreement
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(i) if the issue on which the Shareholder is requested to vote is a proposal to
approve the Merger and the Merger Agreement, each Shareholder agrees to vote in
favor of or give its consent to, as applicable, the Merger and the Merger
Agreement or (ii) otherwise in the manner directed by Holder at any annual,
special or other meeting or action of shareholders of the Company in lieu of a
meeting or otherwise with respect to any issue brought before the shareholders
of the Company.
(c) If Holder (i) exercises its right to vote the Shares pursuant
to the irrevocable proxy as provided in Section 7(a) other than with respect to
the approval of the Merger, or (ii) instructs a Shareholder how to vote
pursuant to Section 7(b)(ii), other than with respect to the approval of the
Merger, and such Shareholder votes his Shares in accordance with such
instruction, Holder agrees to indemnify and hold harmless such Shareholder from
any and all claims, liabilities, losses, demands, causes of action, expenses
(including reasonable attorneys' fees) that arise from or occur by reason of
such actions.
8. Survival. All rights and authority granted herein by each Shareholder
shall survive the death or incapacity of such Shareholder. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective spouses, heirs, personal representatives, successors and assigns.
Holder may, without the consent of any of the Shareholders, assign its rights
hereunder to any wholly owned subsidiary of Holder, but otherwise the consent
of each Shareholder shall be required to assign the rights of Holder hereunder.
9. Further Assurances. Each Shareholder shall cooperate with Holder and
execute and deliver any additional documents necessary or desirable, in the
opinion of Holder or its counsel, to (i) obtain any third party approvals
necessary or advisable to consummation of the exercise of the Option,
including, without limitation, approvals under the HSR Act, if applicable, (ii)
complete the sale and transfer of the Shares with respect to which the Option
is exercised and the vesting of title to such Shares in Holder and (iii)
evidence the irrevocable proxy granted herein with respect to the Shares.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, postage prepaid, addressed to the
respective party at the following addresses:
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To Holder: American Express Company
American Express Tower
World Financial Center
New York, New York 10285-4900
Attn: Xxxxx X. Xxxxxxxx, Esq.
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
To each Shareholder: At the address set forth opposite the Shareholder's
name on Schedule A.
11. Termination. Except as provided in the following sentence, this
Agreement and the Option, other than the provisions of Section 7(c) and as
provided in Section 14 below, shall terminate on the earlier of: (i) the
delivery by Holder to the Shareholders of written notice of Holder's
determination to terminate this Agreement and (ii) the termination of the
Merger Agreement in accordance with the terms thereof (the "Termination Date").
Notwithstanding anything to the contrary in this Agreement or any other
agreement, if during the term of this Agreement an Acquisition Event shall
occur or if the Merger Agreement shall have been terminated by the Company in
accordance with Section 7.1(b)(v) of the Merger Agreement (the date of the
earlier of the occurrence or termination being the "Trigger Date"), this
Agreement and the Option shall remain in full force and effect and the
Termination Date of this Agreement shall automatically extend to the date which
occurs 12 months from the Trigger Date.
12. Remedies. The Shareholders each acknowledge that Holder will be
irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of the several Shareholders
which are contained in this Agreement. It is accordingly agreed that, in
addition to any other remedies which may be available to Holder upon the breach
by any of the
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Shareholders of such covenants and agreements, Holder shall have the right to
obtain injunctive relief to restrain any breach or threatened breach of such
covenants or agreements or otherwise to obtain specific performance of any of
such covenants or agreements.
13. Commissions. Each of the parties hereto represents and warrants that
there are no agreements or claims for brokerage commissions or finders' fees in
connection with the transactions contemplated by this Agreement, and the
Shareholders and Holder will respectively pay or discharge and will indemnify
each other for brokerage commissions or finders' fees incurred by reason of any
action taken by such indemnifying party.
14. Survival of Representations. Notwithstanding any provision of this
Agreement to the contrary, all representations and warranties made by the
Shareholders in this Agreement and the covenants of the Shareholders set forth
in Sections 20 and 21 below shall survive (i) any exercise of the Option by
Holder, (ii) any vote by Holder of the Shares pursuant to the irrevocable proxy
or (iii) any vote by any Shareholder in accordance with Section 7(b).
15. Changes in Capitalization. For all purposes of this Agreement, the
Shares shall include any securities for cash or other property issued or
exchanged with respect to such Shares upon any recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, dividend in cash or stock or other property, split-up or
combination of the securities of the Company, or any other change in its
capital structure and shall also include all Shares of Common Stock issued to
any Shareholder after the date hereof pursuant to the exercise by any
Shareholder of stock options.
16. Compliance with Securities Laws. The parties agree that any transfer of
the Shares effected hereunder shall be effected so as to comply with all
applicable federal and state securities laws.
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17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws principles thereof.
18. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute a single agreement.
19. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any current or future law, and if the rights or
obligations of the parties under this Agreement would not be materially and
adversely affected thereby, such provision shall be fully separable, and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, the remaining
provisions of this Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. In lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement, a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible, and the parties hereto
request the court or any arbitrator to whom disputes relating to this Agreement
are submitted to reform the otherwise illegal, invalid or unenforceable
provision in accordance with this Section 19.
20. Waiver of Rights Under Shareholders' Agreement. Each Shareholder hereby
waives any and all rights of purchase, first refusal or similar rights or
prohibitions or restrictions on transfers of the Shares that he, his spouse or
his estate may have with respect to the Shares of any other Shareholder under
that certain Shareholders' Agreement, dated May 1, 1995, among Xxxxx Xxxxx,
Xxxxx Xxxxxxxx and Xxxxx Xxxxxx (the "Shareholders' Agreement) with respect to
the transactions contemplated by this Agreement and the Merger Agreement
including, without limitation, the rights
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and restrictions set forth in Section 1.1, 1.2, 2.1, 2.2, 3.1 and 3.2 of the
Shareholders' Agreement. Each Shareholder acknowledges that concurrently
herewith he is delivering to Holder a spousal consent duly signed by his spouse
acknowledging, agreeing and consenting to the transactions contemplated by this
Agreement and the Merger Agreement.
21. Agreements to Notify.
(a) Each Shareholder and Holder agree to notify promptly the
Escrow Agent of the termination of this Agreement and agree to deliver to the
Escrow Agent any written instructions that may reasonably be requested by the
Escrow Agent relating to the release of the Shares upon the termination of this
Agreement.
(b) Each Shareholder agrees to notify Holder promptly, and in any
event, without limiting the foregoing undertaking, prior to any exercise of the
Option by Holder, of any commencement or threatened commencement known to such
Shareholder by any person, entity or governmental authority or agency of any
suit, action or legal proceedings with respect to the Option.
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be signed as of the date first above written.
SHAREHOLDERS:
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx Xxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx
HOLDER:
AMERICAN EXPRESS COMPANY
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Title: Authorized Signatory
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Schedule A
Name of Number of Address for
Shareholder Shares Owned of Record Notice Purposes
----------- ---------------------- ---------------
Xxxxx X. Xxxxx 734,666 45 Fortuna
Xxxxxx, Xxxxxxxxxx 00000
Xxxxx Xxxxxxxx 734,667 000 Xxx Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Xxxxx Xxxxxx 734,667 00000 Xxxxx xxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
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Schedule B
Stock Options 401(K) Plan
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Xxxxx X. Xxxxx 40,000 1,336.7659
Xxxxx Xxxxxxxx 40,000 1,201.7736
Xxxxx Xxxxxx 40,000 1,308.6629
