SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (the "Agreement"), dated as of March 28,
2000, is between RMH Teleservices, Inc., a Pennsylvania corporation (the
"Company"), and R-T Investors, LLC, a Nevada limited liability company
("Shareholder").
WHEREAS, pursuant to an option agreement (the "Option Agreement") dated
February 17, 2000, Shareholder (i) paid Advanta Partners LP ("Advanta") an
option fee to acquire a total of 2,658,456 shares of Common Stock (as defined
below) upon the satisfaction of certain conditions, (ii) on March 7, 2000,
purchased 398,000 shares of Common Stock from Advanta and (iii) on March 28,
2000, purchased 2,260,456 shares of Common Stock from Advanta;
WHEREAS, by separate agreement dated March 1, 2000, R-T purchased
1,415,000 shares of Common Stock from Xxxxxxx Xxxxx Investment Co. on March 30,
2000;
WHEREAS, certain members of the Company's management have purchased
126,315 shares of Common Stock from Advanta; and
WHEREAS, in connection therewith, Shareholder has agreed to certain
restrictions on the conduct of Shareholder with respect to the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Stock Purchase Agreement and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. Except as otherwise specified herein, defined
terms used in this Agreement shall have the respective meanings assigned to such
terms in the Stock Purchase Agreement. Unless otherwise specified all references
to "days" shall be deemed to be references to calendar days. For purposes of
this Agreement, the following terms shall have the following meanings:
(a) AFFILIATE. An "Affiliate" of a Person shall have
the meaning set forth in Rule 12b-2 of the Exchange Act as in effect on
the date hereof. In addition, for purposes of this Agreement, Xxxxxx X.
Xxxxxx, members of his family and their respective Affiliates shall
each be deemed to be Affiliates of Shareholder.
(b) BENEFICIAL OWNER. A Person shall be deemed to
"beneficially own," or to have "beneficial ownership" of, Voting
Securities as the term "beneficial ownership" is defined in Rule 13d-3
under the Exchange Act as in effect on the date hereof; provided that
notwithstanding the foregoing a Person shall also have "beneficial
ownership" of securities which such Person has the right to acquire
(irrespective of whether such right is exercisable immediately or only
after the passage of time, including the passage of time in excess of
sixty days) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise. For purposes of this Agreement, Shareholder
shall be deemed to beneficially own any Voting Securities beneficially
owned by its Affiliates or any Group of which Shareholder or any such
Affiliate is a member.
(c) BOARD OF DIRECTORS. "Board of Directors" shall
mean the Board of Directors of the Company.
(d) CEO. "CEO" shall mean the Chief Executive Officer
of the Company.
(e) CLOSING. "Closing" shall mean the Closing as such
term is defined in the Stock Purchase Agreement.
(f) COMMON STOCK. "Common Stock" shall mean the
common stock, without par value, of the Company.
(g) EXCESS SHARES. "Excess Shares" means, as to any
matter being voted upon by the Company's shareholders, the Voting
Securities of the Company beneficially owned by Shareholder and its
Affiliates that represent Voting Power in excess of 32% of the votes
entitled to be cast in respect of such matter.
(h) EXCHANGE ACT. "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
(i) GROUP. "Group" shall mean a "group" as such term
is used in Section 13(d)(3) of the Exchange Act as in effect on the
date hereof.
(j) INDEPENDENT DIRECTOR. "Independent Director"
means a director of the Company who is not (apart from such
directorship) (i) an officer, director, Affiliate, employee,
shareholder, consultant or partner of Shareholder or any Affiliate of
Shareholder or of any entity that was dependent upon Shareholder or any
Affiliate of Shareholder for more than 5% of its revenues or earnings
in its most recent fiscal year, or (ii) an officer, employee,
consultant or partner of the Company or any Affiliate of the Company or
an officer, employee, shareholder, consultant or partner of an entity
that was dependent upon the Company or any Affiliate of the Company for
more than 5% of its revenues or earnings in its most recent fiscal
year.
(k) PERSON. "Person" shall mean any individual,
Group, corporation, general or limited partnership, limited liability
company, governmental entity, joint venture, estate, trust,
association, organization or other entity of any kind or nature.
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(l) SECURITIES ACT. "Securities Act" shall mean the
Securities Act of 1933, as amended.
(m) TAKEOVER PROPOSAL. "Takeover Proposal" means (i)
any tender or exchange offer, (ii) any other proposal to takeover
control of the Company or a merger, share exchange, other business
combination, recapitalization, restructuring, liquidation or similar
transaction involving the Company or any of its material subsidiaries,
or any proposal or offer to acquire in any manner Voting Securities of
the Company representing more than 20% of the Total Voting Power of the
Company or any of its material subsidiaries, a substantial equity
interest in any of the Company's material subsidiaries or a substantial
portion of the assets of the Company or any of its material
subsidiaries, (iii) any waiver or opt out of any anti-takeover statutes
or other anti-takeover provisions applicable to the Company, or (iv) a
proposal having similar effect.
(n) TOTAL VOTING POWER. The term "Total Voting Power"
shall mean the total combined Voting Power in the general election of
directors of the Company, on a fully diluted basis, of all the Voting
Securities then outstanding. For purposes of determining Total Voting
Power under this Agreement, a Voting Security which is convertible into
or exchangeable for a Voting Security shall be counted as having the
greater of (i) the number of votes to which such Voting Security is
entitled prior to conversion or exchange and (ii) the number of votes
to which the Voting Security into which such Voting Security is
convertible or exchangeable is entitled.
(o) VOTING POWER. The term "Voting Power" shall mean
the voting power of the Voting Securities then outstanding entitled to
vote upon any such matter, and shall be calculated for each Voting
Security by reference of the maximum number of votes such Voting
Security is or would be entitled to cast with respect to such matter.
(p) VOTING SECURITIES. "Voting Securities" shall
mean, without duplication, (x) any securities entitled, or which may be
entitled, to vote as to any matter which is the subject of shareholder
action and shall include without limitation the shares of Common Stock,
(y) any securities convertible or exercisable into or exchangeable for
such securities (whether or not the right to convert, exercise or
exchange is subject to the passage of time or contingencies or both),
or (z) any direct or indirect rights or options to acquire any such
securities.
In addition, the following terms have the definitions specified in the
Sections noted:
TERM SECTION
Advanta.............................................recitals
Advanta Shares......................................recitals
Agreement...........................................recitals
Company.............................................recitals
Common Stock........................................recitals
Moving Party........................................5.4
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Shareholder.........................................recitals
Stock Purchase Agreement............................recitals
Transactions........................................recitals
Unaffiliated Shares.................................4.2
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Section 2.1. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants and agrees with, Shareholder as
follows:
(a) The Company is a corporation validly existing and
in good standing under the laws of the State of Pennsylvania.
(b) The Company has full corporate power and
corporate authority to make, execute, deliver and perform this
Agreement and to carry out all of the transactions provided for herein.
(c) The Company has taken such corporate action as is
necessary or appropriate to enable it to perform its obligations
hereunder, and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER
Section 3.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER.
Shareholder represents and warrants to, and covenants and agrees with, the
Company that:
(a) Shareholder is a limited liability company,
validly existing and in good standing under the laws of the State of
Nevada. Xxxxxx Xxxxxx owns 4% of the ownership interest in Shareholder,
Xxxxxx Xxxxxx owns 4% of the ownership interest in Shareholder, Xxxxxxx
Xxxxxx owns 20% of the ownership interest in Shareholder and each of
Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxx Xxxxxx own 18% of the
ownership interest in Shareholder. The capital structure of Shareholder
was determined among the owners for personal financial and tax planning
purposes and there are no agreements, other than the operating
agreement, among the owners for allocations of profits or distribution
of assets of Shareholder.
(b) Shareholder has full legal right, power and
authority to make, execute, deliver and perform this Agreement and to
carry out all of the transactions provided for herein.
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(c) Shareholder has taken such action as is necessary
or appropriate to enable it to perform its obligations hereunder, and
this Agreement constitutes the legal, valid and binding obligation of
Shareholder, enforceable against Shareholder in accordance with its
terms. No approval, waiver, consent or clearance is required from any
third party or governmental authority in connection with the execution,
delivery or performance of this Agreement by Shareholder.
ARTICLE IV
OTHER COVENANTS AND REPRESENTATIONS
Section 4.1. CORPORATE GOVERNANCE. The Company agrees that it will
cause two persons designated by Shareholder and reasonably acceptable to the
Board of Directors to be elected to the Board of Directors upon the resignation
of Xxxxxxxx X. Xxxxxx and Xxxx X. Xxxxx on the Closing. Shareholder and the
Company agree that after the Closing the Board of Directors shall consist (and
Shareholder and the Company shall use their respective best efforts to cause the
Board of Directors to consist) of (i) two persons designated by Shareholder and
reasonably acceptable to the Board of Directors, (ii) the CEO and (iii) at least
three other persons who are Independent Directors. The Board of Directors will
nominate directors thereafter consistent with the preceding sentence. The
parties contemplate that Shareholder's two nominees will initially be Xxxx
Xxxxxx and an industry figure selected by Shareholder with the assistance of the
CEO of the Company. The provisions of this paragraph shall terminate in the
event Shareholder and its Affiliates beneficially own Voting Securities
representing less than 15% of the Voting Power in respect of the general
election of directors of the Company.
Section 4.2. RESTRICTIONS ON BUSINESS COMBINATIONS. Shareholder agrees
that it and its Affiliates will not (and Shareholder agrees that it will cause
its Affiliates not to) consummate any tender offer, exchange offer, merger or
other business combination, recapitalization or similar transaction involving
the Company or any of its subsidiaries unless approved by (i) a majority of
members of a special committee consisting of all of the Independent Directors
and (ii) a majority of the shares voted by holders of shares of Common Stock (or
other Voting Securities) of the Company not owned by Shareholder or its
Affiliates (the "Unaffiliated Shares") or, in the case of a tender offer or
exchange offer, the offer has a minimum condition that a majority of the
Unaffiliated Shares shall have been validly tendered and not withdrawn and the
offer provides that it will be extended for 10 business days after Shareholder
has publicly announced that such minimum condition has been satisfied. In the
event of a Takeover Proposal initiated by a third party and recommended by the
Company's Board of Directors, Shareholder agrees that it and its Affiliates will
vote the Excess Shares in the same proportion as the Unaffiliated Shares are
voted on such Takeover Proposal.
Section 4.3. BYLAWS. Shareholder and the Company agree that the
Company's bylaws shall be amended to provide that the approval of at least a
majority of the Company's Independent Directors shall be required to approve any
amendment to the articles of incorporation or bylaws of the Company that would
contravene or otherwise alter this Agreement.
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Section 4.4. AMENDMENTS. Shareholder and the Company agree that at
least a majority of the Company's Independent Directors shall be required to
approve any amendment to, or waiver of, this Agreement, including amendments of
the defined terms used herein.
ARTICLE V
MISCELLANEOUS
Section 5.1. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, fax or air courier
guaranteeing delivery:
(a) If to the Company, to:
RMH Teleservices, Inc.
00 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Chairman of the Board
Telecopy: (000) 000-0000
(with copies to):
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
or to such other person or address as the Company shall furnish to Shareholder
in writing;
(b) If to Shareholder, to:
R-T Investors, LLC
c/o Xxxxx Xxxxx
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
(with copies to):
Xxxx X. Xxxxxx, Esq.
0000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
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or to such other person or address as Shareholder shall furnish to the Company
in writing.
All such notices, requests, demands and other communications shall be
deemed to have been duly given: at the time of delivery by hand, if personally
delivered; five (5) business days after being deposited in the mail, postage
prepaid, if mailed domestically in the United States; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the business day for
which delivery is guaranteed, if timely delivered to an air courier guaranteeing
such delivery.
Section 5.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall survive through the term of
this Agreement.
Section 5.3. LEGENDS. If requested in writing by the Company,
Shareholder shall present or cause to be presented promptly all certificates
representing Voting Securities beneficially owned by Shareholder or any of its
Affiliates, for the placement thereon of a legend substantially to the following
effect, which legend will remain thereon as long as such Voting Securities are
beneficially owned by Shareholder or an Affiliate:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A SHAREHOLDER AGREEMENT BETWEEN THE COMPANY AND
THE HOLDER SPECIFIED THEREIN. A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE, TRANSFER OR OTHER
DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT
AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE
THEREWITH.
The Company may enter a stop transfer order with the transfer order
with the transfer agent or agents of Voting Securities against any transfer of
Voting Securities not in compliance with the provisions of this Agreement.
Section 5.4. ENFORCEMENT. Shareholder on the one hand, and the Company,
on the other hand, acknowledge and agree that irreparable injury to the other
party would occur in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached and
that such injury would not be adequately compensable in damages. It is
accordingly agreed that, in addition to any other remedies which may be
available at law or in equity, each party hereto (the "Moving Party") shall be
entitled to
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specific enforcement of, and injunctive relief to prevent any violation of, the
terms hereof, and the other party hereto will not take action, directly or
indirectly, in opposition to the Moving Party seeking such relief on the grounds
that any other remedy or relief is available at law or in equity. The parties
further agree that no bond shall be required as a condition to the granting of
any such relief.
Section 5.5. ENTIRE AGREEMENT. This Agreement, and the Stock Purchase
Agreement constitute the entire agreement and understanding of the parties with
respect to the transactions contemplated hereby and thereby. This Agreement may
be amended only by a written instrument duly executed by the parties or their
respective successors or assigns.
Section 5.6. SEVERABILITY. Whenever possible, each provision or portion
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision or portion of any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law, rule or regulation in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision shall have been
replaced with a provision which shall, to the maximum extent permissible under
such applicable law, rule or regulation, give effect to the intention of the
parties as expressed in such invalid, illegal or unenforceable provision.
Section 5.7. HEADINGS. Descriptive headings contained in the Agreement
are for convenience only and will not control or affect the meaning or
construction of any provision of this Agreement.
Section 5.8. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties, and
each such executed counterpart will be an original instrument.
Section 5.9. NO WAIVER. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
Section 5.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the respective successors and assigns of the parties, provided that
Shareholder agrees that it and its Affiliates shall not transfer any Voting
Securities to any Person who has not agreed in writing to be bound by the terms
of the Agreement as if it were Shareholder or an Affiliate of Shareholder.
Notwithstanding the foregoing, Shareholder and its Affiliates shall not be
required to obtain such written agreement from any transferee of Voting
Securities if such transfer is (i) pursuant to a bona fide public offering, (ii)
pursuant to transactions effected in accordance with Rule 144 under the
Securities Act or (iii) a block transfer that will result in the transferee
beneficially
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owning Voting Securities representing less than 10% of the Voting
Power in respect of the general election of directors of the Company.
Section 5.11. GOVERNING LAW. This Agreement will be governed by and
construed and enforced in accordance with the internal laws of the Commonwealth
of Pennsylvania, without giving effect to the conflict of laws principles
thereof.
Section 5.12. FURTHER ASSURANCES. From time to time on and after the
date hereof, the Company and Shareholder, as the case may be, shall deliver or
cause to be delivered to the other party hereto such further documents and
instruments and shall do and cause to be done such further acts as the other
party hereto shall reasonably request to carry out more effectively the
provisions and purposes of this Agreement, to evidence compliance herewith or to
assure that it is protected in acting hereunder.
Section 5.13. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any legal
action or proceeding with respect to this Agreement or any matters arising out
of or in connection with this Agreement, and any action for enforcement of any
judgment in respect thereof shall be brought exclusively in the Court of Common
Pleas of Philadelphia County in the Commonwealth of Pennsylvania or the United
States District Court for the Eastern District of Pennsylvania, and, by
execution and delivery of this Agreement, the Company and Shareholder each
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express carrier or delivery service, to the Company or Shareholder at their
respective addresses referred to herein. The Company and the Shareholder each
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement brought in the courts referred to above
and hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party hereto to serve process in
any other manner permitted by law.
Section 5.14. CONFIDENTIALITY. All information gained by the Company
and Shareholder regarding the business and affairs of the other shall be kept
confidential, except for information in the public domain, information which was
previously known to the receiving party, or such information as is required, in
the good faith determination of the party's counsel, to be disclosed by any law,
regulation or governmental agency.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
R-T Investors, LLC
By: /s/ Xxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx, President
RMH Teleservices, Inc.
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx, Chief Executive
Officer
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