AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BRISTOL RETAIL SOLUTIONS, INC.,
RMAG ACQUISITION CORP.
AND
REGISTRY MAGIC INCORPORATED
DATED AS OF NOVEMBER 6, 2000
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of November 6, 2000 (the
"Agreement"), by and among BRISTOL RETAIL SOLUTIONS, INC., a Delaware
corporation ("BRS"), REGISTRY MAGIC INCORPORATED, a Florida corporation
("RMAG"), and RMAG ACQUISITION CORP., a Delaware corporation ("SUB"), which is a
direct wholly-owned subsidiary of RMAG. BRS and SUB are hereinafter sometimes
collectively referred to as the "Constituent Corporations."
RECITALS
A. The Boards of Directors of BRS, RMAG and SUB deem it advisable and
in the best interests of each corporation and its respective shareholders that
BRS and RMAG combine in order to advance their long-term business interests, all
upon the terms and subject to the conditions of this Agreement.
B. It is intended that the combination be effected by a merger of BRS
with and into SUB with SUB surviving, which for Federal income tax purposes
shall be a tax-free reorganization described in Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. (a) In accordance with the provisions of this
Agreement, the Delaware General Corporation Law ("DGCL") , at the Effective
Time, BRS shall be merged (the "Merger") with and into SUB, and SUB shall be the
surviving corporation (hereinafter sometimes called the "Surviving Corporation")
and shall continue its corporate existence under the laws of the State of
Delaware. The name of the Surviving Corporation shall be Bristol Retail
Solutions, Inc. At the Effective Time, the separate existence of BRS shall
cease.
(b) The Merger shall have the effects on BRS and SUB, as Constituent
Corporations of the Merger, provided for under the DGCL.
Section 1.2 EFFECTIVE TIME. The Merger shall become effective at the
time of filing of, or at such later time as specified in, an agreement of
merger, in the form required by and executed in accordance with the DGCL, and
with the Secretary of State of the State of Delaware in accordance with the
provisions of Section 252 of the DGCL (the "Certificate of Merger"). The date
and time when the Merger shall become effective is herein referred to as the
"Effective Time."
Section 1.3 ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING
CORPORATION. The Certificate of Incorporation and Bylaws of SUB as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation until thereafter amended
as provided by law.
Section 1.4 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. (a) The
directors of the Surviving Corporation shall be the same as the directors of
RMAG at the Effective Time and will hold office from and after the Effective
Time until their respective successors are duly elected or appointed and qualify
in the manner provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation or as otherwise provided by law or their earlier
resignation or removal.
(b) The following individuals shall be the officers of the Surviving
Corporation and each will hold office from and after the Effective Time until
their respective successors are duly appointed and qualify in the manner
provided in the Bylaws of the Surviving Corporation or as otherwise provided by
law or their earlier resignation or removal; (i) Xxxxxxxx Xxxxx - Chief
Executive Officer and President; (ii) Xxxxx Xxxx - Executive Vice President;
(iii) Such other individuals to be determined at or prior to the Effective Time
by the parties hereto.
Section 1.5 DIRECTORS OF RMAG. Prior to the Effective Time, RMAG and
BRS shall take, or cause to be taken, all necessary actions such that, at the
Effective Time, RMAG's Board of Directors shall consist of five (5) members,
without classifications of directors into separate classes. Following the
Effective Time the directors, shall be reelected at the annual meeting of
shareholders of RMAG commencing in the year 2001. The directors of RMAG shall be
designated prior to the filing with the Securities and Exchange Commission of
the preliminary proxy statement referred to herein as follows: (i) RMAG, acting
through its current board of directors, shall designate four (4) directors, at
least two (2) of whom shall be "independent within the meaning of the Securities
Exchange on which the RMAG shares are listed" and (ii) BRS, acting through its
current board of directors, will designate one (1) director.
Section 1.6 FURTHER ASSURANCES. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
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ARTICLE II
CONVERSION OF SHARES
Section 2.1 EFFECT ON BRS SHARES. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof:
(a) Each share of BRS' common stock, .001 par value (the "BRS Common
Shares"), together with the Associated BRS Rights issued pursuant to that Stock
Purchase Rights Agreement, issued and outstanding immediately prior to the
Effective Time (other than shares of RMAG Common Stock owned by BRS or SUB, all
of which shall be canceled as provided herein), shall be converted at the
Effective Time into the right to receive .65 of a validly issued, fully paid and
non-assessable share of RMAG Common Stock, $.001 par value per share (the
"Exchange Ratio") (together with any cash in lieu of fractional shares of RMAG
Common Stock to be paid pursuant to this Agreement (the RMAG "Common Stock").
(b) At the Effective Time each share of Preferred Stock of BRS (the
"BRS Preferred Shares") issued and outstanding = immediately prior to the
Effective Time (other than shares of BRS Preferred Stock owned by RMAG or SUB,
all of which shall be canceled as provided herein) shall be converted at the
Effective Time into the right to receive one (1) share of Preferred Stock of
RMAG having the same rights, preferences and privileges as the Series of Bristol
Preferred Stock, respectively. The BRS Common Shares and BRS Preferred Shares
are referred to as the "BRS Shares".
(c) All BRS Common Shares together with the Associated BRS Rights and
the BRS Preferred Shares shall be canceled and retired, and each certificate
representing any such BRS Shares shall thereafter (i) represent only the right
to receive the RMAG Common Stock and RMAG Preferred Shares issuable in exchange
for such BRS Shares upon the surrender of such certificates in accordance with
Section 2.4 (and any cash payable in respect of fractional shares) and (ii)
entitle the holder thereof to vote with respect to, and receive dividends on,
such number of whole shares of RMAG Common Stock and RMAG Preferred Shares which
such holder is entitled to receive in exchange for such certificates, provided
that dividends shall be paid to such holder, without interest, only upon
surrender of certificates in accordance with Section 2.4.
(d) Notwithstanding anything to the contrary in this Agreement, any
holder of BRS Shares who shall exercise the rights of a dissenting shareholder
pursuant to and strictly in accordance with the provisions of the DGCL shall be
entitled to receive only the payment therein provided for and shall not be
entitled to receive RMAG Common Stock and RMAG Preferred Shares. Such payment
shall be made directly by the Surviving Corporation.
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Section 2.2 EFFECT ON BRS OPTIONS AND WARRANTS. As of the Effective
Time, any stock options, warrants, convertible securities (other than BRS
Preferred Shares), or other contractual commitments to purchase or issue shares
of BRS that are outstanding, both as the date hereof and at the Effective Time
(whether or not contingent or otherwise requiring future shareholder approval)
shall be assumed by RMAG and converted into an option, warrant, convertible
security or other contractual commitment as the case may be, to purchase or
issue under the same terms and conditions (including, without limitation, the
date and exercise provisions) as were applicable prior to the Effective Time,
the number of shares of RMAG Common Stock equal to the number of shares subject
to such option, warrant, convertible security or other contractual commitment
multiplied by [.65], at an exercise price per share of RMAG Common Stock equal
to the former exercise price per share under such option, warrant, convertible
security or other contractual commitment immediately prior to the Effective Time
(taking into account any anti-dilution formula), provided, however, in the case
of the employee stock option to which Section 421 of the Internal Revenue Code
applies by reason of its qualification under Section 422 of the Code, the
conversion formula shall be adjusted, if necessary to comply under Section
424(a) of the Code. No stock option or warrant shall be converted into an option
or warrant to purchase a partial share. Except as provided above, the converted
stock options, warrants, convertible securities or other contractual commitments
shall be assumed by RMAG under the same terms and conditions, but shall not be
subject to further shareholder approval. RMAG agrees that as soon as reasonably
practical after the Effective Time it will file one or more registration
statements on Form S-8 or otherwise, to the extent such securities have been
previously registered under the Securities Act of 1933, or amendment to any
existing registration statements on Form S-8 or otherwise, covering stock
options and warrants, to register the shares issuable upon exercise of the
aforesaid converted options and warrants, at and at or prior to the Effective
Time, RMAG should take all corporate action necessary to reserve a sufficient
number of shares for delivery upon exercise of the options and warrants,
conversion of convertible securities or otherwise pursuant to other contractual
commitments assumed pursuant to this Section. The consummation of the merger
shall not be treated as a termination of employment for purposes of the option
plans.
Section 2.3 SUB COMMON STOCK. Each share of common stock, $.0001 par
value, of SUB issued and outstanding immediately prior to the Effective Time
shall remain outstanding.
Section 2.4 EXCHANGE PROCEDURES. (a) RMAG shall authorize its transfer
agent to act as exchange agent hereunder (the "Exchange Agent") for the purposes
of exchanging certificates representing BRS Shares and shares of RMAG Common
Stock and RMAG Preferred Shares. As promptly as practicable after the Effective
Time, RMAG shall deposit with the Exchange Agent, in trust for the holders of
Certificates (as defined in Section 2.4(b) below), certificates representing the
shares of RMAG Common Stock and RMAG Preferred Shares issuable pursuant to
Section 2.1(a) and (b) in exchange for BRS Shares (the "BRS Certificates").
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(b) Promptly after the Effective Time, the Exchange Agent shall mail or
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented BRS Shares (the "Certificates"), a letter of transmittal and
instructions for use in effecting the surrender of the Certificates for exchange
therefor. Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor that number of shares of RMAG Common
Stock and RMAG Preferred Shares which such holder has the right to receive under
Section 2.1(a) (and any amount of cash payable in lieu of fractional shares) and
such Certificate shall forthwith be canceled. If any such shares are to be
issued to a person other than the person in whose name the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
exchange that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
exchange to a person other than the registered holder of the Certificate
surrendered or such person shall establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
(c) No dividends or other distributions with respect to the RMAG Common
Stock or RMAG Preferred Shares constituting all or a portion of the
consideration payable to the holders of BRS Shares shall be paid to the holder
of any unsurrendered Certificate representing BRS Shares until such Certificate
is surrendered as provided for in this Section 2.4. Subject to the effect of
applicable laws, following such surrender, there shall be paid, without
interest, to the record holder of the certificates representing RMAG Common
Stock and RMAG Preferred Shares (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
payable prior to or on the date of such surrender with respect to such whole
shares of RMAG Common Stock and RMAG Preferred Shares and not paid, and the
amount of cash payable in lieu of any fractional shares, less the amount of any
withholding taxes which may be required thereon under any provision of federal,
state, local or foreign tax law, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time, but prior to the date of surrender and a payment date subsequent
to the date of surrender payable with respect to such whole shares of RMAG
Common Stock or RMAG Preferred Shares, less the amount of any withholding taxes
which may be required thereon under any provision of federal, state, local or
foreign tax Law. RMAG shall make available to the Exchange Agent cash for these
purposes.
(d) Any portion of the RMAG Common Stock and RMAG Preferred Shares made
available to the Exchange Agent pursuant to Section 2.4(a) that remains
unclaimed by the holders of BRS Shares twelve (12) months after the Effective
Date shall be returned to RMAG, upon demand, and any such holder who has not
exchanged his, her or its BRS Shares in accordance with this Section 2.4 prior
to that time shall thereafter look only to RMAG for his, her or its claim for
RMAG Common Stock and RMAG Preferred Shares, (as the case may be), any cash in
lieu of fractional shares and certain dividends or other distributions. Neither
RMAG nor SUB shall be liable to any holder of BRS Shares with respect to any
RMAG Common Stock and RMAG Preferred Shares (or cash in lieu of fractional
shares) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
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(e) If any Certificate representing BRS Shares 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
RMAG, the posting by such person of a bond in such reasonable amount as RMAG may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the consideration payable under Section 2.1(a)
and, if applicable, any unpaid dividends and distributions on shares of RMAG
Stock deliverable with respect thereof and any cash in lieu of fractional
shares, in each case pursuant to this Agreement.
Section 2.5 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of BRS Shares who upon surrender of Certificates
therefor would be entitled to receive a fraction of a share of RMAG Common Stock
and RMAG Preferred Shares shall receive, in lieu of such fractional share, cash
in an amount equal to such fraction multiplied by the initial fair market value
of RMAG Common Stock and RMAG Preferred Shares. For purposes of this Agreement,
initial market value means the average of the closing bid and ask price of RMAG
Common Stock for the five trading days ending three trading days immediately
preceding the Closing.
Section 2.6 TRANSFERS. From and after the Effective Time, there shall
be no transfers on the stock transfer books of BRS or the Surviving Corporation
of BRS Shares. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged as provided in this
Article II.
Section 2.7 CERTAIN ADJUSTMENTS. If between the date of this Agreement
and the Effective Time, the outstanding RMAG Common and Preferred Stock shall
have been changed into a different number of shares or different class by reason
of any reclassification, recapitalization, stock split, split up, combination or
exchange of shares or stock dividend payable and any other securities shall be
declared with a record date within such period, or any other similar event shall
have occurred, the Exchange Ratio shall be appropriately adjusted to provide the
holders of the BRS Common or Preferred Stock under the same economic effect as
contemplated by this Agreement prior to such date.
Section 2.8 ASSOCIATED RIGHTS REFERENCES. In Article I and Article II
of this Agreement the BRS Common Shares shall include, unless the context
requires otherwise, the associated BRS Rights.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RMAG AND SUB
RMAG and SUB jointly and severally represent and warrant to BRS and
each BRS Shareholder as follows:
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Section 3.1 ORGANIZATION. Each of RMAG and SUB is a corporation duly
organized, validly existing and in good standing under the laws of its
respective State of Incorporation. RMAG owns directly all of the outstanding
capital stock of SUB. Each of RMAG and SUB has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Except as set forth in Schedule 3.1, each of RMAG and
SUB is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualifications or licenses necessary,
as indicated on Schedule 3.1 except in such jurisdictions where the failure to
be so duly qualified or licensed and in good standing would not individually or
in the aggregate have a material adverse effect on the business, operations,
assets, prospects, financial condition or results of operations of RMAG and
would not delay or prevent the consummation of the transactions contemplated
hereby (an "RMAG Material Adverse Effect"). RMAG previously has delivered to BRS
accurate and complete copies of its Articles of Incorporation and Bylaws, and
SUB's Certificate of Incorporation and Bylaws, each as currently in effect.
Section 3.2 CAPITALIZATION. (a) The authorized capital stock of RMAG
consists of 30,000,000 shares of RMAG Common Stock and 5,000,000 shares of RMAG
Preferred Shares. As of the date hereof, there are 5,380,000 shares of RMAG
Common Stock issued and outstanding and no shares held in treasury; and no
shares of RMAG Preferred Shares outstanding. As of the date hereof, there were
outstanding under the RMAG Stock Option Plans, or otherwise, RMAG Stock Options
entitling the holders thereof to purchase, up to the number of RMAG Shares as
set forth on Schedule 3.2. Except as set forth in Schedule 3.2 or in the RMAG
SEC Reports, at the Effective Time there will not be any existing options,
warrants, calls, subscriptions, or other rights or other agreements or
commitments obligating RMAG to issue, transfer or sell any shares of capital
stock of RMAG or any other securities convertible into or evidencing the right
to subscribe for any such shares. All shares of RMAG Common Stock and RMAG
Preferred Shares to be issued at the Effective Time shall be, when issued, duly
authorized and validly issued, fully paid, and nonassessable and subject to the
terms of this Agreement free from liens, charges, claims and encumbrances. All
of the shares of RMAG Common Stock shall be, when issued upon proper conversion
of RMAG Preferred Shares, duly authorized and validly issued, fully paid and
nonassessable and subject to the terms of this Agreement free from liens,
charges, claims and encumbrances.
(b) The authorized capital stock of SUB consists of one hundred (100)
shares of common stock, $.0001 par value, of which one hundred (100) are issued
and outstanding and are validly issued, fully paid and nonassessable. As of the
date hereof, there are no outstanding Sub Stock Options entitling the holders
thereof to purchase SUB Shares. At the Effective Time there will not be any
existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating SUB to issue, transfer or sell any shares
of capital stock of SUB or any other securities convertible into or evidencing
the right to subscribe for any such shares.
(c) Except for the SUB, RMAG has no subsidiaries.
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Section 3.3 AUTHORITY. Each of RMAG and SUB has full corporate power
and authority to execute and deliver this Agreement and, subject to the
requisite approval of the shareholders of RMAG, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Boards of Directors of RMAG and SUB and by RMAG
as the sole shareholder of SUB, and, except for the requisite approval by the
shareholders of RMAG, no other corporate proceedings on the part of RMAG or SUB
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of RMAG and SUB and, assuming this Agreement constitutes a
legal, valid and binding agreement of BRS and the BRS Shareholders, constitutes
a legal, valid and binding agreement of RMAG and SUB, as the case may be,
enforceable against each of them in accordance with its terms, except as the
enforceability may be affected by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and the possible unavailability of certain equitable
remedies, including the remedy of specific performance.
Section 3.4 NO VIOLATIONS: CONSENTS AND APPROVALS. Except as set forth
on Schedule 3.4, (a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by RMAG
and SUB with any of the provisions hereof conflicts with, violates or results in
any breach of (i) subject to obtaining the requisite approval of RMAG's
shareholders, any provision of the Articles of Incorporation or Bylaws of either
of RMAG or the Certificate of Incorporation or Bylaws of SUB, (ii) any contract,
agreement, instrument or understanding to which RMAG or SUB is a party or by
which RMAG, SUB or any of their respective assets or properties is bound, or
(iii) subject to the requisite approval of RMAG's shareholders any law,
judgment, decree, order, statute, rule or regulation of any jurisdiction or
governmental authority (a "Law") applicable to RMAG or SUB or any of their
respective assets or properties, excluding from the foregoing clauses (ii) and
(iii) conflicts, violations or breaches which, either individually or in the
aggregate, would not have an RMAG Material Adverse Effect or materially impair
RMAG's or SUB's ability to consummate the transactions contemplated hereby or
for which RMAG or SUB have received or, prior to the Merger, shall have received
appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required by RMAG or SUB in
connection with the execution and delivery of the Agreement or the consummation
by RMAG or SUB of the transactions contemplated hereby, except (i) in
connection, or in compliance, with the provisions of the Securities Act of 1933,
as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") in each case and the rules and regulations
promulgated thereunder, (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, (iii) filings with, and approval
of, the stock exchange where the RMAG Common Stock is to be listed in connection
with obligations of RMAG hereunder, and (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of which to
be obtained or made would not, individually or in the aggregate, have an RMAG
Material Adverse Effect, or materially impair the ability of RMAG or SUB to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.
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Section 3.5 SEC DOCUMENTS: RMAG FINANCIAL STATEMENTS. (a) RMAG has
filed with the Securities and Exchange Commission ("SEC") all documents required
to be filed under the Securities Act and the Exchange Act since the effective
date of its initial public offering (the "RMAG SEC Documents"). As of their
respective dates, the RMAG SEC Documents complied in all respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
none of the RMAG SEC Documents contained any untrue statement of a material fact
or omitted 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.
(b) As of their respective dates, the financial statements of RMAG
included in the RMAG SEC Documents were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
present fairly the consolidated financial position of RMAG as at the dates
thereof and the consolidated results of its operations and statements of
cash-flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). RMAG's balance sheet included in its Form 10-QSB for the
quarter ended April 30, 2000, shall be referred to as the RMAG Interim Balance
Sheet.
(c) RMAG has no liability or obligation of any kind (whether contingent
or otherwise and whether due or to become due) except (i) as set forth on
Schedule 3.5, (ii) as set forth on the RMAG Interim Balance Sheet, or (iii) as
incurred in the ordinary course of business, consistent with past practice since
the date of the RMAG Interim Balance Sheet.
Section 3.6 ABSENCE OF CERTAIN CHANGES. Since the date of the RMAG
Interim Balance Sheet, RMAG has been operated only in the ordinary course,
consistent with past practice, and there has not been any adverse change, or any
event, fact or circumstance which might reasonably be expected to result in an
adverse change, in either event that would have a RMAG Material Adverse Effect.
Without limiting the generality of the foregoing, except as set forth on
Schedule 3.6, since April 30, 2000, there has not been with respect to RMAG any:
(a) sale or disposition of any material asset other than inventory in
the ordinary course;
(b) payment of any dividend, distribution or other payment to any
shareholder of RMAG or to any relative of any such shareholder other than
payments of salary and expense reimbursements made in the ordinary course of
business, consistent with past practice, for employment services actually
rendered or expenses actually incurred;
(c) incurrence or commitment to incur any liability individually or in
the aggregate material to RMAG, except such liabilities under RMAG's existing
credit facilities and liabilities incurred in connection with the Merger;
(d) waiver, release, cancellation or compromise of any indebtedness
owed to RMAG or claims or rights against others, exceeding $50,000 in the
aggregate;
(e) any change in any accounting method, principle or practice except
as required or permitted by generally accepted accounting principles; or
(f) unusual or novel method of transacting business engaged in by RMAG
or any change in RMAG's accounting procedures or practices or its financial or
equity structure.
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Section 3.7 PROXY STATEMENT/PROSPECTUS REGISTRATION STATEMENT. None of
the information regarding RMAG and SUB to be supplied by RMAG and SUB for
inclusion or incorporation by reference in (i) the registration statement on
Form S-4 (as it may be amended or supplemented from time to time, the
"Registration Statement") relating to RMAG Common Stock to be issued in
connection with the Merger or (ii) the proxy statement to be distributed in
connection with the shareholders meeting of BRS contemplated by Section 5.5 (as
it may be amended or supplemented from time to time, the "Proxy Statement" and
together with the prospectus to be included in the Registration Statement, the
"Proxy Statement/Prospectus") will, in the case of the Registration Statement,
at the time it becomes effective and at the Effective Time, and, in the case of
the Proxy Statement, at the time of its mailing to shareholders of BRS and at
the time of the shareholder's meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading in light of
the circumstances when made. If at any time prior to the Effective Time any
event with respect to RMAG or SUB shall occur which is required to be described
in the Proxy Statement or Registration Statement, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the shareholders of RMAG and BRS. The
Proxy Statement and the Registration Statement will (with respect to RMAG)
comply as to form in all material respects with the provisions of the Securities
Act and the Exchange Act.
Section 3.8 STATE ANTITAKEOVER STATUTES. The RMAG Board of Directors
has approved this Agreement and the transactions contemplated hereby and such
approval constitutes approval of the Merger and the other transactions
contemplated hereby, including approval of the voting agreement (as defined in
Section 5.13 below) by the RMAG Board of Directors as required by the Florida
Business Corporation Act ("FBCA"). No "business combination," "moratorium,"
"control share," "fair price," "interested shareholder," affiliated
transactions" or other state antitakeover statute or regulation (i) prohibits or
restricts RMAG's ability to perform its obligations under this Agreement (or any
party's ability to perform their obligations under the voting agreement) or
either party's ability to consummate the Merger or to the other transactions
contemplated hereby or thereby, (ii) would have the effect of invalidating or
voiding this Agreement or the voting agreement or any provision hereof, or (iii)
would subject BRS or SUB to any material impediment or condition in connection
with the exercise of any of their respective rights under this Agreement.
Section 3.9 BROKER'S FEES. Except as set forth on Schedule 3.9, neither
RMAG nor SUB nor any of RMAG's affiliates or their respective officers,
directors or agents has employed any broker, finder or financial advisor or
incurred any liability for any broker's fees, commissions, or financial advisory
or finder's fees in connection with any of the transactions contemplated by this
Agreement.
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Section 3.10 ENVIRONMENTAL MATTERS. RMAG has complied in all material
respects with, and has not been cited for any violation of, federal, state and
local environmental protection laws and regulations; and no material capital
expenditures will be required for compliance with any federal, state or local
laws or regulations now in force relating to the protection of the environment.
As used in this section, "hazardous material" means any hazardous or toxic
substance, material or waste that is regulated by any federal authority or by
any state or local authority where the substance, material or waste is located.
There are no underground storage tanks located on the real property owned by
RMAG, nor were there any such underground storage tanks located in any real
property owned or leased by RMAG during the period of RMAG's period of ownership
or tenancy, nor is RMAG aware of any underground storage tanks on the real
property leased by RMAG in which any hazardous material has been or is being
stored, nor has there been any spill, disposal, discharge or release of any
hazardous material into, upon or over that real property or into or upon ground
or surface water on that real property. There are no asbestos-containing
materials incorporated into the buildings or interior improvements that are part
of the real property or into other assets owned by RMAG, nor is there any
electrical transformer, fluorescent light fixture with ballasts or other
equipment containing polychlorinated biphenyls on the real property owned by
RMAG. RMAG is not aware of any asbestos-containing materials incorporated into
the buildings or interior improvements that are part of the real property or
into other assets leased by RMAG, nor is RMAG aware of any electrical
transformer, fluorescent light fixture with ballasts or other equipment
containing polychlorinated biphenyls on the real property leased by RMAG.
Section 3.11 COMPLIANCE WITH LAWS. RMAG is not or has not conducted its
business in violation of any Law, including without limitation, any Law
pertaining to environmental protection, occupational health or safety, and
employment practices except the violation of which would not have an RMAG
Material Adverse Effect.
Section 3.12 NO LITIGATION. Except as set forth in the RMAG SEC
Documents or on Schedule 3.12 there is no claim, litigation, investigation or
proceeding by any person or governmental authority pending or, to RMAG's
knowledge threatened, against RMAG. There are no pending or, to RMAG's
knowledge, threatened controversies or disputes with, or grievances or claims
by, any employees or former employees of RMAG or any of its respective
predecessors of any nature whatsoever, including, without limitation, any
controversies, disputes, grievances or claims with respect to their employment,
compensation, benefits or working conditions, except for such litigation which
would not have a RMAG Material Adverse Effect.
Section 3.13 EMPLOYEE BENEFITS. All employee welfare benefit plans as
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974
("ERISA"), employee pension benefit plans as defined in Section 3(2) of ERISA,
and all other employee benefit programs or arrangements of any type, written or
unwritten (collectively, the "Plans") maintained by RMAG or to which RMAG
contributes are listed on Schedule 4.16. In addition, Schedule 4.16 separately
sets forth any Plans which RMAG, or any affiliate or predecessor of RMAG
maintained or contributed to within the three years preceding the date hereof.
(a) The Plans comply, with all applicable provisions of all Laws,
including, without limitation, the Code and ERISA, and have so complied during
all prior periods during which any such provisions were applicable. Without
limiting the foregoing, all of the Plans, and any related trust, intended to
meet the requirements for tax-favored treatment under the Code (including,
without limitation, Sections 401 and 501 and Subchapter B of the Chapter 1 of
the Code) meets and for all prior periods has met, such requirements in all
material respects.
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(b) RMAG and any other party involved in the administration of any of
the Plans (i) has complied in all material respects with the provisions of
ERISA, the Code or other Laws, applicable to such party, whether as an employer,
plan sponsor, plan administrator, or fiduciary of any of the Plans or otherwise,
(including without limitation the provisions of ERISA and the Code concerning
prohibited transactions), and (ii) has administered the Plans in accordance with
the terms. RMAG has made all contributions required of it by any Law (including,
without limitation, ERISA) or contract under any of the Plans and no unfunded
liability exists with respect to any of the Plans.
(c) RMAG has no responsibility or liability, contingent or otherwise,
with respect to any Plans or any employee benefits other than under the Plans
listed on Schedule 4.13. RMAG has the right to amend or terminate, without the
consent of any other person, any of the Plans, except as prohibited by law, and
any applicable collective bargaining agreement. Neither RMAG, nor any affiliate
or predecessor of RMAG, maintains or has ever maintained or been obligated to
contribute to (i) any defined benefit pension plan (as such term is defined in
Section 3(35) of ERISA), (ii) any multiemployer plan (as such term is defined in
Section 3(37) of ERISA), (iii) any severance plan or policy, or (iv) any
arrangement providing medical or other welfare benefits to retirees or other
former employees or their beneficiaries, except as required under part 6 of
Subtitle B of Title I of ERISA or Section 4980B(f) of the Code (hereinafter
collectively referred to as "COBRA").
(d) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to RMAG's knowledge, any actions, suits, or claims
(other than routine claims for benefits) which could reasonably be expected to
be asserted, against any of the Plans, or the assets thereof, or against RMAG or
any other party with respect to any of the Plans.
Section 3.14 TAXES. (a) RMAG has duly filed with the appropriate
federal, state, local and foreign taxing authorities all Tax Returns (as defined
below) required to be filed by or with respect to RMAG on or before the date
hereof. RMAG has included in its federal income Tax Returns for all periods
ended on or before July 31, 1996. All such Tax Returns are true, correct and
complete in all material respects as of the time of filing. RMAG, with respect
to the federal income Tax Returns, and, with respect to any other Tax Returns,
has paid in full on a timely basis all Taxes (as defined below) due on such Tax
Returns or such Taxes that are otherwise due, except to the extent such Tax is
being contested in good faith through appropriate proceedings and for contested
Taxes only which adequate reserves have been established on the RMAG Interim
Balance Sheet. Except as set forth on Schedule 4.14, the balance for accrued
Taxes on the RMAG Interim Balance Sheet for the payment of accrued but unpaid
Taxes through the date thereof is correct and the amount of RMAG's liability for
unpaid Taxes shall not exceed such balance for accrued but unpaid Taxes of
RMAG. The balance of accrued Taxes have been determined in accordance with
generally accepted accounting principles, applied on a consistent basis. All
monies which RMAG was required by Law to withhold from employees have been
withheld and either timely paid to the proper governmental authority or set
aside in accounts for such purposes and accrued on the books of RMAG.
(b) RMAG has never been a member of an affiliated group filing
consolidated returns.
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(c) (i) RMAG has not received any notice of a deficiency or assessment
with respect to Taxes of RMAG from any taxing authority which has not been fully
paid or finally settled, except to the extent any such deficiency or assessment
is being contested in good faith through appropriate proceedings and for which
adequate reserves have been established on the RMAG Interim Balance Sheet; (ii)
there are no ongoing audits or examinations of any Tax Return relating to RMAG
and no notice (oral or written) of audit or examination of any such Tax Return
has been received by RMAG; (iii) In the last three years, the federal income Tax
Returns of RMAG have not been audited by the Internal Revenue Service; and (iv)
To RMAG's knowledge, no issue has been raised (either in writing or verbally,
formally or informally) on audit or in any other proceeding (and is currently
pending) with respect to Taxes of RMAG by any taxing authority which, if
resolved against RMAG, would have a RMAG Material Adverse Effect. RMAG has
disclosed on its federal income tax returns all positions taken therein that,
RMAG believes could give rise to a substantial understatement penalty within the
meaning of Code Section 6662.
(d) RMAG is not (nor has it ever been) a party to any tax sharing
agreement and has not assumed the liability for taxes of any other person under
law or contract.
(e) RMAG (i) has not filed a consent pursuant to Code Section 341(f)
nor agreed to have Code Section 341(f)(2) apply to any disposition of a
subsection (f) asset (as such term is defined in Code Section 341(f)) owned by
RMAG; (ii) has not agreed, or is not required, to make any adjustment under Code
Section 481(a) by reason of a change in accounting method or otherwise initiated
by RMAG that will affect the liability of RMAG for Taxes; (iii) has not made an
election, or is required, to treat any asset of RMAG as owned by another person
pursuant to the provisions of former Code Section 168(f)(8); (iv) is not now nor
has ever been a party to any agreement, contract, arrangement, or plan that
would result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Code Section 280G; (v) has not
participated in an international boycott as defined in Code Section 999; (vi) is
not now or has ever been a "foreign person" within the meaning of Code Section
1445(b)(2); (vii) is not now or has ever been a United States real property
holding corporation within the meaning of Code Section 897(c)(1)(A)(ii); or
(viii) has not made any of the foregoing elections or is required to apply any
of the foregoing rules under any comparable state or local tax provision.
(f) RMAG is not required to report or pay any additional Taxes from any
joint venture, partnership or other arrangement or contract limited liability
company that could be treated as a partnership for federal income tax purposes.
(g) For purposes of this Section 4.17, the following terms shall have
the meaning given to them below:
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(i) "Tax" means any of the Taxes, and "Taxes" means, with
respect to RMAG, (i) all income taxes (including any tax on or based upon net
income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, estimated, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, environmental (including taxes under Code Section
59A), alternative, add-on minimum, custom duties, capital stock, social security
(or similar), unemployment, disability, or other taxes, fees assessments, or
charges of any kind whatsoever, together with any interest, penalty, or addition
thereto, whether disputed or not, imposed by any taxing authority on RMAG, and
(ii) any liability for payment of any amount of the Tax described in the
immediately preceding clause (i) as a result of being a "transferee" (within the
meaning of Code Section 6901 or any other applicable law) of another person or
successor, by contract, or otherwise, or a member of an affiliated,
consolidated, or combined group.
(ii) "Tax Return" means any return, declaration, report, claim
or refund, or information return or statement or other document (including any
related or supporting information) filed or required to be filed with any
appropriate federal, state, local and foreign governmental entity or authority
(individually or collectively, "taxing authority") or other authority in
connection with the determination, assessment or collection of any Tax paid or
payable by RMAG or the administration of any Laws, regulations, or
administrative requirements relating to any such Tax.
Section 3.15 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither RMAG nor
any director, officer, employee or agent of the foregoing, nor any other person
acting on its behalf, directly or indirectly, has to RMAG's knowledge given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person which (i) might subject RMAG to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had a RMAG Material Adverse Effect, or
(iii) if not continued in the future, might have a RMAG Material Adverse Effect
or which might subject RMAG to suit or penalty in any private or governmental
litigation or proceeding.
Section 3.16 INTELLECTUAL PROPERTY. (a) Schedule 3.16(a) sets forth a
correct and complete list of (i) all U.S. and foreign trademarks, patents,
service marks, trade names, copyrights, mask works and designs which are
pending, applied for, granted, or registered in any country or jurisdiction of
the world and are owned by RMAG, used in connection with its business; (ii) all
unregistered trademarks, patents, service marks, and trade names which are owned
by RMAG and used in connection with its business; and (iii) all licenses,
contracts, permissions and other agreements relating to the business to which
RMAG is a party relating in any way to rights in any of the foregoing. Except as
set forth on Schedule 3.16(a), title to all registered intellectual property is
recorded on records in the name of RMAG and, to the extent applicable, all
affidavits of continued use and incontestability in respect of such registered
intellectual property have been timely filed.
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(b) Except as disclosed and set forth on Schedule 3.16(b), (i) RMAG
owns or possesses licenses or other valid rights to use, and upon consummation
of the transactions contemplated by this Agreement, the Surviving Corporation
shall own or possess licenses or other valid rights to use (without the making
of any payment to others or the obligation to grant rights to others in
exchange), all intellectual property necessary to the conduct of the business of
RMAG as currently conducted, including, without limitation, all releases
required in connection with quotes, testimonials or likenesses utilized in
editorial or promotional material; (ii) RMAG's right title and interest in such
intellectual property is not being opposed by any claim or demand or in any
proceeding, action, litigation or order to which RMAG or any person or entity
who has granted a license or other right to use intellectual property to RMAG or
who has been granted a license or other right to use intellectual property by
RMAG, is a party or subject, nor to the knowledge of RMAG is any such claim,
demand, proceeding, action, litigation, or court order threatened; and (iii) the
conduct of the business of RMAG as currently conducted does not materially
infringe or conflict with any intellectual property of others.
Section 3.17 KNOWLEDGE. The term "to RMAG's knowledge" shall mean the
actual knowledge of each director and officer of RMAG after reasonable
investigation.
Section 3.18 LABOR. RMAG has not experienced any strike, collective
labor agreements, or the collective bargaining disputes or claims of unfair
labor practices in the last five years. To RMAG's knowledge, there is no
organizational effort presently being made by or on behalf of any labor union
with respect to the employees of RMAG.
Section 3.19 NO UNDISCLOSED INFORMATION. No provision of this Article
III or any Schedule or any document or agreement furnished by RMAG contains any
untrue statement of a material fact, or omits to state a material fact necessary
in order to make the statement contained herein, in light of the circumstances
under which such statements are made, not misleading.
Section 3.20 OPINION OF FINANCIAL ADVISOR. RMAG has received the
opinion of a financial advisor to the effect that, as of such date, the Exchange
Ratio is fair, from a financial point of view, to the holders of the RMAG Common
Stock, copies of which opinions will be promptly provided to the other company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BRS
BRS represents and warrants to RMAG and SUB as follows, and warrant as
follows:
Section 4.1 ORGANIZATION. (a) BRS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. BRS is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualifications or licenses necessary, as
indicated on Schedule 4.1, except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not individually or in
the aggregate have a material adverse effect on the business, operations,
assets, prospects, financial condition or results of operations of BRS and would
not delay or prevent the consummation of the transactions contemplated hereby (a
"BRS Material Adverse Effect").
(b) BRS previously has delivered to RMAG accurate and complete copies
of BRS's Articles of Incorporation and Bylaws, each as currently in effect.
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Section 4.2 CAPITALIZATION. (a) The authorized capital stock of BRS
consists of (i) 2,000,000 BRS Common Shares par value $.001 per share and
shares of Preferred Stock. As of the date hereof, there are 6,926,968 BRS
Common Shares, and shares of BRS Preferred Shares issued and outstanding as set
forth on Schedule 4.2. As of the date hereof, there were outstanding under the
BRS Stock Option Plans, all of which are listed on Schedule 4.2, BRS Stock
Options entitling the holders thereof to purchase, in the aggregate, up to
_______ BRS Shares. Except as set forth on Schedule 4.2, or in the BRS SEC
Reports at the Effective Time, there will not be any existing options, warrants,
calls, subscriptions, or other rights or other agreements or commitments
obligating BRS to issue, transfer or sell any shares of capital stock of BRS or
any other securities convertible into or evidencing the right to subscribe for
any such shares. All issued and outstanding BRS Shares are, and all BRS Shares
issued and outstanding at the Effective Time shall be, duly authorized and
validly issued, fully paid and non-assessable and subject to the terms of this
Agreement free from all liens, charges, claims and encumbrances.
(b) Except as set forth on Schedule 4.2(a), BRS has no subsidiaries.
Section 4.3 AUTHORITY. BRS has full corporate power and authority to
execute and deliver this Agreement and, subject to the requisite approval of the
Merger and the adoption of this Agreement by BRS's shareholders, to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by BRS's Board of Directors and, except for the
requisite approval of the Merger and the adoption of this Agreement by BRS's
shareholders, no other corporate proceedings on the part of BRS are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
BRS's Board of Directors has determined that the transactions contemplated by
this Agreement, including the Merger, are in the best interests of BRS and its
shareholders and, except as provided in Section 5.2 below, have determined to
recommend to such shareholders that they vote in favor of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger. This
Agreement has been duly and validly executed and delivered by BRS, and assuming
this Agreement constitutes a legal, valid and binding agreement of RMAG and SUB,
constitutes a legal, valid and binding agreement of BRS may be, enforceable
against BRS in accordance with its terms, except as the enforceability may be
affected by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
the possible unavailability of certain equitable remedies, including the remedy
of specific performance.
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Section 4.4 NO VIOLATIONS; CONSENTS AND APPROVALS. Except as set forth
on Schedule 4.4, (a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by BRS
with any of the provisions hereof conflicts with, violates or results in any
breach of (i) subject to obtaining the requisite approval of BRS's shareholders,
any provision of the Articles of Incorporation or Bylaws of BRS, (ii) any
contract, agreement, instrument or understanding to which BRS is a party, or by
which BRS, or any of its respective assets or properties is bound, or (iii)
subject to the requisite approval of BRS's shareholders, any Law applicable to
BRS, any BRS Shareholder or any of their respective assets or properties,
excluding from the foregoing clauses (ii) and (iii) conflicts, violations or
breaches which, either individually or in the aggregate, would not have a BRS
Material Adverse Effect or materially impair BRS's or BRS Shareholder's ability
to consummate the transactions contemplated hereby or for which BRS or BRS
Shareholders have received or, prior to the Merger, shall have received
appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required by BRS or SUB in
connection with the execution and delivery of the Agreement or the consummation
by BRS or SUB of the transactions contemplated hereby, except (i) in connection,
or in compliance, with the provisions of the Securities Act and the Exchange
Act , in each case with the rules and regulations promulgated thereunder, (ii)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, (iii) filings with, and approval of, the stock exchange where the
BRS Common Stock is to be listed in connection with obligations of BRS
hereunder, and (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings, the failure of which to be obtained or
made would not, individually or in the aggregate, have an BRS Material Adverse
Effect, or materially impair the ability of BRS or SUB to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 4.5 SEC DOCUMENTS; BRS FINANCIAL STATEMENTS. (a) BRS has filed
with the Securities and Exchange Commission ("SEC") all documents required to be
filed under the Securities Act and the Exchange Act since the effective date of
its initial public offering (the "BRS SEC Documents"). As of their respective
dates, the BRS SEC Documents complied in all respects with the requirements of
the Securities Act and the Exchange Act, as the case may be, and none of the BRS
SEC Documents contained any untrue statement of a material fact or omitted 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.
(b) As of their respective dates, the financial statements of BRS
included in the BRS SEC Documents were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
present fairly the consolidated financial position of BRS as at the dates
thereof and the consolidated results of its operations and statements of
cash-flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). BRS's balance sheet included in its Form 10-QSB for the
quarter ended June 30, 2000, shall be referred to as the BRS Interim Balance
Sheet.
(c) BRS has no liability or obligation of any kind (whether contingent
or otherwise and whether due or to become due) except (i) as set forth on
Schedule 4.5, (ii) as set forth on the BRS Interim Balance sheet, or (iii) as
incurred in the ordinary course of business, consistent with past practice since
the date of the BRS Interim Balance Sheet.
17
Section 4.6 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
4.6, since the date of the BRS Interim Balance Sheet, BRS has been operated only
in the ordinary course, consistent with past practice, and there has not been
any adverse change, or any event, fact or circumstance which might reasonably be
expected to result in an adverse change, in either event that would have an BRS
Material Adverse Effect. Without limiting the generality of the foregoing,
except as set forth on Schedule 4.6, since June 30, 2000, there has not been
with respect to BRS any:
(a) sale or disposition of any material asset other than inventory in
the ordinary course;
(b) payment of any dividend, distribution or other payment to any
Shareholder of BRS or to any relative of any such Shareholder other than
payments of salary and expense reimbursements made in the ordinary course of
business, consistent with past practice, for employment services actually
rendered or expenses actually incurred;
(c) incurrence or commitment to incur any liability individually or in
the aggregate material to BRS, except such liabilities under BRS's existing
credit facilities and liabilities incurred in connection with the Merger;
(d) waiver, release, cancellation or compromise of any indebtedness
owed to BRS or claims or rights against others, exceeding $50,000 in the
aggregate;
(e) any change in any accounting method, principle or practice except
as required or permitted by generally accepted accounting principles; or
(f) unusual or novel method of transacting business engaged in by BRS
or any change in BRS's accounting procedures or practices or its financial or
equity structure.
Section 4.7 PROXY STATEMENT PROSPECTUS; REGISTRATION STATEMENT. None of
the information regarding BRS to be supplied by BRS for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
will, in the case of the Registration Statement at the time it becomes effective
and at the Effective Time, and in the case of the Proxy Statement, at the time
it is first mailed to shareholders of BRS and at the time of their shareholders
meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances when made. If at
any time prior to the Effective Time any event with respect to BRS shall occur
which is required to be described in the Proxy Statement or Registration
Statement, such event shall be so described, and an amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the shareholders of BRS. The Proxy Statement and the Registration Statement will
(with respect to BRS) comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act.
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Section 4.8 STATE ANTITAKEOVER STATUTES. The BRS Board of Directors has
approved this Agreement and the transactions contemplated hereby and such
approval constitutes approval of the Merger and the other transactions
contemplated hereby, including approval of the voting agreement (as defined in
Section 5.13 below) by the BRS Board of Directors as required by the DGCL. No
"business combination," "moratorium," "control share," "fair price," "interested
shareholder," affiliated transactions" or other state antitakeover statute or
regulation (i) prohibits or restricts BRS's ability to perform its obligations
under this Agreement (or any party's ability to perform their obligations under
the voting agreement) or either party's ability to consummate the Merger or to
the other transactions contemplated hereby or thereby, (ii) would have the
effect of invalidating or voiding this Agreement or the voting agreement or any
provision hereof, or (iii) would subject RMAG or SUB to any material impediment
or condition in connection with the exercise of any of their respective rights
under this Agreement.
Section 4.9 BROKER'S FEES. Neither BRS nor any of its affiliates or
their respective officers, directors or agents has employed any broker, finder
or financial advisor or incurred any liability for any broker's fees,
commissions, financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement.
Section 4.10 ENVIRONMENTAL MATTERS. BRS has complied in all material
respects with, and has not been cited for any violation of, federal, state and
local environmental protection laws and regulations; and no material capital
expenditures will be required for compliance with any federal, state or local
laws or regulations now in force relating to the protection of the environment.
As used in this section, "hazardous material" means any hazardous or toxic
substance, material or waste that is regulated by any federal authority or by
any state or local authority where the substance, material or waste is located.
There are no underground storage tanks located on the real property owned by
BRS, nor were there any such underground storage tanks located in any real
property owned or leased by Bristol during the period of Bristol's period of
ownership or tenancy, nor is BRS aware of any underground storage tanks on the
real property leased by BRS in which any hazardous material has been or is being
stored, nor has there been any spill, disposal, discharge or release of any
hazardous material into, upon or over that real property or into or upon ground
or surface water on that real property. There are no asbestos-containing
materials incorporated into the buildings or interior improvements that are part
of the real property or into other assets owned by BRS, nor is there any
electrical transformer, fluorescent light fixture with ballasts or other
equipment containing polychlorinated biphenyls on the real property owned by
BRS. BRS is not aware of any asbestos-containing materials incorporated into the
buildings or interior improvements that are part of the real property or into
other assets leased by BRS, nor is BRS aware of any electrical transformer,
fluorescent light fixture with ballasts or other equipment containing
polychlorinated biphenyls on the real property leased by BRS.
Section 4.11 COMPLIANCE WITH LAWS. BRS is not or has not conducted its
business in violation of any Law, including without limitation, any Law
pertaining to environmental protection, occupational health or safety, and
employment practices except the violation of which would not have an BRS
Material Adverse Effect.
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Section 4.12 NO LITIGATION. Except as set forth in the BRS SEC
Documents as on Schedule 4.12, there is no claim, litigation, investigation or
proceeding by any person or governmental authority pending or, to BRS's
knowledge threatened, against BRS. There are no pending or, to BRS's knowledge,
threatened controversies or disputes with, or grievances or claims by, any
employees or former employees of BRS or any of its respective predecessors of
any nature whatsoever, including, without limitation, any controversies,
disputes, grievances or claims with respect to their employment, compensation,
benefits or working conditions, except for such litigation which would not have
an BRS Material Adverse Effect.
Section 4.13 EMPLOYEE BENEFITS. All employee welfare benefit plans as
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974
("ERISA"), employee pension benefit plans as defined in Section 3(2) of ERISA,
and all other employee benefit programs or arrangements of any type, written or
unwritten (collectively, the "Plans") maintained by BRS or to which BRS
contributes are listed on Schedule 4.16. In addition, Schedule 4.16 separately
sets forth any Plans which BRS, or any affiliate or predecessor of BRS,
maintained or contributed to within the three years preceding the date hereof.
(a) The Plans comply, with all applicable provisions of all Laws,
including, without limitation, the Code and ERISA, and have so complied during
all prior periods during which any such provisions were applicable. Without
limiting the foregoing, all of the Plans, and any related trust, intended to
meet the requirements for tax-favored treatment under the Code (including,
without limitation, Sections 401 and 501 and Subchapter B of the Chapter 1 of
the Code) meets and for all prior periods has met, such requirements in all
material respects.
(b) BRS and any other party involved in the administration of any of
the Plans (i) has complied in all material respects with the provisions of
ERISA, the Code or other Laws, applicable to such party, whether as an employer,
plan sponsor, plan administrator, or fiduciary of any of the Plans or otherwise,
(including without limitation the provisions of ERISA and the Code concerning
prohibited transactions), and (ii) has administered the Plans in accordance with
the terms. BRS has made all contributions required of it by any Law (including,
without limitation, ERISA) or contract under any of the Plans and no unfunded
liability exists with respect to any of the Plans.
(c) BRS has no responsibility or liability, contingent or otherwise,
with respect to any Plans or any employee benefits other than under the Plans
listed on Schedule 4.13. BRS has the right to amend or terminate, without the
consent of any other person, any of the Plans, except as prohibited by law, and
any applicable collective bargaining agreement. Neither BRS, nor any affiliate
or predecessor of BRS, maintains or has ever maintained or been obligated to
contribute to (i) any defined benefit pension plan (as such term is defined in
Section 3(35) of ERISA), (ii) any multiemployer plan (as such term is defined in
Section 3(37) of ERISA), (iii) any severance plan or policy, or (iv) any
arrangement providing medical or other welfare benefits to retirees or other
former employees or their beneficiaries, except as required under part 6 of
Subtitle B of Title I of ERISA or Section 4980B(f) of the Code (hereinafter
collectively referred to as "COBRA").
(d) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to BRS's knowledge, any actions, suits, or claims
(other than routine claims for benefits) which could reasonably be expected to
be asserted, against any of the Plans, or the assets thereof, or against BRS or
any other party with respect to any of the Plans.
20
Section 4.14 TAXES. (a) BRS has duly filed with the appropriate
federal, state, local and foreign taxing authorities all Tax Returns (as defined
below) required to be filed by or with respect to BRS on or before the date
hereof. BRS has included in its federal income Tax Returns for all periods ended
on or before December 31, 1996. All such Tax Returns are true, correct and
complete in all material respects as of the time of filing. BRS, with respect to
the federal income Tax Returns, and, with respect to any other Tax Returns, has
paid in full on a timely basis all Taxes (as defined below) due on such Tax
Returns or such Taxes that are otherwise due, except to the extent such Tax is
being contested in good faith through appropriate proceedings and for contested
Taxes only which adequate reserves have been established on the BRS Interim
Balance Sheet. Except as set forth on Schedule 4.14, the balance for accrued
Taxes on the BRS Interim Balance Sheet for the payment of accrued but unpaid
Taxes through the date thereof is correct and the amount of BRS's liability for
unpaid Taxes shall not exceed such balance for accrued but unpaid Taxes of BRS,
respectively. The balance of accrued Taxes have been determined in accordance
with generally accepted accounting principles, applied on a consistent basis.
All monies which BRS was required by Law to withhold from employees have been
withheld and either timely paid to the proper governmental authority or set
aside in accounts for such purposes and accrued on the books of BRS.
(b) Except as set forth on Schedule 4.14, BRS has never been a member
of an affiliated group filing consolidated returns.
(c) (i) BRS has not received any notice of a deficiency or assessment
with respect to Taxes of BRS from any taxing authority which has not been fully
paid or finally settled, except to the extent any such deficiency or assessment
is being contested in good faith through appropriate proceedings and for which
adequate reserves have been established on the BRS Interim Balance Sheet; (ii)
there are no ongoing audits or examinations of any Tax Return relating to BRS
and no notice (oral or written) of audit or examination of any such Tax Return
has been received by BRS; (iii) In the last three years, the federal income Tax
Returns of BRS have not been audited by the Internal Revenue Service; and (iv)
To BRS's knowledge, no issue has been raised (either in writing or verbally,
formally or informally) on audit or in any other proceeding (and is currently
pending) with respect to Taxes of BRS by any taxing authority which, if resolved
against BRS, would have a BRS Material Adverse Effect. BRS has disclosed on its
federal income tax returns all positions taken therein that, BRS believes could
give rise to a substantial understatement penalty within the meaning of Code
Section 6662.
(d) BRS is not (nor has it ever been) a party to any tax sharing
agreement and has not assumed the liability for taxes of any other person under
law or contract.
21
(e) BRS (i) has not filed a consent pursuant to Code Section 341(f) nor
agreed to have Code Section 341(f)(2) apply to any disposition of a subsection
(f) asset (as such term is defined in Code Section 341(f)) owned by BRS; (ii)
has not agreed, or is not required, to make any adjustment under Code Section
481(a) by reason of a change in accounting method or otherwise initiated by BRS
that will affect the liability of BRS for Taxes; (iii) has not made an election,
or is required, to treat any asset of BRS as owned by another person pursuant to
the provisions of former Code Section 168(f)(8); (iv) is not now nor has ever
been a party to any agreement, contract, arrangement, or plan that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Code Section 280G; (v) has not participated in
an international boycott as defined in Code Section 999; (vi) is not now or has
ever been a "foreign person" within the meaning of Code Section 1445(b)(2);
(vii) is not now or has ever been a United States real property holding
corporation within the meaning of Code Section 897(c)(1)(A)(ii); or (viii) has
not made any of the foregoing elections or is required to apply any of the
foregoing rules under any comparable state or local tax provision.
(f) BRS is not required to report or pay any additional Taxes from any
joint venture, partnership or other arrangement or contract limited liability
company that could be treated as a partnership for federal income tax purposes.
(g) For purposes of this Section 4.17, the following terms shall have
the meaning given to them below:
(i) "Tax" means any of the Taxes, and "Taxes" means, with
respect to BRS, (i) all income taxes (including any tax on or based upon net
income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, estimated, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, environmental (including taxes under Code Section
59A), alternative, add-on minimum, custom duties, capital stock, social security
(or similar), unemployment, disability, or other taxes, fees assessments, or
charges of any kind whatsoever, together with any interest, penalty, or addition
thereto, whether disputed or not, imposed by any taxing authority on BRS, and
(ii) any liability for payment of any amount of the Tax described in the
immediately preceding clause (i) as a result of being a "transferee" (within the
meaning of Code Section 6901 or any other applicable law) of another person or
successor, by contract, or otherwise, or a member of an affiliated,
consolidated, or combined group.
(ii) "Tax Return" means any return, declaration, report, claim
or refund, or information return or statement or other document (including any
related or supporting information) filed or required to be filed with any
appropriate federal, state, local and foreign governmental entity or authority
(individually or collectively, "taxing authority") or other authority in
connection with the determination, assessment or collection of any Tax paid or
payable by BRS or the administration of any Laws, regulations, or administrative
requirements relating to any such Tax.
Section 4.15 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither BRS nor any
director, officer, employee or agent of the foregoing, nor any other person
acting on its behalf, directly or indirectly, has to BRS's knowledge given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person which (i) might subject BRS to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had a BRS Material Adverse Effect, or (iii)
if not continued in the future, might have a BRS Material Adverse Effect or
which might subject BRS to suit or penalty in any private or governmental
litigation or proceeding.
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Section 4.16 INTELLECTUAL PROPERTY. (a) Schedule 4.16(a) sets forth a
correct and complete list of (i) all U.S. and foreign trademarks, patents,
service marks, trade names, copyrights, mask works and designs which are
pending, applied for, granted, or registered in any country or jurisdiction of
the world and are owned by BRS and used in connection with its business; (ii)
all unregistered trademarks, patents, service marks, and trade names which are
owned by BRS and used in connection with its business; and (iii) all licenses,
contracts, permissions and other agreements relating to the business to which
BRS is a party relating in any way to rights in any of the foregoing. Except as
set forth on Schedule 4.16(a), title to all registered intellectual property is
recorded on records in the name of BRS and, to the extent applicable, all
affidavits of continued use and incontestability in respect of such registered
intellectual property have been timely filed.
(b) Except as disclosed and set forth on Schedule 4.16(b), (i) BRS owns
or possesses licenses or other valid rights to use, and upon consummation of the
transactions contemplated by this Agreement, the Surviving Corporation shall own
or possess licenses or other valid rights to use (without the making of any
payment to others or the obligation to grant rights to others in exchange), all
intellectual property necessary to the conduct of the business of BRS as
currently conducted, including, without limitation, all releases required in
connection with quotes, testimonials or likenesses utilized in editorial or
promotional material; (ii) BRS's right title and interest in such intellectual
property is not being opposed by any claim or demand or in any proceeding,
action, litigation or order to which BRS or any person or entity who has granted
a license or other right to use intellectual property to BRS or who has been
granted a license or other right to use intellectual property by BRS, is a party
or subject, nor to the knowledge of BRS is any such claim, demand, proceeding,
action, litigation, or court order threatened; and (iii) the conduct of the
business of BRS as currently conducted does not materially infringe or conflict
with any intellectual property of others.
Section 4.17 REQUIRED VOTE OF BRS SHAREHOLDERS. The affirmative vote of
the holders of a majority of the outstanding BRS Shares is required to approve
the Merger. No other vote of the shareholders of BRS is required by Law, the
Articles of Incorporation or Bylaws of BRS or otherwise in order for BRS to
consummate the Merger and the transactions contemplated hereby.
Section 4.18 KNOWLEDGE. The term "to BRS's knowledge" shall mean the
actual knowledge of each director and officer of BRS and, where applicable, each
BRS Shareholder after reasonable investigation.
Section 4.19 LABOR. BRS has not experienced any strike, collective
labor agreements, or the collective bargaining disputes or claims of unfair
labor practices in the last five years. To BRS's knowledge, there is no
organizational effort presently being made by or on behalf of any labor union
with respect to the employees of BRS.
Section 4.20 BRS STOCKHOLDER RIGHTS PLAN. The Board of Directors of BRS
has amended the BRS Rights Agreement in accordance with its terms to render
inapplicable the transactions contemplated by this Agreement.
23
Section 4.21 OPINION OF FINANCIAL ADVISOR. BRS has received the opinion
of a financial advisor to the effect that, as of such date, the Exchange Ratio
is fair, from a financial point of view, to the holders of the BRS Common Stock,
copies of which opinions will be promptly provided to the other company.
Section 4.22 NO UNDISCLOSED INFORMATION. No provision of this Article
IV or any Schedule or any document or agreement furnished by BRS or the BRS
Shareholders contains any untrue statement of a material fact, or omits to state
a material fact necessary in order to make the statement contained herein, in
light of the circumstances under which such statements are made, not misleading.
ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF BUSINESS OF BRS AND RMAG. Except as contemplated
by this Agreement or as expressly agreed to in writing by the other party,
during the period from the date of this Agreement to the Effective Time, BRS and
RMAG will each conduct their operations substantially as presently operated and
only in the ordinary course of business, in a normal manner consistent with past
practices and will use commercially reasonable efforts to preserve intact their
business organization, to keep available the services of their officers and
employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would adversely affect its ability to consummate the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, except as otherwise expressly provided in this Agreement, prior
to the Effective Time neither BRS nor RMAG will, without the prior written
consent of the other:
(a) amend its Articles of Incorporation or Bylaws;
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any shares of its
capital stock or any securities convertible into shares of its capital stock,
other than pursuant to and in accordance with the terms of its stock option
plans;
(c) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; or purchase, redeem or otherwise acquire any shares of its
own capital stock;
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(d) (i) create, incur, assume, maintain or permit to exist any
long-term debt or any short-term debt for borrowed money other than under
existing lines of credit, relating to purchase money security interests or
obligations as a lessee under leases recorded as capital leases, each as
incurred in the ordinary course of business; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practices; or (iii) make any loans,
advances or capital contributions to, or investments in, any other person;
(e) (i) increase in any manner the rate of compensation of any of its
directors, officers or other employees, except in the ordinary course of
business and in accordance with its customary past practices or as otherwise may
be contractually required; or (ii) pay or agree to pay any bonus, pension,
retirement allowance, severance or other employee benefit except as required
under currently existing employee benefit plans or in the RMAG or BRS SEC
Documents as the case may be;
(f) except as set forth on Schedule 5.1, sell or otherwise dispose of,
or encumber, or agree to sell or otherwise dispose of or encumber, any assets
other than inventory in the ordinary course of business;
(g) enter into any other agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business consistent with past practice;
(h) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into any agreement in principle or an
agreement with respect to, any (i) plan of liquidation or dissolution, (ii)
acquisition of a material amount of assets or securities, (iii) disposition of a
material amount of assets or securities or (iv) material change in its
capitalization, or enter into a material contract or any amendment or
modification of any material contract or release or relinquish any material
contract right;
(i) engage in any unusual or novel method of transacting business or
change any accounting procedure or practice or its financial structure; or
(j) take any action the taking of which, or omit to take any action the
omission of which, would cause any of the representations and warranties herein
to fail to be true and correct in all respects as of the date of such action or
omission as though made at and as of the date of such action or omission.
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Section 5.2 NO SOLICITATION. BRS and RMAG each agrees that, prior to
the Effective Time, except as provided below it shall not, and shall not
authorize or permit any of its directors, officers, employees, agents or
representatives to, directly or indirectly, solicit, initiate, facilitate or
encourage (including by way of furnishing or disclosing information), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to any Transaction Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Transaction Proposal or agree to or endorse any Transaction Proposal or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it to take any such action; provided, however, that
nothing contained in this Agreement shall prohibit the BRS or RMAG Boards of
Directors, respectively, from, (i) furnishing information to or entering into
discussions or negotiations with any person or entity that makes an unsolicited
written, bona fide Transaction Proposal which the BRS or RMAG Board of
Directors, as the case may be, determines in good faith that such action is
necessary for the BRS or RMAG Board of Directors to comply with its fiduciary
duties to shareholders under applicable law or (ii) withdrawing, modifying or
changing its recommendation referred to herein if there exists a Transaction
Proposal and the BRS or RMAG Board of Directors, as the case may be, and based
upon the advice of independent legal counsel, determines in good faith that such
action is necessary for the BRS or RMAG Board of Directors to comply with its
fiduciary duties to shareholders under applicable law in connection with such
Transaction Proposal. BRS or RMAG, as the case may be, shall immediately advise
the other parties to this Agreement, orally and in writing, of any inquiries or
proposals relating to an Transaction Proposal known to it, the material terms
and conditions of such inquiry or proposal, and the identity of the person or
entity making such inquiry or proposal. BRS or RMAG, as the case may be, shall
give the other parties to this Agreement at least two (2) business days advance
notice of any information to be supplied to, and at least three (3) days'
advance notice of any agreement to be entered into with any person or entity
making such a proposal for a Transaction Proposal with respect to BRS or RMAG.
For purposes of this Agreement, "Transaction Proposal" shall mean any of the
following (other than the transactions between BRS, RMAG and SUB contemplated by
this Agreement) involving BRS or RMAG: (i) any merger, consolidation, share
exchange, recapitalization, business combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of twenty percent (20%) or more of the assets of BRS or RMAG, in a single
transaction or series of transactions; (iii) any offer for, or the acquisition
(or right to acquire) of "beneficial ownership" by any person, "group" or entity
(as such terms are defined under Section 13(d) of the Securities Exchange Act of
1934), of twenty percent (20%) or more of the outstanding shares of capital
stock of BRS or RMAG or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement by BRS
of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
Section 5.3 ACCESS TO INFORMATION. (a) From the date of this Agreement
until the Effective Time, BRS will provide RMAG and RMAG will provide BRS, and
their respective lenders and authorized representatives (including counsel,
environmental and other consultants, accountants and auditors) full access
during normal business hours to all facilities, personnel and operations and to
all books and records of BRS, RMAG and SUB, will permit the other party to make
such inspections as it may reasonably require (including without limitation any
air, water or soil testing or sampling deemed necessary) and will cause its
officers to furnish the other party with such financial and operating data and
other information with respect to its business and properties as the other party
may from time to time reasonably request.
26
(b) RMAG and BRS will hold and will cause their representatives to hold
in confidence, all documents and information furnished in connection with this
Agreement. Other than documents or information (i) available to the public, (ii)
which are or become known by RMAG or BRS from a source other than BRS or RMAG,
as the case may be, other than by a breach of a confidentiality obligation owed
to BRS or RMAG, respectively, or (iii) required by law to be disclosed.
Section 5.4 REGISTRATION STATEMENT AND PROXY STATEMENT. RMAG and BRS
shall file with the SEC as soon as is reasonably practicable after the date
hereof, the Proxy Statement/Prospectus and RMAG shall file the Registration
Statement in which the Proxy Statement/Prospectus shall be included. The parties
shall cooperate with each other with regard to such filings. RMAG and BRS shall
use all commercially reasonable efforts to have the Registration Statement
declared effective by the SEC as promptly as practicable. RMAG shall also take
any action required to be taken under applicable state blue sky or securities
laws in connection with the issuance of the RMAG Common Stock. RMAG and BRS
shall promptly furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any action by any of
them in connection with the preceding sentences.
Section 5.5 SHAREHOLDER'S MEETINGS. Unless the BRS Board of Directors
shall have taken an action permitted by clause (ii) of Section 5.2 above, BRS
shall call a meeting of its respective shareholders to be held as promptly as
practicable (and in any event within 45 days after the Registration Statement is
declared effective) for the purpose of voting, in the case of BRS, upon this
Agreement and the Merger. BRS shall, through its Board of Directors, recommend
to its shareholders approval of such matters and will coordinate and cooperate
with respect to the timing of the meeting. Unless the BRS Board of Directors
shall have taken an action permitted by clause (ii) of Section 5.2 above, BRS
shall use all commercially reasonable efforts to solicit from shareholders of
such party proxies in favor of such matters.
Section 5.6 REASONABLE EFFORTS; OTHER ACTIONS. BRS, RMAG and SUB each
shall use all commercially reasonable efforts promptly to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable Law to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, (i) the taking of any actions required to qualify the Merger for
treatment as a tax-free reorganization within the meaning of Code Section
368(a), and (ii) the obtaining of all necessary consents, approvals or waivers
under its material contracts.
Section 5.7 PUBLIC ANNOUNCEMENTS. Before issuing any press release or
otherwise making any public statements with respect to the Merger, RMAG, SUB and
BRS will consult with each other as to its form and substance and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law (it being agreed that the parties
hereto are entitled to disclose all requisite information concerning the
transaction and any filings required with the SEC).
27
Section 5.8 NOTIFICATION OF CERTAIN MATTERS. Each of BRS and RMAG shall
give prompt notice to the other party of (i) any notice of, or other
communication relating to, a default or event which, with notice of lapse of
time or both, would become a default, received by it subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results of operations of BRS
or RMAG, as the case may be, to which it is a party or is subject, (ii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement, (iii) any material adverse change in their
respective financial condition, properties, businesses or results of operations
or the occurrence of any event which is reasonably likely to result in any such
change, or (iv) the occurrence or existence of any event which would, or could
with the passage of time or otherwise, make any representation or warranty
contained herein untrue; provided, however, that the delivery of notice pursuant
to this Section 5.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. Each party shall use its best
efforts to prevent or promptly remedy the same.
Section 5.9 EXPENSES. RMAG and SUB, on the one hand, and BRS, on the
other hand, shall bear their respective expenses incurred in connection with the
Merger, including, without limitation, the preparation, execution and
performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of its representatives, counsel and accountants.
Section 5.10 AFFILIATES. BRS shall deliver to RMAG and RMAG shall
deliver to BRS a letter identifying all persons who, as of the date hereof, may
be deemed to be "affiliates" thereof for purposes of Rule 145 under the
Securities Act (the "Affiliates") and shall advise such party in writing of any
persons who become Affiliates prior to the Effective Time. BRS and RMAG shall
cause each person who is so identified as an Affiliate to deliver, no later than
the earlier of the thirtieth (30th) day prior to the Effective Time or the date
such person becomes an Affiliate, a written agreement substantially in the form
of Exhibit A hereto.
Section 5.11 STOCK EXCHANGE LISTING. RMAG shall file a listing
application on or before the Closing and thereafter shall use its best efforts
to effect approval to list on the NASDAQ SmallCap Stock Market or on the
American Stock Exchange, the RMAG Common Stock to be issued pursuant to the
Merger.
Section 5.12 STATE ANTITAKEOVER LAWS. If any "fair price" or "control
share acquisition" statute or other similar antitakeover regulation shall become
applicable to the transactions contemplated hereby, RMAG and BRS and their
respective Board of Directors shall use their reasonable best efforts to grant
such approvals and to take such other actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and shall otherwise use their reasonable best
efforts to eliminate the effects of any such statute or regulation on the
transactions contemplated hereby.
Section 5.13 VOTING AGREEMENT. Simultaneously, with execution and
delivery of this Agreement, (a) The individuals listed on Schedule 5.13(c) shall
deliver to RMAG a voting agreement in the form attached hereto as Schedule
5.13(a); and (b) the individuals listed on Schedule 5.13(b) shall deliver to BRS
the Voting Agreement in the form attached hereto as Schedule 5.13(b).
[ANY OTHER CONDITIONS]
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Section 5.14 SATISFACTION OF CONDITIONS. BRS agrees to use its best
efforts to cause each of the conditions set forth in Article VII to RMAG and SUB
proceeding with the Closing to be satisfied on or before the Closing Date. RMAG
and SUB agree to use their respective best efforts to cause each of the
conditions set forth in Article VIII to BRS proceeding with the Closing to be
satisfied on or before the Closing Date.
Section 5.15 GOVERNMENT FILINGS. Each party shall (a) confer on a
regular and frequent basis with the other, and (b) report to the other (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. BRS and RMAG shall file all its reports with
the SEC (and all local governmental entities) from the date of this Agreement
and the Effective Time and shall (to the extent permitted by law, regulation or
any applicable confidentiality agreement) deliver to the other party copies of
all such reports, announcements and publications promptly after the same are
filed.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF RMAG, SUB AND BRS
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the closing of each of the following
conditions:
Section 6.1 REGISTRATION STATEMENT. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and remain in effect. All necessary state securities
or blue sky authorizations shall have been received.
Section 6.2 SHAREHOLDER APPROVAL. The requisite vote of the
shareholders of BRS and RMAG and SUB necessary to consummate the transactions
contemplated by this Agreement shall have been obtained.
Section 6.3 CONSENTS AND APPROVALS. All necessary consents and
approvals of any United States or any other governmental authority required for
the consummation of the transactions contemplated by this Agreement shall have
been obtained.
Section 6.4 EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF RMAG AND SUB
The obligation of RMAG and SUB to effect the Merger and to perform
under this Agreement is subject to the fulfillment on or before to the Closing
Date of the following additional conditions, any one or more of which may be
waived, in writing, by RMAG and SUB:
29
Section 7.1 REPRESENTATIONS ACCURATE. The representations and
warranties of BRS contained herein shall be true and correct on the date of this
Agreement and at and on the Closing Date as though such representations and
warranties were made at and on such date.
Section 7.2 PERFORMANCE. BRS shall have complied, in all material
respects, with all agreements, obligations and conditions required by this
Agreement to be complied with by it on or prior to the Closing Date.
Section 7.3 OFFICER'S CERTIFICATE. RMAG and SUB shall have received a
duly executed certificate signed by the President or Chairman of BRS certifying
as to (i) compliance with the conditions set forth in Sections 7.1 and 7.2; (ii)
the accuracy and completeness of the Bylaws of BRS and the director and
shareholder resolutions of BRS approving this Agreement, the Merger and the
transactions contemplated hereby; and (iii) the identity and authority of the
officers and other persons executing documents on behalf of BRS. RMAG and SUB
shall have received a duly executed certificate signed by an BRS Shareholder
certifying as to the compliance with the condition set forth in Section 7.1.
Section 7.4 CERTIFIED ARTICLES OF INCORPORATION. RMAG and SUB shall
have received a certificate of the Secretary of State of the State of Delaware
certifying the Articles of Incorporation of BRS and all amendments thereof,
dated not more than ten (10) days prior to the Closing Date.
Section 7.5 GOOD STANDING. RMAG shall have received a certificate of
good standing, or its equivalent, dated no more than ten (10) days prior to the
Closing Date, from the state of incorporation of BRS and each other state in
which BRS is qualified to do business as set forth on Schedule 4.1.
Section 7.6 LEGAL ACTION. There shall be no pending or threatened legal
action or inquiry which challenges the validity or the legality of or seeks or
could reasonably be expected to prevent, delay or impose conditions on the
consummation of the Merger or would otherwise restrict RMAG's or the Surviving
Corporation's exercise of full rights to own and operate the business of BRS
subsequent to the Effective Time.
Section 7.7 CONSENTS. RMAG and SUB shall have received copies of
consents of all third parties necessary for BRS to execute, deliver and perform
this Agreement and consummate the Merger including, but not limited to, the
consent of First Bank of California.
Section 7.8 DISSENTING SHARES. On the Closing Date, the aggregate
number of BRS Shares with respect to which the holders shall be dissenting
shareholders entitled to relief under the applicable Sections of the DGCL shall
not exceed ten percent (10%) of all outstanding BRS Shares.
Section 7.9 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, operations, assets, prospects, financial
condition or results of operations of BRS.
30
Section 7.10 AGREEMENTS WITH AFFILIATES. RMAG and SUB shall have
received from each person who is an Affiliate under Section 5.10 an executed
copy of the written agreement referred to in Section 5.10 and such agreements
shall be in full force and effect and there shall be no breach, or in existence
any facts which with passage of time or otherwise could constitute a breach,
thereof.
Section 7.11 CERTIFICATE OF MERGER. BRS shall have delivered to RMAG
the Certificate of Merger as executed by duly authorized officers of BRS.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BRS
The obligations of BRS to effect the Merger and to perform under this
Agreement is subject to the fulfillment on or before the Closing Date of the
following additional conditions, any one or more of which may be waived, in
writing, by BRS:
Section 8.1 REPRESENTATIONS ACCURATE. The representations and
warranties of RMAG and SUB contained herein shall be true and correct on the
date of this Agreement and at and on the Closing Date as though such
representations and warranties were made at and on such date.
Section 8.2 PERFORMANCE. RMAG and SUB shall have complied, in all
material respects, with all agreements, obligations and conditions required by
this Agreement to be complied with by them on or prior to the Closing Date.
Section 8.3 COMPLIANCE CERTIFICATE. BRS and the BRS Shareholders shall
have received a certificate signed by the President or Chairman of each of RMAG
and SUB certifying as to (i) compliance with the conditions set forth in
Sections 8.1 and 8.2; (ii) the accuracy and completeness of the Bylaws of SUB
and, as applicable, the director and shareholder resolutions of RMAG and SUB
approving this Agreement, the Merger and the transactions contemplated hereby;
and (iii) the identity and authority of the officers and other persons executing
documents on behalf of RMAG and SUB.
Section 8.4 CERTIFIED ARTICLES OF INCORPORATION. BRS shall have
received a certificate of the Secretary of States of the State of Florida and
Delaware certifying the Articles of Incorporation of RMAG and the Certificate of
Incorporation of SUB and all amendments thereof, dated not more than ten (10)
days prior to the Closing Date.
Section 8.5 GOOD STANDING. BRS shall have received a certificate of
good standing, or its equivalent, dated no more than ten (10) days prior to the
Closing Date, from the state of incorporation of RMAG and SUB and each other
state in which RMAG and SUB are qualified to do business, which states are set
forth on Schedule 8.5.
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Section 8.6 LEGAL ACTION. There shall be no pending or threatened legal
action or inquiry which challenges the validity or legality of or seeks or could
reasonably be expected to prevent, delay or impose conditions on the
consummation of the Merger.
Section 8.7 CONSENTS. BRS shall have received copies of consents of all
third parties necessary for RMAG to execute, deliver and perform this Agreement
and consummate the Merger.
Section 8.8 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, operations, assets, prospects, financial
condition or results of operations of RMAG or SUB.
Section 8.9 CERTIFICATE OF MERGER. SUB shall have delivered to BRS the
Certificate of Merger, executed by duly authorized officers of SUB.
ARTICLE IX
CLOSING
Section 9.1 TIME AND PLACE. Subject to the provisions of Articles VI,
VII, VIII and X, the closing of the Merger (the "Closing") shall take place at
the offices of Atlas Xxxxxxxx, P.A., as soon as practicable, but in no event
later than the second business day after the date on which each of the
conditions set forth in Articles VI, VII and VIII (other than those conditions
that by their nature are to be satisfied at the Closing but subject to such
conditions) have been satisfied or waived, in writing, by the party or parties
entitled to the benefit of such conditions; or at such other place, at such
other time, or on such other date as RMAG, SUB and BRS may, in writing, mutually
agree. The date on which the Closing actually occurs is herein referred to as
the "Closing Date."
Section 9.2 FILINGS AT THE CLOSING. Subject to the provisions of
Articles VI, VII and VIII hereof, BRS, RMAG and SUB shall cause to be executed
and filed at the Closing the Certificate of Merger and shall cause the
Certificate of Merger to be recorded in accordance with the applicable
provisions of the DGCL and shall take any and all other lawful actions and do
any and all other lawful things necessary to cause the Merger to become
effective.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of BRS and RMAG:
(a) by mutual consent of RMAG and BRS;
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(b) by either RMAG or BRS, if any court of competent jurisdiction in
the United States or other governmental body in the United States shall have
issued an order (other than a temporary restraining order), decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have become final
and nonappealable;
(c) by either RMAG or BRS, if the requisite shareholder approvals of
the shareholders of either SUB or BRS are not obtained at a meeting of
shareholders duly called and held therefor; or
(d) by either RMAG or BRS if a merger shall not have been consummated
by June 30, 2001, provided that a party in material breach of this Agreement may
not terminate this Agreement.
Section 10.2 TERMINATION BY RMAG. This Agreement may be terminated and
the Merger may be abandoned, at any time prior to the Effective Time, before or
after the approval of the shareholders of BRS, by RMAG if (a) BRS shall have
failed to comply in any material respect with any of the covenants or agreements
contained in Articles I, II and V of this Agreement to be complied with by BRS
at or prior to such date of termination, (b) there exists a breach of any
representation or warranty of BRS contained in this Agreement such that the
closing conditions set forth in Article VII would not be satisfied, provided,
however, that with respect to either (a) or (b), if such failure or breach is
capable of being cured prior to the Effective Time, such failure or breach shall
not have been cured within fifteen (15) days of delivery to BRS of written
notice of such failure or breach, (c) the Board of Directors of BRS shall have
failed to recommend, or shall have withdrawn, modified or changed its
recommendation of this Agreement or the Merger in a manner adverse to RMAG or
shall have recommended or issued a neutral recommendation with respect to any
proposal in respect of a Transaction Proposal (as defined in Section 5.2 above)
with a person or entity other than RMAG or any Affiliate of RMAG (or the BRS
Board of Directors resolves to do any of the foregoing), or (d) the Board of
Directors of BRS shall furnish or disclose nonpublic information or negotiate,
explore or communicate in any way with a third party with respect to any
Transaction Proposal, or shall have resolved to do any of the foregoing and
publicly disclosed such resolution.
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Section 10.3 TERMINATION BY BRS. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by the shareholders of BRS, by BRS, if (a) RMAG or SUB shall
have failed to comply in any material respect with any of the covenants or
agreements contained in Articles I, II and V of this Agreement to be complied
with by RMAG or SUB at or prior to such date of termination, (b) there exists a
breach of any representation or warranty of RMAG or SUB contained in this
Agreement such that the closing conditions set forth in Article VIII would not
be satisfied, provided, however, that, with respect to either (a) or (b), if
such failure or breach is capable of being cured prior to the Effective Time,
such failure or breach shall not have been cured within fifteen (15) days of
delivery to RMAG or SUB of written notice of such failure or breach, or (c) the
Board of Directors of RMAG or SUB shall have failed to recommend or shall have
withdrawn, modified or changed its recommendation of this Agreement in a manner
adverse to BRS or shall have recommended or issued a neutral recommendation with
respect to any proposal in respect of a Transaction Proposal with a person or
entity other than BRS or any Affiliate of BRS (or the Board of Directors of RMAG
or SUB, respectively, resolves to do any of the foregoing), in each case in
accordance with and solely to the extent permitted by Section 5.2 above.
Section 10.4 PROCEDURE FOR TERMINATION. In the event of termination and
abandonment of the Merger by RMAG or BRS pursuant to this Article X, written
notice thereof shall forthwith be given to the other.
Section 10.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article X, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in this Section 10.5 and in Section 5.3(b) hereof. Nothing in this
Section 10.5 shall relieve any party from liability for willful breach of this
Agreement.
ARTICLE XI
SURVIVABILITY; INVESTIGATIONS
Section 11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties of BRS, RMAG and SUB contained herein or in any
certificate or other documents delivered prior to the Effective Time shall
survive.
ARTICLE XII
MISCELLANEOUS
Section 12.1 NOTICES. All notices shall be in writing delivered as
follows:
If to RMAG or SUB, to:
Registry Magic Incorporated
0000 XXX Xxxxxxxxx, Xxxxx 000-000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
With a copy to:
Atlas Xxxxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
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If to BRS, to:
Bristol Retail Solutions, Inc.
0000 Xxxxxx Xxxxxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as may have been designated in a prior notice pursuant
to this Section. Notices shall be deemed to be effectively served and delivered
(a) when delivered personally; (b) when given by telephone facsimile (with a
copy mailed by first-class U.S. mail); (c) one (1) business day following
deposit with a recognized national air courier service; or (d) three (3)
business days after being deposited in the United States mail in a sealed
envelope, postage prepaid, return receipt requested, to the appropriate party.
Section 12.2 BINDING EFFECT. Except as may be otherwise provided
herein, this Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties. Except as otherwise specifically provided in this Agreement,
nothing in this Agreement is intended or will be construed to confer on any
person other than the parties hereto any rights or benefits hereunder.
Section 12.3 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and will be given no effect in the
construction or interpretation of this Agreement.
Section 12.4 EXHIBITS AND SCHEDULES. The Exhibits and schedules
referred to in this Agreement will be deemed to be a part of this Agreement.
Section 12.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same document.
Section 12.6 GOVERNING LAW. This Agreement will be governed by the laws
of the State of Florida without regard to conflict of laws principles thereof.
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Section 12.7 WAIVERS. Compliance with the provisions of this Agreement
may be waived only a written instrument specifically referring to this Agreement
and signed by the party waiving compliance. No course of dealing, nor any
failure or delay in exercising any right, will be construed as a waiver, and no
single or partial exercise of a right will preclude any other or further
exercise of that or any other right.
Section 12.8 PRONOUNS. The use of a particular pronoun herein will not
be restrictive as to gender or number but will be interpreted in all cases as
the context may require.
Section 12.9 TIME PERIODS. Any action required hereunder to be taken
within a certain number of days will be taken within that number of calendar
days; provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken will be
automatically extended to the next business day.
Section 12.10 MODIFICATION. No supplement, modification or amendment of
this Agreement will be binding unless made in a written instrument that is
signed by all of the parties hereto and that specifically refers to this
Agreement.
Section 12.11 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement among the parties concerning the subject matter
hereof. All negotiations among the parties are merged into this Agreement, and
there are no representations, warranties, covenants, understandings, or
agreements, oral or otherwise, in relation thereto among the parties other than
those incorporated herein and to be delivered hereunder.
Section 12.12 SEVERABILITY. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
REGISTRY MAGIC INCORPORATED
By: /s/ Xxxxxxxx Xxxxx
------------------------------------
Xxxxxxxx Xxxxx, Its Chairman
BRISTOL RETAIL SOLUTIONS, INC.
By: /s/ Xxxxx Xxxx
------------------------------------
Xxxxx Xxxx, President
RMAG ACQUISITION CORP.
By: /S/ XXXXXXXX XXXXX
------------------------------------
Xxxxxxxx Xxxxx, Its Chairman
