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Exhibit 10.12
STOCK SUBSCRIPTION AND CONTINUITY OF INTEREST AGREEMENT
This Stock Subscription and Continuity of Interest Agreement is dated as
of June 27, 1997 by and among ROCK OF AGES CORPORATION, a Vermont corporation
(the "Acquiror"), and MISSOURI RED QUARRIES, INC., a Georgia corporation, (the
"Shareholder"), which is the sole shareholder of KSGM, INC., a Georgia
corporation (the "Target").
RECITALS:
1. On the date of this agreement, the Acquiror, the Target and the
Shareholder have entered into an Agreement and Plan of Reorganization (the
"Plan") whereby (i) the Target shall merge into the Acquiror (the "Merger") and
cease to exist as a separate corporation, and (ii) all issued and outstanding
shares of the Target's common stock no par value ("Target Common Stock") shall
be converted into and exchanged for shares of validly issued, fully paid and
nonassessable common stock, no par value, of the Acquiror (the "Acquiror Common
Stock" or the "Shares") as set forth in the Plan.
2. The Acquiror and the Shareholder are willing to enter into the Plan and
consummate the merger only if the Merger will qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), and, in furtherance of that goal, the parties have
incorporated into this agreement certain continuity of interest representations
and covenants.
3. The Acquiror and the Shareholder also intend that the Acquiror's
issuance of the Shares to the Shareholder pursuant to the Merger constitutes a
so-called "private placement" exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and constitutes a
transaction exempt from the registration requirements of the Georgia Securities
Act of 1973 (the "Georgia Act") pursuant to Section 10-5-9(12) of the Georgia
Act and, in furtherance of that goal, the Acquiror has requested that the
Shareholder, and the Shareholder has agreed to, enter into this agreement and to
make certain representations and covenants describing the Shareholder's access
to the Acquiror's financial and other information reasonably necessary to the
Shareholder's ability to make an informed business decision whether to invest in
the Acquiror and describing the Shareholder's subscription for the Acquiror
Stock and willingness to hold the Acquiror Stock for investment and not for
resale.
4. Terms used herein and not defined herein shall have the meanings
ascribed to them in the Plan.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
intending to be legally bound the Shareholder, hereby agrees with the Acquiror
as follows:
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1. Investment Representations. The Shareholder hereby represents and
warrants to the Acquiror as follows:
(a) The Shareholder has adequate financial means of providing for
the Shareholder's current business needs and possible business contingencies,
has no need for liquidity of this investment in the Acquiror Common Stock, and
is able to bear the economic risks of this investment to the possible extent of
a total loss of this investment. The Shareholder is an "accredited investor",
within the meaning of Rule 501(a) of Regulation D under the Securities Act.
(b) The Shareholder has been afforded the opportunity by Acquiror to
ask questions and request information in order to acquire detailed knowledge and
information concerning the business affairs and operations of Acquiror and its
direct or indirect subsidiaries, parent and affiliates and their financial
condition and prospects; and, as a result of such opportunity to ask questions
and review information and the Shareholder's business, the Shareholder is in a
position to weigh, and assess such knowledge and information in a meaningful
fashion.
(c) The Shareholder acknowledges that any business and financial
projections of Acquiror that may have been provided by or on behalf of Acquiror
are solely for purposes of describing Acquiror's future business and financial
goals and are not intended to be, nor are they, representations or guaranties of
Acquiror 's future performance.
(d) The Shareholder understands that none of the Acquiror's Common
Stock (including the Shares) have been registered under the Securities Act or
any state securities laws and that the Shares are offered in reliance on
exemptions for private offerings under the Securities Act and exemptions for
merger transactions under such state laws. The Shareholder acknowledges that the
Shareholder is acquiring the Shares without being furnished any offering
literature or memorandum.
(e) The Shareholder is acquiring and purchasing the Shares solely
for investment for his own account and the Shares are not being purchased with a
view to or for the resale, distribution, subdivision, or fractionalization of
the Shares.
(f) The Shareholder acknowledges that Shareholder has received and
examined copies of the Acquiror 's Certificate of Incorporation, Articles and
Bylaws, all as amended to date, as well as minutes of all shareholder and
director meetings relevant to the Merger and the issuance of Shares to the
Shareholder pursuant to the Merger. The Shareholder further acknowledges that
Shareholder has been given full opportunity to receive copies of or examine any
and all other minutes of shareholder and director meetings of the Acquiror.
(g) The Shareholder acknowledges that (A) there are substantial
restrictions on the transferability of the Shares, (B) the Shares will not be,
and investors in the Acquiror
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have no rights to require that the Shares be, registered under the Securities
Act or any state securities laws, and (C) there will be no public market for the
Shares and, accordingly, the Shareholder may have to hold the Shares
indefinitely without the possibility of liquidating the Shareholder's investment
in the Acquiror.
2. Representations as to Authority and Enforceability. The Shareholder
hereby represents to the Acquiror as follows: this agreement constitutes the
valid and binding obligation of the Shareholder enforceable in accordance with
its terms. The Shareholder's execution and delivery of this agreement, and
compliance with the provisions of this agreement will not violate or constitute
a breach of Shareholder's Articles of Incorporation or Bylaws or any provision
of law applicable to it and will not conflict with or result in any breach of
any of the terms, conditions, or provisions of, or constitute a default under,
any contractual obligations of Shareholder nor any court or other governmental
order applicable to the Shareholder.
3. Continuity of Interest Representations and Covenants. Shareholder
represents and warrants to, and covenants and agrees with, Acquiror as follows:
(a) Continuity of Interest Representations.
(i) The Shareholder has, and as of the Effective Time will
have, no present plan, intention or arrangement to sell, transfer or
otherwise dispose of that number of the Shares as would reduce
Shareholder's ownership of the Acquiror Common Stock, collectively,
to a number of Shares having a value (as of the Effective Time) of
less than 50% of the value of all of the issued and outstanding
Target Common Stock immediately prior to the Effective Time. For
purposes of this agreement, shares of Target Common Stock exchanged
for cash or other property, surrendered by dissenters, or exchanged
for cash in lieu of fractional shares of Acquiror Common Stock will
be treated as outstanding Target Common Stock at the Effective Time.
Moreover, shares of Target Common Stock and Shares of Acquiror
Common Stock held by the Shareholder and otherwise sold, redeemed,
or disposed of prior or subsequent to the Effective Time will be
considered as outstanding for purposes of this agreement.
(ii) As of the date of this agreement, the Shareholder owns
the number of shares of Target Common Stock set forth opposite
Shareholder's name on Exhibit 1(a).
(b) Covenant Pending Closing. Prior to the Effective Time, the
Shareholder will not sell, transfer, encumber or otherwise dispose of by any
means any Target Common Stock.
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(c) Post-merger Restrictions on Transfer. For a period of two years
after the Effective Time (the "Post-merger Continuity Period") the Shareholder
shall not sell, transfer or otherwise dispose of an aggregate number of Shares
having a value, as of the Effective Time, of more than 50% of the value of all
of the issued and Target Common Stock of the Target immediately prior to the
Effective Time. For purposes of this agreement, shares of Target Common Stock
exchanged for cash or other property, surrendered by dissenters, or exchanged
for cash in lieu of fractional shares of Acquiror Common Stock will be treated
as outstanding Target Common Stock at the Effective Time. Moreover, shares of
Target Common Stock and Shares of Acquiror Common Stock held by Shareholder and
otherwise sold, redeemed or disposed of prior or subsequent to the Effective
Time will be considered as outstanding for purposes of this agreement. The term
"transfer" as used anywhere in this agreement means any voluntary disposition of
any legal or equitable interest in any Shares, whether by sale, pledge, gift,
assignment, in trust to or for the benefit of the Shareholder or a third party,
or otherwise.
(d) Pledges of Shares. Nothing in this agreement shall prohibit the
Shareholder from pledging any or all of Shareholder's Shares as collateral to
secure a bona fide indebtedness of the Shareholder to a financial institution,
provided that such institution agrees to be subject to restrictions on the sale,
transfer or disposal of any such Shares which are similar to those set forth in
this agreement, except that no such restrictions shall apply to the financial
institution's ability to seize and dispose of its collateral in the event of
default in accordance with its loan agreement and applicable law.
(e) Permitted Transfers. The Shareholder agrees to deliver written
notice to Acquiror thirty (30) days prior to disposing of any Shares during the
Post-merger Continuity Period, in accordance with and as permitted by Section
3(c) or 3(d), above, stating the number of Shares disposed of and the manner of
disposition.
4. Inspection Rights; Non-Marketability of Shares; Restrictions on
Transfer. The Shareholder acknowledges and agrees that:
(a) Inspection Rights. Prior to the date hereof, all documents,
information, records, and books pertaining to this investment have been, and
will continue to be, made available for inspection by Shareholder, and the
Shareholder's attorney and/or accountant.
(b) Non-Marketability of Shares. No representations or promises have
been made concerning the marketability or value of the Shares. The Shareholder
agrees that because the Shares have not been registered under the Securities Act
or relevant state securities laws, they cannot be resold or transferred unless:
(i) they are subsequently registered under such laws or exemptions from
registration are available; and (ii) Acquiror receives an opinion of counsel
satisfactory to it and its counsel that such transfer complies with Federal and
state securities laws. Neither Acquiror nor any of its officers, directors, or
shareholders have represented to the Shareholder that the Shares will be
registered under the Securities Act or relevant state securities laws at any
time in the future or otherwise qualified
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for sale under applicable securities laws. Acquiror does not presently intend to
make available to the public information concerning itself so as to permit
shareholders to use Rule 144 of the Rules and Regulations under the Securities
Act for transfer of the Shares.
(c) Restrictions on Transfer. Shareholder agrees to the following
restrictions on the transfer of the Shares, in addition to the restrictions on
transfer set forth in Section 3(c), above and in any other agreement between
Acquiror and the Shareholder:
(i) No transfer will be permitted: (A) which would violate any
applicable law, statute, or regulation, including, but not limited
to, any Federal or state securities laws; or (B) which would require
registration under any Federal or state securities laws.
With respect to any proposed transfer, Acquiror may, at its option, require an
opinion of counsel acceptable to it to the effect that any proposed transfer is
not prohibited under items (A) or (B), above.
(d) Legends on Certificates. Any stock certificates evidencing the
Shares shall bear the following legends:
The securities represented hereby have not been registered under the
Securities Act of 1933 (the "Act") or any state securities law and may not
be sold or transferred unless (i) a registration statement covering these
securities is effective under the Act or (ii) the transaction is exempt
from registration under the Act and any applicable state securities laws
and, if the corporation requests, an opinion satisfactory to the
corporation to such effect has been rendered to the corporation by counsel
satisfactory to the corporation.
The securities represented hereby are subject to restrictions on transfer
and may not be sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of except in accordance with and subject to all the
terms and conditions of a certain Stock Subscription and Continuity of
Interest Agreement dated June 27, 1997, a copy of which the corporation
will furnish to the holder upon request and without charge.
Further restrictive legends may also be inscribed as in the opinion of counsel
are necessary to comply with Federal and state securities laws.
5. Lock-up Agreement. In the event of an underwritten public offering of
Acquiror's securities, the Shareholder (and any permitted transferee thereof),
whether or not any shares of capital stock of Acquiror owed by Shareholder (or
any permitted transferee thereof) are included in such registration, hereby
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Act, of any equity securities or Acquiror (other
than as part of such underwritten offering), without the consent of the managing
underwriter(s) for such offering (the "Managing Underwriter"), during a period
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commencing on the effective date of such registration and ending 180 calendar
days thereafter, or such lesser period as the Board of Directors of Acquiror and
the Managing Underwriter shall reasonably determine is required to effect a
successful offering.
6. Miscellaneous.
(a) Amendment. This agreement may not be amended, in whole or in
part, except by an instrument in writing signed by the Acquiror and the
Shareholder. In the event of the termination of the Plan according to its terms
this agreement shall also terminate and the parties shall have no further
obligations to each other hereunder except for prior breach hereof.
(b) Binding Effect. This agreement shall be binding on and for the
benefit of the parties hereto and their respective successors, and permitted
assigns; provided, that the Shareholder shall not be entitled to assign or
delegate any of the Shareholder's rights or obligations under this agreement
without the prior written consent of Acquiror.
(c) Counterparts. This agreement may be executed in one or more
counterpart copies, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(d) Entire Agreement. Any oral or written statements,
understandings, correspondence, or agreements previously made by any party with
respect to the subject matter of this agreement are superseded by this agreement
(including any Exhibits attached hereto and specifically referenced by this
agreement), which alone fully and completely expresses the parties' respective
obligations. This agreement is entered into by each party after opportunity for
investigation, and each party represents that such party is not relying upon any
statements, understandings, correspondence, or agreements not embodied in this
agreement and made by any other party or on any other party's behalf.
(e) Governing Law. This agreement shall be governed exclusively by
Vermont law.
(f) Notices. Any notice or other communication required or permitted
under this agreement shall be in writing and shall be deemed to have been duly
given (i) upon hand delivery, or (ii) on the third day following delivery to the
U.S. Postal Service as certified or registered mail, return receipt requested
and postage prepaid, or (iii) on the first day following delivery to a
nationally recognized United States overnight courier service, fees prepaid,
return receipt or other confirmation of delivery requested or (iv) when
telecopied or sent by facsimile transmission if an additional notice is also
given under (i), (ii)
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or (iii) above within three days thereafter. Any such notice or communication
shall be directed to a party at its address set forth below or at such other
address as may be designated by a party in a notice given to all other parties
hereto in accordance with the provisions of this Section.
Acquiror: Rock of Ages Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn.: Xx. Xxxx X. Xxxxxxx,
Chairman of the Board and
Chief Executive Officer
Shareholder: See Exhibit 1(a)
(g) Severability. Each term, condition, and provision of this
agreement shall be valid and enforced to the fullest extent permitted by law. If
there is any conflict between any term, condition, or provision of this
agreement and any statute, law, ordinance, order, rule, or regulation, the
latter shall prevail; provided, that any such conflicting term, condition, or
provision shall be curtailed and limited only to the extent necessary to bring
it within the legal requirements and the remainder of this agreement shall not
be affected thereby.
(h) Waiver. No waiver by any party of any breach or default by any
other party of any of such other party's obligations under this agreement shall
be deemed to be a waiver of any other breach or default of the same or any other
nature. No failure by any party on any one or more occasions to exercise any
right or remedy provided in this agreement shall preclude the exercise of such
right or remedy on any other occasion.
(i) Survival of Covenants and Representations. All covenants and
representations of the parties contained in this agreement shall survive the
execution and delivery of this agreement and the closing of the transactions
contemplated hereby.
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IN WITNESS WHEREOF, the parties have executed this agreement all as of the
date first above-written.
Acquiror:
Witness: ROCK OF AGES CORPORATION
------------------------------ By: /s/ Xxxx X. Xxxxxxx
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[Print Name] Xxxx X. Xxxxxxx, Chairman of the Board
President and Chief Executive Officer
Shareholder:
MISSOURI RED QUARRIES, INC.
------------------------------ By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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[Print Name] Xxxxxx X. Xxxxxxx, Xx., President
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EXHIBIT 1-a
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Shareholder Name & Address No. Shares of Target No. Shares of Acquiror
Common Stock Common Stock
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Missouri Red Quarries, Inc. 526,882 526,882
P. O. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
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