EXHIBIT 2.3 STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
May 21, 1998, is made among the XXX X. XXXXXX STOCK BONUS (ESOP)
RETIREMENT PLAN (the "ESOP"), THE XXXXXXXXX XXXXX XXXXXX
TESTAMENTARY TRUST, XXXXXXXXX XXXXXX and those persons signing this
Agreement as "First Preferred Sellers" (collectively, the "First
Preferred Sellers" and, together with the ESOP, the "Sellers"), and
XXXXXXX INC., a Virginia corporation ("Xxxxxxx").
RECITALS
A. The ESOP owns 44,006 of the 325,504 issued and
outstanding shares (the "Common Shares") of common stock of the
Company and 3,000 shares of the Company's Adjustable Rate
Cumulative Preferred Stock Series A (the "Series A Preferred
Stock"). The Sellers own shares of the Company's First Preferred
Stock (the "First Preferred Stock"). The Common Shares, the Series
A Preferred Shares and the First Preferred Stock to be sold
pursuant to this Agreement are collectively referred to herein as
the "Shares").
X. Xxxxxxx desire to sell and Buyer desires to purchase the
Shares on the terms and for the consideration hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have
the following meanings:
"Affiliate" of a Person means a Person, who, directly or
indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person.
"Bankruptcy Claims" means the currently outstanding claims of
the Class 6 and Class 6A creditors as contemplated in the Third
Amended Plan of Reorganization of Xxx X. Xxxxxx Co., as confirmed
on November 10, 1993 by the United States District Court for the
Eastern District of Tennessee.
"Closing" has the meaning set forth in Section 8.1.
"Closing Date" has the meaning set forth in Section 8.1.
"Commitment" has the meaning set forth in Section 4.6.
"Common Stock" means the unclassified common stock of the
Company.
"DGCL" means the Delaware General Corporation Law.
"Distribution Amount" means that portion of the Escrow Amount,
if any, to be distributed to the ESOP in accordance with Article
IX hereof and the Escrow Agreement.
"Escrow Agent" shall mean Sun Trust Bank, in its role as
escrow agent under the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement among Xxxxxxx,
the Escrow Committee and the Escrow Agent, in the form attached
hereto as Exhibit B, to be executed in connection with the
consummation of the transactions contemplated by this Agreement.
"Escrow Amount" means that portion of the total purchase price
for the Common Stock owned by the ESOP equal to $110,015 to be held
in escrow pursuant to the Escrow Agreement.
"Escrow Committee" means Xxxxxxx X. Xxxxxx and Xxxxx X.
Xxxxxxx.
"Escrowed Funds" has the meaning set forth in Section 9.4.
"First Preferred Stock" means the First Preferred Stock of the
Company.
"Harrisonburg Lease" means that certain indenture of lease,
dated January 23, 1978 originally between General Growth Properties
and Xxx X. Xxxxxx Co., as amended to date.
"HSR Act" means the Xxxx-Xxxxx Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Xxxxxx Capital" means Xxxxxx Capital Management, Inc.
"Merger" means the merger of PAS with and into the Company
pursuant to the Merger Agreement.
"Merger Agreement" means the Merger Agreement, dated as of the
date hereof, by and among Xxxxxxx, PAS and the Company.
"PAS" means Xxxxxxx Acquisition Subsidiary, Inc., a Delaware
corporation and a wholly-owned subsidiary of Xxxxxxx.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including
a governmental or political subdivision or an agency or
instrumentality thereof.
"Subsidiary" with respect to any party to this Agreement means
any corporation or other business entity, whether or not
incorporated, of which at least 50% of the securities or interests
having, by their terms, ordinary voting power to elect members of
the board of directors, or other persons performing similar
functions with respect to such entity is held, directly or
indirectly, by such party.
"Survival Date" has the meaning set forth in Section 9.8.
"Tax" or "Taxes" means:
(a) Any federal or state income or franchise
tax; and
(b) Any interest, additions and penalties
(civil or criminal) imposed in connection with any Tax
and any interest in respect of any such additions or
penalties.
"Surviving Corporation" means Xxx X. Xxxxxx Co., the surviving
corporation in the Merger.
"Tax Law" means the Internal Revenue Code, federal, state or
local laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
"Trustee" means Home Federal Bank of Tennessee, the trustee
for the ESOP.
"West Knoxville Lease" means that certain lease agreement,
dated August 23, 1993, between Olde Kingston Towne II, Ltd. and Xxx
X. Xxxxxx Co. and all amendments thereto.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares. At the Closing the Sellers
shall sell the Shares to Xxxxxxx and Xxxxxxx shall purchase the
Shares from Sellers (the "Stock Purchase") in exchange for the
payment of (i) in the case of Common Shares, an amount in cash
equal to $220,030 plus the Distribution Amount, if any, (ii) $69.40
in cash per shares of Series A Preferred Stock and (iii) $78.40 in
cash per share of First Preferred Stock. The cash portion of the
purchase price described in this Section 2.1 shall be paid in
immediately available funds at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 ESOP Representations and Warranties. The ESOP represents
and warrants to Xxxxxxx the following:
3.1.1 Authority Relative to this Agreement.
(a) The ESOP is a trust established pursuant
to an employee stock ownership plan, is duly formed and
validly existing and has full power and authority to own
the Shares set forth next to its name on Exhibit A and to
sell such Shares to Xxxxxxx pursuant to this Agreement.
The Trustee has been duly appointed trustee of the ESOP,
has accepted such trusteeship and has all requisite power
and authority to carry out the obligations of the Trustee
arising in connection with the transactions contemplated
by this Agreement.
(b) This Agreement has been duly executed and
delivered by the ESOP. This Agreement constitutes valid
and binding obligations of the ESOP in accordance with
its terms except as such enforceability may be limited by
(i) bankruptcy, insolvency or similar laws affecting
creditors' rights generally or (ii) general principles of
equity, whether considered in a proceeding in equity or
at law.
3.1.2 No Violation. The execution and delivery by the
ESOP of this Agreement, and the consummation of the transactions
contemplated hereby and thereby will not (i) violate or result in
a breach of any provision of the governing instruments of the ESOP,
(ii) result in a default or give rise to any right of termination,
modification or acceleration under the provisions of any agreement
or other instrument or obligation to which the ESOP is a party or
by which the ESOP or the Shares owned by the ESOP may be bound, or
(iii) violate any law or regulation, or any judgment, order or
decree of any court, governmental body, commission, agency or
arbitrator applicable to the ESOP or the Shares owned by the ESOP.
3.1.3 Consents and Approvals. Except as required by the
HSR Act and as set forth in Schedule 3.1.3 there is no requirement
applicable to the ESOP to make any filing with, or obtain the
consent or approval of, any Person as a condition to the
consummation of the transactions contemplated by this Agreement.
3.1.4 Valuation Opinion. The Trustee has received a
letter, a copy of which has been provided to Xxxxxxx, from Xxxxxx
Capital stating that Xxxxxx Capital has determined that the sale of
the Shares by the ESOP on the terms described in this Agreement is
fair to the participants in the ESOP from a financial point of
view. Xxxxxx Capital has not withdrawn, rescinded, modified,
qualified or changed its opinion described in this Section 3.1.4.
3.1.5 Title to Shares. The ESOP owns 44,006 shares of
Common Stock, 3,000 shares of Series A Preferred Stock and 151
shares of First Preferred Stock. Upon delivery to Xxxxxxx of
certificates evidencing such Shares, duly endorsed for transfer
pursuant to this Agreement, Xxxxxxx will have good title to such
Shares, free of all liens, claims, charges or encumbrances.
3.1.6 Finders. No broker, finder or investment banker
is entitled to any fee or commission from the ESOP for services
rendered on behalf of the ESOP in connection with the transactions
contemplated by this Agreement.
3.2 First Preferred Sellers Representations and Warranties.
Each First Preferred Seller, as to itself only, represents and
warrants to Xxxxxxx the following:
3.2.1 Authority Relative to this Agreement. Such First
Preferred Seller has the power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by
such First Preferred Seller. This Agreement constitutes valid and
binding obligations of such First Preferred Seller, enforceable
against such First Preferred Seller, in accordance with its terms
except as such enforceability may be limited by (i) bankruptcy,
insolvency or similar laws affecting creditors' rights generally or
(ii) general principles of equity, whether considered in a
proceeding in equity or at law.
3.2.2 No Violation. The execution and delivery by such
First Preferred Seller of this Agreement, and the consummation of
the transactions contemplated hereby and thereby will not (i)
violate or result in a breach of any provision of the governing
instruments of such First Preferred Seller, (ii) result in a
default or give rise to any right of termination, modification or
acceleration under the provisions of any agreement or other
instrument or obligation to which such First Preferred Seller is a
party or by which such First Preferred Seller or the Shares owned
by such First Preferred Seller may be bound, or (iii) violate any
law or regulation, or any judgment, order or decree of any court,
governmental body, commission, agency or arbitrator applicable to
such First Preferred Seller or the Shares owned by such First
Preferred Seller.
3.2.3 Consents and Approvals. Except as required by the
HSR Act and as set forth in Schedule 3.2.3 there is no requirement
applicable to such First Preferred Seller to make any filing with,
or obtain the consent or approval of, any Person as a condition to
the consummation of the transactions contemplated by this
Agreement.
3.2.4 Title to Shares. Such First Preferred Seller owns
the shares of First Preferred Stock set forth next to its name in
Exhibit A hereto. Upon delivery to Xxxxxxx of certificates
evidencing such Shares, duly endorsed for transfer pursuant to this
Agreement, Xxxxxxx will have good title to such Shares, free of all
liens, claims, charges or encumbrances.
3.2.5 Finders. No broker, finder or investment banker
is entitled to any fee or commission from such First Preferred
Seller for services rendered on behalf of such First Preferred
Seller in connection with the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx represents and warrants to the Sellers the following:
4.1 Organization; Qualification. Xxxxxxx is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has corporate
power and authority to own all of its properties and assets and to
carry on its business as it is presently being conducted.
4.2 Authority Relative to this Agreement. Xxxxxxx has
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement.
The execution and delivery by Xxxxxxx of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by the Board of Directors of Xxxxxxx and
no other corporate proceedings on the part of Xxxxxxx is necessary
with respect thereto. Assuming that the Sellers have duly
authorized the execution of this Agreement, this Agreement
constitutes valid and binding obligations of Xxxxxxx and is
enforceable against Xxxxxxx in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of
equity.
4.3 Consents and Approvals. Except for approvals required
pursuant to the HSR Act, there is no requirement applicable to
Xxxxxxx to make any filing with, or to obtain any permit,
authorization, consent or approval of any public body as a
condition to the consummation of the transactions contemplated by
this Agreement where the failure to so make or obtain would prevent
or materially restrict consummation of the transactions
contemplated by this Agreement or fulfillment of any of the
conditions to this Agreement.
4.4 Non-Contravention. The execution and delivery by Xxxxxxx
of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement will not, (i) violate or result in
a breach of any provision of the Articles of Incorporation or
Bylaws of Xxxxxxx or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Xxxxxxx or any of
its Subsidiaries, or the businesses conducted by any of them,
excluding from the foregoing clause such defaults and violations
which would not prevent or materially restrict consummation of the
transactions contemplated by this Agreement or fulfillment of any
of the conditions to this Agreement.
4.5 Litigation. There are no actions, suits, claims,
investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of Xxxxxxx, threatened,
against Xxxxxxx or its Subsidiaries, whether at law or in equity
and whether civil or criminal in nature, before any federal, state,
municipal or other court, arbitrator, governmental department,
commission, agency or instrumentality, domestic or foreign, nor are
there any judgments, decrees or orders of any such court,
arbitrator, governmental department, commission, agency or
instrumentality outstanding against Xxxxxxx or its Subsidiaries
which have, or if adversely determined, could reasonably be
expected to prevent, restrict or delay consummation of the
transactions contemplated by this Agreement or fulfillment of any
of the conditions of this Agreement.
4.6 Financing. Xxxxxxx has delivered to the Company a
complete and correct copy of a commitment letter (the "Commitment")
addressed to Xxxxxxx from Fleet Bank, N.A. for the provision of
financing pursuant to a credit agreement on the terms and
conditions described in the Commitment. Such financing is in
amounts sufficient to provide Xxxxxxx with sufficient funds to
consummate the transactions contemplated by this Agreement.
4.7 Finders. No broker, finder or investment banker is
entitled to any fee or commission from Xxxxxxx for services
rendered on behalf of Xxxxxxx in connection with the transactions
contemplated by this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Negotiations with Others. From the date hereof until
the earlier of the Closing Date or the termination of this
Agreement in accordance with Section 10.1 hereof, none of Sellers
will, directly or indirectly, without the written consent of
Xxxxxxx, initiate discussions or engage in negotiations with any
Person other than Xxxxxxx or its Affiliates, concerning any merger
or sale of capital stock or a substantial portion of the assets of
the Company outside the ordinary and usual course of business.
5.2 Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, Xxxxxxx will pay all of its
expenses incurred in connection with this Agreement and the
transactions contemplated hereby and the Sellers shall pay all
expenses incurred by them in connection with the transactions
contemplated by this Agreement.
5.3 Public Announcements. The parties will consult with
each other before issuing any press release or otherwise making any
public statement with respect to this Agreement and the Merger and
will not issue any such press release or make any such public
statement without the consent of the other unless such action is
required by law.
5.4 Subsequent Events. If any event shall occur prior to the
Closing which, had it occurred prior to the execution of this
Agreement, should have been disclosed by a party to this Agreement
in a representation and warranty or otherwise, then as soon as
practicable after the happening of such event, such party shall
disclose the happening of such event to the other parties hereto.
5.5 Efforts to Consummate. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper
or advisable to consummate, as promptly as practicable, the
transactions contemplated hereby, including, but not limited to,
the obtaining of all necessary consents, waivers, authorizations,
orders and approvals of third parties, whether private or
governmental, required of it to enable it to comply with the
conditions precedent to consummating the transactions set forth in
this Agreement and, in the case of Xxxxxxx, obtaining financing to
consummate the transaction. Each party agrees to cooperate fully
with each of the other parties in assisting them to comply with the
provisions of this Section, and in the event any claim, action,
suit, investigation or other proceeding by any governmental body or
other person is commenced which questions the validity or legality
of the transactions contemplated by this Agreement or seeks damages
in connection therewith, the parties agree to cooperate and use
their reasonable best efforts to defend against such claim, action,
suit, investigation or other proceeding. If an injunction or other
order is issued in any such action, suit or other proceeding, the
parties agree to use their reasonable best efforts to have such
injunction or other order lifted. Notwithstanding the foregoing,
no party hereto shall be required to make any substantial payment
or incur any material economic burden, other than a payment
otherwise required of it, to obtain any consent, waiver,
authorization order or approval, and if, despite its efforts, any
party is unable to obtain any material consent, waiver,
authorization, order or approval, the other parties for whose
benefit the consent, waiver, authorization, order or approval is
to be obtained may terminate this Agreement and shall have no
liability therefor, except as is provided in Section 10.2.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF XXXXXXX
The obligation of Xxxxxxx to consummate the transactions
contemplated by this Agreement shall be subject, to the extent not
waived, to the following conditions.
6.1 Representations and Warranties. Each of the
representations and warranties of the Sellers contained in Article
III of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing
Date, and the Sellers shall each have delivered to Xxxxxxx a
certificate to that effect.
6.2 Satisfaction of Conditions to Merger. All of the
conditions to the consummation of the Merger set forth in Article
VI of the Merger Agreement (other than the condition set forth in
Section 6.10 "Purchase of Capital Stock") shall have been satisfied
or waived.
6.3 Performance of this Agreement. The Sellers shall have
complied in all material respects with each of their respective
obligations under this Agreement and shall have delivered to
Xxxxxxx a certificate to that effect.
6.4 Corporate Authorization. All corporate action required to
be taken by any Seller in connection with the transactions
contemplated by this Agreement shall have been taken, all documents
incident thereto shall be reasonably satisfactory in substance and
form to Xxxxxxx and Xxxxxxx shall have received such copies of such
documents as it may reasonably request.
6.5 Consents and Approvals. All consents, authorizations,
orders or approvals of governmental or regulatory authorities which
any Seller is required to obtain in order to be able to consummate
the transactions contemplated by this Agreement shall have been
obtained and all waiting periods specified by law with respect
thereto shall have passed.
6.6 Injunction, Litigation, etc. No order of any court or
governmental agency shall be in effect which restrains or prohibits
the consummation of the transactions contemplated by the Agreement,
and there shall not have been threatened, nor shall there be
pending, any action or proceeding by or before any such court or
governmental agency seeking to prohibit or delay or challenging the
validity of the transactions contemplated by this Agreement.
6.7 Legislation. No statute, rule or regulation shall have
been proposed or enacted which prohibits or might prohibit,
restrict or delay the consummation of the transactions contemplated
by this Agreement.
6.8 Financing. Xxxxxxx shall have obtained, pursuant to the
Commitment or otherwise, the funds necessary to enable Xxxxxxx to
consummate the transactions contemplated by this Agreement on the
terms set forth herein.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to consummate the transactions
contemplated by this Agreement shall be subject, to the extent not
waived, to the following conditions.
7.1 Representations and Warranties. Each of the
representations and warranties of Xxxxxxx contained in Article IV
of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing
Date, and Xxxxxxx shall have delivered to the Sellers a certificate
to that effect signed by an executive officer.
7.2 Performance of this Agreement. Xxxxxxx shall have
complied in all material respects with each of their obligations
under this Agreement, and Xxxxxxx shall have delivered to the
Sellers a certificate to that effect signed by an executive
officer.
7.3 Corporate Authorization. All corporate action required to
be taken by Xxxxxxx in connection with the transactions
contemplated by this Agreement shall have been taken, and the
Sellers shall have received such copies of documents incident to
such approvals as it may reasonably request.
7.4 Consents and Approvals. All consents, authorizations,
orders or approvals of governmental or regulatory authorities which
the Sellers are required to obtain in order to enable it to
consummate the transactions contemplated by this Agreement shall
have been obtained and all waiting periods specified by law with
respect thereto shall have passed.
7.5 Injunction, Litigation, etc. No order of any court or
governmental agency shall be in effect which restrains or prohibits
the consummation of the transactions contemplated by this Agreement
and there shall not have been threatened, nor shall there be
pending, any action or proceeding by or before any such court or
governmental agency seeking to prohibit or delay or challenging the
validity of the transactions contemplated by this Agreement.
7.6 Legislation. No statute, rule or regulation shall have
been proposed or enacted which prohibits or might prohibit,
restrict or delay the consummation of the transactions contemplated
by this Agreement.
ARTICLE VIII
CLOSING
8.1 Time and Place of Closing. The closing (the "Closing")
shall take place at the offices of McGuire, Woods, Battle & Xxxxxx
LLP in Richmond, Virginia at 9:00 a.m. local time on the later of
(i) June 15, 1998, (ii) the next business day after the last of the
closing conditions has been fulfilled or waived or (iii) such other
date as may be agreed upon by the parties (the "Closing Date"). At
the Closing the parties shall supply evidence to the other parties
of the fulfillment or waiver of the conditions to their obligations
under this Agreement.
8.2 Deliveries by the Sellers. At the Closing the Sellers
shall deliver to Xxxxxxx the following:
(i) the certificates representing the Shares
duly endorsed or with stock powers attached thereto duly
signed;
(ii) the certificates required by Sections 6.1
and 6.3;
(iii) evidence that the action required by
Section 6.4 has been taken; and
(iv) copies of the consents required by Section
6.5.
8.3 Deliveries by Xxxxxxx. At the Closing Xxxxxxx shall
deliver to the Sellers the following:
(i) their respective portion of the Purchase
Price in immediately available funds;
(ii) the certificates required by Sections 7.1
and 7.2; and
(iii) evidence that the corporate action
described in Section 7.3 has been taken.
ARTICLE IX
ESCROW
9.1 Appointment of Escrow Committee.
(a) By executing this Agreement the ESOP shall
AUTOMATICALLY BE DEEMED TO HAVE DESIGNATED XXXXXXX X. XXXXXX AND
XXXXX X. XXXXXXX AS THE "ESCROW COMMITTEE." The Escrow Committee
shall have full power to act on behalf of the ESOP in the manner
specified herein in connection with all matters with respect to
which action by the Escrow Committee is contemplated by this
Agreement. The Escrow Committee shall be entitled to reimbursement
from the Escrowed Funds, in accordance with Section 9.4, of all
reasonable expenses included in the performance of the duties
contemplated under this Agreement, including, but not limited to
the right to employ financial advisors and other agents to
undertake or assist in the assessment, arbitration, litigation
and/or settlement of such claims. The Escrow Committee is
expressly authorized to rely upon the advice of such consultants
and agents. THE ESOP SHALL AUTOMATICALLY BE DEEMED TO HAVE WAIVED
ANY RIGHT OR CAUSE OF ACTION FOR ANY ACTION, OF ANY NATURE
WHATSOEVER, TAKEN OR OMITTED FROM BEING TAKEN BY THE ESCROW
COMMITTEE OR ANY SUCCESSOR, ABSENT A CLEAR SHOWING OF HIS, HER OR
ITS GROSS ERROR OR FRAUD.
(b) The Escrow Committee shall take all actions required
to be taken by the Escrow Committee under this Agreement and may
take any action contemplated by this Agreement on behalf of the
ESOP. By giving notice to the Escrow Committee in the manner
provided by Section 11.1, Xxxxxxx shall be deemed to have given
notice to the ESOP and any action taken by the Escrow Committee may
be considered by Xxxxxxx to be the action of the ESOP for all
purposes of this Agreement. The Escrow Committee's duties shall
terminate upon the final distribution of the Escrowed Funds under
the Escrow Agreement.
9.2 Escrow Agreement. The Company, Xxxxxxx, the Escrow
Committee and the Escrow Agent will at the Closing enter into an
Escrow Agreement (the "Escrow Agreement") in substantially the form
of Exhibit B hereto. The provisions of the Escrow Agreement shall
be incorporated herein as if fully stated herein. The Escrow
Amount shall be deposited by Xxxxxxx and held in escrow, as
contingent consideration for the ESOP in connection with the sale
of the Common Stock, by the Escrow Agent in compliance with the
terms and conditions of the Escrow Agreement. The funds held in
escrow pursuant to this Article IX will be invested by the Escrow
Agent only in short-term government securities.
9.3 Non-Transferability of the Escrowed Funds. The funds held
in escrow shall be held for the benefit of the ESOP and Xxxxxxx
only and shall not be transferable by any potential recipient
thereof, except by will, intestate succession or operation of law.
9.4 Escrowed Funds. The moneys deposited under the Escrow
Agreement pursuant to this Agreement and all interest and other
earnings thereon (collectively, the "Escrowed Funds") shall be
applied as provided in the Escrow Agreement and this Agreement. At
the end of the period ending on the first anniversary of the
Closing, any Escrowed Funds which have not been previously
distributed and which are not the subject to any objection with
respect to the distribution thereof as provided in the Escrow
Agreement, shall be distributed as provided in the Escrow
Agreement.
9.5 Adjustments to Purchase Price.
(a) The Distribution Amount shall be determined as
provided in this Section 9.5.
(b) The Distribution Amount shall be equal to the
product of 0.1352 times the sum of the following:
(i) $813,760;
(ii) plus the amount, if any, by which the
prepayment penalty incurred by Xxxxxxx, the Company, PAS
or the Surviving Corporation in connection with the
payment amounts due Congress Financial Corporation
pursuant to that certain Secured Revolving Credit
Facility dated as of August 31, 1993 by the Company is
less than $120,000;
(iii) plus the amount, if any, by which the cash
payment made or contractually committed to be made to
Xxxxxxx, the Company, PAS or the Surviving Corporation on
or before September 30, 1998 in connection with the
termination and settlement of the Harrisonburg Lease
exceeds $500,000;
(iv) minus the total of amounts paid by
Xxxxxxx, the Company, PAS or the Surviving Corporation in
connection with the disposition of the lawsuit styled
Xxxxxx X. Xxxxxx v. Xxx X. Xxxxxx Co., including amounts
paid pursuant to a judgment, amounts paid in settlement
and all attorneys fees, costs and expenses incurred in
connection therewith subsequent to the date of this
Agreement;
(v) minus the sum of all amounts paid by
Xxxxxxx, the Company, PAS or the Surviving Corporation to
the landlord or third party consultants in connection
with the termination and settlement of the obligations of
the Company under the West Knoxville Lease;
(vi) minus the amount of prepayment penalties
or premiums paid by Xxxxxxx, the Company, PAS or the
Surviving Corporation in connection with the prepayment
of the principal and interest due the Fidelity Mutual
Life Insurance Company ("Fidelity Mutual") by the Company
pursuant to the Mortgage Loan Agreement dated as of June
15, 1989, as amended by the First Amendment thereto dated
as of November 10, 1993, by and between Fidelity Mutual
and the Company;
(vii) minus the amount of all amounts owed on
layaway receivables upon which no payment has been made
in 30 days per the layaway file report run at each of The
Company's stores as of the close of business on the
Saturday night immediately preceding the Effective Date;
(viii) minus the amount by which the bad debt
reserve maintained by Shoppers Charge on behalf of the
Company on the Closing Date is confirmed by Shoppers
Charge to exceed $105,000;
(ix) minus the amount by which the advertising
receivable maintained by Xxxxxx'x with respect to
Shoppers Charge on the Closing Date is confirmed by
Shoppers Charge to be less than $46,821;
(x) minus the amount by which the cash
collateral account maintained by Shoppers Charge on
behalf of the Company on the Closing Date is confirmed by
Shoppers Charge to be less than $143,403;
(xi) plus the amount by which the total amount
of principal and interest obligated to be paid by
Xxxxxxx, the Company, PAS or the Surviving Corporation
after the date hereof in respect of the Bankruptcy Claims
is less than $2,458,703;
(xii) minus the amount, if any, by which The
Company's loss before income taxes (after equity in
earnings of Subsidiary have been posted) for the period
beginning on April 5, 1998 and ending on the Closing Date
exceeds $545,000 (such amount to be increased by $11,000
for each day the Closing Date extends beyond June 15,
1998) (for the avoidance of doubt, a loss of $600,000
during such period would result in a reduction of the
Distribution Amount by $55,000); provided, the Company's
loss before income taxes for purposes of this subsection
(xii) shall not include any item affecting the
Distribution Amount pursuant to any other subsection of
this Section 9.5 or any changes relating to store
closings or lease renegotiations;
(xiii) minus the amount, if any, by which the
expenses incurred by the Company in connection with the
transactions contemplated by this Agreement and the
Merger Agreement exceed $200,000, provided any fees paid
to Retail Consulting Services shall not be included in
such amount;
(xiv) minus the amount, if any, of the shortfall
computed in accordance with Section 5.16 of the Merger
Agreement; and
(xv) minus the amount, if any, distributed from
the Escrow Account in respect of any damage, loss,
liability or expense (including, without limitation,
reasonable expenses of investigation and litigation and
reasonable attorneys', accountants' and other
professional fees) arising out of a breach of any
representation, warranty or covenant made by the ESOP in
this Agreement or by the Company in the Merger Agreement.
For purposes of this Section 9.5(b)(xv), the
determination of whether a representation or warranty
made by the ESOP in this Agreement or the Company in the
Merger Agreement has been breached shall be made by
ignoring references to "material" or "Material Adverse
Effect."
The foregoing provisions notwithstanding, in no event
shall the Distribution Amount exceed the total of $110,015 plus
interest earned thereon and deposited in the Escrow Account.
(c) Xxxxxxx shall give written notice (a "Claim Notice")
to the Escrow Agent and the Escrow Committee if Xxxxxxx believes it
is entitled to distributions from the Escrow Fund with respect to
any of the matters set forth in Section 9.5(b). The Claim Notice
shall be provided promptly (but in no event later than ten days
prior to the time any response to an asserted claim is required)
after receipt of knowledge of the fact upon which such claim is
based and shall set forth in reasonable detail the facts giving
rise to any claim for a distribution hereunder.
(d) Upon receipt by the Escrow Committee of a Claim
Notice from Xxxxxxx with respect to any claim of a third party
which gives rise to Xxxxxxx'x right to distribution pursuant to
Section 9.5(b)(xv), the Escrow Committee may assume the defense
thereof with counsel reasonably satisfactory to Xxxxxxx and Xxxxxxx
shall cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony and attend all such
conferences, discovery proceedings, hearing, trials and appeals as
may be reasonably requested in the connection thereof. Xxxxxxx
shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense
of Xxxxxxx unless (i) the Escrow Committee shall not have promptly
employed counsel reasonably satisfactory to Xxxxxxx to take charge
of the defense of any such action or (ii) counsel for Xxxxxxx
determines, in its reasonable judgment, that Xxxxxxx and the Escrow
Committee may have conflicting defenses or claims. Neither Xxxxxxx
nor the Escrow Committee shall make any settlement of any claim
without the written consent of the other, which consent shall not
be unreasonably withheld. Without limiting the generality of the
foregoing, it shall not be deemed unreasonable for Xxxxxxx to
withhold consent to a settlement involving injunctive or other
equitable relief against Xxxxxxx, the Surviving Corporation or
their respective assets, employees or business.
(e) The Escrow Committee shall have the right to object,
by written notice delivered within 20 days after a Claim Notice is
received to Xxxxxxx and the Escrow Agent, to all or any portion of
a proposed distribution contained in any Claim Notice.
9.6 Limitations on Distributions. Notwithstanding the
foregoing provisions of this Article IX, and other than with
respect to claims for fraud, as to which no limitation set forth in
this Article IX shall apply, Xxxxxxx shall not be entitled to any
distributions of Escrowed Funds for claims pursuant to Section
9.5(b)(xv) of this Agreement until the aggregate amount of
distributions to which Xxxxxxx is otherwise entitled for claims
pursuant to Section 9.5(b)(xv) of this Agreement exceeds $6,760,
and then entitlement for claims pursuant to Section 9.5(b)(xv) of
this Agreement in excess of $6,760 shall be limited to the Escrowed
Funds.
9.7 Provision of Information. Xxxxxxx shall provide to the
Escrow Committee on request all information and documentation
reasonably necessary to support and verify any claims that Xxxxxxx
believes give rise to a claim for distribution of Escrowed Funds
and shall give the Escrow Committee reasonable access to all books,
records and personnel in the possession or under the control of the
Xxxxxxx or the Surviving Corporation that would have a bearing on
such claim.
9.8 Survival; Investigation. The representations and
warranties of the Sellers contained in this Agreement shall survive
any investigation by Xxxxxxx and shall not terminate until the
first anniversary of the Closing Date (the "Survival Date") at
which time they shall lapse. Notwithstanding the provisions of the
preceding sentence, any representation or warranty in respect of
which indemnification may be sought under this Article IX shall
survive the Survival Date if written notice, given in good faith,
of a specific breach thereof is given to the Company in accordance
with Section 9.5 prior to the Survival Date.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(i) by mutual consent of the Sellers and
Xxxxxxx;
(ii) by the Sellers or Xxxxxxx in the event the
Merger Agreement is terminated;
(iii) by the Sellers or Xxxxxxx if there has
been a material breach by the other of a representation,
warranty or agreement contained herein, which breach is
not curable or, if curable, is not cured within 20 days
after written notice of such breach is given to the other
party, or if any condition to the consummation of the
transactions contemplated by this Agreement which must be
met by the other, becomes impossible to fulfill; or
(iv) by the Sellers or Xxxxxxx if the Closing
has not occurred by 11:59 p.m. July 15, 1998; provided,
however, that the right to terminate this Agreement
pursuant to this paragraph (iii) shall not be available
to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted
in, the failure of the Closing to have occurred on or
before such date.
10.2 Effect of Termination. In the event of the termination
of this Agreement as provided in Section 10.1, this Agreement shall
become wholly void and of no further force and effect and there
shall be no further liability or obligation on the part of any
party hereto except to pay such expenses as are required of it, but
such termination shall not constitute a waiver by any party of any
claim it may have for damages caused by reason of a breach of a
representation or warranty made by another party to in this
Agreement.
10.3 Amendment. This Agreement and the Exhibits and
Schedules hereto may be amended at any time prior to the Closing
Date that any such amendment is approved in writing by each of the
parties hereto. All representations and warranties of the Sellers
and Xxxxxxx which are true and correct as modified and approved
shall be deemed true and correct for the purposes of Sections 6.1
and 7.1.
10.4 Extension, Waiver. At any time prior to the Closing Date
any party to this Agreement who is entitled to the benefits thereof
may (i) extend the time for the performance of any of the
obligations of another party hereto, (ii) waive a breach of a
representation or warranty of the other party hereto, whether
contained herein or in any exhibit, schedule or document delivered
pursuant hereto, or (iii) waive compliance by any other party
hereto with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in a
written instrument signed by the party giving the extension or
waiver.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices required to be given hereunder
shall be in writing and shall be deemed to have been given if (i)
delivered personally, (ii) transmitted by telefax, (iii) mailed by
registered or certified mail (return receipt requested and postage
prepaid) or (iv) sent by a nationally recognized overnight
delivery courier with proof of delivery to the following listed
persons at the addresses and telefax numbers specified below, or to
such other persons, addresses or telefax numbers as a party
entitled to notice shall give, in the manner hereinabove described,
to the others entitled to notice:
(a) If to the Sellers to:
Home Federal Bank of Tennessee
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxx
Telefax No.: (000) 000-0000
and to:
The address shown next to such
Seller's name on the signature
pages to this Agreement
with a copy to:
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: J. Page Davidson
Telefax No.: (000)000-0000
and to:
Xxxxxxx X. Xxxxx, P.C.
0000 Xxxxxxx Xxxxx, Xxxxx 00
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telefax No.: (000) 000-0000
(b) If to Peebles to:
Xxxxxxx Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxx 00000
Attention: E. Xxxxxxxx Xxxx
Telefax No.: (000) 000-0000
with a copy to:
McGuire, Woods, Battle & Xxxxxx LLP
One Xxxxx Center
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: R. Xxxxxxxx Xxxxxxxx, Xx.
Telefax No.: (000) 000-0000
(c) If to Escrow Committee to:
Xxxxxxx X. Xxxxxx
0000 Xxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
with a copy to:
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: J. Page Davidson
Telefax No.: (000)000-0000
and to:
Xxxxxxx X. Xxxxx, P.C.
0000 Xxxxxxx Xxxxx, Xxxxx 00
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telefax No.: (000) 000-0000
If given personally or transmitted by telefax, a notice shall be
deemed to have been given when it is received. If given by mail,
it shall be deemed to have been given on the third business day
following the day on which it was posted.
11.2 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
11.3 Schedules. The information contained in any exhibit or
schedule which is referred to in a representation and warranty
shall be deemed to have been disclosed in connection with and be a
part of, that particular representation and warranty only and shall
not be deemed a part of any other representation and warranty.
11.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
11.5 Miscellaneous. This Agreement, (i) together with the
Exhibits and Schedules hereto, constitute the entire agreement and
supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject
matter hereof; (ii) is not intended to and shall not confer upon
any other person or business entity, other than the parties hereto,
any rights or remedies with respect to the subject matter hereof;
(iii) shall not be assigned by operation of law or otherwise; and
(iv) shall be governed by the laws of the State of Delaware without
regard to its choice of law rules.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers.
XXXXXXX INC.
By:_____________________________________
Title:__________________________________
XXX X. XXXXXX STOCK BONUS (ESOP)
RETIREMENT PLAN
By:_____________________________________
FIRST PREFERRED SELLERS:
THE XXXXXXXXX XXXXX XXXXXX
TESTAMENTARY TRUST
Address: By: ___________________________________
Trustee
________________________________________
XXXXXXXXX XXXXXX
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
