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EXHIBIT 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Settlement Agreement"), dated as of
this 6th day of October, 1995, by and between Dart Group Corporation, a
Delaware corporation ("Dart"), and Xxxxxx X. Xxxx ("RSH").
WITNESSETH:
WHEREAS, on September 6, 0000 XXX acted to exercise an option to
purchase from Dart one hundred ninety-seven thousand forty-eight (197,048)
shares of Dart Class B Common Stock (the "Option Shares") with the intention,
as stated in a letter of that date from RSH to all of the directors of Dart,
"to remove Xxxxxxx Xxxx as a Director of Dart in order to protect the
corporation from his continuing improper conduct";
WHEREAS, Dart did not issue the Option Shares to RSH as he demanded on
September 6, 1994, but on the next day, September 7, 1994, Dart's Board of
Directors unanimously adopted a resolution recognizing that Dart had been
"confronted by significant developments relating to [its] ownership and
management" and creating an Executive Committee (the "Executive Committee") of
the Board of Directors with the power to "conduct the affairs of [Dart] with
respect to matters that are the subject of dispute between [Xxxxxxx X. Xxxx]
and [RSH]";
WHEREAS, on September 12, 0000 XXX filed a lawsuit captioned Xxxxxx X.
Xxxx v. Dart Group Corporation, Civ. A. No. 13736 (Del. Ch.) (the "Options
Lawsuit"), seeking to compel Dart to issue the Option Shares to him;
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WHEREAS, if RSH were to prevail in the Options Lawsuit, the one
hundred seventy-two thousand seven hundred thirty (172,730) shares of Dart
Class B Common Stock that Xxxxxxx X. Xxxx ("HHH") has heretofore had power to
vote would no longer constitute a majority of the outstanding shares of Dart
voting stock, and RSH, not HHH, would control the largest block of Dart voting
stock;
WHEREAS, the Executive Committee, pursuant to the above-described
September 7, 1994 Board of Directors resolution, has overseen all aspects of
Dart's defense of the Options Lawsuit;
WHEREAS, RSH is willing to settle the Options Lawsuit on the terms,
and subject to the conditions, set forth in this Settlement Agreement, and the
Executive Committee has authorized and approved the Settlement Agreement as
being in the best interests of Dart;
WHEREAS, in January 1994 the Board of Directors of Dart created a
Special Litigation Committee to "have and exercise the full powers of the Board
of Directors to review and determine whether or not the Corporation shall
undertake to institute legal action for, or to maintain the prosecution of, the
claims asserted" in, inter alia, the lawsuit captioned Xxxx X. Xxxx and The
Tudor Trust v. Xxxxxxx Xxxx, Civ. A. Xx. 00000 (Xxx. Xx. filed Sept. 29, 1993)
(the "Xxxx Lawsuit");
WHEREAS, the parties desire to settle the Xxxx Lawsuit, as against
RSH, on the terms set forth in this Settlement Agreement, subject to approval
of the Delaware Chancery Court;
WHEREAS, the Special Litigation Committee has authorized and approved
this Settlement Agreement as being in the best interests of Dart;
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WHEREAS, the Executive Committee was authorized by a resolution
adopted by Dart's Board of Directors on June 30, 1995 to direct Dart's
litigation of an action captioned Xxxxxx X. Xxxx v. Dart Group Corporation,
Civ. A. No. 95-82 (D. Del. filed Feb. 10, 1995), filed by Xxxxxx X. Xxxx to
enforce certain stock options;
WHEREAS, Dart has filed a counterclaim in the Xxxxxx X. Xxxx action
against RSH to cancel certain stock options held by RSH, and Dart and RSH
desire to settle such counterclaim in accordance with the terms set forth in
this Settlement Agreement;
WHEREAS, the Executive Committee was authorized by a resolution
adopted by Dart's Board of Directors on February 10, 1995 to file and prosecute
on behalf of Dart claims relating to its leasing of certain warehouses;
WHEREAS, Dart did file such claims, including claims against RSH, in
an action captioned Dart Group Corporation and Pennsy Warehouse Leasing
Corporation v. Xxxxxxx X. Xxxx, Civ. A. No. CAL 95-02302 (Md. Cir. Ct. filed
Feb. 10, 1995), and RSH and Dart desire to settle such claims against RSH on
the terms set forth in this Settlement Agreement;
WHEREAS, RSH has filed an action against HHH and Dart, the defense of
which on behalf of Dart is vested in the Executive Committee, captioned Xxxxxx
X. Xxxx v. Xxxxxxx X. Xxxx, Civ. A. Xx. 00000 (Xxx. Xx. filed July 18, 1995),
which seeks to cancel a proxy to vote one hundred seventy-two thousand seven
hundred thirty (172,730) shares that RSH had given to HHH and to require Dart
to recognize RSH's right to vote these shares;
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WHEREAS, Dart and RSH desire to resolve RSH's present and future
claims to voting control of Dart on the terms set forth in this Settlement
Agreement; and
WHEREAS, the parties acknowledge that this Settlement Agreement, and
the transactions contemplated hereby, are subject to potential legal challenge,
and the parties intend to cooperate in defending against any such legal
challenge in order to assure the implementation and preservation of such
transactions.
NOW THEREFORE, for and in consideration of the premises and of the
mutual promises and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1. SETTLEMENT.
1.1. Settlement Transactions. The parties shall consummate the
following transactions on the date of this Settlement Agreement:
(a) The Employment Agreement between Dart and RSH, dated
August 1, 1993 (the "Employment Agreement"), shall be amended to
increase to One Hundred Forty Dollars ($140) per share the exercise
price of the option to purchase the Option Shares provided for in the
Employment Agreement.
(b) RSH shall exercise the amended option to purchase the
Option Shares under the amended Employment Agreement and, pursuant to
such exercise, Dart shall issue the Option Shares to RSH in exchange
for (i) the payment of One Hundred Ninety-Seven Thousand Forty-Eight
Dollars ($197,048) from RSH to Dart and (ii) a promissory note
executed and delivered by RSH to Dart in the principal amount of
Twenty-Seven Million Three Hundred Eighty-Nine Thousand Six Hundred
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Seventy-Two Dollars ($27,389,672) in the form of Exhibit A (the "$27.4
Million Note").
(c) RSH shall resign all of his positions as a director
or officer of Dart and each corporation in which Dart holds a direct
or indirect ownership interest; provided, that such resignations shall
be effective thirty (30) days after the date hereof, unless, on such
thirtieth (30th) day, a preliminary or permanent injunction is in
effect prohibiting performance of this Settlement Agreement, in which
case, RSH's resignation shall become effective on the first day on
which no such preliminary or permanent injunction is in effect; and
provided further, that RSH's resignation as a director of Shoppers
Food Warehouse Corp. shall not be effective until such time as the
Board of Directors of Dart shall determine to be appropriate.
(d) Dart and RSH shall execute and deliver a
Buy/Sell/Offering Agreement in the form of Exhibit B (the
"Buy/Sell/Offering Agreement"), which shall give Dart and RSH certain
purchase and sale options relating to: (i) the Option Shares; (ii) an
additional twenty-five thousand two hundred forty-six (25,246) shares
of Dart Class B Common Stock owned by RSH (the "RSH Class B Shares");
(iii) the New Class A Shares (as hereinafter defined); (iv) an
additional twenty-eight thousand one hundred forty-four (28,144)
shares of Dart Class A Common Stock owned by RSH (the "RSH Class A
Shares"); (v) an additional fifty-eight thousand twenty-nine (58,029)
shares of Dart Class A Common Stock that are subject to competing
claims by Xxxxxx X. Xxxx and Xxxxx X.
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Haft and by HHH (the "RSH Contested Class A Shares"); and (vi) an
additional thirty-three thousand three hundred thirty- three (33,333)
shares of Dart Class A Common Stock that are subject to a pledge to
First Union National Bank (the "RSH Pledged Class A Shares").
(e) Dart and RSH shall execute and deliver a Voting Trust
Agreement in the form of Exhibit C (the "Voting Trust Agreement"), and
RSH shall assign and transfer all of the Option Shares, the RSH Class
B Shares, the RSH Class A Shares and the RSH Contested Class A Shares
to the Voting Trustees thereunder (the "Voting Trustees").
(f) RSH shall assign and transfer to Dart the one hundred
seventy-two thousand seven hundred thirty (172,730) shares of Dart
Class B Common Stock that RSH purchased in July 1993 from HHH and that
are held of record by RSH (the "Redemption Class B Shares").
(g) In exchange for the assignment and transfer of the
Redemption Class B Shares by RSH to Dart, Dart shall execute and
deliver to RSH a Subscription Agreement in the form of Exhibit D (the
"Subscription Agreement"), providing (among other things) for the
issuance to RSH, subject to approval by the Board of Directors of
Dart, of 288,312 shares of Dart Class A Common Stock (the "New Class A
Shares").
(h) Dart shall loan to RSH the amount of Thirty-Seven
Million Seven Hundred Forty Thousand One Hundred Sixty- Two Dollars
($37,740,162) by
(i) depositing the amount of Twenty Million
Dollars ($20,000,000) into a separate account of
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SettlementCorp. at Xxxxx National Bank, which account
shall be subject to that certain Restricted Account Security
Agreement of even date herewith by and among RSH, Dart and
SettlementCorp., in the form of Exhibit E (the "Restricted
Account Security Agreement"), and
(ii) transferring to RSH the amount of Seventeen
Million Seven Hundred Forty Thousand One Hundred Sixty-Two
Dollars ($17,740,162),
and RSH shall execute and deliver to Dart a promissory note in the
principal amount of Thirty-Seven Million Seven Hundred Forty Thousand
One Hundred Sixty-Two Dollars ($37,740,162) in the form of Exhibit F
(the "$37 Million Note").
(i) Dart shall loan to RSH the amount of Eleven Million
Six Hundred Twenty-One Thousand Two Hundred Seventy-Six Dollars
($11,621,276) by transferring such amount into a separate account of
Settlementcorp at Xxxxx National Bank, which account shall be subject
to that certain Escrow Agreement [$11.6 Million] of even date herewith
by and between Dart and RSH in the form of Exhibit G (the "Escrow
Agreement [$11.6 Million"], and RSH shall execute and deliver to Dart
a promissory note in the principal amount of Eleven Million Six
Hundred Twenty-One Thousand Two Hundred Seventy-Six Dollars
($11,621,276) in the form of Exhibit H hereto (the "$11.6 Million
Note"). Immediately after said transfer of funds into such account is
made, a certified check payable to HHH drawn on said account, in the
amount of Eleven Million Six Hundred Twenty-One Thousand Two Hundred
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Seventy-Six Dollars ($11,621,276) shall be tendered by RSH to HHH as
prepayment in full of that certain Promissory Note of RSH to HHH dated
July 28, 1993 in the principal amount of Eleven Million Fifty-Four
Thousand Seven Hundred Twenty Dollars ($11,054,720) (the "HHH Note").
(j) Dart and RSH shall execute and deliver a Stock and
Trust Certificate Pledge Agreement in the form of Exhibit I hereto
(the "Stock and Trust Certificate Pledge Agreement"), which shall
cause the loans represented by the $11.6 Million Note, the $27.4
Million Note and the $37 Million Note to be secured by all shares of
Class A Common Stock and Class B Common Stock beneficially owned by
RSH and all trust certificates issued to RSH under the Voting Trust
Agreement.
(k) RSH and Dart shall execute and deliver to each other
a mutual general release in the form of Exhibit J (the "Release").
(l) Dart and RSH shall execute and deliver a Real Estate
Master Agreement in the form of Exhibit K (the "Real Estate Master
Agreement"), and all of the transactions set forth in Section 1.1 of
the Real Estate Master Agreement shall be consummated as part of the
Closing (as hereinafter defined).
(m) Immediately after amendment of the Employment
Agreement pursuant to Section 1.1(a) and issuance of the Option Shares
pursuant to Section 1.1(b), the Employment Agreement shall be
terminated without any further obligation thereunder on the part of
either Dart or RSH.
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(n) RSH shall execute and deliver to each of Dart,
Dart/SFW Corp. ("Dart/SFW"), Crown Books Corporation ("Crown Books")
and Trak Auto Corporation ("Trak Auto") instruments cancelling all
outstanding options held by RSH to purchase stock of, respectively,
Dart, Dart/SFW, Trak Auto and Crown Books, except for RSH's option to
purchase the Option Shares under the Employment Agreement as amended
pursuant to Section 1.1(a).
(o) Dart shall pay to RSH the amount of One Hundred
Eighty-Five Thousand Five Hundred Forty-Eight Dollars ($185,548).
(p) Dart shall deliver to RSH copies of the resolutions
adopted by the Executive Committee and the Special Litigation
Committee with respect to this Settlement Agreement and the
transactions contemplated hereby.
1.2. Closing Documents and Process. The documents and instruments
executed and delivered to effectuate the transactions set forth in Section 1.1
shall be in form and substance reasonably satisfactory to both parties, and the
closing of such transactions shall all deemed to have occurred simultaneously
effective as of 4:01 p.m. (Eastern Daylight Savings Time) on the date hereof at
the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 0000 X Xxxxxx, XX, Xxxxxxxxxx, X.X.
00000 (the "Closing"). Except as otherwise provided herein, all payments to be
made as part of the closing of the transactions contemplated by this Settlement
Agreement shall be made by certified check, bank check or wire transfer of
immediately available funds pursuant to written instructions from the party
entitled to receive the payment.
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1.3. [INTENTIONALLY LEFT BLANK]
1.4. Court Proceedings. (a) Immediately upon the execution of
this Settlement Agreement, the parties shall file appropriate papers with the
Delaware Court of Chancery to dismiss the Options Lawsuit, without prejudice,
and terminate the Standstill Agreement between the parties dated September 14,
1994.
(b) Within ten (10) days after the date of execution of
this Settlement Agreement, the parties shall file appropriate papers with the
Delaware Court of Chancery, including a Stipulation and Agreement of
Compromise, Settlement and Release (the "Xxxx Stipulation"), to seek approval
of the Settlement Agreement and dismissal, with prejudice, of RSH and Combined
Properties, Inc. ("CPI") as defendants in the Xxxx Lawsuit.
(c) Within fifteen (15) days after the date of this
Settlement Agreement, Dart shall file appropriate papers with the United States
District Court for the District of Delaware to dismiss, without prejudice, its
pending counterclaim against RSH in the action captioned Xxxxxx X. Xxxx v. Dart
Group Corporation, Civ. A. No. 95-82 (D. Del. filed Feb. 10, 1995).
(d) Within fifteen (15) days after the date of this
Settlement Agreement, Dart shall file appropriate papers with the Maryland
Circuit Court to dismiss, without prejudice, RSH and CPI as defendants in the
action captioned Dart Group Corporation and Pennsy Warehouse Leasing
Corporation v. Xxxxxxx X. Xxxx, Civ. A. No. CAL 95-02302 (Md. Cir. Ct. filed
Feb. 10, 1995).
(e) Within fifteen (15) days after the date of this
Settlement Agreement, RSH and Dart shall file appropriate papers realigning
Dart as a plaintiff in the derivative portion of the
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action captioned Xxxxxx X. Xxxx v. Xxxxxxx X. Xxxx, Xx. 00000 (Xxx. Xx. filed
July 18, 1995) and, if Dart so elects, it may dismiss the derivative claims
stated in such action.
(f) The parties shall cooperate in the defense of any
litigation challenging the validity of this Settlement Agreement. If Dart
obtains a release of any claim relating to the validity of this Settlement
Agreement from any other person or entity, or if Dart obtains a release of any
claim from any member of the Haft family relating to any matter, Dart shall use
its reasonable efforts to obtain a release of the same claim in substantially
similar form for RSH. If RSH obtains a release of any claim relating to the
validity of this Settlement Agreement from any other person or entity, or if
RSH obtains a release of any claim from any member of the Haft family relating
to any matter, RSH shall use his reasonable efforts to obtain a release of the
same claim in substantially similar form for Dart.
1.5 Revocation. (a) The parties agree to consummate a Revocation
Closing (in accordance with paragraph (c) of this Section 1.5, if Dart so
elects by providing written notice to RSH of such election, and if the Delaware
Court of Chancery has declined to approve the Settlement Agreement and dismiss
RSH and CPI in accordance with the Xxxx Stipulation; provided, that such
written notice by Dart to RSH shall have been given within fourteen (14) days
of the issuance of a final order denying dismissal of the claims against RSH
and CPI in the Xxxx Lawsuit or, if such final order is appealed, within
fourteen (14) days of the entry of the final order resolving the appeal. Any
Revocation Closing pursuant to this Section 1.5(a) shall occur on
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the date specified by Dart in its written notice to RSH of its election that a
Revocation Closing occur; provided that the date of such Revocation Closing
shall be not less than two (2) days after the date such written notice is
delivered to RSH; and provided, further, that the date of any Revocation
Closing pursuant to this Section 1.5(a) shall not be earlier than April 11,
1996. In the event that a Revocation Closing is delayed because of the last
proviso of the immediately preceding sentence, Dart agrees that it shall not
take any corporate action regarding a change in its capital structure that
requires a vote of the holders of Dart Class B Common Stock during the period
of such delay.
(b) The parties agree to consummate a Revocation Closing
(in accordance with paragraph (c) of this Section 1.5, if Dart so elects by
providing written notice to RSH of such election, upon or after the issuance by
a court of competent jurisdiction of a final order to the effect that the
issuance of the Option Shares pursuant to Section 1.1 of this Settlement
Agreement was invalid or that the Voting Trustees may not exercise the power to
vote the Option Shares as contemplated by the Voting Trust Agreement; provided,
that such written notice by Dart to RSH shall have been given within fourteen
(14) days of the issuance of such final order or, if such final order is
appealed, within fourteen (14) days of the entry of the final order resolving
the appeal. Any Revocation Closing pursuant to this Section 1.5(b) shall occur
on the date specified by Dart in its written notice to RSH of its election that
a Revocation Closing occur, which date shall not be less than two (2) days
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after the date such written notice is delivered to RSH; provided, that if Dart
provides such written notice to RSH prior to the issuance by a court of
competent jurisdiction of a final order to the effect that the issuance of the
Option Shares is invalid or that the Voting Trustees may not exercise the power
to vote the Option Shares as contemplated by the Voting Trust Agreement, then
Dart may specify that the Revocation Closing shall occur and be effective
immediately upon the issuance of such final order if and when it is issued and
require that the documents and instruments necessary to consummate such
Revocation Closing be executed and put into escrow for delivery immediately
upon issuance by the Court of such final order.
(c) At any Revocation Closing pursuant to either
paragraph (a) or paragraph (b) of this Section 1.5, the parties shall
consummate the following transactions simultaneously:
(i) RSH and the Voting Trustees shall assign and
transfer the Option Shares and the New Class A Shares (if issued
pursuant to the Subscription Agreement) to Dart, all of the other
shares of stock held by the Voting Trustees shall be assigned and
transferred to RSH (subject to the perfected security interest of Dart
under the Stock and Trust Certificate Pledge Agreement), and the
Voting Trust Agreement shall terminate.
(ii) Dart shall reissue the Redemption Class B
Shares to RSH, provided that the Redemption Class B Shares shall be
subject to the perfected security interest of Dart under the Stock and
Trust Certificate Pledge Agreement.
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(iii) The $27.4 Million Note shall be cancelled, and
Dart shall pay to RSH the amount of One Hundred Ninety-Seven Thousand
Forty-Eight Dollars ($197,048), together with interest thereon from
the date hereof until the date of the Revocation Closing at the simple
per annum rate of eight percent (8%).
(iv) RSH shall pay to Dart the amount of One Hundred
Eighty-Five Thousand Five Hundred Forty-Eight Dollars ($185,548).
(v) The JV Agreements (as defined in the Real Estate
Master Agreement) shall be revised to provide that (x) all
distributions payable under the respective JV Agreements with respect
to Partnership Net Operating Cash Flow (as defined in the JV
Agreements) shall be payable to the partners in accordance with the
sharing percentages specified in Section 3.06(a)(i)(C) of the
respective JV Agreements and (y) all distributions payable under
Section 3.06(a)(ii)(B) of the respective JV Agreements shall be
payable to the partners in accordance with the sharing percentages
specified in Section 3.06(a)(i)(C) of the respective JV Agreements.
In addition, RSH shall pay to Xxxxx-Xxxxxx (immediately if all of the
Properties or Joint Ventures (each as defined in the Real Estate
Master Agreements) have theretofore been sold, or (if all of the
Properties or Joint Ventures have not theretofore been sold) upon the
earlier of the next sale of any Property or Joint Venture or the
second anniversary of the Revocation Closing) Xxxxx-Xxxxxx'x sharing
percentage (as specified in
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Section 3.06(a)(i)(C) of the respective JV Agreements) of all
distributions with respect to Partnership Net Operating Cash Flow (as
defined in the respective JV Agreements) paid from the Closing Date
through the Revocation Closing.
(vi) The Buy/Sell/Offering Agreement, the Real
Estate Master Agreement (except for Article 7), the Subscription
Agreement and the Release, and the rights and obligations of the
parties thereunder, shall terminate and be of no further force and
effect, and Sections 5.1, 5.2, 5.3, 5.4, 5.6, 5.7 and 5.8 of this
Settlement Agreement shall terminate and be of no further force or
effect.
(vii) The amendment of the Employment Agreement
pursuant to Section 1.1(a) shall be revoked, the Employment Agreement
(including the option to purchase the Option Shares thereunder) shall
be reinstated, Dart shall pay to RSH compensation under the Employment
Agreement for the period from the date of this Settlement Agreement to
the date of the Revocation Closing during which such compensation was
not paid, and RSH shall be reinstated to all of the positions as an
officer of Dart, as a director of Dart (if practicable without a vote
of Dart's shareholders) and as a director or officer of each
corporation in which Dart owns a direct or indirect ownership interest
that he held immediately prior to the execution and delivery of this
Settlement Agreement.
(viii) RSH shall receive instruments reinstating
all of the outstanding options cancelled pursuant to Section
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1.1(n) of this Settlement Agreement on the terms in existence prior
to such cancellation.
(d) In the event that a court of competent jurisdiction
issues a final order to the effect that the issuance of the Option Shares
pursuant to Section 1.1 of this Settlement Agreement was invalid or that the
Voting Trustees may not exercise the power to vote the Option Shares as
contemplated by the Voting Trust Agreement, then Dart may elect (in lieu of
electing that the parties consummate a Revocation Closing pursuant to this
Section 1.5), by providing written notice to RSH of such election (within
fourteen (14) days of the issuance of such final order or, if such final order
is appealed, within fourteen (14) days of the entry of the final order
resolving the appeal) that the parties consummate the following transactions on
the date specified in such written notice, which date shall not be less than
two (2) days after the date such written notice is delivered to RSH:
(i) RSH and the Voting Trustees shall assign and
transfer the Option Shares to Dart;
(ii) The $27.4 Million Note shall be cancelled, and
Dart shall pay to RSH the amount of One Hundred Ninety-Seven Thousand
Forty-Eight Dollars ($197,048), together with interest thereon from
the date hereof until the date of the Revocation Closing at the simple
per annum rate of eight percent (8%); and
(iii) RSH shall pay to Dart (as an obligation
independent of the $37 Million Note and the $11.6 Million Note) the
amount of Eight Million Dollars ($8,000,000);
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provided, that such payment shall be made immediately if more than two
(2) of the Properties or Joint Ventures (each as defined in the Real
Estate Master Agreement) have theretofore been sold, or (if all of the
Properties or Joint Ventures have not theretofore been sold) upon the
earlier of the next sale of any Property or Joint Venture or the
second anniversary of such written notice.
(e) Notwithstanding any other provision of this Section 1.5,
RSH shall have no obligation to consummate a Revocation Closing or the
transactions described in paragraph (d) of Section 1.5 if after the date of
this Settlement Agreement the Certificate of Incorporation of Dart shall have
been amended to permit holders of shares of any class other than Class B Common
Stock to vote in the election of directors or to authorize the issuance of
additional shares of Class B Common Stock.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF DART.
Dart represents and warrants to RSH that:
2.1. Organization and Existence. Dart and Xxxxx Xxxxxx are each
corporations duly organized and validly existing under the laws of the State of
Delaware.
2.2. Absence of Conflict. The execution, delivery and performance by
Dart of this Settlement Agreement, the Real Estate Master Agreement, the
Buy/Sell/Offering Agreement, the Voting Trust Agreement, the Stock and Trust
Certificate Pledge Agreement, the Pledge Agreements (as defined in the Real
Estate Master Agreement), the Escrow Agreement (as defined in the Real Estate
Master Agreement), Restricted Account Security Agreement and the Escrow
Agreement [$11.6 Million] (collectively referred
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to hereinafter as the "Agreements") and the consummation of the transactions
contemplated thereby, and the execution and delivery of the Release by Dart,
Trak Auto, Crown Books, Xxxxx Xxxxxx and Dart/SFW will not breach, violate or
conflict with any provision of, give rise to any right of acceleration of any
obligation under or constitute a default under (or an event which with the
giving of notice or lapse of time, or both, would give rise to such a right or
constitute such a default), nor require the consent or waiver of any other
party to, (i) any mortgage, lease, note, contract, agreement or instrument to
which Dart, Crown Books, Trak Auto, Dart/SFW or Xxxxx Xxxxxx is a party; or
(ii) any law, regulation, order, judgment, writ, decree, decision or award by
which Dart, Crown Books, Trak Auto, Dart/SFW or Xxxxx Xxxxxx is bound.
2.3. No Consents. No consent, waiver, release, approval, order or
authorization of, or notification to, any third party or any government or
government agency is required in connection with the execution, delivery or
performance by Dart or Xxxxx Xxxxxx of the Agreements, the consummation by Dart
of the transactions contemplated thereby or the execution and delivery of the
Release by Dart, Crown Books, Trak Auto, Dart/SFW and Xxxxx Xxxxxx.
2.4. Litigation. Except as set forth in Schedule 2.4, there are no
actions, suits, proceedings, investigations or claims pending or, to the
knowledge of Dart or Xxxxx Xxxxxx, threatened, against Dart, that relate to any
of the transactions contemplated hereby and that, if successful, could restrain
or prohibit the consummation of such transactions.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF RSH.
RSH represents and warrants to Dart that:
3.1. Authorization. Subject to bankruptcy court approval, the
execution and delivery of the Release by CPI has been made by the President of
CPI and shall be duly authorized by all necessary corporate action on the part
of CPI within three (3) days of the date hereof.
3.2. Binding Effect. The Agreements, the $11.6 Million Note, the
$27.4 Million Note and the $37 Million Note are valid and binding obligations
of RSH, enforceable against RSH in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or like
laws limiting the remedies of creditors generally, and except that, in the
discretion of the court, equitable remedies may not be available for the
enforcement thereof.
3.3. Absence of Conflict. Except as set forth in Schedule 3.3, the
execution, delivery and performance by RSH of the Agreements, the $11.6 Million
Note, the $27.4 Million Note and the $37 Million Note, and the consummation of
the transactions contemplated hereby and thereby, and the execution and
delivery of the Release by RSH and CPI, will not breach, violate or conflict
with any provision of, give rise to any right of acceleration of any obligation
under or constitute a default under (or an event which with the giving of
notice or lapse of time, or both, would give rise to such a right or constitute
such a default), nor require the consent or waiver of any other party to, (i)
any mortgage, lease, note, contract, agreement or instrument to which RSH or
CPI is a party; or (ii) any law,
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regulation, order, judgment, writ, decree, decision or award by which RSH or
CPI is bound.
3.4. No Consents. Except as set forth in Schedule 3.4, no consent,
waiver, release, approval, order or authorization of, or notification to, any
third party or any government or government agency is required in connection
with the execution, delivery or performance by RSH of the Agreements, the $11.6
Million Note, the $27.4 Million Note and the $37 Million Note, the consummation
by RSH of the transactions contemplated hereby and thereby or the execution and
delivery of the Release by RSH and CPI.
3.5. Title. Except as set forth in Schedule 3.5 and as provided by
the Stock and Trust Certificate Pledge Agreement, RSH has good and marketable
title to all of the Redemption Class B Shares, the RSH Class B Shares, the RSH
Class A Shares, the RSH Contested Class A Shares and the RSH Pledged Class A
Shares, free and clear of liens, charges, security interests, restrictions,
claims or encumbrances of any kind, and RSH has not taken any action that could
give rise to any such lien, charge, security interest, restriction, claim or
encumbrance. Upon the issuance by Dart of the Option Shares and the New Class
A Shares to RSH pursuant to Section 1.1, RSH will have good and marketable
title to all of the Option Shares and the New Class A Shares free and clear of
liens, charges, security interests, restrictions, claims or encumbrances of any
kind and RSH will not have taken any action that could give rise to any such
lien, charge, security interest, restriction, claim or encumbrance, except as
provided by the Stock and Trust Certificate Pledge Agreement.
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3.6. Liabilities. Except for liabilities, obligations and
commitments in an amount less than One Hundred Thousand Dollars ($100,000)
individually and Two Million Dollars ($2,000,000) in the aggregate and except
as set forth in Schedule 3.6, RSH has no liabilities, obligations or
commitments, including, without limitation, those for taxes of any kind, that,
if adversely determined or not discharged or performed by RSH, will create any
lien, charge, security interest, restriction, claim or encumbrance in or
against any of the Redemption Class B Shares, the RSH Class B Shares, the
Option Shares, the RSH Class A Shares, the New Class A Shares, the RSH
Contested Class A Shares or the RSH Pledged Class A Shares. Except as set
forth in Schedule 3.6, RSH is not a general partner of any partnership whose
liabilities (including contingent liabilities as guarantor for any debt of any
third party) exceeds its assets. To the best knowledge of RSH there is no
liability, commitment or obligation of RSH, or any partnership of which RSH is
or has been a general partner, with respect to any of the Redemption Class B
Shares, the RSH Class B Shares, the Option Shares, the RSH Class A Shares, the
New Class A Shares, the RSH Contested Class A Shares or the RSH Pledged Class A
Shares that is not disclosed in this Settlement Agreement or the Schedules
hereto.
3.7. Litigation. Except as described in Schedule 3.7, (a) there are
no actions, suits, proceedings, investigations or claims pending or, to the
knowledge of RSH, threatened against RSH, or any other party, or involving any
of the Redemption Class B Shares, the RSH Class B Shares, the Option Shares,
the RSH Class A Shares, the New Class A Shares, the RSH Contested Class A
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Shares or the RSH Pledged Class A Shares, that affect or could affect any of
the Redemption Class B Shares, the RSH Class B Shares, the Option Shares, the
RSH Class A Shares, the New Class A Shares, the RSH Contested Class A Shares or
the RSH Pledged Class A Shares in any respect, or that relate to any of the
transactions contemplated by this Settlement Agreement and that, if successful,
could restrain or prohibit the consummation of such transactions, and (b)
neither RSH nor any of the Redemption Class B Shares, the RSH Class B Shares,
the Option Shares, the RSH Class A Shares, the New Class A Shares, the RSH
Contested Class A Shares or the RSH Pledged Class A Shares is subject to any
order, judgment, writ, decree, decision or award that affects or could affect
any of the Redemption Class B Shares, the RSH Class B Shares, the Option
Shares, the RSH Class A Shares, the New Class A Shares, the RSH Contested Class
A Shares or the RSH Pledged Class A Shares in any respect.
3.8. HHH Note. Through December 31, 1994, RSH has paid to HHH all
principal and interest owing under the HHH Note and, as of the date hereof, RSH
is not in default under the HHH Note. The pay-off amount of the HHH Note is
Eleven Million Five Hundred Sixty-Seven Thousand Two Hundred Twenty-Three
Dollars ($11,567,223) as of the date hereof (principal amount of $11,054,720
plus accrued interest of $512,503).
ARTICLE 4. INDEMNIFICATION.
4.1. Indemnification by RSH. RSH shall defend, indemnify and hold
Dart and each of its subsidiaries and their respective officers, employees,
directors, agents and representatives (the "Dart Indemnitees") harmless from
and against any and all
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demands, claims, actions, suits, proceedings, losses, damages, judgments,
liabilities, costs and expenses, including, without limitation, fees and
expenses of legal counsel, (collectively, "Costs") asserted against or incurred
by any Dart Indemnitee, directly or indirectly, arising out of or resulting
from any inaccuracy in or breach of any of the representations, warranties or
covenants of RSH contained in any of the Agreements, or any certificate or
other instrument furnished to Dart by or on behalf of RSH pursuant to any of
the Agreements.
4.2. Indemnification by Dart. Dart shall defend, indemnify and hold
RSH and his agents and representatives (the "RSH Indemnitees") harmless from
and against any and all Costs asserted against or incurred by any RSH
Indemnitee, directly or indirectly, arising out of or resulting from any
inaccuracy in or breach of any of the representations, warranties or covenants
of Dart contained in any of the Agreements, or any certificate or other
instrument furnished to RSH by or on behalf of Dart pursuant to any of the
Agreements.
4.3. Indemnification Procedure. As soon as is reasonably practicable
after any RSH Indemnitee or any Dart Indemnitee becomes aware of any claim that
it has to recover Costs under this Article 4, such RSH Indemnitee or Dart
Indemnitee, as the case may be ("Indemnified Party"), shall notify the other
party ("Indemnifying Party") in writing, which notice shall describe the claim
in reasonable detail, and shall indicate the amount (estimated, if necessary
and to the extent feasible) of the claim. The failure of any Indemnified Party
to promptly give any Indemnifying Party such notice shall not preclude such
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Indemnified Party from obtaining indemnification under this Article 4, except
to the extent that such Indemnified Party's failure has materially prejudiced
the Indemnifying Party's rights or materially increased its liabilities and
obligations hereunder. In the event of a third party claim which is subject to
indemnification under this Article 4, the Indemnifying Party shall have the
right, upon agreeing in writing that it is obligated to fully indemnify the
Indemnified Party for the full amount of the claim (to the extent such claim is
proven or settled) and providing satisfactory evidence to the Indemnified Party
that the Indemnifying Party has sufficient financial resources to provide such
indemnification and defend such claim properly, to assume the defense of such
claim by counsel of its own choosing. The Indemnified Party and Indemnifying
Party shall cooperate with one another in the defense of such claim, including
the settlement of the matter on the basis stipulated by the Indemnifying Party
(with the Indemnifying Party being responsible for all costs and expenses of
such settlement). If the Indemnifying Party within a reasonable time after
notice of a claim fails to defend the Indemnified Party, the Indemnified Party
shall be entitled to undertake the defense, compromise or settlement of such
claim at the expense of and for the account and risk of the Indemnifying Party.
4.4. Remedies to be Cumulative. The remedies to the Indemnified
Party provided herein shall be in addition to, and not in lieu of, any other
remedies to which the Indemnified Party is entitled at law or in equity for any
breach or non-compliance
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by the Indemnifying Party with the provisions of any of the Agreements.
ARTICLE 5. COVENANTS.
5.1 Additional Transfer of Shares. (a) RSH shall assign and
transfer the New Class A Shares to the Voting Trustees under the Voting Trust
Agreement immediately upon the issuance of the New Class A Shares to RSH
pursuant to the Subscription Agreement.
(b) RSH shall assign and transfer the Pledged Shares to the
Voting Trustees under the Voting Trust Agreement as promptly as practicable
and, in any event, immediately upon the release of the existing pledge of the
Pledged Shares to First Union National Bank.
5.2 RSH Contested Class A Shares. In the event that Dart
purchases any of the RSH Contested Class A Shares pursuant to the
Buy/Sell/Offering Agreement and a court of competent jurisdiction determines
that RSH cannot or has not transferred to Dart lawful title to any of such
shares, then RSH shall be obligated immediately upon written demand from Dart
to pay to Dart, in cash, an amount equal to the purchase price of such shares
under the Buy/Sell/Offering Agreement that was applicable to Dart's attempted
purchase thereof.
5.3. Xxxxxxx Xxxx Legal Action. (a) The parties acknowledge that HHH
has filed a lawsuit captioned Xxxxxxx X. Xxxx v. Xxxxxx X. Xxxx, Civ. A. No.
94CA9883 (D.C. Super. Ct. July 17, 1995), and a counterclaim in the lawsuit
captioned Xxxxxx X. Xxxx v. Xxxxxxx X. Xxxx, Civ. A. Xx. 00000 (Xxx. Xx. filed
July 18, 1995), seeking relief that includes rescission of
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his July 1993 sale of the Redemption Class B Shares to RSH (collectively, the
"Rescission Action").
(b) In the event that a court of competent jurisdiction
enters a final order or grants equitable relief, in the Rescission Action or
otherwise, the effect of which is that HHH's sale of the Redemption Class B
Shares to RSH is or has been rescinded, that Dart has not received a valid and
effective assignment and transfer of the Redemption Class B Shares from RSH as
of the date of this Settlement Agreement or that the Redemption Class B Shares
(or shares substituted therefor) must be returned or delivered to HHH or RSH,
then (subject to paragraph (c) of this Section 5.3) immediately upon written
notice from Dart to RSH:
(i) If Dart shall not theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering Agreement, (x)
RSH shall be obligated to prepay Twenty-Four Million One Hundred
Eighty-Two Thousand Two Hundred Dollars ($24,182,200) of the
outstanding principal amount of the $37 Million Note, together with
accrued interest on said principal amount required to be prepaid, as
and subject to the conditions set forth in the $37 Million Note, and
(y) the New Class A Shares shall be immediately transferred to, and
redeemed by, Dart; and
(ii) If Dart shall theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering Agreement, then
RSH shall pay to Dart (as an obligation independent of the $37 Million
Note, the $27.4 Million Note and the $11.6 Million Note) an amount
equal to the purchase
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price that was applicable in Dart's purchase of the New Class A Shares
pursuant to the Buy/Sell/Offering Agreement; provided, that such
payment shall be made immediately if more than two (2) of the
Properties or Joint Ventures (each as defined in the Real Estate
Master Agreement) have theretofore been sold, or (if all of the
Properties or Joint Ventures have not theretofore been sold) upon the
earlier of the next sale of any Property or Joint Venture or the
second anniversary of such written notice.
(c) Notwithstanding the provisions of paragraph (b) of
this Section 5.3, in the event that a court of competent jurisdiction enters an
order the effect of which is that RSH may not assign and transfer the
Redemption Class B Shares to Dart during HHH's lifetime (or until the
termination of the proxy granted by RSH to HHH in July 1993 to vote the
Redemption Class B Shares), then the transaction provided for in Section 1.1(f)
of this Settlement Agreement shall be consummated immediately once RSH is able
to assign and transfer the Redemption Class B Shares to Dart and RSH shall not
transfer or assign to any other party any interest in any of the Redemption
Class B Shares and shall not grant or suffer to exist any lien, charge,
security interest, restriction, claim or encumbrance of any kind (other than
the proxy granted to HHH in July 1993 as it now exists) in, against or with
respect to any of the Redemption Class B Shares; provided, that if after the
date of this Settlement Agreement and prior to the valid and effective
consummation of the transaction provided for in Section 1.1(f), there shall
have occurred, with the approval of HHH or other holders of Dart Class B Common
Stock
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but without the approval of the Voting Trustees, any change in the voting
rights of Dart Class A Common Stock or Dart Class B Common Stock or any
recapitalization of Dart the result of which is that the Redemption Class B
Shares (while outstanding) represent less than thirty-four percent (34%) of the
issued and outstanding shares of Dart capital stock that vote in the election
of Directors, and the shares of Dart stock held by the Voting Trustees
represent fifty percent (50%) or less of the issued and outstanding shares of
Dart capital stock that vote in the election of Directors, then RSH shall pay
to Dart (as an obligation independent of the $37 Million Note, the $27.4
Million Note and the $11.6 Million Note) the amount of Eight Million Dollars
($8,000,000) at the time the transaction provided for in Section 1.1(f) of this
Settlement Agreement is consummated, subject to a deferral of such payment (if
not more than two (2) of the Properties or Joint Ventures (each as defined in
the Real Estate Master Agreements) have theretofore been sold) until the
earlier of the next sale of any Property or Joint Venture or the second
anniversary of the transition provided for in Section 1.1(f); and provided
further that if, prior to the valid and effective consummation of the
transaction provided for in Section 1.1(f), any event (for example, RSH's legal
incapacity or RSH's testamentary transfer of the Redemption Class B Shares to
HHH) shall occur that renders RSH unable to consummate the transaction provided
for in Section 1.1(f), then immediately upon written notice from Dart to RSH:
(i) If Dart shall not theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering
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Agreement, (x) RSH shall be obligated to prepay Twenty-Four Million
One Hundred Eighty-Two Thousand Two Hundred Dollars ($24,182,200) of
the outstanding principal amount of the $37 Million Note, together
with accrued interest on said principal amount required to be prepaid,
as and subject to the conditions set forth in the $37 Million Note,
and (y) the New Class A Shares shall be immediately transferred to,
and redeemed by, Dart; and
(ii) If Dart shall theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering Agreement, RSH
shall pay to Dart (as an obligation independent of and in addition to
the $37 Million Note) an amount equal to the purchase price that was
applicable in Dart's purchase of the New Class A Shares pursuant to
the Buy/Sell/Offering Agreement; provided, that such payment shall be
made immediately if more than two (2) of the Properties or Joint
Ventures (each as defined in the Real Estate Master Agreement) have
theretofore been sold, or (if all of the Properties or Joint Ventures
have not theretofore been sold) upon the earlier of the next sale of
any Property or Joint Venture or the second anniversary of such
written notice.
5.4. Reaffirmation of Leases. Dart hereby reaffirms that it, Trak
Auto or Crown Books, as the case may be, is a party to, and is bound by, each
of the leases (the "Leases") listed on Schedule 5.4. Except as provided in the
Release, none of Dart, Trak Auto or Crown Books releases or discharges any
person, corporation or partnership from any claims, demands, damages,
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causes of action or lawsuits of any kind, whether known or unknown, heretofore
existing with respect to any of the Leases.
5.5. Further Assurances. RSH and Dart each shall execute and deliver
promptly such additional documents, assignments, certificates and instruments
as the other party to this Settlement Agreement may reasonably request in order
to effectuate more effectively the transfers and assignments provided for in
this Settlement Agreement.
5.6. RSH Restrictions. Except for RSH's record and/or beneficial
ownership, as of the date hereof, of the Redemption Class B Shares, the Option
Shares, the RSH Class A Shares, RSH Class B Shares, the New Class A Shares, the
RSH Contested Class A Shares, the RSH Pledged Class A Shares and eight hundred
seventy (870) Class A shares owned of record by CP Holdings, Inc., for a period
commencing on the date hereof and continuing through the tenth anniversary of
the date hereof, RSH shall not, singly, through a partnership or otherwise as
part of any group, directly or indirectly:
(a) Purchase, acquire or own, or offer or agree to
purchase, acquire or own, any securities of Dart, Crown Books or Trak
Auto or of any Acquisition Company (as hereinafter defined)
(collectively, "Restricted Securities"). For purposes of this
Settlement Agreement, an "Acquisition Company" shall mean any
corporation, partnership or other entity that at the time has entered
into a memorandum of intent, agreement in principle or similar type of
written understanding with Dart, Crown Books or Trak Auto, or a
subsidiary or affiliate of any thereof,
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that contemplates the acquisition of control of such corporation,
partnership or other entity by Dart, Crown Books or Trak Auto or any
such subsidiary or affiliate, or a business combination involving such
corporation, partnership or other entity and Dart, Crown Books or Trak
Auto or any such subsidiary or affiliate, and with respect to which
proposed transaction a public announcement has been made and a copy
thereof has been furnished to RSH; provided, however, that a
corporation, partnership or other entity shall not be deemed an
Acquisition Company if (i) at the date of the first public
announcement of such memorandum of intent, agreement in principle or
similar type of written understanding, RSH alone or with other members
of a group were the beneficial owners of an aggregate of more than
five percent (5%) of the outstanding voting securities of such
corporation, partnership or other entity and RSH (alone or with other
members of a group) had on file with the Securities and Exchange
Commission a Schedule 13D indicating such beneficial ownership, or
(ii) within six (6) months after such announcement, the transaction
contemplated by such memorandum of intent or agreement in principle or
a similar type of written understanding has not become the subject of
a definitive acquisition or similar agreement. Notwithstanding the
prohibitions contained in this Section 5.6(a) with respect to the
acquisition or ownership of Restricted Securities of Dart, Crown Books
or Trak Auto, (i) in the event that RSH acquires such Restricted
Securities in connection with an acquisition by Dart, Crown
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Books or Trak Auto of an Acquisition Company or the securities of an
Acquisition Company by an exchange offer or otherwise, RSH may hold
such Restricted Securities for a period not in excess of one year,
during which period he shall dispose of all such Restricted
Securities, and (ii) in the event RSH acquires such Restricted
Securities in connection with an acquisition by Dart, Crown Books or
Trak Auto of a corporation, partnership or other entity that is not an
Acquisition Company or the securities of such a corporation,
partnership or other entity by an exchange offer or otherwise, RSH may
hold such Restricted Securities indefinitely; provided, however, the
provisions of this Section 5.6(a) shall continue to prohibit any
further purchase, acquisition or ownership of Restricted Securities of
Dart, Crown Books and Trak Auto. Nothing contained herein shall
require disposal of securities representing five percent (5%) or less
of the voting securities of an Acquisition Company owned at the time
such corporation, partnership or other entity becomes an Acquisition
Company. As used in this Section 5.6(a), an "affiliate" of any party
shall mean any person or entity that directly or indirectly controls,
is controlled by or is under common control with such party.
(b) Solicit, or encourage any other person to solicit,
proxies or become a "participant" or otherwise engage in any
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) in
opposition to a recommendation of a
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majority of the directors of Dart, Crown Books, Trak Auto or any
Acquisition Company with respect to any matter;
(c) Initiate, propose or otherwise solicit stockholders
for the approval of one or more stockholder proposals with respect to
Dart, Crown Books, Trak Auto or any Acquisition Company, as described
in Rule 14A-8 under the Exchange Act;
(d) Acquire or affect the control of Dart, Crown Books,
Trak Auto or any Acquisition Company or directly or indirectly
participate in or encourage the formation of any group seeking to
acquire or affect control of Dart, Crown Books, Trak Auto or any
Acquisition Company; or
(e) Encourage any person, firm, corporation, group or
other entity to engage in any of the actions covered by clauses (a)
through (d) of this Section 5.6.
5.7. Dart Restrictions. Except in the event the Voting Trust
Agreement is terminated and Dart has not purchased any RSH Class A Shares or
Option Shares, for a period commencing on the date hereof and continuing
through the tenth anniversary of the date hereof, Dart shall not, singly,
through a partnership or otherwise as part of any group, directly or
indirectly:
(a) Purchase, acquire or own, or offer or agree to
purchase, acquire or own, any securities or other ownership interests
of CPI, of the affiliated entities of CPI or RSH listed in Schedule
5.7 (the "RSH/CPI Affiliates"), or of any RSH/CPI Acquisition Company
(as hereinafter defined) (collectively, "RSH/CPI Restricted
Securities"). For purposes of this Settlement Agreement, an "RSH/CPI
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Acquisition Company" shall mean any corporation, partnership or other
entity that at the time has entered into a memorandum of intent,
agreement in principle or similar type of written understanding with
RSH, CPI or any RSH/CPI Affiliate that contemplates the acquisition of
control of such corporation, partnership or other entity by CPI or any
RSH/CPI Affiliate, or a business combination involving such
corporation, partnership or other entity and CPI or any RSH/CPI
Affiliate, and with respect to which proposed transaction a public
announcement has been made and a copy thereof has been furnished to
Dart; provided, however, that a corporation, partnership or other
entity shall not be deemed an RSH/CPI Acquisition Company if (i) at
the date of the first public announcement of such memorandum of
intent, agreement in principle or similar type of written
understanding, Dart alone or with other members of a group were the
beneficial owners of an aggregate of more than five percent (5%) of
the outstanding voting securities of such corporation, partnership or
other entity and Dart (alone or with other members of a group) had on
file with the Securities and Exchange Commission a Schedule 13D
indicating such beneficial ownership, or (ii) within six (6) months
after such announcement, the transaction contemplated by such
memorandum of intent or agreement in principle or a similar type of
written understanding has not become the subject of a definitive
acquisition or similar agreement. Notwithstanding the prohibitions
contained in this Section 5.7(a) with respect to the acquisition or
ownership of
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RSH/CPI Restricted Securities of CPI or any RSH/CPI Affiliate, (i) in
the event that Dart acquires such RSH/CPI Restricted Securities in
connection with an acquisition by CPI or any RSH/CPI Affiliate of an
RSH/CPI Acquisition Company or the securities of an RSH/CPI
Acquisition Company by an exchange offer or otherwise, Dart may hold
such RSH/CPI Restricted Securities for a period not in excess of one
(1) year, during which period Dart shall dispose of all such RSH/CPI
Restricted Securities, and (ii) in the event Dart acquires such
RSH/CPI Restricted Securities in connection with an acquisition by CPI
or any RSH/CPI Affiliate of a corporation, partnership or other entity
that is not an RSH/CPI Acquisition Company or the securities of such a
corporation, partnership or other entity by an exchange offer or
otherwise, Dart may hold such RSH/CPI Restricted Securities
indefinitely; provided, however, the provisions of this Section 5.7(a)
shall continue to prohibit any further purchase, acquisition or
ownership of RSH/CPI Restricted Securities of CPI or any RSH/CPI
Affiliate. Nothing contained herein shall require disposal of
securities representing five percent (5%) or less of the voting
securities of an RSH/CPI Acquisition Company owned at the time such
corporation, partnership or other entity becomes an RSH/CPI
Acquisition Company.
(b) Acquire or affect the control of CPI or any RSH/CPI
Affiliate or directly or indirectly participate in or encourage the
formation of any group seeking to acquire or affect control of CPI or
any RSH/CPI Affiliate; or
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(c) Encourage any person, firm, corporation, group or
other entity to engage in any of the actions covered by clauses (a)
and (b) of this Section 5.7.
(d) Notwithstanding the foregoing, nothing in this
Section 5.7 shall prohibit, limit or otherwise affect any rights,
interests or remedies that Dart may have under or in respect of the
Agreements, the $37 Million Note, the $27.4 Million Note, the $11.6
Million Note, or any of the other documents or instruments executed
and delivered pursuant to this Settlement Agreement and the Real
Estate Master Agreement, or directly or indirectly as a result of any
breach by RSH of any of his obligations thereunder or under this
Settlement Agreement, the Real Estate Master Agreement or any of the
documents or instruments contemplated hereby or thereby.
(e) Notwithstanding the foregoing, nothing in this
Section 5.7 shall prohibit Dart from acquiring the First Union Stock
Line (as hereinafter defined), as contemplated by Section 5.8, any
other line of credit or loan in connection with which the RSH Pledged
Class A Shares are encumbered and/or that certain loan evidenced by a
promissory note, dated December 23, 1992, executed by Combined
Properties Limited Partnership in favor of Star Enterprise in the
original principal amount of Fifty Million Dollars ($50,000,000) (the
"Star Loan"), or from exercising or enforcing any rights or remedies
in connection therewith; provided, however, that Dart shall not
acquire the Star Loan, or engage in discussions or negotiations with
Star
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Enterprises, Inc. regarding a possible acquisition by Dart of the Star
Loan, during the pendency of the bankruptcy proceedings or any appeals
thereto described in the Restricted Account Security Agreement; and
provided further, that if Dart shall acquire the Star Loan, then Dart
shall not exercise or enforce any rights or remedies in connection
with the Star Loan against RSH unless and until Dart has taken all
reasonable steps to obtain full satisfaction from all other obligors
and/or guarantors under the Star Loan, and Dart shall not release any
such obligor or guarantor from liability with respect to the Star Loan
unless Dart shall also offer to release RSH from liability with
respect to the Star Loan on substantially the same terms as the
release of such other obligor or guarantor.
5.8. First Union National Bank Stock Line. RSH acknowledges that
Dart has discussed with First Union National Bank of Washington, D.C. ("First
Union D.C.") the potential purchase by Dart, directly or through a designee, of
all of First Union D.C.'s right, title and interest as holder in and to that
certain Revolving Credit Note dated July 24, 1994 made by RSH and HHH in favor
of First Union D.C., and in and to all loan documentation, collateral, security
interests, judgments, liens (whether obtained by garnishment, attachment,
judgment or otherwise), proofs of claim and any and all other rights of
collection or enforcement relating thereto (all such right, title and interest
being hereafter referred to as the "First Union Stock Line"). In the event
that Dart, in its sole and absolute discretion, elects to proceed with a
potential purchase of the
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First Union Stock Line from First Union D.C. or the then-holder of the First
Union Stock Line, as the case may be, RSH shall cooperate in all respects with
Dart in such effort, which cooperation shall include, without limitation,
execution and delivery of such documents as Dart may reasonably request,
including a release by RSH (to be effective upon closing of such purchase) of
First Union D.C. and its affiliates, and the officers, directors, employees,
agents, representatives, successors and assigns of each, from any and all
obligations, claims or causes of action, known or unknown, relating to or
arising from the First Union Stock Line. In the event that Dart purchases the
First Union Stock Line, and provided that RSH has fully cooperated as aforesaid
and is not otherwise then in default of any obligation under this Agreement or
under any other agreement executed pursuant to this Agreement, Dart shall
release RSH from RSH's liability to Dart as holder of the First Union Stock
Line upon (a) RSH's payment to Dart, in cash, of twenty-one and thirty-six
one-hundredths percent (21.36%) of the then-outstanding balance of the First
Union Stock Line, including interest accrued thereon, and (b) the expiration of
one (1) year plus one (1) day from the date of such payment (the "Release
Suspense Period"). Such release of RSH by Dart shall be only for the benefit
of RSH, and shall not constitute a release of, nor be deemed to affect the
liability of, any other person relating to the First Union Stock Line. Upon
RSH's payment to Dart as aforesaid, Dart will forebear from enforcing as
against RSH its rights as holder of the First Union Stock Line pending
expiration of the Release Suspense Period, provided, however, that such
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forbearance shall terminate, and all of Dart's rights shall be restored if such
payment by RSH is recovered from Dart as a voidable transfer. Such forbearance
shall be only for the benefit of RSH, and shall not affect, or be deemed to
affect, Dart's rights of enforcement as against any other person relating to
the First Union Stock Line.
5.9. Specific Performance. Dart and RSH each acknowledge and agree
that in the event of any breach of this Settlement Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that Dart and RSH, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance (including temporary restraining orders) of this
Settlement Agreement in any action instituted in the Delaware Court of Chancery
or the United States District Court for the District of Delaware, or, in the
event neither of said courts would have jurisdiction over such action, in any
court of the United States or any state having subject matter jurisdiction.
Dart and RSH consent to personal jurisdiction in any such action brought in the
Delaware Court of Chancery or the United States District Court for the District
of Delaware.
5.10. Brokerage. Dart and RSH each represent and warrant to the
other that the negotiations relevant to this Settlement Agreement have been
carried on by each directly with the other and that there are no claims for
finder's fees or other like payments in connection with this Settlement
Agreement or the transactions contemplated hereby, except that Dart has engaged
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the investment banking firm of Xxxxxxxxxxx Xxxxxxx & Co. to render financial
advisory services in connection with the transactions contemplated hereby and
Dart is solely responsible for all amounts due Xxxxxxxxxxx Xxxxxxx & Co. as a
result thereof. Dart and RSH each agree to indemnify and hold each other
harmless from and against any and all claims or liabilities for finder's fees
or other like payments incurred by reason of any action taken by it.
5.11 No Voluntary Bankruptcy of RSH. RSH covenants to Dart that he
does not have the present intention to do any of the following: (i) apply for,
or consent in writing to, the appointment of a receiver, trustee or liquidator;
(ii) file a voluntary petition seeking relief under the U.S. Bankruptcy Code,
or be unable, or admit in writing his inability, to pay his debts as they
become due; or (iii) make a general assignment for the benefit of creditors.
ARTICLE 6. MISCELLANEOUS.
6.1. Expenses. The parties shall pay their own respective expenses
incurred in connection with this Settlement Agreement and the transactions
hereunder, including, without limitation, any sales, transfer or other similar
taxes and fees for accountants and attorneys.
6.2. Cross-Default. This Settlement Agreement, the Real Estate
Master Agreement, the Agreements and documents related thereto constitute one
integrated whole. RSH agrees that a material breach by RSH under any of the
Agreements shall constitute a material breach under each of the Agreements.
Dart
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agrees that a material breach by Dart under any of the Agreements shall
constitute a material breach under each of the Agreements.
6.3. Notices. Any notices or consents required or permitted by this
Settlement Agreement shall be in writing and shall be deemed given if delivered
in person or if sent by certified mail, postage prepaid, return receipt
requested, or by facsimile as follows, unless any such address is changed by
notice hereunder:
To Dart:
Dart Group Corporation
0000 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
Facsimile: 000-000-0000
Copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile: 000-000-0000
To RSH:
Xxxxxx X. Xxxx
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile: 000-000-0000
Copy to:
Xxxxxx X. Xxxxx, Esq.
Blank, Rome, Xxxxxxx & XxXxxxxx
0000 Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: 000-000-0000
6.4. Governing Law. This Settlement Agreement, and the documents and
instruments delivered pursuant hereto, except as otherwise provided therein,
shall be construed in accordance with and governed by the laws of the State of
Delaware.
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6.5. Counterparts. This Settlement Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
6.6. Survival of Representations and Warranties. The representations
and warranties of the parties hereto made in this Settlement Agreement shall
survive the closing of the transactions contemplated hereby.
6.7. Amendments. This Settlement Agreement may be amended only by a
written agreement executed by both of the parties hereto.
6.8. Entire Agreement. This Settlement Agreement (including the
Schedules and Exhibits hereto), the other Agreements, and the documents and
instruments executed and delivered pursuant hereto and thereto, set forth the
entire understanding of the parties hereto and supersede all prior agreements
between them with respect to the subject matter hereof.
6.9. Severability. If any one or more of the provisions contained in
this Settlement Agreement, or any agreement, document or instrument delivered
pursuant hereto, should be held to be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of all remaining provisions
shall not in any way be affected or impaired.
6.10. Binding Effect. This Settlement Agreement, and the documents
and instruments delivered pursuant hereto, shall inure to the benefit of, and
shall be binding upon, the respective parties hereto, their heirs, executors,
administrators,
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successors (including any representative, executor or administrator of RSH's
estate) and assigns.
6.11. Waiver. The waiver by any party hereto of any matter provided
for herein shall not be deemed to be a waiver of any other matter provided for
herein.
6.12. Exhibits and Schedules. The Exhibits and Schedules attached to
this Settlement Agreement are incorporated herein and shall be part of this
Settlement Agreement for all purposes.
6.13. Headings. The headings in this Settlement Agreement, and the
headings in the Schedules hereto, are solely for convenience of reference and
shall not be given any effect in the construction or interpretation of this
Settlement Agreement.
IN WITNESS WHEREOF, Dart and RSH have executed, or have caused this
Settlement Agreement to be executed on their behalf, on the date first above
written.
DART GROUP CORPORATION
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------- ----------------------------
Attest Name:
Title:
/s/ Xxxxxx X. Xxxx
-------------------------------------- -------------------------------
Witness XXXXXX X. XXXX
The undersigned, as named plaintiffs in the lawsuit captioned Xxxx X.
Xxxx and The Tudor Trust v. Xxxxxxx X. Xxxx, Civ. A. Xx. 00000 (Xxx. Xx. filed
Sept. 29, 1993) and as derivative defendant in the lawsuit captioned Xxxxxx X.
Xxxx v.
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Dart Group Corporation, C.A. Xx. 00000 (Xxx. Xx. filed Sept. 12, 1994), hereby
accept and agree to the terms of this Settlement Agreement and, without
limiting the generality of the foregoing, agree to cooperate fully with the
performance of Sections 1.4(a) and 1.4(b) thereof.
XXXX X. XXXX and
THE TUDOR TRUST
By:/s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxxx
Xxxxxxxxx, Xxxxxx & Xxxxxx
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Index to Schedules and Exhibits
Schedules
2.4 Schedule of Litigation
3.3 Schedule of Conflicts
3.4 Schedule of Consents
3.5 Schedule of Adverse Claims
3.6 Schedule of Liabilities
3.7 Schedule of Litigation
5.4 Schedule of Reaffirmed Leases
5.7 Schedule of CPI/RSH Affiliated Entities
Exhibits
A Form of $27.4 Million Note
B Form of Buy/Sell/Offering Agreement
C Form of Voting Trust Agreement
D Form of Subscription Agreement
E Form of Restricted Account Security Agreement
F Form of $37 Million Note
G Form of Escrow Agreement [$11.6 Million]
H Form of $11.6 Million Note
I Form of Stock and Trust Certificate Pledge Agreement
J Form of Mutual Release
K Form of Real Estate Master Agreement
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