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EXHIBIT 2.3
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into this 4th
day of November, 1997 and effective as of the Effective Time (as defined in the
Merger Agreement (defined below)) between Consolidated Stores Corporation, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx ("Xxxxxx"). In the
event the Merger (as defined below) is not consummated, this Agreement shall be
null and void.
WHEREAS, Xxxxxx is currently the Chief Executive Officer and President
of Mac Frugal's Bargains - Close-outs, Inc., a Delaware corporation ("Mac
Frugal's") and a member of the Board of Directors of Mac Frugal's (the "Board"),
is intimately familiar with the business of Mac Frugal's, and has been
instrumental to the operation of Mac Frugal's.
WHEREAS, the Company, Mac Frugal's and MBC Consolidated Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of the Company
("MBC"), have entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of the date hereof providing for the merger of MBC with and
into Mac Frugal's with Mac Frugal's as the surviving corporation (the "Merger").
WHEREAS, the execution and delivery of this Agreement is contemplated by
the parties in connection with the Merger Agreement.
NOW, THEREFORE, the Company and Xxxxxx agree as follows:
1. Noncompetition Payments.
(a) In consideration of Carter's covenant not to compete (as set
forth in Section 2 below) and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Company hereby agrees to pay
Xxxxxx the aggregate amount of Nine Hundred Thirty Thousand Dollars ($930,000),
payable in equal weekly installments beginning as of August 1, 1998 and
continuing for a period of two (2) years thereafter.
(b) As of the Effective Time (as defined in the Merger
Agreement), the Company is establishing a single purpose escrow account in a Los
Angeles, California office of a national bank into which it is depositing the
Nine Hundred Thirty Thousand Dollars ($930,000) aggregate amount of compensation
payable to Xxxxxx pursuant to this Agreement and the Nine Hundred Seventy
Thousand Dollars ($970,000) payable to Xxxxxx pursuant to the Consultant
Agreement of even date herewith. Funds shall be released from escrow on a weekly
basis as provided in Section 1(a) above and Section 3 of the Consulting
Agreement, without any offsets, claims or charges of any kind whatsoever being
asserted by the Company, except in the event that a court of law makes a final
adjudication that the Company is entitled to assert any such offset, claim or
charge against Xxxxxx.
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2. Noncompetition Covenants and Confidential Information.
(a) Xxxxxx agrees that, that for a period of two (2) years from
August 1, 1998, he will continue to be subject to the contractual provisions
contained in Sections 11, 12 and 13 of his Employment Agreement with Mac
Frugal's dated March 12, 1997.
(b) Xxxxxx also agrees that for a period of two (2) years from
August 1, 1998, he will not:
(i) own any interest in, or accept employment directly or
indirectly with, any person, firm, corporation, or other business entity that
directly or indirectly engages in business competition with the Company or any
of its affiliates in the United States, other than ownership of up to five
percent (5%) of the stock of any publicly-held entity;
(ii) become employed, either directly or indirectly, with
any wholesaler or retailer which has revenues equivalent to those of the
Company; and
(iii) accept employment, either directly or indirectly,
with the following retail/close-out businesses - Walmart, K-Mart, Target, 99
Cent Stores, TJ Maxx, Xxxx Stores, Dollar General and Stage Stores.
(c) For the purposes of this Agreement, the phrase "business
competition" with the Company or any of its affiliates will mean any business
that is predominantly engaged in the specialty retail close-out industry or
specialty wholesale close-out industry.
(d) The parties confirm and agree that the restrictions imposed
by this Section 2 are reasonable, designed to limit unfair competition, do not
stifle the skill and experience of Xxxxxx and will not operate as a bar to
Carter's means of support.
3. Attorney's Fees. In the event that litigation is commenced to enforce
this Agreement, the prevailing party shall be awarded attorneys fees and costs
in connection with such litigation.
4. Notices, All notices, requests, demands and other communications
under this Agreement must be in writing and shall be deemed duly given, unless
otherwise expressly indicated to the contrary in this Agreement, (i) when
personally delivered, (ii) upon receipt of a telephonic facsimile transmission
with a confirmed telephonic transmission answer back, (iii) three (3) days after
having been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, or (iv) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by either party to the other) as
follows:
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To the Company: Consolidated Stores Corporation
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Facsimile No.: 000-000-0000
Attention: General Counsel
With a Copy to: Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Facsimile No.: 000-000-0000
Attention: Xxxxxxx Xxxxx, Esq.
To Xxxxxx: Xxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxxxxxxx, #000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
5. Assignments. The rights and obligations of Xxxxxx under this
Agreement are not assignable by Xxxxxx, but, upon his death prior to July 31,
2000, any unpaid balance owing under Section 1 shall be paid to Carter's estate.
The rights and obligations of the Company under this Agreement will inure to the
benefit of, and will be binding upon, the Company and its successors and
assigns.
6. Waiver. The failure of either party to enforce any provision or
provisions of this Agreement will not in any way be construed as a waiver of any
such provision or provisions as to any future violations thereof, nor prevent
that party thereafter from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are cumulative and the waiver
of any single remedy will not constitute a waiver of such party's right to
assert all other legal and equitable remedies available to it under the
circumstances.
7. Several Provisions. The provisions of this Agreement are severable,
and if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable in any jurisdiction shall
nevertheless be binding and enforceable.
8. Miscellaneous. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof. Section headings used in
this Agreement are for convenience only and are not a part of this Agreement and
are not to be used in construing it. No modification, termination or attempted
waiver of this Agreement will be valid unless in writing and signed by the party
against whom the same is sought to be enforced. This Agreement may be executed
in several identical counterparts, each of which when executed by the parties
and delivered will constitute a single agreement.
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9. Governing Law. This Agreement shall be construed under and governed
by the laws of the State of California without regard to conflicts of laws
principles. The parties hereto consent to the jurisdiction of the courts of the
State of California and to venue within the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CONSOLIDATED STORES CORPORATION
By:______________________________________
Its:_____________________________________
XXXXXX
_________________________________________
Xxxxxx X. Xxxxxx
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