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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and
entered into as of May 1, 1998 by and among VALUE CITY DEPARTMENT STORES, INC.,
an Ohio corporation ("Buyer"), and SCHOTTENSTEIN STORES CORPORATION, a Delaware
corporation ("SSC"), NACHT MANAGEMENT INC., an Ohio corporation ("Nacht"). SSC
and Nacht are collectively referred to herein as "Sellers".
A. Nacht owns 205.2524 shares of the common stock, without par
value ("Company Common Stock"), of Shonac Corporation, an Ohio corporation (the
"Company"), representing 50% of the issued and outstanding shares of the Company
Common Stock. SSC owns 204.8418952 shares of Company Common Stock, representing
49.9% of the issued and outstanding shares of the Company Common Stock. The Ohio
State University owns 0.4105048 shares of Company Common Stock, representing
0.1% of the outstanding shares of the Company Common Stock.
B. The Company owns and operates, as licensee, the shoe
departments in the chain of off-price department stores owned by Buyer and the
shoe departments in two Valley Fair stores and, directly or through its
wholly-owned subsidiary, owns and operates two chains of retail footwear outlets
under the names DSW Shoe Warehouse and Crown Shoe ( all of the foregoing
collectively, the "Business").
X. Xxxxxxx desire to sell all of their 410.0942952 shares of
Company Common Stock, representing 99.9% of the issued and outstanding shares of
the Company Common Stock (the "Shares"), to Buyer and Buyer desires to purchase
the Shares from Sellers, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE 1.
SALE AND PURCHASE OF SHARES
Section 1.1. Sale and Purchase of Shares. Upon the terms and
subject to the conditions hereinafter set forth, Sellers agree to sell,
transfer, assign and deliver the Shares to Buyer, and Buyer agrees to purchase
the Shares from Sellers, free and clear of all security interests, liens,
pledges, claims, charges, escrows, encumbrances, options, rights of first
refusal, mortgages, indentures, security agreements or other agreements,
arrangements, contracts, commitments, understandings or obligations, whether
written or oral and whether or not relating in any way to credit or the
borrowing of money.
Section 1.2. Delivery of Shares. At the Closing (as defined in
Section 3.1 hereof), Sellers shall deliver to Buyer all of the share
certificates representing the Shares duly endorsed in blank or otherwise in
transferable form satisfactory to Buyer.
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ARTICLE 2.
PURCHASE PRICE
Section 2.1. Purchase Price. The purchase price (the "Purchase
Price") for all 410.0942952 of the Shares shall be a total of Ninety-Nine
Million Nine Hundred Thousand Dollars ($99,900,000) in cash.
Section 2.2. Payment. The Purchase Price shall be paid by a wire
transfer from Buyer in the total amount of the Purchase Price to Sellers at the
Closing, with $50,000,000 of the Purchase Price being paid to Nacht and
$49,900,000 of the Purchase Price being paid to SSC, in each case with interest
on such amounts from the Effective Time through the date of payment at the rate
of eight and one-half percent (8.5%) per annum.
ARTICLE 3.
THE CLOSING
Section 3.1. The Closing. This transaction shall be closed (the
"Closing") at 10:00 a.m., local time, on Friday, May 8, 1998 (the "Closing
Date") at the offices of Porter, Wright, Xxxxxx & Xxxxxx, Columbus, Ohio or at
such other time and place as the parties may agree upon in writing, and shall be
effective as of 12:01 a.m., Columbus, Ohio time, on May 3, 1998 (the "Effective
Time").
Section 3.2. Buyer's Obligations at the Closing. At the Closing,
Buyer shall deliver to Sellers:
(a) The payment of the Purchase Price, plus interest, as
provided in Section 2.2; and
(b) A certificate of the Chief Executive Officer of Buyer in
form reasonably satisfactory to Sellers stating that the
representations and warranties of Buyer set forth in Article
5 are true and correct as of the Closing Date.
Section 3.3. Sellers' Obligations at the Closing. At the Closing,
Sellers shall deliver to Buyer:
(a) The certificates representing the Shares duly executed
in blank as provided in Section 1.2 above; and
(b) A certificate of Sellers in form satisfactory to Buyer
stating that the representations and warranties of Sellers
set forth in Article 4 are true and correct as of the
Closing Date.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Buyer that, except as set
forth on the Disclosure Schedule delivered by Sellers to Buyer in connection
with this Agreement (the "Disclosure Schedule"), but, with respect to any
specific representation and warranty, only to the extent that it would be
reasonably apparent that a reference on the Disclosure Schedule relates to such
representation and warranty:
Section 4.1. Organization and Qualification; Subsidiaries. The
Company and each of its subsidiaries (as such subsidiaries are listed on the
Disclosure Schedule) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and any necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority and governmental
approval could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect (as defined below). The Company and each of its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing which could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
When used in connection with the Company or a subsidiary, the term "Material
Adverse Effect" means any change or effect that, either individually or in the
aggregate with all other changes or effects, is materially adverse to the
assets, business, condition (financial or otherwise), prospects or results of
operations of the Company and its subsidiaries taken as a whole.
Section 4.2. Articles of Incorporation and Code of Regulations.
The Company has heretofore furnished to Buyer a complete and correct copy of the
articles of incorporation and the code of regulations of the Company as
currently in effect. Such articles of incorporation and code of regulations are
in full force and effect and no other organizational documents are applicable to
or binding upon the Company. The Company is not in violation of any of the
provisions of its articles of incorporation or code of regulations. As used in
this Agreement, reference to the delivery of documents by Sellers to Buyer shall
include delivery of such documents by Sellers to counsel for Buyer.
Section 4.3. Capitalization. The authorized capital stock of the
Company consists of 500 shares of Company Common Stock. As of April 15, 1998,
410.5048 shares of Company Common Stock were issued and outstanding, fully paid
and nonassessable, all of which were validly issued to Sellers and The Ohio
State University and were issued free of preemptive (or similar) rights. The
Company has not issued or reserved for issuance: (a) any shares of capital stock
or other voting securities of the Company or any of its subsidiaries, other than
the Shares, (b) any options or other rights to acquire from the Company or any
of its subsidiaries, or any obligation of the Company or any its subsidiaries to
issue, any capital stock,
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voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company or any of its subsidiaries, or (c) any
equity equivalents, interests in the ownership or earnings of the Company or any
of its subsidiaries or other similar rights (clauses (a), (b) and (c)
collectively, "Company Securities"). There are no outstanding obligations of the
Company or its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities or to provide funds to or make any investment (in the form of
a loan, capital contribution or otherwise) in any such subsidiary or any other
entity. There are no options, calls, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or its subsidiaries to which the Company or any of
its subsidiaries is a party. The Company has delivered to Buyer prior to the
date hereof a true and complete list of the subsidiaries and associated entities
of the Company which evidences, among other things, the amount of capital stock
or other equity interests owned by the Company, directly or indirectly, in such
subsidiaries or associated entities. Each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and all such shares are owned by the Company or
another wholly owned subsidiary of the Company and are owned free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
voting rights, charges or other encumbrances of any nature whatsoever. No entity
in which the Company owns, directly or indirectly, less than a 50% equity
interest is, individually or when taken together with all such other entities,
material to the business of the Company and its subsidiaries taken as a whole.
As of the date hereof, the only outstanding indebtedness for borrowed money of
the Company and its subsidiaries is set forth on Section 4.3 of the Disclosure
Schedule.
Section 4.4. Authority Relative to this Agreement; Title to the
Shares. Each Seller has the full legal right, capacity and power required to
enter into, execute and deliver this Agreement and to perform fully its
obligations hereunder. This Agreement has been duly executed and delivered by
Sellers and, assuming the due execution and delivery of this Agreement by Buyer,
this Agreement constitutes the valid and binding obligation of Sellers
enforceable against Sellers in accordance with its terms, has been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of any Seller is necessary to authorize this Agreement or to
consummate the transactions contemplated under this Agreement. At the Effective
Time, Sellers shall own and transfer the Shares to Buyer free and clear of all
security interests, liens, pledges, claims, charges, escrows, encumbrances,
options, rights of first refusal, mortgages, indentures, security agreements or
other agreements, arrangements, contracts, commitments, understandings or
obligations, whether written or oral and whether or not relating in any way to
credit or the borrowing of money.
Section 4.5. No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this
Agreement by each of the Sellers does not and will not: (i) conflict with or
violate the articles of incorporation or code of regulations of the Company or
the equivalent organizational documents of any of its subsidiaries; (ii)
assuming that all consents, approvals and authorizations contemplated by clauses
(i) and (ii) of subsection (b) below have been obtained and all filings
described in such clauses have been made, conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to
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the Company or any of its subsidiaries or by which its or any of their
respective properties are bound or affected; or (iii) result in any breach or
violation of or constitute a default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or affected,
except (A) in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and (B) in the case of clause (iii), other than as set forth in
Section 4.5 of the Disclosure Schedule.
(b) The execution, delivery and performance of this
Agreement by the Sellers and the consummation of the stock purchase pursuant
hereto (the "Stock Purchase") do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
Federal, state or local government or any court, administrative agency or
commission or other governmental authority, official or agency, domestic or
foreign (a "Governmental Entity"), except for (i) the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (ii) such
consents, approvals, authorizations, permits, actions, filings or notifications
the failure of which to make or obtain could not reasonably be expected to (x)
prevent or materially delay consummation of the Stock Purchase or (y) have a
Material Adverse Effect.
Section 4.6. Compliance. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except for any such conflicts, defaults or violations which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 4.7. Financial Statements.
(a) The Company has heretofore delivered or promptly will
deliver to Buyer, each of the audited consolidated financial statements of the
Company, including all related notes thereto, for each of the two fiscal years
ended January 3, 1998 and will deliver to Buyer, at least five business days
prior to the Closing, the unaudited financial statements of the Company
consisting of a balance sheet of the Company as of April 4, 1998 and a statement
of earnings of the Company for the three months then ended (the "Financial
Statements"). The Financial Statements have been, and will be as of the Closing
Date, prepared in accordance with generally
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accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly
present, and will fairly present as of the Closing Date, the consolidated
financial position of the Company and its subsidiaries at the respective dates
thereof and the consolidated results of its operations and changes in cash flows
for the periods indicated.
(b) Except as and to the extent set forth on the
consolidated balance sheet of the Company and its subsidiaries at April 4, 1998,
neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities or obligations incurred in the ordinary course of
business since April 4, 1998 and for liabilities that could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 4.8. Absence of Certain Changes or Events. Since April 4,
1998, except as contemplated by this Agreement or disclosed in Section 4.8 of
the Disclosure Schedule, the Company and its subsidiaries have conducted their
businesses only in the ordinary course and, since such date, there has not been
(i) any condition, event or occurrence which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, or (ii) any
condition, event or occurrence which could reasonably be expected to prevent,
hinder or materially delay the ability of the Sellers to consummate the
transactions contemplated by this Agreement.
Section 4.9. Absence of Litigation. Except as disclosed in Section
4.9 of the Disclosure Schedule, there are no suits, claims, actions, proceedings
or investigations pending or, to the best knowledge of the Company or the
Sellers, threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
Governmental Entity, that (i) individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect or (ii) seek to delay or prevent
the consummation of the transactions contemplated hereby. As of the date hereof,
neither the Company nor any of its subsidiaries nor any of their respective
properties is or are subject to any order, writ, judgment, injunction, decree,
determination or award having, or which, insofar as can be reasonably foreseen,
in the future could reasonably be expected to have a Material Adverse Effect or
could prevent or materially delay the consummation of the transactions
contemplated hereby. As of the date hereof, no officer, director or shareholder
of the Company is a defendant in any litigation with respect to the performance
of duties as an officer, director or shareholder of the Company under any
federal or state law (including litigation under federal and state securities
laws).
Section 4.10. Properties.
(a) Section 4.10(a) of the Disclosure Schedule sets forth a
complete and accurate list and description of all real property and interests in
real property owned in fee by the Company (the "Owned Real Property"), such
description including, for each parcel of Owned Real Property, the legal
description and address thereof, the approximate acreage thereof, the use
thereof, and the nature and square footage of any improvements thereon. Section
4.10(a) of the Disclosure Schedule also sets forth a complete and accurate list
and description of all real
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property leased, subleased or otherwise occupied by the Company (the "Leased
Real Property"), such description including, for each Leased Real Property, an
identification of the lease or sublease agreement therefor and any and all
amendments, modifications, side letters pertaining to the lease terms
(collectively, the "Leases"), default notices and material estoppel letters
related thereto (true and complete copies of which have previously been
delivered by the Company to Buyer), the names of the lessor and lessee (or
sublessor or sublessee) thereunder (including whether the lessor thereunder is
an affiliate of the Company, the title and date thereof, the location and
approximate size of the premises leased thereunder, the rental and term
thereunder, including any extension options, and the use of such premises. The
Owned Real Property and the Leased Real Property shall be hereinafter
collectively referred to as the "Real Property."
(b) The Company holds good and marketable fee or leasehold
title (as the case may be) to the Owned Real Property and the Leased Real
Property, free and clear of any liens, mortgages, easements, rights-of-way,
licenses, use restrictions, claims, charges, options, title defects or
encumbrances of any nature whatsoever, except for the Permitted Encumbrances (as
defined below). The Permitted Encumbrances do not and will not impair or
adversely affect the current or contemplated (the term "contemplated," as used
in this Section 4.10, meaning as identified in Section 4.10(a) of the Disclosure
Schedule) use, occupancy or operation of any Real Property, or the business,
operations, condition (financial or otherwise) or prospects of the Company. All
aspects of the Real Property are in compliance with any and all restrictions and
other provisions included in the Permitted Encumbrances, and there are no
matters which create, or which with notice or the passage of time would create,
a default under any of the documents evidencing the Permitted Encumbrances. No
part of the Real Property is subject to any building or use restrictions that
would restrict or prevent the present or contemplated use and enjoyment of the
Real Property, and the Real Property is properly and duly zoned for its current
and contemplated use and is in all material respects a conforming use. As used
herein, the term "Permitted Encumbrances" means those (i) liens for taxes not
yet due and payable or which are being contested in good faith and by
appropriate proceedings, (ii) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like liens, or (iii) easements,
rights-of-way, encroachments, restrictions, conditions and other similar
encumbrances, which are described or listed in Section 4.10(b) of the Disclosure
Schedule.
(c) Section 4.10(c) of the Disclosure Schedule contains a
complete and accurate list and description of all existing surveys, title
insurance policies, title insurance, abstracts and other evidence of title in
the Company's or Sellers's possession (true and complete copies of which have
previously been delivered by the Company and Sellers to Buyer) covering the Real
Property and all Permitted Encumbrances arising with respect to the Real
Property since the issuance of such title insurance policies.
(d) All buildings, structures, improvements and fixtures
located on, under, over or within the Real Property, and all other aspects of
each parcel of Real Property, (i) are in good operating condition and repair and
are structurally sound and free of any material defects; (ii) are suitable,
sufficient and appropriate in all respects for their current and contemplated
uses; and (iii) consist of sufficient land, parking areas, sidewalks, driveways
and other improvements to permit the continued use of such facilities in the
manner and for the purposes to which they are
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presently devoted or to which they are contemplated to be devoted, except for
such violations of (i),(ii) or (iii) which, individually or in the aggregate
with any other violation, could not reasonably be expected to have a Material
Adverse Effect. There are no outstanding or threatened requirements by any
insurance company which has issued an insurance policy covering any Real
Property, or by any board of fire underwriters or other body exercising similar
functions, requiring any repairs or alterations to be done on any Real Property,
except for such requirements which, individually or in the aggregate with any
other requirement, could not reasonably be expected to have a Material Adverse
Effect.
(e) There is no pending or, to the best knowledge of the
Company or the Sellers, threatened action or proceeding by any Governmental
Entity for assessment or collection of taxes, impact fees or special assessments
affecting any part of any Real Property, and no condemnation or eminent domain
proceeding against any part of any Real Property is pending or, to the best
knowledge of the Company or the Sellers, threatened, except for such actions or
proceedings which, individually or in the aggregate with any other action or
proceeding, could not reasonably be expected to have a Material Adverse Effect.
(f) Except for such circumstances which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect: (i) all of the Leases are valid, binding and in full force and effect
and no Lease is subject to any pledge, lien, sublease, assignment, license or
other agreement granting to any third party any interest in such Lease or any
right to the use or occupancy of any Leased Real Property; (ii) the lessee under
each Lease is now in possession of the applicable Leased Real Property and there
is no pending or, to the best knowledge of the Company or the Sellers,
threatened proceeding which might interfere with the quiet enjoyment of each
tenant; (iii) to the best knowledge of the Company or the Sellers, there are no
outstanding defaults or circumstances which, upon the giving of notice or
passage of time or both, would constitute a default or breach by either party
under any Lease; (iv) the consummation of the transactions contemplated hereby
does not require the consent of any lessor under any Lease and will not
constitute a breach or default under any Lease; (v) the Company has exercised
within the time prescribed in each Lease any option provided therein to extend
or renew the term thereof; and (vi) the Leased Real Property either (A) is not
subject to any mortgage, deed of trust or other lien which has priority over any
Lease held by the Company, or (B) the holder of any such lien has entered into a
valid, binding and enforceable nondisturbance agreement in favor of the Company
pursuant to which the lease cannot be extinguished or terminated by reason of
any foreclosure or other acquisition of title by such holder. As used herein,
the term "lease" shall also include subleases, the term "lessor" shall also
include any sublessor, and the term "lessee" shall also include any sublessee.
Section 4.11. Employee Benefit Plans.
(a) Section 4.11(a) of the Disclosure Schedule contains a
true and complete list of each "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including without limitation multiemployer plans within the meaning
of ERISA Section 3(37), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus,
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incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), under which any employee or former employee of the Company or any of
its subsidiaries has, or could reasonably be expected to have, any present or
future right to benefits or under which the Company or any subsidiary of the
Company has, or could reasonably be expected to have, any present or future
liability. All such plans, agreements, programs, policies and arrangements shall
be collectively referred to as the "Company Plans." Section 4.11 of the
Disclosure Schedule also contains a true and complete description of all
severance plans of the Company or any of its subsidiaries. No Company Plan is a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA or is an
"employee pension plan" within the meaning of Section 3(2) of ERISA subject to
Title IV of ERISA.
(b) With respect to each Company Plan, the Company has
delivered or made available to Buyer a current, accurate and complete copy (or,
to the extent no such copy exists, an accurate description) thereof and, to the
extent applicable, (i) any related trust agreement, annuity contract or other
funding instrument; (ii) the most recent determination letter; (iii) any summary
plan description and other written communications (or description of any oral
communication) by the Company or any of its subsidiaries which modify in any
significant respect the benefits provided under the terms of any Company Plan in
a manner not reflected in any of the documents described in this subsection (b);
and (iv) for the three most recent years (A) the Form 5500 and attached
schedules; (B) audited financial statements; and (C) actuarial valuation
reports.
(c) With respect to all the Company Plans: (i) all Company
Plans are in compliance with all applicable laws, including the Internal Revenue
Code of 1986, as amended (the "Code") and ERISA, and including all filing and
reporting requirements; (ii) the aggregate accumulated benefit obligations of
each pension plan that is subject to Title IV of ERISA (as of the date of the
most recent actuarial valuation prepared for such Plan) do not exceed the fair
market value of the assets of such pension plan (as of the date of such
valuation), and no material adverse change has occurred with respect to the
financial condition of such plan since such last valuation; (iii) each pension
plan that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service, and
the Company is not aware of any circumstances likely to result in revocation of
any such favorable determination letter; (iv) there is no pending or, to the
knowledge of Sellers, threatened litigation or administrative agency proceeding
relating to any Company Plan (other than benefit claims in the ordinary course);
(v) the Company has no obligations under any unfunded deferred compensation
plans; (vi) neither the Company, its subsidiaries nor any entity that is treated
as a single employer with the Company or its subsidiaries under Section 414(b),
(c), (m) or (o) of the Code (an "ERISA Affiliate") has incurred or reasonably
expects to incur any lien or liability to the Pension Benefit Guaranty
Corporation, any Pension Plan or otherwise under Title IV of ERISA (other than
the payment of contributions or premiums, none of which are overdue) or under
Section 412 of the Code; and (vii) all contributions required to be made to any
Company Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Company Plan, for any period through the date
hereof have been timely made or paid in full or, to the extent not
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required to be made or paid on or before the date hereof, have been fully
reflected on the Financial Statements.
(d) Except as specifically contemplated by the agreements
listed in Section 4.11(d) of the Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not (x) entitle any Company
employee or director to severance pay, or (y) accelerate the time of payment or
vesting or trigger any payment of compensation or benefits under, increase the
amount payable or trigger any other material obligation pursuant to, any of the
Company Plans.
(e) Except as specifically contemplated by the agreements
listed in Section 4.11(d) of the Disclosure Schedule, none of the Company or any
of its subsidiaries has any liability for life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents thereof, except for
health continuation coverage as required by Section 4980B of the Code or Part 6
of Title I of ERISA and at no expense to the Company or any of its subsidiaries.
(f) All Company Plans covering foreign employees of the
Company or any of its subsidiaries comply with applicable local law and are
fully funded and/or book reserved to the extent applicable.
(g) There are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations which have
been asserted or instituted against the Company Plans, any fiduciaries thereof
with respect to their duties to the Company Plans or the assets of any of the
trusts under any of the Plans which could reasonably be expected to result in
any material liability to the Company.
Section 4.12. Tax Matters. For purposes of this Section 4.12, any
reference to the Company or its subsidiaries shall include any corporation that
merged or was liquidated with and into the Company or any of its subsidiaries.
Except as disclosed in Section 4.12 of the Disclosure Schedule:
(a) All Tax Returns required to be filed by or with respect
to the Company and its subsidiaries have been timely filed. The Company and its
subsidiaries have (i) timely paid all Taxes that are due, or that have been
asserted in writing by any taxing authority to be due, from or with respect to
it for the periods ending prior to the date hereof or (ii) provided adequate
reserves in its financial statements for any Taxes that have not been paid,
whether or not shown as being due on any Tax Returns.
(b) No material claim for unpaid Taxes has become a lien
against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries.
(c) Except as described in Section 4.12 of the Disclosure
Schedule, there are no outstanding agreements, waivers or arrangements extending
the statutory period of limitation applicable to any claim for, or the period
for the collection or assessment of, Taxes due from or
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with respect to the Company or any subsidiary of the Company for any taxable
period, and no power of attorney granted by or with respect to the Company or
any subsidiary of the Company relating to Taxes is currently in force.
(d) No audit or other proceeding by any Governmental Entity
has formally commenced and no specific notification has been given to the
Company or any subsidiary of the Company that such an audit or other proceeding
is pending or threatened with respect to any Taxes due from or with respect to
the Company or any subsidiary of the Company or any Tax Return filed by or with
respect to the Company or any subsidiary of the Company. No assessment of Tax
has been proposed in writing against the Company or any subsidiary of the
Company or any of their assets or properties.
(e) As of the Effective Time, neither the Company nor any of
the subsidiaries shall be a party to, be bound by or have any obligation under,
any Tax sharing agreement or similar contract or arrangement with any party
other than exclusively the Company and its subsidiaries.
(f) There is no contract or agreement, plan or arrangement
by the Company or any subsidiary of the Company covering any person that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible by the Company or its subsidiaries by reason of section
280G of the Code, as now in effect.
(g) As used herein, "Taxes" shall mean all taxes of any
kind, including, without limitation, those on or measured by or referred to as
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
Governmental Entity. As used herein, "Tax Return" shall mean any return,
declaration, report, claim for refund or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
Section 4.13. Environmental Laws. Except to the extent that any
condition, individually or in the aggregate with any other condition, could not
reasonably be expected to have a Material Adverse Effect, (a) each of the
Company and each of its subsidiaries complies and has complied with all
Environmental Laws applicable to the properties, assets or businesses of the
Company and its subsidiaries, and possesses and complies with and has possessed
and complied with all Environmental Permits required under such laws except
where any noncompliance or failure to possess any Environmental Permit has not
resulted in, or could not reasonably be expected to result in, individually or
in the aggregate, material liability under Environmental Laws; (b) no
modification, revocation, reissuance, alteration, transfer, or amendment of any
of the Environmental Permits, or any review by, or approval of, any third party
of any of the Environmental Permits is required in connection with the execution
or delivery of this Agreement or the consummation of the transactions
contemplated hereby or the continuation of the business of Company and its
subsidiaries following such consummation; (c)
12
none of the Company and its subsidiaries has received any Environmental Claim,
which has not been corrected or settled, and none of the Company and its
subsidiaries is aware after reasonable inquiry of any threatened Environmental
Claim; (d) none of the Company and its subsidiaries has assumed, contractually
or by operation of law, any contractual liabilities or obligations under any
Environmental Laws, other than under real estate purchases or leases entered
into in the ordinary course of business; (e) to the best knowledge of the
Company or the Sellers, there are no past or present events, conditions,
circumstances, practices, plans or legal requirements that could reasonably be
expected to result in material liability to the Company or any of its
subsidiaries under Environmental Laws, or that could reasonably be expected to
materially increase the burden on the Company or any subsidiary of, complying
with Environmental Laws or of obtaining, renewing, or complying with all
Environmental Permits required under such laws; (f) to the best knowledge of the
Company or the Sellers, there is and has been no generation, treatment,
recycling, storage, disposal or presence, for any reason whatsoever, of any
Hazardous Materials or other conditions at or from any property owned, leased,
operated or otherwise used by the Company or any subsidiary now or in the past
that could reasonably be expected to give rise to material liability of the
Company or any subsidiary under any Environmental Law; (g) to the best knowledge
of the Company or the Sellers, there is not now nor has there ever been any
migration from neighboring properties to, or in the direction of, any property
owned, leased, operated or otherwise used by the Company or any subsidiary of
any Hazardous Materials, nor is the Company aware of any threatened migration of
any Hazardous Materials onto such property; (h) the Company has heretofore
delivered to Buyer true and complete copies of all reports, surveys or
evaluations of or with respect to the environmental condition of any property
owned, leased, operated or otherwise used by the Company or any subsidiary now
or in the past, which were prepared during the Company's or any subsidiary's
ownership, lease, operation or other use of such property or are otherwise in
the Company's possession, and has informed Buyer in writing of any work
previously performed or now contemplated at any property owned, leased, operated
or otherwise used by the Company or any subsidiary which in any way relates to
the environmental condition thereof. For purposes of this Agreement, the
following terms shall have the following meanings:
"Environmental Claim" means any written or oral notice,
claim, demand, action, suit, complaint, proceeding or other communication by any
person alleging liability or potential liability arising out of, relating to,
based on or resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Materials at any location, whether or not
owned, leased or operated by the Company or any of its subsidiaries or (ii)
circumstances forming the basis of any violation or alleged violation of any
Environmental Law or Environmental Permit or (iii) otherwise relating to
obligations or liabilities under any Environmental Laws.
"Environmental Permits" means all permits, licenses,
registrations and other governmental authorizations required for the Company and
the operations of the Company's and its subsidiaries' facilities and otherwise
to conduct its business under Environmental Laws.
13
"Environmental Laws" means all applicable federal, state and
local statutes, rules, regulations, ordinances, orders, decrees and common law,
as they exist at the date hereof, relating in any manner to contamination,
pollution or protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act, the Solid Waste Disposal Act, the Resource Conservation and Recovery Act,
the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as amended, and
similar state laws.
"Hazardous Materials" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum (including crude oil or
any fraction thereof) and petroleum products, asbestos and asbestos-containing
materials, pollutants and contaminants regulated pursuant to, or that could form
the basis of liability under, any Environmental Law.
Section 4.14. Labor Matters. Except as set forth in Section 4.14
of the Disclosure Schedule, (i) neither the Company nor any of its subsidiaries
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement with a labor union or labor organization; (ii) to the knowledge
of the Company or the Sellers, neither the Company nor any of its subsidiaries
is the subject of any proceeding asserting that it or any of its subsidiaries
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment; (iii) there is
no strike, work stoppage or other labor dispute involving the Company or any of
its subsidiaries pending or, to the Company's or the Sellers's knowledge,
threatened; (iv) to the knowledge of the Company or the Sellers, no material
action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity brought by or on behalf of
any employee, prospective employee, former employee, retiree, labor organization
or other representative of its employees is pending or threatened against the
Company or any of its subsidiaries; (v) to the knowledge of the Company or the
Sellers, no material grievance is pending or threatened against the Company or
any of its subsidiaries; (vi) neither the Company nor any of its subsidiaries is
a party to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Entity relating to employees or employment practices; and (vii) no
labor organization or group of employees of the Company has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company or the Sellers, threatened
to be brought or filed, with the National Labor Relations Board or any other
labor relations tribunal or authority.
Section 4.15. Trade Names. The Company or its subsidiaries owns
all rights to, or has the valid right to use, all domestic or foreign
trademarks, trade names, brandmarks, brand names, copyrights, applications
pending for trademarks or trade name registrations, and brandmarks or brand name
registrations or copyright registrations and other proprietary rights
("Intellectual Property"), used by the Company and each of its subsidiaries in
the conduct of its operations ("Company Intellectual Property"), in each case,
free and clear of any liens, encumbrances or security interests, other than such
encumbrances, restrictions and limitations imposed under license agreements
which do not materially and adversely affect the Company's use thereof. The
Company Intellectual Property includes all Intellectual Property that is
14
necessary in the operation of the business of the Company and each of its
subsidiaries as currently conducted. To the best knowledge of the Company and
the Sellers, the use of the Company Intellectual Property by the Company and its
subsidiaries does not infringe on the rights of any person, except for such
infringement which, individually or in the aggregate with other infringements,
could not reasonably be expected to have a Material Adverse Effect.
Section 4.16. Affiliated-Party Transactions. Set forth in Section
4.16 of the Disclosure Schedule is an accurate and complete listing, as of the
date hereof, of all contracts, leases, agreements or understandings, whether
written or oral, between the Company or any of its subsidiaries on the one hand,
and any affiliate or associate of the Company (other than its wholly-owned
subsidiaries), on the other hand ("Affiliate Transactions"), that (a) require
the Company or any of its subsidiaries to make annual expenditures in excess of
$50,000, (b) require the Company or any of its subsidiaries to make total
expenditures in excess of $100,000 or (c) are otherwise material to the Company
or its subsidiaries. Section 4.16 of the Disclosure Schedule (i) identifies
which Affiliate Transactions will and will not survive the Closing, and (ii)
contains a complete and accurate summary of the material terms of the Affiliate
Transactions which will survive the Closing. The terms of each Affiliate
Transaction which will survive the Closing reflect terms no less favorable to
the Company than terms which could have been obtained in arms-length
transactions between unaffiliated parties.
Section 4.17. Disclosure. None of the representations, warranties
or covenants contained in this Agreement, nor in any schedule or exhibit hereto
made by Sellers, contains any untrue statement of material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer warrants and represents to and covenants with Sellers as
follows:
Section 5.1. Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and any necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power, authority and governmental approval could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
assets, business, condition (financial or otherwise), prospects or results of
operations of Buyer and its subsidiaries taken as a whole.
Section 5.2. Validity and Execution. Buyer has full legal right,
capacity and power and all requisite authority and approval required to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder, subject to approval of the transactions contemplated pursuant to this
Agreement and each of the other agreements required to be entered into pursuant
hereto by Buyer by the board of directors of Buyer. This Agreement has been duly
15
executed and delivered by Buyer and constitutes the valid and binding obligation
of Buyer enforceable against it in accordance with its terms.
Section 5.3. No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this
Agreement by Buyer does not and will not: (i) conflict with or violate the
articles of incorporation or code of regulations of the Buyer or the equivalent
organizational documents of any of its subsidiaries; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i) and (ii) of
subsection (b) below have been obtained and all filings described in such
clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Buyer or any of its subsidiaries or by
which its or any of their respective properties are bound or affected; or (iii)
result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both could become a default) or result in the
loss of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Buyer or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Buyer or any of its subsidiaries is a party or by which Buyer or any of
its subsidiaries or its or any of their respective properties are bound or
affected; except for any such conflicts, violations, breaches, defaults, liens
or other occurrences which could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Buyer's ability
to perform its obligations hereunder.
(b) The execution, delivery and performance of this
Agreement by Buyer and the consummation of the Stock Purchase pursuant hereto do
not and will not require any consent, approval, authorization or permit of,
action by, filing with or notification to, any Federal, state or local
government or any court, administrative agency or commission or other
governmental authority, official or agency, domestic or foreign (a "Governmental
Entity"), except for (i) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") (ii) such consents, approvals, authorizations,
permits, actions, filings or notifications the failure of which to make or
obtain could not reasonably be expected to (x) prevent or materially delay
consummation of the Stock Purchase or (y) have a material adverse effect on the
Buyer's ability to perform its obligations hereunder.
Section 5.4. Compliance. Neither Buyer nor any of its subsidiaries
is in conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to Buyer or any of its
subsidiaries or by which its or any of their respective properties are bound or
affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Buyer or any of its subsidiaries is a party or by which Buyer or any of its
subsidiaries or its or any of their respective properties are bound or affected,
except for any such conflicts, defaults or violations which could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the Buyer's ability to perform its obligations hereunder.
16
Section 5.5. Disclosure. None of the representations, warranties
or covenants contained in this Agreement, nor in any schedule or exhibit hereto
made by Buyer, contains any untrue statement of material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE 6.
CERTAIN OBLIGATIONS OF SELLERS PENDING CLOSING
Section 6.1. Investigation. During the period from the date of
this Agreement to the Closing Date (the "Due Diligence Period"), (a) Sellers
shall cause the Company to permit Buyer and its authorized representatives to
have full access to the Company's facilities during normal business hours, to
observe the Business operations, to meet with the Company's officers and
employees engaged in the Business, to contact the Company's auditors, to audit,
examine and copy all files, books and records, and other documents and papers
relating to the Company and the Business, and to perform such other due
diligence procedures as it deems reasonably necessary or appropriate, and (b)
Sellers shall cause the Company to provide to Buyer and its authorized
representatives all information concerning the Company and the Business, and all
information concerning the financial condition of the Company and the Business,
that is reasonably requested by Buyer. Buyer shall not be obligated to
consummate the transactions contemplated by this Agreement if it is not
satisfied with its findings during the Due Diligence Period because of the
discovery of a material adverse condition relating to the Business, operations,
or financial condition of Company or because of a material misrepresentation by
Sellers.
Section 6.2. Conduct of the Business. Between the date of this
Agreement and the Effective Time, except with the prior written consent of Buyer
or as expressly set forth in the agreements listed in Section 4.16 of the
Disclosure Schedule, Sellers shall and shall cause the Company and its
subsidiaries to (i) conduct the Business in a diligent manner consistent with
past practices and in the ordinary course, (ii) not make any change in the
Company's and its subsidiaries business practices, (iii) not make any
distribution by the Company or its subsidiaries or transfer assets of the
Company or its subsidiaries or allow the Company or its subsidiaries to incur
liabilities other than in the ordinary course, and (iv) use their best efforts
to preserve the resources and organization of the Business intact, keeping
available, the services of its current officers, employees, agents and
representatives engaged in the Business, and maintaining the good will of its
customers, suppliers and other persons and entities having business relations
with the Company or its subsidiaries and the Business.
Section 6.3. Acquisition Proposals. Between the date of this
Agreement and the Effective Time, neither Sellers nor any of their
representatives, agents or affiliates, shall, directly or indirectly, solicit,
initiate, encourage or respond to any inquiries or proposals from, or
participate in any discussions or negotiations with, or provide any non-public
information to, any person, entity, or group (other than Buyer and its
respective officers, employees, representatives and agents) concerning any sale
of any of the Company or its subsidiaries or the Business, the assets of the
Business, any sale of shares of capital stock or other securities of the Company
or its subsidiaries, or any merger, consolidation or similar transaction
involving the Company or its
17
subsidiaries or the Business and the assets of the Business. Sellers shall
immediately advise Buyer of, and communicate to Buyer the terms of, any such
inquiry or proposal received by the Company or Sellers.
Section 6.4. Advice of Changes. Between the date of this Agreement
and the Effective Time, Sellers shall promptly advise Buyer, in writing, of any
fact of which any of them obtains knowledge and which, if existing or known as
of the date of this Agreement, would have been required to be set forth or
disclosed in or pursuant to this Agreement or in order to prevent any
representation or warranty made by Sellers herein from being incorrect or
misleading.
Section 6.5. Reasonable Efforts. Sellers and Buyer shall use their
reasonable efforts to consummate the transactions contemplated by this Agreement
as of the earliest practicable date. Sellers and Buyer shall not take, or cause
to be taken, or to the best of their ability permit to be taken, any action that
would impair the prospect of completing the transactions contemplated by this
Agreement.
Section 6.6. Tax Matters. Buyer shall not take, or cause to be
taken, or permit to be taken, any action that would result in an election under
Section 338(h) of the Code with respect to the Company and/or the transactions
contemplated by this Agreement.
ARTICLE 7.
CONDITIONS TO CLOSING
Section 7.1. Conditions to Sellers' Obligations. The obligations
of Sellers to enter into and complete the Closing are subject to the fulfillment
on or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Buyer contained in
this Agreement shall be true and complete and correct on and as of
the Closing Date with the same force and effect as though made on
and as of the Closing Date;
(b) Buyer shall have performed and complied with all
covenants and agreements required by this Agreement to be
performed or complied with by Buyer on or prior to the Closing
Date; and
(c) Buyer shall have delivered all certifications and other
documents required of it pursuant to this Agreement.
Section 7.2. Conditions to Buyer's Obligations. The obligations of
Buyer to enter into and complete the Closing are subject to the fulfillment on
or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Sellers contained
in this Agreement shall be true and complete and correct on and as
of the Closing Date with the same force and effect as though made
on and as of the Closing Date;
18
(b) Sellers shall have performed and complied with all
covenants and agreements required by this Agreement to be
performed or complied with by any of them on or prior to the
Closing Date;
(c) The Company shall have received the resignations of
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxxxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxxx, Xxxx X. Xxxxxxx, and Xxxx X. Xxxxxxxxx as directors,
officers, and employees of the Company and its subsidiaries,
effective as of the Closing Date and on terms and conditions
satisfactory to Buyer;
(d) Buyer shall have caused the Company to enter into
mutually acceptable employment agreements with Xxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxxx Xxxxxx, and Xxxxxxx Xxxxxxx;
(f) Sellers shall have delivered all certifications and
other documents required pursuant to this Agreement; and
(g) Buyer shall have completed its due diligence review of
the Company to its satisfaction during the Due Diligence Period as
provided in Section 6.1 confirming that there has been no material
adverse change in the Company's financial condition or results of
operations from those reflected in the Financial Statements;
(h) The board of directors of Buyer shall have approved this
transaction after receipt by the special committee of such board
of the opinion of an investment banking firm retained by it, that
the transactions contemplated by this Agreement are fair, from a
financial point of view, to the shareholders of Buyer other than
SSC;
(i) The Buyer shall have received the proceeds of financing,
on terms and conditions satisfactory to Buyer, to enable Buyer to
fund its obligations hereunder;
(j) There shall not be pending by any Governmental Entity
any suit, action or proceeding (or by any other person any suit,
action or proceeding which has a reasonable likelihood, in the
opinion of counsel to Buyer, of success) (i) challenging or
seeking to restrain or prohibit the consummation of the Stock
Purchase or any of the other transactions contemplated by this
Agreement or seeking to obtain from Buyer or any of its affiliates
any damages that are material to any such party, (ii) seeking to
prohibit or limit the ownership or operation by the Company or any
of its subsidiaries of any material portion of the business or
assets of the Company or any of its subsidiaries or (iii) seeking
to impose limitations on the ability of Buyer (or any designee of
Buyer pursuant to this Agreement) or any shareholder of Buyer or
the Company to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock.
19
Section 7.3. Conditions to the Obligations of Both Parties. The
obligations of Sellers and Buyer under this Agreement are subject to the
fulfillment, prior to or at the Closing of the following conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Stock Purchase shall be in effect;
provided, however, that the parties hereto shall use their best
efforts to have any such injunction, order, restraint or
prohibition vacated; and
(b) The Termination Agreements listed in Schedule 4.16 of
the Disclosure Schedule shall have been executed and delivered by
all parties thereto and remain in full force and effect.
ARTICLE 8.
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
Stock Purchase contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) By mutual written consent of Buyer and the Sellers;
(b) By Buyer or the Sellers if any court of competent
jurisdiction, arbitrator or other Governmental Entity located or having
jurisdiction within the United States or any country or economic region in which
either the Sellers or Buyer, directly or indirectly, has material assets or
operations, shall have issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the consummation of
the Stock Purchase or any of the transactions contemplated by this Agreement, or
otherwise altering the terms of any of the foregoing in any significant respect,
and such order, decree, ruling or other action is or shall have become final and
nonappealable; or
(c) By Buyer or the Sellers if the Stock Purchase shall not
have been consummated on or before May 8, 1998, provided further that the right
to terminate this Agreement under this Section 8.1(c) shall not be available to
the party whose action or failure to act has been the cause of or resulted in
the failure of the Stock Purchase to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement.
Section 8.2. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except as set forth in Section 8.3 and Section 9.1.
Section 8.3. Fees and Expenses. Except as otherwise specifically
provided herein, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
20
Section 8.4. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
Section 8.5. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
Section 8.6. Remedies/Specific Performance. Sellers recognizes
that in the event Sellers wrongfully refuse to perform the provisions of this
Agreement, monetary damages alone my not be adequate and Buyer shall, therefore,
be entitled in such event to obtain specific performance of the terms of this
Agreement, in which event Buyer shall also be entitled to recovery of reasonable
attorneys' fees and other costs of enforcing its rights hereunder. In any action
to enforce the provisions of this Agreement, Sellers shall waive the defense
that there is an adequate remedy at law or equity and Sellers further agrees
that Buyer shall have the right to obtain specific performance of the terms of
this Agreement without being required to prove actual damages, post bond or
furnish other security.
ARTICLE 9.
GENERAL PROVISIONS
Section 9.1. Non-Survival of Representations, Warranties and
Agreements. The representations and warranties in this Agreement shall terminate
as of the Closing or upon the termination of this Agreement pursuant to Section
8.1, as the case may be except that the agreements set forth in Sections 8.2 and
8.3 and in Article 9 shall survive the Closing and shall survive termination of
this Agreement.
Section 9.2. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by fax or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
if to Buyer:
Value City Department Stores, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, President and CEO
Fax: 000-000-0000
with copies to:
Porter, Wright, Xxxxxx & Xxxxxx Xxxxxxxxxx, Xxxxxxxxx & Xxxxxxxxx
LLP
21
00 Xxxxx Xxxx Xxxxxx 00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000 Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxx Xxxxxx, Xx., Esq. Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax: 000-000-0000 Fax: 000-000-0000
if to the Sellers:
Nacht Management Inc. Schottenstein Stores Corporation
0000 Xxxxxxx Xxxx 0000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000 Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx Xxxxx, President Attention: Xxxxxx X. Xxxxxxxx, COO
Fax: 000-000-0000 Fax: 000-000-0000
with a copy to:
In the case of: Nacht Management Inc. Schottenstein Stores Corporation
Schottenstein, Zox & Xxxx 0000 Xxxxx Xxxx
00 Xxxxx Xxxx Xxxxxx Xxxxxxxx, Xxxx 00000
Xxxxxxxx, Xxxx 00000 Attention: Xxxxx X. Xxxx, Esq.,
Attention: Xxxxxxxx X. Xxxxxx, Esq. General Counsel
Fax: 000-000-0000 Fax: 000-000-0000
Section 9.3. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "associate" of a person means (1) any corporation or
organization (other than the registrant or a majority-owned subsidiary of the
registrant) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, (2) any trust or other estate of which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a similar
fiduciary capacity, and (3) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is a
director or officer of the registrant or any of its parents or subsidiaries;
(c) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 of the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, wan-ants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or person with whom such person
or any of its affiliates or
22
associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Company Common Stock;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession in the
United States, in each case applied on a basis consistent with the manner in
which the audited financial statements for the fiscal year of the Company ended
January 3, 1998 were prepared;
(f) "person" means an individual, corporation, partnership,
association. trust. unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act);
(g) "subsidiary" or "subsidiaries" of the Company, or any
other person means any corporation, partnership, joint venture or other legal
entity of which the Company or such other person, as the case may be (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder of
which is generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity; and
(h) "Significant Subsidiary" has the meaning set forth in
Regulation S-X promulgated by the SEC.
Section 9.4. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 9.5. Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof;
provided, however the confidentiality provisions in paragraph (E) of the letter
of intent, dated March 12, 1998, among the parties shall survive the
23
execution of this Agreement and continue in full force and effect. This
Agreement shall not be assigned by operation of law or otherwise, except that
Buyer may assign all or any of its rights and obligations hereunder to any
direct or indirect wholly owned subsidiary or subsidiaries of Buyer, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
Section 9.6. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their permitted
assigns. Except as provided in the preceding sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 9.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.8. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 9.9. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Section 9.10. Further Assurances. At any time and from time to time
after the Closing Date, at Buyer's request and expense, and without further
consideration, Sellers shall promptly execute and deliver all such further
agreements, certificates, instruments and documents, and perform such further
actions, as Buyer may reasonably request in order to fully consummate the
transactions contemplated hereby and carry out the purposes and intent of this
Agreement. Seller shall not take any action which is inconsistent with Seller's
treatment for tax purposes of the entire Purchase Price as consideration for its
purchase of the Shares.
Section 9.11. Interpretation. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine,
or neuter, as the context requires.
Section 9.12. Termination of Shareholder Agreements. Each of the
Sellers agree that effective on the Closing, the following agreements relating
to the Sellers' ownership of the Company shall terminate and be of no further
force and effect: Option Agreement, effective December 1, 1989; Amended and
Restated Option Agreement effective January 1, 1990; Close Corporation
Agreement, effective January 1, 1990; and Stock Restriction Agreement, effective
December 31, 1989.
24
IN WITNESS WHEREOF, Buyer and the Sellers have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
BUYER: SELLERS:
VALUE CITY DEPARTMENT NACHT MANAGEMENT INC.
STORES, INC.
By: _____________________________ By: _____________________________
Its: _____________________ Its: _____________________
SCHOTTENSTEIN STORES
CORPORATION
By: _____________________________
Its: _____________________
