Exhibit A
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of May 16, 1998, by
and between Xxxxxxx'x, Inc., a company organized under the laws of Delaware
("Purchaser"), and each of the parties listed on the signature page hereto
(individually a "Seller" and collectively, the "Sellers").
RECITALS
Concurrently herewith, Purchaser, MSC Acquisitions, Inc., a Delaware
corporation and a wholly-owned subsidiary of Purchaser, and Mercantile Stores
Company (the "Company"), a Delaware corporation, are entering into an Agreement
and Plan of Merger of even date herewith attached hereto (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), pursuant to which Sub agrees to
make a tender offer (the "Offer") for all outstanding shares of common stock,
$.14 2/3 par value per share (the "Common Stock"), of the Company, at $80 per
share (the "Offer Price"), net to the seller in cash, to be followed by a merger
(the "Merger") of Sub with and into the Company.
As a condition to their willingness to enter into the Merger Agreement and
make the Offer, Purchaser and Sub have required that each of the Sellers agree,
and each Seller has agreed, among other things, to grant to Purchaser the Option
and irrevocable proxy with respect to the number of shares of Common Stock of
such Seller set forth opposite such Seller's name on the signature page hereto,
together with any additional shares when and if they are acquired (such shares,
and any additional shares when and if they are acquired, being referred to
herein as the "Shares") on the terms and conditions provided for herein.
The Board of Directors of the Company has approved the Purchaser becoming
an "interested shareholder" for purposes of Section 203 of the Delaware General
Corporation Law and for all purposed under Article Eighth of the Company's
Certificate of Incorporation.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties agree as follows:
1. Option to Purchase Shares.
1.1 Grant of Option. Each Seller hereby grants to Purchaser an irrevocable
option (the "Option") to purchase all of the Shares set forth below such
Seller's name on the signature page hereto at a purchase price of $80 per share
(the "Exercise Price") in cash (subject to adjustment pursuant to Section 7
below) for each Share purchased.
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1.2 Exercise of Option.
(a) Subject to applicable law (including Rule 10b-13 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), the Option may be
exercised by Purchaser, in whole or in part, at any time, or from time to time,
commencing upon the Exercise Date and prior to the Expiration Date (as
hereinafter defined). As used herein, the term "Exercise Date" means the first
to occur of any of the following dates:
(i) Seller fails to perform any agreement or covenant of Seller contained
herein in any material respect; or
(ii) the Merger Agreement is terminated and Purchaser is entitled to the
payment of a termination fee pursuant to any of the provisions set forth in
Section 8.3(a)(ii) of the Merger Agreement.
As used herein, the term "Expiration Date" means the first to occur of any
of the following dates:
(1) the Effective Time (as defined in the Merger Agreement);
(2) 12 months after the date of the termination of the Merger Agreement; or
(3) written notice of termination of this Agreement by Purchaser to the
Seller.
(b) In the event Purchaser wishes to exercise the Option, Purchaser shall
send a written notice to Seller of its intention to so exercise the Option (a
"Notice"), specifying the place, time and date of the closing of such purchase
(the "Closing"), which date shall not be less than two business days nor more
than five business days from the date on which a Notice is delivered; provided,
that the Closing shall be held only if such purchase would not otherwise then
violate or cause the violation of, any applicable law or regulations (including,
without limitation, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxx")) or any decree, order or injunction of any governmental agency,
authority or court, whether temporary, preliminary or permanent. If the Closing
shall be violative of any such laws or rules or any such decree, order or
injunction, then such Notice shall be deemed rescinded and of no effect and
Purchaser shall send a new Notice at such time as the Closing is not violative
of such laws, rules, decrees, orders or injunctions. Notwithstanding the
occurrence of such rescission, this Agreement shall remain in full force and
effect.
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(c) At the Closing, Seller shall deliver to Purchaser all of the Shares to
be purchased by delivery of a certificate or certificates evidencing such Shares
so purchased by Purchaser duly endorsed or with executed blank stock power
attached, in either event with signature guaranteed such that registered
ownership of the Shares may be registered for transfer on the books of the
Company and Purchaser will make payment to Seller of the aggregate Exercise
Price for the Shares being purchased upon exercise of the Option in immediately
available funds in the amount equal to the Exercise Price multiplied by the
number of Shares purchased pursuant to this Section 1.
(d) Notwithstanding any of the foregoing, with respect to the Shares held
by Minot Mercantile Corporation and Woodbank Xxxxx, Inc. (collectively, the "C
Corps"), Purchaser shall form an acquisition subsidiary to acquire such Shares
in the form of a merger pursuant to a form of merger agreement reasonably
acceptable to the parties, and each party will use its best efforts to
consummate the acquisition of such Shares pursuant to the Option by merger.
2. Agreement to Tender. Each Seller hereby agrees to validly tender
pursuant to the Offer and not withdraw all Shares; provided, however, the C
Corps shall not be obligated to tender the Shares held by each of them because
such Shares will be acquired by Merger as contemplated by the Merger Agreement.
3. Irrevocable Proxy. Each Seller hereby irrevocably appoints Purchaser or
any designee of Purchaser the lawful agent, attorney and proxy of such
shareholder, during the term of this Agreement, to (a) vote the Shares in favor
adoption of the Merger Agreement; (b) vote the Shares against any action or
agreement that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (c) vote the Shares against any action or
agreement (other than the Merger Agreement or the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer, including, but not limited to: (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company and its subsidiaries; (ii) a sale or
transfer of a material amount of assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company and its
subsidiaries; (iii) any change in the management or board of directors of the
Company, except as otherwise agreed to in writing by Purchaser; (iv) any
material change in the present capitalization or dividend policy of the Company;
or (v) any other material change in the Company's corporate structure or
business. Each Seller intends this proxy to be irrevocable and coupled with an
interest and will take such further action or execute such other instruments as
may be necessary to effectuate the intent of this proxy and hereby revokes any
proxy previously granted by it with respect to the Shares. Each Seller shall not
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hereafter, unless and until this Agreement terminates pursuant to Section 8.6
hereof, purport to vote (or execute a consent with respect to) such Shares
(other than through this irrevocable proxy) or grant any other proxy or power of
attorney with respect to any Shares, deposit any Shares into a voting trust or
enter into any agreement (other than this Agreement), arrangement or
understanding with any person, directly or indirectly, to vote, grant any proxy
or give instructions with respect to the voting of such Shares. Notwithstanding
anything herein to the contrary, the Sellers may transfer as charitable gifts up
to an aggregate of 300,000 Shares.
4. Representations and Warranties.
4.1 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to each Seller as follows:
(a) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Purchaser, and no other corporate
proceedings on the part of Purchaser are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Purchaser and constitutes a valid and
binding agreement of Purchaser, enforceable against Purchaser in accordance with
its terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) No Conflicts. Except for (i) filings under the HSR Act, if applicable,
(ii) the applicable requirements of the Exchange Act and the Securities Act of
1933, as amended (the "Securities Act"), (iii) the applicable requirements of
state securities, takeover or Blue Sky laws and (iv) such notifications,
filings, authorizing actions, orders and approvals as may be required under
other laws, (A) no filing with, and no permit, authorization, consent or
approval of, any state, federal or foreign public body or authority is necessary
for the execution of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby and (B) neither the execution
and delivery of this Agreement by Purchaser nor the consummation by Purchaser of
the transactions contemplated hereby nor compliance by Purchaser with any of the
provisions hereof shall (1) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws (or similar documents)
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of Purchaser, (2) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which Purchaser is a party or by which it or any of its properties or assets may
be bound or (3) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Purchaser or any of its properties or assets, except in
the case of (2) or (3) for violations, breaches or defaults which would not in
the aggregate materially impair the ability of Purchaser to perform its
obligations hereunder.
(c) Good Standing. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
corporate power and authority to execute and deliver this Agreement.
4.2 Representations and Warranties of Sellers. Each Seller hereby severally
and not jointly represents and warrants to Purchaser as follows:
(a) Ownership of Shares. Subject to Section 5.3, such Seller is the owner
of the Shares set forth below its name and has the power to vote and dispose of
such Shares. To Seller's knowledge, such Shares are validly issued, fully paid
and nonassessable, with no personal liability attaching to the ownership
thereof. Such Seller has good title to the Shares, free and clear of any
agreements, liens, adverse claims or encumbrances whatsoever with respect to the
ownership of or the right to vote such Shares.
(b) Power; Binding Agreement. Such Seller has the legal capacity, power and
authority to enter into and perform all of its obligations under this Agreement,
except for the approval of the holders of a majority of the stockholders of
Minot Mercantile Corporation is required with respect to their obligations under
Section 1. The execution, delivery and performance of this Agreement by such
Seller will not violate any other agreement to which such Seller is a party
including, without limitation, any voting agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly authorized, executed and
delivered by such Seller and constitutes a valid and binding agreement of such
Seller, enforceable against such Seller in accordance with its terms, except
that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
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(c) No Conflicts. Except for (i) filings under the HSR Act, if applicable,
(ii) the applicable requirements of the Exchange Act and the Securities Act,
(iii) the applicable requirements of state securities, takeover or Blue Sky
laws, (iv) such notifications, filings, authorizing actions, orders and
approvals as may be required under other laws, (A) no filing with, and no
permit, authorization, consent or approval of, any state, federal or foreign
public body or authority is necessary for the execution of this Agreement by
such Seller and the consummation by such Seller of the transactions contemplated
hereby and (B) neither the execution and delivery of this Agreement by such
Seller nor the consummation by such Seller of the transactions contemplated
hereby nor compliance by such Seller with any of the provisions hereof shall (1)
conflict with or result in any breach of any provision of the certificate of
incorporation, by-laws, trust or charitable instruments (or similar documents)
of such Seller, (2) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which such Seller is a party or by which he or any of his properties or assets
may be bound or (3) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to such Seller or any of his properties or assets,
except in the case of (2) or (3) for violations, breaches or defaults which
would not in the aggregate materially impair the ability of such Seller to
perform his obligations hereunder.
5. Certain Covenants of Sellers. Each Seller hereby covenants and agrees as
follows:
5.1 No Solicitation. Such Seller shall not, directly or indirectly,
solicit, encourage, participate in or initiate any inquiries or the making of
any proposal by any person or entity (other than Purchaser or any affiliate of
Purchaser) which constitutes, or may reasonably be expected to lead to, (a) any
sale of the Shares or (b) any acquisition or purchase of a material portion of
the Company's assets or any equity interest in, or any merger, consolidation or
business combination with, the Company or any of its subsidiaries. If such
Seller receives an inquiry or proposal with respect to the sale of Shares, then
such Seller shall promptly inform Purchaser of the terms and conditions, if any,
of such inquiry or proposal and the identity of the person making it. Each
Seller will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
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5.2 Restriction on Transfer, Proxies and NonInterference. Each Seller
hereby agrees, while this Agreement is in effect, and except as contemplated
hereby, not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares or (b) grant any proxies, deposit any Shares
into a voting trust or enter into a voting agreement with respect to any Shares
or (c) take any action that would make any representation or warranty of such
Seller contained herein untrue or incorrect or have the effect of preventing or
disabling such Seller from performing his obligations under this Agreement.
5.3 Legending of Certificates; Nominees Shares. If requested by Purchaser,
each Seller agrees to submit to Purchaser contemporaneously with or promptly
following execution of this Agreement all certificates representing the Shares
so that Purchaser may note thereon a legend referring to the option, proxy and
other rights granted to it by this Agreement. If any of the Shares beneficially
owned by such Seller are held of record by a brokerage firm in "street name" or
in the name of any other nominee (a "Nominee," and, as to such Shares, "Nominee
Shares"), each Seller agrees that, upon written notice by Purchaser requesting
it, such Seller will within five days of the giving of such notice execute and
deliver to Purchaser a limited power of attorney in such form as shall be
reasonably satisfactory to Purchaser enabling Purchaser to require the Nominee
to (i) grant to Purchaser an option and irrevocable proxy to the same effect as
Sections 1 and 3 hereof with respect to the Nominee Shares held by such Nominee,
(ii) tender such Nominee Shares in the Offer pursuant to Section 2 hereof and
(iii) submit to Purchaser the certificates representing such Nominee Shares for
notation of the above-referenced legend thereon.
5.4 Stop Transfer Order. In furtherance of this Agreement, concurrently
herewith, each Seller shall and hereby does authorize the Company's counsel to
notify the Company's transfer agent that there is a stop transfer order with
respect to all of the Shares (and that this Agreement places limits on the
voting and transfer of such shares).
6. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Purchaser good title to any Shares
purchased hereunder.
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7. Adjustments to Prevent Dilution, Etc. In the event of a stock dividend
or distribution, or any change in the Company's Common Stock by reason of any
stock dividend, split-up, reclassification, recapitalization, combination or the
exchange of shares, the term "Shares" shall be deemed to refer to and include
the Shares as well as all such stock dividends and distributions and any shares
into which or for which any or all of the Shares may be changed or exchanged. In
such event, the amount to be paid per share by Purchaser shall be
proportionately adjusted.
8. Miscellaneous.
8.1 Entire Agreement; Assignment. This Agreement (i) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise, provided that Purchaser may assign
its rights and obligations hereunder to any direct or indirect wholly owned
parent company or subsidiary of Purchaser, but no such assignment shall relieve
Purchaser of its obligations hereunder if such assignee does not perform such
obligations.
8.2 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
8.3 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 received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the
Sellers: c/o Ivins Xxxxxxxx & Xxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
If to Purchaser:
Xxxxxxx'x, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
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copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
8.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.5 Cooperation as to Regulatory Matters. If so requested by Purchaser,
promptly after the date hereof, the Seller will use its reasonable best efforts
to cause it and the Company (if required) to make all filings which are required
under the HSR Act and applicable requirements and to seek all regulatory
approvals required in connection with the transactions contemplated hereby. The
parties shall furnish to each other such necessary information and reasonable
assistance as may be requested in connection with the preparation of filings and
submissions to any governmental agency, including, without limitation, filings
under the provisions of the HSR Act. The Seller shall also use its reasonable
best efforts to cause the Company to supply Purchaser with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between the Company and its representatives and the Federal
Trade Commission, the Department of Justice and any other governmental agency or
authority and members of their respective staffs with respect to this Agreement
and the transactions contemplated hereby.
8.6 Termination. Except for the provisions of Sections 1 and 5.2 which
shall expire on the Expiration Date, this Agreement shall terminate on the
earlier of (i) the Effective Time or (ii) the termination of the Merger
Agreement in accordance with its terms.
8.7 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
8.8 Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed to be an original, but both of which shall constitute
one and the same Agreement.
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8.9 Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
8.10 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
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IN WITNESS WHEREOF, the Sellers and Purchaser have caused this Agreement to
be duly executed as of the day and year first above written.
XXXXXXX'X, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
[The Sellers listed on the attached signature pages]
/s/ Xxxxx Xxxxxxxx
- -------------------------------
Xxxxx Xxxxxxxx
Wilmington Trust Company
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
as the trustees of trusts
holding 2,120,485
shares of the common stock,
par value $.14 2/3 per share,
of Mercantile Stores Company, Inc.
Wilmington Trust Company
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
as the trustee of trusts holding 1,654,311 shares of the common stock, par value
$.14 2/3 per share, of Mercantile Stores Company, Inc.
/s/ Justine VR. Xxxxxxxx
---------------------------------
Justine VR. Xxxxxxxx
/s/ Minot X. Xxxxxxxx
---------------------------------
Minot X. Xxxxxxxx
as a majority of the trustees of trusts holding 27,645 shares of the common
stock, par value of $.14 2/3 per share, of Mercantile Stores Company, Inc.
/s/ Justine VR. Xxxxxxxx
---------------------------------
Justine VR. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
/s/ Minot X. Xxxxxxxx
---------------------------------
Minot X. Xxxxxxxx
as a majority of the trustees of trusts holding 25,065 shares of the common
stock, par value $.14 2/3 per share, of Mercantile Stores Company, Inc.
Woodbank Xxxxx, Inc.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chairman
as the holder of 27,413 shares of the common stock, par value $.14 2/3 per
share, of Mercantile Stores Company, Inc.
Minot Mercantile Corporation
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chairman
as the holder of 10,484,875 shares of the common stock, par value $.14 2/3 per
share, of Mercantile Stores Company, Inc.
/s/ Xxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
as a majority of the trustees of trusts holding 56,848 shares of the common
stock, par value $.14 2/3 per share, of Mercantile Stores Company, Inc.
/s/ Xxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
/s/ Minot X. Xxxxxxxx
---------------------------------
Minot X. Xxxxxxxx
as a majority of the trustees of trusts holding 258,178 shares of the common
stock, par value $.14 2/3 per share, of Mercantile Stores Company, Inc.
/s/ Xxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx
/s/ Minot X. Xxxxxxxx
---------------------------------
Minot X. Xxxxxxxx
as a majority of the trustees of trusts holding 22,104 shares of the common
stock, par value $.14 2/3 per share, of Mercantile Stores Company, Inc.
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
/s/ Minot X. Xxxxxxxx
--------------------------------
Minot X. Xxxxxxxx
as a majority of the trustees of trusts holding 32,419 shares of the common
stock, par value $.14 2/3 per share, of Mercantile Stores Company, Inc.
