PROXY AND INDEMNIFICATION AGREEMENT
PROXY AND INDEMNIFICATION AGREEMENT (this "Agreement"), dated
as of May 16, 1998, among XXXXXXX'X, INC., a Delaware corporation ("Parent"),
and each of the stockholders of MINOT MERCANTILE CORPORATION, a Delaware
corporation (the "Company"), that are signatories hereto (each, a "MMC
Stockholder").
W I T N E S S E T H :
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WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, MMC Acquisition, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("Purchaser"), and the Company have entered into a
merger agreement, dated as of the date hereof (the "Merger Agreement";
capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement), pursuant to which MMC MergerSub will be merged with
and into the Company (the "Merger"), and the Company shall be the surviving
corporation; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement and consummate the Merger, Parent and Purchaser have required
that each MMC Stockholder agree, and each MMC Stockholder has agreed, among
other things, (i) to grant to Parent the irrevocable proxy with respect to all
of the Company's common stock, par value $5.00 per share ("Company Common
Stock"), owned by such MMC Stockholder, 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 such MMC Stockholder's "Shares"
and collectively as the "Shares") on the terms and conditions provided for
herein, and (ii) to indemnify and hold harmless Parent and Purchaser, in the
manner provided herein, on account of any Losses (as defined herein) arising out
of or relating to the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent and each MMC Stockholder hereby agree as follows:
1. Irrevocable Proxy. Each MMC Stockholder hereby irrevocably
appoints Parent or any designee of Parent the lawful agent, attorney and proxy
of such stockholder, during the term of this Agreement, to (a) vote such MMC
Stockholder's Shares in favor of the Merger and, if applicable, in favor of
Parent's exercise of its option under the Company's Stockholder's Agreement; (b)
vote such MMC Stockholder's 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 such MMC Stockholder's 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; (ii) a sale or transfer of a
material amount of assets of the Company or a reorganization, recapitalization
or liquidation of the Company; (iii) any change in the management or board of
directors of the Company, except as otherwise agreed to in writing by
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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 MMC Stockholder 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 MMC Stockholder shall not hereafter, unless and until this
Agreement terminates pursuant to Section 7.6 hereof, purport to vote (or execute
a consent with respect to) his Shares (other than through this irrevocable
proxy) or grant any other proxy or power of attorney with respect to such
Shares, deposit any such 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.
2. Representations and Warranties.
2.1 Representations and Warranties of Parent. Parent hereby
represents and warrants to the MMC Stockholders 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 Parent, and no other corporate proceedings on the part of Parent are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by Parent and constitutes a valid and binding agreement
of Parent, enforceable against Parent 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 Parent
and the consummation by Parent of the transactions contemplated hereby
and (B) neither the execution and delivery of this Agreement by Parent
nor the consummation by Parent of the transactions contemplated hereby
nor compliance by Parent 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) of
Parent, (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 Parent is a party or by which
it or any of its properties or assets may be bound or
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(3) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent 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
Parent to perform its obligations hereunder.
(c) Good Standing. Parent 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.
2.2 Representations and Warranties of each MMC Stockholder.
Each MMC Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such MMC Stockholder is the owner of
his Shares and has the power to vote and dispose of such Shares. To
such MMC Stockholder's knowledge, his Shares are validly issued, fully
paid and nonassessable, with no personal liability attaching to the
ownership thereof. Such MMC Stockholder has good title to his 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 MMC Stockholder has the
legal capacity, power and authority to enter into and perform all of
its obligations under this Agreement. The execution, delivery and
performance of this Agreement by such MMC Stockholder will not violate
any other agreement to which such MMC Stockholder 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 MMC Stockholder and constitutes a valid
and binding agreement of such MMC Stockholder, enforceable against such
MMC Stockholder 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.
(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 MMC
Stockholder and the consummation by such MMC Stockholder of the
transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by such MMC Stockholder nor the consummation
by such MMC Stockholder of the transactions contemplated hereby nor
compliance by such MMC Stockholder 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 MMC Stockholder, (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
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any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or
obligation to which such MMC Stockholder is a party or by which such
MMC Stockholder 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 MMC Stockholder 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 MMC Stockholder to perform his obligations hereunder.
3. Certain Covenants of each MMC Stockholder. Each MMC
Stockholder hereby covenants and agrees as follows:
3.1 No Solicitation. Such MMC Stockholder 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
Parent or any affiliate of Parent) 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.
If any MMC Stockholder receives an inquiry or proposal with respect to the
sale of Shares, then such MMC Stockholder shall promptly inform Parent of the
terms and conditions, if any, of such inquiry or proposal and the identity of
the person making it. Each MMC Stockholder 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.
3.2 Restriction on Transfer, Proxies and
Non-Interference. Each MMC Stockholder 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 his
Shares or (b) grant any proxies, deposit any of his Shares into a voting
trust or enter into a voting agreement with respect to any of his Shares or
(c) take any action that would make any representation or warranty of such
MMC Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such MMC Stockholder from performing his obligations
under this Agreement.
4. 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.
5. Adjustments to Prevent Dilution, Etc. In the event of a
stock dividend or distribution, or any change in the Company Common Stock by
reason of any stock dividend, split-up, 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.
6. Indemnification.
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6.1 General Indemnification. Each MMC Stockholder
(collectively, the "Indemnifying Party"), jointly and severally, indemnifies,
defends and holds Parent, Purchaser and Surviving Corporation and their
respective directors, officers, employees and affiliates (collectively, the
"Indemnified Party") harmless from any and all liabilities, damages, expenses,
losses or other claims (including, without limitation, reasonable attorneys'
fees and expenses) ("Losses"), directly or indirectly, suffered or paid that
arise out of or relate to (i) the failure of any representation or warranty made
by (A) the Company under the Merger Agreement or (B) any MMC Stockholder
hereunder, in each case to be true and correct in all respects as of the date of
this Agreement and as of the Closing Date, (ii) any breach by (A) the Company of
any of its covenants or agreements contained in the Merger Agreement and (B) any
MMC Stockholder of any of its covenants or agreements contained herein, and
(iii) the Company's business, operations or conduct at any time on or prior to
the Closing Date, including, without limitation, any and all Taxes imposed on
the Company in respect of periods on or prior to the Closing Date; provided
that, the aggregate amount of the Holdback Amount (as defined in Section 1.6 of
the Merger Agreement) shall be applied to the payment of any Losses prior to any
recourse to any Indemnifying Party's indemnity hereunder.
6.2 Indemnification Procedures. If any indemnifiable
claim is asserted by any third party against or sought to be collected from
any Indemnified Party, such Indemnified Party shall promptly notify the
Indemnifying Party of such claim and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall not be conclusive
of the final amount of such claim); provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder
except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure. The Indemnifying Party shall have 20
days after receipt of such notice to assume the conduct and control, through
counsel reasonably acceptable to the Indemnified Party and at the expense of
the Indemnifying Party, of the settlement or defense thereof; provided that
the Indemnifying Party shall permit the Indemnified Party to participate in
such settlement or defense through counsel chosen by the Indemnified Party so
long as the fees and expenses of such counsel are borne by the Indemnified
Party. So long as the Indemnifying Party is reasonably contesting any such
claim in good faith, the Indemnified Party shall not pay or settle any such
claim; provided that the Indemnified Party may pay or settle any such claim
if the Indemnified Party waives its right to indemnification hereunder in
respect of such claim. If the Indemnifying Party does not notify the
Indemnified Party within 20 days after the receipt of the Indemnified Party's
notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to contest, pay
or settle the claim but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement. The Indemnifying Party shall not, except
with the consent of the Indemnified Party, enter into any settlement that
does not include as an unconditional term thereof the unconditional release
of the Indemnified Party from all liability with respect to the related
claim. The obligations to indemnify and hold harmless pursuant to this
Section 6 shall survive the consummation of the transactions contemplated
hereby.
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7. Miscellaneous.
7.1 Entire Agreement; Assignment. This Agreement, together
with the Merger 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 Parent may assign its rights and obligations
hereunder to any direct or indirect wholly owned parent company or subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations hereunder
if such assignee does not perform such obligations.
7.2 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.
7.3 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 (i) in the case of any MMC Stockholder, c/o Ivins Xxxxxxxx
& Xxxxxx, 0000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, X.X. 00000, and (ii) in the case
of Parent, the following address:
if to Parent:
Xxxxxxx'x, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
with a 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.
7.4 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.
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7.5 Cooperation as to Regulatory Matters. If so requested by
Parent, promptly after the date hereof, each MMC Stockholder 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. Each MMC
Stockholder shall also use its reasonable best efforts to cause the Company to
supply Parent 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.
7.6 Termination. Except for the provisions of Section 6
which shall remain in effect indefinitely, 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.
7.7 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.
7.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same Agreement.
7.9 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.
7.10 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, Parent and each MMC Stockholder 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
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Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
MMC STOCKHOLDERS (listed on next page)
Woodbank Xxxxx, Inc.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: Chairman
as the holder of 139,000 shares
of the common stock,
par value $5.00 per share,
of Minot Mercantile Corporation
/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 32,646 shares of the common stock,
par value $5.00 per share,
of Minot Mercantile Corporation
/s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
as a majority of the trustees of trusts
holding 43,680 shares of the common stock,
par value $5.00 per share,
of Minot Mercantile Corporation
/s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx
/s/ Minot X. Xxxxxxxx
-----------------
Minot X. Xxxxxxxx
as a majority of the trustees of trusts
holding 5,660 shares of the common stock,
par value $5.00 per share,
of Minot Mercantile Corporation
