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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Amendment No. 6)
Under the Securities Exchange Act of 1934
DART GROUP CORPORATION
(Name of Issuer)
Class A Common Stock, par value $1 per share
(Title of Class of Securities)
237415-10-4 (CUSIP Number)
Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
(202) 234-9393
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street, Suite 800
Wilmington, Delaware 19801
(302) 425-6400
October 6, 1995
(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: / /
Check the following box if a fee is being paid with this statement: / /
This Report contains 8 pages. Page 1 of 8 Pages
Exhibit index appears on page 7
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CUSIP No. 237415-10-4 13D-Amend.6 Page 2 of 8 Pages
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(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Ronald S. Haft
S.S. No. ###-##-####
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
/ / (a) N/A
/ / (b) N/A
(3) SEC Use Only
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(4) Source of Funds (See Instructions) PF;OO;SC
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or
2(e). / /
(6) Citizenship or Place of Organization U.S.A.
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Number of (7) Sole Voting Power 33,333
Shares
Beneficially (8) Shared Voting Power 0
Owned By
Each (9) Sole Dispositive Power 407,818
Reporting
Person (10) Shared Dispositive Power 0
With
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(11) Aggregate Amount Beneficially Owned By Each Reporting Person: 407,818
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / /
(13) Percent of Class Represented by Amount in Row (11) 20.9%
(14) Type of Reporting Person (See Instructions) IN
</TABLE>
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CUSIP No. 237415-10-4 13D-Amend.6 Page 3 of 8 Pages
The following items of the Schedule 13D relating to the Class A Common Stock $1
per share par value (the "Class A Common Stock"), of Dart Group Corporation, a
Delaware Corporation (the "Issuer" or "Dart"), with its principal executive
offices located at 3300 75th Avenue, Landover, Maryland 20785, are amended to
include the following disclosure:
Item 4. Purpose of Transaction.
On October 6, 1995, Ronald S. Haft ("RSH") entered into a Settlement
Agreement of certain litigation with the Issuer for, among other reasons, the
purpose of resolving all of RSH's present and future claims to voting control
of the Issuer on the terms set forth in the Settlement Agreement.
Pursuant to the terms of the Settlement Agreement the following
transactions, among others, occurred:
1. RSH's existing option to acquire 197,048 shares of
the Issuer's Class B Common Stock (the "Option Shares") was amended to
increase the exercise price from $89.65 per share to $140 per share.
2. RSH acquired the Option Shares for an aggregate
purchase price of $27,586,720.
3. RSH resigned all of his positions as a director or
officer of the Issuer and its subsidiaries, effective 30 days after
October 6, 1995, unless, on such thirtieth day a preliminary or
permanent injunction is in effect prohibiting performance of the
Settlement Agreement, in which case, RSH's resignation will become
effective on the first day on which no such preliminary or permanent
injunction is in effect.
4. RSH assigned and transferred to the Issuer 172,730
shares of Class B Common Stock that were subject to a proxy held by
Herbert H. Haft.
5. In exchange for the assignment and transfer to the
Issuer of such 172,730 shares of Class B Common Stock, the Issuer
(upon receipt of Board of Director approval on October 8, 1995) issued
to RSH 288,312 shares of Dart Class A Common Stock.
6. All outstanding options held by RSH to purchase
shares of Dart and its affiliated companies were canceled.
7. RSH executed and delivered a certain Voting Trust
Agreement, a certain Buy/Sell/Offering Agreement (the "Buy-Sell
Agreement") and a certain Stock and Trust Certificate Pledge Agreement
(the "Pledge Agreement"), certain terms of which are described under
Item 6.
Item 5. Interest in Securities of the Issuer.
As of October 8, 1994, RSH beneficially owned 407,818 shares of Class
A Common Stock representing approximately 20.9% of the 1,948,990 shares of
Class A Common Stock outstanding as of July 31, 1995 (as adjusted to reflect
the issuance to RSH of 288,312 shares), as reported in the Issuer's Form 10-Q
for the quarterly period ending July 31, 1995. RSH has no power to vote or to
direct the vote of the shares of Class A Common Stock beneficially owned by
him. RSH has sole
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CUSIP No. 237415-10-4 13D-Amend.6 Page 4 of 8 Pages
power to dispose or to direct the disposition (subject to the terms of the
Voting Trust Agreement and the rights of the Issuer set forth in the Pledge
Agreement) of the shares of Class A Common Stock beneficially owned by him.
Of the 407,818 shares of Class A Common Stock beneficially owned by
RSH, 288,312 shares were issued to RSH on October 8, 1995 by the Issuer in
exchange for the assignment and transfer to the Issuer by RSH of 172,730 shares
of Class B Common Stock. This exchange was consummated pursuant to the terms
of the Settlement Agreement.
Pursuant to the Voting Trust Agreement, cash dividends or
distributions paid upon or in respect of any shares deposited by RSH in the
Voting Trust (including the shares of Class A Common Stock beneficially owned
by RSH) (the "Trust Shares") are to be paid as follows:
(i) to the extent that such cash dividends or
distributions paid on the Trust Shares in any calendar year during the
term of the Voting Trust Agreement total thirty cents or less per
Trust Share, all of such cash dividends or distributions are to be
paid to RSH;
(ii) to the extent that in any calendar year during the
term of the Voting Trust Agreement there are cash dividends or
distributions paid on the Trust Shares in excess of thirty cents per
Trust Share, then one-half of such excess is to be paid to RSH and the
other half is to be applied by the Voting Trustees first, to pay or
reimburse Dart for the fees and expenses of the Voting Trustees under
the Voting Trust Agreement and second, to be deposited by the Voting
Trustees in one or more interest-bearing deposit accounts and, upon
such deposit, to become part of the Trust Shares.
Pursuant to the Buy-Sell Agreement, any purchase price required to be
paid by the Issuer upon the Issuer's acquisition of any of the shares of the
Issuer's Class A Common Stock or Class B Common Stock which are subject to the
Buy-Sell Agreement is required to be credited against the obligations of RSH to
the Issuer pursuant to promissory notes in the principal amounts of $23,389,672
and $37,740,162.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The purchase price for the Option Shares was paid by RSH making a cash
payment to the Issuer of $197,048 and delivering a promissory note in the
principal amount of $27,389,672. The note is due June 30, 2000, subject to
earlier mandatory prepayment in the event of disposition pursuant to the
Buy-Sell Agreement of the shares of stock held by the Voting Trustees.
Interest on the note accrues at an annual rate of 8% and is due and payable on
maturity.
Pursuant to the terms of the Settlement Agreement, RSH executed and
delivered a Voting Trust Agreement and delivered to the Voting Trustees under
the Voting Trust Agreement 222,294 shares of Dart Class B Common Stock (which
includes the Option Shares issued to RSH on October 6, 1995 pursuant to the
terms of the Settlement Agreement) and 374,485 shares of Dart Class A Common
Stock (which includes 288,312 shares of Dart Class A Common Stock issued to RSH
on October 8, 1995 in exchange for 172,730 shares of Class B Common Stock
transferred by RSH to Dart on October 6, 1995 pursuant to the terms of the
Settlement Agreement). RSH has agreed to assign to the Voting Trustees an
additional 33,333 shares of Dart Class A Common Stock that are currently
pledged as security for bank debt of RSH. The Voting Trustees are entitled to
vote the
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CUSIP No. 237415-10-4 13D-Amend.6 Page 5 of 8 Pages
shares delivered to them by RSH, to the full extent such shares are entitled to
vote, on all matters submitted to Dart's stockholders, in such manner as the
Voting Trustees deem, in their sole and absolute discretion, to be in the best
interests of Dart and all of its shareholders as a single class. The initial
Voting Trustees are Larry G. Schafran and Sidney B. Silverman. It is
contemplated that within 90 days after October 6, 1995, Mr. Schafran and Mr.
Silverman will agree upon the appointment of a permanent replacement Voting
Trustee. In the event of their failure to appoint a replacement voting
trustee, the parties to the Voting Trust Agreement will seek to have a
permanent trustee appointed by the Delaware Court of Chancery.
Pursuant to the terms of the Settlement Agreement, RSH executed and
delivered a Stock and Trust Certificate Pledge Agreement (the "Pledge
Agreement"). All trust certificates issued to RSH to evidence his beneficial
interest in the Voting Trust have been pledged by RSH to Dart and certain
affiliates of Dart as collateral security for certain obligations of RSH to
Dart and certain affiliates. RSH has agreed that without the consent of Dart
he will not sell, transfer, pledge or otherwise dispose of any of the
collateral pledged to Dart and its affiliates pursuant to the Pledge Agreement,
except as permitted by the terms of the Buy-Sell Agreement.
Pursuant and subject to the terms of the Buy-Sell Agreement, at any
time after December 31, 1996 and prior to January 1, 2000, RSH may exercise an
option to cause Dart to purchase all of the shares of Class A Common Stock and
Class B Common Stock held in the Voting Trust. If RSH does not exercise his
option, Dart will have the right to cause RSH to sell the shares to Dart during
the first seven months of the year 2000. The per share purchase price for the
Class A Common Stock is $83.875 plus interest (compounded annually) accrued at
a rate of 8.0% per annum from October 6, 1995 through the date the shares are
purchased. The per share purchase price for the Class B Common Stock is
$154.13 plus interest (compounded annually) accrued at a rate of 8% per annum
for any period during which Dart may elect not to accept delivery of the Class
B shares pursuant to the terms of the Buy-Sell Agreement.
RSH has agreed that, except for the shares of Dart Class A Common
Stock and Dart Class B Common Stock he currently owns of record or
beneficially, he will not acquire or own, or offer or agree to purchase,
acquire or own, any securities of Dart or its affiliates.
Item 7. Material to be Filed as Exhibits.
1. Letter dated September 6, 1994, from Ronald S. Haft to Herbert
H. Haft*
2. Letter dated September 6, 1994 from Ronald S. Haft to members
of the Board of the Issuer.*
3. July 28, 1993 proxy from Ronald S. Haft to Herbert Haft.*
4. July 28, 1993 note from Ronald S. Haft to Herbert Haft.*
5. September 6, 1994 note from Ronald S. Haft to the Issuer.*
6. September 12, 1994 Complaint filed in Delaware Chancery Court
(without attachments).*
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CUSIP No. 237415-10-4 13D-Amend.6 Page 6 of 8 Pages
7. September 12, 1994 letter from Ronald S. Haft to members of
the Executive Committee of Issuer's Board of Directors
(without attachment).*
8. September 14, 1994 Standstill Agreement.*
9. July 29, 1994 Stock Pledge Agreement between Herbert H. Haft
and Ronald S. Haft, and First Union National Bank.*
10. Stipulation and Agreement of Compromise, Settlement and
Release dated January 19, 1995 in Ronald S. Haft v. Dart Group
Corporation, and Alan R. Kahn and The Tudor Trust,
derivatively on behalf of Dart Group Corporation, C.A. No.
13736 (Del. Ch.).*
11. March 10, 1995 letter from Victor F. Battaglia to Chancellor
William T. Allen.*
12. Voting Trust Agreement, dated as of October 6, 1995, by and
among Ronald S. Haft, Dart Group Corporation and Larry G.
Schafran and Sidney B. Silverman, as initial voting trustees.
13. Settlement Agreement, dated as of October 6, 1995, by and
between Dart Group Corporation and Ronald S. Haft.
14. Buy/Sell/Offering Agreement, dated as of October 6, 1995, by
and between Dart Group Corporation and Ronald S. Haft.
15. Promissory Note, dated October 6, 1995, executed by Ronald S.
Haft in favor of Dart Group Corporation in the principal
amount of $27,389,672.00.
16. Stock and Trust Certificate Pledge Agreement, dated as of
October 6, 1995, made by Ronald S. Haft in favor of Larry G.
Schafran and Sidney B. Silverman, as collateral agents and
bailees for Dart Group Corporation and Cabot-Morgan Real
Estate Company.
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* Previously filed.
SIGNATURE.
After reasonable inquiry and to the best of my knowledge and believe,
I certify that the information set forth in this Statement is true, complete
and correct.
October 13, 1995 /s/Ronald S. Haft
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Ronald S. Haft
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CUSIP No. 237415-10-4 13D-Amend.6 Page 7 of 8 Pages
EXHIBIT INDEX
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Exhibit Page
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1. Letter dated September 6, 1994, from Ronald
S. Haft to Herbert H. Haft.*
2. Letter dated September 6, 1994 from Ronald S.
Haft to members of the Board of the Issuer.*
3. July 28, 1993 proxy from Ronald S. Haft to
Herbert Haft.*
4. July 28, 1993 note from Ronald S. Haft to
Herbert Haft.*
5. September 4, 1994 note from Ronald S. Haft to
the Issuer.*
6. Complaint filed in Delaware Chancery Court on
September 12, 1994 (without attachments.)*
7. September 12, 1994 letter from Ronald S. Haft
to members of the Executive Committee of Issuer's
Board of Directors (without attachment).*
8. September 14, 1994 Standstill Agreement*
9. July 29, 1994 Stock Pledge Agreement between
Herbert H. Haft and Ronald S. Haft, and First
Union National Bank.*
10. Stipulation and Agreement of Compromise, Settlement
and Release dated January 19, 1995 in Ronald S. Haft
v. Dart Group Corporation and Alan R. Kahn and The
Tudor Trust derivatively on behalf of Dart Group
Corporation, C.A. No. 13736 (Del. Ch.).*
11. March 10, 1995 letter from Victor F. Battaglia
to Chancellor William T. Allen.*
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* Previously filed.
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CUSIP No. 237415-10-4 13D-Amend.6 Page 8 of 8 Pages
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12. Voting Trust Agreement, dated as of October 6, 1995,
by and among Ronald S. Haft, Dart Group Corporation and
Larry G. Schafran and Sidney B. Silverman, as initial
voting trustees.
13. Settlement Agreement, dated as of October 6, 1995, by
and between Dart Group Corporation and Ronald S. Haft.
14. Buy/Sell/Offering Agreement, dated as of October 6, 1995,
by and between Dart Group Corporation and Ronald S. Haft.
15. Promissory Note, dated October 6, 1995, executed by
Ronald S. Haft in favor of Dart Group Corporation in
the principal amount of $27,389,672.00.
16. Stock and Trust Certificate Pledge Agreement, dated as of
October 6, 1995, made by Ronald S. Haft in favor of Larry
G. Schafran and Sidney B. Silverman, as collateral agents
and bailees for Dart Group Corporation and Cabot-Morgan
Real Estate Company.
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EXHIBIT 12
VOTING TRUST AGREEMENT
This Voting Trust Agreement (the "Voting Trust Agreement") dated as of
this 6th day of October, 1995, by and among Ronald S. Haft (the "Beneficiary"),
Dart Group Corporation, a Delaware corporation ("Dart"), and Larry G. Schafran
and Sidney B. Silverman, as the initial voting trustees.
WITNESSETH:
WHEREAS, the Beneficiary and Dart are parties to that certain
Settlement Agreement, of even date herewith (the "Settlement Agreement"), which
provides for the execution and delivery of this Voting Trust Agreement;
WHEREAS, this Voting Trust Agreement is consistent with the
authorization provided by Section 218 of the Delaware General Corporation Law;
WHEREAS, Larry G. Schafran and Sidney B. Silverman are serving as the
initial voting trustees under this Voting Trust Agreement, and it is
contemplated that one or more other persons may be appointed as additional or
substitute voting trustees (the person or persons at any time serving in the
capacity of voting trustee under this Voting Trust Agreement are hereinafter
referred to collectively as the "Voting Trustees");
WHEREAS, it is anticipated that the Voting Trustees will use their
authority hereunder to serve the best interests of Dart and all of its
shareholders as a single class, as determined by the Voting Trustees, and,
without limiting the generality of the foregoing, to facilitate an orderly
transition of the corporate
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governance of Dart from domination by the previous holders of Dart's Class B
Common Stock or their affiliates;
WHEREAS, it is also anticipated that the Voting Trustees will act to
protect and implement Dart's and the Beneficiary's rights under the
Buy/Sell/Offering Agreement, of even date herewith, by and between Dart and the
Beneficiary (the "Buy/Sell/Offering Agreement"), as directed by Dart or the
Beneficiary, as the case may be, in accordance with the terms thereof and (in
their capacity as collateral agents under the Stock and Trust Certificate
Pledge Agreement (as defined in Section 1(c) hereof)) to protect Dart's
security interest in the Trust Shares (as defined in Section 1(a) hereof),
which are collateral for certain promissory notes executed on the date hereof
by the Beneficiary in favor of Dart.
NOW THEREFORE, for and in consideration of the premises and the mutual
promises and agreements herein contained, the parties hereto agree as follows:
1. Registration and Holding of Shares.
(a) The Beneficiary shall, immediately upon the execution and
delivery of this Voting Trust Agreement, deliver to Dart stock certificates
representing a total of two hundred twenty-two thousand two hundred ninety-four
(222,294) shares of Dart Class B Common Stock and 86,173 shares of Dart Class A
Common Stock (collectively, together with all other shares, securities, rights
and money deemed to be part of the "Trust Shares" under the terms of this
Voting Trust Agreement, the
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"Trust Shares"), duly endorsed for transfer to the Voting Trustees, and Dart
shall register the transfer of the Trust Shares from the Beneficiary to the
Voting Trustees in its stock transfer records and cause new stock certificates
representing the Trust Shares to be issued in the name of and delivered to the
Voting Trustees.
(b) The Beneficiary shall, as and when required by
Section 5.1 of the Settlement Agreement, deliver to Dart stock certificates
representing an additional thirty-three thousand three hundred thirty-three
(33,333) shares of Dart Class A Common Stock (the "RSH Pledged Class A Shares")
duly endorsed for transfer to the Voting Trustees, and Dart shall register the
transfer of the RSH Pledged Class A Shares from the Beneficiary to the Voting
Trustees in its stock transfer records and cause new stock certificate(s)
representing the RSH Pledged Class A Shares to be issued in the name of and
delivered to the Voting Trustees. From and after the transfer of the RSH
Pledged Class A Shares from the Beneficiary to the Voting Trustees in
accordance with the preceding sentence, the RSH Pledged Class A Shares shall be
deemed to be part of the Trust Shares.
(c) If any shares of Dart stock other than those
referenced in paragraphs (a) and (b) of this Section 1 are at any time
delivered to the Voting Trustees pursuant to that certain Stock and Trust
Certificate Pledge Agreement, of even date herewith, executed by the
Beneficiary for the benefit of Dart and Cabot-Morgan Real Estate Company, a
copy of which is attached
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hereto as Exhibit C (the "Stock and Trust Certificate Pledge Agreement"), then
such shares shall be deemed to be part of the Trust Shares.
(d) The Trust Shares shall be held and applied by the
Voting Trustees for the purpose of and in accordance with this Voting Trust
Agreement, and none of the Trust Shares, nor any interest therein, shall be
sold, transferred, pledged, assigned or otherwise encumbered by the Voting
Trustees, except (i) upon the direction of Dart or the Beneficiary, as the case
may be, pursuant to the terms of the Buy/Sell/Offering Agreement (a copy of
which is attached hereto as Exhibit B), (ii) as provided in the Stock and Trust
Certificate Pledge Agreement or (iii) as agreed to in writing by the Voting
Trustees and the Beneficiary.
2. Issuance of Voting Trust Certificates. The Voting Trustees shall,
immediately upon the execution and delivery of this Voting Trust Agreement,
issue to the Beneficiary voting trust certificates in the form of Exhibit A
hereto ("Voting Trust Certificates") representing the Beneficiary's beneficial
ownership of the Trust Shares transferred and delivered to the Voting Trustees
pursuant to Section 1 of this Voting Trust Agreement. Each Voting Trust
Certificate shall be manually signed by each of the Voting Trustees at the time
it is issued. This Voting Trust Agreement shall remain in full force and
effect and be enforceable against any donee, transferee or assignee of any
Voting Trust Certificate or the Beneficiary's interest in the
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Trust Shares, or any part thereof or any direct or indirect interest therein.
3. Distributions on or Exchanges of Trust Shares.
(a) The Voting Trustees shall be entitled from time to time
to receive, and shall pay over to the Beneficiary or otherwise apply in
accordance with this Voting Trust Agreement, all dividends or distributions
paid upon or in respect of the Trust Shares. Without limiting the generality
of the foregoing, if the Voting Trustees shall receive any dividend or
distribution (i) of Securities (as hereinafter defined) or (ii) of rights to
purchase, or securities convertible into, Securities, the Voting Trustees shall
hold such Securities or rights subject to this Voting Trust Agreement. Except
as otherwise provided in paragraph (d) of this Section 3, any cash payments,
Securities or rights so received by the Voting Trustees as a dividend or
distribution upon or in respect of the Trust Shares shall be deemed to be part
of the Trust Shares hereunder, and each then outstanding Voting Trust
Certificate shall, without any further action, be deemed to be adjusted as may
be appropriate to reflect such cash payments, Securities or rights received by
the Voting Trustees in respect of the Trust Shares represented by such Voting
Trust Certificates. As used herein, the term "Securities" shall mean any
shares of capital stock of Dart or any other corporation.
(b) Upon any split, increase, reduction or reclassification
of any Securities then held as part of the Trust
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Shares hereunder, or upon any merger, consolidation, reorganization or
dissolution of Dart or any other corporation whose Securities are then part of
the Trust Shares, the Voting Trustees are authorized to make such surrender of
the affected Trust Shares as may be proper or expedient and to receive under
this Voting Trust Agreement, and either to hold or to distribute as would be
required by paragraph (a) of this Section 3 if it were a dividend or
distribution, any Securities or other property issued in exchange for such
surrendered Trust Shares, and each then outstanding Voting Trust Certificate
shall, without any further action, be deemed to be adjusted as may be
appropriate to reflect the effect of such split, increase, reduction,
reclassification, merger, consolidation, reorganization or dissolution on the
Trust Shares represented by such Voting Trust Certificate.
(c) If any of the Trust Shares at any time include any rights
to purchase, or securities convertible into, Securities, then the Beneficiary
shall have the right to direct the Voting Trustees, by written notice and
payment of any related charges of the Voting Trustees and any consideration
required to be paid to Dart upon exercise or conversion, to convert such
securities convertible into Securities or exercise such rights to purchase
Securities; provided, however, that the Voting Trustees shall be under no
responsibility to convert such securities or to exercise such rights in the
absence of compliance by the Beneficiary with this paragraph (c). Any
Securities received upon such exercise
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or conversion shall be deemed to be part of the Trust Shares hereunder, and
each then outstanding Voting Trust Certificate that represents the Trust Shares
with respect to which such exercise or conversion takes place shall, without
any further action, be deemed to be adjusted as may be appropriate to reflect
such additional Securities.
(d) Notwithstanding any other provision of this Voting Trust
Agreement:
(i) To the extent that the cash dividends or
distributions, if any, paid upon or in respect of the Trust Shares in
any calendar year during the term of this Voting Trust Agreement total
Thirty Cents ($0.30) or less per Trust Share, subject to appropriate
reduction to reflect any stock split or appropriate increase to
reflect any combination of shares ("Ordinary Cash Dividends"), they
shall be paid over on a current basis by the Voting Trustees to the
Beneficiary as beneficial owner of the Trust Shares;
(ii) To the extent that in any calendar year during
the term of this Voting Trust Agreement there are cash dividends or
distributions paid upon or in respect of the Trust Shares in excess of
the amount of Ordinary Cash Dividends ("Extraordinary Cash
Dividends"), then (x) one-half (1/2) of the amount of such
Extraordinary Cash Dividends shall be paid over on a current basis by
the Voting Trustees to the Beneficiary as beneficial owner of the
Trust Shares and (y) one-half (1/2) of the amount of such
Extraordinary
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Cash Dividends shall be applied by the Voting Trustees as follows:
(aa) First, to pay and/or to reimburse Dart for the
fees and expenses (including counsel fees and expenses) of the
Voting Trustees in connection with the administration of the
trust hereunder and the compensation of the Voting Trustees in
accordance with Section 8(a) of this Voting Trust Agreement;
and
(bb) Second, to be deposited by the Voting Trustees
in one or more interest-bearing deposit accounts (the "Trust
Accounts") established by the Voting Trustees with a national
bank having total assets in excess of Five Billion Dollars
($5,000,000,000).
The amounts at any time on deposit in the Trust Accounts shall be deemed to be
part of the Trust Shares hereunder.
4. Voting of Trust Shares.
(a) The Voting Trustees shall be entitled to vote all of the
Trust Shares, to the full extent the Trust Shares are entitled to be voted, (i)
in person or by proxy, on all matters submitted to Dart's stockholders at each
duly constituted meeting thereof, or (ii) by written consent of majority
stockholder in lieu of a meeting pursuant to Section 228 of the Delaware
General Corporation Law. The Voting Trustees shall be entitled to exercise
their power to vote the Trust Shares in such manner as the Voting Trustees
shall deem, in their sole and absolute
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discretion, to be in the best interests of Dart and all of its shareholders as
a single class. Without limiting the generality of the foregoing, the Voting
Trustees shall have authority to vote the Trust Shares to approve at any time
any amendment of the Certificate of Incorporation of Dart that they shall deem,
in their sole and absolute discretion, to be in the best interests of Dart and
all of its shareholders as a single class.
(b) At any time when there are two (2) or more Voting
Trustees in office, they shall vote the Trust Shares on any matter in the
manner a majority of them determine, in their sole and absolute discretion, to
be appropriate.
5. Sale or Other Disposition of Trust Shares.
(a) At the closing of the Simultaneous Purchase, Put
Option or Call Option (each as defined in the Buy/Sell/Offering Agreement), the
Voting Trustees shall deliver to Dart the stock certificate(s) representing
the Trust Shares being purchased by Dart, duly endorsed or accompanied by stock
powers together with such other instruments as shall be requested by Dart to
transfer to Dart all right, title and interest in and to the Trust Shares. All
such certificates, stock powers and instruments shall be in form and content
reasonably satisfactory to Dart and its counsel.
(b) Any time after the Voting Trustees receive an
Offering/Put Exercise Notice (as defined in the Buy/Sell/Offering Agreement)
from the Beneficiary notifying Dart and the Voting Trustees that the
Beneficiary has elected the Public Offering Option (as defined in the
Buy/Sell/Offering Agreement), the
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Voting Trustees shall execute and deliver all documents and instruments as may
be requested by Dart in order to effect an exchange of the 222,294 shares of
Class B Common Stock constituting part of the Trust Shares for the Public
Offering Class A Shares (as defined in the Buy/Sell/Offering Agreement). At
the closing of the Public Offering (as defined in the Buy/Sell/Offering
Agreement), the Voting Trustees shall deliver the stock certificate(s)
representing the Public Offering Class A Shares, duly endorsed or accompanied
by stock powers together with such other instruments as shall be requested by
the Beneficiary to transfer to the underwriters of the Public Offering all
right, title and interest in and to the Public Offering Class A Shares. All
such certificates, stock powers and instruments shall be in form and content
reasonably satisfactory to the Beneficiary and his counsel.
(c) The Voting Trustees hereby acknowledge that any
purchase price for the sale of the Trust Shares pursuant to this Section 5
shall be paid directly to the Beneficiary by Dart, in the event Dart purchases
all or part of the Trust Shares, or by the underwriters of the Public Offering,
in the event such underwriters purchase the Public Offering Class A Shares
(except the underwriters shall pay to Dart an amount equal to the outstanding
principal sum and accrued interest on the $27.4 Million Note (as defined in the
Settlement Agreement)).
(d) (i) The parties hereto acknowledge that Herbert H.
Haft ("HHH") has filed a lawsuit captioned Herbert H. Haft
- 10 -
<PAGE> 11
v. Ronald S. Haft, Civ. A. No. 94CA9883 (D.C. Super. Ct. July 17,
1995), and a counterclaim in the lawsuit captioned Ronald S. Haft v.
Herbert H. Haft, Civ. A. No. 14425 (Del. Ch. filed July 18, 1995),
seeking relief that includes rescission of his July 1993 sale of one
hundred seventy-two thousand seven hundred thirty (172,730) shares of
Class B Common Stock (the "Redemption Class B Shares") to the
Beneficiary (collectively, the "Rescission Action").
(ii) In the event that a court of competent jurisdiction
enters a final order or grants equitable relief, in the Rescission
Action or otherwise, the effect of which is that HHH's sale of the
Redemption Class B Shares to the Beneficiary is or has been rescinded,
that Dart has not received a valid and effective assignment and
transfer of the Redemption Class B Shares from the Beneficiary to Dart
as of the date of the Settlement Agreement or that the Redemption
Class B Shares (or shares substituted therefor) must be returned or
delivered to HHH or the Beneficiary, then (subject to subparagraph
(iii) of this paragraph (d)) immediately upon written notice from Dart
to the Beneficiary and the Voting Trustees, (x) the Beneficiary shall
deliver to Dart the Voting Trust Certificate representing beneficial
ownership of the New Class A Shares (as defined in the Settlement
Agreement) (to the extent Dart does not already hold such certificate
pursuant to the Stock and Trust Certificate Pledge Agreement), duly
endorsed or accompanied
- 11 -
<PAGE> 12
by stock powers together with such other instruments as shall be
requested by Dart to transfer to Dart all right, title and interest in
and to such Voting Trust Certificate, and (y) the Voting Trustees
shall deliver to Dart stock certificates representing the New Class A
Shares, duly endorsed or accompanied by stock powers together with
such other instruments as shall be requested by Dart to transfer to
Dart all right, title and interest in and to such shares and any
remaining cash held by the Voting Trustees in the Trust Accounts from
dividends and distributions made upon the New Class A Shares,
including any interest in fact earned thereon.
(iii) Notwithstanding the provisions of subparagraph (ii) of
this paragraph (d), in the event that a court of competent
jurisdiction enters an order the effect of which is that the
Beneficiary may not assign and transfer the Redemption Class B Shares
to Dart during HHH's lifetime (or until the termination of the proxy
granted by the Beneficiary to HHH in July 1993 to vote the Redemption
Class B Shares), and prior to the consummation of a valid and
effective assignment and transfer of the Redemption Class B Shares
from the Beneficiary to Dart any event (for example, the Beneficiary's
legal incapacity or the Beneficiary's testamentary transfer of the
Redemption Class B Shares to HHH) shall occur that renders the
Beneficiary unable to consummate such assignment or transfer, or the
- 12 -
<PAGE> 13
Beneficiary shall grant or suffer to exist any lien, charge, security
interest, restriction, claim or encumbrance of any kind (other than
the proxy granted to HHH in July 1993) in, against or with respect to
any of the Redemption Class B Shares, then immediately upon written
notice from Dart to the Beneficiary and the Voting Trustees, (x) the
Beneficiary shall deliver to Dart the Voting Trust Certificate
representing beneficial ownership of the New Class A Shares (to the
extent Dart does not already hold such certificate pursuant to the
Stock and Trust Certificate Pledge Agreement), duly endorsed or
accompanied by stock powers together with such other instruments as
shall be requested by Dart to transfer to Dart all right, title and
interest in and to such Voting Trust Certificate, and (y) the Voting
Trustees shall deliver to Dart stock certificates representing the New
Class A Shares, duly endorsed or accompanied by stock powers together
with such other instruments as shall be requested by Dart to transfer
to Dart all right, title and interest in and to such shares and any
remaining cash held by the Voting Trustees in the Trust Accounts from
dividends and distributions made upon the New Class A Shares,
including any interest in fact earned thereon.
(e) The parties hereto acknowledge that Linda G. Haft and
Robert M. Haft have filed a lawsuit against the Beneficiary captioned Linda G.
Haft and Robert M. Haft v. Ronald S. Haft,
- 13 -
<PAGE> 14
Civ. A. No. 0002994-95 (D.C. Super. Ct., 1995), seeking relief that includes
specific performance directing the Beneficiary to transfer to Linda G. Haft and
Robert M. Haft fifty-eight thousand twenty-nine (58,029) shares of Class A
Common Stock (the "Contested Class A Shares") and enjoining the Beneficiary
from selling such shares to any third party (the "Contested Class A Lawsuit").
In the event that a court of competent jurisdiction enters a final order or
equitable relief, in the Contested Class A Lawsuit or otherwise, that Linda G.
Haft, Robert M. Haft or HHH, or any of their respective heirs, executors,
successors or assigns, are entitled to ownership of any or all of the Contested
Class A Shares, then immediately upon written notice from the Beneficiary or
Dart to the Voting Trustees: (i) the Voting Trustees, to the extent they hold
the stock certificate(s) representing such Contested Class A Shares, shall
deliver such certificate(s) as ordered by such court; (ii) the Voting Trust
Certificate representing the Contested Class A Shares shall automatically be
deemed not to represent such Contested Class A Shares and, if all of the
Contested Class A Shares are so determined not to be owned by the Beneficiary,
then such Voting Trust Certificate shall be cancelled.
6. Termination of Voting Trust Agreement.
(a) The term of this Voting Trust Agreement shall expire on:
(i) the closing of Dart's purchase of all of the Trust Shares pursuant to the
Buy/Sell/Offering Agreement; (ii) the closing of the sale of all of the Public
Offering Class
- 14 -
<PAGE> 15
A Shares pursuant to the Public Offering and the sale of all remaining Trust
Shares to Dart in a Simultaneous Purchase under the Buy/Sell/Offering
Agreement; (iii) August 1, 2000, if neither a Call Exercise Notice, nor an
Offering/Put Exercise Notice (each as defined in the Buy/Sell/Offering
Agreement) shall have theretofore been delivered in the manner specified in the
Buy/Sell/Offering Agreement; (iv) December 31, 2002, if a Call Exercise Notice
or an Offering/Put Exercise Notice shall have been timely delivered in the
manner specified in the Buy/Sell/Offering Agreement but the closing of Dart's
purchase or the closing of the Public Offering, as the case may be, of the
Trust Shares pursuant to the Buy/Sell/Offering Agreement shall not have
occurred because of an order of a court of competent jurisdiction enjoining
such closing; (v) the consummation of the transactions specified in clause (i)
of Section 1.3 of the Settlement Agreement; (vi) the consummation of a
Revocation Closing pursuant to Section 1.5 of the Settlement Agreement; or
(vii) the mutual written agreement of the Beneficiary and Dart.
(b) Upon the expiration of the term of this Voting Trust
Agreement pursuant to clause (i) of the immediately preceding paragraph (a),
the Voting Trust Certificates shall be of no further force or effect, and the
Voting Trustees shall immediately deliver to Dart the certificate(s)
representing the Trust Shares, duly endorsed for transfer, and any amounts on
deposit in the Trust Accounts. Upon the expiration of the term of this Voting
Trust Agreement pursuant to clause (ii), clause
- 15 -
<PAGE> 16
(iii) or clause (iv) of the immediately preceding paragraph (a), the Voting
Trustees shall, upon surrender to them of each Voting Trust Certificate,
immediately deliver to the Beneficiary the stock certificate(s) representing
the Trust Shares to which such Voting Trust Certificate relates, duly endorsed
for transfer, and any remaining cash held by the Voting Trustees in the Trust
Accounts from dividends and distributions made upon the Trust Shares, including
any interest in fact earned thereon. Upon the expiration of the term of this
Voting Trust Agreement pursuant to clause (v) of the immediately preceding
paragraph (a), the Voting Trustees shall, upon surrender to them of each Voting
Trust Certificate, (w) immediately deliver to Dart the stock certificate(s)
representing the Option Shares (as defined in the Settlement Agreement), duly
endorsed for transfer, and any remaining cash held by the Voting Trustees in
the Trust Accounts from dividends and distributions made upon the Option
Shares, including any interest in fact earned thereon, and (x) immediately
deliver to the Beneficiary the stock certificate(s) representing all of the
other Trust Shares, duly endorsed for transfer, and any remaining cash held by
the Voting Trustees in the Trust Accounts from dividends and distributions made
upon such other Trust Shares, including any interest in fact earned thereon.
Upon the expiration of the term of this Voting Trust Agreement pursuant to
clause (vi) of the immediately preceding paragraph (a), the Voting Trustees
shall, upon surrender to them of each Voting Trust Certificate, (y) immediately
deliver to Dart
- 16 -
<PAGE> 17
the stock certificate(s) representing the Option Shares and the New Class A
Shares, duly endorsed for transfer, and any remaining cash held by the Voting
Trustees in the Trust Accounts from dividends and distributions made upon the
Option Shares and the New Class A Shares, including any interest in fact earned
thereon, and (z) immediately deliver to the Beneficiary the stock
certificate(s) representing all of the other Trust Shares, duly endorsed for
transfer, and any remaining cash held by the Voting Trustees in the Trust
Accounts from dividends and distributions made upon such other Trust Shares,
including any interest in fact earned thereon. Upon the expiration of the term
of this Voting Trust Agreement pursuant to clause (vii) of the immediately
preceding paragraph (a), the Voting Trust Certificates shall be of no further
force or effect, and the Voting Trustees shall immediately deliver, in
accordance with the joint written instructions of the Beneficiary and Dart, the
certificate(s) representing the Trust Shares, duly endorsed for transfer, and
any amounts on deposit in the Trust Accounts.
7. Interest of Voting Trustees.
(a) The Voting Trustees assume no liability as stockholders,
their interest hereunder being that of trustees only. The Voting Trustees
shall be entitled to vote the Trust Shares on all matters, but they shall have
no implied obligations and assume no responsibility in respect of any action
taken by them or taken in pursuance of their vote so cast, and the Voting
Trustees shall incur no responsibility as trustees or otherwise
- 17 -
<PAGE> 18
by reason of any error in law, mistake of judgment or of anything done,
suffered or omitted to be done under this Voting Trust Agreement, except for
their own individual gross negligence or willful misconduct. Each of the
Voting Trustees shall be entitled to rely and to act upon the advice of legal
counsel, which may be separate legal counsel for any or all of the Voting
Trustees or the same legal counsel that represents Dart or its Board of
Directors or any committee thereof in any matter. The Voting Trustees assume
no responsibility with respect to the validity or genuineness of any of the
stock certificates to be deposited hereunder, or any notice, request,
assignment, power of attorney, acknowledgment or other papers or documents, and
the Voting Trustees shall be entitled to assume that any such stock
certificates or other papers or documents are genuine and valid and what they
purport to be, and are signed by the proper parties, and the endorsements and
assignments thereof are genuine and legal.
(b) Any or each of the Voting Trustees may also act as a
director or officer of Dart and/or any subsidiary of Dart, and the Voting
Trustees may, in their absolute discretion, vote the Trust Shares to elect or
appoint themselves to such positions.
8. Expenses and Compensation of Voting Trustees.
(a) The reasonable fees and expenses (including counsel fees
and expenses) paid or incurred by the Voting Trustees in the administration of
the trust hereunder (the "Trust Expenses") shall be paid by the Voting Trustees
from funds, if
- 18 -
<PAGE> 19
any, available pursuant to Section 3(d)(ii)(aa) hereof or funds, if any, on
deposit from time to time in the Trust Accounts, and at all times when the
funds from such sources are insufficient for this purpose the Trust Expenses
shall, to the extent of the insufficiency, be borne and promptly paid by Dart
(subject to subsequent reimbursement if and to the extent funds are available
pursuant to Section 3(d)(ii)(aa) hereof). The Trust Expenses shall include
compensation to each of the Voting Trustees for their time reasonably spent in
rendering services hereunder at the rate of Two Hundred Seventy-Five Dollars
($275) per hour or at such other rate or rates as the Beneficiary, Dart and the
Voting Trustees shall agree in writing; provided, however, that any Voting
Trustee who also is a full-time employee of Dart or any of its affiliated
corporations shall not be entitled to receive compensation for his or her
service as a Voting Trustee; and provided further that Sidney B. Silverman
hereby waives his right to receive compensation for his service as a Voting
Trustee and any other Voting Trustee may at any time waive his or her right to
receive compensation for his or her service as a Voting Trustee.
(b) Dart hereby acknowledges that the Voting Trustees are
acting in that capacity at its request and agrees that the Voting Trustees are
entitled to indemnification in accordance with Article Eleventh of Dart's
Certificate of Incorporation and Article VII of Dart's Bylaws.
- 19 -
<PAGE> 20
9. Appointment of Additional Voting Trustees; Resignation and Removal
of Voting Trustees.
(a) The parties acknowledge that Larry G. Schafran
("Schafran") and Sidney B. Silverman ("Silverman") are serving as the Interim
Voting Trustees pursuant to this Voting Trust Agreement for a period not to
exceed ninety days and that Dart and the Beneficiary contemplate the
appointment of a permanent Voting Trustee who is otherwise unaffiliated with
Dart or the Beneficiary before the expiration of that ninety day period.
(b) If, within their period of service as Interim Voting
Trustees, Schafran and Silverman are in disagreement as to any matter involving
the exercise of the voting rights of the shares in the Voting Trustee, or any
other matter involving the exercise of their fiduciary responsibilities as
trustees, Allen G. Terrell, Esq. will advise and consult with the Interim
Voting Trustees and, in the event disagreement persists, shall be empowered to
decide the dispute.
(c) Within 90 days, the Interim Voting Trustees will, by
agreement, appoint a permanent Voting Trustee and resign from their positions
as Voting Trustees.
(d) If they are unable to reach agreement on a permanent
Voting Trustee, the Interim Voting Trustees will apply to the Delaware Court of
Chancery to appoint a permanent Trustee from a list of two nominees. Each of
the Interim Voting Trustees shall choose one name for submission to the Court.
- 20 -
<PAGE> 21
(e) Any Voting Trustee may resign at any time by
providing written notice of such resignation, stating the effective date
thereof, to the Beneficiary, the other Voting Trustees (if any) and Dart. Any
Voting Trustee may not be removed except for good cause by order of the
Delaware Court of Chancery upon application by the Beneficiary or Dart. A
Voting Trustee shall cease to be a Voting Trustee upon the death of such Voting
Trustee or a determination of a court of competent jurisdiction that such
Voting Trustee lacks the requisite physical or mental capacity to exercise the
powers under this Voting Trust Agreement. After the effective date of the
resignation or removal of any Voting Trustee, or the date any Voting Trustee
dies or is determined by a court of competent jurisdiction to be incapacitated,
the remaining Voting Trustees, if any, shall be entitled to exercise full
authority as Voting Trustees hereunder.
(f) In the event that the permanent Voting Trustee
appointed pursuant to the provisions of this agreement ceases to be a Trustee
for any reason, the parties to the Settlement Agreement shall agree to the
appointment of a replacement Trustee. In the event that the parties cannot
agree on a replacement Trustee, the parties will apply to the Delaware Court of
Chancery to appoint a replacement Trustee from a list of no more than three
nominees. Each of the parties shall be entitled to submit one nominee to the
Court.
- 21 -
<PAGE> 22
10. Mutilated or Lost Voting Trust Certificates. In case any Voting
Trust Certificate shall become mutilated or be destroyed, lost or stolen, the
Beneficiary may notify the Voting Trustees who shall issue and deliver to the
Beneficiary a new Voting Trust Certificate in exchange for and upon
cancellation of the Voting Trust Certificate so mutilated, or in substitution
for the Voting Trust Certificate so destroyed, lost or stolen, provided that
the Beneficiary shall have furnished proof reasonably satisfactory to the
Voting Trustees of such destruction, loss or theft, and upon request, shall
furnish indemnity reasonably satisfactory to the Voting Trustees and shall
comply with such other reasonable requirements as the Voting Trustees may
prescribe.
11. Notices. Any notices or consents required or permitted by
this Voting Trust Agreement shall be in writing and shall be deemed given if
delivered in person or if sent by certified mail, postage prepaid, return
receipt requested, or by facsimile as follows, unless any such address is
changed by notice to the other parties hereunder:
To Dart:
Dart Group Corporation
3300 75th Avenue
Landover, MD 20785
Attention: Corporate Secretary
Facsimile: 301-733-2707
- 22 -
<PAGE> 23
Copy to:
Stephen J. Brogan, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
Facsimile: 202-737-2832
To the Beneficiary:
Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
Facsimile: ______________
Copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street
8th Floor
Wilmington, DE 19801
Facsimile: 302-425-6464
To the Voting Trustees:
Larry G. Schafran
Voting Trustee, Dart Group Corporation
c/o Allen M. Terrell, Jr., Esq.
Richards, Layton & Finger
10th & King
One Rodney Square
Wilmington, Delaware 19801
Facsimile: 302-658-6548
Sidney B. Silverman, Esq.
Voting Trustee, Dart Group Corporation
Silverman, Harnes & Harnes
14th Floor
750 Lexington Avenue
New York, NY 10022
Facsimile: 212-754-2378
12. Amendments. This Voting Trust Agreement may be amended from time
to time only by a written agreement executed by the Beneficiary and Dart;
provided, that any amendment of this Voting Trust Agreement that is not also
executed and delivered by all of the Voting Trustees shall not be effective
until the earlier of
- 23 -
<PAGE> 24
the written acceptance of such amendment by all of the Voting Trustees or ten
(10) days after written notice of such amendment is delivered to all of the
Voting Trustees.
13. Counterparts. This Voting Trust Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
14. Inspection. Until the termination of this Voting Trust
Agreement, one (1) original copy of each counterpart hereof and amendment
hereto shall be kept at the registered office of Dart in the State of Delaware,
and such documents shall be open to the inspection of the Beneficiary or any
stockholder of Dart or his or her attorney daily during business hours.
15. Further Assurances. It is the intention of the parties that this
Voting Trust Agreement be administered in compliance with Section 218 of the
Delaware General Corporation Law. Each party to this Voting Trust Agreement
shall give such further assurances and perform such acts (including, without
limitation, the preparation, execution and filing of appropriate documents with
appropriate governmental agencies) that will or may become necessary or
appropriate to effectuate and carry out the purposes or provisions of this
Voting Trust Agreement.
16. Acceptance of Trust. The Voting Trustees accept the trust
created hereby subject to all the terms and conditions herein contained and
agree that they will exercise the powers and perform their duties as Voting
Trustees as herein set forth
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<PAGE> 25
according to the provisions of this Voting Trust Agreement; provided, however,
that each of the Voting Trustees may resign and be discharged from the trust
created hereby in the manner herein provided.
17. Governing Law. This Voting Trust Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
18. Cross-Default. This Voting Trust Agreement, the Settlement
Agreement, the Buy/Sell/Offering Agreement and other documents relating thereto
(collectively, the "Agreements") constitute one integrated whole. The
Beneficiary agrees that a material breach by the Beneficiary under any of the
Agreements shall constitute a material breach under each of the Agreements.
Dart agrees that a material breach by Dart under any of the Agreements shall
constitute a material breach under each of the Agreements.
19. Entire Agreement. This Voting Trust Agreement (including,
without limitation, the exhibits hereto), the other Agreements and the
documents and instruments executed and delivered pursuant hereto, set forth the
entire understanding of the parties hereto, and supersede all prior agreements
between them, with respect to the subject matter hereof.
20. Specific Performance. Dart and the Beneficiary each
acknowledge and agree that in the event of any breach of this Voting Trust
Agreement, the non-breaching party would be irreparably harmed and could not be
made whole by monetary
- 25 -
<PAGE> 26
damages. It is accordingly agreed that Dart and the Beneficiary, in addition
to any other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of this Voting Trust Agreement in any
action instituted in the Delaware Court of Chancery or the United States
District Court for the District of Delaware, or, in the event neither of said
courts would have jurisdiction over such action, in any court of the United
States or any state having subject matter jurisdiction. Dart, the Beneficiary
and each of the Voting Trustees consent to personal jurisdiction in any such
action brought in the Delaware Court of Chancery or the United States District
Court for the District of Delaware.
21. Severability. If any one or more of the provisions contained in
this Voting Trust Agreement, or any agreement, document or instrument delivered
pursuant hereto, should be held to be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of all remaining provisions
shall not in any way be affected or impaired.
22. Binding Effect. This Voting Trust Agreement, and the documents
and instruments delivered pursuant hereto, shall inure to the benefit of, and
shall be binding upon, the respective parties hereto, their heirs, executors,
administrators, successors and assigns.
23. Waiver. The waiver by any party hereto of any matter provided
for herein shall not be deemed to be a waiver of any other matter provided for
herein.
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<PAGE> 27
24. Headings. The headings in this Voting Trust Agreement are solely
for convenience of reference and shall not be given any effect in the
construction or interpretation of this Voting Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Voting
Trust Agreement as of the day and year first above written.
<TABLE>
<S> <C>
/s/ Ronald S. Haft
- -------------------------------- ------------------------------------
Witness Ronald S. Haft
DART GROUP CORPORATION
/s/ Bonita A. Wilson By: /s/ Robert A. Marmon
- -------------------------------- --------------------------------
Attest Title:
ACCEPTED AND AGREED TO:
/s/ Bonita A. Wilson /s/ Larry G. Schafran
- -------------------------------- ------------------------------------
Witness Larry G. Schafran,
as Voting Trustee
/s/ Kenneth J. Ayres /s/ Sidney B. Silverman
- -------------------------------- ------------------------------------
Witness Sidney B. Silverman,
as Voting Trustee
</TABLE>
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<PAGE> 1
EXHIBIT 13
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Settlement Agreement"), dated as of
this 6th day of October, 1995, by and between Dart Group Corporation, a
Delaware corporation ("Dart"), and Ronald S. Haft ("RSH").
WITNESSETH:
WHEREAS, on September 6, 1994 RSH acted to exercise an option to
purchase from Dart one hundred ninety-seven thousand forty-eight (197,048)
shares of Dart Class B Common Stock (the "Option Shares") with the intention,
as stated in a letter of that date from RSH to all of the directors of Dart,
"to remove Herbert Haft as a Director of Dart in order to protect the
corporation from his continuing improper conduct";
WHEREAS, Dart did not issue the Option Shares to RSH as he demanded on
September 6, 1994, but on the next day, September 7, 1994, Dart's Board of
Directors unanimously adopted a resolution recognizing that Dart had been
"confronted by significant developments relating to [its] ownership and
management" and creating an Executive Committee (the "Executive Committee") of
the Board of Directors with the power to "conduct the affairs of [Dart] with
respect to matters that are the subject of dispute between [Herbert H. Haft]
and [RSH]";
WHEREAS, on September 12, 1994 RSH filed a lawsuit captioned Ronald S.
Haft v. Dart Group Corporation, Civ. A. No. 13736 (Del. Ch.) (the "Options
Lawsuit"), seeking to compel Dart to issue the Option Shares to him;
<PAGE> 2
WHEREAS, if RSH were to prevail in the Options Lawsuit, the one
hundred seventy-two thousand seven hundred thirty (172,730) shares of Dart
Class B Common Stock that Herbert H. Haft ("HHH") has heretofore had power to
vote would no longer constitute a majority of the outstanding shares of Dart
voting stock, and RSH, not HHH, would control the largest block of Dart voting
stock;
WHEREAS, the Executive Committee, pursuant to the above-described
September 7, 1994 Board of Directors resolution, has overseen all aspects of
Dart's defense of the Options Lawsuit;
WHEREAS, RSH is willing to settle the Options Lawsuit on the terms,
and subject to the conditions, set forth in this Settlement Agreement, and the
Executive Committee has authorized and approved the Settlement Agreement as
being in the best interests of Dart;
WHEREAS, in January 1994 the Board of Directors of Dart created a
Special Litigation Committee to "have and exercise the full powers of the Board
of Directors to review and determine whether or not the Corporation shall
undertake to institute legal action for, or to maintain the prosecution of, the
claims asserted" in, inter alia, the lawsuit captioned Alan R. Kahn and The
Tudor Trust v. Herbert Haft, Civ. A. No. 13154 (Del. Ch. filed Sept. 29, 1993)
(the "Kahn Lawsuit");
WHEREAS, the parties desire to settle the Kahn Lawsuit, as against
RSH, on the terms set forth in this Settlement Agreement, subject to approval
of the Delaware Chancery Court;
WHEREAS, the Special Litigation Committee has authorized and approved
this Settlement Agreement as being in the best interests of Dart;
2
<PAGE> 3
WHEREAS, the Executive Committee was authorized by a resolution
adopted by Dart's Board of Directors on June 30, 1995 to direct Dart's
litigation of an action captioned Robert M. Haft v. Dart Group Corporation,
Civ. A. No. 95-82 (D. Del. filed Feb. 10, 1995), filed by Robert M. Haft to
enforce certain stock options;
WHEREAS, Dart has filed a counterclaim in the Robert M. Haft action
against RSH to cancel certain stock options held by RSH, and Dart and RSH
desire to settle such counterclaim in accordance with the terms set forth in
this Settlement Agreement;
WHEREAS, the Executive Committee was authorized by a resolution
adopted by Dart's Board of Directors on February 10, 1995 to file and prosecute
on behalf of Dart claims relating to its leasing of certain warehouses;
WHEREAS, Dart did file such claims, including claims against RSH, in
an action captioned Dart Group Corporation and Pennsy Warehouse Leasing
Corporation v. Herbert H. Haft, Civ. A. No. CAL 95-02302 (Md. Cir. Ct. filed
Feb. 10, 1995), and RSH and Dart desire to settle such claims against RSH on
the terms set forth in this Settlement Agreement;
WHEREAS, RSH has filed an action against HHH and Dart, the defense of
which on behalf of Dart is vested in the Executive Committee, captioned Ronald
S. Haft v. Herbert H. Haft, Civ. A. No. 14425 (Del. Ch. filed July 18, 1995),
which seeks to cancel a proxy to vote one hundred seventy-two thousand seven
hundred thirty (172,730) shares that RSH had given to HHH and to require Dart
to recognize RSH's right to vote these shares;
3
<PAGE> 4
WHEREAS, Dart and RSH desire to resolve RSH's present and future
claims to voting control of Dart on the terms set forth in this Settlement
Agreement; and
WHEREAS, the parties acknowledge that this Settlement Agreement, and
the transactions contemplated hereby, are subject to potential legal challenge,
and the parties intend to cooperate in defending against any such legal
challenge in order to assure the implementation and preservation of such
transactions.
NOW THEREFORE, for and in consideration of the premises and of the
mutual promises and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1. SETTLEMENT.
1.1. Settlement Transactions. The parties shall consummate the
following transactions on the date of this Settlement Agreement:
(a) The Employment Agreement between Dart and RSH, dated
August 1, 1993 (the "Employment Agreement"), shall be amended to
increase to One Hundred Forty Dollars ($140) per share the exercise
price of the option to purchase the Option Shares provided for in the
Employment Agreement.
(b) RSH shall exercise the amended option to purchase the
Option Shares under the amended Employment Agreement and, pursuant to
such exercise, Dart shall issue the Option Shares to RSH in exchange
for (i) the payment of One Hundred Ninety-Seven Thousand Forty-Eight
Dollars ($197,048) from RSH to Dart and (ii) a promissory note
executed and delivered by RSH to Dart in the principal amount of
Twenty-Seven Million Three Hundred Eighty-Nine Thousand Six Hundred
4
<PAGE> 5
Seventy-Two Dollars ($27,389,672) in the form of Exhibit A (the "$27.4
Million Note").
(c) RSH shall resign all of his positions as a director
or officer of Dart and each corporation in which Dart holds a direct
or indirect ownership interest; provided, that such resignations shall
be effective thirty (30) days after the date hereof, unless, on such
thirtieth (30th) day, a preliminary or permanent injunction is in
effect prohibiting performance of this Settlement Agreement, in which
case, RSH's resignation shall become effective on the first day on
which no such preliminary or permanent injunction is in effect; and
provided further, that RSH's resignation as a director of Shoppers
Food Warehouse Corp. shall not be effective until such time as the
Board of Directors of Dart shall determine to be appropriate.
(d) Dart and RSH shall execute and deliver a
Buy/Sell/Offering Agreement in the form of Exhibit B (the
"Buy/Sell/Offering Agreement"), which shall give Dart and RSH certain
purchase and sale options relating to: (i) the Option Shares; (ii) an
additional twenty-five thousand two hundred forty-six (25,246) shares
of Dart Class B Common Stock owned by RSH (the "RSH Class B Shares");
(iii) the New Class A Shares (as hereinafter defined); (iv) an
additional twenty-eight thousand one hundred forty-four (28,144)
shares of Dart Class A Common Stock owned by RSH (the "RSH Class A
Shares"); (v) an additional fifty-eight thousand twenty-nine (58,029)
shares of Dart Class A Common Stock that are subject to competing
claims by Robert M. Haft and Linda G.
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Haft and by HHH (the "RSH Contested Class A Shares"); and (vi) an
additional thirty-three thousand three hundred thirty- three (33,333)
shares of Dart Class A Common Stock that are subject to a pledge to
First Union National Bank (the "RSH Pledged Class A Shares").
(e) Dart and RSH shall execute and deliver a Voting Trust
Agreement in the form of Exhibit C (the "Voting Trust Agreement"), and
RSH shall assign and transfer all of the Option Shares, the RSH Class
B Shares, the RSH Class A Shares and the RSH Contested Class A Shares
to the Voting Trustees thereunder (the "Voting Trustees").
(f) RSH shall assign and transfer to Dart the one hundred
seventy-two thousand seven hundred thirty (172,730) shares of Dart
Class B Common Stock that RSH purchased in July 1993 from HHH and that
are held of record by RSH (the "Redemption Class B Shares").
(g) In exchange for the assignment and transfer of the
Redemption Class B Shares by RSH to Dart, Dart shall execute and
deliver to RSH a Subscription Agreement in the form of Exhibit D (the
"Subscription Agreement"), providing (among other things) for the
issuance to RSH, subject to approval by the Board of Directors of
Dart, of 288,312 shares of Dart Class A Common Stock (the "New Class A
Shares").
(h) Dart shall loan to RSH the amount of Thirty-Seven
Million Seven Hundred Forty Thousand One Hundred Sixty- Two Dollars
($37,740,162) by
(i) depositing the amount of Twenty Million
Dollars ($20,000,000) into a separate account of
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SettlementCorp. at Riggs National Bank, which account
shall be subject to that certain Restricted Account Security
Agreement of even date herewith by and among RSH, Dart and
SettlementCorp., in the form of Exhibit E (the "Restricted
Account Security Agreement"), and
(ii) transferring to RSH the amount of Seventeen
Million Seven Hundred Forty Thousand One Hundred Sixty-Two
Dollars ($17,740,162),
and RSH shall execute and deliver to Dart a promissory note in the
principal amount of Thirty-Seven Million Seven Hundred Forty Thousand
One Hundred Sixty-Two Dollars ($37,740,162) in the form of Exhibit F
(the "$37 Million Note").
(i) Dart shall loan to RSH the amount of Eleven Million
Six Hundred Twenty-One Thousand Two Hundred Seventy-Six Dollars
($11,621,276) by transferring such amount into a separate account of
Settlementcorp at Riggs National Bank, which account shall be subject
to that certain Escrow Agreement [$11.6 Million] of even date herewith
by and between Dart and RSH in the form of Exhibit G (the "Escrow
Agreement [$11.6 Million"], and RSH shall execute and deliver to Dart
a promissory note in the principal amount of Eleven Million Six
Hundred Twenty-One Thousand Two Hundred Seventy-Six Dollars
($11,621,276) in the form of Exhibit H hereto (the "$11.6 Million
Note"). Immediately after said transfer of funds into such account is
made, a certified check payable to HHH drawn on said account, in the
amount of Eleven Million Six Hundred Twenty-One Thousand Two Hundred
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Seventy-Six Dollars ($11,621,276) shall be tendered by RSH to HHH as
prepayment in full of that certain Promissory Note of RSH to HHH dated
July 28, 1993 in the principal amount of Eleven Million Fifty-Four
Thousand Seven Hundred Twenty Dollars ($11,054,720) (the "HHH Note").
(j) Dart and RSH shall execute and deliver a Stock and
Trust Certificate Pledge Agreement in the form of Exhibit I hereto
(the "Stock and Trust Certificate Pledge Agreement"), which shall
cause the loans represented by the $11.6 Million Note, the $27.4
Million Note and the $37 Million Note to be secured by all shares of
Class A Common Stock and Class B Common Stock beneficially owned by
RSH and all trust certificates issued to RSH under the Voting Trust
Agreement.
(k) RSH and Dart shall execute and deliver to each other
a mutual general release in the form of Exhibit J (the "Release").
(l) Dart and RSH shall execute and deliver a Real Estate
Master Agreement in the form of Exhibit K (the "Real Estate Master
Agreement"), and all of the transactions set forth in Section 1.1 of
the Real Estate Master Agreement shall be consummated as part of the
Closing (as hereinafter defined).
(m) Immediately after amendment of the Employment
Agreement pursuant to Section 1.1(a) and issuance of the Option Shares
pursuant to Section 1.1(b), the Employment Agreement shall be
terminated without any further obligation thereunder on the part of
either Dart or RSH.
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(n) RSH shall execute and deliver to each of Dart,
Dart/SFW Corp. ("Dart/SFW"), Crown Books Corporation ("Crown Books")
and Trak Auto Corporation ("Trak Auto") instruments cancelling all
outstanding options held by RSH to purchase stock of, respectively,
Dart, Dart/SFW, Trak Auto and Crown Books, except for RSH's option to
purchase the Option Shares under the Employment Agreement as amended
pursuant to Section 1.1(a).
(o) Dart shall pay to RSH the amount of One Hundred
Eighty-Five Thousand Five Hundred Forty-Eight Dollars ($185,548).
(p) Dart shall deliver to RSH copies of the resolutions
adopted by the Executive Committee and the Special Litigation
Committee with respect to this Settlement Agreement and the
transactions contemplated hereby.
1.2. Closing Documents and Process. The documents and instruments
executed and delivered to effectuate the transactions set forth in Section 1.1
shall be in form and substance reasonably satisfactory to both parties, and the
closing of such transactions shall all deemed to have occurred simultaneously
effective as of 4:01 p.m. (Eastern Daylight Savings Time) on the date hereof at
the offices of Jones, Day, Reavis & Pogue, 1450 G Street, NW, Washington, D.C.
20005 (the "Closing"). Except as otherwise provided herein, all payments to be
made as part of the closing of the transactions contemplated by this Settlement
Agreement shall be made by certified check, bank check or wire transfer of
immediately available funds pursuant to written instructions from the party
entitled to receive the payment.
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1.3. [INTENTIONALLY LEFT BLANK]
1.4. Court Proceedings. (a) Immediately upon the execution of
this Settlement Agreement, the parties shall file appropriate papers with the
Delaware Court of Chancery to dismiss the Options Lawsuit, without prejudice,
and terminate the Standstill Agreement between the parties dated September 14,
1994.
(b) Within ten (10) days after the date of execution of
this Settlement Agreement, the parties shall file appropriate papers with the
Delaware Court of Chancery, including a Stipulation and Agreement of
Compromise, Settlement and Release (the "Kahn Stipulation"), to seek approval
of the Settlement Agreement and dismissal, with prejudice, of RSH and Combined
Properties, Inc. ("CPI") as defendants in the Kahn Lawsuit.
(c) Within fifteen (15) days after the date of this
Settlement Agreement, Dart shall file appropriate papers with the United States
District Court for the District of Delaware to dismiss, without prejudice, its
pending counterclaim against RSH in the action captioned Robert M. Haft v. Dart
Group Corporation, Civ. A. No. 95-82 (D. Del. filed Feb. 10, 1995).
(d) Within fifteen (15) days after the date of this
Settlement Agreement, Dart shall file appropriate papers with the Maryland
Circuit Court to dismiss, without prejudice, RSH and CPI as defendants in the
action captioned Dart Group Corporation and Pennsy Warehouse Leasing
Corporation v. Herbert H. Haft, Civ. A. No. CAL 95-02302 (Md. Cir. Ct. filed
Feb. 10, 1995).
(e) Within fifteen (15) days after the date of this
Settlement Agreement, RSH and Dart shall file appropriate papers realigning
Dart as a plaintiff in the derivative portion of the
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action captioned Ronald S. Haft v. Herbert H. Haft, No. 14425 (Del. Ch. filed
July 18, 1995) and, if Dart so elects, it may dismiss the derivative claims
stated in such action.
(f) The parties shall cooperate in the defense of any
litigation challenging the validity of this Settlement Agreement. If Dart
obtains a release of any claim relating to the validity of this Settlement
Agreement from any other person or entity, or if Dart obtains a release of any
claim from any member of the Haft family relating to any matter, Dart shall use
its reasonable efforts to obtain a release of the same claim in substantially
similar form for RSH. If RSH obtains a release of any claim relating to the
validity of this Settlement Agreement from any other person or entity, or if
RSH obtains a release of any claim from any member of the Haft family relating
to any matter, RSH shall use his reasonable efforts to obtain a release of the
same claim in substantially similar form for Dart.
1.5 Revocation. (a) The parties agree to consummate a Revocation
Closing (in accordance with paragraph (c) of this Section 1.5, if Dart so
elects by providing written notice to RSH of such election, and if the Delaware
Court of Chancery has declined to approve the Settlement Agreement and dismiss
RSH and CPI in accordance with the Kahn Stipulation; provided, that such
written notice by Dart to RSH shall have been given within fourteen (14) days
of the issuance of a final order denying dismissal of the claims against RSH
and CPI in the Kahn Lawsuit or, if such final order is appealed, within
fourteen (14) days of the entry of the final order resolving the appeal. Any
Revocation Closing pursuant to this Section 1.5(a) shall occur on
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the date specified by Dart in its written notice to RSH of its election that a
Revocation Closing occur; provided that the date of such Revocation Closing
shall be not less than two (2) days after the date such written notice is
delivered to RSH; and provided, further, that the date of any Revocation
Closing pursuant to this Section 1.5(a) shall not be earlier than April 11,
1996. In the event that a Revocation Closing is delayed because of the last
proviso of the immediately preceding sentence, Dart agrees that it shall not
take any corporate action regarding a change in its capital structure that
requires a vote of the holders of Dart Class B Common Stock during the period
of such delay.
(b) The parties agree to consummate a Revocation Closing
(in accordance with paragraph (c) of this Section 1.5, if Dart so elects by
providing written notice to RSH of such election, upon or after the issuance by
a court of competent jurisdiction of a final order to the effect that the
issuance of the Option Shares pursuant to Section 1.1 of this Settlement
Agreement was invalid or that the Voting Trustees may not exercise the power to
vote the Option Shares as contemplated by the Voting Trust Agreement; provided,
that such written notice by Dart to RSH shall have been given within fourteen
(14) days of the issuance of such final order or, if such final order is
appealed, within fourteen (14) days of the entry of the final order resolving
the appeal. Any Revocation Closing pursuant to this Section 1.5(b) shall occur
on the date specified by Dart in its written notice to RSH of its election that
a Revocation Closing occur, which date shall not be less than two (2) days
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after the date such written notice is delivered to RSH; provided, that if Dart
provides such written notice to RSH prior to the issuance by a court of
competent jurisdiction of a final order to the effect that the issuance of the
Option Shares is invalid or that the Voting Trustees may not exercise the power
to vote the Option Shares as contemplated by the Voting Trust Agreement, then
Dart may specify that the Revocation Closing shall occur and be effective
immediately upon the issuance of such final order if and when it is issued and
require that the documents and instruments necessary to consummate such
Revocation Closing be executed and put into escrow for delivery immediately
upon issuance by the Court of such final order.
(c) At any Revocation Closing pursuant to either
paragraph (a) or paragraph (b) of this Section 1.5, the parties shall
consummate the following transactions simultaneously:
(i) RSH and the Voting Trustees shall assign and
transfer the Option Shares and the New Class A Shares (if issued
pursuant to the Subscription Agreement) to Dart, all of the other
shares of stock held by the Voting Trustees shall be assigned and
transferred to RSH (subject to the perfected security interest of Dart
under the Stock and Trust Certificate Pledge Agreement), and the
Voting Trust Agreement shall terminate.
(ii) Dart shall reissue the Redemption Class B
Shares to RSH, provided that the Redemption Class B Shares shall be
subject to the perfected security interest of Dart under the Stock and
Trust Certificate Pledge Agreement.
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(iii) The $27.4 Million Note shall be cancelled, and
Dart shall pay to RSH the amount of One Hundred Ninety-Seven Thousand
Forty-Eight Dollars ($197,048), together with interest thereon from
the date hereof until the date of the Revocation Closing at the simple
per annum rate of eight percent (8%).
(iv) RSH shall pay to Dart the amount of One Hundred
Eighty-Five Thousand Five Hundred Forty-Eight Dollars ($185,548).
(v) The JV Agreements (as defined in the Real Estate
Master Agreement) shall be revised to provide that (x) all
distributions payable under the respective JV Agreements with respect
to Partnership Net Operating Cash Flow (as defined in the JV
Agreements) shall be payable to the partners in accordance with the
sharing percentages specified in Section 3.06(a)(i)(C) of the
respective JV Agreements and (y) all distributions payable under
Section 3.06(a)(ii)(B) of the respective JV Agreements shall be
payable to the partners in accordance with the sharing percentages
specified in Section 3.06(a)(i)(C) of the respective JV Agreements.
In addition, RSH shall pay to Cabot-Morgan (immediately if all of the
Properties or Joint Ventures (each as defined in the Real Estate
Master Agreements) have theretofore been sold, or (if all of the
Properties or Joint Ventures have not theretofore been sold) upon the
earlier of the next sale of any Property or Joint Venture or the
second anniversary of the Revocation Closing) Cabot-Morgan's sharing
percentage (as specified in
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Section 3.06(a)(i)(C) of the respective JV Agreements) of all
distributions with respect to Partnership Net Operating Cash Flow (as
defined in the respective JV Agreements) paid from the Closing Date
through the Revocation Closing.
(vi) The Buy/Sell/Offering Agreement, the Real
Estate Master Agreement (except for Article 7), the Subscription
Agreement and the Release, and the rights and obligations of the
parties thereunder, shall terminate and be of no further force and
effect, and Sections 5.1, 5.2, 5.3, 5.4, 5.6, 5.7 and 5.8 of this
Settlement Agreement shall terminate and be of no further force or
effect.
(vii) The amendment of the Employment Agreement
pursuant to Section 1.1(a) shall be revoked, the Employment Agreement
(including the option to purchase the Option Shares thereunder) shall
be reinstated, Dart shall pay to RSH compensation under the Employment
Agreement for the period from the date of this Settlement Agreement to
the date of the Revocation Closing during which such compensation was
not paid, and RSH shall be reinstated to all of the positions as an
officer of Dart, as a director of Dart (if practicable without a vote
of Dart's shareholders) and as a director or officer of each
corporation in which Dart owns a direct or indirect ownership interest
that he held immediately prior to the execution and delivery of this
Settlement Agreement.
(viii) RSH shall receive instruments reinstating
all of the outstanding options cancelled pursuant to Section
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1.1(n) of this Settlement Agreement on the terms in existence prior
to such cancellation.
(d) In the event that a court of competent jurisdiction
issues a final order to the effect that the issuance of the Option Shares
pursuant to Section 1.1 of this Settlement Agreement was invalid or that the
Voting Trustees may not exercise the power to vote the Option Shares as
contemplated by the Voting Trust Agreement, then Dart may elect (in lieu of
electing that the parties consummate a Revocation Closing pursuant to this
Section 1.5), by providing written notice to RSH of such election (within
fourteen (14) days of the issuance of such final order or, if such final order
is appealed, within fourteen (14) days of the entry of the final order
resolving the appeal) that the parties consummate the following transactions on
the date specified in such written notice, which date shall not be less than
two (2) days after the date such written notice is delivered to RSH:
(i) RSH and the Voting Trustees shall assign and
transfer the Option Shares to Dart;
(ii) The $27.4 Million Note shall be cancelled, and
Dart shall pay to RSH the amount of One Hundred Ninety-Seven Thousand
Forty-Eight Dollars ($197,048), together with interest thereon from
the date hereof until the date of the Revocation Closing at the simple
per annum rate of eight percent (8%); and
(iii) RSH shall pay to Dart (as an obligation
independent of the $37 Million Note and the $11.6 Million Note) the
amount of Eight Million Dollars ($8,000,000);
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provided, that such payment shall be made immediately if more than two
(2) of the Properties or Joint Ventures (each as defined in the Real
Estate Master Agreement) have theretofore been sold, or (if all of the
Properties or Joint Ventures have not theretofore been sold) upon the
earlier of the next sale of any Property or Joint Venture or the
second anniversary of such written notice.
(e) Notwithstanding any other provision of this Section 1.5,
RSH shall have no obligation to consummate a Revocation Closing or the
transactions described in paragraph (d) of Section 1.5 if after the date of
this Settlement Agreement the Certificate of Incorporation of Dart shall have
been amended to permit holders of shares of any class other than Class B Common
Stock to vote in the election of directors or to authorize the issuance of
additional shares of Class B Common Stock.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF DART.
Dart represents and warrants to RSH that:
2.1. Organization and Existence. Dart and Cabot Morgan are each
corporations duly organized and validly existing under the laws of the State of
Delaware.
2.2. Absence of Conflict. The execution, delivery and performance by
Dart of this Settlement Agreement, the Real Estate Master Agreement, the
Buy/Sell/Offering Agreement, the Voting Trust Agreement, the Stock and Trust
Certificate Pledge Agreement, the Pledge Agreements (as defined in the Real
Estate Master Agreement), the Escrow Agreement (as defined in the Real Estate
Master Agreement), Restricted Account Security Agreement and the Escrow
Agreement [$11.6 Million] (collectively referred
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to hereinafter as the "Agreements") and the consummation of the transactions
contemplated thereby, and the execution and delivery of the Release by Dart,
Trak Auto, Crown Books, Cabot Morgan and Dart/SFW will not breach, violate or
conflict with any provision of, give rise to any right of acceleration of any
obligation under or constitute a default under (or an event which with the
giving of notice or lapse of time, or both, would give rise to such a right or
constitute such a default), nor require the consent or waiver of any other
party to, (i) any mortgage, lease, note, contract, agreement or instrument to
which Dart, Crown Books, Trak Auto, Dart/SFW or Cabot Morgan is a party; or
(ii) any law, regulation, order, judgment, writ, decree, decision or award by
which Dart, Crown Books, Trak Auto, Dart/SFW or Cabot Morgan is bound.
2.3. No Consents. No consent, waiver, release, approval, order or
authorization of, or notification to, any third party or any government or
government agency is required in connection with the execution, delivery or
performance by Dart or Cabot Morgan of the Agreements, the consummation by Dart
of the transactions contemplated thereby or the execution and delivery of the
Release by Dart, Crown Books, Trak Auto, Dart/SFW and Cabot Morgan.
2.4. Litigation. Except as set forth in Schedule 2.4, there are no
actions, suits, proceedings, investigations or claims pending or, to the
knowledge of Dart or Cabot Morgan, threatened, against Dart, that relate to any
of the transactions contemplated hereby and that, if successful, could restrain
or prohibit the consummation of such transactions.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF RSH.
RSH represents and warrants to Dart that:
3.1. Authorization. Subject to bankruptcy court approval, the
execution and delivery of the Release by CPI has been made by the President of
CPI and shall be duly authorized by all necessary corporate action on the part
of CPI within three (3) days of the date hereof.
3.2. Binding Effect. The Agreements, the $11.6 Million Note, the
$27.4 Million Note and the $37 Million Note are valid and binding obligations
of RSH, enforceable against RSH in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or like
laws limiting the remedies of creditors generally, and except that, in the
discretion of the court, equitable remedies may not be available for the
enforcement thereof.
3.3. Absence of Conflict. Except as set forth in Schedule 3.3, the
execution, delivery and performance by RSH of the Agreements, the $11.6 Million
Note, the $27.4 Million Note and the $37 Million Note, and the consummation of
the transactions contemplated hereby and thereby, and the execution and
delivery of the Release by RSH and CPI, will not breach, violate or conflict
with any provision of, give rise to any right of acceleration of any obligation
under or constitute a default under (or an event which with the giving of
notice or lapse of time, or both, would give rise to such a right or constitute
such a default), nor require the consent or waiver of any other party to, (i)
any mortgage, lease, note, contract, agreement or instrument to which RSH or
CPI is a party; or (ii) any law,
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regulation, order, judgment, writ, decree, decision or award by which RSH or
CPI is bound.
3.4. No Consents. Except as set forth in Schedule 3.4, no consent,
waiver, release, approval, order or authorization of, or notification to, any
third party or any government or government agency is required in connection
with the execution, delivery or performance by RSH of the Agreements, the $11.6
Million Note, the $27.4 Million Note and the $37 Million Note, the consummation
by RSH of the transactions contemplated hereby and thereby or the execution and
delivery of the Release by RSH and CPI.
3.5. Title. Except as set forth in Schedule 3.5 and as provided by
the Stock and Trust Certificate Pledge Agreement, RSH has good and marketable
title to all of the Redemption Class B Shares, the RSH Class B Shares, the RSH
Class A Shares, the RSH Contested Class A Shares and the RSH Pledged Class A
Shares, free and clear of liens, charges, security interests, restrictions,
claims or encumbrances of any kind, and RSH has not taken any action that could
give rise to any such lien, charge, security interest, restriction, claim or
encumbrance. Upon the issuance by Dart of the Option Shares and the New Class
A Shares to RSH pursuant to Section 1.1, RSH will have good and marketable
title to all of the Option Shares and the New Class A Shares free and clear of
liens, charges, security interests, restrictions, claims or encumbrances of any
kind and RSH will not have taken any action that could give rise to any such
lien, charge, security interest, restriction, claim or encumbrance, except as
provided by the Stock and Trust Certificate Pledge Agreement.
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3.6. Liabilities. Except for liabilities, obligations and
commitments in an amount less than One Hundred Thousand Dollars ($100,000)
individually and Two Million Dollars ($2,000,000) in the aggregate and except
as set forth in Schedule 3.6, RSH has no liabilities, obligations or
commitments, including, without limitation, those for taxes of any kind, that,
if adversely determined or not discharged or performed by RSH, will create any
lien, charge, security interest, restriction, claim or encumbrance in or
against any of the Redemption Class B Shares, the RSH Class B Shares, the
Option Shares, the RSH Class A Shares, the New Class A Shares, the RSH
Contested Class A Shares or the RSH Pledged Class A Shares. Except as set
forth in Schedule 3.6, RSH is not a general partner of any partnership whose
liabilities (including contingent liabilities as guarantor for any debt of any
third party) exceeds its assets. To the best knowledge of RSH there is no
liability, commitment or obligation of RSH, or any partnership of which RSH is
or has been a general partner, with respect to any of the Redemption Class B
Shares, the RSH Class B Shares, the Option Shares, the RSH Class A Shares, the
New Class A Shares, the RSH Contested Class A Shares or the RSH Pledged Class A
Shares that is not disclosed in this Settlement Agreement or the Schedules
hereto.
3.7. Litigation. Except as described in Schedule 3.7, (a) there are
no actions, suits, proceedings, investigations or claims pending or, to the
knowledge of RSH, threatened against RSH, or any other party, or involving any
of the Redemption Class B Shares, the RSH Class B Shares, the Option Shares,
the RSH Class A Shares, the New Class A Shares, the RSH Contested Class A
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Shares or the RSH Pledged Class A Shares, that affect or could affect any of
the Redemption Class B Shares, the RSH Class B Shares, the Option Shares, the
RSH Class A Shares, the New Class A Shares, the RSH Contested Class A Shares or
the RSH Pledged Class A Shares in any respect, or that relate to any of the
transactions contemplated by this Settlement Agreement and that, if successful,
could restrain or prohibit the consummation of such transactions, and (b)
neither RSH nor any of the Redemption Class B Shares, the RSH Class B Shares,
the Option Shares, the RSH Class A Shares, the New Class A Shares, the RSH
Contested Class A Shares or the RSH Pledged Class A Shares is subject to any
order, judgment, writ, decree, decision or award that affects or could affect
any of the Redemption Class B Shares, the RSH Class B Shares, the Option
Shares, the RSH Class A Shares, the New Class A Shares, the RSH Contested Class
A Shares or the RSH Pledged Class A Shares in any respect.
3.8. HHH Note. Through December 31, 1994, RSH has paid to HHH all
principal and interest owing under the HHH Note and, as of the date hereof, RSH
is not in default under the HHH Note. The pay-off amount of the HHH Note is
Eleven Million Five Hundred Sixty-Seven Thousand Two Hundred Twenty-Three
Dollars ($11,567,223) as of the date hereof (principal amount of $11,054,720
plus accrued interest of $512,503).
ARTICLE 4. INDEMNIFICATION.
4.1. Indemnification by RSH. RSH shall defend, indemnify and hold
Dart and each of its subsidiaries and their respective officers, employees,
directors, agents and representatives (the "Dart Indemnitees") harmless from
and against any and all
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demands, claims, actions, suits, proceedings, losses, damages, judgments,
liabilities, costs and expenses, including, without limitation, fees and
expenses of legal counsel, (collectively, "Costs") asserted against or incurred
by any Dart Indemnitee, directly or indirectly, arising out of or resulting
from any inaccuracy in or breach of any of the representations, warranties or
covenants of RSH contained in any of the Agreements, or any certificate or
other instrument furnished to Dart by or on behalf of RSH pursuant to any of
the Agreements.
4.2. Indemnification by Dart. Dart shall defend, indemnify and hold
RSH and his agents and representatives (the "RSH Indemnitees") harmless from
and against any and all Costs asserted against or incurred by any RSH
Indemnitee, directly or indirectly, arising out of or resulting from any
inaccuracy in or breach of any of the representations, warranties or covenants
of Dart contained in any of the Agreements, or any certificate or other
instrument furnished to RSH by or on behalf of Dart pursuant to any of the
Agreements.
4.3. Indemnification Procedure. As soon as is reasonably practicable
after any RSH Indemnitee or any Dart Indemnitee becomes aware of any claim that
it has to recover Costs under this Article 4, such RSH Indemnitee or Dart
Indemnitee, as the case may be ("Indemnified Party"), shall notify the other
party ("Indemnifying Party") in writing, which notice shall describe the claim
in reasonable detail, and shall indicate the amount (estimated, if necessary
and to the extent feasible) of the claim. The failure of any Indemnified Party
to promptly give any Indemnifying Party such notice shall not preclude such
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Indemnified Party from obtaining indemnification under this Article 4, except
to the extent that such Indemnified Party's failure has materially prejudiced
the Indemnifying Party's rights or materially increased its liabilities and
obligations hereunder. In the event of a third party claim which is subject to
indemnification under this Article 4, the Indemnifying Party shall have the
right, upon agreeing in writing that it is obligated to fully indemnify the
Indemnified Party for the full amount of the claim (to the extent such claim is
proven or settled) and providing satisfactory evidence to the Indemnified Party
that the Indemnifying Party has sufficient financial resources to provide such
indemnification and defend such claim properly, to assume the defense of such
claim by counsel of its own choosing. The Indemnified Party and Indemnifying
Party shall cooperate with one another in the defense of such claim, including
the settlement of the matter on the basis stipulated by the Indemnifying Party
(with the Indemnifying Party being responsible for all costs and expenses of
such settlement). If the Indemnifying Party within a reasonable time after
notice of a claim fails to defend the Indemnified Party, the Indemnified Party
shall be entitled to undertake the defense, compromise or settlement of such
claim at the expense of and for the account and risk of the Indemnifying Party.
4.4. Remedies to be Cumulative. The remedies to the Indemnified
Party provided herein shall be in addition to, and not in lieu of, any other
remedies to which the Indemnified Party is entitled at law or in equity for any
breach or non-compliance
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by the Indemnifying Party with the provisions of any of the Agreements.
ARTICLE 5. COVENANTS.
5.1 Additional Transfer of Shares. (a) RSH shall assign and
transfer the New Class A Shares to the Voting Trustees under the Voting Trust
Agreement immediately upon the issuance of the New Class A Shares to RSH
pursuant to the Subscription Agreement.
(b) RSH shall assign and transfer the Pledged Shares to the
Voting Trustees under the Voting Trust Agreement as promptly as practicable
and, in any event, immediately upon the release of the existing pledge of the
Pledged Shares to First Union National Bank.
5.2 RSH Contested Class A Shares. In the event that Dart
purchases any of the RSH Contested Class A Shares pursuant to the
Buy/Sell/Offering Agreement and a court of competent jurisdiction determines
that RSH cannot or has not transferred to Dart lawful title to any of such
shares, then RSH shall be obligated immediately upon written demand from Dart
to pay to Dart, in cash, an amount equal to the purchase price of such shares
under the Buy/Sell/Offering Agreement that was applicable to Dart's attempted
purchase thereof.
5.3. Herbert Haft Legal Action. (a) The parties acknowledge that HHH
has filed a lawsuit captioned Herbert H. Haft v. Ronald S. Haft, Civ. A. No.
94CA9883 (D.C. Super. Ct. July 17, 1995), and a counterclaim in the lawsuit
captioned Ronald S. Haft v. Herbert H. Haft, Civ. A. No. 14425 (Del. Ch. filed
July 18, 1995), seeking relief that includes rescission of
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his July 1993 sale of the Redemption Class B Shares to RSH (collectively, the
"Rescission Action").
(b) In the event that a court of competent jurisdiction
enters a final order or grants equitable relief, in the Rescission Action or
otherwise, the effect of which is that HHH's sale of the Redemption Class B
Shares to RSH is or has been rescinded, that Dart has not received a valid and
effective assignment and transfer of the Redemption Class B Shares from RSH as
of the date of this Settlement Agreement or that the Redemption Class B Shares
(or shares substituted therefor) must be returned or delivered to HHH or RSH,
then (subject to paragraph (c) of this Section 5.3) immediately upon written
notice from Dart to RSH:
(i) If Dart shall not theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering Agreement, (x)
RSH shall be obligated to prepay Twenty-Four Million One Hundred
Eighty-Two Thousand Two Hundred Dollars ($24,182,200) of the
outstanding principal amount of the $37 Million Note, together with
accrued interest on said principal amount required to be prepaid, as
and subject to the conditions set forth in the $37 Million Note, and
(y) the New Class A Shares shall be immediately transferred to, and
redeemed by, Dart; and
(ii) If Dart shall theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering Agreement, then
RSH shall pay to Dart (as an obligation independent of the $37 Million
Note, the $27.4 Million Note and the $11.6 Million Note) an amount
equal to the purchase
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<PAGE> 27
price that was applicable in Dart's purchase of the New Class A Shares
pursuant to the Buy/Sell/Offering Agreement; provided, that such
payment shall be made immediately if more than two (2) of the
Properties or Joint Ventures (each as defined in the Real Estate
Master Agreement) have theretofore been sold, or (if all of the
Properties or Joint Ventures have not theretofore been sold) upon the
earlier of the next sale of any Property or Joint Venture or the
second anniversary of such written notice.
(c) Notwithstanding the provisions of paragraph (b) of
this Section 5.3, in the event that a court of competent jurisdiction enters an
order the effect of which is that RSH may not assign and transfer the
Redemption Class B Shares to Dart during HHH's lifetime (or until the
termination of the proxy granted by RSH to HHH in July 1993 to vote the
Redemption Class B Shares), then the transaction provided for in Section 1.1(f)
of this Settlement Agreement shall be consummated immediately once RSH is able
to assign and transfer the Redemption Class B Shares to Dart and RSH shall not
transfer or assign to any other party any interest in any of the Redemption
Class B Shares and shall not grant or suffer to exist any lien, charge,
security interest, restriction, claim or encumbrance of any kind (other than
the proxy granted to HHH in July 1993 as it now exists) in, against or with
respect to any of the Redemption Class B Shares; provided, that if after the
date of this Settlement Agreement and prior to the valid and effective
consummation of the transaction provided for in Section 1.1(f), there shall
have occurred, with the approval of HHH or other holders of Dart Class B Common
Stock
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<PAGE> 28
but without the approval of the Voting Trustees, any change in the voting
rights of Dart Class A Common Stock or Dart Class B Common Stock or any
recapitalization of Dart the result of which is that the Redemption Class B
Shares (while outstanding) represent less than thirty-four percent (34%) of the
issued and outstanding shares of Dart capital stock that vote in the election
of Directors, and the shares of Dart stock held by the Voting Trustees
represent fifty percent (50%) or less of the issued and outstanding shares of
Dart capital stock that vote in the election of Directors, then RSH shall pay
to Dart (as an obligation independent of the $37 Million Note, the $27.4
Million Note and the $11.6 Million Note) the amount of Eight Million Dollars
($8,000,000) at the time the transaction provided for in Section 1.1(f) of this
Settlement Agreement is consummated, subject to a deferral of such payment (if
not more than two (2) of the Properties or Joint Ventures (each as defined in
the Real Estate Master Agreements) have theretofore been sold) until the
earlier of the next sale of any Property or Joint Venture or the second
anniversary of the transition provided for in Section 1.1(f); and provided
further that if, prior to the valid and effective consummation of the
transaction provided for in Section 1.1(f), any event (for example, RSH's legal
incapacity or RSH's testamentary transfer of the Redemption Class B Shares to
HHH) shall occur that renders RSH unable to consummate the transaction provided
for in Section 1.1(f), then immediately upon written notice from Dart to RSH:
(i) If Dart shall not theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering
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<PAGE> 29
Agreement, (x) RSH shall be obligated to prepay Twenty-Four Million
One Hundred Eighty-Two Thousand Two Hundred Dollars ($24,182,200) of
the outstanding principal amount of the $37 Million Note, together
with accrued interest on said principal amount required to be prepaid,
as and subject to the conditions set forth in the $37 Million Note,
and (y) the New Class A Shares shall be immediately transferred to,
and redeemed by, Dart; and
(ii) If Dart shall theretofore have purchased the
New Class A Shares pursuant to the Buy/Sell/Offering Agreement, RSH
shall pay to Dart (as an obligation independent of and in addition to
the $37 Million Note) an amount equal to the purchase price that was
applicable in Dart's purchase of the New Class A Shares pursuant to
the Buy/Sell/Offering Agreement; provided, that such payment shall be
made immediately if more than two (2) of the Properties or Joint
Ventures (each as defined in the Real Estate Master Agreement) have
theretofore been sold, or (if all of the Properties or Joint Ventures
have not theretofore been sold) upon the earlier of the next sale of
any Property or Joint Venture or the second anniversary of such
written notice.
5.4. Reaffirmation of Leases. Dart hereby reaffirms that it, Trak
Auto or Crown Books, as the case may be, is a party to, and is bound by, each
of the leases (the "Leases") listed on Schedule 5.4. Except as provided in the
Release, none of Dart, Trak Auto or Crown Books releases or discharges any
person, corporation or partnership from any claims, demands, damages,
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<PAGE> 30
causes of action or lawsuits of any kind, whether known or unknown, heretofore
existing with respect to any of the Leases.
5.5. Further Assurances. RSH and Dart each shall execute and deliver
promptly such additional documents, assignments, certificates and instruments
as the other party to this Settlement Agreement may reasonably request in order
to effectuate more effectively the transfers and assignments provided for in
this Settlement Agreement.
5.6. RSH Restrictions. Except for RSH's record and/or beneficial
ownership, as of the date hereof, of the Redemption Class B Shares, the Option
Shares, the RSH Class A Shares, RSH Class B Shares, the New Class A Shares, the
RSH Contested Class A Shares, the RSH Pledged Class A Shares and eight hundred
seventy (870) Class A shares owned of record by CP Holdings, Inc., for a period
commencing on the date hereof and continuing through the tenth anniversary of
the date hereof, RSH shall not, singly, through a partnership or otherwise as
part of any group, directly or indirectly:
(a) Purchase, acquire or own, or offer or agree to
purchase, acquire or own, any securities of Dart, Crown Books or Trak
Auto or of any Acquisition Company (as hereinafter defined)
(collectively, "Restricted Securities"). For purposes of this
Settlement Agreement, an "Acquisition Company" shall mean any
corporation, partnership or other entity that at the time has entered
into a memorandum of intent, agreement in principle or similar type of
written understanding with Dart, Crown Books or Trak Auto, or a
subsidiary or affiliate of any thereof,
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<PAGE> 31
that contemplates the acquisition of control of such corporation,
partnership or other entity by Dart, Crown Books or Trak Auto or any
such subsidiary or affiliate, or a business combination involving such
corporation, partnership or other entity and Dart, Crown Books or Trak
Auto or any such subsidiary or affiliate, and with respect to which
proposed transaction a public announcement has been made and a copy
thereof has been furnished to RSH; provided, however, that a
corporation, partnership or other entity shall not be deemed an
Acquisition Company if (i) at the date of the first public
announcement of such memorandum of intent, agreement in principle or
similar type of written understanding, RSH alone or with other members
of a group were the beneficial owners of an aggregate of more than
five percent (5%) of the outstanding voting securities of such
corporation, partnership or other entity and RSH (alone or with other
members of a group) had on file with the Securities and Exchange
Commission a Schedule 13D indicating such beneficial ownership, or
(ii) within six (6) months after such announcement, the transaction
contemplated by such memorandum of intent or agreement in principle or
a similar type of written understanding has not become the subject of
a definitive acquisition or similar agreement. Notwithstanding the
prohibitions contained in this Section 5.6(a) with respect to the
acquisition or ownership of Restricted Securities of Dart, Crown Books
or Trak Auto, (i) in the event that RSH acquires such Restricted
Securities in connection with an acquisition by Dart, Crown
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<PAGE> 32
Books or Trak Auto of an Acquisition Company or the securities of an
Acquisition Company by an exchange offer or otherwise, RSH may hold
such Restricted Securities for a period not in excess of one year,
during which period he shall dispose of all such Restricted
Securities, and (ii) in the event RSH acquires such Restricted
Securities in connection with an acquisition by Dart, Crown Books or
Trak Auto of a corporation, partnership or other entity that is not an
Acquisition Company or the securities of such a corporation,
partnership or other entity by an exchange offer or otherwise, RSH may
hold such Restricted Securities indefinitely; provided, however, the
provisions of this Section 5.6(a) shall continue to prohibit any
further purchase, acquisition or ownership of Restricted Securities of
Dart, Crown Books and Trak Auto. Nothing contained herein shall
require disposal of securities representing five percent (5%) or less
of the voting securities of an Acquisition Company owned at the time
such corporation, partnership or other entity becomes an Acquisition
Company. As used in this Section 5.6(a), an "affiliate" of any party
shall mean any person or entity that directly or indirectly controls,
is controlled by or is under common control with such party.
(b) Solicit, or encourage any other person to solicit,
proxies or become a "participant" or otherwise engage in any
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) in
opposition to a recommendation of a
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majority of the directors of Dart, Crown Books, Trak Auto or any
Acquisition Company with respect to any matter;
(c) Initiate, propose or otherwise solicit stockholders
for the approval of one or more stockholder proposals with respect to
Dart, Crown Books, Trak Auto or any Acquisition Company, as described
in Rule 14A-8 under the Exchange Act;
(d) Acquire or affect the control of Dart, Crown Books,
Trak Auto or any Acquisition Company or directly or indirectly
participate in or encourage the formation of any group seeking to
acquire or affect control of Dart, Crown Books, Trak Auto or any
Acquisition Company; or
(e) Encourage any person, firm, corporation, group or
other entity to engage in any of the actions covered by clauses (a)
through (d) of this Section 5.6.
5.7. Dart Restrictions. Except in the event the Voting Trust
Agreement is terminated and Dart has not purchased any RSH Class A Shares or
Option Shares, for a period commencing on the date hereof and continuing
through the tenth anniversary of the date hereof, Dart shall not, singly,
through a partnership or otherwise as part of any group, directly or
indirectly:
(a) Purchase, acquire or own, or offer or agree to
purchase, acquire or own, any securities or other ownership interests
of CPI, of the affiliated entities of CPI or RSH listed in Schedule
5.7 (the "RSH/CPI Affiliates"), or of any RSH/CPI Acquisition Company
(as hereinafter defined) (collectively, "RSH/CPI Restricted
Securities"). For purposes of this Settlement Agreement, an "RSH/CPI
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<PAGE> 34
Acquisition Company" shall mean any corporation, partnership or other
entity that at the time has entered into a memorandum of intent,
agreement in principle or similar type of written understanding with
RSH, CPI or any RSH/CPI Affiliate that contemplates the acquisition of
control of such corporation, partnership or other entity by CPI or any
RSH/CPI Affiliate, or a business combination involving such
corporation, partnership or other entity and CPI or any RSH/CPI
Affiliate, and with respect to which proposed transaction a public
announcement has been made and a copy thereof has been furnished to
Dart; provided, however, that a corporation, partnership or other
entity shall not be deemed an RSH/CPI Acquisition Company if (i) at
the date of the first public announcement of such memorandum of
intent, agreement in principle or similar type of written
understanding, Dart alone or with other members of a group were the
beneficial owners of an aggregate of more than five percent (5%) of
the outstanding voting securities of such corporation, partnership or
other entity and Dart (alone or with other members of a group) had on
file with the Securities and Exchange Commission a Schedule 13D
indicating such beneficial ownership, or (ii) within six (6) months
after such announcement, the transaction contemplated by such
memorandum of intent or agreement in principle or a similar type of
written understanding has not become the subject of a definitive
acquisition or similar agreement. Notwithstanding the prohibitions
contained in this Section 5.7(a) with respect to the acquisition or
ownership of
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RSH/CPI Restricted Securities of CPI or any RSH/CPI Affiliate, (i) in
the event that Dart acquires such RSH/CPI Restricted Securities in
connection with an acquisition by CPI or any RSH/CPI Affiliate of an
RSH/CPI Acquisition Company or the securities of an RSH/CPI
Acquisition Company by an exchange offer or otherwise, Dart may hold
such RSH/CPI Restricted Securities for a period not in excess of one
(1) year, during which period Dart shall dispose of all such RSH/CPI
Restricted Securities, and (ii) in the event Dart acquires such
RSH/CPI Restricted Securities in connection with an acquisition by CPI
or any RSH/CPI Affiliate of a corporation, partnership or other entity
that is not an RSH/CPI Acquisition Company or the securities of such a
corporation, partnership or other entity by an exchange offer or
otherwise, Dart may hold such RSH/CPI Restricted Securities
indefinitely; provided, however, the provisions of this Section 5.7(a)
shall continue to prohibit any further purchase, acquisition or
ownership of RSH/CPI Restricted Securities of CPI or any RSH/CPI
Affiliate. Nothing contained herein shall require disposal of
securities representing five percent (5%) or less of the voting
securities of an RSH/CPI Acquisition Company owned at the time such
corporation, partnership or other entity becomes an RSH/CPI
Acquisition Company.
(b) Acquire or affect the control of CPI or any RSH/CPI
Affiliate or directly or indirectly participate in or encourage the
formation of any group seeking to acquire or affect control of CPI or
any RSH/CPI Affiliate; or
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<PAGE> 36
(c) Encourage any person, firm, corporation, group or
other entity to engage in any of the actions covered by clauses (a)
and (b) of this Section 5.7.
(d) Notwithstanding the foregoing, nothing in this
Section 5.7 shall prohibit, limit or otherwise affect any rights,
interests or remedies that Dart may have under or in respect of the
Agreements, the $37 Million Note, the $27.4 Million Note, the $11.6
Million Note, or any of the other documents or instruments executed
and delivered pursuant to this Settlement Agreement and the Real
Estate Master Agreement, or directly or indirectly as a result of any
breach by RSH of any of his obligations thereunder or under this
Settlement Agreement, the Real Estate Master Agreement or any of the
documents or instruments contemplated hereby or thereby.
(e) Notwithstanding the foregoing, nothing in this
Section 5.7 shall prohibit Dart from acquiring the First Union Stock
Line (as hereinafter defined), as contemplated by Section 5.8, any
other line of credit or loan in connection with which the RSH Pledged
Class A Shares are encumbered and/or that certain loan evidenced by a
promissory note, dated December 23, 1992, executed by Combined
Properties Limited Partnership in favor of Star Enterprise in the
original principal amount of Fifty Million Dollars ($50,000,000) (the
"Star Loan"), or from exercising or enforcing any rights or remedies
in connection therewith; provided, however, that Dart shall not
acquire the Star Loan, or engage in discussions or negotiations with
Star
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Enterprises, Inc. regarding a possible acquisition by Dart of the Star
Loan, during the pendency of the bankruptcy proceedings or any appeals
thereto described in the Restricted Account Security Agreement; and
provided further, that if Dart shall acquire the Star Loan, then Dart
shall not exercise or enforce any rights or remedies in connection
with the Star Loan against RSH unless and until Dart has taken all
reasonable steps to obtain full satisfaction from all other obligors
and/or guarantors under the Star Loan, and Dart shall not release any
such obligor or guarantor from liability with respect to the Star Loan
unless Dart shall also offer to release RSH from liability with
respect to the Star Loan on substantially the same terms as the
release of such other obligor or guarantor.
5.8. First Union National Bank Stock Line. RSH acknowledges that
Dart has discussed with First Union National Bank of Washington, D.C. ("First
Union D.C.") the potential purchase by Dart, directly or through a designee, of
all of First Union D.C.'s right, title and interest as holder in and to that
certain Revolving Credit Note dated July 24, 1994 made by RSH and HHH in favor
of First Union D.C., and in and to all loan documentation, collateral, security
interests, judgments, liens (whether obtained by garnishment, attachment,
judgment or otherwise), proofs of claim and any and all other rights of
collection or enforcement relating thereto (all such right, title and interest
being hereafter referred to as the "First Union Stock Line"). In the event
that Dart, in its sole and absolute discretion, elects to proceed with a
potential purchase of the
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First Union Stock Line from First Union D.C. or the then-holder of the First
Union Stock Line, as the case may be, RSH shall cooperate in all respects with
Dart in such effort, which cooperation shall include, without limitation,
execution and delivery of such documents as Dart may reasonably request,
including a release by RSH (to be effective upon closing of such purchase) of
First Union D.C. and its affiliates, and the officers, directors, employees,
agents, representatives, successors and assigns of each, from any and all
obligations, claims or causes of action, known or unknown, relating to or
arising from the First Union Stock Line. In the event that Dart purchases the
First Union Stock Line, and provided that RSH has fully cooperated as aforesaid
and is not otherwise then in default of any obligation under this Agreement or
under any other agreement executed pursuant to this Agreement, Dart shall
release RSH from RSH's liability to Dart as holder of the First Union Stock
Line upon (a) RSH's payment to Dart, in cash, of twenty-one and thirty-six
one-hundredths percent (21.36%) of the then-outstanding balance of the First
Union Stock Line, including interest accrued thereon, and (b) the expiration of
one (1) year plus one (1) day from the date of such payment (the "Release
Suspense Period"). Such release of RSH by Dart shall be only for the benefit
of RSH, and shall not constitute a release of, nor be deemed to affect the
liability of, any other person relating to the First Union Stock Line. Upon
RSH's payment to Dart as aforesaid, Dart will forebear from enforcing as
against RSH its rights as holder of the First Union Stock Line pending
expiration of the Release Suspense Period, provided, however, that such
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forbearance shall terminate, and all of Dart's rights shall be restored if such
payment by RSH is recovered from Dart as a voidable transfer. Such forbearance
shall be only for the benefit of RSH, and shall not affect, or be deemed to
affect, Dart's rights of enforcement as against any other person relating to
the First Union Stock Line.
5.9. Specific Performance. Dart and RSH each acknowledge and agree
that in the event of any breach of this Settlement Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that Dart and RSH, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance (including temporary restraining orders) of this
Settlement Agreement in any action instituted in the Delaware Court of Chancery
or the United States District Court for the District of Delaware, or, in the
event neither of said courts would have jurisdiction over such action, in any
court of the United States or any state having subject matter jurisdiction.
Dart and RSH consent to personal jurisdiction in any such action brought in the
Delaware Court of Chancery or the United States District Court for the District
of Delaware.
5.10. Brokerage. Dart and RSH each represent and warrant to the
other that the negotiations relevant to this Settlement Agreement have been
carried on by each directly with the other and that there are no claims for
finder's fees or other like payments in connection with this Settlement
Agreement or the transactions contemplated hereby, except that Dart has engaged
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<PAGE> 40
the investment banking firm of Wasserstein Perella & Co. to render financial
advisory services in connection with the transactions contemplated hereby and
Dart is solely responsible for all amounts due Wasserstein Perella & Co. as a
result thereof. Dart and RSH each agree to indemnify and hold each other
harmless from and against any and all claims or liabilities for finder's fees
or other like payments incurred by reason of any action taken by it.
5.11 No Voluntary Bankruptcy of RSH. RSH covenants to Dart that he
does not have the present intention to do any of the following: (i) apply for,
or consent in writing to, the appointment of a receiver, trustee or liquidator;
(ii) file a voluntary petition seeking relief under the U.S. Bankruptcy Code,
or be unable, or admit in writing his inability, to pay his debts as they
become due; or (iii) make a general assignment for the benefit of creditors.
ARTICLE 6. MISCELLANEOUS.
6.1. Expenses. The parties shall pay their own respective expenses
incurred in connection with this Settlement Agreement and the transactions
hereunder, including, without limitation, any sales, transfer or other similar
taxes and fees for accountants and attorneys.
6.2. Cross-Default. This Settlement Agreement, the Real Estate
Master Agreement, the Agreements and documents related thereto constitute one
integrated whole. RSH agrees that a material breach by RSH under any of the
Agreements shall constitute a material breach under each of the Agreements.
Dart
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agrees that a material breach by Dart under any of the Agreements shall
constitute a material breach under each of the Agreements.
6.3. Notices. Any notices or consents required or permitted by this
Settlement Agreement shall be in writing and shall be deemed given if delivered
in person or if sent by certified mail, postage prepaid, return receipt
requested, or by facsimile as follows, unless any such address is changed by
notice hereunder:
To Dart:
Dart Group Corporation
3300 75th Avenue
Landover, MD 20785
Attention: Corporate Secretary
Facsimile: 301-733-2707
Copy to:
Stephen J. Brogan, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
Facsimile: 202-737-2832
To RSH:
Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
Facsimile: 202-234-1222
Copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street
8th Floor
Wilmington, DE 19801
Facsimile: 302-425-6464
6.4. Governing Law. This Settlement Agreement, and the documents and
instruments delivered pursuant hereto, except as otherwise provided therein,
shall be construed in accordance with and governed by the laws of the State of
Delaware.
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6.5. Counterparts. This Settlement Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
6.6. Survival of Representations and Warranties. The representations
and warranties of the parties hereto made in this Settlement Agreement shall
survive the closing of the transactions contemplated hereby.
6.7. Amendments. This Settlement Agreement may be amended only by a
written agreement executed by both of the parties hereto.
6.8. Entire Agreement. This Settlement Agreement (including the
Schedules and Exhibits hereto), the other Agreements, and the documents and
instruments executed and delivered pursuant hereto and thereto, set forth the
entire understanding of the parties hereto and supersede all prior agreements
between them with respect to the subject matter hereof.
6.9. Severability. If any one or more of the provisions contained in
this Settlement Agreement, or any agreement, document or instrument delivered
pursuant hereto, should be held to be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of all remaining provisions
shall not in any way be affected or impaired.
6.10. Binding Effect. This Settlement Agreement, and the documents
and instruments delivered pursuant hereto, shall inure to the benefit of, and
shall be binding upon, the respective parties hereto, their heirs, executors,
administrators,
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successors (including any representative, executor or administrator of RSH's
estate) and assigns.
6.11. Waiver. The waiver by any party hereto of any matter provided
for herein shall not be deemed to be a waiver of any other matter provided for
herein.
6.12. Exhibits and Schedules. The Exhibits and Schedules attached to
this Settlement Agreement are incorporated herein and shall be part of this
Settlement Agreement for all purposes.
6.13. Headings. The headings in this Settlement Agreement, and the
headings in the Schedules hereto, are solely for convenience of reference and
shall not be given any effect in the construction or interpretation of this
Settlement Agreement.
IN WITNESS WHEREOF, Dart and RSH have executed, or have caused this
Settlement Agreement to be executed on their behalf, on the date first above
written.
<TABLE>
<S> <C>
DART GROUP CORPORATION
/s/ Bonita A. Wilson By: /s/ Robert A. Marmon
- -------------------------------------- ----------------------------
Attest Name:
Title:
/s/ Ronald S. Haft
- -------------------------------------- -------------------------------
Witness RONALD S. HAFT
</TABLE>
The undersigned, as named plaintiffs in the lawsuit captioned Alan R.
Kahn and The Tudor Trust v. Herbert H. Haft, Civ. A. No. 13154 (Del. Ch. filed
Sept. 29, 1993) and as derivative defendant in the lawsuit captioned Ronald S.
Haft v.
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Dart Group Corporation, C.A. No. 13736 (Del. Ch. filed Sept. 12, 1994), hereby
accept and agree to the terms of this Settlement Agreement and, without
limiting the generality of the foregoing, agree to cooperate fully with the
performance of Sections 1.4(a) and 1.4(b) thereof.
ALAN R. KAHN and
THE TUDOR TRUST
By:/s/ Sidney B. Silverman
--------------------------
Sidney B. Silverman
Silverman, Harnes & Harnes
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Index to Schedules and Exhibits
Schedules
2.4 Schedule of Litigation
3.3 Schedule of Conflicts
3.4 Schedule of Consents
3.5 Schedule of Adverse Claims
3.6 Schedule of Liabilities
3.7 Schedule of Litigation
5.4 Schedule of Reaffirmed Leases
5.7 Schedule of CPI/RSH Affiliated Entities
Exhibits
A Form of $27.4 Million Note
B Form of Buy/Sell/Offering Agreement
C Form of Voting Trust Agreement
D Form of Subscription Agreement
E Form of Restricted Account Security Agreement
F Form of $37 Million Note
G Form of Escrow Agreement [$11.6 Million]
H Form of $11.6 Million Note
I Form of Stock and Trust Certificate Pledge Agreement
J Form of Mutual Release
K Form of Real Estate Master Agreement
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EXHIBIT 14
BUY/SELL/OFFERING AGREEMENT
This BUY/SELL/OFFERING AGREEMENT, dated as of this 6th day of October,
1995 (the "Agreement"), is made and entered into by and between Dart Group
Corporation, a Delaware corporation ("Dart"), and Ronald S. Haft ("RSH").
WITNESSETH:
WHEREAS, pursuant to that certain Settlement Agreement, of even date
herewith, between Dart and RSH (the "Settlement Agreement"), Dart is loaning
$37,740,162 to RSH and RSH is executing and delivering to Dart that certain
promissory note, of even date herewith, in favor of Dart for such principal
amount (the "$37 Million Note");
WHEREAS, Dart has two authorized classes of Common Stock, its Class A
Common Stock, $1.00 par value per share ("Class A Common Stock"), and its Class
B Common Stock ("Class B Common Stock");
WHEREAS, pursuant to the Settlement Agreement, Dart is issuing to RSH
197,048 shares of Class B Common Stock (the "Option Shares") in consideration
of (i) the payment of $197,048 by RSH to Dart and (ii) delivery of a promissory
note executed by RSH in favor of Dart in the principal amount of $27,389,672
(collectively with the $37 Million Note, the "Promissory Notes");
WHEREAS, pursuant to that certain Subscription Agreement, of even date
herewith, between Dart and RSH (the "Subscription Agreement"), RSH has
subscribed for, and Dart has agreed to issue to RSH, subject to the terms and
conditions thereof, 288,312 shares of Class A Common Stock (the "New Class A
Shares");
<PAGE> 2
WHEREAS, pursuant to the Settlement Agreement RSH is assigning and
transferring to the Voting Trustee under that certain Voting Trust Agreement
(the "Voting Trust Agreement"), of even date herewith, by and among RSH, Dart
and Larry G. Schafran and Sidney B. Silverman as initial Voting Trustees (a
copy of which Voting Trust Agreement is attached hereto as Exhibit A), the
following: (i) the Option Shares; (ii) an additional 25,246 shares of Dart
Class B Common Stock owned by RSH (the "RSH Class B Shares"); (iii) 28,144
shares of Class A Common Stock owned by RSH (the "RSH Class A Shares"); (iv) an
additional 58,029 shares of Class A Common Stock that are subject to competing
claims by Robert M. Haft and Linda G. Haft and, in part, by Herbert H. Haft
(the "RSH Contested Class A Shares"); and (v) immediately upon their issuance
pursuant to the Subscription Agreement, the New Class A Shares;
WHEREAS, pursuant to the Settlement Agreement RSH is to assign and
transfer to the Voting Trustee(s) an additional 33,333 shares of Dart Class A
Common Stock that are subject to a pledge to First Union National Bank (the
"RSH Pledged Class A Shares"), immediately upon the release of that pledge;
WHEREAS, pursuant to that certain Stock and Trust Certificate Pledge
Agreement, of even date herewith, between RSH and Dart (and acknowledged by the
initial Voting Trustees), as security for the payment and performance of RSH's
obligations under the Promissory Notes, RSH is pledging and granting to Dart a
security interest in all of his right, title and interest in and to the Option
Shares, the RSH Class B Shares, the RSH Class A Shares, the RSH Contested Class
A Shares, the New Class A Shares
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<PAGE> 3
and the trust certificates issued to him under the Voting Trust Agreement; and
WHEREAS, pursuant to the Settlement Agreement, RSH and Dart have
agreed to enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Buy/Sell Class B Shares" shall mean, collectively, the Option Shares
and the RSH Class B Shares.
"Buy/Sell Class A Shares" shall mean, at any time, collectively: (i)
the RSH Class A Shares; (ii) the RSH Contested Class A Shares; (iii) the New
Class A Shares; and (iv) the RSH Pledged Class A Shares; provided, however,
that the term "Buy/Sell Class A Shares" shall not include the RSH Contested
Class A Shares at any time, and to the extent, that neither RSH nor the Voting
Trustee(s) can then transfer record ownership thereof because of the adverse
claims of Robert M. Haft, Linda G. Haft or Herbert H. Haft thereto; and
provided further, that the term "Buy/Sell Class A Shares" shall not include the
New Class A Shares at any time such shares have not been issued pursuant to the
Subscription Agreement or, after being issued, such shares have been redeemed
by Dart pursuant to Section 5.3 of the Settlement Agreement; and provided
further, that the "Buy/Sell Class A Shares" shall not include the RSH Pledged
Class A Shares at any time that such shares are subject to any pledge to First
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<PAGE> 4
Union National Bank or any affiliate, successor or assign thereof.
"Buy/Sell Shares" shall mean, at any time, the Buy/Sell Class B Shares
and the Buy/Sell Class A Shares, collectively. For all purposes under this
Agreement, all dividends and distributions paid upon or in respect of any of
the Buy/Sell Shares, to the extent held by the Voting Trustee(s) under the
Voting Trust Agreement, and all trust certificates representing any of the
Buy/Sell Shares that are issued pursuant to the Voting Trust Agreement, shall
be deemed to be part of such Buy/Sell Shares.
2. Public Offering and Grant of Put Option. (a) At any time
after December 31, 1996 and prior to January 1, 2000, RSH may deliver to Dart
and the Voting Trustee(s) written notice (the "Offering/Put Exercise Notice")
that he elects to exercise one of the following options (specifying which
option he elects): (i) the option (the "Public Offering Option"), which Dart
hereby irrevocably grants to RSH, to require Dart to exchange (the "Exchange")
the Buy/Sell Class B Shares for 244,523 shares of Class A Common Stock (the
"Public Offering Class A Shares") and to exercise the demand registration
rights, subject to the terms and conditions thereof, set forth in Schedule 2(a)
attached hereto, pursuant to which RSH may sell all of the Public Offering
Class A Shares in an underwritten public offering (the "Public Offering"); or
(ii) the option (the "Put Option"), which Dart hereby irrevocably grants to
RSH, to require Dart to purchase all of his right, title and interest in and to
the Buy/Sell Shares
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<PAGE> 5
and for the Aggregate Purchase Price (as hereinafter defined) of the shares
purchased subject to the terms and conditions hereof.
(b) Except as provided in the next sentence, RSH's
exercise of the Public Offering Option or the Put Option, as the case may be,
shall be effective thirty (30) days after the date of Dart's receipt of the
Offering/Put Exercise Notice, unless Dart, within thirty (30) days after
receiving the Offering/Put Exercise Notice, provides written notice to RSH and
the Voting Trustee(s) (a "Challenge Notice") that there exists pending or
threatened litigation challenging RSH's title to any of the Buy/Sell Class B
Shares, the right of the Voting Trustee(s) to vote the Buy/Sell Class B Shares
or any action taken by Dart's Board of Directors granting voting rights to the
Class A Common Stock or relating to any other recapitalization plan of Dart
that materially changes Dart's corporate governance structure; provided,
however, that any Challenge Notice delivered by Dart to RSH shall not be
effective any time after November 30, 1999. RSH's exercise of the Public
Offering Option or the Put Option, as the case may be, at any time after
November 30, 1999 and prior to January 1, 2000, shall be effective immediately
upon Dart's receipt of the Offering/Put Exercise Notice. RSH shall have an
absolute right to sell the Buy/Sell Shares, on the terms and subject to the
conditions set forth in this Agreement, upon any exercise of the Public
Offering Option or the Put Option that becomes effective; provided, however,
that nothing herein shall give rise to any implication that Dart is a guarantor
of the closing or the success of any Public Offering. Except as otherwise
provided herein, if Dart delivers a valid Challenge
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<PAGE> 6
Notice to RSH, then RSH's exercise of the Public Offering Option or Put Option
will not be effective. If Dart delivers a valid Challenge Notice to RSH, then
Dart shall promptly notify RSH in writing once there no longer exists any basis
for a Challenge Notice. If Dart delivers a written notice to RSH that there no
longer exists any basis for a previously delivered Challenge Notice, or if a
previously delivered Challenge Notice otherwise becomes ineffective under the
terms hereof, then RSH shall be entitled to deliver another Offering/Put
Exercise Notice to Dart. Any period of time from the delivery of a Challenge
Notice by Dart to RSH until the earlier of the delivery of a subsequent notice
by Dart to RSH that there no longer exists any basis for a Challenge Notice or
December 1, 1999, is herein referred to as a "Denial Period."
(c) Any exercise of the Public Offering Option or the Put
Option that becomes effective shall be irrevocable and any attempted exercise
of the Public Offering Option or the Put Option subsequent to such
effectiveness shall be ineffective, provided, however, that if in any effective
Offering/Put Exercise Notice RSH elects the Public Offering Option, he may
thereafter by written notice to Dart cancel such election and instead elect the
Put Option so long as the Exchange has not been effected and RSH reimburses
Dart for all fees and expenses theretofore incurred by Dart in connection with
the proposed Public Offering.
(d) If RSH exercises the Public Offering Option, then
Dart shall effect the Exchange no later than the date on which the registration
statement related to the proposed Public
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<PAGE> 7
Offering is declared effective by the U.S. Securities and Exchange Commission.
(e) If RSH exercises the Public Offering Option and the
proposed Public Offering pursuant thereto does not close by July 15, 2000, then
Dart shall (i) if the Exchange has not been effected, purchase the Buy/Sell
Class B Shares on or about August 1, 2000 at a price per share equal to the
price of Buy/Sell Class B Shares set forth in Section 5(b) or (ii) if the
Exchange has been effected, purchase the Public Offering Class A Shares on or
about August 1, 2000 at a price per share equal to the price of Buy/Sell Class
B Shares set forth in Section 5(b) hereof less ten percent (10%).
3. Grant of Call Option. Dart shall have the option (the "Call
Option"), which RSH hereby irrevocably grants to Dart, to require RSH to sell
to Dart all of RSH's right, title and interest in and to the Buy/Sell Shares
and to require RSH to sell to Dart all of RSH's right, title and interest in
and to the RSH Pledged Class A Shares, for the Aggregate Purchase Price of such
shares, in accordance with the terms and subject to the conditions set forth in
this Agreement. The Call Option shall be exercisable as and when specified in
Section 7 of this Agreement, and Dart's right to exercise the Call Option with
respect to the Buy/Sell Shares shall be separate and independent from Dart's
right to exercise the Call Option with respect to the RSH Pledged Class A
Shares.
4. Buy/Sell Class A Shares. On the date of the closing of the
Public Offering, Dart shall purchase from RSH, and RSH shall sell to Dart, all
of RSH's right, title and interest in and to
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<PAGE> 8
the Buy/Sell Class A Shares for the Aggregate Purchase Price of such shares in
accordance with the terms and subject to the conditions hereof (the
"Simultaneous Purchase").
5. Purchase Price. The Aggregate Purchase Price applicable in
the case of any purchase of shares by Dart pursuant to the Put Option, the Call
Option or the Simultaneous Purchase shall be the number of Buy/Sell Class A
Shares, Buy/Sell Class B Shares and/or RSH Pledged Class A Shares (as may be
adjusted for any stock dividend, stock split or combination of shares)
purchased by Dart multiplied by the respective purchase price as determined as
follows:
(a) Price of Buy/Sell Class A Shares. The purchase price
for each of the Buy/Sell Class A Shares or RSH Pledged Class A Shares shall be
equal to $83.875 (the "Buy/Sell Class A Share Price") plus interest (compounded
annually) accrued at a rate of eight percent (8.0%) per annum from the date
hereof through the closing of the purchase of such shares by Dart, provided,
however, that in connection with any closing of Dart's purchase of the RSH
Pledged Class A Shares pursuant to Section 6(b) or Section 7, the purchase
price per RSH Pledged Class A Share shall be equal to the purchase price per
share paid by Dart for Buy/Sell Class A Shares in the first closing of the Put
Option, the Call Option or the Simultaneous Purchase, as the case may be, it
being understood that no interest shall accrue on the purchase price with
respect to the RSH Pledged Class A Shares after the date of such prior closing.
(b) Price of Buy/Sell Class B Shares. The purchase price
for each of the Buy/Sell Class B Shares shall be equal to
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<PAGE> 9
$154.13 plus interest (compounded annually) accrued at a rate of eight percent
(8.0%) per annum for the duration of any Denial Period(s).
(c) Price Adjustments. Adjustments to the per share
prices set forth in this Section 5 shall be made as Dart may in good faith
determine to be equitably required in order to prevent any dilution or
expansion of the value of Dart's rights or obligations, or the value of RSH's
rights or obligations, under this Agreement, as the result of any stock
dividend, stock split or combination of shares that occurs on or after the date
of this Agreement.
(d) Interest. For purposes of paragraphs (a) and (b) of
this Section 5, interest shall be computed on the basis of a three hundred
sixty (360) day year and the actual number of days elapsed.
6. Exercise of Put Option. (a) In the event RSH elects to
exercise the Put Option, RSH shall notify Dart and the Voting Trustee(s) that
he will sell the Buy/Sell Shares to Dart and specify a date for the closing of
such sale between 45 and 60 days after the date of the Offering/Put Exercise
Notice at a location in Washington, D.C. specified in the Offering/Put Exercise
Notice or such other place or time as the parties may mutually agree. Upon the
effectiveness of the exercise of the Put Option, RSH shall be obligated to
deliver, or to cause the Voting Trustee(s) to deliver, the Buy/Sell Shares to
Dart in accordance with Section 8 of this Agreement, on the later of the date
specified in the Offering/Put Exercise Notice or the first day on which the
following conditions are satisfied: (i) no
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<PAGE> 10
preliminary or permanent injunction or other order against the delivery of the
Buy/Sell Shares issued by any federal or state court of competent jurisdiction
in the United States shall be in effect, and (ii) any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "HSR Act") shall have
expired or been terminated. Upon such delivery to Dart of the Buy/Sell Shares,
Dart shall purchase such shares for the Aggregate Purchase Price.
(b) In the event that any of the RSH Pledged Class A
Shares are not purchased by Dart together with the Buy/Sell Shares at the
closing of the Put Option or the Simultaneous Purchase, then RSH shall have the
option, which Dart hereby irrevocably grants to RSH, to require Dart on one
additional occasion to purchase any of the RSH Pledged Class A Shares that can
be delivered free of Encumbrances (as hereinafter defined), subject to the
terms and conditions hereof. In the event RSH wishes to exercise such option,
RSH shall send a written notice to Dart at least fifteen (15) days prior to the
closing notifying Dart that he will sell such shares and specifying a date for
the closing. Upon delivery of the such notice, RSH shall be obligated to
deliver, or to cause the Voting Trustees to deliver, such shares to Dart in
accordance with Section 8 of this Agreement, on the later of the date specified
in such notice or the first day on which the following conditions are
satisfied: (i) no preliminary or permanent injunction or other order against
the delivery of such shares issued by any federal or state court of competent
jurisdiction in the United States shall be in
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effect, and (ii) any applicable waiting period under the HSR Act shall have
expired or been terminated. Upon such delivery to Dart of the RSH Pledged
Class A Shares, Dart shall purchase such shares for the Aggregate Purchase
Price. RSH's right to exercise the option granted under this Section 6(b)
shall expire on July 15, 2000.
7. Exercise of Call Option. (a) Dart may exercise the Call
Option, no more than once with respect to the Buy/Sell Shares and once with
respect to the RSH Pledged Class A Shares, at any time (i) after the death of
RSH, (ii) after a court of competent jurisdiction has determined that RSH lacks
the requisite physical or mental capacity to exercise his powers under this
Agreement, (iii) after December 31, 1996, if the Consolidated Net Worth (as
defined in the $37 Million Note) of Dart as of the end of its last fiscal
quarter ending prior to the exercise of the Call Option is less than $80
million; (iv) after the occurrence of an Event of Default (as defined in the
Promissory Notes); or (v) after December 31, 1999; provided, however, that Dart
may not exercise the Call Option at any time after July 15, 2000, except to the
extent that the delay is the result of any injunction or other court order
preventing exercise of the Call Option on or prior to July 15, 2000; and
provided, further, that the Call Option may not be exercised with respect to
the Buy/Sell Shares at any time after an Offering/Put Exercise Notice has
become effective; and provided, further, that the Call Option may not be
exercised with respect to the RSH Pledged Class A Shares unless there has been
a closing of the Simultaneous
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Purchase or the Put Option or there has been an exercise of the Call Option
with respect to the Buy/Sell Shares.
(b) In the event Dart wishes to exercise the Call Option,
Dart shall send a written notice (the "Call Exercise Notice"), which shall be
irrevocable, to RSH and the Voting Trustee(s) notifying each of them that Dart
will purchase the Buy/Sell Shares or any of the RSH Pledged Class A Shares, as
the case may be, and specifying a date for the closing of such purchase within
fifteen (15) days of the date of the Call Exercise Notice at a location in
Washington, D.C. specified in the Exercise Notice or such other place or time
as the parties may mutually agree. Upon receipt of the Call Exercise Notice,
RSH shall be obligated to deliver to Dart the Buy/Sell Shares or any of the RSH
Pledged Class A Shares, as the case may be, in accordance with Section 8 of
this Agreement, on the later of the date specified in the Call Exercise Notice
or the first day on which the following conditions are satisfied: (i) no
preliminary or permanent injunction or other order against the delivery of the
Buy/Sell Shares issued by any federal or state court of competent jurisdiction
in the United States shall be in effect, and (ii) any applicable waiting period
under the HSR Act shall have expired or been terminated. Upon such delivery to
Dart of the Buy/Sell Shares or the RSH pledged Class A Shares, as the case may
be, Dart shall purchase such shares for the Aggregate Purchase Price.
8. Payment of Purchase Price; Closing. At the closing of the
Simultaneous Purchase, the Put Option or the Call Option, as the case may be,
Dart may pay the Aggregate Purchase Price by
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offsetting any unpaid principal and accrued but unpaid interest on the
Promissory Notes against the Aggregate Purchase Price, as follows:
(a) If the aggregate amount of unpaid principal and
accrued but unpaid interest on the Promissory Notes is less than or
equal to the Aggregate Purchase Price, then in lieu of any payment of
the Aggregate Purchase Price by Dart to RSH, Dart shall deem RSH to
have made payment in full of RSH's obligations under the Promissory
Notes, and Dart shall cancel the Promissory Notes and pay to RSH, by a
certified or bank check payable to RSH, the amount, if any, by which
the Aggregate Purchase Price exceeds the aggregate amount of unpaid
principal and accrued but unpaid interest on the Promissory Notes.
(b) If the aggregate amount of unpaid principal and
accrued but unpaid interest on the Promissory Notes is greater than
the Aggregate Purchase Price, then in lieu of any payment of the
Aggregate Purchase Price by Dart to RSH, Dart shall deem RSH to have
made a partial prepayment, in the amount of the Aggregate Purchase
Price, in respect of RSH's obligations under the Promissory Notes.
At the closing of the Simultaneous Purchase, the Put Option or the Call Option,
as the case may be, RSH shall cause the Voting Trustee(s) to deliver the
Buy/Sell Shares, the Buy/Sell Class A Shares or the RSH Pledged Class A Shares,
as the case may be, to Dart, free and clear of all liens, claims (except for
claims of any Haft family member relating to the RSH Contested Class A Shares
and claims made after the date hereof that challenge the
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transactions contemplated hereby), charges and encumbrances of any kind or
nature whatsoever, and RSH shall cause the Voting Trustee(s) to deliver to Dart
certificates representing the number of such shares so purchased and endorsed
in blank. In addition to the Buy/Sell Shares, Dart shall be entitled to
receive at any such closing, without the payment of any additional
consideration other than the Aggregate Purchase Price, any and all other cash,
securities or rights then held pursuant to the Voting Trust Agreement by the
Voting Trustee(s) in the Trust Accounts (as defined in the Voting Trust
Agreement) or otherwise held as part of the Trust Shares (as defined in the
Voting Trust Agreement).
9. Representations and Warranties of RSH. RSH represents and
warrants to Dart the following:
(a) The Buy/Sell Shares, the Buy/Sell Class A Shares or
the RSH Pledged Class A Shares, as the case may be, when sold and delivered by
RSH to Dart upon the closing of the Simultaneous Purchase, the Put Option or
the Call Option, as the case may be, will be free and clear of all restrictions
(except for restrictive legends on stock certificates representing the Buy/Sell
Class B Shares and the New Class A Shares), liens, encumbrances, charges,
pledges, adverse claims, options, calls, trusts and other commitments,
agreements or arrangements (collectively, "Encumbrances") and shall not be
subject to any preemptive rights; provided, that the RSH Contested Class A
Shares may be subject to the adverse claims of Robert M. Haft, Linda G. Haft
and Herbert H. Haft that exist as of the date of this Agreement and the RSH
Pledged Class A Shares may be subject
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to the pledge to First Union National Bank (or any affiliate thereof) that
exists on the date of this Agreement (the "Permitted Encumbrances").
(b) Except as otherwise required by the HSR Act, the
execution, delivery and performance of this Agreement by RSH and the
consummation by him of the transactions contemplated hereby do not require the
consent, waiver, approval, license or authorization of or any filing with any
person or public authority and will not violate, result in a breach or
acceleration of any obligation under, or constitute a default under, any
provision of any indenture, mortgage, lien, lease, agreement, contract,
instrument, order, judgment, ordinance, regulation or decree, or any
restriction to which any property of RSH is bound.
10. Representations and Warranties of Dart. Dart represents and
warrants to RSH that except as otherwise required by the HSR Act, the
execution, delivery and performance of this Agreement by Dart and the
consummation by it of the transactions contemplated hereby do not require the
consent, waiver, approval, license or authorization of or any filing with any
person or public authority and will not violate, result in a breach or
acceleration of any obligation under, or constitute a default under, any
provision of any indenture, mortgage, lien, lease, agreement, contract,
instrument, order, judgment, ordinance, regulation or decree, or any
restriction to which any property of Dart is bound.
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11. Conditions to Closing. For purposes of this Section 11,
closing is defined as the closing of the Simultaneous Purchase, the Put Option
or the Call Option, as the case may be.
(a) Conditions Precedent to Obligations of Dart. Dart's
obligation to purchase the Buy/Sell Shares, the Buy/Sell Class A Shares or the
RSH Pledged Class A Shares, as the case may be, from RSH in accordance with
this Agreement shall be subject to the satisfaction (or waiver in writing by
Dart), at or prior to the closing, of each of the following conditions:
(i) The closing of the Public Offering or the due
exercise of the Call Option by Dart or the Put Option by RSH.
(ii) There shall be tendered for delivery to Dart
certificates representing the Buy/Sell Shares, the Buy/Sell Class A
Shares or the RSH Pledged Class A Shares, as the case may be, and all
trust certificates issued to RSH pursuant to Section 2 of the Voting
Trust Agreement in respect of such shares, duly endorsed (or
accompanied by appropriate stock powers duly endorsed) in blank by the
registered holder thereof for transfer and, if any of such shares are
subject to any Encumbrance, then together with such supporting
documents, endorsements, assignments, affidavits and other good and
sufficient instruments of sale and transfer, in form and substance
reasonably satisfactory to Dart and its counsel, as are necessary to
permit Dart to acquire all of such shares free and clear of all
Encumbrances (except the Permitted Encumbrances).
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(iii) Dart shall receive a letter, dated the date of
the closing, of counsel to RSH, that, based upon a certificate from
RSH, such counsel has no knowledge that immediately prior to the
closing, RSH did not have good and valid title, free and clear of all
Encumbrances (except the Permitted Encumbrances) with full lawful
right, power and capacity to sell, assign, transfer and deliver such
shares to Dart pursuant to this Agreement.
(iv) The representations and warranties of RSH
contained in this Agreement shall be true and correct on the date of
closing (as if made anew on and as of the closing); RSH shall have, in
all material respects, performed and complied with all agreements,
undertakings and obligations which are required by this Agreement and
the Settlement Agreement to be performed or complied with by him at or
prior to the closing; and there shall have been delivered to Dart a
certificate to that effect, dated the date of the closing and executed
by RSH.
(v) No preliminary or permanent injunction or other
order (including a temporary restraining order) of any governmental
authority of competent jurisdiction shall be in effect as of the
closing which enjoins, restrains or prohibits any of the transactions
contemplated by this Agreement and no proceeding instituted by any
third party or any governmental authority shall be pending or
threatened against or affecting Dart or any of its subsidiaries or any
of their respective assets or RSH that seeks to enjoin or
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restrain any of the transactions contemplated by this Agreement.
(b) Conditions Precedent to Obligations of RSH. The
obligation of RSH to sell the Buy/Sell Shares, the Buy/Sell Class A Shares or
the RSH Pledged Class A Shares, as the case may be, to Dart in accordance with
this Agreement shall be subject to the satisfaction, at or prior to the
closing, of each of the following conditions:
(i) The closing of the Public Offering or the due
exercise of the Call Option by Dart or the Put Option by RSH.
(ii) Dart shall pay to RSH the Aggregate Purchase
Price for the Buy/Sell Shares, the Buy/Sell Class A Shares or the RSH
Pledged Class A Shares, as the case may be, delivered to Dart at the
closing in accordance with Section 8 of this Agreement.
(iii) The representations and warranties of Dart
contained in this Agreement shall be true and correct on the date of
closing (as if made anew on and as of the closing); Dart shall have,
in all material respects, performed and complied with all agreements,
undertakings and obligations which are required by this Agreement and
the Settlement Agreement to be performed or complied with by it at or
prior to the closing; and there shall have been delivered to RSH a
certificate to that effect, dated the date of the closing and executed
by Dart.
(iv) No preliminary or permanent injunction or other
order (including a temporary restraining order) of any
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governmental authority of competent jurisdiction shall be in effect as
of the closing which enjoins, restrains or prohibits any of the
transactions contemplated by this Agreement and no proceeding
instituted by any third party or any governmental authority shall be
pending or threatened against or affecting RSH or his assets or Dart
that seeks to enjoin or restrain any of the transactions contemplated
by this Agreement.
12. Miscellaneous.
(a) Transfer Prohibition. RSH agrees that he will not
(i) sell or otherwise dispose of, or grant any option with respect to, any of
the Option Shares, RSH Class B Shares, RSH Class A Shares, RSH Contested Class
A Shares, New Class A Shares, RSH Pledged Class A Shares or the Voting Trust
Certificates without the prior written consent of Dart, except as provided in
this Agreement, or (ii) create or permit to exist any Encumbrance (other than a
Permitted Encumbrance) upon or with respect to any of the Buy/Sell Shares or
the Voting Trust Certificates, except as provided in the Stock and Trust
Certificate Pledge Agreement.
(b) Substitution Prohibition. RSH agrees that he may not
substitute any shares for any of the Buy/Sell Shares or the Public Offering
Class A Shares, and that the Put Option may only be exercised with respect to
the Buy/Sell Shares and the Public Offering Option may be exercised only with
respect to the Public Offering Class A Shares.
(c) Cross-Default. This Agreement, the Voting Trust
Agreement, the Settlement Agreement and all other agreements and documents
relating thereto (collectively, the "Agreements")
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constitute one integrated whole. RSH agrees that a material breach by RSH
under any of the Agreements shall constitute a material breach under each of
the Agreements. Dart agrees that a material breach by Dart under any of the
Agreements shall constitute a material breach under each of the Agreements.
(d) Notice. Notices under this Agreement shall be deemed
duly given (if so given) if delivered in person, by facsimile, registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
If to Dart:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attention: Corporate Secretary
If to RSH:
Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of changes of address shall
only be effective upon receipt.
(e) Further Assurances. Dart and RSH will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
(f) Assignment. No party hereto may assign any of
his/its rights or obligations under this Agreement without the prior written
consent of the other party. Without limiting the generality of the foregoing,
RSH shall not assign or transfer the
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Put Option or the Public Offering Option, or any part thereof or any interest
therein.
(g) Binding Effect. This Agreement, and the documents
and instruments delivered pursuant hereto, shall inure to the benefit of, and
shall be binding upon, the respective parties hereto, their heirs, executors,
administrators, successors and assigns.
(h) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to its conflict of laws principles.
(i) Severability of Provisions. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall not be affected, impaired or invalidated.
(j) Headings. The descriptive headings contained herein
are for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(k) Amendment in Writing. In accordance with its terms,
this Agreement may be amended, but only in a writing that is signed by each of
the parties hereto.
(l) Waiver. The waiver by any party hereto of any matter
provided for herein shall not be deemed to be a waiver of any other matter
provided for herein.
(m) Integration. This Agreement and all the other
Agreements set forth the entire understanding of the parties hereto and
supersedes all prior understandings or agreements,
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whether written or oral, with respect to the subject matter hereof.
(n) Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but each of
which together shall constitute one and the same document.
IN WITNESS WHEREOF, each of RSH and Dart has executed and delivered
this Agreement on the day and year first above written.
DART GROUP CORPORATION
/s/ Bonita A. Wilson By /s/ Robert A. Marmon
- ----------------------------- ----------------------------------
Attest Name:
Title:
/s/ Ronald S. Haft
- ----------------------------- -------------------------------------
Witness RONALD S. HAFT
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<PAGE> 23
SCHEDULE 2(a)
REGISTRATION RIGHTS
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Buy/Sell/Offering Agreement to which this Schedule 2(a)
is attached.
1. Demand Registration.
(a) Request for Registration. If any exercise by RSH of
the Public Offering Option becomes effective (and as long as such exercise
remains effective) pursuant to Section 2 of the Buy/Sell/Offering Agreement,
RSH may once, in connection with an underwritten public offering of the Public
Offering Class A Shares, request registration under the Securities Act of 1933,
as amended (the "Securities Act"), of all Public Offering Class A Shares on
Form S-1 or any similar long-form registration or on Form S-2 or S-3 or any
similar short-form registration, if available (in either case, the "Demand
Registration").
(b) Restrictions on Registrations. The Company may
postpone the filing of a registration statement in response to any request for
a Demand Registration for up to 90 calendar days after receipt of such request
if, in the good faith judgment of the Company's board of directors, such
postponement would be in the best interests of the Company; provided, however,
that the Company may not exercise such right more than once.
(c) Selection of Underwriters. Each of RSH and the
Company may select one investment banker to act as co-manager in administering
the offering.
2. Holdback Agreement. The Company agrees not to effect any
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven days prior to and during the 90-day period beginning on the effective
date of any underwritten Demand Registration (except pursuant to registrations
on Form S-8 or any successor form), or for such longer or shorter period as the
underwriters managing the registered public offering agree.
3. Registration Procedures. Whenever RSH has requested that the
Public Offering Class A Shares be registered pursuant to this Agreement, the
Company will use reasonable efforts to timely effect the registration and the
sale of the Public Offering Class A Shares. Pursuant to such request, the
Company shall as expeditiously as possible:
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(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Public Offering Class
A Shares and use reasonable efforts to cause such registration statement to
become effective, provided, however, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
will furnish to RSH's counsel copies of all such documents proposed to be
filed;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than six months and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition set forth in
such registration statement;
(c) furnish to RSH such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as he may reasonably request in order to facilitate
the disposition of the Public Offering Class A Shares;
(d) use reasonable efforts to register or qualify such
Public Offering Class A Shares under such other securities or blue sky laws of
such jurisdictions as RSH or the underwriters reasonably request and do any and
all other acts and things which may be reasonably necessary or advisable to
enable RSH to consummate the disposition in such jurisdictions of the Public
Offering Class A Shares, provided, however, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;
(e) notify RSH at any time when a prospectus relating to
the Public Offering Class A Shares is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading and, at the request of RSH, prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of the
Public Offering Class A Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause the Public Offering Class A Shares to be listed
on the Nasdaq National Market, if other Company shares of the same class are
then listed on the Nasdaq National Market, or
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<PAGE> 25
a securities exchange, if any, on which other Company shares of the same class
are then listed;
(g) enter into customary agreements (including an
underwriting agreement in customary form) and take all such other actions as
the underwriters reasonably request in order to expedite or facilitate the
disposition of the Public Offering Class A Shares;
(h) make available for inspection by RSH, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by RSH, all financial and
other pertinent records and documents of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any underwriter, attorney, accountant or
agent in connection with such registration statement; and
(i) obtain a "comfort letter" from the Company's
independent public accountants in customary form.
4. Registration Expenses.
(a) The Company shall pay all expenses incident to the
Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, and fees
and disbursements of counsel for the Company and all independent certified
public accountants, underwriters (excluding discounts and commissions) and
other persons retained by the Company.
(b) In connection with any Demand Registration, RSH shall
pay all underwriters' discounts and commissions, all fees and expenses of his
counsel, and all of his incidental expenses.
5. Indemnification.
(a) The Company agrees to indemnify RSH, to the extent
permitted by law, against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by RSH expressly for use
therein or by RSH's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished RSH with a sufficient number of copies of the same. The Company also
will indemnify the
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underwriters participating in such offering to the same extent as provided
above with respect to the indemnification of RSH.
(b) RSH will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any registration statement or prospectus and, to the extent
permitted by law, agrees to indemnify the Company, its directors and officers
and each person who controls the Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses caused by
any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by RSH or his
representatives.
(c) Any person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.
(d) The indemnification provided for hereunder will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the transfer of securities.
6. Participation in Underwritten Registrations. RSH agrees to
(a) sell his securities on the basis provided in any underwriting arrangement
approved by him and the Company and (b) complete and execute all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
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<PAGE> 1
EXHIBIT 15
PROMISSORY NOTE
$27,389,672.00 October 6, 1995
FOR VALUE RECEIVED, and intending to be legally bound, the
undersigned, Ronald S. Haft ("Borrower"), hereby promises to pay to the order
of Dart Group Corporation, a Delaware corporation, its successors and assigns
("Lender"), on June 30, 2000 (the "Maturity Date"), the principal sum of
Twenty-Seven Million Three Hundred Eighty-Nine Thousand Six Hundred Seventy-Two
and 00/100 Dollars ($27,389,672.00) (the "Principal Sum").
1. Payments. a. Principal. Borrower promises to pay
the Principal Sum on or before the Maturity Date or on such earlier date as is
provided in paragraphs 5 and 9 hereof.
b. Interest. Borrower also promises to pay
interest on the Principal Sum, outstanding from time to time, from the date
hereof until the Principal Sum is paid in full, at a rate per annum equal to
eight percent (8.0%). Interest shall accrue daily on the unpaid Principal Sum
and shall be due on the Principal Sum at maturity or upon any acceleration of
this Promissory Note, or on the amount of any prepayment of the Principal Sum
on the date of such prepayment. Interest shall be computed on the basis of a
three hundred sixty (360) day year and the actual number of days elapsed.
2. Use of Funds. Borrower is borrowing the Principal
Sum in order to exercise on the date hereof his option to purchase 197,048
shares (the "Shares") of the Class B Common Stock granted pursuant to that
certain Employment Agreement, dated August 1, 1993 by and between Borrower and
Lender, as amended by Amendment No. 1 thereto. Upon the approval of the
issuance of the Shares by the Board of Directors of Lender and the execution
and delivery of this Promissory Note, Lender shall issue the Shares to
Borrower.
3. Payment Office. Both the principal hereof and the
interest hereon and any other amounts payable hereunder are payable in lawful
money of the United States of America at the office of Lender at 3300 75th
Avenue, Landover, Maryland 20785 or at such other place as Lender may specify
in writing to Borrower. Any payment by other than immediately available funds
shall be subject to collection. Interest shall continue to accrue until the
funds by which payment is made are available to Lender for its use. Any
payment hereunder that is stated to be due on a day on which banks in Maryland
are required or permitted to be closed for business shall be due and payable on
the next day on which banks in Maryland are not required or permitted to be
closed (each such day a "Business Day") and such extension of time shall be
included in the computation of interest in connection with such payment.
4. Settlement Agreement. This Promissory Note is the
$27.4 Million Note referred to in, and is issued pursuant to, the
<PAGE> 2
Settlement Agreement, of even date herewith, between Borrower and Lender (the
"Settlement Agreement") and is entitled to the benefits of the Settlement
Agreement, to which reference is made for a more complete statement of the
terms and conditions under which the loans evidenced hereby are made.
Capitalized terms used herein without definition shall have the meaning set
forth in the Settlement Agreement. Notwithstanding a Revocation Closing
pursuant to Section 1.5 of the Settlement Agreement, terms defined herein by
reference to agreements which do not survive the Revocation Closing shall
continue to have the meanings ascribed to such terms in such agreements.
5. Prepayment. a. Borrower may prepay this Promissory
Note in whole or in part without penalty. Any prepayment must be of at least
$2,000,000 of the outstanding principal (or such lesser total principal amount
then outstanding). Borrower shall notify Lender of his election to make a
prepayment under this subparagraph 5.a. at least fifteen (15) days prior to the
date of prepayment. On or before the date of prepayment, Borrower shall
deliver to Lender the full amount that Borrower intends to prepay on this
Promissory Note plus interest accrued on the outstanding Principal Sum through
the date of prepayment specified in Borrower's notice.
b. Upon the closing of the sale from Borrower to
Lender, pursuant to that certain Buy/Sell/Offering Agreement (the
"Buy/Sell/Offering Agreement"), of even date herewith, by and between Borrower
and Lender, of any shares of Lender's Class B Common Stock, $1.00 par value per
share (the "Class B Common Stock"), or Lender's Class A Common Stock, $1.00 par
value per share (the "Class A Common Stock"), or the closing of any public
offering of shares of Class A Common Stock as contemplated by the
Buy/Sell/Offering Agreement, this Promissory Note shall be prepaid in full.
Lender shall credit against any such principal and interest so due and payable
under this Promissory Note the amount of the purchase price payable by Lender
to Borrower under the Buy/Sell/Offering Agreement. Any amount of principal and
interest which remains unpaid after the application of any such credit to the
payment of principal and interest shall be paid from time to time and at such
times as, and to the extent that, Escrow Funds are on deposit in the C-M Escrow
Account (as such terms are defined in that certain Master Real Estate Agreement
as of even date herewith among Borrower, Lender and Cabot-Morgan Real Estate
Company (the "Master Agreement")) or, if not paid in full prior to the Maturity
Date, on the Maturity Date.
c. All prepayments under this paragraph 5 shall
be applied first, to the payment of outstanding interest on the Principal Sum
being prepaid, and second, to the payment of the outstanding amount of the
Principal Sum. In addition to the prepayments required by paragraph 5.b. of
this Promissory Note, the $37 Million Note, the $11.6 Million Note and certain
other obligations of Borrower are payable from the Escrow Funds when and to the
extent Escrow Funds are available. Pursuant to the Master Agreement, Lender
may in its discretion apply the Escrow
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<PAGE> 3
Funds to such obligations in the order Lender determines. The failure to
prepay all or any portion of this Promissory Note from available Escrow Funds
as a consequence of Lender applying such Escrow Funds to other obligations
shall not constitute an Event of Default arising from a failure of Borrower to
pay principal of and interest on any prepayment required by this Promissory
Note.
6. No Presentment. Borrower hereby expressly waives any
presentment for payment, demand for payment, notice of nonpayment or dishonor,
protest and notice of protest of any kind.
7. Collateral. The indebtedness evidenced by this
Promissory Note shall be secured by a first lien security interest on all
unencumbered shares of Class B Common Stock and Class A Common Stock of Lender
owned by Borrower, which Borrower has pledged for the benefit of Lender and
Cabot-Morgan Real Estate Company ("Cabot-Morgan") pursuant to a Stock and Trust
Certificate Pledge Agreement, as of even date herewith (the "Stock Pledge
Agreement"). The indebtedness evidenced by this Promissory Note shall also be
secured by the collateral granted by Borrower and entities directly or
indirectly owned and controlled by Borrower pursuant to the Settlement
Agreement, the Master Real Estate Agreement of even date herewith among
Borrower, Lender and Cabot-Morgan (the "Master Agreement") and the other
Settlement Documents (as defined in the Master Agreement).
8. Events of Default. The following events are each an
"Event of Default" hereunder:
a. Borrower fails to make any payment of
principal on this Promissory Note when due or fails to make any payment of
interest, fees or other amounts owed to or for the account of Lender hereunder
and such payment of interest, fees or other amounts remains unpaid for ten (10)
Business Days after written notice to Borrower that such payment is due; or
b. Borrower fails to make any payment of
principal when due on the $37 Million Note or the $11.6 Million Note or fails
to make any payment of interest, fees or other amounts owed to or for the
account of Lender thereunder and such payment of interest, fees or other
amounts remains unpaid for ten (10) Business Days after written notice to
Borrower that such payment is due; or
c. Borrower or any RSH Obligor (as defined in
the Master Agreement) (i) has made any representation or warranty in this
Promissory Note, the Settlement Agreement or any other Settlement Document that
contains any untrue statement of a material fact or omits a material fact
necessary to make such representation or warranty not misleading; or (ii) fails
to perform or observe, or cause to be performed or observed, any other term,
obligation, covenant, condition or agreement contained in this Promissory Note,
the Settlement Agreement or
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<PAGE> 4
any other Settlement Document and such failure continues for a period of thirty
(30) days after written notice to Borrower thereof; and in each case after
giving effect to such untrue or misleading warranty or representation or
failure there has been (A) a material adverse effect on the value of the
Collateral (as defined in the Master Agreement) or (B) a material increase in
the amount of the Obligations (other than the Reserved Obligations (each as
defined in the Master Agreement)); or
d. Lender in its reasonable discretion
determines that there has occurred or developed an event or condition which
would materially and adversely impair the prospect of payment or performance of
the Obligations (as defined in the Master Agreement); provided, however, that
the initiation or pendency prior to judgment of any proceeding shall not
constitute the basis for an Event of Default under this paragraph 8.5.; or
e. Borrower shall (i) apply for, or consent in
writing to, the appointment of a receiver, trustee or liquidator; (ii) file a
voluntary petition seeking relief under the U.S. Bankruptcy Code (11 U.S.C.
Section Section 101 et seq.), or be unable, or admit in writing Borrower's
inability, to pay his debts as they become due; (iii) make a general assignment
for the benefit of creditors; (iv) file a petition or an arrangement or a
readjustment of debt with creditors, apply for, take advantage, permit or
suffer to exist the commencement of any insolvency, bankruptcy, suspension of
payments, debt arrangement or similar event, under the law of the United States
or of any state (or the District of Columbia) in which Borrower is a resident;
(v) file an answer admitting the material allegations of a petition filed
against Borrower in any such bankruptcy, or insolvency case or proceeding; or
(vi) take any action authorizing, or in furtherance of, any of the foregoing;
or
f. (i) an involuntary case is commenced
against Borrower and the petition is not controverted within ten (10) days or
is not dismissed within sixty (60) days after the commencement of the case; or
(ii) an order, judgment or decree shall be entered by any court of competent
jurisdiction on the application of a creditor adjudicating Borrower bankrupt or
insolvent, or appointing a receiver or trustee for all or substantially all of
the assets of Borrower and such order, judgment or decree shall continue
unstayed and in effect for a period of thirty (30) days or shall not be
discharged within ten (10) days after the expiration of any stay thereof; or
g. except as expressly permitted by any
Settlement Document, (i) Borrower sells, assigns, transfers, pledges or
encumbers any Pledged Collateral (as defined in the Stock Pledge Agreement); or
(ii) Borrower sells, assigns, transfers, pledges or encumbers, or allows to be
sold, assigned, transferred, pledged or encumbered, any interest or asset
subject to the liens granted to Lender under any other Settlement Document.
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<PAGE> 5
9. Acceleration. Upon the occurrence of any Event of
Default described in subparagraph 8.e. or 8.f. hereof, the unpaid amount of the
Principal Sum and any and all accrued interest thereon shall automatically
become immediately due and payable without presentment, demand or protest or
other requirements of any kind (including, without limitation, valuation and
appraisement, diligence, notice of intent to demand or accelerate and of
acceleration), all of which are hereby expressly waived by Borrower; and upon
the occurrence and during the continuance of any other Event of Default, Lender
may by written notice to Borrower declare the unpaid amount of the Principal
Sum and any and all accrued and unpaid interest thereon to be, and the same
shall thereupon be, immediately due and payable without presentment, demand or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by Borrower.
10. Lender's Rights; Limitation on Liability.
a. If all or any portion of the outstanding
Principal Sum is not paid when due, Lender may proceed, to the extent permitted
by law, to protect and enforce its rights either by suit in equity or by action
at law, or both, whether for the specific performance of any covenant,
condition or agreement contained in this Promissory Note or any other
Settlement Document or in aid of the exercise of any power granted in this
Promissory Note or any other Settlement Document or proceed to enforce the
payment of this Promissory Note or to enforce the exercise of any remedy under
any other Settlement Document or to enforce any other legal or equitable right
of Lender. No right or remedy herein or in any other agreement or instrument
to the benefit of Lender is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall
be in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. Without
limiting the generality of the foregoing, if the outstanding Principal Sum,
interest on the Principal Sum or any of the other obligations of Borrower to
Lender shall not be paid when due, Lender shall not be required to resort to
any particular right or remedy or to proceed in any particular order of
priority, and Lender shall have the right at any time and from time to time, in
any manner and in any order, to enforce its rights and remedies, or any of
them, as it deems appropriate in the circumstances, to such obligations of
Borrower as it determines in its sole discretion.
b. If the Consolidated Net Worth (defined below)
of Lender is less than $75 million on the date the obligations under this
Promissory Note becomes due and payable, whether on (i) the Maturity Date or
(ii) the date obligations under this Promissory Note become due and payable
pursuant to acceleration under paragraph 9 or otherwise (but not including the
date on which all or any portion of this Promissory Note becomes
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<PAGE> 6
prepayable pursuant to paragraph 5), then the personal liability of Borrower
hereunder shall be strictly limited to the collateral granted under the
Settlement Documents. Consolidated Net Worth means, as of the end of any
fiscal quarter or year of Lender, (i) the total consolidated assets of Lender
that would be shown as assets on a consolidated balance sheet of Lender as of
such time prepared in accordance with generally accepted accounting principles,
after eliminating all amounts properly attributable to minority interests, if
any, in the stock and surplus of its subsidiaries; minus (ii) the total
consolidated liabilities of Lender that would be shown as liabilities on a
consolidated balance sheet of Lender as of such time prepared in accordance
with generally accepted accounting principles; provided, however, that
Consolidated Net Worth shall be calculated without giving effect to any
reduction in assets or increase in liabilities arising as a consequence of an
Event of Default.
c. Upon the occurrence of any Event of Default
(other than an Event of Default under paragraphs 8.e. and f.) the exercise and
enforcement of rights and remedies by Lender against Borrower seeking judgment
personally against Borrower or any of Borrower's assets other than the
collateral granted under the Settlement Documents is subject to the conditions
and limitations set forth in Section 11.5 of the Master Agreement.
11. No Defenses. Borrower's obligations hereunder shall
not be subject to any set-off, counterclaim or defense to payment that Borrower
now or hereafter has.
12. No Waiver. No failure or delay on the part of Lender
in exercising any right, power or privilege under this Promissory Note, nor any
course of dealing between Borrower and Lender, shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
13. Writing Required. No modification or waiver of any
provisions of this Promissory Note nor consent to any departure from the terms
hereof by Borrower, shall in any event be effective, irrespective of any course
of dealing between the parties, unless the same shall be in a writing executed
by Lender and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on Borrower in any case shall thereby entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
14. Notices. Any notice or demand given under this
Promissory Note shall be in writing and shall be deemed given if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
or by facsimile (answerback required) addressed as follows:
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<PAGE> 7
To Borrower: Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
Fax: (202) 833-3013
To Lender: Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attention: Chief Financial Officer
Fax: (301) 772-3910
Each party may designate a change of address by notice to the other given in
accordance herewith at least fifteen (15) days before such change of address is
to become effective. A notice given under this Promissory Note shall be deemed
received three (3) days after it is mailed or when it is delivered according to
the requirements of this paragraph.
15. Section Headings. The headings of the several
paragraphs of this Promissory Note are inserted solely for convenience of
reference and are not a part of and are not intended to govern, limit or aid in
the construction of any term or provision.
16. Severability. Any provision contained in this
Promissory Note that is prohibited or unenforceable in any respect in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Survival of Terms. All covenants, agreements,
representations and warranties made in this Promissory Note or delivered
pursuant hereto shall survive Borrower's execution and delivery of this
Promissory Note to Lender and shall continue in full force and effect so long
as this Promissory Note or any other obligation hereunder or thereunder shall
be outstanding and unpaid or any other obligation of Borrower hereunder or
thereunder shall remain unperformed.
18. Assignment; Non-negotiability. This Promissory Note
may not be assigned by Lender without the consent of Borrower and is
non-negotiable.
19. GOVERNING LAW, JURISDICTION, ETC. THIS PROMISSORY
NOTE IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE WITHOUT RESPECT TO ANY OTHERWISE APPLICABLE CONFLICTS-OF-LAWS
PRINCIPLES, BOTH AS TO INTERPRETATION AND PERFORMANCE, AND THE PARTIES
EXPRESSLY AGREE TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
DELAWARE, WAIVING ALL CLAIMS OR DEFENSES BASED ON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE, INCONVENIENT FORUM OR THE LIKE.
7
<PAGE> 8
IN WITNESS WHEREOF, the undersigned has executed this
Promissory Note as of the day and year first above written.
WITNESS:
/s/ Ronald S. Haft
- -------------------------------- ----------------------------------
Ronald S. Haft
8
<PAGE> 9
Washington, )
) ss:
District of Columbia )
I, Celein C. Glasgow, a Notary Public in and for the
aforesaid jurisdiction, do hereby certify that RONALD S. HAFT, who is
personally known to me as the person who executed the foregoing Promissory
Note, bearing the date of October 6, 1995, personally appeared before me in the
aforesaid jurisdiction and acknowledged said Promissory Note to be his act and
deed and that he executed said Promissory Note for the purposes therein
contained.
WITNESS my hand and official seal this 6th day of October,
1995.
/s/ Celein C. Glasgow
-------------------------------------
NOTARY PUBLIC
My commission expires:
<PAGE> 1
EXHIBIT 16
STOCK AND TRUST CERTIFICATE PLEDGE AGREEMENT
This STOCK AND TRUST CERTIFICATE PLEDGE AGREEMENT (this
"Pledge Agreement"), dated as of October 6, 1995, is made by Ronald S. Haft
("Pledgor") in favor of Larry G. Schafran and Sidney B. Silverman, as
collateral agents and bailees (in such capacity, "Collateral Agent") for Dart
Group Corporation, a Delaware corporation ("Lender"), and Cabot-Morgan Real
Estate Company, a Delaware corporation ("Cabot-Morgan"). Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Promissory Notes (defined below).
WITNESSETH:
WHEREAS, Lender and Pledgor are adverse parties in the
lawsuits captioned, Ronald S. Haft v. Dart Group Corporation, Delaware Chancery
Court, CA-13736 and Alan R. Kahn and the Tudor Trust v. Herbert Haft, Del. Ch.
C.A. No. 13154 and, simultaneously with the execution and delivery of this
Pledge Agreement, have entered into that certain Settlement Agreement of even
date herewith pursuant to which Lender and Pledgor have agreed to settle such
lawsuits on the terms, and subject to the conditions, set forth therein (the
"Settlement Agreement");
WHEREAS, in connection with the Settlement Agreement Pledgor,
Lender and certain of their respective affiliates have entered into certain
other agreements and documents, including the Real Estate Master Agreement of
even date herewith among Borrower, Lender and Cabot-Morgan (the "Master
Agreement") and this Pledge Agreement, which, together with the Settlement
Agreement, are collectively referred to herein as the "Settlement Documents"
(as such term is defined in the Master Agreement);
WHEREAS, on the date hereof, Lender has made certain loans to
Borrower and Borrower has executed and delivered to Lender the $37 Million
Note, the $27.4 Million Note and the $11.6 Million Note (as such terms are
defined in the Settlement Agreement; collectively, the "Promissory Notes") to
evidence such loans;
WHEREAS, Pledgor (i) is the legal and beneficial owner of
25,246 shares of Class B Common Stock, $1.00 par value per share, of Lender
(the "Class B Common Stock"), (ii) concurrently with the execution and delivery
of this Pledge Agreement, will become the owner of 197,048 shares of Class B
Common Stock, (iii) is the legal and beneficial owner of and 119,506 shares of
Class A Common Stock, $1.00 par value per share, of Lender ("Class A Common
Stock"), and (iv) pursuant to and subject to the terms and conditions of the
Settlement Agreement, the Board of Directors of Lender may authorize the
issuance to Borrower of the New Class A Shares (as defined in the Settlement
Agreement);
WHEREAS, concurrently with entering into the Settlement
Agreement Pledgor, Lender and Larry G. Schafran and Sidney B. Silverman, as
initial voting trustees (in such capacity and
<PAGE> 2
including any additional or substitute voting trustee or trustees appointed
pursuant to the Voting Trust Agreement, the "Voting Trustees"), will enter into
that certain Voting Trust Agreement, of even date herewith (the "Voting Trust
Agreement") pursuant to which Pledgor will transfer, subject to the lien and
security interests created hereunder, all shares of Class A Common Stock and
Class B Common Stock owned by Borrower from time to time (other than the First
Union Pledged Shares (as defined in Section 6(b)) which shall be pledged and
transferred only at such time as any of such shares are no longer encumbered)
to the Voting Trustees to be held under the voting trust created pursuant to
the Voting Trust Agreement, and Lender will register the transfer of such
shares from Pledgor to the Voting Trustees in Lender's stock transfer records
and cause new certificates representing such shares to be issued in the name
of, and delivered to, the Voting Trustees; and
WHEREAS, Pledgor and Lender are parties to that certain
Buy/Sell/Offering Agreement, of even date herewith (the "Buy/Sell/Offering
Agreement"), pursuant to which Pledgor has granted Lender an option to purchase
the Pledged Stock (defined below).
NOW, THEREFORE, for and in consideration of Lender and
Cabot-Morgan entering into the Settlement Documents and Lender making the loans
evidenced by the Promissory Notes, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Collateral Agent, Lender and Pledgor hereby agree as follows:
1. Appointment as Collateral Agent. (a) Lender and
Cabot-Morgan hereby designate and appoint the Voting Trustees from time to time
in place under the Voting Trust Agreement, and in their capacity as the initial
Voting Trustees, Mr. Larry G. Schafran and Sidney B. Silverman, Esq., to act
as bailee and collateral agent for Lender and Cabot-Morgan for purposes of
perfecting the pledge and assignment of and holding the Pledged Collateral (as
defined below). Larry G. Schafran and Sidney B. Silverman, in their capacity
as Voting Trustees, hereby accept such appointment. All powers of Collateral
Agent hereunder shall be exercised upon the direction of Lender. Any
additional or substitute voting trustee or trustees appointed in accordance
with the Voting Trust Agreement shall upon the effectiveness of such
appointment under the Voting Trust Agreement be automatically appointed as a
Collateral Agent hereunder. Pledgor hereby acknowledges that Larry G.
Schafran, Sidney B. Silverman and any additional or successor Voting Trustee or
Trustees are acting both as Collateral Agent hereunder and as Voting Trustees
under the Voting Trust Agreement and irrevocably authorizes and consents to
their acting, now and in the future, in both such capacities. The appointment
as Collateral Agent pursuant to this Agreement of the persons serving as Voting
Trustees at the time of any Revocation Closing (as defined in the Settlement
Agreement) shall survive such Revocation Closing. Notwithstanding the
foregoing upon or at any time after a
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<PAGE> 3
Revocation Closing Lender may appoint a substitute collateral agent and bailee
to serve as Collateral Agent hereunder. Upon any such appointment the
Collateral Agent at such time shall immediately deliver to the substitute
collateral agent and bailee any and all Pledged Collateral (as defined in
Section 2).
2. Pledge. Pledgor hereby pledges to Collateral Agent,
for the benefit of Lender and Cabot-Morgan, a security interest in, the
following (collectively, the "Pledged Collateral"):
(a) Any and all shares of Class A Common Stock, Class B
Common Stock (other than the First Union Pledged Shares as defined in
Section 6(b)) or any other capital stock of Lender, now or at any time
or times hereafter, owned by Pledgor, the certificates representing
the shares of such capital stock and the trust certificates issued by
the Voting Trustees to Pledgor that represent any such shares of
capital stock (such now-owned shares and trust certificates being
identified on Exhibit A attached hereto and made a part hereof), all
options and warrants for the purchase of shares of Class A Common
Stock and Class B Common Stock, now or hereafter held in the name of
Pledgor or the Voting Trustees (all of said capital stock, voting
certificates, options and warrants and all capital stock held in the
name of Pledgor or the Voting Trustees as a result of the exercise of
such options or warrants being hereinafter collectively referred to as
the "Pledged Stock"), stock powers with respect to the Pledged Stock
in the form of Exhibit B attached hereto and made a part hereof (the
"Powers") duly executed in blank, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of, or in exchange for, any or all of the
Pledged Stock including any funds held by the Voting Trustees in the
Trust Accounts (as defined in the Voting Trust Agreement);
(b) All additional shares of Class A Common Stock or
Class B Common Stock from time to time acquired by Pledgor in any
manner, the certificates representing such additional shares and the
trust certificates issued by the Voting Trustees to Pledgor that
represent any such additional shares of capital stock (any such
additional shares and voting certificates shall constitute part of the
Pledged Stock and Lender is irrevocably authorized to amend Exhibit A
from time to time to reflect such additional shares and voting
certificates), and all options, warrants, dividends, cash, instruments
and other rights and options from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such shares;
(c) Any and all options to purchase stock of Dart/SFW
Corp. ("Dart/SFW") and any all shares of capital stock of Dart/SFW
acquired upon the exercise of such options, in each case from time to
time acquired by Pledgor in any manner,
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<PAGE> 4
the certificates representing such options or shares (any such options
or shares shall constitute part of the Pledged Stock and Lender is
irrevocably authorized to amend Exhibit A from time to time to reflect
such options or shares), and all options, warrants, dividends, cash,
instruments and other rights and options from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such shares;
(d) The property and interests in property described in
Section 4 below; and
(e) All proceeds of the foregoing.
3. Security for Obligations. The Pledged Collateral
secures the prompt payment, performance and observance of all present and
future debts, obligations and liabilities of Pledgor or of any other obligor
under the Settlement Documents which is controlled by Pledgor (collectively
with Pledgor, the "RSH Obligors") to Lender and Cabot-Morgan arising pursuant
to, or on account of this Pledge Agreement and the other Settlement Documents,
including, without limitation, the obligations of the RSH Obligors to
Cabot-Morgan and/or Lender (i) to pay any indemnification obligation under this
Pledge Agreement or any other Settlement Document, and any and all other sums
due (including applicable interest thereon) at any time thereunder, (ii) to pay
principal of, interest on, and all other amounts payable pursuant to, the
Promissory Notes, including any amendment, extension or renewal thereof, or any
exchange or substitution therefor, and (iii) to pay all other amounts, and
perform, observe and comply with all of the terms, covenants and conditions
which are to be performed, observed or complied with by the RSH Obligors under
this Pledge Agreement, the Promissory Notes or any other Settlement Document
(collectively, the "Obligations").
4. Pledged Collateral Adjustments. If, during the term
of this Pledge Agreement:
(a) Any stock dividend, reclassification, readjustment or
other change is declared or made in the capital structure of Lender or
Dart/SFW, or any option or warrant included within the Pledged
Collateral is exercised, or both, or
(b) Any subscription, warrants or any other rights or
options shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants, rights, options or
other securities, issued by reason of any of the foregoing (including voting
certificates issued by the Voting Trustees), shall be immediately delivered to
and held by Collateral Agent under the terms of this Pledge Agreement and shall
constitute Pledged Collateral hereunder.
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<PAGE> 5
5. Subsequent Changes Affecting Pledged Collateral.
Pledgor represents and warrants that Pledgor has made Pledgor's own
arrangements for keeping informed of changes or potential changes affecting
Lender or the capital structure of Lender (including, but not limited to,
rights to convert, rights to subscribe, payment of dividends, reorganization or
other exchanges, tender offers and voting rights), and Pledgor agrees that none
of Collateral Agent, Lender or Cabot-Morgan shall have any obligation to inform
Pledgor or the Voting Trustees of any such changes or potential changes or to
take any action or omit to take any action with respect thereto.
6. Delivery of Pledged Collateral. (a) All certificates
or instruments representing or evidencing the Pledged Collateral held by
Pledgor on the date hereof have herewith been delivered to Collateral Agent,
accompanied by Powers in the form of Exhibit B duly executed in blank, and any
and all hereafter obtained or received by Pledgor shall be delivered to
Collateral Agent pursuant hereto, accompanied by Powers in the form of Exhibit
B duly executed in blank. Promptly upon the execution and delivery of the
Voting Trust Agreement Collateral Agent will surrender the Pledged Shares to
Lender so that Lender may register in Lender's stock transfer records the
transfer, subject to the lien and security interests created hereunder, of the
Pledged Shares from Pledgor to the Voting Trustees and cause new certificates
representing the Pledged Shares to be issued in the name of, and delivered to,
the Voting Trustees. The new certificates and the Pledged Shares represented
thereby shall be held by Collateral Agent as Pledged Collateral and any voting
trust certificate issued by the Voting Trustees to Pledgor shall by delivered
to Collateral Agent and held as Pledged Collateral. All of the foregoing
certificates shall be accompanied by Powers in the form of Exhibit B duly
executed in blank and shall bear legends indicating that such Pledged Shares
(including the trust certificates) are subject to the lien and security
interest created under this Pledge Agreement. All certificates or instruments
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Lender.
(b) In furtherance of the foregoing Pledgor agrees that
at any time (i) any or all of the New Class A Shares are issued to Borrower or
(ii) any or all of the 33,333 shares of Class A Common Stock owned by Pledgor
which are pledged to First Union National Bank (the "First Union Pledged
Shares") no longer are subject to such Lien, such shares shall constitute
Pledged Collateral and Pledgor shall immediately deliver such shares to
Collateral Agent accompanied by Powers in the form of Exhibit B duly executed
in blank. Promptly upon the delivery of any New Class A Shares or First Union
Pledged Shares to Collateral Agent, Collateral Agent will surrender such New
Class A Shares or First Union Pledged Shares to Lender so that Lender may
register in Lender's stock transfer records the transfer, subject to the lien
and security interests created hereunder, of the New Class A
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<PAGE> 6
Shares or First Union Pledged Shares from Pledgor to the Voting Trustees and
cause new certificates to be issued in substitution for the New Class A Shares
or First Union Pledged Shares to be issued in the name of, and delivered to,
the Voting Trustees. The new certificates and the Pledged Shares represented
thereby shall be held by Collateral Agent as Pledged Collateral and any voting
trust certificate issued by the Voting Trustees to Pledgor shall by delivered
to Collateral Agent and held as Pledged Collateral.
(c) In the event that a court of competent jurisdiction
enters a Court Invalidation Order (as defined in the Settlement Agreement) the
effect of which is that Pledgor may not assign and transfer the Redemption
Class B Shares (as defined in the Settlement Agreement) to Lender during the
lifetime of Herbert H. Haft ("HHH") (or until the termination of the proxy
granted by Pledgor to HHH in July 1993 to vote the Redemption Class B Shares),
Pledgor agrees that such shares shall constitute Pledged Collateral and upon
the reissuance of the Redemption Class B Shares, Pledgor shall immediately
deliver such shares to Collateral Agent accompanied by Powers in the form of
Exhibit B duly executed in blank. In addition, Collateral Agent, Lender and
Pledgor shall take all such actions as are necessary to exchange certificates
representing the Pledged Shares in the name of the Voting Trustees for new
certificates representing the Pledged Shares in the name of Pledgor, all of
which shall constitute Pledged Collateral and immediately be delivered to
Collateral Agent accompanied by Powers in the form of Exhibit B duly executed
in blank.
(d) In the event of a Revocation Closing pursuant to
Section 1.5 of the Settlement Agreement, Pledgor agrees that the Redemption
Class B Shares reissued to Pledgor shall constitute Pledged Collateral and upon
the reissuance of the Redemption Class B Shares, Pledgor shall immediately
deliver such shares to Collateral Agent accompanied by Powers in the form of
Exhibit B duly executed in blank.
7. Representations and Warranties. Pledgor represents
and warrants to Collateral Agent, Lender and Cabot-Morgan as follows:
(a) Pledgor is the sole legal and beneficial owner of,
and Pledgor has the complete and unconditional authority to pledge and
grant a security interest in, the Pledged Stock, as set forth in
Exhibit A, free and clear of any lien, security interest, pledge,
hypothecation, claim, charge, tax assessment, encumbrance or other
restriction of any kind or character ("Lien") except for the Lien
created by this Pledge Agreement and the adverse claims of Robert Haft
and Linda Haft regarding 58,028 shares of Class A Common Stock (the
"RSH Contested Class A Shares"), and the Pledged Collateral
constitutes 100% of Pledgor's interests in Lender except for the First
Union Pledged Shares;
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<PAGE> 7
(b) Pledgor has full power and authority to enter into
this Pledge Agreement;
(c) Except as provided in the Voting Trust Agreement,
there are no restrictions upon the voting rights associated with, or
upon the transfer of, or upon the grant of Lien on, any of the Pledged
Collateral;
(d) Except as provided in the Voting Trust Agreement,
Pledgor and the Voting Trustees have the right to vote, pledge,
assign and grant a security interest in or otherwise transfer such
Pledged Collateral free of any Liens, without the necessity of
obtaining any consents or authorizations from any third parties;
(e) No authorization, approval, or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required either (i) for the pledge of the Pledged Collateral
pursuant to this Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by Pledgor or (ii) for the
exercise by Collateral Agent or Lender of the voting or other rights
provided for in this Pledge Agreement or the remedies in respect of
the Pledged Collateral pursuant to this Pledge Agreement (except as
may be required in connection with such disposition by laws affecting
the offering and sale of securities generally);
(f) The pledge of the Pledged Collateral pursuant to this
Pledge Agreement creates a valid and perfected first priority security
interest in the Pledged Collateral, in favor of Collateral Agent, for
the benefit of Lender and Cabot- Morgan, securing the payment and
performance of the Obligations;
(g) This Pledge and the Powers have been executed and
delivered by Pledgor and constitute the legal, valid and binding
obligation of Pledgor, enforceable against Pledgor in accordance with
their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' right generally and except as to
limitations under general equitable principles on the availability of
specific relief;
(h) The Powers are duly executed and give Collateral
Agent the authority they purport to confer;
(i) There is no action, suit, proceeding, governmental
investigation or arbitration, at law or in equity, or before or by any
governmental authority, pending, or to the knowledge of Pledgor,
threatened against Pledgor or any property or assets of Pledgor that
will materially and adversely affect the ability of Pledgor to perform
Pledgor's obligations under this Pledge Agreement; and
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<PAGE> 8
(j) The execution, delivery and performance of this Pledge
Agreement by Pledgor does not violate (i) any instrument or any
indenture, mortgage, or any other agreement to which Pledgor is a
party or by which any of the properties or assets of Pledgor may be
bound; or (ii) any restriction on the transfer or encumbrance of such
Pledged Collateral.
8. Voting Rights. During the term of this Pledge
Agreement, and except as provided in the Voting Trust Agreement and this
Section 8, Pledgor shall have the right to vote the Pledged Stock on all
corporate questions in a manner not inconsistent with the terms of this Pledge
Agreement, the Promissory Notes and the other Settlement Documents.
9. Dividends and Other Distributions. (a) Subject to
the terms of the Voting Trust Agreement, so long as no Event of Default shall
have occurred:
(i) Pledgor shall be entitled to receive and retain any
and all dividends and interest paid in respect of the Pledged
Collateral; provided, however, that any and all:
(A) dividends and interest paid or payable other
than in cash with respect to, and instruments and other
property received, receivable or otherwise distributed with
respect to, or in exchange for, any of the Pledged Collateral;
(B) dividends and other distributions paid or
payable in cash with respect to any of the Pledged Collateral
on account of a partial or total liquidation or dissolution
(including the sale of all or substantially all of the capital
stock or assets of any subsidiary of Lender) or in connection
with a reduction of capital, capital surplus or paid-in
surplus; and
(C) cash paid, payable or otherwise distributed
with respect to principal of, or in redemption of, or in
exchange for, any of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to
Collateral Agent to hold as Pledged Collateral and shall, if received
by Pledgor, be received in trust for Collateral Agent, be segregated
from the other property or funds of Pledgor, and shall be paid over or
delivered immediately to Collateral Agent as Pledged Collateral in the
same form as so received (with any necessary endorsements); and
(ii) Collateral Agent shall execute and deliver (or cause
to be executed and delivered) to Pledgor all such proxies and other
instruments as Pledgor may reasonably request for the purpose of
enabling Pledgor to receive the
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<PAGE> 9
dividends or interest payments which it is authorized to receive and
retain pursuant to clause (i) above.
(b) Notwithstanding the provisions of Section 9(a), upon and after
the occurrence of a Revocation Closing:
(i) All rights of Pledgor to receive the dividends and
interest payments that Pledgor would otherwise be authorized to
receive and retain pursuant to Section 9(a)(i) shall be limited to
fifty percent (50%) of the amount of all such dividends and interest
payments and the right to receive the remaining fifty percent (50%) of
the amount of all such dividends and interest payment shall thereupon
become vested in Collateral Agent which shall thereupon have the sole
right to receive and hold as Pledged Collateral such portion of the
dividends and interest payments, and any funds so received following a
Revocation Closing shall be immediately applied to the prepayment of
the $37 Million Note, and upon payment in full thereof, prepayment of
the $11.6 Million Note;
(ii) All dividends and interest payments which are
received by Pledgor contrary to the provisions Section 9(b)(i) shall
be received in trust for Collateral Agent, shall be segregated from
other funds of Pledgor and shall be paid over or delivered immediately
to Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsements);
(iii) All amounts in the Trust Accounts on deposit at the
time of the Revocation Closing shall, at the time of the Revocation
Closing, and all amounts received by the Collateral Agent pursuant to
this Section 9(b) shall, at the time received, be applied to the
mandatory prepayment of the $37 Million Note and the $11.6 Million
Note (as such terms are defined in the Settlement Agreement).
(c) Notwithstanding any other provision of this Section 9, after
the occurrence of an Event of Default:
(i) All rights of Pledgor to receive the dividends and
interest payments that Pledgor would otherwise be authorized to
receive and retain pursuant to Section 9(a)(i) or 9(b) (i) hereof
shall cease, and all such rights shall thereupon become vested in
Collateral Agent which shall thereupon have the sole right to receive
and hold as Pledged Collateral such dividends and interest payments;
(ii) All dividends and interest payments which are
received by Pledgor contrary to the provisions Section 9(b)(i) shall
be received in trust for Collateral Agent, shall be segregated from
other funds of Pledgor and shall be paid over or delivered immediately
to Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsements).
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<PAGE> 10
10. Transfers and Other Liens. Pledgor agrees that
Pledgor will not (i) sell, assign, transfer, pledge or otherwise dispose of or
encumber, or grant any option with respect to, all or any portion of the
Pledged Collateral without the prior written consent of Lender, except to the
Voting Trustees as contemplated by Section 6 and as provided in the
Buy/Sell/Offering Agreement, (ii) create or permit to exist any Lien upon or
with respect to any of the Pledged Collateral, except for the Lien under this
Pledge Agreement and for the adverse claim of Robert Haft and Linda Haft
regarding 58,028 shares of Class A Common Stock or (iii) consent or approve the
authorization of any additional shares of capital stock of Lender. Pledgor
shall defend the title to the Pledged Collateral against all persons.
11. Liens on HHH Refunds or Repayments. As security for
the Obligations, Pledgor hereby pledges to Lender, as collateral agent and
bailee for Lender and Cabot-Morgan, and grants to Lender, as collateral agent
and bailee for Lender and Cabot-Morgan, a security interest in, any claim
Pledgor may have against, or any refund or other return of money or property
that Pledgor may receive or be entitled to receive from, HHH as a refund or
other repayment of payments made on that certain Promissory Note, dated July
28, 1993, executed by Pledgor in favor of HHH (the "HHH Note") (including any
return, or failure by HHH to accept tender, of the prepayment to be made on the
HHH Note by Pledgor concurrently with the transactions contemplated by the
Settlement Agreement) and any refund or other return of money or property that
Pledgor may receive from HHH as the return or refund of any payment by Pledgor
of all or any portion of the purchase price of the Redemption Class B Shares,
including any such refund or other payment arising from any decision,
settlement or compromise of the lawsuit captioned Herbert H. Haft v. Ronald S.
Haft, Civ. A. No. 94CA9883 (D.C. Super. Ct. July 17, 1995), and a counterclaim
in the lawsuit captioned Ronald S. Haft v. Herbert H. Haft, Civ. A. No. 14425
(Del. Ch. filed July 18, 1995) (collectively, the "Rescission Action") or
otherwise, which results in the rescission of the sale of the HHH Redemption
Class B Shares (as defined in the Settlement Agreement) or HHH obtaining any
right to own or vote the HHH Redemption Class B Shares or shares issued in
substitution therefor. Pledgor hereby agrees that any payment or instrument
received by Pledgor related to the foregoing claims shall be received in trust
for Lender, as collateral agent and bailee for Lender and Cabot-Morgan, shall
be segregated from other funds of Pledgor and shall be paid over immediately to
Lender in the same form as so received (with any necessary endorsements). With
respect to the collateral granted under this Section, Lender shall be entitled
to all the rights, remedies and benefits provided under this Pledge Agreement
to Collateral Agent and Lender as if such collateral constituted Pledged
Collateral hereunder.
12. Remedies. (a) Collateral Agent and Lender shall
have, in addition to any other rights given under this Pledge Agreement or by
law, all of the rights and remedies with respect
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<PAGE> 11
to the Pledged Collateral of a secured party under the Uniform Commercial Code
as in effect in the State of Delaware. In addition, after the occurrence of an
Event of Default, Collateral Agent and Lender shall have such powers of sale
and other powers as may be conferred by applicable law. With respect to the
Pledged Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of Collateral Agent and Lender
or which Collateral Agent and Lender shall otherwise have the ability to
transfer under applicable law, Collateral Agent and Lender may, in Lender's
sole discretion, without notice except as specified below, after the occurrence
of an Event of Default, sell or cause the same to be sold at any exchange,
broker's board or at public or private sale, in one or more sales or lots, at
such price as Lender may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk, and the purchaser of any or
all of the Pledged Collateral so sold shall thereafter own the same, absolutely
free from any claim, encumbrance or right of any kind whatsoever. Lender or
Cabot-Morgan may, in its own name, or in the name of a designee or nominee, buy
the Pledged Collateral at any public sale and, if permitted by applicable law,
buy the Pledged Collateral at any private sale. Pledgor agrees to pay to
Collateral Agent, Lender and Cabot-Morgan all reasonable expenses (including,
without limitation, court costs and reasonable attorneys' and paralegals' fees
and expenses) of, or incident to, the enforcement of any of the provisions
hereof. Collateral Agent and Lender agrees to distribute any proceeds of the
sale of the Pledged Collateral in accordance with Section 12(g) and Pledgor
shall remain liable for any deficiency following the sale of the Pledged
Collateral.
(b) Unless any of the Pledged Collateral threatens to
decline speedily in value or is or becomes of a type sold on a recognized
market, Lender will give Pledgor reasonable notice of the time and place of any
public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Notwithstanding any provision to the
contrary contained herein, Pledgor agrees that any requirements of reasonable
notice shall be met if such notice is received by Pledgor at least five (5)
Business Days before the time of the sale or disposition; provided, however,
that Lender may give any shorter notice that is commercially reasonable under
the circumstances. Any other requirement of notice, demand or advertisement
for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities
laws may impose certain restrictions on the method by which a sale of the
Pledged Collateral may be effected after an Event of Default, Pledgor agrees
that after the occurrence of an Event of Default, Lender may, from time to
time, attempt to sell
- 11 -
<PAGE> 12
all or any part of the Pledged Collateral (i) by means of an underwritten
public offering as provided in Section 12(d), (ii) by private placement as
provided in Section 12(e), or (iii) by taking the Pledged Collateral as
treasury stock of Lender as provided in Section 12(f).
(d) Lender may, at Pledgor's expense, attempt to sell the
Pledged Collateral in an underwritten public offering. In such event Pledgor
shall, upon the request of Lender, execute and deliver all such instruments and
documents, and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of Lender, Pledgor or Lender's or Pledgor's
counsel, advisable to assist Lender in registering the applicable Pledged
Collateral under the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), to qualify the Pledged Collateral under state securities or
"Blue Sky" laws and to obtain all necessary governmental approvals for the sale
of the Pledged Collateral, and to assist Lender in making all amendments and
supplements thereto and to the related prospectus which, in the opinion of
Lender, Pledgor or Lender's or Pledgor's counsel, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules and
regulations thereunder.
Pledgor shall, upon the request of Lender, at Pledgor's
expense, do or cause to be done all such other acts and things as may be
necessary to permit Lender to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law and the
requirements of any underwriter, including the execution and delivery of any
underwriting agreement.
Pledgor will reimburse Lender for all expenses incurred by
Lender including, without limitation, reasonable attorneys' and accountants'
fees and expenses in connection with the foregoing. In the event capital stock
of Lender other than Pledged Collateral is included in any offering pursuant to
this Section 12(d), Pledgor shall bear expenses incurred in connection with the
offering based on the proportion that Pledged Collateral included in such
offering represents all shares of capital stock of Lender included in such
offering. Upon or at any time after the occurrence of an Event of Default, if
Lender determines that, prior to any public offering of any securities
constituting part of the Pledged Collateral, such securities should be
registered under the Securities Act and/or registered or qualified under any
other federal or state law and such registration and/or qualification is not
practicable, then Pledgor agrees that it will be commercially reasonable if a
private sale, upon at least five (5) Business Days' notice to Pledgor, is
arranged so as to avoid a public offering, even though the sales price
established and/or obtained at such private sale may be substantially less then
prices which could have been obtained for such security on any market or
exchange or in any other public sale.
(e) Lender may, at Pledgor's expense, attempt to sell
the Pledged Collateral in a private placement restricting the
- 12 -
<PAGE> 13
bidders and prospective purchasers to those who are qualified and will
represent and agree that they are purchasing for investment only and not for
distribution. In so doing, Lender may solicit offers to buy the Pledged
Collateral, or any part of it, from a limited number of investors deemed by
Lender, in its reasonable judgment, to be financially responsible parties who
might be interested in purchasing the Pledged Collateral. If Lender solicits
such offers from not less than three (3) such investors, then the acceptance by
Lender of the highest offer obtained therefrom shall be deemed to be a
commercially reasonable method of disposing of such Pledged Collateral;
provided, however, that this Section does not impose a requirement that Lender
solicit offers from three or more investors in order for the sale to be
commercially reasonable.
(f) In lieu of selling or otherwise disposing of the
Pledged Collateral as permitted by any other provision of this Section 12, by
law or otherwise, in the event Lender in its reasonable discretion determines
that the market value of the Pledged Collateral (including amounts retained in
the Trust Accounts) equals or exceeds the Obligations outstanding under the $37
Million Note and the $27.4 Million Note (as such terms are defined in the
Settlement Agreement) Lender will offer to retain the Pledged Collateral or
such portion of the Pledged Collateral as Lender in its sole discretion
determines in satisfaction of the Obligations of Pledgor under the $37 Million
Note and the $27.4 Million Note, subject to preserving any claims Lender may
have then or at any time in the future arising from or related to the First
Union Pledged Shares and the RSH Contested Class A Shares.
(g) Pledgor agrees that (i) in the event Collateral Agent
and Lender shall, upon any Event of Default, sell the Pledged Collateral or any
portion thereof at a private sale or sales, Lender shall have the right to rely
upon the advice and opinion of investment bankers engaged by Lender as to the
best price reasonably obtainable upon such a private sale and (ii) in the
absence of fraud, such reliance shall be conclusive evidence that Lender
handled such matter in a commercially reasonable manner under applicable law.
(h) Each right, power and remedy of Collateral Agent,
Lender, Cabot-Morgan or any collateral agent, bailee or escrow agent acting on
behalf of Lender or Cabot-Morgan provided for in this Pledge Agreement, the
Promissory Notes or any other Settlement Document, or now or hereafter existing
at law or in equity, by statute or otherwise, shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Pledge Agreement, the Promissory Notes or in any of the
other Settlement Documents, or now or hereafter existing at law or in equity,
by statute or otherwise. The exercise or the beginning of the exercise by
Collateral Agent, Lender, Cabot-Morgan or any collateral agent, bailee or
escrow agent acting on behalf of Lender or Cabot-Morgan of any one or more of
such rights, powers or remedies shall not preclude
- 13 -
<PAGE> 14
the simultaneous or later exercise by any of them of any or all such other
rights, powers or remedies. Collateral Agent, Lender, Cabot-Morgan or any
collateral agent, bailee or escrow agent acting on behalf of Lender or
Cabot-Morgan may exercise any such right, power or remedy against Pledgor
without exercising such rights, powers or remedies against any other RSH
Obligor.
(i) Pledgor hereby agrees that after the occurrence of an
Event of Default, Collateral Agent, Lender, Cabot-Morgan or any collateral
agent, bailee or escrow agent acting on behalf of Lender or Cabot-Morgan may
proceed to foreclose the security interest in, or exercise any rights of any of
them against, any or all collateral which any of them may hold as a security
for repayment of the Obligations in such order, and at such times, as
Collateral Agent, Lender, Cabot-Morgan or any collateral agent, bailee or
escrow agent acting on behalf of Lender or Cabot-Morgan may elect in its sole
discretion. No such action shall be deemed to release, relinquish, alter or
impair any rights of Collateral Agent, Lender or Cabot-Morgan hereunder.
Pledgor hereby waives all rights which Pledgor may have under the doctrines of
marshalling of assets or marshalling of Liens.
(j) Upon the occurrence of any Event of Default and the
sale of any or all of the Pledged Collateral, the proceeds from such sale shall
be applied by Lender as follows:
First: to payment of the costs and expenses of such sale,
including the expenses of Collateral Agent and Lender and the fees and expenses
of counsel employed in connection therewith;
Second: to the payment of the remainder of the Obligations in
such order as Lender shall determine;
Third: to the payment of any other amounts required by
applicable law;
Fourth: the balance, if any, of such proceeds shall be paid
to Pledgor, Pledgor's successor and assigns, or as a court of competent
jurisdiction may direct.
13. Security Interest Absolute. All rights of Collateral
Agent, Lender and Cabot-Morgan and the security interests created hereunder,
and all obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(i) Any lack of validity or enforceability of this Pledge
Agreement, the Promissory Notes or any other Settlement Document;
(ii) Any change in the time, manner or place of payment
of, or in any other term of, all or any part of the Promissory Notes
or any other Obligation, or any other amendment or waiver of or any
consent to any departure from
- 14 -
<PAGE> 15
this Pledge Agreement, the Promissory Notes or any other Settlement
Document;
(iii) Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the Obligations;
or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Pledgor in
respect of the Obligations or of this Pledge Agreement, the Promissory
Notes or any other Settlement Document.
14. Collateral Agent and Lender Appointed
Attorney-in-Fact. Pledgor hereby appoints each of Collateral Agent and Lender
Pledgor's attorney-in-fact, with full authority, in the name of Pledgor or
otherwise, after the occurrence of an Event of Default, from time to time in
Lender's sole discretion, individually or jointly to take any action and to
execute any instrument which Lender may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full
discharge for the same and to arrange for the transfer of all or any part of
the Pledged Collateral on the books of Lender to the name of Collateral Agent,
Lender or Collateral Agent's or Lender's nominee. After the occurrence of an
Event of Default, Collateral Agent may, at any time upon the direction of
Lender, in Lender's sole discretion and without notice to Pledgor, transfer or
register the Pledged Collateral or any part thereof into its or its nominee's
name with or without any indication that such Pledged Collateral is subject to
the security interest hereunder. In addition, Collateral Agent, upon the
direction of Lender, may at any time exchange certificates or instruments
representing or evidencing any Pledged Collateral for certificates or
instruments of smaller or larger denominations.
15. Duty of Care. None of Collateral Agent, Lender or
Cabot-Morgan shall be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Pledged Collateral, except for those arising
out of or in connection with Collateral Agent's, Lender's or Cabot-Morgan's (i)
gross negligence or willful misconduct, or (ii) failure to use reasonable care
with respect to the safe custody of the Pledged Collateral in Collateral
Agent's or Lender's possession. Without limiting the generality of the
foregoing, none of Collateral Agent, Lender or Cabot-Morgan shall be under any
obligation to take any steps necessary to preserve rights in the Pledged
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be
- 15 -
<PAGE> 16
for the sole account of Pledgor, and shall constitute part of the Obligations
secured hereby.
16. Notices. All notices and other communications
provided for hereunder shall be in writing and shall be deemed given if
delivered in person or if sent by certified mail, postage prepaid, return
receipt requested, or by facsimile (answerback required), if to Lender or
Pledgor, at the addresses specified from time to time in accordance with the
Promissory Notes and if to the Voting Trustees or Collateral Agent, at the
address specified for the Voting Trustees from time to time in accordance with
the Voting Trust Agreement.
17. Indemnity and Expenses. (a) Pledgor agrees to
indemnify Collateral Agent, Lender and Cabot-Morgan from and against any and
all claims, losses and liabilities (including reasonable attorneys' fees)
arising out of or resulting from this Pledge Agreement (including, without
limitation, enforcement of this Pledge Agreement), except claims, losses or
liabilities resulting from Collateral Agent's, Lender's or Cabot-Morgan's gross
negligence or willful misconduct.
(b) Pledgor will upon demand pay to Collateral Agent,
Lender and Cabot-Morgan the amount of any and all reasonable expenses,
including the reasonable fees and expenses of counsel to any of them and of any
experts and agents, which any of them may incur in connection with (i) the
administration of this Pledge Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of Collateral Agent, Lender or Cabot-Morgan hereunder or (iv) the failure by
Pledgor to perform or observe any of the provisions hereof.
18. Specific Performance. Pledgor acknowledges and
agrees that in the event of any breach of this Pledge Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that Collateral Agent, Lender and
Cabot-Morgan, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance (including
temporary restraining orders) of this Pledge Agreement in any action instituted
in the Delaware Court of Chancery or the United States District Court for the
District of Delaware, or, in the event neither of said courts would have
jurisdiction over such action, in any court of the United States or any state
having subject matter jurisdiction. Pledgor consents to personal jurisdiction
in any such action brought in the Delaware Court of Chancery or the United
States District Court for the District of Delaware.
19. Term; Releases. This Pledge Agreement shall remain
in full force and effect until (i) the Obligations have been fully and
indefeasibly paid in cash whether as (A) direct payment from RSH to Lender or
Cabot-Morgan, (B) the credit
- 16 -
<PAGE> 17
against the payment of the $37 Million Note (as defined in the Settlement
Agreement) for the purchase price of shares under the Buy/Sell/Offering
Agreement (as provided in paragraph 5.b. and c. of the $37 Million Note), or
(C) provided by Article 6 of the Master Agreement and (ii) if applicable, the
delivery by Pledgor to Lender of the Redemption Class B Shares (as defined in
the Settlement Agreement) pursuant to Section 5.3(c) of the Settlement
Agreement. This Pledge Agreement shall continue in effect notwithstanding any
Revocation Closing pursuant to Section 1.5 of the Settlement Agreement. Upon
the termination of this Pledge Agreement as provided above (other than as a
result of the sale of the Pledged Collateral), Lender will direct Collateral
Agent to release the security interest created hereunder. Notwithstanding the
foregoing, the Pledged Collateral shall be released by Collateral Agent upon
the sale of any or all of the Pledged Shares pursuant to the Buy/Sell/Offering
Agreement and the release of such Pledged Shares in accordance with Section 5
of the Voting Trust Agreement.
20. Cross Default. The Settlement Agreement, this Pledge
Agreement and the other Settlement Documents constitute one integrated whole.
Pledgor acknowledges and agrees that a material breach under any of the
Settlement Documents by Pledgor or any other RSH Obligor shall constitute a
material breach under each other Settlement Document including this Pledge
Agreement. Lender and Cabot-Morgan acknowledge and agree that a material
breach under any of the Settlement Documents by Lender, Cabot-Morgan or any
Person controlled by Lender shall constitute a material breach under each other
Settlement Document including this Pledge Agreement.
21. Reinstatement; Liens. This Pledge Agreement and the
Obligations and Liens hereunder shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference," "fraudulent conveyance,"
or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.
Pledgor shall not contest or support any other Person in contesting, in any
actions or proceedings, the priority or validity of any Lien or other claim in
any collateral or other interest granted under any Settlement Document by
Pledgor, or any other RSH Obligor to Collateral Agent, Lender, Cabot-Morgan, or
any collateral agent, bailee or escrow agent acting on behalf of Lender or
Cabot-Morgan.
22. Further Assurances. Pledgor agrees that Pledgor will
cooperate with Collateral Agent, Lender and Cabot-Morgan and will execute and
deliver, or cause to be executed and delivered, all such other powers, proxies,
instruments and documents, and
- 17 -
<PAGE> 18
will take all such other actions, including, without limitation, the execution
and filing of financing statements, as Lender may reasonably request from time
to time in order to carry out the provisions and purposes of this Pledge
Agreement.
23. Survival of Representations and Warranties. The
covenants, agreements, representations and warranties of the parties hereto
made in this Pledge Agreement shall survive the closing of the transactions
contemplated hereby.
24. Successors and Assigns. This Pledge Agreement shall
be binding upon and inure to the benefit of Pledgor, Collateral Agent, Lender,
Cabot-Morgan and their respective heirs, executors, administrators, successors
(including any representative, executor or administrator of Borrower's estate)
and assigns. Pledgor's successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for Pledgor.
25. Amendments, Waivers and Consents. No amendment or
waiver of any provision of this Pledge Agreement nor consent to any departure
by Pledgor from this Pledge Agreement, shall in any event be effective unless
the same shall be in writing and signed by the Lender and Collateral Agent, and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
26. Exhibits. The Exhibits attached to this Pledge
Agreement are incorporated herein and shall be part of this Pledge Agreement
for all purposes.
27. Section Headings. The section headings herein, and
the headings in the Exhibits hereto, are solely for convenience of reference
and shall not be given any effect in the construction or interpretation of this
Pledge Agreement. Unless otherwise specified, references in this Pledge
Agreement to Sections or Exhibits are references to Sections of, or Exhibits
to, this Pledge Agreement.
28. Definitions. The singular shall include the plural
and vice versa as the context may require. Notwithstanding a Revocation
Closing (as defined in the Settlement Agreement) pursuant to Section 1.5 of the
Settlement Agreement, terms defined herein by reference to agreements which do
not survive the Revocation Closing shall continue to have the meanings ascribed
to such terms in such agreements.
29. Entire Agreement. This Pledge Agreement (including
the Exhibits hereto) and the other Settlement Documents set forth the entire
understanding of the parties hereto and supersede all prior agreements between
them with respect to the subject matter hereof and all prior negotiations
between the parties are merged in this Pledge Agreement and the other
Settlement Documents, and there are no promises, agreements, conditions,
undertakings, warranties or
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<PAGE> 19
representations, oral or written, express or implied, between them other than
as herein set forth.
30. Severability. If this Pledge Agreement or any other
Settlement Document or any one or more of the provisions contained in this
Pledge Agreement or any other Settlement Document, should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of all remaining provisions shall not in any way be affected or
impaired.
31. Governing Law. THIS PLEDGE AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO ITS CONFLICT OF LAWS PRINCIPLES.
32. Consent to Jurisdiction, Waiver of Jury Trial.
(a) PLEDGOR, TO THE EXTENT THAT PLEDGOR MAY LAWFULLY DO
SO, HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AS
WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM
SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF ANY OF PLEDGOR'S OBLIGATIONS HEREUNDER OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS
PLEDGOR MAY HAVE AS TO VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE
OF SUCH FORUM, IN ANY OF SUCH COURTS. IN ADDITION, TO THE EXTENT THAT PLEDGOR
MAY LAWFULLY DO SO, PLEDGOR CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL
SERVICE OR U.S. CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO PLEDGOR AT THE ADDRESS SPECIFIED PURSUANT TO SECTION 16 OF THIS
PLEDGE AGREEMENT. TO THE EXTENT PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE WITH RESPECT TO PLEDGOR OR PLEDGOR'S PROPERTY, PLEDGOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF PLEDGOR'S OBLIGATIONS
UNDER THIS PLEDGE AGREEMENT.
(b) PLEDGOR HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS PLEDGE AGREEMENT.
33. Acknowledgment by Voting Trustees. The Voting
Trustees by their acknowledgment of this Pledge Agreement hereby acknowledges
and agrees that the transfer of any Pledged Collateral by Pledgor to the Voting
Trustees is subject at all times to the Lien created under this Pledge
Agreement and all the terms and conditions of this Pledge Agreement and that
the covenants and agreements of Pledgor hereunder with respect to the Pledged
Collateral are binding upon the Voting Trustees and apply to the Voting
Trustees as if Voting Trustees were Pledgor hereunder.
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<PAGE> 20
34. Execution in Counterparts. This Pledge Agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which shall together constitute one and the same agreement.
IN WITNESS WHEREOF, Pledgor, Collateral Agent and Lender have
executed this Pledge Agreement as of the date set forth above.
<TABLE>
<S> <C>
PLEDGOR:
/s/ Ronald S. Haft
--------------------------
Ronald S. Haft
COLLATERAL AGENT:
/s/ Larry G. Schafran
--------------------------
Larry G. Schafran
/s/ Sidney B. Silverman
--------------------------
Sidney B. Silverman
DART GROUP CORPORATION
By: /s/ Robert A. Marmon
--------------------------
Name:
Title:
ACKNOWLEDGED AS OF THE
DATE FIRST WRITTEN ABOVE
Voting Trustees under that certain Voting
Trust Agreement of even date herewith among
Pledgor, Lender and the undersigned in their
capacity as voting trustees thereunder:
/s/ Larry G. Schafran
- --------------------------
Larry G. Schafran
/s/ Sidney B. Silverman
- --------------------------
Sidney B. Silverman
</TABLE>
- 20 -
<PAGE> 21
EXHIBIT A
to
PLEDGE AGREEMENT
Pledged Stock and Trust Certificates
<TABLE>
<CAPTION>
Name and Address Description of Certificate
of Pledgor Pledged Stock Numbers
- ---------------- ------------- -----------
<S> <C> <C>
Ronald S. Haft Trust certificate
2435 California Street, N.W. representing shares 3, 4
Washington, D.C. 20008 of Class A Common Stock,
par value $1.00 per
share, of Dart
Group Corporation
Trust Certificate 1, 2
representing
222,294 shares of
Class B Common
Stock, par value
$1.00 per share, of
Dart Group
Corporation
Larry G. Schafran and 86,173 shares of 92705 (85,303
Sidney B. Silverman Class A Common shares held
Voting Trustees Stock in brokerage
par value $1.00 per account)
share, of Dart
Group Corporation
222,294 shares of 92706
Class B Common
Stock, par value
$1.00 per share, of
Dart Group
Corporation
</TABLE>
- 21 -
<PAGE> 22
EXHIBIT B
to
PLEDGE AGREEMENT
Form of Irrevocable Stock Power
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to _____________________________ _____ shares of Class ___ Common
Stock, $1.00 par value per share, of Dart Group Corporation, a Delaware
corporation, (the "Corporation"), represented by Certificate No. __ (the
"Stock"), standing in the name of the undersigned on the books of said
corporation and does hereby irrevocably constitute and appoint
___________________________________ as the undersigned's true and lawful
attorney, for it and in its name and stead, to sell, assign and transfer all or
any of the Stock, and for that purpose to make and execute all necessary acts
of assignment and transfer thereof; and to substitute one or more persons with
like full power, hereby ratifying and confirming all that said attorney or
substitute or substitutes shall lawfully do by virtue hereof.
Dated:
----------------------
- ------------------------------------------
Ronald S. Haft
