<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
-------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 6, 1995
DART GROUP CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 0-1946 53-0242973
- ----------------------------- -------------- -----------------
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
3300 75th Avenue, Landover, Maryland 20785
------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (301) 731-1200
--------------
--------------------------------------------------------------------
(Former name or former address, if changed since last report).
<PAGE> 2
Item 1. Changes in Control of Registrant
The discussion under Item 5 of this Current Report on Form 8-K is
incorporated herein by reference.
The following table sets forth all beneficial owners of Dart Class B
Common Stock, Dart's only voting securities, held as of October 9, 1995.
Unless otherwise indicated, all Class B shares are held with sole voting and
investment power.
<TABLE>
<CAPTION>
Name Shares Owned Percent of Class
- ---- ------------ ----------------
<S> <C> <C>
Larry G. Schafran and 222,294(1) 67.9%
Sidney B. Silverman as
Voting Trustees for
Ronald S. Haft as
beneficial owner
Ronald S. Haft 222,294(1) 67.9%
Gloria G. Haft 54,484 16.7%
Linda G. Haft 25,246 7.7%
Robert M. Haft 25,246 7.7%
</TABLE>
- -------------------
(1) Under the Voting Trust Agreement (defined below), Larry G. Schafran and
Sidney B. Silverman, as Voting Trustees, have sole voting power over the
shares and Ronald S. Haft has sole investment power over the shares,
subject to the rights of Dart to exercise a call option to purchase the
shares, as provided in the Buy/Sell/Offering Agreement (defined below).
Item 5. Other Events
Overview of Settlement with Ronald Haft
On October 6, 1995, the Executive Committee and the Special Litigation
Committee of the Board of Directors of Dart Group Corporation ("Dart") approved
a settlement of certain litigation between Dart and Ronald S. Haft and other
related transactions between Dart and Ronald S. Haft (collectively, the
"Settlement"). Immediately thereafter, Dart and Ronald Haft entered into a
Settlement Agreement (the "Settlement Agreement") and various related
agreements. The Settlement transactions have the effect, by their terms, of
transferring majority control of Dart's voting stock to voting trustees (the
"Voting Trustees") under a Voting Trust Agreement (the "Voting Trust
Agreement"), by and among Ronald Haft, Dart and Larry G. Schafran and Sidney B.
Silverman, as initial Voting Trustees. On October 8, 1995, the Board of
Directors of Dart ratified and approved the Settlement.
Terms of Settlement with Ronald Haft
The terms of the Settlement transactions are set forth in the
documents included as exhibits to this Current Report on Form 8-K, all of which
exhibits are incorporated herein by this reference. A complete understanding
of the Settlement transactions requires a review of the documents included as
exhibits to this Current Report on Form 8-K. The summary outline of basic
terms of the Settlement transactions set forth below does not necessarily
reflect all of the material provisions of those documents.
THE SUMMARY OUTLINE OF BASIC TERMS OF THE SETTLEMENT TRANSACTIONS SET
FORTH BELOW ALSO ASSUMES THE VALIDITY AND LEGAL EFFECTIVENESS OF THOSE
TRANSACTIONS. AS NOTED BELOW, THERE IS PENDING AND POSSIBLE FUTURE LITIGATION
THAT COULD ADVERSELY AFFECT THE VALIDITY AND LEGAL EFFECTIVENESS OF THE
SETTLEMENT TRANSACTIONS. NO ASSURANCE CAN BE GIVEN AS TO THE OUTCOME OF SUCH
LITIGATION.
Subject to the foregoing qualifications, the basic terms of the
Settlement transactions include the following:
- Ronald Haft transferred to Dart 172,730 shares of Dart Class B
Common Stock in exchange for the issuance of 288,312 shares of
Dart Class A Common Stock. These 288,312 shares of Dart Class
A Common Stock have been placed by Ronald Haft into the Voting
Trust under the Voting Trust Agreement. Prior to the
Settlement, Herbert Haft exercised voting rights with respect
to the 172,730 shares of Dart Class B Common Stock transferred
to Dart pursuant to the Settlement. Before July 28, 1993, he
exercised such voting rights as record owner of these shares,
and thereafter he exercised such voting rights pursuant to a
proxy granted by Ronald Haft that entitled Herbert Haft to
vote these shares "on all matters on which they are entitled
to vote." The transfer of these 172,730 shares of Dart Class
B Common Stock shares to Dart pursuant to the Settlement
causes them to become treasury shares, which are not entitled
to vote.
<PAGE> 3
- Ronald Haft's option to purchase 197,048 shares of Dart Class
B Common Stock pursuant to his 1993 employment agreement with
Dart was amended to increase the exercise price from $89.65 to
$140 per share, and these 197,048 shares of Dart Class B
Common Stock were issued to Ronald Haft pursuant to his
exercise of this option in exchange for $197,048 in cash
(i.e., $1.00 par value per share) and a secured promissory
note of Ronald Haft in the principal amount of $27,389,672
(the "$27.4 Million Note"). The $27.4 Million Note is due
June 30, 2000, subject to earlier mandatory prepayment in the
event of a disposition, pursuant to the Buy/Sell/Offering
Agreement (discussed below), of the shares of stock held by
the Voting Trustees. Interest on the $27.4 Million Note
accrues at an annual rate of 8% and is due at maturity.
Immediately after issuance of these 197,048 shares of Dart
Class B Common Stock to him, Ronald Haft assigned such shares
to the Voting Trustees under the Voting Trust Agreement.
- Ronald Haft assigned to the Voting Trustees (i) an additional
25,246 shares of Dart Class B Common Stock and (ii) an
additional 86,173 shares of Dart Class A Common Stock (subject
to competing claims as to 58,029 of those shares), and 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 Ronald Haft.
- Dart transferred $37,925,710 to Ronald Haft and received from
Ronald Haft a $37,740,162 secured promissory note (the "$37.7
Million Note"), which is due June 30, 2000, subject to earlier
mandatory prepayment in the event of a disposition, pursuant
to the Buy/Sell/Offering Agreement (discussed below), of the
shares of stock held by the Voting Trustees.
- Dart transferred an additional $11,621,276 to Ronald Haft in
escrow, and such funds have been tendered to Herbert Haft as
prepayment of a promissory note that Ronald Haft gave to
Herbert Haft in 1993 as partial payment for the 172,730 shares
of Dart Class B Common Stock transferred by Ronald Haft to
Dart pursuant to the Settlement. In exchange, Ronald Haft has
given Dart a secured promissory note in the principal amount
of $11,621,276 (the "$11.6 Million Note"), which is due June
30, 2000, subject to earlier mandatory prepayment upon the
sale of Cabot-Morgan joint venture properties (discussed
below).
- Dart's wholly-owned subsidiary, Cabot-Morgan Real Estate
Company ("Cabot-Morgan"), has agreed to the sale to third
parties of the five properties which it owns through joint
ventures with Haft-owned entities on terms to be arranged by
Ronald Haft during the next five years. Cabot-Morgan has
assigned its interests in the proceeds of these sales (except
for the first $2.0 million) to Ronald Haft, but Ronald Haft is
required to apply the first assigned sale proceeds toward
payment of the $11.6 Million Note.
- Ronald Haft and Dart have agreed to various transactions
(including, among others, lease amendments and transfers of
<PAGE> 4
interests) relating to certain warehouse and office facility
properties that Dart and/or Trak Auto Corporation lease from
Haft-owned entities (collectively, the "Warehouse
Transactions"). These properties include the so-called Pennsy
I, Pennsy II and Pennsy III warehouse facilities in Landover,
Maryland, Dart's headquarters office building on 75th Avenue
in Landover, Maryland and warehouse facilities in Bridgeview,
Illinois and Ontario, California. The Warehouse Transactions,
which are subject to a variety of contingencies that include
bankruptcy court and mortgagee approval, are intended to
produce a benefit for Dart calculated to be at least $30
million. That calculation of benefit is based on a discounted
present value analysis of reduced future lease obligations of
Dart and Trak Auto Corporation as a result of the Warehouse
Transactions. To the extent, if any, that the Warehouse
Transactions fail to produce that level of benefit for Dart,
the assignment to Ronald Haft of Cabot-Morgan's interests in
sale proceeds will be reduced.
- As part of the Settlement, Ronald Haft resigned all of his
positions as a director or officer of Dart and its
subsidiaries, effective 30 days after the date of Settlement
unless the Settlement is enjoined by a court. He also
consented to termination of his employment agreement with Dart
without any further rights he might otherwise have under that
agreement.
- As part of the Settlement, Ronald Haft has also consented to
termination of all of his outstanding stock options from Dart
and its affiliated companies. Ronald Haft has relinquished
options to purchase the following: (i) five shares of Dart/SFW
Corp., a subsidiary of Dart that owns a 50% interest in
Shoppers Food Warehouse Corp., at an exercise price of
$192,687.50 per share; (ii) 10,000 shares (6,666 currently
exercisable) of Dart Class A Common Stock at exercise prices
of between $81.50 and $89.65 per share; (iii) 10,000 shares
(6,666 currently exercisable) of Crown Books Corporation
Common Stock at $23.00 per share; and (iv) 10,000 shares
(6,666 currently exercisable) of Trak Auto Corporation Common
Stock at $12.50 per share.
The Voting Trust Agreement provides that the Voting Trustees will be
entitled to exercise the power to vote the shares they hold as Voting Trustees
in such manner as they deem to be "in the best interests of Dart and all of its
shareholders as a single class." After implementation of the Settlement, a
total of 327,270 shares of Dart Class B Common Stock, the only class of Dart
stock entitled to vote in the election of directors, are issued and
outstanding. Of these shares, a total of 222,294 shares (or 67.9% of the total
number of shares of Dart Class B Common Stock issued and outstanding) -- which
represent voting control of Dart -- are held by the Voting Trustees.
Larry G. Schafran and Sidney B. Silverman are serving as the initial
two Voting Trustees. It is contemplated that within 90 days, Mr. Schafran and
Mr. Silverman will agree upon the appointment of a permanent replacement Voting
Trustee. In the event of their failure to so appoint a
<PAGE> 5
replacement Voting Trustee. It is contemplated that the parties will seek to
have a permanent trustee appointed by the Delaware Court of Chancery.
A Buy/Sell/Offering Agreement between Dart and Ronald Haft governs the
ultimate disposition of the shares held by the Voting Trustees. That agreement
gives Ronald Haft the right to "put" to Dart the stock held by the Voting
Trustees at any time between January 1, 1997 and December 31, 1999, subject to
certain conditions. With respect to the 222,294 shares of Class B Common Stock
held by the Voting Trustees, Ronald Haft may (instead of including them in the
"put") exchange them for 244,523 shares of Class A Common Stock (i.e., a 1.1 to
1 exchange ratio) and offer those 244,523 shares of Class A Common Stock to the
public. Dart has an option to "call" the shares held by the Voting Trustees,
if they have not previously been disposed of as described above, at any time
during the first seven months of the year 2000.
The price paid by Dart in any "put" or "call" of the shares held by
the Voting Trustees will be, for shares of Class A Common Stock, an amount per
share equal to $83.875 plus 8% annual interest from October 6, 1995 until the
date of purchase. For shares of Class B Common Stock held by the Voting
Trustees, the price per share paid by Dart in any "put" or "call" will be
$154.13, plus 8% annual interest for any period after December 1996 during
which Ronald Haft is denied the right to exercise the "put" or public offering
option because of actual or threatened litigation.
The $37.7 Million Note and the $27.4 Million Note that Ronald Haft has
given to Dart in connection with the Settlement both have a stated maturity
date of June 30, 2000, but will be due and payable upon the closing of a "put"
or "call" under the Buy/Sell/Offering Agreement. The price of the shares
purchased by Dart upon the closing of a "put" or "call" would be offset against
the principal and interest due on these two promissory notes.
As previously announced, Dart will present the Settlement with Ronald
Haft to the Delaware Chancery Court for its approval in connection with the
dismissal of the derivative lawsuit, Kahn and The Tudor Trust v. Herbert Haft,
et al., Civ. A. No. 13154 (Del. Ch. filed Sept. 29, 1993). Also as previously
disclosed, the Delaware Chancery Court also has jurisdiction over a pending
claim brought by Herbert Haft in July 1995 to rescind his 1993 sale of the
172,730 shares of Class B Common Stock to Ronald Haft that Ronald Haft is
transferring to Dart pursuant to the Settlement. In addition, press reports
since Dart's initial announcement of the Settlement on October 6 indicate that
the Settlement could be subject to challenge in further litigation by Herbert
Haft as well as by Gloria, Robert and Linda Haft. No assurance can be given as
to the outcome of these litigation matters.
The documents implementing the Settlement contain certain provisions intended
to protect Dart's interests if a challenge to the Settlement is accepted by the
Delaware Chancery Court. In general terms, these provisions include the
following:
- If the Delaware Chancery Court does not approve the settlement
in the Kahn action, Dart will have the right to cause the
Settlement
<PAGE> 6
transactions to be reversed, except that (i) Ronald Haft will
have up to two years to repay the $37.7 Million Note and the
$11.6 Million Note, (ii) the Warehouse Transactions will
proceed and (iii) the sale of the Cabot-Morgan joint venture
properties will proceed, but without any assignment to Ronald
Haft of Cabot-Morgan's portion of the sale proceeds.
- If Herbert Haft succeeds through his rescission claim in
reacquiring ownership of the 172,730 shares of Class B Common
Stock transferred by Ronald Haft to Dart as part of the
Settlement, repayment of $24.2 million of the principal amount
of the $37.7 Million Note will be due within two years and the
288,312 shares of Dart Class A Common Stock issued to Ronald
Haft under the Settlement will be returned to Dart.
- If a court rules that Ronald Haft cannot transfer the 172,730
shares of Class B Common Stock to Dart because of the impact
on Herbert Haft's preexisting proxy from Ronald Haft to vote
those shares, then $8.0 million of the Cabot-Morgan sale
proceeds will be held in escrow until the transfer occurs and
may, under certain circumstances, be returned to Dart.
- If a court determines that the 197,048 shares of Class B
Common Stock are not validly issued or that the Voting
Trustees are not entitled to vote the shares they hold, then
Dart will have the same rights (discussed above) as in the
event that the Court does not approve the settlement of the
Kahn lawsuit. Alternatively, Dart could elect that the
197,048 shares of Class B Common Stock be returned to Dart,
that the $27.4 million promissory note be cancelled and that
Ronald Haft pay $8.0 million to Dart within two years.
Dismissal of Litigation
Current Litigation. The Settlement resolves various pending
litigation between Dart and Ronald Haft, as follows:
- Kahn and the Tudor Trust v. Herbert Haft, et al., Civ. A. No.
13154 (Del. Ch. filed Sept. 29, 1993). The claims against
Ronald Haft and Combined Properties, Inc. will be dismissed on
the merits and with prejudice as against the shareholder
plaintiffs and Dart, subject to approval by the Delaware Court
of Chancery.
- Ronald S. Haft v. Dart Group Corporation, Civ. A. No. 13736
(Del. Ch. filed Sept. 12, 1994). Ronald Haft, Dart and the
shareholder plaintiffs have stipulated to the dismissal
without prejudice of this lawsuit.
- Dart Group Corporation and Pennsy Warehouse Leasing
Corporation v. Herbert H. Haft, et al., Civ. A. No.
CAL95-02302 (Prince Georges Cty., Md. Cir. Ct. filed Feb. 10,
1995). Dart will cause Ronald Haft to be dismissed with
prejudice from this action.
<PAGE> 7
- Robert M. Haft v. Dart Group Corporation, Civ. A. No. 95-82
(D. Del. filed Feb. 10, 1995). Dart will dismiss with
prejudice its counterclaim against Ronald Haft in this action.
- Ronald S. Haft v. Herbert H. Haft, Civ. A. No. 14425 (Del. Ch.
filed July 18, 1995). Ronald Haft will dismiss with prejudice
his claims against Dart in this action.
Effect of Settlement on Financial Condition
The loans made to Ronald Haft pursuant to the Settlement have resulted
in a reduction in cash of approximately $50 million and a reduction in
shareholders' equity of approximately $56 million. See Item 7(b) -- Pro Forma
Financial Information.
<PAGE> 8
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
(b) Pro forma financial statements
The following pro forma balance sheet as of July 31, 1995 and income
statement for the six months ended July 31, 1995 are provided, on a preliminary
basis, to present the effects of the transactions between Dart and Ronald
S. Haft, as if those transactions had occurred on July 31, 1995.
No adjustment has been made in the accompanying pro forma income
statement to reflect the transfer of interests in Cabot Morgan or reductions
in interest income resulting from the utilization of cash in connection with
the transaction. These pro forma financial statements should be read in
conjunction with the historical annual and quarterly financial statements of
Dart previously filed on Forms 10-K and 10-Q and the other information
contained in this Form 8-K.
<PAGE> 9
DART GROUP CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
<TABLE>
<CAPTION>
BALANCE SHEET
ASSETS Unaudited
------ --------------------------------------------------------------------------------
Historical Pro forma
July 31, 1995 Debit Credit July 31, 1995
------------- ------- --------- -------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and Short Term Instruments $106,149 $ 1,125 A $ (37,926) D $ 56,831
197 B (11,621) E
(1,093) G
Marketable Debt Securities 60,486 60,486
Accounts Receivable 7,495 (147) G 7,348
Note Receivable-Ronald S. Haft 0 11,621 E 11,621
Merchandise Inventories 184,525 184,525
Deferred Income Taxes 17,851 17,851
Other Current Assets 2,401 (3) G 2,398
-------- ------- --------- ---------
Total Current Assets 378,907 12,943 (50,790) 341,060
Property and Equipment, at cost:
Furniture, Fixtures, and Equipment 82,831 82,831
Land, Buildings and Improvements 199,802 21,793 F (170,881) G 50,714
Property Under Capital Lease 27,129 (24,472) F 2,657
-------- ------- --------- --------
309,762 21,793 (195,353) 136,202
Accumulated Depreciation and Amortization (83,405) 7,660 F (57,835)
17,910 G
-------- ------- --------- --------
226,357 47,363 (195,353) 78,367
Other Assets 8,648 (7,082) G 1,566
Retained Interest in Cabot Morgan
Real Estate Company 0 2,000 G 2,000
Share of Equity in Shoppers Food
Warehouse Corporation 44,581 44,581
Excess of Purchase Price Over
Net Assets Acquired 1,830 1,830
Deferred Income Tax Benefit 10,786 10,786
-------- ------- --------- --------
Total Assets $671,109 $62,306 $(253,225) $480,190
======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of this consolidated
pro forma balance sheet.
<PAGE> 10
DART GROUP CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
BALANCE SHEET
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited
------------------------------------ --------------------------------------------------------------------------------
Historical Pro forma
July 31, 1995 Debit Credit July 31, 1995
------------- --------- --------- -------------
<S> <C> <C> <C> <C>
Current Liabilities:
Current Portion of Mortgages Payable $ 1,955 $ (1,058) G $ 897
Accounts Payable 88,503 88,503
Other Accrued Liabilities 76,275 (1,503) G 67,405
(2,850) H
(517) I
(4,000) J
Accrued Judgment in favor of
Robert M. Haft 33,554 33,554
Current Portion of Reserve for Closed
Facilities and Restructuring 10,558 10,558
Current Portion of Obligations Under
Capital Lease 184 (91) F 93
-------- --------- -------- --------
Total Current Liabilities 211,029 (10,019) 0 201,010
Mortgages Payable 79,042 (79,042) G 34,960 F 34,960
Obligation Under Capital Lease 29,989 (29,888) F 101
Reserve for Closed Facilities and
Restructuring 54,396 (22,000) K 32,396
Minority Interests 94,113 (28,380) G 65,733
Stockholders' Equity:
Note Receivable-Ronald S. Haft 0 (27,390) B (65,131)
(37,741) D
Class A Common Stock 1,661 288 C 1,949
Class B Common Stock 303 197 B 500
Paid-in Capital 65,331 (185) D 985 A 86,411
(34,500) G 27,390 B
2,850 H
2,540 I
22,000 K
Unrealized Losses on Short Term
Investments (103) (103)
Retained Earnings 137,097 (12,696) 124,401
Treasury Stock Class A Common Stock (1,749) (1,749)
Treasury Stock Class B Common Stock 0 (288) C (288)
-------- --------- ------- --------
Total Stockholders' Equity 202,540 (112,800) 56,250 145,990
Total Liabilities and Stockholders' Equity $671,109 $(282,129) $91,210 $480,190
======== ========= ======= ========
</TABLE>
The accompanying notes are an integral part of this consolidated pro forma
balance sheet.
<PAGE> 11
DART GROUP CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
<TABLE>
<CAPTION>
CAPSULE STATEMENT OF INCOME Unaudited
--------------------------- --------------------------------------------------------------------------------
Historical Pro forma
July 31, 1995 Debit Credit July 31, 1995
------------- --------- --------- -------------
<S> <C> <C> <C> <C>
Revenues $317,319 $ (140) A $317,459
Operating Expenses:
Selling and Administrative 65,525 2,023 I (4,000) J 63,548
Other Operating Expenses 249,127 14,813 G 263,940
-------- ------- ------- ---------
Income before Income Taxes, Equity in
Affiliate and Minority Interests 2,667 16,836 (4,140) (10,029)
Income Taxes 2,250 2,250
Equity in affiliate 3,605 3,605
Minority interests (1,617) (1,617)
-------- ------- ------- --------
Net income (loss) $ 2,405 $16,836 $(4,140) $(10,291)
======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of this consolidated
pro forma statement of income.
<PAGE> 12
DART GROUP CORPORATION
Notes to Pro Forma Financial
Statements
July 31, 1995
(In thousands)
Note 1: Description of Pro Forma Adjustments:
The following pro forma adjustments reflect on a preliminary basis, the
transactions between Dart and Ronald S. Haft entered into on
October 6, 1995.
<TABLE>
<S> <C> <C> <C>
A. Dr. Cash $1,125
Cr. Paid in Capital $985
Cr. Interest Income 140
</TABLE>
To record the purchase of 197,048 Class B stock options by Ronald S.
Haft. These Class B options had not previously been recognized by Dart.
<TABLE>
<S> <C> <C> <C>
B. Dr. Cash $ 197
Dr. Note Receivable--Shareholder 27,390
Cr. Common Stock--Class B $ 197
Cr. Paid In Capital 27,390
</TABLE>
To record the exercise of options to purchase 197,048 Class B shares
(at $140 per share) for cash and a note receivable from Ronald S. Haft.
<TABLE>
<S> <C> <C> <C>
C. Dr. Treasury Stock--Class B $288
Cr. Common Stock--Class A $288
</TABLE>
To record the exchange of 172,730 shares of Class B common stock
(voting) for 288,312 shares of Class A common stock (non-voting).
<TABLE>
<S> <C> <C> <C>
D. Dr. Notes Receivable--Shareholder $37,741
Dr. Paid in Capital 185
Cr. Cash $37,926
</TABLE>
To record the loan to Ronald S. Haft, secured by the shares in the
voting trust, among other collateral. Note is payable by Ronald S. Haft in
cash or in exchange for stock in the Voting Trust.
<TABLE>
<S> <C> <C> <C>
E. Dr. Note Receivable $11,621
Cr. Cash $11,621
</TABLE>
To record note receivable from Ronald S. Haft to be repaid in cash at
maturity or from proceeds of sale or refinancing of real estate interests
(Cabot-Morgan).
<PAGE> 13
<TABLE>
<S> <C> <C> <C>
F. Dr. Capital Lease Obligation - S/T $ 91
Dr. Capital Lease Obligation - L/T 29,888
Dr. Accumulated Depreciation 7,660
Dr. Land and Buildings 21,793
Cr. Mortgages Payable $34,960
Cr. Leased Property 24,472
</TABLE>
To record various transactions (including lease amendments and
transfers of interest) on certain property leased by Dart and its affiliates.
<TABLE>
<S> <C> <C> <C>
G. Dr. Loss on Real Estate $14,813
Dr. Mortgage Payable - Current 1,058
Dr. Mortgage Payable 79,042
Dr. Accrued Liabilities 1,503
Dr. Minority Interest 28,380
Dr. Retained Interest In Cabot Morgan 2,000
Dr. Accumulated Depreciation 17,910
Dr. Paid In Capital 34,500
Cr. Land and Buildings $170,881
Cr. Cash 1,093
Cr. Accounts Receivable 147
Cr. Other Assets - Current 3
Cr. Other Assets - Long Term 7,082
</TABLE>
To write down Cabot Morgan partnership interests to fair value based on
appraisals and record transfer of Cabot Morgan, net of Dart's retained interest,
to Ronald S. Haft.
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
H. Dr. Accrued Expense $2,850
Cr. Paid In Capital $2,850
</TABLE>
To record elimination of Ronald S. Haft option to purchase 5 shares of
Dart/SFW Corp..
<TABLE>
<S> <C> <C> <C>
I. Dr. Compensation Expense $2,023
Dr. Accrued Expenses 517
Cr. Paid In Capital $2,540
</TABLE>
To record estimated fair value of Ronald S. Haft terminated employment
agreement.
<TABLE>
<S> <C> <C> <C>
J. Dr. Accrued Expenses $4,000
Cr. Legal Expenses $4,000
</TABLE>
To record reversal of accrued legal expenses no longer required.
<TABLE>
<S> <C> <C> <C>
K. Dr. Closed Store Reserve $22,000
Cr. Paid In Capital $22,000
</TABLE>
To record elimination of reserve for warehouse lease obligations as a
result of lease transactions (see Entry F).
<PAGE> 15
(c) Exhibits
Exhibit 9 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.
Exhibit 10.1 Settlement Agreement, dated as of October 6, 1995, by
and between Dart Group Corporation and Ronald S.
Haft.
Exhibit 10.2 Buy/Sell/Offering Agreement, dated as of October 6,
1995, by and between Dart Group Corporation and
Ronald S. Haft.
Exhibit 10.3 Amendment No. 1 to Employment Agreement, dated
October 6, 1995, by an between Dart Group Corporation
and Ronald S. Haft.
Exhibit 10.4 Promissory Note, dated October 6, 1995, executed by
Ronald S. Haft in favor of Dart Group Corporation in
the principal amount of $37,740,162.00.
Exhibit 10.5 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.
Exhibit 10.6 Promissory Note, dated October 6, 1995, executed by
Ronald S. Haft in favor of Dart Group Corporation in
the principal amount of $11,621,276.00.
Exhibit 10.7 Restricted Account Security Agreement, dated as of
October 6, 1995, by and among Ronald S. Haft, Dart
Group Corporation and Settlement Corp., as escrow
agent.
Exhibit 10.8 Escrow Agreement [$11.6 Million], dated as of October
6, 1995 by and among Ronald S. Haft, Dart Group
Corporation and Settlementcorp, as escrow agent.
Exhibit 10.9 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.
Exhibit 10.10 Pledge of Undisputed Partnership Interests, dated as
of October 6, 1995, executed by Ronald S. Haft and
certain of his affiliates in favor of Dart Group
Corporation.
Exhibit 10.11 Pledge of Disputed Partnership Interests, dated as of
October 6, 1995, executed by Ronald S. Haft and
certain of his affiliates in favor of Dart Group
Corporation.
Exhibit 10.12 Partnership Stock Pledge Agreement, dated as of
October 6, 1995 in favor of Dart Group Corporation.
Exhibit 10.13 Mutual Release, dated as of October 6, 1995, by and
between each of Dart Group Corporation, Crown Books
Corporation, Trak Auto Corporation, Cabot-Morgan Real
Estate Company, Dart/SFW Corporation, and each of
Ronald S. Haft and Combined Properties, Inc.
Exhibit 10.14 Real Estate Master Agreement, dated as of October 6,
1995, by and among Ronald S. Haft, Dart Group
Corporation and Cabot-Morgan Real Estate Company.
Exhibit 10.15 Escrow and Security Agreement, dated as of October 6,
1995, by and among Ronald S. Haft, certain of his
affiliates, Dart Group Corporation, Cabot-Morgan Real
Estate Company and Settlementcorp, as escrow agent.
Exhibit 10.16 Purchase Agreement [Pennsy Drive Warehouses], dated
October 6, 1995, by and between Ronald S. Haft and
Dart Group Corporation.
Exhibit 10.17 Purchase Agreement [Warehouse Partnership Interests],
dated October 6, 1995, by and between Ronald S. Haft
and Dart Group Corporation.
Exhibit 10.18 Disputed Partnership Interest Purchase Agreement,
dated October 6, 1995, by and between Ronald S. Haft
and Dart Group Corporation.
Exhibit 10.19 Termination of Employment Agreement, dated as of
October 6, 1995, by and between Dart Group
Corporation and Ronald S. Haft.
Exhibit 10.20 Subscription Agreement, dated as of October 6, 1995,
by and between Dart Group Corporation and Ronald S.
Haft.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DART GROUP CORPORATION
By: ROBERT A. MARMON
------------------------------
Robert A. Marmon
Treasurer and
Chief Financial Officer
Date: October 10, 1995
<PAGE> 16
DART GROUP CORPORATION
Form 8-K
Exhibit Index
Exhibit 9 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.
Exhibit 10.1 Settlement Agreement, dated as of October 6, 1995, by
and between Dart Group Corporation and Ronald S.
Haft.
Exhibit 10.2 Buy/Sell/Offering Agreement, dated as of October 6,
1995, by and between Dart Group Corporation and
Ronald S. Haft.
Exhibit 10.3 Amendment No. 1 to Employment Agreement, dated
October 6, 1995, by an between Dart Group Corporation
and Ronald S. Haft.
Exhibit 10.4 Promissory Note, dated October 6, 1995, executed by
Ronald S. Haft in favor of Dart Group Corporation in
the principal amount of $37,740,162.00.
Exhibit 10.5 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.
Exhibit 10.6 Promissory Note, dated October 6, 1995, executed by
Ronald S. Haft in favor of Dart Group Corporation in
the principal amount of $11,621,276.00.
Exhibit 10.7 Restricted Account Security Agreement, dated as of
October 6, 1995, by and among Ronald S. Haft, Dart
Group Corporation and Settlement Corp., as escrow
agent.
Exhibit 10.8 Escrow Agreement [$11.6 Million], dated as of October
6, 1995 by and among Ronald S. Haft, Dart Group
Corporation and Settlementcorp, as escrow agent.
Exhibit 10.9 Stock and Trust Certificate Pledge Agreement, dated
as of October 6, 1995, made by Ronald S. Haft in
favor of Larry G. Schafran and
<PAGE> 17
Sidney B. Silverman, as collateral agents and bailees
for Dart Group Corporation and Cabot-Morgan Real
Estate Company.
Exhibit 10.10 Pledge of Undisputed Partnership Interests, dated as
of October 6, 1995, executed by Ronald S. Haft and
certain of his affiliates in favor of Dart Group
Corporation.
Exhibit 10.11 Pledge of Disputed Partnership Interests, dated as of
October 6, 1995, executed by Ronald S. Haft and
certain of his affiliates in favor of Dart Group
Corporation.
Exhibit 10.12 Partnership Stock Pledge Agreement, dated as of
October 6, 1995 in favor of Dart Group Corporation.
Exhibit 10.13 Mutual Release, dated as of October 6, 1995, by and
between each of Dart Group Corporation, Crown Books
Corporation, Trak Auto Corporation, Cabot-Morgan Real
Estate Company, Dart/SFW Corporation, and each of
Ronald S. Haft and Combined Properties, Inc.
Exhibit 10.14 Real Estate Master Agreement, dated as of October 6,
1995, by and among Ronald S. Haft, Dart Group
Corporation and Cabot-Morgan Real Estate Company.
Exhibit 10.15 Escrow and Security Agreement, dated as of October 6,
1995, by and among Ronald S. Haft, certain of his
affiliates, Dart Group Corporation, Cabot-Morgan Real
Estate Company and Settlementcorp, as escrow agent.
Exhibit 10.16 Purchase Agreement [Pennsy Drive Warehouses], dated
October 6, 1995, by and between Ronald S. Haft and
Dart Group Corporation.
Exhibit 10.17 Purchase Agreement [Warehouse Partnership Interests],
dated October 6, 1995, by and between Ronald S. Haft
and Dart Group Corporation.
Exhibit 10.18 Disputed Partnership Interest Purchase Agreement,
dated October 6, 1995, by and between Ronald S. Haft
and Dart Group Corporation.
Exhibit 10.19 Termination of Employment Agreement, dated as of
October 6, 1995, by and between Dart Group
Corporation and Ronald S. Haft.
Exhibit 10.20 Subscription Agreement, dated as of October 6, 1995,
by and between Dart Group Corporation and Ronald S.
Haft.
<PAGE> 1
EXHIBIT 9
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
<PAGE> 2
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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<PAGE> 3
"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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<PAGE> 4
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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<PAGE> 5
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
- 5 -
<PAGE> 6
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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<PAGE> 7
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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<PAGE> 8
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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<PAGE> 9
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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<PAGE> 10
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
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<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
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<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
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<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,
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<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
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<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
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<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
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<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
- 24 -
<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.
- 26 -
<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>
- 27 -
<PAGE> 1
EXHIBIT 10.1
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.
5
<PAGE> 6
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
6
<PAGE> 7
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
7
<PAGE> 8
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.
8
<PAGE> 9
(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.
9
<PAGE> 10
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
10
<PAGE> 11
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
11
<PAGE> 12
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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<PAGE> 17
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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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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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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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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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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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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<PAGE> 35
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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<PAGE> 37
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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<PAGE> 38
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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<PAGE> 39
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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<PAGE> 41
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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<PAGE> 43
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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<PAGE> 44
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
44
<PAGE> 45
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
45
<PAGE> 1
EXHIBIT 10.2
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
3
<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
5
<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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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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<PAGE> 11
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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<PAGE> 12
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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<PAGE> 13
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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<PAGE> 14
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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<PAGE> 15
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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<PAGE> 16
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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<PAGE> 17
(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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<PAGE> 18
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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<PAGE> 19
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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<PAGE> 20
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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<PAGE> 24
(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
2
<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.
4
<PAGE> 1
EXHIBIT 10.3
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This AMENDMENT NO. 1, dated October 6, 1995, is entered into by and
between Dart Group Corporation, a Delaware corporation ("Employer"), and Ronald
S. Haft ("Employee").
RECITALS
WHEREAS, Employer and Employee are parties to that certain Employment
Agreement, dated August 1, 1993 (the "Agreement"); and
WHEREAS, Employer and Employee desire to make certain amendments to
the Agreement.
NOW THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Agreement is hereby amended as follows:
1. Section 4(a)
The first paragraph of Section 4(a) of the Agreement is hereby deleted
and replaced in its entirety with the following:
(a) Class B Stock Option. In consideration of the execution of
this contract by Employee and the payment by Employee of Five Dollars
($5) per share, an aggregate of Nine Hundred Eighty-Five Thousand Two
Hundred Forty Dollars ($985,240) (the "Option Purchase Payment"),
Employer hereby grants and sells to Employee the right and option to
purchase one hundred ninety-seven thousand forty-eight (197,048)
shares of the Class B Common Stock of Employer at a price of One
Hundred Forty Dollars ($140) per share.
2. Section 4(b)
Section 4(b) of the Agreement is hereby deleted and replaced in its
entirety with the following:
(b) Employer Loan. Employer agrees to loan to Employee the
amounts of the purchase prices in the event Employee exercises all or
parts of any option to purchase stock of Employer. Any such loan
shall bear interest at eight percent (8.0%) per annum. Said principal
and interest of each such loan shall be separately due and payable
upon the earlier of (i) the sale by Employee of shares purchased with
such loan proceeds or (ii) the fifth anniversary of the date of that
loan.
<PAGE> 2
3. Section 7
Section 7 of the Agreement is hereby amended and supplemented by
adding immediately after subsection (h) thereof the following new subsection:
(i) Mutual Consent. Employer and Employee may terminate this
Agreement at any time by mutual written consent of the parties hereto.
IN WITNESS WHEREOF, Employee has executed and Employer has caused to
be executed this Amendment No. 1 as of the date first written above.
RONALD S. HAFT
/s/ Ronald S. Haft
--------------------------------
DART GROUP CORPORATION
By:/s/ Robert A. Marmon
-----------------------------
Robert A. Marmon
Treasurer and Chief Financial
Officer
- 2 -
<PAGE> 1
EXHIBIT 10.4
PROMISSORY NOTE
$37,740,162.00 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
Thirty-Seven Million Seven Hundred Forty Thousand One Hundred Sixty-Two and
00/100 Dollars ($37,740,162.00) (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. [intentionally left blank]
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
$37 Million Note referred to in, and is issued pursuant to, the 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,
<PAGE> 2
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;
provided, however, in the event any RSH Pledged Class A Shares are owned by
Borrower at such time but not purchased at such closing, this Promissory Note
shall be prepaid in part, in an amount equal to the Principal Sum, less the
product of the number of RSH Pledged Class A Shares not purchased and the
Buy/Sell Class A Share Price (as defined in the Buy/Sell/Offering Agreement).
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. Upon any subsequent closing pursuant to the
Buy/Sell/Offering Agreement of the sale from Borrower to Lender of RSH Pledged
Class A Shares, 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 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 or,
if not paid in full prior to the Maturity Date, on the Maturity Date.
2
<PAGE> 3
d. (i) The principal sum of Twenty-Four Million
One Hundred Eighty-Two Thousand Two Hundred Dollars ($24,182,200.00) and
interest thereon shall be mandatorily prepaid in the event a court of competent
jurisdiction enters a final order or grants equitable relief, in 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) (the
"Rescission Action") or otherwise, the effect of which is that the sale of
172,730 shares of Lender's Class B Common Stock (the "Redemption Class B
Shares") (or shares substituted therefor) to Borrower by Herbert H. Haft
("HHH"), is or has been rescinded, that Lender has not received a valid and
effective assignment and transfer of the Redemption Class B Shares from
Borrower as of the date hereof or that the Redemption Class B Shares (or shares
substituted therefor) must be returned or delivered to HHH or Borrower.
Borrower shall immediately prepay Five Million Dollars ($5,000,000.00) of the
principal sum required to be prepaid by this paragraph 5.d.(i), and interest
thereon. Any amount of principal and interest which remains unpaid shall be
paid from time to time and at such times as, and to the extent that, Escrow
Funds are on deposit in the Escrow Accounts or, if not paid in full prior to
the Maturity Date, on the Maturity Date.
(ii) Notwithstanding the provisions of
paragraph 5.d.(i), in the event that a court of competent jurisdiction enters
an order the effect of which is that Borrower may not assign and transfer the
Redemption Class B Shares to Lender during HHH's lifetime (or until the
termination of the proxy granted by Borrower to HHH in July 1993 to vote the
Redemption Class B Shares), the mandatory prepayment provisions under paragraph
5.d.(i) shall not apply; provided, however, that if, prior to the valid and
effective consummation of the transaction provided for in Section 1.1(f) of the
Settlement Agreement, any event (for example, Borrower's legal incapacity or
Borrower's testamentary transfer of the Redemption Class B Shares to HHH) shall
occur that renders Borrower unable to consummate the transaction provided for
in Section 1.1(f) of the Settlement Agreement, then upon written notice from
Lender to Borrower the principal sum of Twenty-Four Million One Hundred
Eighty-Two Thousand Two Hundred Dollars ($24,182,200.00) and interest thereon
shall be mandatorily prepaid in accordance with the provisions of paragraph
5.d(i).
e. Following any Revocation Closing this
Promissory Note shall be mandatorily prepaid from time to time and at such
times as, and to the extent that, (A) Escrow Funds are on deposit in the RSH
Escrow Account (as defined in the Master Agreement) and (B) distributions
(including funds on deposit in the Trust Accounts (as defined in the Voting
Trust Agreement) on the Revocation Closing) are payable to the collateral agent
under Section 9(b) of the Stock Pledge Agreement (as defined paragraph 7) or,
if not paid in full prior to the Revocation Maturity Date (as defined in
paragraph 6), on the Revocation Maturity Date. Following a Revocation Closing
Date, in the event that with respect to any Warehouse Partnership or
3
<PAGE> 4
Warehouse Property (as defined in the Master Agreement) the condition for the
release of all or a portion of the Warehouse Reserve (as defined in the Master
Agreement) with respect to such Warehouse Property or Warehouse Partnership are
satisfied in accordance with the requirements of Section 7.2 of the Master
Agreement, then Borrower shall receive a credit for, and the amounts payable
under this Promissory Note shall be reduced by, the amount of the Allocation
(as defined in the Master Agreement) with respect to such Warehouse Property or
Warehouse Partnership.
f. 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 paragraphs 5.b., c.,
d. and e. of this Promissory Note, the $27.4 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 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; Revocation Maturity Date. Borrower
hereby expressly waives any presentment for payment, demand for payment, notice
of nonpayment or dishonor, protest and notice of protest of any kind. Upon the
occurrence of a Revocation Closing pursuant to Section 1.5 of the Settlement
Agreement, the payment of the Principal Sum and interest on, and all other
amounts payable under, this Promissory Note shall become due on the date which
is two years after the date of the Revocation Closing (the "Revocation Maturity
Date").
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 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
4
<PAGE> 5
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 $27.4 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 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)); provided,
however, that after a Revocation Closing this paragraph 8.c. shall not apply to
any covenant contained in the Settlement Agreement, which covenant terminates
pursuant to Section 1.5 thereof, or any covenant in any other Settlement
Document which terminates pursuant to Section 1.5 of the Settlement 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.d.; 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
5
<PAGE> 6
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.
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
6
<PAGE> 7
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 become due and payable, whether on (i) the Maturity Date, (ii)
the Revocation Maturity Date or (iii) the date obligations under this
Promissory Note become due and payable pursuant to acceleration under paragraph
9 or otherwise (but not including any date on which all or any portion of this
Promissory Note becomes 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. The limitations on the personal liability of Borrower under
this paragraph 10.b. shall no longer apply upon and after any Revocation
Closing.
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
7
<PAGE> 8
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:
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
8
<PAGE> 9
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.
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
9
<PAGE> 10
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 10.5
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.
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<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
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<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 10.6
PROMISSORY NOTE
$11,621,276.00 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 Eleven
Million Six Hundred Twenty-One Thousand Two Hundred Seventy-Six and 00/100
Dollars ($11,621,276.00) (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
six and sixty one-hundredths percent (6.61%); provided, however, that for the
period, if any, in which funds remain in the account established pursuant to
the Escrow Agreement [$11.6 Million] (as defined in the Settlement Agreement
referred to in paragragh 4) and interest is continuing to accrue on the HHH
Note (as defined in the Settlement Agreement), the accrual of interest on this
Promissory Note for such period shall be limited to the amount of interest
credited during such period to the account established pursuant to the Escrow
Agreement [$11.6 Million]. Interest shall accrue annually on the unpaid
Principal Sum at a simple rate of interest and shall be due on December 31 of
each year, beginning December 31, 1995. 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 pay off in full the principal sum and accrued interest owed by
Borrower under that certain Promissory Note, dated July 28, 1993, executed by
Borrower in favor of Herbert H. Haft (the "HHH Note").
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.
<PAGE> 2
4. Settlement Agreement. This Promissory Note is the
$11.6 Million Note referred to in, and is issued pursuant to, the 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. This Promissory Note shall be mandatorily prepaid
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. Following any Revocation Closing this
Promissory Note shall be mandatorily prepaid from time to time and at such
times as, and to the extent that, (A) Escrow Funds are on deposit in the RSH
Escrow Account (as defined in the Master Agreement) and (B) distributions
(including funds on deposit in the Trust Accounts (as defined in the Voting
Trust Agreement) on the Revocation Closing) are payable to the collateral agent
under Section 9(b) of the Stock Pledge Agreement (as defined paragraph 7) or,
if not paid in full prior to the Revocation Maturity Date (as defined in
paragraph 6), on the Revocation Maturity Date. Following a Revocation Closing
Date and in the event the $37.9 Million Note is paid in full, in the event that
with respect to any Warehouse Partnership or Warehouse Property (as defined in
the Master Agreement) the condition for the release of all or a portion of the
Warehouse Reserve (as defined in the Master Agreement) with respect to such
Warehouse Property or Warehouse Partnership are satisfied in accordance with
the requirements of Section 7.2 of the Master Agreement, then Borrower shall
receive a credit for, and the amounts payable under this Promissory Note shall
be reduced by, the amount of the
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<PAGE> 3
Allocation (as defined in the Master Agreement) with respect to such Warehouse
Property or Warehouse Partnership.
d. 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. and
c. of this Promissory Note, the $27.4 Million Note, the $37 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 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; Revocation Maturity Date. Borrower
hereby expressly waives any presentment for payment, demand for payment, notice
of nonpayment or dishonor, protest and notice of protest of any kind. Upon the
occurrence of a Revocation Closing pursuant to Section 1.5 of the Settlement
Agreement, the payment of the Principal Sum and interest on, and all other
amounts payable under, this Promissory Note shall become due on the date which
is two years after the date of the Revocation Closing (the "Revocation Maturity
Date"); provided, however, that this Promissory Note shall continue to be due
on the Maturity Date (and not the Revocation Maturity Date) in the event
Herbert H. Haft has accepted prepayment in full of the HHH Note (as defined in
the Settlement Agreement).
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 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
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<PAGE> 4
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 $27.4 Million Note or the $37 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 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)); provided,
however, that after a Revocation Closing this paragraph 8.c. shall not apply to
any covenant contained in the Settlement Agreement, which covenant terminates
pursuant to Section 1.5 thereof, or any covenant in any other Settlement
Document which terminates pursuant to Section 1.5 of the Settlement 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 Event of Default under this paragraph 8.d.; 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
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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.
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. 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
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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. 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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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.
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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
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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 10.7
RESTRICTED ACCOUNT SECURITY AGREEMENT
This RESTRICTED ACCOUNT SECURITY AGREEMENT ("Agreement") is executed
and delivered this 6th day of October, 1995, by and among RONALD S. HAFT, (the
"Debtor"), and DART GROUP CORPORATION, a Delaware corporation, ("Dart" or the
"Secured Party"), and SETTLEMENTCORP, a Maryland corporation ("Escrow Agent").
R E C I T A L S:
A. As of the date hereof, Debtor is indebted to Dart for borrowed
money in the outstanding principal amounts of THIRTY-SEVEN MILLION SEVEN
HUNDRED FORTY THOUSAND ONE HUNDRED SIXTY-TWO DOLLARS ($37,740,162.00) (the
"Loan") evidenced by that certain promissory note in such principal amount
dated October 6, 1995 (the "Note"), which terms shall include all
modifications, extensions, renewals, refinancing, amendments, substitutions and
consolidations thereof now or hereafter executed.
B. To further secure Debtor's performance under the Note and all
other Loan Documents, as defined below, Debtor has agreed to deposit and
maintain with the Escrow Agent the Account (defined below), which funds are to
be disbursed as hereinafter provided and to grant Dart a first priority
security interest in said funds as additional security for repayment of the
Loans and the performance of all terms and conditions of the Loan Documents
(the "Loan Obligations").
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Account" means Account No. 76709526 maintained by Escrow
Agent in Escrow Agent's name as bailee for Dart and escrow agent for
Dart and Debtor at The Riggs National Bank of Washington, D.C.
("Bank"), which is the restricted deposit account created and
administered pursuant to this Agreement. "Account" shall include all
funds and investment earnings thereon in the Account from time to time
and all obligations owed to the depositor by Bank in respect of the
Account.
"Cabot-Morgan" means Cabot Morgan Real Estate Company, a
Delaware Corporation.
<PAGE> 2
"Collateral" shall have the meaning given in Section
2.01.
"Default" or "Event of Default" means after the passing of any
applicable notice and cure period as provided under the Note, any
default or event of default hereunder or as defined or described in
the Loan Documents.
"Loan" shall have the meaning given in Recital A. of this
Agreement.
"Loan Documents" means this Agreement, the Note, and all of
the other documents, agreements and instruments evidencing or securing
the Loan, and all extensions, modifications, renewals, refinancing,
amendments, substitutions and consolidations thereof now or hereafter
entered into.
"Loan Obligations" shall have the meaning given in Recital B.
of this Agreement.
"Major Event of Default" shall mean a default described in
paragraphs 8.a, 8.b, 8.e or 8.f of the Note.
"Master Agreement" means that certain Master Real Estate
Agreement as of even date herewith among Debtor, Dart and Cabot-Morgan.
"Non-affiliated Third Party" shall have the meaning given in
Section 4.03.
"Note" shall have the meaning given in Recital A. of this
Agreement.
"Obligations" shall have the meaning given in the Master
Agreement.
"Other Collateral" shall have the meaning given in
Section 6.02.
"RSH Obligor" shall have the meaning given in the Master
Agreement.
"Settlement Documents" shall have the meaning given in the
Master Agreement.
Section 1.02. Other Definitional Provisions. References to
"Sections," "subsections" and "Exhibits," shall be to Sections, subsections,
and Exhibits, respectively, of this Agreement unless otherwise specifically
provided. All definitions contained in this Agreement are equally applicable
to the singular and plural forms of the terms defined. All references to
statutes and regulations shall include any amendments of the same and any
successor statutes and regulations.
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ARTICLE II
SECURITY INTEREST
Section 2.01. Security Interest. As collateral security for the
prompt payment and performance in full when due of the Loan Obligations
(whether at stated maturity, by acceleration, or otherwise), the Debtor hereby
grants to Dart a lien on and security interest in all of the Debtor's right,
title, and interest in and to the Account and all proceeds and products of said
Account, including, without limitation, all interest earned on the Account and
all substitute collateral given pursuant to Section 4.02 of this Agreement (the
"Collateral").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Secured Party to enter into this Agreement, the Debtor
represents and warrants to the Secured Party that:
Section 3.01. Principal Place of Business. The residence and
principal place of business of the Debtor, and the office where the Debtor
keeps his books and records, are located in Washington, D.C.
ARTICLE IV
COVENANTS
The Debtor covenants and agrees with the Secured Party that until the
Loan Obligations are paid and performed in full:
Section 4.01. Encumbrances. Subject to Section 4.03 of this
Agreement, the Debtor shall not create, permit, or suffer to exist, and shall
defend the Collateral against, any Lien or other encumbrance on the Collateral,
and shall defend the Debtor's rights in the Collateral and the Secured Party's
security interest in the Collateral against the claims and demands of all
Persons. The Debtor shall do nothing to impair the rights of the Secured Party
in the Collateral.
Section 4.02. Account. On or before October 6, 1995, the Debtor
shall deliver to Escrow Agent the sum of $20,000,000.00 in good funds, which
funds shall be deposited in the Account, and Debtor shall have access to the
funds in the Account solely for the purpose of making the disbursements set
forth herein under the terms and conditions hereof. The Account shall contain
no funds other than the $20,000,000.00 deposit and investment earnings on the
Account. Without the prior written consent of Dart, Debtor may cause the
Escrow Agent to disburse funds from the Account only for
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the purposes and only upon satisfaction of the conditions set forth in this
Agreement.
Section 4.03. Withdrawals; Transfers. Debtor may from time to time
cause Escrow Agent to withdraw or transfer funds from the Account for the
following uses:
(a) provided that no Major Event of Default has occurred under
the Loan Documents and is continuing, for new capital contributions
made for the acquisition or preservation of equity interests in favor
of Debtor in which a perfected security interest in favor of Secured
Party can be created and effectively maintained, in one or more of
the debtors in possession in the bankruptcy cases listed on Exhibit A
hereto in implementation of plans of reorganization in such bankruptcy
cases;
(b) provided that no Major Event of Default has occurred under
the Loan Documents and is continuing, to make superpriority loans,
directly by Debtor or indirectly through an entity controlled by
Debtor, to one or more of the debtors in possession in the bankruptcy
cases listed on Exhibit A hereto pursuant to 11 U.S.C. Section 364
(d)(1);
(c) provided that no Major Event of Default has occurred under
the Loan Documents and is continuing, for the purchase by Debtor,
directly or through an entity controlled by Debtor, from First Union
National Bank of Washington, D.C. and/or First Union National Bank of
Maryland, N.A. ("First Union D.C.", "First Union Maryland", and
together "First Union") of First Union's right, title and interest as
holder in and to that certain Revolving Credit Note dated July 24,1994
made by Debtor and Herbert S. Haft in favor of First Union D.C. and
First Union's right, title and interest as holder in and to that
certain promissory note dated July 1, 1991 made by Debtor, Herbert S.
Haft, Robert M. Haft, Gloria Haft and Linda Haft in favor of First
Union Maryland, 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; or
(d) provided that no Default or Event of Default has occurred
under the Loan Documents and is continuing, for the payment of
consideration for the acquisition of property (real or personal,
tangible or intangible, within the United States) from a person or
entity who is not an affiliate or relative of Debtor, or in which
Debtor or any affiliate or relative holds any beneficial interest (a
"Non-affiliated Third Party"), in which such property (and its
proceeds) a perfected security interest
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or lien in favor of Secured Party can be created and effectively
maintained;
provided however, that it shall be a condition of any such withdrawal or
transfer that Secured Party has received a letter addressed to Dart from
counsel to Debtor (which counsel shall be Latham & Watkins, or other
nationally-recognized law firm reasonably acceptable to Dart (1) confirming to
Dart that such withdrawal or transfer is for such permitted purpose, and (2)
tendering written certification from Debtor that no Default or Event of Default
(or, in the case of a use permitted by subsections 4.03 (a), (b) and (c), no
Material Event of Default) has occurred and is continuing under the Loan
Documents, and (3) further tendering documents fully executed by Debtor
sufficient to create and effectively maintain, when held by Dart or when filed
or recorded, without expense to or further action by Dart, in the requisite
places (or, in Dart's sole and absolute discretion, upon the taking of such
other steps as Dart may elect):
(i) in the case of a use permitted by subsection 4.03 (a), a
perfected security interest in the equity interests to be acquired or
preserved in the debtors in possession, and
(ii) in the case of a use permitted by subsection 4.03 (b), a
perfected first-priority security interest in the debt instruments and
all related loan documentation evidencing or supporting such
superpriority loans, together with a perfected first-priority security
interest in one hundred percent (100%) of the equity ownership
interests in the entities or entities making such loans, and
(iii) in the case of a use permitted by subsection 4.03(c); a
perfected first priority security interest in or lien on the property
(and its proceeds) to be acquired from First Union D.C. and/or First
Union Maryland and a first-priority perfected security interest in one
hundred percent (100%) of the equity ownership interests in the
acquiring entity if the acquisition is not by Debtor directly, and
(iv) in the case of a use permitted by subsection 4.03(d), a
perfected security interest in or lien on the property (and its
proceeds, including a collateral assignment of rents, issues and
profits, if any) to be acquired from a Non-affiliated Third Party;
and provided further, that in the case of a use permitted under subsection (d)
of this Section 4.03, Escrow Agent shall also have received written
confirmation from Dart that Dart has determined, after consultation with its
counsel and in the exercise of its reasonable discretion, that the value of the
property to be acquired, and the proposed method for creating, documenting and
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maintaining a perfected security interest in favor of Dart is sufficient to
preserve the value of the Collateral to Dart.
Notwithstanding any applicable cure periods in any of the Loan
Documents, upon the occurrence of a Default or Event of Default in any of the
Loan Documents, Debtor shall no longer have any access to the funds in the
Account and the funds in the Account shall be held by Escrow Agent subject to
the further instructions of Secured Party and the provisions of Section 6.01
hereof, except that for so long as no Major Event of Default has occurred and
is continuing Debtor may have access to the funds for the uses permitted by
subsections 4.03 (a), (b) and (c) in accordance with the terms and conditions
of Section 4.03. Debtor may request access to such funds, which access may be
granted at the sole discretion of the Secured Party, provided, however, that
upon cure by the Debtor access to the Account shall be restored.
Section 4.04. Further Assurances. At any time and from time to time,
upon the reasonable request of the Secured Party, and at the sole expense of
the Debtor, the Debtor shall promptly execute and deliver all such further
instruments, agreements, and documents and take such further action as the
Secured Party may deem necessary or desirable to preserve and perfect its
security interest in the Collateral and carry out the provisions and purposes
of this Agreement.
Section 4.05. Statements; Information. Escrow Agent and Debtor shall
forward to Secured Party, within five (5) days of receipt of same, copies of
all statements and enclosures received from Bank in connection with the
Account, including, without limitation, copies of the monthly bank statements.
Section 4.06. Notification. Escrow Agent and Debtor shall promptly
notify the Secured Party of (a) any lien, encumbrance, or claim that has
attached to or been made or asserted against any of the Collateral, (b) any
material change in any of the Collateral, including, without limitation, any
material damage to or loss of Collateral, and (c) the occurrence of any other
event or condition that could have a material adverse effect on the Collateral
or the security interest created hereunder.
Section 4.07. Application of Earnings. Payments, interest, earnings,
dividends, gain or other amounts accruing or paid on the Account funds or any
investment thereof shall be attributable for federal, state and local income
tax and other similar purpose to Debtor. All such amounts shall remain or be
deposited in the Account and be held and applied in the manner set forth
herein, except that Debtor may use such amounts, in Debtor's discretion, to pay
to Dart accrued and unpaid debt service or outstanding principal on that
certain Promissory Note dated of even date herewith made by Debtor in favor of
Dart in the approximate initial principal amount of $11,621,276.00.
Section 4.8. Modification of Account. Escrow Agent and Debtor shall
not modify, alter or otherwise change the Account,
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including, without limitation, the style, account number or other designation
without the prior written consent of Secured Party, which consent shall be
given in Secured Party's sole discretion. Further, Escrow Agent and Debtor
shall not be permitted to close the Account if any amount remains due and owing
on the Loan or under the Loan Documents without the prior written consent of
Secured Party, which consent shall be given in Secured Party's sole discretion.
Section 4.9. Disbursements or Withdrawals by Escrow Agent. Upon
Escrow Agent's receipt of the letters from counsel described in Section 4.03,
together with all required certifications and documents (and, in the case of a
use permitted by subsection 4.03 (d), the required written confirmation from
Dart), Escrow Agent shall disburse the funds as directed by the Debtor for the
permitted uses.
ARTICLE V
RIGHTS OF THE SECURED PARTY
Section 5.01. Power of Attorney. The Debtor hereby irrevocably
constitutes and appoints the Secured Party, and any authorized officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the name of the
Debtor or in its own name, to take after the occurrence and during the
continuance of a Default or Event of Default and from time to time thereafter,
any and all action and to execute any and all documents and instruments which
the Secured Party at any time and from time to time deems necessary or
desirable to accomplish the purposes of this Agreement relating to the
Collateral.
This power of attorney is a power coupled with an interest and shall
be irrevocable. The Secured Party shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges, and options
expressly or implicitly granted to the Secured Party in this Agreement, and
shall not be liable for any failure to do so or any delay in doing so. Neither
the Secured Party nor any person designated by the Secured Party shall be
liable for any act or omission or for any error of judgment or any mistake of
fact or law. This power of attorney is conferred on the Secured Party solely to
protect, preserve, maintain, and realize upon its security interest in the
Collateral.
Section 5.02. Assignment by the Secured Party. Dart may not assign
its rights and obligations under this Agreement without the prior written
consent of the Debtor to the assignment of the Note. In the event that such
consent is given, the assignee of the Note shall, upon such assignment, become
vested with all the benefits of this Agreement unless otherwise provided by
Dart.
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Section 5.03. Performance by the Secured Party. If the Debtor shall
fail to perform any covenant or agreement contained in this Agreement, the
Secured Party may perform or attempt to perform such covenant or agreement on
behalf of the Debtor. In such event, the Debtor shall, at the request of the
Secured Party, promptly pay any amount expended by the Secured Party in
connection with such performance or attempted performance to the Secured Party,
together with interest thereon at the rate of interest applicable under the
appropriate Loan Documents, from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that the Secured Party shall not have any
liability or responsibility for the performance of any obligation of the Debtor
under this Agreement.
ARTICLE VI
DEFAULT
Section 6.01. Rights and Remedies. If a Default or Event of Default
shall have occurred and be continuing, the Secured Party shall have the
following rights and remedies with respect to the Collateral: (i) Debtor and/or
Escrow Agent shall have no right to disburse any funds from the Account (except
for a use permitted under subsections 4.03 (a), (b) and (c) in accordance with
the terms and conditions of Section 4.03 so long as no Material Event of
Default under the Loan Documents has occurred and is continuing), (ii) subject
to Section 6.02, Secured Party shall have the rights and remedies set forth in
the Loan Documents, (iii) subject to 6.02, Secured Party shall have the right,
without prior notice to Debtor, to direct Escrow Agent from time to time to
disburse all or any portion of the amounts then held in the Account to the
order of Secured Party, as Secured Party directs Escrow Agent, and (iv) subject
to Section 6.02, Secured Party may liquidate all investments of such funds in
the Account and pay the proceeds thereof to Secured Party for application
against amounts due and payable with respect to the Loans.
Section 6.02. Initial Recourse to Other Collateral.
(a) Subject to subsection 6.02(b) of this Agreement, Dart hereby
agrees that upon the occurrence of any Event of Default (other than an Event of
Default under paragraphs 8.e and f. of the Note), Dart will attempt to satisfy
the Loan Obligations from other collateral ("Other Collateral") granted under
the Settlement Documents for the Loan Obligations prior to foreclosing Dart's
security interest or lien in the Collateral. In the event that Dart is
"prevented from enforcing" (as defined below) any rights or remedies with
respect to the Other Collateral or, after enforcing such rights and remedies,
any Loan Obligations remain unpaid (without regard to any principal of
marshalling of collateral), then Dart shall be entitled to foreclose on its
security interests in and liens on the Collateral.
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(b) For purposes of subsection 6.02(a), "prevented from enforcing"
shall mean (i) the filing of any claim or commencement of any proceeding by
Debtor or any RSH Obligor asserting a defense to any Obligation or to the
enforcement of any right or remedy granted under the Settlement Documents with
respect the Obligations, (ii) the filing of any claim or commencement of any
proceeding by any other person (including any entity) (A) seeking to prevent
the enforcement of any right or remedy granted under the Settlement Documents
with respect to the Obligations or (B) asserting any claim or interest in any
of the Other Collateral, including the commencement of any bankruptcy,
insolvency or other creditor's proceeding described as an Event of Default
under paragraphs 8.e and f. of the Note, or (iii) the failure of Dart and/or
Cabot-Morgan to sell or otherwise dispose of, for cash, any of the Other
Collateral within six months after Dart or Cabot-Morgan has commenced a private
or public sale of the Other Collateral pursuant to the terms of the Settlement
Documents pursuant to which a security interest or lien has been granted
(whether as a consequence of the auction or other sale proceeding failing to
result in bids for unsold Other Collateral or the failure of a successful
bidder in any such proceeding to perform under such bid or otherwise). This
Section 6.02 shall not impose upon Dart any other duties with respect to the
custody or disposition of any Other Collateral other than as and to the extent
provided in the Settlement Documents pursuant to which a security interest or
lien is granted in such Other Collateral. In the event Debtor shall become a
"debtor" in any case under 11 U.S.C. Section 101 et seq. of the United States
Code, as amended from time to time, or any successor statute, the provisions of
this Section 6.02 shall cease to be in effect and Dart shall be entitled to
assert and prove any claim against Debtor and the Collateral to the full extent
of the Loan Obligations without any limitation.
ARTICLE VII
SETTLEMENTCORP
Section 7.01. Appointment of Escrow Agent. Secured Party hereby
appoints Settlement Corp. as bailee for Dart and escrow agent for Secured Party
and Debtor for the purposes of perfecting and maintaining Secured Party's
security interest in the Account.
Section 7.02. Investment of Funds. Escrow Agent shall invest the
funds in the Account initially a money market account at the Bank, and
thereafter in United States Government securities having such maturities (or
maturity profiles) as Debtor may from time to time direct. All investment
earnings shall be retained in the Account subject to the terms of the
Agreement.
Section 7.03. Indemnification of Escrow Agent. The Debtor hereby
agrees to indemnify Escrow Agent for, and to hold Escrow Agent harmless
against, any loss, liability or expense incurred without willful misconduct or
negligence on the part of Escrow
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Agent arising out of or in connection with entering into this Agreement and
carrying out Escrow Agent's duties hereunder, including the costs and expenses
of defending itself against any such claim or liability, including reasonable
attorneys' fees.
Section 7.04. Liability of Escrow Agent. Escrow Agent will incur no
liability whatever in connection with its duties hereunder except for willful
misconduct or negligence so long as it acts in good faith. Escrow Agent may
rely on any certificate, statement, request, consent, agreement or other
instrument which it believes to be genuine and to have been signed or presented
by a proper person or persons. Escrow Agent will not be bound by any
modification of this Agreement unless in writing and signed by the parties
hereto. In the event Escrow Agent becomes uncertain as to its duties or rights
hereunder or receives instructions from any other party hereto with respect to
the Account which, in its opinion, are in conflict with any provision of this
Agreement, it will be entitled to refrain from taking any action other than to
keep the Account safe until it is directed otherwise in writing by Secured
Party and the Debtor or by an order, judgment or decree of a court of competent
jurisdiction, to which order, judgment or decree all rights of appeal have
expired or been waived.
Section 7.05. Resignation. Escrow Agent may resign and be discharged
from its duties or obligations hereunder at any time by giving no less than
twenty (20) days prior written notice of resignation to Secured Party and
Debtor. Escrow Agent will thereafter have no further obligation hereunder
except to deliver the Account funds, and any property held by it pursuant to
this Agreement to either a successor escrow agent designated by the Secured
Party and Debtor or to the Secured Party and Debtor, and to render the
accounting required by Section 7.07 hereof. Upon receipt of the funds in the
Account and any other property, the successor to Escrow Agent will thereupon be
bound by the provisions hereof as if named herein.
Section 7.06. Termination of Appointment of Escrow Agent. The
Secured Party and/or Debtor (with Secured Party's written consent) may
terminate the appointment of Escrow Agent hereunder by notifying Escrow Agent,
specifying the date such termination will take effect. In the event of such
termination or resignation pursuant to Section 7.05, the Debtor and Secured
Party will appoint a successor within twenty (20) days of such notice and
Escrow Agent will turn over and deliver to its successor all of the funds in
the Account and all property held by it pursuant to this Agreement and render
the accounting required by Section 7.07 hereof. Upon receipt of the funds in
such Account and any other property, the successor to Escrow Agent will
thereupon be bound by the provisions hereof as fully as if named herein.
Section 7.07. Accounting. In the event of the resignation or
termination of Escrow Agent or upon termination of this Agreement, Escrow Agent
will render to the Debtor, the Secured Party and to the successor escrow agent,
if any, an accounting in writing of the
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<PAGE> 11
funds in the Account and all other property held by it pursuant to this
Agreement and all distributions therefrom.
Section 7.08. Fees and Expenses. Debtor will pay or reimburse Escrow
Agent on request for all expenses, disbursements and advances (including
without limitation brokerage commissions and reasonable attorneys' fees, except
for attorneys' fees relating to matters for which Escrow Agent is determined to
be liable under Section 7.03 hereof) incurred or made by it in connection with
carrying out its duties hereunder.
Section 7.09. Benefit of Secured Party. Escrow Agent holds the
Account for the benefit of Secured Party as bailee for Secured Party and escrow
agent for Secured Party and Debtor, and for the purpose of perfection of
Secured Party's security interest therein, and Escrow Agent shall be an agent
of the Secured Party for such perfection.
Section 7.10. Right of Setoff. Escrow Agent does not have nor shall
it have any rights of setoff with respect to the Account, any such rights being
hereby expressly waived.
Section 7.11. Representative of Dart. The duly authorized
representative of Dart for purposes of receiving funds from the Escrow Agent,
giving consents or instructions to the Escrow Agent, and for all other purposes
under this Agreement, shall be Robert A. Marmon, Treasurer and Chief Financial
Officer (or his duly appointed successor).
ARTICLE VIII
MISCELLANEOUS
Section 8.01. No Waiver; Cumulative Remedies. No failure on the part
of the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.
Section 8.02. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Escrow Agent, Debtor, and Dart and
their respective heirs, successors, and assigns, except that neither Debtor nor
Dart may assign any of its rights or obligations under this Agreement without
the prior written consent of the other.
Section 8.03. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE
OTHER WRITTEN AGREEMENTS EXECUTED IN CONNECTION WITH THE LOAN OBLIGATIONS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
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<PAGE> 12
PARTIES HERETO AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. THE PROVISIONS
OF THIS AGREEMENT MAY BE AMENDED OR WAIVED ONLY BY AN INSTRUMENT IN WRITING
SIGNED BY THE PARTIES HERETO.
Section 8.04. Notices. All notices and other communications provided
for in this Agreement shall be given or made by telex, telegraph, telecopy,
cable, or in writing and telexed, telecopied, telegraphed, cabled, mailed by
certified mail, return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to the other party given in accordance with this Section. Except
as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telex or telecopy, subject
to telephone confirmation of receipt, or delivered to the telegraph or cable
office, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid.
Section 8.05. Governing Law; Venue; Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
District of Columbia and the applicable laws of the United States of America.
Any action or proceeding against the Debtor under or in connection with this
Agreement or any other Loan Document may, without limiting any other choice of
venue or jurisdiction, be brought in any local or federal court in the District
of Columbia. The Debtor hereby irrevocably (a) submits to the nonexclusive
jurisdiction of such courts, and (b) waives any objection he may now or
hereafter have as to the venue of any such action or proceeding brought in such
court or that such court is an inconvenient forum. The Debtor agrees that
service of process upon him may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with
the provisions of Section 8.04 of this Agreement. Nothing in this Agreement or
any other Loan Document shall affect the right of the Secured Party to serve
process in any other manner permitted by law or shall limit the right of the
Secured Party to bring any action or proceeding against the Debtor or with
respect to any of his property in courts in other jurisdictions. Any action or
proceeding by the Debtor against the Secured Party shall be brought only in a
court located in the District of Columbia.
Section 8.06. Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 8.07. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured
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<PAGE> 13
Party shall affect the representations and warranties or the right of the
Secured Party to rely upon them.
Section 8.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 8.09. No Joint Venture or Partnership. Nothing contained in
this Agreement or in any of the other Loan Documents and no other aspect of the
relationship between Debtor and Secured Party shall be construed as creating a
partnership, joint venture, or other relationship of or between Debtor and
Secured Party other than the lending relationship of lender and borrower. In no
event shall Secured Party be held liable for any of the debts, obligations,
losses, or liabilities of Debtor.
Section 8.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 8.11. Construction. The Debtor and the Secured Party
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Debtor and the Secured Party.
Section 8.12. Termination.
(a) If all of the Loan Obligations shall have been paid and performed
in full and all commitments of the Secured Party to the Debtor shall have
expired or terminated, the Secured Party shall, upon the written request of the
Debtor, execute and deliver to the Debtor a proper instrument or instruments
acknowledging the release and termination of the security interests or liens
created by this Agreement. Debtor shall provide an executed copy of such
instrument or instruments to Escrow Agent.
(b) Provided that there exist no Defaults or Events of Default under
any of the Loan Documents, the restrictions on the Debtor's access to the
Account will terminate, and the security interests or liens created by (and
only by) this Agreement shall be released, upon the later of the first
anniversary of this Agreement or the final resolution of all actions, if any,
that are filed by any person or entity within sixty (60) days after the date of
this Agreement seeking to preliminarily enjoin, rescind or obtain other
equitable relief with respect to that certain Settlement Agreement by and
between Debtor and Dart dated of even date with this Agreement.
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<PAGE> 14
(c) At such time that the total outstanding balance on the Note,
inclusive of all accrued and unpaid interest thereon and all accrued and unpaid
costs and other charges, if any, owing under the terms thereof, decreases below
Twenty Million Dollars ($20,000,000.00), Debtor and Secured Party shall given
written notice thereof to Escrow Agent. Thereafter, provided that no Default
or Event of Default has occurred and is continuing, Debtor shall be entitled to
withdraw from the Account, on a dollar-for-dollar basis, the amount by which
such outstanding balance has been reduced below $20,000,000.00, and to use such
withdrawn funds as Debtor elects in his sole and absolute discretion, free and
clear of any encumbrance, lien or security interest of Secured Party, provided
however that such withdrawals shall be in increments of at least One Thousand
Dollars ($1,000.00), and Debtor shall give Escrow Agent and Dart at least five
(5) business days prior written notice of each such withdrawal.
Section 8.13. Time. Time is of the essence of this Agreement and of
each and every term, covenant and condition herein.
Section 8.14. No Third Party Beneficiary Rights Created. Debtor and
Secured Party expressly declare that it is their joint and mutual intention
that this Agreement and the transactions contemplated hereby shall not be
construed as creating a third party beneficiary contract, and this Agreement
shall not be construed as giving or conferring any rights or benefits
whatsoever to or upon any other persons or entities other than Debtor and
Secured Party, and their respective (to the extent permitted) successor and
assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
<TABLE>
<S> <C>
ADDRESSES FOR NOTICES: DEBTOR:
-------
TO DEBTOR:
/s/ Ronald S. Haft
Ronald S. Haft --------------------------
2435 California Street Ronald S. Haft
Washington, D.C. 20008
(Telecopy No.: 202/234-9222)
with a copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street
8th Floor
Wilmington, Delaware 19801
(Telecopy No.: 302/425-6464)
</TABLE>
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<PAGE> 15
<TABLE>
<S> <C>
SECURED PARTY:
--------------
TO DART: DART GROUP CORPORATION, a
Delaware corporation
Dart Group Corporation
Attn: Chief Financial Officer
3300 75th Avenue By: /s/ Robert A. Marmon
-----------------------------
Landover, Maryland 20785 Robert A. Marmon
(Telecopy No.: 301/733-2707) Treasurer and Chief
Financial Officer
with a copy to:
Stephen J. Brogan, Esq.
Jones, Day, Reavis & Pogue
1450 G Street N.W.
Washington, D.C. 20005
(Telecopy No.: 202/737-2832)
ESCROW AGENT:
-------------
TO SETTLEMENTCORP SETTLEMENTCORP, a
Maryland corporation
SETTLEMENTCORP
5301 Wisconsin Avenue, N.W. By:/s/ Todd S. Deckelbaum
Suite 710 -----------------------------
Washington, D.C. Todd S. Deckelbaum
(Telecopy No.: 202/537-1899 Vice President
</TABLE>
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<PAGE> 16
EXHIBIT A
BANKRUPTCY CASES
1. In re: Haft Equities-Bladen Limited Partnership, Case No.
95-1-3093-DK (Chapter 11).
2. In re: Combined Properties Incorporated, Case No. 95-1-3094-DK
(Chapter 11).
3. In re: Combined Properties/Ontario Limited Partnership, Case
No. 95-1-3095-DK (Chapter 11).
4. In re: Haft/Equities-Rose Hill Limited Partnership, Case No.
95-1-3096-DK (Chapter 11).
5. In re: Haft/Equities-Sully Plaza Limited Partnership, Case
No. 95-1-3097-DK (Chapter 11).
6. In re: Combined Properties/Reseda Associates Limited
Partnership, Case No. 95-1-3098-DK (Chapter 11).
7. In re: Trak Chicago Limited Partnership I, Case No.
95-1-3099-DK (Chapter 11).
8. In re: Combined Properties/Silver Hill Limited Partnership,
Case No. 95-1-3100-DK (Chapter 11).
9. In re: Charles County Associates Limited Partnership, Case
No. 95-1-3101-DK (Chapter 11).
10. In re: Penn-Daw Associates Limited Partnership, Case No.
95-1-3102-DK (Chapter 11).
11. In re: Seventy-Fifth Avenue Associates Limited Partnership,
Case No. 95-1-3103 (Chapter 11).
12. In re: 1751 Columbia Road Limited Partnership, Case No.
95-1-3104-DK (Chapter 11).
13. In re: Combined Properties Limited Partnership, Case No.
95-1-3122-DK (Chapter 11).
14. In re: Rock Creek Village Associates Limited Partnership,
Case No. 95-1-3123-DK (Chapter 11).
15. In re: Sugarland Plaza Limited Partnership, Case No.
95-1-4225-DK (Chapter 11).
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<PAGE> 1
EXHIBIT 10.8
ESCROW AGREEMENT [$11.6 MILLION]
This Escrow Agreement [$11.6 Million] (this "Agreement"), dated as of
this 6th day of October, 1995, is made by and among RONALD S. HAFT ("RSH"),
DART GROUP CORPORATION, a Delaware corporation ("Dart"), and Settlementcorp.
(the "Escrow Agent").
WHEREAS, Dart and RSH 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 Agreement, have entered
into that certain Settlement Agreement, of even date herewith, pursuant to
which Dart and RSH have agreed to settle such lawsuits on the terms, and
subject to the conditions, set forth therein (the "Settlement Agreement");
WHEREAS, on the date hereof, Dart has loaned to RSH $11,619,274.00 and
deposited such amount with the Escrow Agent (the "Escrow Funds"), and RSH has
executed a promissory note in favor of Dart for the Escrow Funds (the "$11.6
Million Note") and delivered such promissory note to the Escrow Agent;
WHEREAS, RSH is borrowing the Escrow Funds in order to pay off in full
the principal sum and accrued interest owed by RSH under that certain
Promissory Note, dated July 28, 1993 (the "HHH Note"), executed by RSH in favor
of Herbert H. Haft ("HHH");
WHEREAS, pursuant to the Settlement Agreement, RSH and Dart have
agreed that RSH shall, on the date hereof, tender prepayment in full of the HHH
Note and that the Escrow Agent shall act on behalf of RSH in effecting such
prepayment in accordance with the terms of this Agreement; and
WHEREAS, RSH and Dart desire to appoint the Escrow Agent as the escrow
agent under this Agreement upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the parties do hereby agree as follows:
1. APPOINTMENT OF ESCROW AGENT; RECEIPT OF ESCROW FUNDS
(a) RSH and Dart hereby appoint the Escrow Agent to act
as escrow agent on the terms and conditions hereinafter set forth, and the
Escrow Agent accepts such appointment.
(b) The Escrow Agent hereby acknowledges receipt of the
Escrow Funds and the $11.6 Million Note and agrees to hold
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and dispose of the Escrow Funds and the $11.6 Million Note pursuant to the
terms and conditions of this Agreement.
2. DUTIES OF ESCROW AGENT
(a) The Escrow Agent's duties and responsibilities, shall
be limited to those expressly set forth in this Agreement and the Escrow Agent
shall not be subject to, nor obliged to recognize, any other agreement covering
the subject matter hereof.
(b) The Escrow Agent shall make the Escrow Funds
available for pick-up by HHH as provided in Section 5(a) hereof, and agrees, in
connection therewith, to maintain authorized personnel at its offices located
at 5301 Wisconsin Avenue, N.W., Suite 710, Washington, D.C. 20015, and have the
Escrow Funds in the form of a cashier's check readily available for pick-up by
HHH on October 6, 1995 until 9:00 p.m., on October 7, 1995 from 10:00 a.m.
until 3:00 p.m., on October 9, 1995 from 10:00 a.m. until 3:00 p.m., and
October 10, 1995 from 10:00 a.m. until 3:00 p.m. Any time after October 10,
1995, the Escrow Agent shall make the Escrow Funds available for pick-up by HHH
as provided in Section 5(a) hereof within one business day upon receipt of
written notification by HHH of his intent to pick-up the Escrow Funds.
(c) The Escrow Agent is authorized, in its sole
discretion, to disregard any and all notices, claims, instructions, demands or
directions (individually and collectively, "Directions") given by RSH or Dart,
or by any other Person, except (i) such Directions as are specifically provided
for herein, and (ii) a Final Order (as defined below) of a court of law. If
the delivery of any document subject hereto is at any time stayed or enjoined
by order of a court, or in case the Final Order of a court shall be made or
entered affecting any such document, then and in any of such events, the Escrow
Agent is authorized, in its sole discretion, to rely upon and comply with any
such order, writ, judgment or decree of any court which the Escrow Agent
determines is not subject to further review or appeal and is binding upon the
Escrow Agent (a "Final Order"). In reaching such determination, the Escrow
Agent, in its sole discretion, may obtain the advice of counsel of its own
choosing (which may be counsel for Dart).
(d) If the Escrow Agent believes it to be reasonably
necessary to consult with counsel concerning any of its duties in connection
with this Agreement, or in case the Escrow Agent becomes involved in litigation
on account of being Escrow Agent hereunder or on account of having received
property subject hereto, then, in either case, the attorneys' and accountants'
fees incurred by the Escrow Agent (including the fair value of legal services
rendered by the Escrow Agent), if any, shall be borne by RSH.
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<PAGE> 3
3. LIABILITY AND RELIANCE
(a) The Escrow Agent shall not, be personally liable for
any act taken or omitted hereunder absent gross negligence or willful
misconduct on its part.
(b) The Escrow Agent shall not be responsible for the
sufficiency, form, accuracy, execution, validity or genuineness of any
Direction or document given to the Escrow Agent hereunder, nor shall the Escrow
Agent be responsible or liable in any respect on account of the identity,
authority or rights of the persons executing or delivering or purporting to
execute or deliver any such Direction or document. The Escrow Agent shall also
be fully protected in relying upon any Direction or document believed by it in
good faith to be genuine and valid and shall be fully protected in acting in
accordance with any Direction or document given to the Escrow Agent hereunder.
(c) Upon delivery or return of the Escrow Funds and the
$11.6 Million Note pursuant to this Agreement, the Escrow Agent shall have no
further responsibility or liability hereunder.
4. INVESTMENT
(a) Upon the date hereof and until 3:00 p.m. on October 10,
1995, the Escrow Agent shall not invest the Escrow Funds in any manner but
shall hold the Escrow Funds in the form of a cashier's check made payable to
"Herbert H. Haft" and hold such cashier's check in a secure place in the
offices of the Escrow Agent.
(b) Commencing 3:00 p.m. on October 10, 1995 and during the
remaining term of this Agreement, the Escrow Funds shall be continuously
invested and reinvested by the Escrow Agent in (i) money market funds available
through Riggs National Bank of Washington, D.C. that hold solely U.S. Treasury
bills or (ii) such other investments as Dart and RSH may jointly direct the
Escrow Agent by written notice. All interest or profit earned on such
investments shall be credited to the Escrow Funds to be disbursed on the terms
and subject to the conditions of this Agreement.
(c) All interest or profit earned on investments of the
Escrow Funds shall be attributed to RSH (S.S. no. ###-##-####) for tax
purposes.
5. DELIVERY OF ESCROW FUNDS
(a) Immediately upon receipt from HHH of (i) the original
Promissory Note in the form attached hereto as Exhibit A or (ii) a receipt in
the form attached hereto as Exhibit B, the Escrow Agent shall deliver to HHH
the Escrow Funds in the form of a cashier's check made payable to "Herbert H.
Haft." Immediately upon delivery of the Escrow Funds to HHH, the Escrow Agent
shall
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<PAGE> 4
deliver the $11.6 Million Note to Dart and, unless otherwise directed by RSH,
deliver any interest or profit on the Escrow Funds, net of expenses due the
Escrow Agent, to RSH.
(b) Notwithstanding paragraph (a) of this Section 5, upon
written instructions from Dart that direct the Escrow Agent to deliver the
Escrow Funds to HHH as prepayment in full of the HHH Note, the Escrow Agent
shall promptly comply with such instructions and deliver the $11.6 Million Note
to Dart and the interest and profit on the Escrow Funds to RSH.
(c) Notwithstanding the foregoing, the Escrow Agent shall
immediately deliver the Escrow Funds, including interest and profits thereon,
to Dart and the $11.6 Million Note to RSH at any time upon written notice from
each of RSH and Dart.
(d) If the Escrow Funds have not been delivered to HHH or
otherwise returned to Dart in accordance with this Section 5 by June 30, 2000,
then the Escrow Agent shall immediately deliver the Escrow Funds, including
interest and profits thereon, to Dart.
6. TERMINATION
Upon the delivery of the Escrow Funds and the $11.6 Million
Note in accordance with Section 5 hereof, this Agreement shall cease, terminate
and be of no further force or effect.
7. CONFLICTS
If at any time the Escrow Agent shall receive conflicting
Directions or documents with respect to the Escrow Funds and cannot determine
the proper course of action to take hereunder, or if for any other reason the
Escrow Agent shall in good faith be unable to determine the party or parties
entitled to receive the Escrow Funds or any part thereof, it may refuse to make
any delivery or return thereof and retain the Escrow Funds safely in its
possession until it shall have received Directions in writing concurred in by
all parties, or until directed by a Final Order of a court of competent
jurisdiction, whereupon the Escrow Agent shall make such disposition of the
Escrow Funds in accordance with such Directions or such Final Order.
8. ESCROW FEES
The Escrow Agent shall be entitled to the fees for its
services in acting as Escrow Agent hereunder as are agreed to from time to time
between the Escrow Agent and Dart. The Escrow Agent shall be reimbursed for
all expenses reasonably incurred by it in connection with the performance of
its duties and obligations hereunder. All fees and expenses shall be borne by
RSH.
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<PAGE> 5
9. INDEMNIFICATION
RSH and Dart shall jointly and severally indemnify and hold
the Escrow Agent harmless from and against any damage, cost, liability or
expense (including, but not limited to, reasonable legal fees which it may
incur by reason of its acting hereunder, except with respect to actions or
omissions taken or suffered by the Escrow Agent in bad faith, in willful
disregard of the terms of this Agreement or involving gross negligence on the
Escrow Agent's part, without prejudice to any right which any party may have to
recover from any other party for any such damage, cost, liability, expense or
legal fees.
10. REPRESENTATIVE OF DART
The duly authorized representative of Dart for purposes of receiving
funds from the Escrow Agent, giving consents or instruction to the Escrow
Agent, and for all other purposes under this Agreement, shall be Robert A.
Marmon, Treasurer and Chief Financial Officer (or his duly appointed
successor).
11. NOTICES
Any notices or consents required or permitted by this
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:
If to Dart:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: Chief Financial Officer
Facsimile: 301-772-3910
with a copy to:
Kenneth J. Ayres, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
Facsimile: 202-737-2832
If to RSH:
Ronald S. Haft
2435 California Street
Washington, D.C. 20008
Facsimile: (202) 234-1222
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<PAGE> 6
with a copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street
8th Floor
Wilmington, DE 19801
Facsimile: 302-425-6464
If to the Escrow Agent:
Todd Deckelbaum, Esq.
Settlementcorp.
5301 Wisconsin Avenue, N.W.
Suite 710
Washington, D.C. 20015
Facsimile: (202) 537-1899
12. GOVERNING LAW; JURISDICTION
This 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 District of Columbia, without
giving effect to its conflict of law rules. The parties hereto submit to the
jurisdiction of the courts of the District of Columbia.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The covenants, agreements, representations and warranties of
the parties hereto made in this Agreement shall survive the closing of the
transactions contemplated hereby.
14. AMENDMENT; WAIVER; REMEDIES
This Agreement may be amended only by a written agreement
executed by the Escrow Agent and the other parties hereto. No delay on the
part of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof. No waiver of any of the provisions of this
Agreement or any other agreement referred to herein shall be valid unless in
writing and signed by the party against whom it is sought to be enforced. 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.
15. ENTIRE AGREEMENT
This Agreement and the other Agreements 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 Agreement and the other Agreements and
documents related thereto, and there are no promises, agreements, conditions,
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<PAGE> 7
undertakings, warranties or representations, oral or written, express or
implied, between them other than as herein set forth.
16. SEVERABILITY
If any one or more of the provisions contained in this
Agreement 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.
17. 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 successors and permissible assigns of the parties. Dart may freely
assign its rights and delegate its duties hereunder.
18. HEADINGS
The headings in this Agreement are solely for convenience of
reference and shall not be given any effect in the construction or
interpretation of this Agreement.
19. COUNTERPARTS
This 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.
IN WITNESS WHEREOF, the parties have executed, or have caused
this Agreement to be executed on their behalf, as of the date first above
written.
DART GROUP CORPORATION
By: /s/ Robert A. Marmon
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Robert A. Marmon
Treasurer and
Chief Financial Officer
/s/ Ronald S. Haft
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Ronald S. Haft
SETTLEMENTCORP
By: /s/ Todd S. Deckelbaum
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Todd S. Deckelbaum
Vice President
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EXHIBIT 10.9
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
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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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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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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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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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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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(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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(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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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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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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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
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<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
- 18 -
<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.
- 19 -
<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
<PAGE> 1
EXHIBIT 10.10
PLEDGE OF UNDISPUTED PARTNERSHIP INTERESTS
This PLEDGE OF UNDISPUTED PARTNERSHIP INTERESTS (this
"Pledge"), dated as of October 6, 1995, is executed by and among Ronald S. Haft
("Borrower"), each Partnership (defined below), each Greenbriar Upper Tier
Partnership (defined below), and each Affiliate (defined below) in favor of
Dart Group Corporation, a Delaware corporation ("Lender"), as collateral agent
and bailee (in such capacity, "Collateral Agent") for 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 Master Agreement (defined below) except
that an "Event of Default" shall have the meaning set forth in the Promissory
Notes (defined below). Borrower, the Partnerships, the Greenbriar Upper Tier
Partnerships and the Affiliates are referred to herein individually as
"Pledgor" and collectively as "Pledgors."
WITNESSETH:
WHEREAS, Lender and Borrower 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, have entered into that certain Settlement Agreement of even date
herewith pursuant to which Lender and Borrower 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 Borrower,
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, 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, Borrower owns a general and/or limited partner
interest in each of (i) Combined Properties/Greenway Center Limited
Partnership, a District of Columbia limited partnership ("CP/Greenway"), (ii)
Combined Properties/Briggs Chaney Plaza Limited Partnership, a District of
Columbia limited partnership ("CP/Briggs Chaney"), (iii) CP/Greenbriar Retail
Investments Limited Partnership, a Virginia limited partnership ("CP/Greenbriar
Retail"), (iv) CP/Greenbriar Office Investments
<PAGE> 2
Limited Partnership, a Virginia limited partnership ("CP/Greenbriar Office"),
and (v) CP/Bull Run Limited Partnership, a Maryland limited partnership
("CP/Bull Run"), (collectively, the "Partnerships");
WHEREAS, each Partnership owns a general partner interest in
the Joint Venture set forth below having the most similar name: (i) CM/CP
Greenway Center Joint Venture, a Delaware general partnership, (ii) CM/CP
Briggs Chaney Plaza Joint Venture, a Delaware general partnership, (iii) CM/CP
Greenbriar Retail Joint Venture, a Delaware general partnership, (iv) CM/CP
Greenbriar Office Joint Venture, a Delaware general partnership, and (v) CM/CP
Bull Run Joint Venture, a Delaware general partnership, (collectively, the
"Joint Ventures");
WHEREAS, CM/CP Greenbriar Retail Joint Venture, a Delaware
general partnership, and CM/CP Greenbriar Office Joint Venture, a Delaware
general partnership (collectively, the "Greenbriar Upper Tier Partnerships")
own general partner interests in, respectively, Combined Properties/Greenbriar
Limited Partnership, a District of Columbia limited partnership, and Combined
Properties/Greenbriar Office Limited Partnership, a District of Columbia
limited partnership (collectively, the "Greenbriar Property Partnerships");
WHEREAS, Borrower is the Manager of and owns 99% of the
membership interests in JV Management, L.L.C., a Delaware limited liability
company ("JV Management"), which owns all of the general partner interests in
each of the Joint Ventures which are not owned by the Partnerships or
Cabot-Morgan;
WHEREAS, the following entities, owned, directly or
indirectly, by Borrower, own all of the general and limited partnership
interests in each of the Partnerships that are not owned directly by Borrower:
(i) CP/Greenbriar Retail, Inc., a Virginia corporation, owns a 1% general
partnership interest in CP/Greenbriar Retail; (ii) CP/Greenbriar Office, Inc.,
a Virginia corporation, owns a 1% general partnership interest in CP/Greenbriar
Office; and (iii) Bull Run, Inc., a Maryland corporation, owns a 1% general
partnership interest in CP/Bull Run (collectively with JV Management, the
"Affiliates"); and
WHEREAS, Lender and Cabot-Morgan have required, as a condition
to entering into the Settlement Documents and as a condition of Lender making
the loans evidenced by the Promissory Notes, that Borrower and each other
Pledgor execute and deliver this Pledge.
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 and each Pledgor hereby agree as follows:
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1. Pledge and Assignment. Each Pledgor hereby pledges,
grants and assigns to Collateral Agent, for the benefit of Lender and
Cabot-Morgan, a security interest in the following (collectively, the "Pledged
Collateral"):
(a) All of the right, title and interest of such Pledgor
in, to and under such Pledgor's interest as a member of JV Management
or as a general or limited partner, as the case may be, in each Joint
Venture, Greenbriar Property Partnership and Partnership (the Joint
Ventures, the Greenbriar Property Partnerships and the Partnerships
collectively referred to as the "Subject Partnerships") (excluding the
partnership interests owned by such Pledgor which are being pledged
pursuant to the Pledge of Disputed Partnership Interests delivered
pursuant to the Master Agreement; the "Disputed Partnership
Interests"), including, but not limited to:
(i) the profits and losses of JV Management and the
Subject Partnerships and the rights, as a member of JV
Management or as a general or limited partner of any of the
Subject Partnerships, as the case may be, to receive
distributions of the assets of JV Management and any of the
Subject Partnerships, whether now existing or hereafter
arising, whether arising under the terms of the limited
liability agreement of JV Management or the respective
partnership agreement of any of the Subject Partnerships (as
any such agreement, heretofore or hereinafter may be amended,
restated, supplemented or otherwise modified from time to time
the "Organizational Agreements") or otherwise, or at law or in
equity, and any and all proceeds therefrom (such now-owned
member or partnership interests being identified on Exhibit A
attached hereto and made a part hereof),
(ii) all options and warrants for the purchase of
member or partnership interests of JV Management and any of
the Subject Partnerships now or hereafter held in the name of
such Pledgor (all of said member or partnership interests,
options and warrants under clauses (i) and (ii) held in the
name of any Pledgor, including as a result of the exercise of
options or warrants, being hereinafter collectively referred
to as the "Assigned Partner Interests"),
(iii) all dividends, distributions, 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 Assigned Partner Interests,
(iv) all voting rights of such Pledgor with respect
to JV Management and any of the Subject Partnerships, now or
hereafter acquired,
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<PAGE> 4
(v) any other right or privilege that such Pledgor
presently has, is entitled to, may be entitled to, or shall
acquire pursuant to the Organizational Agreements of JV
Management or any of the Subject Partnerships, or conferred by
statute, law, rule, regulation, or decision, and
(vi) any other interest whatsoever of such Pledgor to
which such Pledgor is entitled as owner of member or
partnership interests in JV Management or any of the Subject
Partnerships, whether now owned or hereafter acquired;
(b) All additional member or partnership interests of JV
Management or any of the Subject Partnerships from time to time
acquired by Pledgor in any manner (any such additional member or
partnership interests shall constitute part of the Assigned Partner
Interests and Collateral Agent is irrevocably authorized to amend
Exhibit A from time to time to reflect such additional partnership
interests);
(c) The property and interests in property described in
Section 5; and
(d) All proceeds of the foregoing.
2. Security for Obligations. The Pledged Collateral
secures the prompt payment, performance and observance of all present and
future debts, obligations and liabilities of Borrower or any other obligor
(including the Pledgors) under the Settlement Documents which is controlled by
Borrower (collectively with Borrower, the "RSH Obligors") arising pursuant to,
or on account of this Pledge, the Promissory Notes and the other Settlement
Documents, including, without limitation, the obligations of the RSH Obligors
to Cabot-Morgan, Lender (on its behalf and as agent and bailee for itself and
Cabot-Morgan) and/or any collateral agent, bailee or escrow agent acting on
behalf of Lender or Cabot-Morgan (i) to pay any indemnification obligation
under this Pledge 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, or (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, the Promissory Notes or any other Settlement Document
(collectively, the "Obligations").
3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral, if any, held by
each Pledgor on the date hereof have herewith been delivered to Collateral
Agent and any and all hereafter obtained or received by each Pledgor shall be
delivered to
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<PAGE> 5
Collateral Agent pursuant hereto. 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 Collateral Agent.
4. Registration and Acknowledgments. Each Pledgor who
is a manager or member of JV Management or a general partner of any of the
Subject Partnerships hereby consents to the pledge and assignment under this
Pledge of the Assigned Partner Interests in JV Management and the Subject
Partnerships, agrees to register in the books and records of JV Management or
any of the Subject Partnerships, as the case may be, the pledges of the
Assigned Partner Interests to Collateral Agent. Each Pledgor, as a manager or
member of JV Management or as a limited partner and/or general partner in one
or more of the Subject Partnerships, does hereby acknowledge and agree that
upon notice by Collateral Agent to JV Management or any of the Subject
Partnerships, as the case may be, that an Event of Default has occurred and is
continuing, Collateral Agent or its designee shall be treated as an "assignee"
for all purposes under the Organizational Agreement of JV Management or any of
the Subject Partnerships, as the case may be.
5. Pledged Collateral Adjustments. If, during the term
of this Pledge:
(a) Any reclassification, readjustment or other change is
declared or made in the member or partnership structure of JV
Management or any of the Subject Partnerships, 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 member or partnership interests,
warrants, rights, options or other securities, issued by reason of any of the
foregoing, shall be immediately delivered to and held by Collateral Agent under
the terms of this Pledge and shall constitute Pledged Collateral hereunder.
6. Subsequent Changes Affecting Pledged Collateral.
Each Pledgor represents and warrants that such Pledgor has independently made
arrangements for keeping such Pledgor informed of changes or potential changes
affecting the Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of distributions, reorganization or other
exchanges, offers to purchase and voting rights), and such Pledgor agrees that
none of Collateral Agent, Lender or Cabot-Morgan shall have any obligation to
inform such Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. Collateral Agent may,
at any time in its discretion and without notice, transfer or
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<PAGE> 6
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 may at any time
exchange certificates or instruments representing or evidencing any Pledged
Collateral for certificates or instruments of smaller or larger denominations.
7. Representations and Warranties. Borrower represents
and warrants to Collateral Agent, Lender and Cabot-Morgan as follows with
respect to each Pledgor (including Borrower) and each other Pledgor represents
and warrants to Collateral Agent, Lender, and Cabot-Morgan as follows:
(a) Such Pledgor is the sole legal and beneficial owner
of the issued and outstanding member or partnership interests of JV
Management or any of the Subject Partnerships, as set forth in Exhibit
A hereto, 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 and the Escrow Agreement and the Pledged
Collateral constitutes 100% of such Pledgor's interests in JV
Management and the Subject Partnerships, other than the Disputed
Partnership Interests;
(b) Such Pledgor has full power and authority to enter
into this Pledge and the Escrow Agreement;
(c) 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) Such Pledgor has the right to vote, pledge, assign
and grant a security interest in or otherwise transfer such Pledged
Collateral and pledge and assign such Pledgor's interest in the RSH
Escrow Account, in each case 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 is required
either (i) for the pledge and assignment of the Pledged Collateral
pursuant to this Pledge or the pledge and assignment of the RSH Escrow
Account pursuant to the Escrow Agreement or for the execution,
delivery or performance of this Pledge and the Escrow Agreement by
such Pledgor or (ii) for the exercise by Collateral Agent of the
voting or other rights provided for in this Pledge or the remedies in
respect of the Pledged Collateral pursuant to this Pledge (except as
may be required in connection with such disposition by laws affecting
the offering and sale of securities generally) and the Escrow
Agreement;
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<PAGE> 7
(f) The pledge and assignment of the Pledged Collateral
pursuant to this Pledge and the pledge and assignment of such
Pledgor's interest in the RSH Escrow Account pursuant to the Escrow
Agreement each 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) Exhibit B sets forth a complete list of the
Organizational Agreements of each Pledgor (other than Borrower) and
each Pledgor (other than Borrower) has delivered true and complete
copies of its Organizational Agreements to the Dart Parties. Each
Organizational Agreement to which such Pledgor is a party, has been
duly and validly authorized, executed and delivered by such Pledgor
and constitutes the legal, valid and binding obligation of such
Pledgor, enforceable against such Pledgor in accordance with its
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) Each of this Pledge and the Escrow Agreement has been
duly and validly authorized, executed and delivered by and on behalf
of such Pledgor and constitutes the legal, valid and binding
obligation of such Pledgor, enforceable against such 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;
(i) Except as described in Schedule 7(i), (a) there are
no actions, suits, proceedings, investigations or claims pending or,
to the knowledge of such Pledgor, threatened against such Pledgor, or
any other party, or involving or which affect or could affect any of
the Properties which such Pledgor, directly or indirectly, owns or any
direct or indirect interest of such Pledgor in JV Management or the
Subject Partnerships, in any respect, or which relate to any of the
transactions contemplated by this Pledge or the other Settlement
Documents and which, if successful, could restrain or prohibit the
consummation of such transactions, and (b) none of such Pledgor, any
of the Properties, JV Management or Subject Partnerships in which such
Pledgor owns a direct or indirect interest or any such interest, is
subject to any order, judgment, writ, decree, decision or award that
affects or could affect in any respect such Pledgor, any such
Properties, JV Management or Subject Partnership or any interest of
such Pledgor therein;
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<PAGE> 8
(j) Such Pledgor (other than Borrower) (i) is a limited
liability company, partnership or corporation, as the case may be,
duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, (ii) is duly qualified to do
business and is in good standing under the laws of each jurisdiction
in which it owns or leases real property or in which the nature of
such Pledgor's business requires such Pledgor to be so qualified,
except where the failure to so qualify would not have a material and
adverse effect on the financial condition of such Pledgor, and (iii)
has all requisite power and authority to own, operate and encumber
such Pledgor's property and assets and to conduct such Pledgor's
business as presently conducted;
(k) The execution, delivery and performance of this
Pledge and the Escrow Agreement by such Pledgor does not violate (i)
any charter or organizational agreement (including the Organizational
Agreements) or instrument or any indenture, mortgage, or any other
agreement to which such Pledgor is a party or by which any of such
Pledgor's properties or assets may be bound; or (ii) any restriction
on the transfer or encumbrance of such Pledged Collateral;
(l) Borrower is the sole general partner of CP/Greenway
and CP/Briggs Chaney and Borrower, directly or indirectly, controls
CP/Greenbriar Office, Inc., CP/Greenbriar Retail, Inc. and Bull Run,
Inc., (collectively with Borrower, the "Joint Venture General
Partners") which are the sole general partners of, respectively,
CP/Greenbriar Office, CP/Greenbriar Retail and CP/Bull Run;
(m) The Subject Partnerships in which such Pledgor holds
any direct or indirect interest have no debts or liabilities other
than indebtedness under the Underlying Loan Documents in the
outstanding amount set forth on Schedule 7(m), their guaranties of
RSH's and Herbert H. Haft's obligations as indemnitors of Gloria,
Linda and Robert Haft under that certain Indemnification Agreement
dated as of July 31, 1994 (the "Haft Family Indemnification
Agreement"), and those incurred prior to the date hereof in the
ordinary course of business. Except as noted on Schedule 7(m), the
indebtedness evidenced by the Underlying Loan Documents and all of
such other obligations are in good standing and no situation exists
or, with the passage of time or the giving of notice (or both) could
exist, which would constitute a default thereunder or cause the
acceleration thereof. Borrower has delivered to Collateral Agent
true, accurate and complete copies of the Underlying Loan Documents
and of the Haft Family Indemnification Agreement;
(n) Except for any Lien granted under the Settlement
Documents or the Underlying Loan Documents (as described in Schedule
7(m)), the Properties in which such Pledgor holds
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<PAGE> 9
any direct or indirect interest are free and clear of any and all
Liens (other than such Liens, if any, which may have been placed on
the Properties by action of Cabot-Morgan as a general partner of the
Joint Ventures of which Pledgor has no knowledge as of the date
hereof), and to the best of Pledgor's knowledge, there are no claims
which could result in a Lien of any kind thereon;
(o) With respect to each Partnership (or its respective
predecessors-in-interest) in which such Pledgor holds any direct
interest, such Partnership has made all capital contributions to the
Joint Venture in which such Partnership is a partner required of it
and has received all distributions to which it is entitled. Each
Pledgor (or its respective predecessors-in-interest) which holds a
direct interest in any Partnership has made all capital contributions
to such Partnership required of such Pledgor and has received all
distributions to which such Pledgor is entitled. No Pledgor has made
any loan to or otherwise advanced any money to or on behalf of any
Joint Venture, Greenbriar Property Partnership or Partnership. Each
Joint Venture has on or before the date hereof distributed to the
partners in such Joint Venture all "Operating Cash Flow", "Capital
Cash Flow " or "Distributable Cash Flow" (as such terms are defined in
the respective Joint Venture Agreements as in effect prior to the
consummation of the transactions contemplated by this Agreement) as
determined as of September 30, 1995;
(p) Except as set forth in Schedule 7(m), such Pledgor
does not have any liabilities, obligations or commitments, including,
without limitation, those for taxes of any kind, which, if adversely
determined or not discharged or performed by such Pledgor, will create
any Lien in or against any of the Properties, any of JV Management or
the Subject Partnerships in which such Pledgor holds any direct or
indirect interest, or any direct or indirect interest of such Pledgor
therein. To the best knowledge of such Pledgor there is no liability,
commitment or obligation of such Pledgor or any Property or any of JV
Management or the Subject Partnerships in which such Pledgor holds any
direct or indirect interest which is not disclosed in this Agreement
or the Schedules hereto, which liability, commitment or obligation
could have a material adverse effect on the value of the Properties,
JV Management, any Subject Partnership or any interest of such Pledgor
therein;
(q) To the best knowledge of such Pledgor there is no
event or condition affecting any of the Properties, Joint Ventures or
Greenbriar Property Partnerships, which, if included the assumptions
and facts set forth in the appraisals identified on Schedule 7(q),
could have a material adverse effect on the valuation of the
Properties set forth in such appraisals;
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<PAGE> 10
provided, however, that the representations set forth in this Section are
subject to the limitation that they do not address whether, in executing and
delivering this Pledge, any Pledgor has acted within its respective fiduciary
responsibility to other members or partners of JV Management or any Subject
Partnership.
8. Voting Rights. During the term of this Pledge, and
except as provided in this Section 8, each Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Pledged Collateral on all limited liability company or partnership questions,
as the case may be, in a manner not inconsistent with the terms of this Pledge,
the Promissory Notes and the other Settlement Documents. After the occurrence
of an Event of Default, Collateral Agent may, at Collateral Agent's sole option
and following written notice from Collateral Agent to such Pledgor, exercise
all voting and other consensual rights pertaining to the Pledged Collateral,
including the right to take action by consent of managers, members or partners,
as the case may be.
9. Dividends and Other Distributions. (a) Subject to
Section 9(b) and so long as no Event of Default shall have occurred:
(i) Each Pledgor shall be entitled to receive and retain
any and all dividends, interest and distributions paid in respect of
the Pledged Collateral; provided, however, that any and all dividends,
interest and distributions 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 shall be Pledged Collateral, and shall be forthwith
delivered to Collateral Agent to hold as Pledged Collateral and shall,
if received by such Pledgor, be received in trust for Collateral
Agent, be segregated from the other property or funds of such 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 each Pledgor all such proxies and
other instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to receive the dividends,
distributions or interest payments which it is authorized to receive
and retain pursuant to clause (i) above.
(b) Notwithstanding the provisions of Section 9(a) and
subject to the limitations set forth below, Collateral Agent shall at all times
have the sole right to receive and retain any and all dividends, interest and
distributions paid in respect of the Pledged Collateral which, directly or
indirectly, constitute dividends, interest and distributions from the Joint
Ventures to the Partnerships and JV Management, paid pursuant to Sections
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3.06 and/or 8.02 of the respective Amended and Restated Joint Venture
Agreements of the Joint Ventures. All dividends, interest and distributions
received by any Pledgor contrary to the provisions of this Section 9(b), shall
be received in trust for Collateral Agent, be segregated from the other
property or funds of such 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).
The foregoing obligation shall apply to any funds which are
directly or indirectly receivable by any RSH Obligor upon any sale of any Joint
Venture or Property which occurs after at least any two of the Joint Ventures
or Properties have been sold (including that such obligation applies to any
group or series of sales after which the number of Joint Ventures or Properties
sold would exceed two). Upon any such sale the Pledgor or Pledgors entitled to
receive distributions or sale proceeds shall pay into the RSH Escrow Account
the portion of the funds receivable by such Pledgor or Pledgors that is equal
to the product of $5.0 million multiplied by the quotient of the Stipulated
Value (as defined in Exhibit K to the Master Agreement) with respect to the
Joint Venture or Property being sold divided by the Stipulated Value of the
Joint Ventures or Properties not yet sold (including any Joint Venture or
Property then being sold) multiplied by ten percent (10%); provided, however,
that upon the sale of the last Property to be sold the Pledgor or Pledgors
entitled to receive distributions or sale proceeds shall pay into the RSH
Escrow Account such amount as is necessary so that the aggregate proceeds
deposited into the RSH Escrow Account is at least $5.0 million; provided,
further, that in the event the pledge pursuant to the Pledge Agreements by any
RSH Obligor shall become wholly or partially invalid or unenforceable, upon the
sale of any Joint Venture or Property, the Pledgors entitled to receive
distributions or sale proceeds as a consequence of any such sale shall deposit
all such distributions or sales proceeds into the RSH Escrow Account until the
aggregate proceeds deposited into the RSH Escrow Account is at least $5.0
million (taking into account, if applicable, reductions in the amount on
deposit as a consequence of any refund or repayment arising in connection with
any invalidation or unenforceability).
Subject to the second proviso of the second sentence of the
immediately preceding paragraph, the obligations of the Pledgors to make
payments into the RSH Escrow Account pursuant to this Section 9(b) shall be
limited to a cumulative $5.0 million and the obligation to make such payments
shall terminate on the earlier to occur of (i) such time as the cumulative
distributions deposited into the RSH Escrow Account equal $5.0 million, (ii)
the date on which the Reserved Obligation described under Section 4.1(a)(iv) of
the Master Agreement shall cease in its entirety to be a Reserved Obligation
pursuant to Section 4.1(b)(iv) of the Master Agreement and (iii) the date on
which the Escrow Funds, plus Attributed Interest (as defined below) exceeds the
sum of the aggregate amount of (A) the Reserved Obligations and (B) the
Warehouse Reserve. For purposes of this Section 9(b) "Attributed
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Interest" shall mean a projected amount of interest which would accrue at a
simple rate of interest of 6.0% per annum on (i) the Escrow Funds in the C-M
Escrow Account from the date of calculation through the Termination Date and
(ii) the Escrow Funds in the RSH Escrow Account from the date of calculation
through the date which is 30 months after the date of calculation. The
calculation of the amount of the Retained Distributions, Escrow Funds, the
Reserved Obligations and the Attributed Interest shall be determined as
provided in Section 11.2 of the Master Agreement.
Each Pledgor hereby notifies the Manager of JV Management and
the general partner of each Subject Partnership in which such Pledgor holds an
interest to pay such dividends, interests and distributions directly to the RSH
Escrow Account in accordance with this Pledge. The Manager of JV Management
and the general partner of each Subject Partnership hereby consent and agree to
make such payments in accordance with this Pledge.
(c) Notwithstanding any other provision of this Section
9, (A) after the occurrence of an Event of Default or (B) upon any Revocation
Closing (as defined in the Settlement Agreement) pursuant to Section 1.5 of the
Settlement Agreement:
(i) All rights of any Pledgor to receive the dividends,
interest payments and other distributions which it would otherwise be
authorized to receive and retain pursuant to Section 9(a)(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, interest payments and
other distributions, 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, interest payments and other
distributions which are received by any Pledgor contrary to the
provisions of Section 9(c)(i) shall be received in trust for
Collateral Agent, shall be segregated from other funds of such 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
(iii) Each Pledgor shall, upon the request of Collateral
Agent, at such Pledgor's expense, do or cause to be done all such
other acts and things as may be necessary to make such assignment of
the Pledged Collateral or any part thereof valid and binding and in
compliance with applicable law.
Each Pledgor will reimburse Collateral Agent for all expenses incurred
by Collateral Agent, including, without limitation, reasonable attorneys' and
accountants' fees and expenses in connection with the foregoing.
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10. Other Covenants. (a) Transfers and Other Liens.
Each Pledgor agrees that, other than the Lien created hereby, such 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 Collateral Agent, (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 or (iii) consent or approve the creation of any
other Manager or Member interest in any Subject Partnership or JV Management or
any other partnership interest in any Subject Partnership. The Joint Venture
General Partners shall at all times remain the sole general partners of the
Joint Ventures.
(b) Further Assurances of Title. Each Pledgor shall
defend the title to the Pledged Collateral against all natural persons,
partnerships, limited liability companies, corporations, joint ventures,
trusts, estates, joint-stock companies, unincorporated organizations or
governments or any agencies or political subdivisions thereof (a "Person") and
shall, upon request of Collateral Agent (i) furnish further assurance of title,
and (ii) execute and deliver to Collateral Agent, in form satisfactory to
Collateral Agent, any financing or continuation statement as Collateral Agent
may reasonably request in order to perfect, preserve, maintain or continue
perfected the Lien created hereunder or its priority.
(c) Preservation of Existence. Each Pledgor shall
perform and observe all of the terms of the Organizational Agreements required
on the part of such Pledgor to be performed or observed. No Pledgor shall
consent to any modification or amendment thereof without the prior written
approval of Collateral Agent. No Pledgor shall take, or shall permit to be
done, any act which might result in the termination, dissolution, liquidation,
merger or consolidation of such Pledgor, JV Management or any of the Subject
Partnerships.
(d) Indebtedness; Contingent Liabilities.
(i) Each Pledgor covenants that it will
insure that none of JV Management or any Joint Venture, Partnership or
Greenbriar Property Partnership, directly or indirectly (A) incur,
assume or suffer to exist any Indebtedness (hereinafter defined) other
than Indebtedness existing as of the date hereof and renewals,
extensions and replacements thereof not exceeding the outstanding
principal balance of any such Indebtedness on the date hereof, (B)
enter into any operating guarantee, equity investment, commitment or
other instrument, document or obligation which creates any contingent
liability, (C) make any loan or advance or extend credit to any Person
or (D) permit any Lien to exist on any Property other than Liens
securing Indebtedness permitted by clause (A) above.
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(ii) For purposes of this Pledge,
"Indebtedness" shall mean at any time (A) indebtedness of any Person
for borrowed money or for the deferred purchase price of property or
services purchased (other than amounts constituting accrued expenses,
trade payables (payable within 90 days) and incidental debt arising in
the ordinary course of business), (B) obligations of any Person in
respect of letters of credit, acceptance facilities or drafts or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person, (C) deferred payment
obligations of any Person resulting from the adjudication or
settlement of any claim or litigation, and (D) indebtedness of others
of the type described in clauses (A), (B) and (C) above which any
Person has (1) directly or indirectly assumed from another Person, or
guarantied, or (2) secured by a lien on the assets of any such Person,
whether or not such Person, has assumed such indebtedness.
(e) Changes in Business. None of JV Management or any
Subject Partnership shall alter the nature of their respective businesses in
any material respect without the prior written consent of Lender.
(f) Consolidation, Merger, Sale or Purchase of Assets.
Except as otherwise permitted by the provisions of this Section 10(f), without
the prior written consent of Collateral Agent, which consent may be granted or
withheld in the sole and absolute discretion of Collateral Agent, no Pledgor,
nor any of JV Management or any Subject Partnership (in one transaction or
series of transactions) shall (i) wind up, liquidate or dissolve its affairs,
(ii) enter into any transaction of merger or consolidation, (iii) sell or
otherwise dispose of all or any part of its property or assets, (iv) purchase,
lease or otherwise acquire all or any part of the property or assets of any
Person if such purchase, lease or other acquisition would violate the
provisions of Section 10(d), or (v) agree to do or suffer any of the foregoing.
Notwithstanding the foregoing, the Joint Ventures (other than the Greenbriar
Upper Tier Partnerships) and the Greenbriar Property Partnerships shall have
the right to sell, in the ordinary course of business, furniture and equipment
(other than equipment integral to their respective businesses) and shall be
permitted to sell the respective Properties which they own if such sale shall
have been consented to, or initiated by, Cabot-Morgan in accordance with the
provisions of the respective Joint Venture Agreements.
(g) Taxes and Charges. Each Pledgor shall duly pay and
discharge as to itself, and cause to be paid and discharged as to JV Management
and each Subject Partnership, before the same shall become delinquent, all
federal, state or local taxes, assessments, levies and other governmental
charges imposed upon any such Pledgor and any such Person in which such Pledgor
directly or indirectly owns an interest, or their respective properties, sales
and activities or any part thereof, or upon the
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<PAGE> 15
income or profits therefrom as well as all claims for labor, materials, or
supplies which if unpaid might by law become a Lien upon any other property of
such Pledgor and any such Person in which such Pledgor directly or indirectly
owns an interest.
(h) Maintenance of Licenses. Each Pledgor will insure
that such Pledgor, JV Management and the Subject Partnerships maintain all
licenses, permits, charters and registrations which are material to the conduct
of their respective businesses.
(i) Insurance. Each Pledgor shall insure that the Joint
Ventures which own Properties and the Greenbriar Property Partnerships shall
maintain in full force and effect at all times such insurance as is in place on
the date hereof on substantially similar terms and amounts and such other
insurance, if any, as may be required from time to time pursuant to the Joint
Venture Agreements.
11. Remedies. (a) Collateral Agent shall have, in
addition to any other rights given under this Pledge or by law, all of the
rights and remedies with respect 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 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 or which Collateral Agent shall otherwise have the ability to
transfer under applicable law, Collateral Agent may, in its 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
Collateral Agent 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.
Notwithstanding any other rights or remedies of Collateral
Agent, Lender and Cabot-Morgan in view of the fact that the Pledged Collateral
represents an indirect interest in the Properties and that the ability to sell
the Pledged Collateral is limited without the right to sell the Properties, the
Pledgors hereby acknowledge and agree that in addition to any other right and
remedy, Collateral Agent, in its sole discretion, may exercise the voting
rights granted under Section 8 and with the consent of the other partners in
the Joint Venture, may cause the sale of the Properties as provided in Section
4.04 of the respective Joint Venture Agreements.
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<PAGE> 16
Each 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
agrees to distribute any proceeds of the sale of the Pledged Collateral in
accordance with Section 11(f) and each 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, Collateral Agent will give each Pledgor which owns Pledged Collateral
that is to be sold 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,
each Pledgor agrees that any requirements of reasonable notice shall be met if
such notice is received by such Pledgor at least five (5) Business Days before
the time of the sale or disposition; provided, however, that Collateral Agent
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, each Pledgor
agrees that after the occurrence of an Event of Default, Collateral Agent may,
from time to time, attempt to sell all or any part of the Pledged Collateral by
means of a private placement restricting the 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,
Collateral Agent may solicit offers to buy the Pledged Collateral, or any part
of it, from a limited number of investors deemed by Collateral Agent, in its
reasonable judgment, to be financially responsible parties who might be
interested in purchasing the Pledged Collateral. If Collateral Agent solicits
such offers from not less than three (3) such investors, then the acceptance by
Collateral Agent 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
Collateral Agent solicit offers from three or more investors in order for the
sale to be commercially reasonable.
(d) 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
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<PAGE> 17
this Pledge, 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, 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 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 any or all of the Pledgors or the Subject
Partnerships without exercising such rights, powers or remedies against any
other Pledgor, all of Pledgors or any or all of the Subject Partnerships.
(e) Each 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 its
rights against, any or all collateral which it 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. Each Pledgor
hereby waives all rights which such Pledgor may have under the doctrines of
marshalling of assets or marshalling of Liens.
(f) 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 Collateral Agent as follows:
First: to payment of the costs and expenses of such
sale, including the expenses of Collateral Agent and the fees and expenses of
counsel employed in connection therewith;
Second: to the payment of the Obligations in such
order as Collateral Agent 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 the Pledgor who owns the Pledged Collateral so sold, such Pledgor's
successor and assigns, or as a court of competent jurisdiction may direct.
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<PAGE> 18
(g) In addition, notwithstanding any other provision of
this Section 11, Lender hereby agrees that if each Pledgor, promptly after the
occurrence of an Event of Default, delivers written notice to Borrower that
they authorize Lender to forebear, for a specified period not in excess of six
months, the exercise of any remedy to sell the Pledged Collateral, Lender will
not initiate any public or private sale of the Assigned Partner Interests
during such period; provided, that at the end of each specified period the
Pledgors may extend such forbearance for an additional period not to exceed six
months.
12. Prospective Economic Benefits; Limits on Pledge and
Assignment. (a) In addition to any other rights granted under this Pledge,
each Pledgor covenants to deliver to the RSH Escrow Account dividends, interest
and distributions and other payments of any sort whatsoever constituting
Pledged Collateral which any such Pledgor may hereafter derive, directly or
indirectly, from distributions paid from the Joint Ventures to the Partnerships
in such amounts, and when and to the extent required to be paid to the RSH
Escrow Account pursuant to Section 9(b) (the "Prospective Economic Benefits").
(b) It is intended that the assignments and security
interests created under the Escrow Agreement and this Pledge are pledges of
general intangibles governed by Section 9-318 of the Uniform Commercial Code,
as adopted in any jurisdiction relevant to this Agreement. However, if and to
the extent the provisions of the Escrow Agreement or this Pledge would allow
any other partner in any Subject Partnership to invoke a right of first offer
or first refusal with respect to any such interest and such other partner
indicates a desire to do so, then, without further action by the parties
hereto, the provisions of the Escrow Agreement and this Pledge shall be
suspended immediately with respect to such interest, and, if necessary, shall
become null and void, with respect to such interest until such time, if any, as
such right of first offer or first refusal is no longer applicable or waived.
13. Security Interest Absolute. All rights of Collateral
Agent, Lender and Cabot-Morgan and security interests created hereunder, and
all obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(i) Any lack of validity or enforceability of this
Pledge, 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 this Pledge, the Promissory Notes or any
other Settlement Document;
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<PAGE> 19
(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, any Pledgor in
respect of the Obligations or of this Pledge, the Promissory Notes or
any other Settlement Document.
14. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints Collateral Agent 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 Collateral Agent's sole discretion, to
take any action and to execute any instrument which Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Pledge, including,
without limitation, to receive, endorse and collect all instruments made
payable to any 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 JV Management or any of the
Subject Partnerships to the name of Collateral Agent or Collateral Agent's
nominee.
15. Consent of Pledgors and Partnerships. By execution
of this Pledge, each Pledgor hereby consents and agrees to all of the terms,
conditions and provisions hereof and waives and relinquishes any and all rights
which it may have with respect to the collateral pledged under this or any
other Pledge Agreement, whether pursuant to any and all Organizational
Agreements or otherwise.
16. 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 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 for the sole account of the Pledgors, and shall constitute
part of the Obligations secured hereby.
17. 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
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<PAGE> 20
(answerback required) at the address of Borrower (for notices addressed to
Borrower and each other Pledgor) and at the address of Collateral Agent (for
notices to Collateral Agent, Lender and Cabot-Morgan), each as specified from
time to time in accordance with the Promissory Note.
18. Indemnity and Expenses. (a) Each Pledgor agrees to
indemnify Collateral Agent, Lender and Cabot-Morgan from and against any and
all claims, losses and liabilities (including reasonable attorneys' fees)
growing out of or resulting from this Pledge (including, without limitation,
enforcement of this Pledge), except claims, losses or liabilities resulting
from Collateral Agent's, Lender's or Cabot-Morgan's gross negligence or willful
misconduct.
(b) Each 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 its counsel and of any experts
and agents, which any of them may incur in connection with (i) the
administration of this Pledge, (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 and Cabot-Morgan hereunder or (iv) the failure by any
Pledgor to perform or observe any of the provisions hereof.
19. Specific Performance. Each Pledgor acknowledges and
agrees that in the event of any breach of this Pledge, 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 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. Each 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.
20. Term. This Pledge shall remain in full force and
effect until the first to occur of: (i) the date on which the Obligations
shall have been fully and indefeasibly paid in cash and (ii) the date on which
all the Properties shall have been sold and the distributions related thereto
shall have been distributed in accordance with Section 9. Notwithstanding the
foregoing, upon the sale of any Property, the pledge by any Pledgor hereunder
of any interests in JV Management or any Subject Partnership which directly or
indirectly owns an interest in such Property shall be released to the extent of
such interests upon the sale of such Property; provided, however that
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<PAGE> 21
the pledge by any such Pledgor of interests in JV Management or any Subject
Partnership which directly or indirectly own interests in any other Property
shall remain in full force and effect; provided, further, that no release shall
relieve any Pledgor of the obligation, if any at such time, to deposit funds
representing the proceeds of the sale of a Property into the RSH Escrow Account
pursuant to Section 9 or 12. Upon the termination of this Pledge as provided
above (other than as a result of the sale of the Pledged Collateral),
Collateral Agent will release the security interest created hereunder. This
Pledge shall continue in effect notwithstanding the occurrence of any
Revocation Closing (as defined in the Settlement Agreement) pursuant to Section
1.5 of the Settlement Agreement.
21. Cross Default. The Settlement Agreement, this Pledge
and other Settlement Documents constitute one integrated whole. Each Pledgor
acknowledges and agrees that a material breach under any of the Settlement
Documents by Borrower or any other RSH Obligor (including any Pledgor) shall
constitute a material breach under each other Settlement Document including
this Pledge. Lender and Cabot-Morgan each acknowledges and agrees 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.
22. Reinstatement; Liens. This Pledge 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 by Borrower or any other RSH Obligor, or any part thereof
(including the receipt of any collateral or proceeds 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. No Pledgor shall 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 Borrower, or any other RSH Obligor (including any
Pledgor) controlled by Borrower to Collateral Agent, Lender, Cabot-Morgan or
any collateral agent, bailee or escrow agent acting on behalf of Lender or
Cabot-Morgan.
23. Further Assurances. Each 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, agreements and documents, and will take all such other
actions, including, without limitation, the execution and filing of financing
statements, as Collateral Agent may
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<PAGE> 22
reasonably request from time to time in order to carry out the provisions and
purposes of this Pledge.
24. Survival of Representations and Warranties. The
covenants, agreements, representations and warranties of the parties hereto
made in this Pledge shall survive the closing of the transactions contemplated
hereby.
25. Successors and Assigns. This Pledge shall be binding
upon and inure to the benefit of each 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. Each Pledgor's successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for any Pledgor.
26. Amendments, Waivers and Consents. No amendment or
waiver of any provision of this Pledge nor consent to any departure by any
Pledgor from this Pledge, shall in any event be effective unless the same shall
be in writing and signed by 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.
27. Exhibits and Schedules. The Exhibits and Schedules
attached to this Pledge are incorporated herein and shall be part of this
Pledge for all purposes.
28. Section Headings. The section headings herein, and
the headings in the Exhibits and Schedules hereto, are solely for convenience
of reference and shall not be given any effect in the construction or
interpretation of this Pledge. Unless otherwise specified, references in this
Agreement to Sections, Exhibits or Schedules are references to Sections of, or
Exhibits or Schedules to, this Pledge.
29. 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.
30. Entire Agreement. This Pledge (including the
Exhibits and Schedules 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 and the other
Settlement Documents, and there are no promises, agreements, conditions,
undertakings, warranties or representations, oral or written, express or
implied, between them other than as herein set forth.
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<PAGE> 23
31. Severability. If this Pledge or any other Settlement
Document or any one or more of the provisions contained in this Pledge 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.
32. Governing Law. THIS PLEDGE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES, EXCEPT WITH RESPECT TO THE PERFECTION OF SECURITY
INTERESTS GRANTED UNDER THIS PLEDGE AS TO WHICH THE LAWS OF THE DISTRICT OF
COLUMBIA SHALL APPLY.
33. Consent to Jurisdiction, Waiver of Jury Trial.
(a) EACH PLEDGOR, TO THE EXTENT THAT SUCH 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 SUCH PLEDGOR'S OBLIGATIONS HEREUNDER OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS
SUCH 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 SUCH PLEDGOR MAY LAWFULLY DO SO, EACH PLEDGOR CONSENTS TO THE SERVICE OF
PROCESS BY PERSONAL SERVICE OR U.S. CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO SUCH PLEDGOR AS SPECIFIED PURSUANT TO SECTION
17. TO THE EXTENT ANY 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 SUCH PLEDGOR OR SUCH PLEDGOR'S PROPERTY, SUCH PLEDGOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF SUCH PLEDGOR'S
OBLIGATIONS UNDER THIS PLEDGE.
(b) EACH PLEDGOR HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS PLEDGE.
34. Execution in Counterparts. This Pledge 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.
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<PAGE> 24
IN WITNESS WHEREOF, Borrower, each other Pledgor and
Collateral Agent have executed this Pledge as of the date first set forth
above.
BORROWER AND PLEDGOR:
/s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
ALL OTHER PLEDGORS:
COMBINED PROPERTIES/GREENWAY CENTER
LIMITED PARTNERSHIP
By: /s/ Ronald S. Haft
-------------------------------
Ronald S. Haft
General Partner
COMBINED PROPERTIES/BRIGGS CHANEY
PLAZA LIMITED PARTNERSHIP
By: /s/ Ronald S. Haft
-------------------------------
Ronald S. Haft
General Partner
CP/GREENBRIAR RETAIL INVESTMENTS
LIMITED PARTNERSHIP
By: CP/GREENBRIAR RETAIL, INC.
General Partner
By: /s/ Ronald S. Haft
-----------------------
Ronald S. Haft
President
CP/GREENBRIAR OFFICE INVESTMENTS
LIMITED PARTNERSHIP
By: CP/GREENBRIAR OFFICE, INC.
General Partner
By: /s/ Ronald S. Haft
-----------------------
Ronald S. Haft
President
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<PAGE> 25
CP/BULL RUN LIMITED PARTNERSHIP
By: BULL RUN, INC.
General Partner
By: /s/ Ronald S. Haft
----------------------
Ronald S. Haft
President
JV MANAGEMENT, L.L.C.
By: /s/ Ronald S. Haft
----------------------------
Ronald S. Haft
Manager
CP/GREENBRIAR RETAIL, INC.
By: /s/ Ronald S. Haft
----------------------------
Ronald S. Haft
President
CP/GREENBRIAR OFFICE, INC.
By: /s/ Ronald S. Haft
---------------------------
Ronald S. Haft
President
BULL RUN, INC.
By: /s/ Ronald S. Haft
---------------------------
Ronald S. Haft
President
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<PAGE> 26
CM/CP GREENBRIAR RETAIL JOINT
VENTURE
By: JV Management, L.L.C.,
General Partner
By: /s/ Ronald S. Haft
-----------------------
Ronald S. Haft
Manager
CM/CP GREENBRIAR OFFICE JOINT
VENTURE
By: JV Management, L.L.C.,
General Partner
By: /s/ Ronald S. Haft
-----------------------
Ronald S. Haft
Manager
COLLATERAL AGENT:
DART GROUP CORPORATION, as
Collateral Agent and Bailee
for Dart Group Corporation
and Cabot-Morgan Real Estate
Company
By:/s/ Robert A. Marmon
-----------------------------
Name:
Title:
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<PAGE> 27
EXHIBIT A
PLEDGE OF UNDISPUTED PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Percentage of
Outstanding
General/Limited
Partnership
Interests owned
Name of Pledgor Name of Partnership by Pledgor
- --------------- ------------------- ---------------
<S> <C> <C>
Ronald S. Haft Combined Properties/ 1% (general)
Greenway Center 32.33% (limited)
Limited Partnership
Combined Properties/ 1% (general)
Briggs Chaney Plaza 65.16% (limited)
Limited Partnership
CP/Greenbriar Retail 33% (limited)
Investments
Limited Partnership
CP/Greenbriar 33% (limited)
Office Investments
Limited Partnership
CP/Bull Run 66% (limited)
Limited Partnership
JV Management, L.L.C. 99%
Combined Properties/ CM/CP Greenway Center 25% (general)
Greenway Center Joint Venture
Limited Partnership
Combined Properties/ CM/CP Briggs Chaney 25% (general)
Briggs Chaney Plaza Plaza Joint Venture
Limited Partnership
CP/Greenbriar Retail CM/CP Greenbriar 48.99949%
Investments Retail Joint Venture (general)
Limited Partnership
CP/Greenbriar Office CM/CP Greenbriar 48.99949%
Investments Office Joint Venture (general)
Limited Partnership
CP/Bull Run CM/CP Bull Run 49% (general)
Limited Partnership Joint Venture
</TABLE>
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<PAGE> 28
<TABLE>
<S> <C> <C>
CP/Greenbriar CP/Greenbriar 1% (general)
Retail, Inc. Retail Investments
Limited Partnership
CP/Greenbriar CP/Greenbriar 1% (general)
Office, Inc. Office Investments
Limited Partnership
Bull Run, Inc. CP/Bull Run 1% (general)
Limited Partnership
CM/CP Greenbriar Retail Combined Properties/ 99.999% (general)
Joint Venture Greenbriar Limited
Partnership
CM/CP Greenbriar Office Combined Properties/ 99.999% (general)
Joint Venture Greenbriar Office
Limited Partnership
JV Management, L.L.C. CM/CP Greenway Center 1% (general)
Joint Venture
CM/CP Briggs Chaney 1% (general)
Plaza Joint Venture
CM/CP Greenbriar 1% (general)
Retail Joint Venture
CM/CP Greenbriar 1% (general)
Office Joint Venture
CM/CP Bull Run 1% (general)
Joint Venture
</TABLE>
<PAGE> 1
EXHIBIT 10.11
PLEDGE OF DISPUTED PARTNERSHIP INTERESTS
This PLEDGE OF DISPUTED PARTNERSHIP INTERESTS (this "Pledge"),
dated as of October 6, 1995, is executed by and among Ronald S. Haft
("Borrower"), and each Affiliate (defined below) in favor of Dart Group
Corporation, a Delaware corporation ("Lender"), as collateral agent and bailee
(in such capacity, "Collateral Agent") for 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 Master Agreement (defined below) except that an
"Event of Default" shall have the meaning set forth in the Promissory Notes
(defined below). Borrower and the Affiliates are referred to herein
individually as "Pledgor" and collectively as "Pledgors."
WITNESSETH:
WHEREAS, Lender and Borrower 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, have entered into that certain Settlement Agreement of even date
herewith pursuant to which Lender and Borrower 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 Borrower,
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, 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, Borrower owns a general and/or limited partner
interest in each of (i) Combined Properties/Greenway Center Limited
Partnership, a District of Columbia limited partnership ("CP/Greenway"), (ii)
Combined Properties/Briggs Chaney Plaza Limited Partnership, a District of
Columbia limited partnership ("CP/Briggs Chaney"), (iii) CP/Greenbriar Retail
Investments Limited Partnership, a Virginia limited partnership ("CP/Greenbriar
Retail"), (iv) CP/Greenbriar Office Investments Limited Partnership, a Virginia
limited partnership ("CP/Greenbriar Office"), and (v) CP/Bull Run Limited
<PAGE> 2
Partnership, a Maryland limited partnership ("CP/Bull Run"), (collectively, the
"Partnerships");
WHEREAS, each Partnership owns a general partner interest in
the Joint Venture set forth below having the most similar name: (i) CM/CP
Greenway Center Joint Venture, a Delaware general partnership, (ii) CM/CP
Briggs Chaney Plaza Joint Venture, a Delaware general partnership, (iii) CM/CP
Greenbriar Retail Joint Venture, a Delaware general partnership, (iv) CM/CP
Greenbriar Office Joint Venture, a Delaware general partnership, and (v) CM/CP
Bull Run Joint Venture, a Delaware general partnership, (collectively, the
"Joint Ventures");
WHEREAS, CM/CP Greenbriar Retail Joint Venture, a Delaware
general partnership, and CM/CP Greenbriar Office Joint Venture, a Delaware
general partnership (collectively, the "Greenbriar Upper Tier Partnerships")
own general partner interests in, respectively, Combined Properties/Greenbriar
Limited Partnership, a District of Columbia limited partnership, and Combined
Properties/Greenbriar Office Limited Partnership, a District of Columbia
limited partnership (collectively, the "Greenbriar Property Partnerships");
WHEREAS, Borrower is the Manager of and owns all the
membership interests in JV Management, L.L.C., a Delaware limited liability
company ("JV Management"), which owns all of the general partner interests in
each of the Joint Ventures which are not owned by the Partnerships or
Cabot-Morgan;
WHEREAS, the following entities, owned, directly or
indirectly, by Borrower, own all of the general and limited partnership
interests in each of the Partnerships that are not owned directly by Borrower:
(i) CP Properties Holdings Limited Partnership, a Delaware limited partnership
("CP Holdings"), owns: (A) a 66-2/3% limited partnership interest in
CP/Greenway, (B) a 66% limited partnership interest in CP/Greenbriar Retail,
and (C) a 66% limited partnership interest in CP/Greenbriar Office; (ii) CP
Holdings MD, Inc., a Virginia corporation, owns a 1% limited partnership
interest in CP/Briggs Chaney; (iii) HCP Partner MD, Inc., a Delaware
corporation, owns a 1% limited partnership interest in CP/Briggs Chaney; and
(iv) Bull Run, Inc., a Maryland corporation, owns a 1.94% general partnership
interest in CP/Bull Run (collectively, the "Affiliates"); and
WHEREAS, Lender and Cabot-Morgan have required, as a condition
to entering into the Settlement Documents and as a condition of Lender making
the loans evidenced by the Promissory Notes, that Borrower and each other
Pledgor execute and deliver this Pledge.
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
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<PAGE> 3
which are hereby acknowledged, Collateral Agent and each Pledgor hereby agree
as follows:
1. Pledge and Assignment. Each Pledgor hereby pledges,
grants and assigns to Collateral Agent, for the benefit of Lender and
Cabot-Morgan, a security interest in the following (collectively, the "Pledged
Collateral"):
(a) All of the right, title and interest of such Pledgor
in, to and under such Pledgor's interest as a general or limited
partner, as the case may be, in CP Holdings and each Partnership (CP
Holdings and the Partnerships collectively referred to as the "Subject
Partnerships") excluding the partnership interests owned by,
respectively, Borrower and Bull Run Inc. which are being pledged
pursuant to the Pledge of Undisputed Partnership Interests delivered
pursuant to the Master Agreement; the "Undisputed Partnership
Interests"), including, but not limited to:
(i) the profits and losses of the Subject
Partnerships and the rights, as a general or limited partner
of any of the Subject Partnerships, as the case may be, to
receive distributions of the assets of any of the Subject
Partnerships, whether now existing or hereafter arising,
whether arising under the terms of the respective partnership
agreement of any of the Subject Partnerships (as any such
agreement, heretofore or hereinafter may be amended, restated,
supplemented or otherwise modified from time to time the
"Organizational Agreements") or otherwise, or at law or in
equity, and any and all proceeds therefrom (such now-owned
member or partnership interests being identified on Exhibit A
attached hereto and made a part hereof),
(ii) all options and warrants for the purchase of
partnership interests of any of the Subject Partnerships now
or hereafter held in the name of such Pledgor (all of said
member or partnership interests, options and warrants under
clauses (i) and (ii) held in the name of any Pledgor,
including as a result of the exercise of options or warrants,
being hereinafter collectively referred to as the "Assigned
Partner Interests"),
(iii) all dividends, distributions, 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 Assigned Partner Interests,
(iv) all voting rights of such Pledgor with respect
to any of the Subject Partnerships, now or hereafter acquired,
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<PAGE> 4
(v) any other right or privilege that such Pledgor
presently has, is entitled to, may be entitled to, or shall
acquire pursuant to the Organizational Agreements of any of
the Subject Partnerships, or conferred by statute, law, rule,
regulation, or decision, and
(vi) any other interest whatsoever of such Pledgor to
which such Pledgor is entitled as owner of member or
partnership interests in any of the Subject Partnerships,
whether now owned or hereafter acquired;
(b) All additional partnership interests of any of the
Subject Partnerships from time to time acquired by Pledgor in any
manner (any such additional member or partnership interests shall
constitute part of the Assigned Partner Interests and Collateral Agent
is irrevocably authorized to amend Exhibit A from time to time to
reflect such additional partnership interests);
(c) The property and interests in property described in
Section 5; and
(d) All proceeds of the foregoing.
2. Security for Obligations. The Pledged Collateral
secures the prompt payment, performance and observance of all present and
future debts, obligations and liabilities of Borrower or any other obligor
(including the Pledgors) under the Settlement Documents which is controlled by
Borrower (collectively with Borrower, the "RSH Obligors") arising pursuant to,
or on account of this Pledge, the Promissory Notes and the other Settlement
Documents, including, without limitation, the obligations of the RSH Obligors
to Cabot-Morgan, Lender (on its behalf and as agent and bailee for itself and
Cabot-Morgan) and/or any collateral agent, bailee or escrow agent acting on
behalf of Lender or Cabot-Morgan (i) to pay any indemnification obligation
under this Pledge 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, or (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, the Promissory Notes or any other Settlement Document
(collectively, the "Obligations").
3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral, if any, held by
each Pledgor on the date hereof have herewith been delivered to Collateral
Agent and any and all hereafter obtained or received by each Pledgor shall be
delivered to Collateral Agent pursuant hereto. All certificates or instruments
shall be in suitable form for transfer by delivery,
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<PAGE> 5
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Collateral Agent.
4. Registration and Acknowledgments. Each Pledgor who
is a general partner of any of the Subject Partnerships hereby consents to the
pledge and assignment under this Pledge of the Assigned Partner Interests in
the Subject Partnerships, agrees to register in the books and records of any of
the Subject Partnerships, as the case may be, the pledges of the Assigned
Partner Interests to Collateral Agent. Each Pledgor, as a limited partner
and/or general partner in one or more of the Subject Partnerships, does hereby
acknowledge and agree that upon notice by Collateral Agent to any of the
Subject Partnerships, as the case may be, that an Event of Default has occurred
and is continuing, Collateral Agent or its designee shall be treated as an
"assignee" for all purposes under the Organizational Agreement of any of the
Subject Partnerships, as the case may be.
5. Pledged Collateral Adjustments. If, during the term
of this Pledge:
(a) Any reclassification, readjustment or other change is
declared or made in the member or partnership structure of any of the
Subject Partnerships, 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 member or partnership interests,
warrants, rights, options or other securities, issued by reason of any of the
foregoing, shall be immediately delivered to and held by Collateral Agent under
the terms of this Pledge and shall constitute Pledged Collateral hereunder.
6. Subsequent Changes Affecting Pledged Collateral.
Each Pledgor represents and warrants that such Pledgor has independently made
arrangements for keeping such Pledgor informed of changes or potential changes
affecting the Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of distributions, reorganization or other
exchanges, offers to purchase and voting rights), and such Pledgor agrees that
none of Collateral Agent, Lender or Cabot-Morgan shall have any obligation to
inform such Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. Collateral Agent may,
at any time in its discretion and without notice, 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 may at any time exchange
certificates or instruments representing or evidencing any
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<PAGE> 6
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
7. Representations and Warranties. Borrower represents
and warrants to Collateral Agent, Lender and Cabot-Morgan as follows with
respect to each Pledgor (including Borrower) and each other Pledgor represents
and warrants to Collateral Agent, Lender, and Cabot-Morgan as follows:
(a) Subject to the claims asserted in the action set
forth on Schedule 7(i), such Pledgor is the sole legal and beneficial
owner of the issued and outstanding partnership interests of any of
the Subject Partnerships, as set forth in Exhibit A hereto, 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 and
the Escrow Agreement and the Pledged Collateral constitutes 100% of
such Pledgor's interests in the Subject Partnerships, other than the
Undisputed Partnership Interests;
(b) Subject to the claims asserted in the action set
forth on Schedule 7(i), such Pledgor has full power and authority to
enter into this Pledge and the Escrow Agreement;
(c) Subject to the claims asserted in the action set
forth on Schedule 7(i), 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) Subject to the claims asserted in the action set
forth on Schedule 7(i), such Pledgor has the right to vote, pledge,
assign and grant a security interest in or otherwise transfer such
Pledged Collateral and pledge and assign such Pledgor's interest in
the RSH Escrow Account, in each case 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 is required
either (i) for the pledge and assignment of the Pledged Collateral
pursuant to this Pledge or the pledge and assignment of the RSH Escrow
Account pursuant to the Escrow Agreement or for the execution,
delivery or performance of this Pledge and the Escrow Agreement by
such Pledgor or (ii) for the exercise by Collateral Agent of the
voting or other rights provided for in this Pledge or the remedies in
respect of the Pledged Collateral pursuant to this Pledge (except as
may be required in connection with such disposition by laws affecting
the offering and sale of securities generally) and the Escrow
Agreement;
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<PAGE> 7
(f) Subject to the claims asserted in the action set
forth on Schedule 7(i), the pledge and assignment of the Pledged
Collateral pursuant to this Pledge and the pledge and assignment of
such Pledgor's interest in the RSH Escrow Account pursuant to the
Escrow Agreement each 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) Exhibit B sets forth a complete list of the
Organizational Agreements of each Pledgor (other than Borrower) and
each Pledgor (other than Borrower) has delivered true and complete
copies of its Organizational Agreements to the Dart Parties. Each
Organizational Agreement to which such Pledgor is a party, has been
duly and validly authorized, executed and delivered by such Pledgor
and constitutes the legal, valid and binding obligation of such
Pledgor, enforceable against such Pledgor in accordance with its
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) Subject to the claims asserted in the action set
forth on Schedule 7(i), each of this Pledge and the Escrow Agreement
has been duly and validly authorized, executed and delivered by and on
behalf of such Pledgor and constitutes the legal, valid and binding
obligation of such Pledgor, enforceable against such 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;
(i) Except as described in Schedule 7(i), (a) there are
no actions, suits, proceedings, investigations or claims pending or,
to the knowledge of such Pledgor, threatened against such Pledgor, or
any other party, or involving or which affect or could affect any of
the Properties which such Pledgor, directly or indirectly, owns or any
direct or indirect interest of such Pledgor in the Subject
Partnerships, in any respect, or which relate to any of the
transactions contemplated by this Pledge or the other Settlement
Documents and which, if successful, could restrain or prohibit the
consummation of such transactions, and (b) none of such Pledgor, any
of the Properties or Subject Partnerships in which such Pledgor owns a
direct or indirect interest or any such interest, is subject to any
order, judgment, writ, decree, decision or award that affects or could
affect in any respect such Pledgor, any
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<PAGE> 8
such Properties or Subject Partnership or any interest of such Pledgor
therein;
(j) Such Pledgor (other than Borrower) (i) is a limited
liability company, partnership or corporation, as the case may be,
duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, (ii) is duly qualified to do
business and is in good standing under the laws of each jurisdiction
in which it owns or leases real property or in which the nature of
such Pledgor's business requires such Pledgor to be so qualified,
except where the failure to so qualify would not have a material and
adverse effect on the financial condition of such Pledgor, and (iii)
has all requisite power and authority to own, operate and encumber
such Pledgor's property and assets and to conduct such Pledgor's
business as presently conducted;
(k) The execution, delivery and performance of this
Pledge and the Escrow Agreement by such Pledgor does not violate (i)
any charter or organizational agreement (including the Organizational
Agreements) or instrument or any indenture, mortgage, or any other
agreement to which such Pledgor is a party or by which any of such
Pledgor's properties or assets may be bound; or (ii) subject to the
claims asserted in the action set forth on Schedule 7(i), any
restriction on the transfer or encumbrance of such Pledged Collateral;
(l) Borrower is the sole general partner of CP/Greenway
and CP/Briggs Chaney and Borrower, directly or indirectly, controls
CP/Greenbriar Office, Inc., CP/Greenbriar Retail, Inc. and Bull Run,
Inc., (collectively with Borrower, the "Joint Venture General
Partners") which are the sole general partners of, respectively,
CP/Greenbriar Office, CP/Greenbriar Retail and CP/Bull Run;
(m) The Subject Partnerships in which such Pledgor holds
any direct or indirect interest have no debts or liabilities other
than indebtedness under the Underlying Loan Documents in the
outstanding amount set forth on Schedule 7(m), their guaranties of
RSH's and Herbert H. Haft's obligations as indemnitors of Gloria,
Linda and Robert Haft under that certain Indemnification Agreement
dated as of July 31, 1994 (the "Haft Family Indemnification
Agreement"), and those incurred prior to the date hereof in the
ordinary course of business. Except as noted on Schedule 7(m), the
indebtedness evidenced by the Underlying Loan Documents and all of
such other obligations are in good standing and no situation exists
or, with the passage of time or the giving of notice (or both) could
exist, which would constitute a default thereunder or cause the
acceleration thereof. Borrower has delivered to Collateral Agent
true, accurate and complete copies of the Underlying
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<PAGE> 9
Loan Documents and of the Haft Family Indemnification Agreement;
(n) Except for any Lien granted under the Settlement
Documents or the Underlying Loan Documents (as described in Schedule
7(m)), the Properties in which such Pledgor holds any direct or
indirect interest are free and clear of any and all Liens (other than
such Liens, if any, which may have been placed on the Properties by
action of Cabot-Morgan as a general partner of the Joint Ventures of
which Pledgor has no knowledge as of the date hereof), and to the best
of Pledgor's knowledge, there are no claims which could result in a
Lien of any kind thereon;
(o) With respect to each Partnership (or its respective
predecessors-in-interest) in which such Pledgor holds any direct
interest, such Partnership has made all capital contributions to the
Joint Venture in which such Partnership is a partner required of it
and has received all distributions to which it is entitled. Each
Pledgor (or its respective predecessors-in-interest) which holds a
direct interest in any Partnership has made all capital contributions
to such Partnership required of such Pledgor and has received all
distributions to which such Pledgor is entitled. No Pledgor has made
any loan to or otherwise advanced any money to or on behalf of any
Joint Venture, Greenbriar Property Partnership or Partnership. Each
Joint Venture has on or before the date hereof distributed to the
partners in such Joint Venture all "Operating Cash Flow", "Capital
Cash Flow " or "Distributable Cash Flow" (as such terms are defined in
the respective Joint Venture Agreements as in effect prior to the
consummation of the transactions contemplated by this Agreement) as
determined as of September 30, 1995;
(p) Except as set forth in Schedule 7(p), such Pledgor
does not have any liabilities, obligations or commitments, including,
without limitation, those for taxes of any kind, which, if adversely
determined or not discharged or performed by such Pledgor, will create
any Lien in or against any of the Properties, any of the Subject
Partnerships in which such Pledgor holds any direct or indirect
interest, or any direct or indirect interest of such Pledgor therein.
To the best knowledge of such Pledgor there is no liability,
commitment or obligation of such Pledgor or any Property or any of the
Subject Partnerships in which such Pledgor holds any direct or
indirect interest which is not disclosed in this Agreement or the
Schedules hereto, which liability, commitment or obligation could have
a material adverse effect on the value of the Properties, any Subject
Partnership or any interest of such Pledgor therein;
(q) To the best knowledge of such Pledgor there is no
event or condition affecting any of the Properties, Joint
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<PAGE> 10
Ventures or Greenbriar Property Partnerships, which, if included the
assumptions and facts set forth in the appraisals identified on
Schedule 7(q), could have a material adverse effect on the valuation
of the Properties set forth in such appraisals;
provided, however, that the representations set forth in this Section are
subject to the limitation that they do not address whether, in executing and
delivering this Pledge, any Pledgor has acted within its respective fiduciary
responsibility to other partners of any Subject Partnership.
8. Voting Rights. During the term of this Pledge, and
except as provided in this Section 8, each Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Pledged Collateral on all partnership questions, as the case may be, in a
manner not inconsistent with the terms of this Pledge, the Promissory Notes and
the other Settlement Documents. After the occurrence of an Event of Default,
Collateral Agent may, at Collateral Agent's sole option and following written
notice from Collateral Agent to such Pledgor, exercise all voting and other
consensual rights pertaining to the Pledged Collateral, including the right to
take action by consent of partners.
9. Dividends and Other Distributions. (a) Subject to
Section 9(b) and so long as no Event of Default shall have occurred:
(i) Each Pledgor shall be entitled to receive and retain
any and all dividends, interest and distributions paid in respect of
the Pledged Collateral; provided, however, that any and all dividends,
interest and distributions 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 shall be Pledged Collateral, and shall be forthwith
delivered to Collateral Agent to hold as Pledged Collateral and shall,
if received by such Pledgor, be received in trust for Collateral
Agent, be segregated from the other property or funds of such 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 each Pledgor all such proxies and
other instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to receive the dividends,
distributions or interest payments which it is authorized to receive
and retain pursuant to clause (i) above.
(b) Notwithstanding the provisions of Section 9(a) and
subject to the limitations set forth below, Collateral Agent
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<PAGE> 11
shall at all times have the sole right to receive and retain any and all
dividends, interest and distributions paid in respect of the Pledged Collateral
which, directly or indirectly, constitute dividends, interest and distributions
from the Joint Ventures to the Partnerships, paid pursuant to Sections 3.06
and/or 8.02 of the respective Amended and Restated Joint Venture Agreements of
the Joint Ventures. All dividends, interest and distributions received by any
Pledgor contrary to the provisions of this Section 9(b), shall be received in
trust for Collateral Agent, be segregated from the other property or funds of
such 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).
The foregoing obligation shall apply to any funds which are
directly or indirectly receivable by any RSH Obligor upon any sale of any Joint
Venture or Property which occurs after at least any two of the Joint Ventures
or Properties have been sold (including that such obligation applies to any
group or series of sales after which the number of Joint Ventures or Properties
sold would exceed two). Upon any such sale the Pledgor or Pledgors entitled to
receive distributions or sale proceeds shall pay into the RSH Escrow Account
the portion of the funds receivable by such Pledgor or Pledgors that is equal
to the product of $5.0 million multiplied by the quotient of the Stipulated
Value (as defined in Exhibit K to the Master Agreement) with respect to the
Joint Venture or Property being sold divided by the Stipulated Value of the
Joint Ventures or Properties not yet sold (including any Joint Venture or
Property then being sold) multiplied by ten percent (10%); provided, however,
that upon the sale of the last Property to be sold the Pledgor or Pledgors
entitled to receive distributions or sale proceeds shall pay into the RSH
Escrow Account such amount as is necessary so that the aggregate proceeds
deposited into the RSH Escrow Account is at least $5.0 million; provided,
further, that in the event the pledge pursuant to the Pledge Agreements by any
RSH Obligor shall become wholly or partially invalid or unenforceable, upon the
sale of any Joint Venture or Property, the Pledgors entitled to receive
distributions or sale proceeds as a consequence of any such sale shall deposit
all such distributions or sales proceeds into the RSH Escrow Account until the
aggregate proceeds deposited into the RSH Escrow Account is at least $5.0
million (taking into account, if applicable, reductions in the amount on
deposit as a consequence of any refund or repayment arising in connection with
any invalidation or unenforceability).
Subject to the second proviso of the second sentence of the
immediately preceding paragraph, the obligations of the Pledgors to make
payments into the RSH Escrow Account pursuant to this Section 9(b) shall be
limited to a cumulative $5.0 million and the obligation to make such payments
shall terminate on the earlier to occur of (i) such time as the cumulative
distributions deposited into the RSH Escrow Account equal $5.0 million, (ii)
the date on which the Reserved Obligation described under Section 4.1(a)(iv) of
the Master Agreement shall cease in its entirety to
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be a Reserved Obligation pursuant to Section 4.1(b)(iv) of the Master Agreement
and (iii) the date on which the Escrow Funds, plus Attributed Interest (as
defined below) exceeds the sum of the aggregate amount of (A) the Reserved
Obligations and (B) the Warehouse Reserve. For purposes of this Section 9(b)
"Attributed Interest" shall mean a projected amount of interest which would
accrue at a simple rate of interest of 6.0% per annum on (i) the Escrow Funds
in the C-M Escrow Account from the date of calculation through the Termination
Date and (ii) the Escrow Funds in the RSH Escrow Account from the date of
calculation through the date which is 30 months after the date of calculation.
The calculation of the amount of the Retained Distributions, Escrow Funds, the
Reserved Obligations and the Attributed Interest shall be determined as
provided in Section 11.2 of the Master Agreement.
Each Pledgor hereby notifies the general partner of each
Subject Partnership in which such Pledgor holds an interest to pay such
dividends, interests and distributions directly to the RSH Escrow Account in
accordance with this Pledge. The general partner of each Subject Partnership
hereby consents and agrees to make such payments in accordance with this
Pledge.
(c) Notwithstanding any other provision of this Section
9, (A) after the occurrence of an Event of Default or (B) upon any Revocation
Closing (as defined in the Settlement Agreement) pursuant to Section 1.5 of the
Settlement Agreement:
(i) All rights of any Pledgor to receive the dividends,
interest payments and other distributions which it would otherwise be
authorized to receive and retain pursuant to Section 9(a)(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, interest payments and
other distributions, 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, interest payments and other
distributions which are received by any Pledgor contrary to the
provisions of Section 9(c)(i) shall be received in trust for
Collateral Agent, shall be segregated from other funds of such 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
(iii) Each Pledgor shall, upon the request of Collateral
Agent, at such Pledgor's expense, do or cause to be done all such
other acts and things as may be necessary to make such assignment of
the Pledged Collateral or any part thereof valid and binding and in
compliance with applicable law.
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Each Pledgor will reimburse Collateral Agent for all expenses incurred
by Collateral Agent, including, without limitation, reasonable attorneys' and
accountants' fees and expenses in connection with the foregoing.
10. Other Covenants. (a) Transfers and Other Liens.
Each Pledgor agrees that, other than the Lien created hereby, such 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 Collateral Agent, (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 or (iii) consent or approve the creation of any
other Manager or Member interest in any Subject Partnership or any other
partnership interest in any Subject Partnership. The Joint Venture General
Partners shall at all times remain the sole general partners of the Joint
Ventures.
(b) Further Assurances of Title. Each Pledgor shall
defend the title to the Pledged Collateral against all natural persons,
partnerships, limited liability companies, corporations, joint ventures,
trusts, estates, joint-stock companies, unincorporated organizations or
governments or any agencies or political subdivisions thereof (a "Person") and
shall, upon request of Collateral Agent (i) furnish further assurance of title,
and (ii) execute and deliver to Collateral Agent, in form satisfactory to
Collateral Agent, any financing or continuation statement as Collateral Agent
may reasonably request in order to perfect, preserve, maintain or continue
perfected the Lien created hereunder or its priority.
(c) Preservation of Existence. Each Pledgor shall
perform and observe all of the terms of the Organizational Agreements required
on the part of such Pledgor to be performed or observed. No Pledgor shall
consent to any modification or amendment thereof without the prior written
approval of Collateral Agent. No Pledgor shall take, or shall permit to be
done, any act which might result in the termination, dissolution, liquidation,
merger or consolidation of such Pledgor or any of the Subject Partnerships.
(d) Indebtedness; Contingent Liabilities.
(i) Each Pledgor covenants that it will
insure that none of any Joint Venture, Partnership or Greenbriar
Property Partnership, directly or indirectly (A) incur, assume or
suffer to exist any Indebtedness (hereinafter defined) other than
Indebtedness existing as of the date hereof and renewals, extensions
and replacements thereof not exceeding the outstanding principal
balance of any such Indebtedness on the date hereof, (B) enter into
any operating guarantee, equity investment, commitment or other
instrument, document or obligation which creates any contingent
liability, (C) make any loan or advance or extend
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credit to any Person or (D) permit any Lien to exist on any Property
other than Liens securing Indebtedness permitted by clause (A) above.
(ii) For purposes of this Pledge,
"Indebtedness" shall mean at any time (A) indebtedness of any Person
for borrowed money or for the deferred purchase price of property or
services purchased (other than amounts constituting accrued expenses,
trade payables (payable within 90 days) and incidental debt arising in
the ordinary course of business), (B) obligations of any Person in
respect of letters of credit, acceptance facilities or drafts or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person, (C) deferred payment
obligations of any Person resulting from the adjudication or
settlement of any claim or litigation, and (D) indebtedness of others
of the type described in clauses (A), (B) and (C) above which any
Person has (1) directly or indirectly assumed from another Person, or
guarantied, or (2) secured by a lien on the assets of any such Person,
whether or not such Person, has assumed such indebtedness.
(e) Changes in Business. No Subject Partnership shall
alter the nature of their respective businesses in any material respect without
the prior written consent of Lender.
(f) Consolidation, Merger, Sale or Purchase of Assets.
Except as otherwise permitted by the provisions of this Section 10(f), without
the prior written consent of Collateral Agent, which consent may be granted or
withheld in the sole and absolute discretion of Collateral Agent, no Pledgor,
nor any of Subject Partnership (in one transaction or series of transactions)
shall (i) wind up, liquidate or dissolve its affairs, (ii) enter into any
transaction of merger or consolidation, (iii) sell or otherwise dispose of all
or any part of its property or assets, (iv) purchase, lease or otherwise
acquire all or any part of the property or assets of any Person if such
purchase, lease or other acquisition would violate the provisions of Section
10(d), or (v) agree to do or suffer any of the foregoing. Notwithstanding the
foregoing, the Joint Ventures (other than the Greenbriar Upper Tier
Partnerships) and the Greenbriar Property Partnerships shall have the right to
sell, in the ordinary course of business, furniture and equipment (other than
equipment integral to their respective businesses) and shall be permitted to
sell the respective Properties which they own if such sale shall have been
consented to, or initiated by, Cabot-Morgan in accordance with the provisions
of the respective Joint Venture Agreements.
(g) Taxes and Charges. Each Pledgor shall duly pay and
discharge as to itself, and cause to be paid and discharged as to each Subject
Partnership, before the same shall become delinquent, all federal, state or
local taxes, assessments, levies and other governmental charges imposed upon
any such
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Pledgor and any such Person in which such Pledgor directly or indirectly owns
an interest, or their respective properties, sales and activities or any part
thereof, or upon the income or profits therefrom as well as all claims for
labor, materials, or supplies which if unpaid might by law become a Lien upon
any other property of such Pledgor and any such Person in which such Pledgor
directly or indirectly owns an interest.
(h) Maintenance of Licenses. Each Pledgor will insure
that such Pledgor and the Subject Partnerships maintain all licenses, permits,
charters and registrations which are material to the conduct of their
respective businesses.
(i) Insurance. Each Pledgor shall insure that the Joint
Ventures which own Properties and the Greenbriar Property Partnerships shall
maintain in full force and effect at all times such insurance as is in place on
the date hereof on substantially similar terms and amounts and such other
insurance, if any, as may be required from time to time pursuant to the Joint
Venture Agreements.
11. Remedies. (a) Collateral Agent shall have, in
addition to any other rights given under this Pledge or by law, all of the
rights and remedies with respect 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 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 or which Collateral Agent shall otherwise have the ability to
transfer under applicable law, Collateral Agent may, in its 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
Collateral Agent 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.
Notwithstanding any other rights or remedies of Collateral
Agent, Lender and Cabot-Morgan in view of the fact that the Pledged Collateral
represents an indirect interest in the Properties and that the ability to sell
the Pledged Collateral is limited without the right to sell the Properties, the
Pledgors hereby acknowledge and agree that in addition to any other right and
remedy, Collateral Agent, in its sole discretion, may exercise the voting
rights granted under Section 8 and with the consent of the other partners in
the Joint Venture, may cause
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the sale of the Properties as provided in Section 4.04 of the respective Joint
Venture Agreements.
Each 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
agrees to distribute any proceeds of the sale of the Pledged Collateral in
accordance with Section 11(f) and each 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, Collateral Agent will give each Pledgor which owns Pledged Collateral
that is to be sold 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,
each Pledgor agrees that any requirements of reasonable notice shall be met if
such notice is received by such Pledgor at least five (5) Business Days before
the time of the sale or disposition; provided, however, that Collateral Agent
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, each Pledgor
agrees that after the occurrence of an Event of Default, Collateral Agent may,
from time to time, attempt to sell all or any part of the Pledged Collateral by
means of a private placement restricting the 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,
Collateral Agent may solicit offers to buy the Pledged Collateral, or any part
of it, from a limited number of investors deemed by Collateral Agent, in its
reasonable judgment, to be financially responsible parties who might be
interested in purchasing the Pledged Collateral. If Collateral Agent solicits
such offers from not less than three (3) such investors, then the acceptance by
Collateral Agent 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
Collateral Agent solicit offers from three or more investors in order for the
sale to be commercially reasonable.
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(d) 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, 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, 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 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
any or all of the Pledgors or the Subject Partnerships without exercising such
rights, powers or remedies against any other Pledgor, all of Pledgors or any or
all of the Subject Partnerships.
(e) Each 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 its
rights against, any or all collateral which it 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. Each Pledgor
hereby waives all rights which such Pledgor may have under the doctrines of
marshalling of assets or marshalling of Liens.
(f) 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 Collateral Agent as follows:
First: to payment of the costs and expenses of such
sale, including the expenses of Collateral Agent and the fees and expenses of
counsel employed in connection therewith;
Second: to the payment of the Obligations in such
order as Collateral Agent 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 the Pledgor who owns the Pledged Collateral so
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sold, such Pledgor's successor and assigns, or as a court of competent
jurisdiction may direct.
(g) In addition, notwithstanding any other provision of
this Section 11, Lender hereby agrees that if each Pledgor, promptly after the
occurrence of an Event of Default, delivers written notice to Borrower that
they authorize Lender to forebear, for a specified period not in excess of six
months, the exercise of any remedy to sell the Pledged Collateral, Lender will
not initiate any public or private sale of the Assigned Partner Interests
during such period; provided, that at the end of any specified period the
Pledgors may extend such forbearance for one additional period not to exceed
six months.
12. Prospective Economic Benefits; Limits on Pledge and
Assignment. (a) In addition to any other rights granted under this Pledge,
each Pledgor covenants to deliver to the RSH Escrow Account dividends, interest
and distributions and other payments of any sort whatsoever constituting
Pledged Collateral which any such Pledgor may hereafter derive, directly or
indirectly, from distributions paid from the Joint Ventures to the Partnerships
in such amounts, and when and to the extent required to be paid to the RSH
Escrow Account pursuant to Section 9(b) (the "Prospective Economic Benefits").
(b) It is intended that the assignments and security
interests created under the Escrow Agreement and this Pledge are pledges of
general intangibles governed by Section 9-318 of the Uniform Commercial Code,
as adopted in any jurisdiction relevant to this Agreement. However, if and to
the extent the provisions of the Escrow Agreement or this Pledge would allow
any other partner in any Subject Partnership to invoke a right of first offer
or first refusal with respect to any such interest and such other partner
indicates a desire to do so, then, without further action by the parties
hereto, the provisions of the Escrow Agreement and this Pledge shall be
suspended immediately with respect to such interest, and, if necessary, shall
become null and void, with respect to such interest until such time, if any, as
such right of first offer or first refusal is no longer applicable or waived.
13. Security Interest Absolute. All rights of Collateral
Agent, Lender and Cabot-Morgan and security interests created hereunder, and
all obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(i) Any lack of validity or enforceability of this
Pledge, 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
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this Pledge, 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, any Pledgor in
respect of the Obligations or of this Pledge, the Promissory Notes or
any other Settlement Document.
14. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints Collateral Agent 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 Collateral Agent's sole discretion, to
take any action and to execute any instrument which Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Pledge, including,
without limitation, to receive, endorse and collect all instruments made
payable to any 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 any of the Subject Partnerships
to the name of Collateral Agent or Collateral Agent's nominee.
15. Consent of Pledgors and Partnerships. By execution
of this Pledge, each Pledgor hereby consents and agrees to all of the terms,
conditions and provisions hereof and waives and relinquishes any and all rights
which it may have with respect to the collateral pledged under this or any
other Pledge Agreement, whether pursuant to any and all Organizational
Agreements or otherwise.
16. 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 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 for the sole account of the Pledgors, and shall constitute
part of the Obligations secured hereby.
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17. 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) at the address of
Borrower (for notices addressed to Borrower and each other Pledgor) and at the
address of Collateral Agent (for notices to Collateral Agent, Lender and
Cabot-Morgan), each as specified from time to time in accordance with the
Promissory Note.
18. Indemnity and Expenses. (a) Each Pledgor agrees to
indemnify Collateral Agent, Lender and Cabot-Morgan from and against any and
all claims, losses and liabilities (including reasonable attorneys' fees)
growing out of or resulting from this Pledge (including, without limitation,
enforcement of this Pledge), except claims, losses or liabilities resulting
from Collateral Agent's, Lender's or Cabot-Morgan's gross negligence or willful
misconduct.
(b) Each 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 its counsel and of any experts
and agents, which any of them may incur in connection with (i) the
administration of this Pledge, (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 and Cabot-Morgan hereunder or (iv) the failure by any
Pledgor to perform or observe any of the provisions hereof.
19. Specific Performance. Each Pledgor acknowledges and
agrees that in the event of any breach of this Pledge, 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 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. Each 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.
20. Term. This Pledge shall remain in full force and
effect until the first to occur of: (i) the date on which the Obligations
shall have been fully and indefeasibly paid in cash and (ii) the date on which
all the Properties shall have been sold and the distributions related thereto
shall have been distributed in accordance with Section 9. Notwithstanding the
foregoing, upon the sale of any Property, the pledge by any
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Pledgor hereunder of any interests in any Subject Partnership which directly or
indirectly owns an interest in such Property shall be released to the extent of
such interests upon the sale of such Property; provided, however that the
pledge by any such Pledgor of interests in any Subject Partnership which
directly or indirectly own interests in any other Property shall remain in full
force and effect; provided, further, that no release shall relieve any Pledgor
of the obligation, if any at such time, to deposit funds representing the
proceeds of the sale of a Property into the RSH Escrow Account pursuant to
Section 9 or 12. Upon the termination of this Pledge as provided above (other
than as a result of the sale of the Pledged Collateral), Collateral Agent will
release the security interest created hereunder. This Pledge shall continue in
effect notwithstanding the occurrence of any Revocation Closing (as defined in
the Settlement Agreement) pursuant to Section 1.5 of the Settlement Agreement.
21. Cross Default. The Settlement Agreement, this Pledge
and other Settlement Documents constitute one integrated whole. Each Pledgor
acknowledges and agrees that a material breach under any of the Settlement
Documents by Borrower or any other RSH Obligor (including any Pledgor) shall
constitute a material breach under each other Settlement Document including
this Pledge. Lender and Cabot-Morgan each acknowledges and agrees 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.
22. Reinstatement; Liens. This Pledge 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 by Borrower or any other RSH Obligor, or any part thereof
(including the receipt of any collateral or proceeds 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. No Pledgor shall 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 Borrower, or any other RSH Obligor (including any
Pledgor) controlled by Borrower to Collateral Agent, Lender, Cabot-Morgan or
any collateral agent, bailee or escrow agent acting on behalf of Lender or
Cabot-Morgan.
23. Further Assurances. Each 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,
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instruments, agreements and documents, and will take all such other actions,
including, without limitation, the execution and filing of financing
statements, as Collateral Agent may reasonably request from time to time in
order to carry out the provisions and purposes of this Pledge.
24. Survival of Representations and Warranties. The
covenants, agreements, representations and warranties of the parties hereto
made in this Pledge shall survive the closing of the transactions contemplated
hereby.
25. Successors and Assigns. This Pledge shall be binding
upon and inure to the benefit of each 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. Each Pledgor's successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for any Pledgor.
26. Amendments, Waivers and Consents. No amendment or
waiver of any provision of this Pledge nor consent to any departure by any
Pledgor from this Pledge, shall in any event be effective unless the same shall
be in writing and signed by 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.
27. Exhibits and Schedules. The Exhibits and Schedules
attached to this Pledge are incorporated herein and shall be part of this
Pledge for all purposes.
28. Section Headings. The section headings herein, and
the headings in the Exhibits and Schedules hereto, are solely for convenience
of reference and shall not be given any effect in the construction or
interpretation of this Pledge. Unless otherwise specified, references in this
Agreement to Sections, Exhibits or Schedules are references to Sections of, or
Exhibits or Schedules to, this Pledge.
29. 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.
30. Entire Agreement. This Pledge (including the
Exhibits and Schedules 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 and the other
Settlement Documents, and there are no promises, agreements, conditions,
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undertakings, warranties or representations, oral or written, express or
implied, between them other than as herein set forth.
31. Severability. If this Pledge or any other Settlement
Document or any one or more of the provisions contained in this Pledge 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.
32. Governing Law. THIS PLEDGE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES, EXCEPT WITH RESPECT TO THE PERFECTION OF SECURITY
INTERESTS GRANTED UNDER THIS PLEDGE AS TO WHICH THE LAWS OF THE DISTRICT OF
COLUMBIA SHALL APPLY.
33. Consent to Jurisdiction, Waiver of Jury Trial.
(a) EACH PLEDGOR, TO THE EXTENT THAT SUCH 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 SUCH PLEDGOR'S OBLIGATIONS HEREUNDER OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS
SUCH 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 SUCH PLEDGOR MAY LAWFULLY DO SO, EACH PLEDGOR CONSENTS TO THE SERVICE OF
PROCESS BY PERSONAL SERVICE OR U.S. CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO SUCH PLEDGOR AS SPECIFIED PURSUANT TO SECTION
17. TO THE EXTENT ANY 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 SUCH PLEDGOR OR SUCH PLEDGOR'S PROPERTY, SUCH PLEDGOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF SUCH PLEDGOR'S
OBLIGATIONS UNDER THIS PLEDGE.
(b) EACH PLEDGOR HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS PLEDGE.
34. Execution in Counterparts. This Pledge 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, Borrower, each other Pledgor and
Collateral Agent have executed this Pledge as of the date first set forth
above.
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<PAGE> 24
BORROWER AND PLEDGOR:
/s/ Ronald S. Haft
----------------------------------------
Ronald S. Haft
ALL OTHER PLEDGORS:
CP PROPERTIES HOLDINGS LIMITED
PARTNERSHIP
By: CP Properties Holdings, Inc.
General Partner
By: /s/ Ronald S. Haft
------------------------------------
Ronald S. Haft
President
CP HOLDINGS MD, INC.
By: /s/ Ronald S. Haft
------------------------------------
Ronald S. Haft
President
HCP PARTNER MD, INC.
By: /s/ Ronald S. Haft
------------------------------------
Ronald S. Haft
President
BULL RUN, INC.
By: /s/ Ronald S. Haft
------------------------------------
Ronald S. Haft
President
COLLATERAL AGENT:
DART GROUP CORPORATION, as Collateral
Agent and Bailee for Dart Group
Corporation and Cabot-Morgan Real
Estate Company
By: /s/ Robert A. Marmon
------------------------------------
Name:
Title:
-24-
<PAGE> 25
EXHIBIT A
PLEDGE OF DISPUTED PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Percentage of
Outstanding
General/Limited
Partnership
Interests owned
Name of Pledgor Name of Partnership by Pledgor
- --------------- ------------------- ---------------
<S> <C> <C>
Ronald S. Haft CP/Bull Run 33% (limited)
Limited
Partnership
CP Properties Holdings
Limited Partnership quitclaim
Combined Properties/ 31.84% (limited)
Brigs Chaney Plaza
Limited Partnership
CP Properties Combined Properties/ 66.66% (limited)
Holdings Limited Greenway Center
Partnership Limited Partnership
CP/Greenbriar 66% (limited)
Office Investments
Limited Partnership
CP/Greenbriar 66% (limited)
Retail Investments
Limited Partnership
CP Holdings MD, Combined Properties/ 1% (limited)
Inc. Briggs Chaney Plaza
Limited Partnership
HCP Partner MD, Combined Properties/ 1% (limited)
Inc. Briggs Chaney Plaza
Limited Partnership
Bull Run, Inc. CP/Bull Run 1.94% (general)
Limited Partnership
</TABLE>
<PAGE> 1
EXHIBIT 10.12
PARTNERSHIP STOCK PLEDGE AGREEMENT
This PARTNERSHIP STOCK PLEDGE AGREEMENT (this "Pledge
Agreement"), dated as of October 6, 1995, is made by Ronald S. Haft ("Pledgor")
in favor of Dart Group Corporation, a Delaware corporation ("Lender"), as
collateral agent and bailee (in such capacity, "Collateral Agent") for 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 Master Agreement (defined
below) except that an "Event of Default" shall have the meaning set forth 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 Pledgor, 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
Pledgor and Pledgor has executed and delivery 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 is the legal and beneficial owner of 400
shares of capital stock of CP/Greenbriar Retail, Inc., a Virginia corporation,
400 shares of capital stock of CP/Greenbriar Office, Inc., a Virginia
corporation, and 300 shares of capital stock of Bull Run, Inc., a Maryland
corporation (the "Subject Corporations");
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 and Pledgor hereby agree as follows:
<PAGE> 2
1. 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 the capital stock of the
Subject Corporations, now or at any time or times hereafter, owned by
Pledgor, the certificates representing the shares of such capital
stock (such now-owned shares being identified on Exhibit A attached
hereto and made a part hereof), all options and warrants for the
purchase of shares of the capital stock of the Subject Corporations,
now or hereafter held in the name of Pledgor (all of said capital
stock, options and warrants and all capital stock held in the name of
Pledgor 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;
(b) All additional shares of the capital stock of the
Subject Corporations from time to time acquired by Pledgor in any
manner and the certificates representing such additional shares (any
such additional shares and voting certificates shall constitute part
of the Pledged Stock and Collateral Agent is irrevocably authorized to
amend Exhibit A from time to time to reflect such additional 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;
(c) The property and interests in property described in
Section 3 below; and
(d) All proceeds of the foregoing.
2. 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 (on its own behalf and as an agent
and bailee for itself and Cabot-Morgan) 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, Lender (on its own behalf and as an agent and bailee for itself
and Cabot-Morgan) and/or any collateral agent, bailee or escrow agent acting on
behalf of Lender or Cabot-Morgan (i) to pay any indemnification obligation
under this Pledge Agreement or any
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<PAGE> 3
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").
3. 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 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 shall be immediately
delivered to and held by Collateral Agent under the terms of this Pledge
Agreement and shall constitute Pledged Collateral hereunder.
4. 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 the
Subject Corporations or the capital structure of the Subject Corporations
(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 of any such changes or
potential changes or to take any action or omit to take any action with respect
thereto.
5. Delivery of Pledged Collateral. 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. 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 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
- 3 -
<PAGE> 4
accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to Collateral Agent.
6. 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 Pledged Collateral
constitutes 100% of Pledgor's interests in the Subject Corporations
except for the First Union Pledged Shares;
(b) Pledgor has full power and authority to enter into
this Pledge Agreement;
(c) 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) Pledgor has 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 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
- 4 -
<PAGE> 5
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;
(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;
(k) Pledgor does not have any liabilities, obligations or
commitments, including, without limitation, those for taxes of any
kind, which, if adversely determined or not discharged or performed by
Pledgor, will create any Lien in or against any of the Pledged
Collateral or the Subject Corporations in which Pledgor holds any
direct or indirect interest or any direct or indirect interest of such
Pledgor therein. To the best knowledge of Pledgor there is no
liability, commitment or obligation of Pledgor or any Pledged
Collateral or the Subject Corporations in which Pledgor holds any
direct or indirect interest which is not disclosed in this Agreement
or any schedule hereto, which liability, commitment or obligation
could have a material adverse effect on the value of the Pledged
Collateral, any Subject Corporation or any interest of Pledgor
therein; and
7. Voting Rights. During the term of this Pledge
Agreement, and except as provided in this Section 7, 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.
8. Dividends and Other Distributions. (a) Subject to
Section 8(b) and 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:
- 5 -
<PAGE> 6
(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 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 dividends or interest payments which
it is authorized to receive and retain pursuant to clause (i) above.
(b) Notwithstanding the provisions of Section 8(a) and
subject to the limitations set forth below, Collateral Agent shall at all times
have the sole right to receive and retain any and all dividends, interest and
distributions paid in respect of the Pledged Collateral which, directly or
indirectly, constitute dividends, interest and distributions from the Joint
Ventures to the CP/Partnerships or JV Management, L.L.C., paid pursuant to
Sections 3.06 and/or 8.02 of the respective Amended and Restated Joint Venture
Agreements of the Joint Ventures. All dividends, interest and distributions
received by Pledgor contrary to the provisions of this Section 8(b), shall 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).
The foregoing obligation shall apply to any funds which are
directly or indirectly receivable by any RSH Obligor upon any sale of any Joint
Venture or Property which occurs after at least any two of the Joint Ventures
or Properties have been sold (including that such obligation applies to any
group or series of sales after which the number of Joint Ventures or Properties
sold would exceed two). Upon any such sale Pledgor shall pay into the
- 6 -
<PAGE> 7
RSH Escrow Account the portion of the funds receivable by Pledgor that is equal
to the product of $5.0 million multiplied by the quotient of the Stipulated
Value (as defined in Exhibit K to the Master Agreement) with respect to the
Joint Venture or Property being sold divided by the Stipulated Value of the
Joint Ventures or Properties not yet sold (including any Joint Venture or
Property then being sold) multiplied by ten percent (10%); provided, however,
that upon the sale of the last Property to be sold Pledgor shall pay into the
RSH Escrow Account such amount as is necessary so that the aggregate proceeds
deposited into the RSH Escrow Account is at least $5.0 million; provided,
further, that in the event the pledge pursuant to the Pledge Agreements by any
RSH Obligor shall become wholly or partially invalid or unenforceable, upon the
sale of any Joint Venture or Property, Pledgor shall deposit all such
distributions or sales proceeds into the RSH Escrow Account until the aggregate
proceeds deposited into the RSH Escrow Account is at least $5.0 million (taking
into account, if applicable, reductions in the amount on deposit as a
consequence of any refund or repayment arising in connection with any
invalidation or unenforceability).
Subject to the second proviso of the second sentence of the
immediately preceding paragraph, the obligation of Pledgor to make payments
into the RSH Escrow Account pursuant to this Section 8(b) shall be limited to a
cumulative $5.0 million and the obligation to make any further payments shall
terminate on the earlier to occur of (i) such time as the cumulative
distributions deposited into the RSH Escrow Account equal $5.0 million, (ii)
the date on which the Reserved Obligation described under Section 4.1(a)(iv) of
the Master Agreement shall cease in its entirety to be a Reserved Obligation
pursuant to Section 4.1(b)(iv) of the Master Agreement and (iii) the date on
which the Escrow Funds, plus Attributed Interest (as defined below) exceeds the
aggregate amount of the sum of (A) the Reserved Obligations and (B) the
Warehouse Reserve. For purposes of this Section 8(b) "Attributed Interest"
shall mean a projected amount of interest which would accrue at a simple rate
of interest of 6.0% per annum on (i) the Escrow Funds in the C-M Escrow Account
from the date of calculation through the Termination Date and (ii) the Escrow
Funds in the RSH Escrow Account from the date of calculation through the date
which is 30 months after the date of calculation. The calculation of the
amount of the Retained Distributions, Escrow Funds, the Reserved Obligations
and the Attributed Interest shall be determined as provided in Section 11.2 of
the Master Agreement.
Each Pledgor agrees to notify each Subject Corporation in
which such Pledgor holds an interest to pay such dividends, interests and
distributions directly to the RSH Escrow Account in accordance with this
Pledge.
(c) Notwithstanding any other provision of this Section
8, (A) after the occurrence of an Event of Default or (B) upon any Revocation
Closing (as defined in the Settlement Agreement) pursuant to Section 1.5 of the
Settlement Agreement:
- 7 -
<PAGE> 8
(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 8(a)(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 and other
distributions, 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
$11.7 Million Note;
(ii) All dividends, interest payments and other
distributions which are received by Pledgor contrary to the provisions
Section 8(c)(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) The Pledged Collateral may be sold or otherwise
disposed of by Collateral Agent as provided in Section 10;
(iv) Pledgor shall, upon the request of Collateral Agent,
at Pledgor's expense, do or cause to be done all such other acts and
things as may be necessary to make such assignment of the Pledged
Collateral or any part thereof valid and binding and in compliance
with applicable law.
Pledgor will reimburse Collateral Agent for all expenses
incurred by Collateral Agent, including, without limitation, reasonable
attorneys' and accountants' fees and expenses in connection with the foregoing.
9. 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 Collateral Agent, (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 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.
10. Remedies. (a) Collateral Agent shall have, in
addition to any other rights given under this Pledge Agreement or by law, all
of the rights and remedies with respect 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
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
- 8 -
<PAGE> 9
Agent or which Collateral Agent shall otherwise have the ability to transfer
under applicable law, Collateral Agent may, in Collateral Agent'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 Collateral Agent 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 agrees to distribute any proceeds of
the sale of the Pledged Collateral in accordance with Section 10(i) 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, Collateral Agent 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 Collateral Agent 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, Collateral Agent may, from
time to time, attempt to sell all or any part of the Pledged Collateral (i) by
means of an underwritten public offering as provided in Section 10(d) or (ii)
by private placement as provided in Section 10(e).
(d) Collateral Agent 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
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<PAGE> 10
Collateral Agent, 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 Collateral Agent, Pledgor or Collateral Agent's or Pledgor's
counsel, advisable to assist Collateral Agent 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 Collateral
Agent in making all amendments and supplements thereto and to the related
prospectus which, in the opinion of Collateral Agent, Pledgor or Collateral
Agent'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 Collateral Agent, at
Pledgor's expense, do or cause to be done all such other acts and things as may
be necessary to permit Collateral Agent 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 Collateral Agent for all expenses
incurred by Collateral Agent including, without limitation, reasonable
attorneys' and accountants' fees and expenses in connection with the foregoing.
Upon or at any time after the occurrence of an Event of Default, if Collateral
Agent 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) Collateral Agent may, at Pledgor's expense, attempt
to sell the Pledged Collateral in a private placement restricting the 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, Collateral Agent may solicit offers to buy the Pledged Collateral,
or any part of it, from a limited number of investors deemed by Collateral
Agent, in its reasonable judgment, to be financially responsible parties who
might be interested in purchasing the Pledged Collateral. If Collateral Agent
solicits such offers from not less than three (3) such investors, then the
acceptance by Collateral Agent of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method
- 10 -
<PAGE> 11
of disposing of such Pledged Collateral; provided, however, that this Section
does not impose a requirement that Collateral Agent solicit offers from three
or more investors in order for the sale to be commercially reasonable.
(f) Pledgor agrees that (i) in the event Collateral Agent
shall, upon any Event of Default, sell the Pledged Collateral or any portion
thereof at a private sale or sales, Collateral Agent shall have the right to
rely upon the advice and opinion of investment bankers engaged by Collateral
Agent 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
Collateral Agent handled such matter in a commercially reasonable manner under
applicable law.
(g) 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 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.
(h) 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.
(i) 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 Collateral Agent as follows:
- 11 -
<PAGE> 12
First: to payment of the costs and expenses of such sale,
including the expenses of Collateral Agent 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 Collateral Agent 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.
In addition, notwithstanding any other provision of this Section 10,
Lender hereby agrees that if Pledgor, promptly after the occurrence of an Event
of Default, delivers written notice to Borrower that it authorizes Lender to
forebear, for a specified period not in excess of six months, the exercise of
any remedy to sell the Pledged Collateral, Lender will not initiate any public
or private sale of the Pledged Stock during such period; provided, that at the
end of each specified period the Pledgor may extend such forbearance for an
additional period not to exceed six months.
11. Security Interest Absolute. All rights of Collateral
Agent 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 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.
12. Collateral Agent Appointed Attorney-in-Fact. Pledgor
hereby appoints Collateral Agent Pledgor's attorney-in-fact, with full
authority, in the name of Pledgor or
- 12 -
<PAGE> 13
otherwise, after the occurrence of an Event of Default, from time to time in
Collateral Agent's sole discretion, individually or jointly to take any action
and to execute any instrument which Collateral Agent 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 or Collateral Agent's nominee. After the occurrence of an Event of
Default, Collateral Agent may in Collateral Agent'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 may at any time exchange certificates or instruments
representing or evidencing any Pledged Collateral for certificates or
instruments of smaller or larger denominations.
13. 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 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 for the sole account of Pledgor, and shall constitute part
of the Obligations secured hereby.
14. 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 Collateral
Agent or Pledgor, at the addresses specified from time to time in accordance
with the Promissory Note.
15. 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.
- 13 -
<PAGE> 14
(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.
16. 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.
17. Term; Releases. This Pledge Agreement shall remain
in full force and effect until the Obligations have been fully and indefeasibly
paid in cash whether as direct payment to Lender or Cabot-Morgan or as provided
by Article 6 of the Master Agreement. Upon the termination of this Pledge
Agreement as provided above (other than as a result of the sale of the Pledged
Collateral), Collateral Agent will release the security interest created
hereunder. This Pledge Agreement shall continue in effect notwithstanding the
occurrence of any Revocation Closing (as defined in the Settlement Agreement)
pursuant to Section 1.5 of the Settlement Agreement.
18. 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.
19. Reinstatement; Liens. This Pledge Agreement and the
Obligations and Liens hereunder shall continue to be
- 14 -
<PAGE> 15
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.
20. 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 will take all such other actions, including,
without limitation, the execution and filing of financing statements, as
Collateral Agent may reasonably request from time to time in order to carry out
the provisions and purposes of this Pledge Agreement.
21. 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.
22. 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 Pledgor's estate)
and assigns. Pledgor's successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for Pledgor.
23. 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 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.
24. Exhibits. The Exhibits attached to this Pledge
Agreement are incorporated herein and shall be part of this Pledge Agreement
for all purposes.
25. Section Headings. The section headings herein, and
the headings in the Exhibits hereto, are solely for
- 15 -
<PAGE> 16
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.
26. 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.
27. 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 representations, oral or written, express or
implied, between them other than as herein set forth.
28. 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.
29. 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, EXCEPT WITH RESPECT TO THE PERFECTION OF
SECURITY INTERESTS GRANTED UNDER THIS PLEDGE AS TO WHICH THE LAWS OF THE
DISTRICT OF COLUMBIA SHALL APPLY.
- 16 -
<PAGE> 17
30. 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 14 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.
31. 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.
- 17 -
<PAGE> 18
IN WITNESS WHEREOF, Pledgor and Collateral Agent have executed
this Pledge Agreement as of the date set forth above.
PLEDGOR:
/s/ Ronald S. Haft
--------------------------
Ronald S. Haft
COLLATERAL AGENT:
DART GROUP CORPORATION, as
Collateral Agent and Bailee
for Dart Group Corporation and
Cabot-Morgan Realty Company
By:/s/ Robert A. Marmon
--------------------------
Name:
Title:
- 18 -
<PAGE> 19
EXHIBIT A
to
PLEDGE AGREEMENT
Pledged Stock
<TABLE>
<CAPTION>
Name and Address Description of Certificate
of Pledgor Pledged Stock Numbers
---------------- -------------- -----------
<S> <C> <C>
Ronald S. Haft 400 Shares of Common Stock, par 1
2435 California Street, N.W. value $1.00 per share, of
Washington, D.C. 20008 CP/Greenbriar Retail, Inc.
400 shares of Common Stock, par 1
value $1.00 per share, of
CP/Greenbriar Office, Inc.
300 shares of Common Stock, par Not Numbered
value $1.00 per share of Bull Run,
Inc.
</TABLE>
<PAGE> 20
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 Common Stock,
$1.00 par value per share, of __________________________________, a
___________________ 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
<PAGE> 1
EXHIBIT 10.13
MUTUAL RELEASE
This Mutual Release (the "Release"), dated as of this 6th day of
October, 1995, by and between (1) each of Dart Group Corporation, a Delaware
corporation ("Dart"), Crown Books Corporation, a Delaware corporation ("Crown
Books"), Trak Auto Corporation, a Delaware corporation ("Trak Auto"),
Cabot-Morgan Real Estate Company, a Delaware corporation ("Cabot-Morgan") and
Dart/SFW Corp., a Delaware corporation ("Dart/SFW"), and (2) each of Ronald S.
Haft and Combined Properties, Inc., a District of Columbia corporation ("CPI").
WITNESSETH
WHEREAS, Dart and Ronald S. Haft are parties to that certain
Settlement Agreement, of even date herewith (the "Settlement Agreement") which
provides, inter alia, for the execution and delivery of this Release by the
parties hereto at the closing of the transactions contemplated by the
Settlement Agreement; and
WHEREAS, the closing of the transactions contemplated by the
Settlement Agreement is occurring on the date hereof;
NOW THEREFORE, for and in consideration of the premises and of the
mutual promises and agreements herein contained, the parties hereto agree as
follows:
Section 1. Release by Dart and Affiliates. Dart, Crown Books, Trak
Auto, Cabot-Morgan and Dart/SFW for themselves and their respective heirs,
executors, administrators, successors, assigns and controlled affiliates and
their respective present and former officers, directors, employees, attorneys
and agents (collectively, the "Dart Release Parties"), hereby permanently,
irrevocably and unconditionally release and forever discharge
<PAGE> 2
Ronald S. Haft and CPI, and their respective heirs, executors, administrators,
successors, assigns and present and former employees, attorneys and agents and
CPI's present and former officers, directors and controlled affiliates
(collectively, the "RSH/CPI Release Parties"), from any and all manner of
claims, demands, damages, actions, causes of action, contracts, agreements,
charges, sums of money, claims for attorneys' fees and lawsuits of every kind
and description whatsoever, in law or equity, whether known or unknown, now
existing or which may hereafter arise against the RSH/CPI Release Parties, or
any of them, under the laws of the United States, any State thereof, or any
other jurisdiction, for or by reason of any matter, cause, or thing whatsoever
prior to the date hereof, including, without limitation, any of the claims
asserted against the RSH/CPI Release Parties in the actions listed in the
Schedule of Litigation (Schedule 3.7) to the Settlement Agreement, regardless
of whether future damages may result therefrom.
Section 2. Release by Ronald S. Haft, CPI and Affiliates. Ronald S.
Haft and CPI, for themselves and all of the other RSH/CPI Release Parties,
hereby permanently, irrevocably and unconditionally release and forever
discharge Dart, Crown Books, Trak Auto, Cabot-Morgan, Dart/SFW and all of the
other Dart Release Parties from any and all manner of claims, demands, damages,
actions, causes of action, contracts, agreements, charges, sums of money,
claims for attorneys' fees and lawsuits of every kind and description
whatsoever, in law or equity, whether known or unknown, now existing or which
may hereafter arise against the Dart Release Parties, or any of them, under the
2
<PAGE> 3
laws of the United States, any State thereof, or any other jurisdiction, for or
by reason of any matter, cause, or thing whatsoever prior to the date hereof,
including, without limitation, any of the claims asserted in the lawsuit
captioned Ronald S. Haft v. Dart Group Corporation, Delaware Chancery Court,
CA-13736, regardless of whether future damages may result therefrom.
Section 3. Non-Assignment. Dart, Crown Books, Trak Auto,
Cabot-Morgan and Dart/SFW each represent and warrant to Ronald S. Haft and CPI
that they have not assigned or transferred any claim they have or may have
arising out of or by reason of any matter, cause or thing whatsoever occurring
prior to the date hereof against any of the RSH/CPI Release Parties to any
other person or entity. Likewise, Ronald S. Haft and CPI represent and warrant
to Dart, Crown Books, Trak Auto, Cabot-Morgan and Dart/SFW that they have not
assigned or transferred any claim they have or may have arising out of or by
reason of any matter, cause or thing whatsoever occurring prior to the date
hereof against any of the Dart Release Parties to any other person or entity.
Section 4. No Release of Other Hafts, Michael Klein, Wilmer, Cutler &
Pickering or Partnerships or Corporations other than CPI, Dart and Dart
Affiliates. Notwithstanding any other provision of this Release, neither
Herbert H. Haft, Gloria G. Haft, Robert M. Haft, Linda G. Haft, Michael Klein,
the law firm of Wilmer, Cutler & Pickering nor any partnerships or corporations
other than CPI, Dart and Dart affiliates shall be deemed to be among the
persons constituting either Dart Release Parties or RSH/CPI Release Parties for
purposes of this Release.
3
<PAGE> 4
Section 5. Indemnification for RSH from Actions By Dart Against RSH
Partnerships. Dart agrees to indemnify RSH for and hold him harmless from
reasonable attorneys fees, costs and damages that may be incurred by him as a
result of any action brought by Dart against any partnership in which RSH is a
general partner and, in the case of limited partnership interests, only to the
extent of such limited partnership interest, provided that RSH and CPI
cooperate with Dart's prosecution of any such action and provided further that
Dart is not obligated to indemnify RSH for any amounts incurred by him or for
which he may be liable as a result of any claim by Dart against any individual
for breach of fiduciary duty owed to Dart or any of its affiliates.
Section 6. Severability; Enforceability. In case any provision in
this Release is held to be illegal, invalid or unenforceable under present or
future laws effective while this Release remains in effect, the legality,
validity and enforceability of the remaining provisions will not in any way be
affected or impaired thereby, and in lieu of each such illegal, invalid or
unenforceable provision the parties shall negotiate in good faith to add a
provision that is legal, valid and enforceable and as similar in terms to such
illegal, invalid or unenforceable provision as may be possible while giving
effect to the benefits and burdens for which the parties have bargained
hereunder.
Section 7. Governing Law. This Release will be governed by and
construed in accordance with the law of the State of Delaware, without regard
to its principles concerning conflicts of law, and any actions under this
Release shall be brought
4
<PAGE> 5
exclusively in the courts of the State of Delaware or the United States
District Court for the District of Delaware.
Section 8. Counterparts. This Release may be executed in any number
of counterparts, whether transmitted by telecopier or otherwise, each of which
shall be deemed to be an original, and all of which together shall be deemed to
be one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Release to be executed on their behalf, on the date first written above.
/s/ Larry G. Schafran DART GROUP CORPORATION
- --------------------------
Larry G. Schafran
BY: /s/ Robert A. Marmon
----------------------------
/s/ Bonita A. Wilson CROWN BOOKS CORPORATION
- ---------------------------
Bonita A. Wilson
BY: /s/ Robert A. Marmon
----------------------------
/s/ Douglas M. Bregman TRAK AUTO CORPORATION
- ---------------------------
Douglas M. Bregman
BY: /s/ Robert A. Marmon
----------------------------
/s/ Robert A. Marmon CABOT-MORGAN REAL ESTATE
- --------------------------- COMPANY
Robert A. Marmon
BY: /s/ Robert A. Marmon
----------------------------
5
<PAGE> 6
/s/ Ronald S. Haft DART/SFW CORP.
- --------------------------
Ronald S. Haft
BY: /s/ Robert A. Marmon
----------------------------
COMBINED PROPERTIES, INC.
BY: /s/ Ronald S. Haft
----------------------------
6
<PAGE> 1
EXHIBIT 10.14
REAL ESTATE MASTER AGREEMENT
This Real Estate Master Agreement (this "Agreement"), dated as
of this 6th day of October, 1995, is made by and among RONALD S. HAFT ("RSH")
and DART GROUP CORPORATION, a Delaware corporation ("Dart"), and CABOT MORGAN
REAL ESTATE COMPANY, a Delaware corporation ("Cabot-Morgan"; together with
Dart, the "Dart Parties").
WITNESSETH:
WHEREAS, RSH claims to be directly the owner of the
partnership interests set forth on Exhibit A-2 in the "CP/Partnerships" named
on Exhibit A-1;
WHEREAS, RSH claims to own and control, directly or
indirectly, the entities named in Exhibit A-3 (the "RSH Entities"), and the RSH
Entities claim to be the owners of the partnership interests set forth on
Exhibit A-3 in the CP/Partnerships;
WHEREAS, Herbert H. Haft ("HHH") claims to own certain
CP/Partnership Interests owned by RSH or the RSH Entities, and the ownership
structure of the CP/Partnerships alleged by HHH is listed on Exhibit A-5 (the
"Disputed Partnership Interests");
WHEREAS, Cabot-Morgan and each CP/Partnership are joint
venture partners in the entities named in Exhibit A-4 (the "Joint Ventures")
and each Joint Venture is the direct or indirect owner of the "Property"
ascribed to it on Exhibit B;
WHEREAS, Dart and RSH 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
Agreement, have entered into that certain Settlement Agreement of even date
herewith pursuant to which Dart and RSH have agreed to settle such lawsuits on
the terms, and subject to the conditions, set forth therein (the "Settlement
Agreement");
WHEREAS, each of Dart and RSH, as a condition to entering into
the Settlement Agreement, has required that the other party execute and deliver
this Agreement and the documents, agreements and instruments to be delivered
pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
RSH, Dart and Cabot-Morgan hereby agree as follows:
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ARTICLE 1. DEFINITIONS
Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Settlement Agreement. In addition to the
terms defined elsewhere in this Agreement, the following terms have the
meanings set forth below unless the context clearly requires otherwise:
1.1 Attributed Interest. Shall mean a projected amount
of interest which would accrue, at a simple rate of interest of 6.0% per annum,
on (i) the Escrow Funds in the C-M Escrow Account from the date of calculation
through the Termination Date and (ii) the Escrow Funds in the RSH Escrow
Account from the date of calculation through the earlier of (A) the date which
is 30 months after the date of calculation or (B) the date which is 30 months
after the date on which an aggregate $5 million has been deposited into the RSH
Escrow Account.
1.2 C-M Escrow Account. Shall have the meaning ascribed
to it in Section 3.3.
1.3 Cabot-Morgan Retention. Shall mean, collectively,
the Escrow Funds, plus the Attributed Interest.
1.4 Escrow Accounts. Shall mean, collectively, the C-M
Escrow Account and the RSH Escrow Account.
1.5 Escrow Funds. Shall mean the amounts, if any, on
deposit from time to time in the C-M Escrow Account and the RSH Escrow Account
including any interest credited to such accounts.
1.6 Liquidated Reserved Obligations. Shall have the
meaning ascribed to it in Section 5.1.
1.7 Obligations. Shall have the meaning ascribed to it
in Section 3.5.
1.8 RSH Available Funds. Shall mean the amount, if any,
by which the Cabot-Morgan Retention exceeds the sum of (i) the Reserved
Obligations and (ii) the Warehouse Reserve.
1.9 RSH Escrow Account. Shall have the meaning ascribed
to it in Section 3.1.
1.10 Reserved Obligations. Shall have the meaning
ascribed to it in Section 4.1(a).
1.11 Retained Distributions. Shall have the meaning
ascribed to it in Section 3.3.
1.12 Settlement Funds. Shall have the meaning ascribed to
it Section 8.2(a).
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1.13 Termination Date. Shall mean October 6, 2000.
1.14 Warehouse Funds. Shall mean the amount, if any, up
to an aggregate $31,000,000.00 of RSH Available Funds after the first $16
million of RSH Available Funds, if any.
1.15 Warehouse Reserve. Shall have the meaning ascribed
to it in Section 7.1.
ARTICLE 2. CLOSING.
2.1 Closing Transactions. In order to effectuate the
transactions contemplated by the Settlement Agreement, the following documents
and instruments (together with this Agreement, the "Master Agreement
Documents") shall be executed and delivered, in form and substance reasonably
satisfactory to both parties, at the closing of such transactions which shall
occur on the date hereof at the offices of Jones, Day, Reavis & Pogue, 1450 G
Street, NW, Washington, D.C. 20005 (the "Closing"). Dart hereby agrees that it
will cause Cabot-Morgan to execute and deliver to RSH such Master Agreement
Documents as to which Cabot-Morgan is a party.
(a) Cabot-Morgan shall execute and deliver to RSH, and RSH
shall execute and deliver, or cause to be executed and delivered, to
Cabot-Morgan, the amended and restated joint venture agreements of
CM/CP Greenbriar Office Joint Venture, CM/CP Greenbriar Retail Joint
Venture, CM/CP Bull Run Joint Venture, CM/CP Greenway Center Joint
Venture and CM/CP Briggs Chaney Plaza Joint Venture in the forms
attached as Exhibit C-1, C-2, C-3, C-4 and C-5 (collectively, the "JV
Agreements");
(b) RSH shall have executed and delivered, or caused to be
executed and delivered, to the Dart Parties, the Pledge of Undisputed
Partnership Interests and the Pledge of Disputed Partnership Interests
in the forms attached as Exhibits D-1 and D-2 and the Partnership
Stock Pledge Agreement in the form attached as Exhibit D-3
(collectively, the "Pledge Agreements");
(c) the Dart Parties shall execute and deliver to RSH and
SettlementCorp ("Escrow Agent") and RSH shall execute and deliver, or
cause to be executed and delivered, to the Dart Parties and Escrow
Agent, the Escrow and Security Agreement in the form attached as
Exhibit E (the "Escrow Agreement");
(d) RSH shall execute and deliver, or cause to be executed
and delivered, to the Dart Parties UCC-1 financing statements
evidencing the encumbrances granted pursuant to the Pledge Agreements,
the Escrow Agreement and the other Settlement Documents (as defined in
Section 3.5), and Cabot-
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Morgan shall deliver to RSH UCC-1 financing statements evidencing
Cabot-Morgan's obligation to pay certain distributions from the Joint
Ventures into the C-M Escrow Account;
(e) The Dart Parties shall execute and deliver to RSH, and
RSH shall execute and deliver, or cause to be executed and delivered,
to the Dart Parties, the Purchase Agreement [Pennsy Drive Warehouses]
("Warehouse I Purchase Agreement"), the Purchase Agreement [Warehouse
Partnership Interests] ("Warehouse II Purchase Agreement")and the
Disputed Partnership Interest Purchase Agreement [Warehouses]
("Warehouse III Purchase Agreement"), each of even date herewith in
the form attached as Exhibits F-1, F-2 and F-3 (the "Warehouse
Purchase Agreements") pursuant to which RSH has agreed to convey or
cause to be conveyed to Dart or its designees certain interests in the
entities named in Exhibit G-1 (the "Warehouse Partnerships") and/or
the properties set forth on Exhibit G-2 (the "Warehouse Properties");
and the Dart Parties shall execute and deliver to RSH, and RSH shall
execute and deliver, or cause to be executed and delivered, to the
Dart Parties, each of the agreements, documents or instruments that
are to be delivered pursuant thereto (collectively with Warehouse
Purchase Agreements, the "Warehouse Documents");
(f) RSH shall cause each Property Owning Entity (as defined
in Exhibit A-4) to execute and deliver to the Dart Parties a Guaranty
in the form attached as Exhibit H (the "Guaranties") and RSH shall
cause Combined Properties/Greenbriar Office Limited Partnership to
execute and deliver to the Dart Parties the Indemnity Deed of Trust
with respect to the Property owned by Combined Properties/Greenbriar
Office Limited Partnership (the "Indemnity Deed of Trust") in the form
attached as Exhibit I; and
(g) RSH shall cause CM/CP Bull Run Joint Venture to
execute and deliver to Cabot-Morgan, and Cabot-Morgan shall execute
and deliver to CM/CP Bull Run Joint Venture, the Amendment to Loan
Agreement in the form attached as Exhibit J-1 (the "Loan Amendment")
and Cabot-Morgan shall execute and deliver to RSH the Allonge, the
Assignment of Deed of Trust and the Assignment of Loan Documents in
the form attached as Exhibit J-2.
2.2 Post-Closing Transactions. (a) Promptly after the
Closing, RSH shall deliver, or cause to be delivered, to the Dart Parties all
such consents, waivers or approvals, if any, as are required pursuant to the
loan documents relating to any loan to any Joint Venture, Greenbriar Limited
Partnership (as defined in Exhibit A-4), CP/Partnership or with respect to any
Property (as each such loan and loan document is set forth on Exhibit K) (the
"Underlying Loan Documents"). Upon the request of the Dart Parties and subject
to receiving any consent of lenders required
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<PAGE> 5
under the Underlying Loan Documents, RSH shall cause each Property Owning
Entity (other than Combined Properties/Greenbriar Office Limited Partnership)
to execute and deliver an Indemnity Deed of Trust with respect to the Property
owned by each such Property Owning Entity substantially in the form attached as
Exhibit I. RSH shall, and shall cause the Property Owning Entities to,
cooperate with the Dart Parties in securing any consents by lenders required
under the Underlying Loan Documents to the Property Owning Entities entering
into such Indemnity Deeds of Trust. Any costs or expenses charged by such
lenders in connection with such consents shall be paid by the Dart Parties.
Cabot-Morgan hereby consents to and authorizes the managing general partners of
the Joint Ventures to execute and deliver, or cause to be executed and
delivered, any Settlement Documents (as defined in Section 3.5) to be executed
by the Joint Ventures or the Greenbriar Limited Partnerships (as defined in
Exhibit A-4).
(b) In the event RSH proposes that any Joint Venture
owning a Property in Virginia be converted into a limited partnership,
Cabot-Morgan agrees to review promptly any such proposal and not to
unreasonably withhold its consent thereto. Any limited partnership agreement
proposed to effect such conversion shall be on substantially the same terms as
the JV Agreement for such Joint Venture with such changes as are appropriate to
reflect a limited partnership structure.
ARTICLE 3. ESCROW ACCOUNTS; SECURITY INTERESTS; OBLIGATIONS
3.1 RSH Escrow Account; Security Interests. (a) RSH
hereby agrees that in the event any Joint Venture or Property is sold RSH will
cause the distributions or sale proceeds described in Section 3.1(b) to be paid
to the escrow account (the "RSH Escrow Account") maintained by Escrow Agent
under the Escrow Agreement to receive payments from the RSH Obligors (as
defined in Section 3.5). All such funds shall be held in the RSH Escrow
Account pursuant to the Escrow Agreement and released from the RSH Escrow
Account on the terms, and subject to the conditions, set forth in the Escrow
Agreement and Sections 6.1(b), 8.1 and 9.2. Pursuant to the Escrow Agreement,
RSH will pledge and grant a security interest in, and will cause each RSH
Entity to pledge and grant a security interest in, the RSH Escrow Account, as
security for the Obligations.
(b) The obligation under Section 3.1(a) to deposit
distributions or sales proceeds into the RSH Escrow Account shall apply to any
distributions or sales proceeds which are directly or indirectly receivable by
any RSH Obligor upon any sale of any Joint Venture or Property which occurs
after any two of the Joint Ventures or Properties have been sold (including
that such obligation applies to any group or series of sales after which the
number of Joint Ventures or Properties sold would exceed two). Upon any such
sale the RSH Obligor entitled to receive distributions or sale proceeds shall
pay into the RSH Escrow Fund
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<PAGE> 6
the portion of the funds receivable by such RSH Obligor that is equal to the
product of $5.0 million multiplied by the quotient of the Stipulated Value (as
defined below) with respect to the Joint Venture or Property being sold divided
by the Stipulated Value of the Joint Ventures or Properties not yet sold
(including any Joint Venture or Property then being sold) multiplied by one
hundred ten percent (110%); provided, however, that upon the sale of the last
Property to be sold the RSH Obligor or RSH Obligors entitled to receive
distributions or sale proceeds shall pay into the RSH Escrow Fund such amount
as is necessary so that the aggregate distributions or sales proceeds deposited
into the RSH Escrow Account is at least $5.0 million; provided, further, that
in the event the pledge pursuant to the Pledge Agreements by any RSH Obligor
shall become wholly or partially invalid or unenforceable, upon the sale of any
Joint Venture or Property the RSH Obligors entitled to receive distributions or
sale proceeds as a consequence of any such sale shall deposit all such
distributions or sales proceeds into the RSH Escrow Account until the aggregate
distributions or sales proceeds deposited into the RSH Escrow Account is at
least $5.0 million (taking into account, if applicable, reductions in the
amount on deposit as a consequence of any refund or repayment arising in
connection with any invalidation or unenforceability). The "Stipulated Value"
of each Property and Joint Venture is the value set forth opposite the name of
such Joint Venture on Exhibit L.
(c) Subject to the second proviso of the second sentence of
Section 3.1(b), the obligation under this Section 3.1 to make payments into the
RSH Escrow Account shall terminate on the earlier to occur of (i) such time as
the cumulative distributions or sales proceeds deposited into the RSH Escrow
Account equal $5.0 million, (ii) the date on which the Reserved Obligation
described under Section 4.1(a)(iv) shall cease in its entirety to be a Reserved
Obligation pursuant to Section 4.1(b)(iv) or (iii) the date on which the Escrow
Funds, plus Escrow Attributed Interest (as defined below) exceeds the sum of
the aggregate amount of (A) the Reserved Obligations and (B) the Warehouse
Reserve. For purposes of this Section 3.1(c) "Escrow Attributed Interest"
shall mean a projected amount of interest which would accrue at a simple rate
of interest of 6.0% per annum on (i) the Escrow Funds in the C-M Escrow Account
from the date of calculation through the Termination Date and (ii) the Escrow
Funds in the RSH Escrow Account from the date of calculation through the date
which is 30 months after the date of calculation.
3.2 Limits on Pledge and Assignment. It is intended that
the assignments and security interests created under the Escrow Agreement and
the Pledge Agreements are pledges of general intangibles governed by Section
9-318 of the Uniform Commercial Code, as adopted in any jurisdiction relevant
to this Agreement. However, if and to the extent the provisions of the Escrow
Agreement or any Pledge Agreement would allow any other partner in any Joint
Venture, Greenbriar Limited Partnership, CP/Partnership or RSH Obligor to
invoke a right of first offer or
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<PAGE> 7
first refusal with respect to any such interest and such other partner
indicates a desire to do so, then, without further action by the parties
hereto, the provisions of the Escrow Agreement and/or such Pledge Agreement
shall be suspended immediately with respect to such interest, and, if
necessary, shall become null and void, with respect to such interest until such
time, if any, as such right of first offer or first refusal is no longer
applicable or waived.
3.3 C-M Escrow Account. The parties hereto hereby agree
that in the event any Joint Venture or Property is sold Cabot-Morgan will cause
up to a maximum cumulative aggregate amount of $47.0 million of (i)
distributions received by Cabot-Morgan from any Joint Venture from proceeds of
such sales or (ii) the proceeds of such sales received by Cabot-Morgan for
selling its interest in any Joint Venture (the "Retained Distributions") to be
deposited into the escrow account (the "C-M Escrow Account") maintained by
Escrow Agent under the Escrow Agreement to receive payments from Cabot-Morgan.
The foregoing obligation shall apply only to distributions or proceeds
receivable by Cabot-Morgan following receipt by Cabot-Morgan of $2.0 million
from the sale of the first one or more Joint Ventures, or Properties to be sold
after the Closing.
3.4 Cabot-Morgan Retention. The parties hereto agree
that the Retained Distributions which are to be placed into the C-M Escrow
Account plus the amounts placed into the RSH Escrow Account are to constitute a
reserve for the Reserved Obligations and the Warehouse Reserve and so long as
they remain in reserve, are available to satisfy the payment when due and
payable of the Obligations.
3.5 Obligations. RSH hereby acknowledges and agrees
that the Cabot-Morgan Retention shall secure the prompt payment, performance
and observance of all present and future debts, obligations and liabilities of
RSH, or any other obligor controlled by RSH (collectively with RSH, the "RSH
Obligors"), under this Agreement, the other Master Agreement Documents, the
Settlement Agreement and each other agreement, document or instrument to be
executed and delivered in connection with any of the foregoing (collectively,
the "Settlement Documents") arising pursuant to, or on account of, the
Settlement Documents, including, without limitation, the obligations of the RSH
Obligors to Dart (on its own behalf and as agent and bailee for itself and
Cabot-Morgan), Cabot-Morgan and/or any collateral agent, bailee or escrow agent
acting on behalf of Dart or Cabot-Morgan (i) to pay any indemnification
obligation under this 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 $27.4 Million Note, the $37 Million Note and the $11.6
Million Note (as such terms are defined in the Settlement Agreement), including
any amendment, extension or renewal thereof, or any exchange or substitution
therefor, and (iii) to pay all other amounts, and perform,
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<PAGE> 8
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 any
Settlement Document (collectively, the "Obligations").
ARTICLE 4. RESERVED OBLIGATIONS
4.1 Reserved Obligations.
(a) For purposes of this Agreement the parties hereto
stipulate and agree that the amount of the "Reserved Obligations" at any time
shall equal the aggregate amount of the following as calculated from time to
time:
(i) the outstanding principal of and all other amounts
(other than interest) payable pursuant to, the $11.6 Million Note;
(ii) $5.0 million, plus accrued but unpaid interest on
such amount, relating to the RSH Contested Class A Shares which are
subject to a claim of ownership by Robert M. Haft ("RMH"), Linda G.
Haft ("LGH") and HHH;
(iii) $2.8 million, plus accrued but unpaid interest on such
amount, relating to the RSH Pledged Class A Shares which are subject
to a pledge to First Union National Bank or any affiliate, successor
or assign thereof; and
(iv) $24.2 million, plus accrued but unpaid interest on
such amount, payable 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 hereof or that
the Redemption Class B Shares (or shares substituted therefor) must be
returned or delivered to HHH or RSH (the "Rescission Claim"), subject
to the conditions and limitations set forth in Section 5.3(c) of the
Settlement Agreement.
(b) For purposes hereof, the parties hereto stipulate and
agree that each Reserved Obligation shall be reduced or cease to be a Reserved
Obligation if and to the extent the conditions set forth below for such
Reserved Obligation are satisfied.
(i) $11.6 Million Note. The Reserved Obligation relating
to the $11.6 Million Note shall be reduced by the aggregate amount of
principal of the $11.6 Million Note received by Dart and shall cease
to be a Reserved Obligation at such time as all principal or other
amounts (other than interest) payable under the $11.6 Million Note are
paid in full.
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<PAGE> 9
(ii) RSH Contested Class A Shares. The amount of the
Reserved Obligation relating to the RSH Contested Class A Shares shall
be reduced or cease to be a Reserved Obligation if:
(A) An order of a court of competent jurisdiction
has been entered pursuant to which RSH has been determined to
be the owner of the RSH Contested Class A Shares as against
claims to the RSH Contested Class A Shares by RMH, LGH and
HHH, and the decision has become final after the period for
appealing such decision has expired; or
(B) The statute of limitations on any claim of
RMH, LGH and HHH to the RSH Contested Class A Shares has
lapsed and no claim with respect thereto has been filed and is
pending with any court.
In the event only a portion of the RSH Contested Class A Shares are
determined to be owned by RSH as provided in clause (A), the Reserved
Obligation relating to the RSH Contested Class A Shares shall be
reduced by an amount equal to the number of shares so owned by RSH
multiplied by the Buy/Sell Class A Share Price (as defined in the
Buy/Sell/Offering Agreement).
(iii) RSH Pledged Class A Shares. The amount of the Reserved
Obligation relating to the RSH Pledged Class A Shares shall be reduced
or cease to be a Reserved Obligation if:
(A) The RSH Pledged Class A Shares shall be free
and clear of any lien, security interest, pledge,
hypothecation, mortgage, deed of trust, conditional sale or
other title retention agreement, claim, charge, tax
assessment, encumbrance or other restriction of any kind or
character ("Lien") of First Union National Bank, or any
affiliate, successor or assigns thereof; or
(B) Dart shall own the loans which are secured
by the Lien on the RSH Pledged Class A Shares and RSH shall
have paid the principal amount of, and all accrued interest
on, $1,494,945 of such loans and 21.36% of all other amounts
due and payable in connection with such loans.
In the event only a portion of the RSH Pledged Class A Shares become
free of all Liens as provided in clause (A), the Reserved Obligation
relating to the RSH Pledged Class A Shares shall be reduced by an
amount equal to the number of shares free of Liens multiplied by the
Buy/Sell Class A Share Price (as defined in the Buy/Sell/Offering
Agreement). In the event only a portion of the balance of the loan is
paid by RSH as provided in clause (B), the Reserved
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Obligation relating to the RSH Pledged Class A Shares shall be equal
to the amount of principal of, interest on, and all other amounts due
and payable in connection with, such loan outstanding from time to
time.
(iv) Rescission Claim. (A) The amount of the Reserved
Obligation relating to the Rescission Claim shall be reduced by the
amount of funds, if any, Dart receives with respect to any repayment
by HHH of any and all payments made by or on behalf of RSH to HHH as
consideration for acquiring the Redemption Class B Shares, including
the payments to HHH of amounts under the HHH Note.
(B) (i) The Reserved Obligation relating to the
Rescission Claim shall cease to be a Reserved Obligation if the
Rescission Action has been dismissed with prejudice or an order of a
court of competent jurisdiction has been entered, in either case
pursuant to which RSH has been determined to be the owner of the
Redemption Class B Shares as against claims to the ownership of, or
authority to vote, the Redemption Class B Shares or shares issued in
substitution therefor by HHH, such dismissal or order has become final
after the period for appealing such dismissal or order has expired,
and no other claim seeking the rescission of the sale from HHH to RSH
of the Redemption Class B Shares or shares issued in substitution
therefor and/or the right to own or vote the Redemption Class B Shares
or shares issued in substitution therefor has been filed and is
pending with any court.
(ii) The Reserved Obligation relating to the Rescission Claim
shall be reduced by $16.2 million in the event a court of competent
jurisdiction enters an order the effect of which is that RSH has been
determined to be the owner of the Redemption Class B Shares as against
claims to the ownership of the Redemption Class B Shares by HHH, but
RSH may not assign and transfer the Redemption Class B Shares or
shares issued in substitution therefor 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), such order has become final after
the period for appealing such order has expired without an appeal
having been filed, and no other claim seeking the rescission of the
sale from HHH to RSH of the Redemption Class B Shares and/or the right
to own or vote the Redemption Class B Shares or shares issued in
substitution therefor has been filed; provided, however, that in such
event the remaining $8.0 million of the Reserved Obligation relating
to the Rescission Claim shall cease to be a Reserved Obligation if and
when the Redemption Class B Shares are transferred to Dart as provided
for in Section 1.1(f) of the Settlement Agreement.
(C) Notwithstanding the foregoing, the Reserved Obligation
relating to the Rescission Claim shall remain in effect in its
entirety so long as RSH remains obligated to
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deliver the Redemption Class B Shares to Dart pursuant to Section
5.3(c) of the Settlement Agreement.
ARTICLE 5. LIQUIDATED OBLIGATIONS; DUE AND PAYABLE OBLIGATIONS
5.1 Liquidated Reserved Obligations. (a) For purposes
of releasing Escrow Funds for the payment of Obligations as provided in Section
6.1, the parties hereto stipulate and agree that each Reserved Obligation shall
be deemed "due and payable" and therefore constitute a "Liquidated Reserved
Obligation" as provided below.
(1) $11.6 Million Note. The Reserved Obligation relating
to the $11.6 Million Note shall become due and payable (A) when any
prepayment of the $11.6 Million Note is required by paragraph 5.b. or
5.c. thereof and/or (B) on the maturity date of the $11.6 Million
Note.
(2) RSH Contested Class A Shares. The Reserved
Obligation relating to any RSH Contested Class A Shares shall become
due and payable (A) when payment is required under Section 5.2 of the
Settlement Agreement, (B) when any prepayment of the $37 Million Note
is required by paragraph 5.b. thereof if prior to the time of the
closing of the purchase and sale of Buy/Sell Class A Shares (as
defined in the Buy/Sell Offering Agreement) pursuant to the
Buy/Sell/Offering Agreement, a court of competent jurisdiction has
determined that RSH is not the owner of all or a portion of the RSH
Contested Class A Shares, and the period for appealing such decision
has expired without an appeal having been filed and/or (C) on the
Termination Date. In the event a court determines that RSH owns only
a portion of the RSH Contested Class A Shares, the Reserved Obligation
relating to the RSH Contested Class A Shares shall become due and
payable in an amount equal to the number of such RSH Contested Class A
Shares not owned by RSH multiplied by the Buy/Sell Class A Share Price
(as defined in the Buy/Sell/Offering Agreement).
(3) RSH Pledged Class A Shares. The Reserved Obligation
relating to any RSH Pledged Class A Shares shall become due and
payable (A) when any prepayment of the $37 Million Note is required by
paragraph 5.b. thereof if at the time of the closing of the purchase
and sale of Buy/Sell Class A Shares (as defined in the
Buy/Sell/Offering Agreement) pursuant to the Buy/Sell/Offering
Agreement, RSH no longer owns all the RSH Pledged Class A Shares, (B)
when any prepayment of the $37 Million Note is required by paragraph
5.c. thereof and/or (C) on the Termination Date. In the event the
secured party holding a Lien on the RSH Pledged Class A Shares sells
or otherwise disposes of only a portion of the RSH Pledged Class A
Shares, the Reserved Obligation relating to the RSH Pledged Class A
Shares shall
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become due and payable in an amount equal to the number of RSH Pledged
Class A Shares so sold or disposed of multiplied by the Buy/Sell Class
A Share Price (as defined in the Buy/Sell/Offering Agreement).
(4) Rescission Claim. The Reserved Obligation relating
to the Rescission Claim shall become due and payable (A) when and to
the extent payment is required as provided in Sections 5.3(b)(ii) and
5.3(c) of the Settlement Agreement (excluding the payments required
under the $37 Million Note described in such sections), (B) when any
prepayment of the $37 Million Note is required by paragraph 5.d.
thereof and/or (C) on the Termination Date.
(b) Except as provided in the following sentence, any
Obligation other than the Reserved Obligations shall be deemed "due and
payable" in accordance with the terms and conditions specified in the
Settlement Document under which such Obligation arises. Any Obligation arising
(i) under Article 4 of the Settlement Agreement (or other indemnity of general
application set forth in any other Settlement Document) for indemnification by
RSH or any RSH Obligor for a breach of representation, warranty, covenant or
agreement in the Settlement Documents or (ii) the failure of RSH or any other
RSH Obligor to perform, observe or comply with any term, covenant or condition
to be performed, observed or complied with under the Settlement Documents shall
be deemed "due and payable" only when a court of competent jurisdiction decides
that RSH is obligated to pay such Obligation and the period for appealing such
decision has expired without an appeal having been filed; provided, however,
that clause (ii) above shall not apply to payments under the $37 Million Note,
the $27.4 Million Note, the $11.6 Million Note or the Buy/Sell/Offering
Agreement or the payment of any specific amount which any Settlement Document
specifies as due and payable on a specified date or upon the occurrence of
specified events or conditions.
(c) Subject to the provisions of Section 6.1(b), Dart, in its sole
discretion, may determine the order of application to the Obligations of funds
released from the Escrow Funds to Dart and/or Cabot-Morgan. The failure to
prepay all or any portion of any prepayment obligation under the $27.4 Million
Note, the $37 Million Note or the $11.6 Million Note from available Escrow
Funds as a consequence of Dart applying such Escrow Funds to other Obligations
shall not constitute an Event of Default (as defined in such promissory notes)
arising from a failure by RSH to pay when due principal of and interest on any
such required prepayment on the $27.4 Million Note, the $37 Million Note or the
$11.6 Million Note.
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<PAGE> 13
ARTICLE 6. RELEASE OF ESCROW FUNDS TO CABOT MORGAN
6.1 Escrow Release. (a) Funds deposited into the C-M
Escrow Account shall be held for purposes of satisfying claims for any
Obligation and in the event any Obligation becomes due and payable in
accordance with the provisions of Section 5.1 (including any Reserved
Obligation becoming a Liquidated Reserved Obligation), funds on deposit in the
C-M Escrow Account shall be paid over to Cabot-Morgan and/or Dart and applied
to the payment of such Obligation.
(b) Funds deposited into the RSH Escrow Account shall be held for
purposes of satisfying claims for the Reserved Obligation described under
Section 4.1(a)(iv) and in the event such Reserved Obligation becomes a
Liquidated Reserved Obligation, the funds on deposit in the RSH Escrow Account
shall be paid over to Dart and applied to the payment of such Liquidated
Reserved Obligation before any funds on deposit in the C-M Escrow Account are
paid over to Dart as payment of such Liquidated Reserved Obligation. In the
event the funds on deposit are less than $5.0 million, all additional funds
thereafter deposited in the RSH Escrow Account shall be paid over to Dart
and/or Cabot-Morgan and applied to payment of such Liquidated Reserved
Obligation or any other Obligation which becomes due and payable before any
funds on deposit in the C-M Escrow Account are applied to such Liquidated
Reserved Obligation or any other Obligation.
ARTICLE 7. PROVISIONS RELATING TO THE WAREHOUSES
7.1 Warehouse Reserve. (a) Pursuant to the Warehouse
Purchase Agreements, RSH has agreed either (i) to cause the leases between the
current owners of the Warehouse Properties and Dart and/or Trak to be amended
as set forth in the Warehouse Purchase Agreements (the "Lease Amendments")
and/or (ii) to convey certain rights related to, or interests in, the Warehouse
Partnerships. RSH hereby agrees that the C-M Escrow Account shall be used as a
reserve, for the benefit of the Dart Parties, in the amount of $31.0 million to
insure that Dart and/or Trak realize at least $31.0 million of the benefits
intended to be provided to Dart and/or Trak by the Warehouse Purchase
Agreements (the "Warehouse Reserve").
(b) The benefits intended to be provided to Dart, Trak or
Dart's designees under the Warehouse Purchase Agreements may be provided by
means of (i) the Lease Amendments, (ii) the conveyance of "Prospective Economic
Benefits" pursuant to the Warehouse Purchase Agreements, (iii) the purchase and
sale of "Interim Partnership Interests", "Interim Economic Interests",
"Remainder Partnership Interests" and "Remainder Economic Interests" pursuant
to the Warehouse Purchase Agreements and/or (iv) the reimbursement by RSH to
the Dart Parties of any fees
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<PAGE> 14
under the management contracts (the "Management Agreements") for the Warehouse
Properties between the current owner of the Warehouse Properties and Combined
Properties Incorporated ("CPI") which are paid by the Dart Parties or any
Warehouse Partnership. To the extent any distributions or other payments
(excluding interest) are received by Dart, Trak or Dart's designees as a
consequence of the foregoing transactions contemplated by the Warehouse
Documents, any amounts so received shall reduce the amount of the Warehouse
Reserve.
7.2 Reductions in Warehouse Reserve. The Warehouse
Reserve shall be reduced at such times and to the extent provided below.
(a) Pennsy Warehouse I. The Warehouse Reserve shall be
reduced in the amount of:
(i) $4,800,000 if RSH shall have caused the execution
and delivery of the Lease Amendment for Pennsy Warehouse I and
such Lease Amendment shall be in full force and effect, and
either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which such
Lease Amendment shall have been determined to be
binding and enforceable against 3301 Pennsy Drive
Associates in a lawsuit brought by any partner in
3301 Pennsy Drive Associates (other than RSH) seeking
to rescind such Lease Amendment or seeking damages
for the portion of such partner's partnership
percentage of the amount by which rent payable under
the lease has been reduced by such Lease Amendments,
and the period for appealing such order shall have
expired without an appeal having been filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(ii) $1,440,000 if the conditions set forth in the
foregoing clause (i) shall have not been satisfied, but RSH
shall have caused the execution and delivery of the Lease
Amendment for Pennsy Warehouse I and such Lease Amendment
shall be in full force and effect, and an order of a court of
competent jurisdiction has been entered (A) pursuant to which
such Lease Amendment shall have been determined to be binding
and enforceable against 3301 Pennsy Drive Associates (other
than RSH) and (B) awarding damages to a partner (other than
RSH) not in excess of the portion of such partner's
partnership percentage of the amount by which rent payable
under the lease has been reduced by such
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<PAGE> 15
Lease Amendments, and the period for appealing such order
shall have expired without an appeal having been filed.
(ii) $1,440,000 if the conditions set forth in the
foregoing clauses (i) through (ii) shall have not been
satisfied, but RSH shall have conveyed the "Remainder
Partnership Interest" and the "Remainder Economic Interest" in
3301 Pennsy Drive Associates to Dart pursuant to Sections 4
and 12 of the Warehouse II Purchase Agreement and at least 20%
of the partnership interests in 3301 Pennsy Drive Associates
being conveyed to Dart as the "Disputed Partnership Interest"
and the "Disputed Economic Interest" pursuant to Sections 1
and 7 of the Warehouse III Purchase Agreement and such
conveyances shall be in full force and effect, and:
either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which all
such conveyances in 3301 Pennsy Drive Associates
shall have been determined to be binding and
enforceable against 3301 Pennsy Drive Associates and
the partners therein in a lawsuit brought by any
partner in 3301 Pennsy Drive Associates (other than
RSH) seeking to rescind such conveyance and
admission, and the period for appealing such order
shall have expired without an appeal having been
filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(b) Pennsy Warehouses II, III and III Addition. The
Warehouse Reserve shall be reduced in the amount of:
(i) $18,200,000 if RSH shall have conveyed fee
title to Pennsy Warehouses II, III, and III Addition to Pennsy
Newco (as such term is defined in the Warehouse I Purchase
Agreement) pursuant to Section 1 of the Warehouse I Purchase
Agreement, the covenant relating to the delivery of
"Prospective Economic Benefits" in Pennsy Newco to Dart
pursuant to Section 2 of the Warehouse I Purchase Agreement
shall be in full force and effect, Pennsy Newco shall have
received title insurance with respect to such Warehouse
Properties as required by Section 7.1 of the Warehouse I
Purchase Agreement, and all other conditions required by
Section 11 of the Warehouse I Purchase Agreement with respect
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<PAGE> 16
to Pennsy Warehouses II, III and III Addition shall have been
performed.
(ii) $12,133,333 if the conditions set forth in the
foregoing clause (i) shall have not been satisfied, but RSH
shall have conveyed fee title to Pennsy Warehouses II, III and
III Addition to Pennsy Newco pursuant to Section 1 of the
Warehouse I Purchase Agreement, and the conveyance of the
"Remainder Interest" and the "Remainder Economic Interest" in
Pennsy Newco to Dart pursuant to Section 3 of the Warehouse I
Purchase Agreement shall be in full force and effect.
(c) 75th Avenue Headquarters and 75th Avenue Wooded Lot.
The Warehouse Reserve shall be reduced in the amount of:
(i) $15,550,000 if the U.S. Bankruptcy Court for the
District of Maryland, Southern Division (the "Bankruptcy
Court") shall have entered a Final Order (defined below)
approving the Plans of Reorganization for the 75th Avenue
Headquarters and the 75th Avenue Wooded Lot (as such terms are
defined in the Warehouse II Purchase Agreement) in accordance
with the requirements of the Warehouse II Purchase Agreement
and such Plans of Reorganization shall have been fully
implemented in accordance with their respective terms. For
purposes of this Section 7.2, "Final Order" shall mean an
order by the applicable court as to which (a) no appeal has
been taken or motion for reconsideration filed and the time
period for any such filing shall have expired, or (b) if an
appeal has been taken or reconsideration sought, no stay of
such order pending appeal or motion for reconsideration shall
have been obtained; or
(ii) $15,550,000 if the conditions set forth in the
foregoing clause (i) shall have not been satisfied, but RSH
shall have caused the execution and delivery of the Lease
Amendments for 75th Avenue Headquarters and 75th Avenue Wooded
Lot and such Lease Amendments shall be in full force and
effect, and either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which such
Lease Amendments shall have been determined to be
binding and enforceable against Seventy-Fifth Avenue
Associates in a lawsuit brought by any partner in
Seventy-Fifth Avenue Associates (other than RSH)
seeking to rescind such Lease Amendments or seeking
damages for the portion of such partner's partnership
percentage of the amount by which rent payable under
the lease has been reduced by such Lease Amendments,
and the
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<PAGE> 17
period for appealing such order shall have expired
without an appeal having been filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(iii) $10,366,667 if the conditions set forth in the
foregoing clauses (i) through (ii) shall have not been
satisfied, but RSH shall have caused the execution and
delivery of the Lease Amendments for 75th Avenue Headquarters
and 75th Avenue Wooded Lot and such Lease Amendments shall be
in full force and effect, and an order of a court of competent
jurisdiction has been entered (A) pursuant to which such Lease
Amendments shall have been determined to be binding and
enforceable against Seventy-Fifth Avenue Associates and (B)
awarding damages to any partner (other than RSH) not in excess
of the portion of such partner's partnership percentage of the
amount by which rent payable under the lease has been reduced
by such Lease Amendments, and the period for appealing such
order shall have expired without an appeal having been filed;
or
(iv) $10,366,667 if the conditions set forth in the
foregoing clauses (i) through (iii) shall have not been
satisfied, but the conveyance of the "Remainder Partnership
Interest" and the "Remainder Economic Interest" in
Seventy-Fifth Avenue Associates to Dart pursuant to Sections 4
and 12 of the Warehouse II Purchase Agreement and the
conveyance of at least one-half of the 66-2/3% of the
"Disputed Economic Interest" in Seventy-Fifth Avenue
Associates pursuant to Sections 1 and 7 of the Warehouse III
Purchase Agreement shall be in full force and effect, Dart
shall have been admitted as a limited partner to Seventy-Fifth
Avenue Associates, and:
either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which all
such conveyances in Seventy-Fifth Avenue Associates
shall have been determined to be binding and
enforceable against Seventy-Fifth Avenue Associates
and the partners therein in a lawsuit brought by any
partner in Seventy-Fifth Avenue Associates (other
than RSH) seeking to rescind such conveyance and
admission, and the period for appealing such order
shall have expired without an appeal having been
filed; or
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<PAGE> 18
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(d) Bridgeview Warehouse. The Warehouse Reserve shall be
reduced in the amount of:
(i) $4,200,000 if the Bankruptcy Court shall have
entered a Final Order approving the Plan of Reorganization for
the Bridgeview Warehouse (as such terms are defined in the
Warehouse II Purchase Agreement) in accordance with the
requirements of the Warehouse II Purchase Agreement and such
Plan of Reorganization shall have been fully implemented in
accordance with its terms; or
(ii) $4,200,000 if the conditions set forth in the
foregoing clause (i) shall have not been satisfied, but RSH
shall have caused the execution and delivery of the Lease
Amendment for the Bridgeview Warehouse and such Lease
Amendment shall be in full force and effect, and either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which such
Lease Amendment shall have been determined to be
binding and enforceable against Trak Chicago I in a
lawsuit brought by any partner Trak Chicago I (other
than RSH) seeking to rescind such Lease Amendment or
seeking damages for the portion of such partner's
partnership percentage of the amount by which rent
payable under the lease has been reduced by such
Lease Amendment, and the period for appealing such
order shall have expired without an appeal having
been filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(iii) $2,800,000 if the conditions set forth in the
foregoing clauses (i) through (ii) shall have not been
satisfied, but RSH shall have caused the execution and
delivery of the Lease Amendment for the Bridgeview Warehouse
and such Lease Amendment shall be in full force and effect,
and an order of a court of competent jurisdiction has been
entered (A) pursuant to which such Lease Amendment shall have
been determined to be binding and enforceable against Trak
Chicago I and (B) awarding damages to a partner (other than
RSH) not in excess of the portion of such partner's
partnership
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<PAGE> 19
percentage of the amount by which rent payable under the lease
has been reduced by such Lease Amendment, and the period for
appealing such order shall have expired without an appeal
having been filed; or
(iv) $2,800,000 if the conditions set forth in the
foregoing clauses (i) through (iii) shall have not been
satisfied, but the conveyance of the "Remainder Partnership
Interest" and the "Remainder Economic Interest" in Trak
Chicago I to Dart pursuant to Sections 4 and 12 of the
Warehouse II Purchase Agreement and the conveyance of at least
one-half of the 66-2/3% of the "Disputed Economic Interest"
pursuant to Sections 1 and 7 of the Warehouse III Purchase
Agreement shall be in full force and effect, Dart shall have
been admitted as a limited partner to Trak Chicago I, and:
either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which all
such conveyances shall have been determined to be
binding and enforceable against Trak Chicago I and
the partners therein in a lawsuit brought by any
partner in Trak Chicago I (other than RSH) seeking to
rescind such conveyance and admission, and the period
for appealing such order shall have expired without
an appeal having been filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(e) Ontario Warehouse. The Warehouse Reserve shall be
reduced in the amount of:
(i) $6,400,000 if the Bankruptcy Court shall have
entered a Final Order approving the Plan of Reorganization for
the Ontario Warehouse (as such terms are defined in the
Warehouse II Purchase Agreement) in accordance with the
requirements of the Warehouse II Purchase Agreement and such
Plan of Reorganization shall have been fully implemented in
accordance with its terms; or
(ii) $6,400,000 if the conditions set forth in the
foregoing clause (i) shall have not been satisfied, but RSH
shall have caused the execution and delivery of the Lease
Amendment for the Ontario Warehouse and such Lease Amendment
shall be in full force and effect, and either:
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<PAGE> 20
(X) an order of a court of competent
jurisdiction has been entered pursuant to which such
Lease Amendment shall have been determined to be
binding and enforceable against CP/Ontario in a
lawsuit brought by any partner in CP/Ontario (other
than RSH) seeking to rescind such Lease Amendment or
seeking damages for the portion of such partner's
partnership percentage of the amount by which rent
payable under the lease has been reduced by such
Lease Amendment, and the period for appealing such
order shall have expired without an appeal having
been filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
(iii) $4,266,667 if the conditions set forth in the
foregoing clauses (i) through (ii) shall have not been
satisfied, but RSH shall have caused the execution and
delivery of the Lease Amendment for the Ontario Warehouse and
such Lease Amendment shall be in full force and effect, and an
order of a court of competent jurisdiction has been entered
(A) pursuant to which such Lease Amendment shall have been
determined to be binding and enforceable against CP/Ontario
and (B) awarding damages to a partner (other than RSH) not in
excess of the portion of such partner's partnership percentage
of the amount by which rent payable under the lease has been
reduced by such Lease Amendment, and the period for appealing
such order shall have expired without an appeal having been
filed; or
(iv) $4,266,667 if the conditions set forth in the
foregoing clauses (i) through (iii) shall have not been
satisfied, but the conveyance of the "Remainder Partnership
Interest" and the "Remainder Economic Interest" in CP/Ontario
to Dart pursuant to Sections 4 and 12 of the Warehouse II
Purchase Agreement shall be in full force and effect, Dart
shall have been admitted as a limited partner to CP/Ontario
and:
either:
(X) an order of a court of competent
jurisdiction has been entered pursuant to which the
conveyance of the "Remainder Partnership Interest"
and the "Remainder Economic Interest" in CP/Ontario
shall have been determined to be binding and
enforceable against CP/Ontario and the partners
therein in a lawsuit brought by any partner in
CP/Ontario (other than RSH) seeking to rescind such
conveyance and admission, and the
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<PAGE> 21
period for appealing such order shall have expired
without an appeal having been filed; or
(Y) the statute of limitations
applicable to any lawsuit described in clause (X)
above shall have lapsed and no claim with respect
thereto shall have been filed and be pending with any
court.
The Warehouse Reserve relating to any Warehouse Property shall cease to exist
at the time any of the conditions set forth above with respect to such
Warehouse Property are satisfied; provided, however, that the amount of the
Warehouse Reserve required at any time shall be equal to $31.0 million, less
the amount of any payments received by any of the Dart Parties with respect to
any Warehouse Property or Warehouse Partnership in accordance with Section
7.1(b). The Warehouse Reserve shall cease to exist at such time as the total
value of reductions to this Section 7.2 shall equal or exceed $31.0 million.
7.3 Acquisition of Warehouse Partnership Interests.
(a) Warehouse Funds shall be applied from time to time to
the acquisition of the interests in the Warehouse Partnerships when (i) the
"Closing" (as defined in the Warehouse I Purchase Agreement and Warehouse II
Purchase Agreement) with respect to such Warehouse Partnership can occur in
accordance with Sections 9 and 11 of the Warehouse I Purchase Agreement and
Sections 10 and 12 of the Warehouse II Purchase Agreement, as the case may be,
and (ii) the Warehouse Funds equal or exceed the consideration allocated to the
"Remainder Partnership Interests" and "Remainder Economic Interests" in the
Warehouse Partnerships (as set forth on Exhibit M; the "Allocations") with
respect to which interests are being purchased.
(b) On the Termination Date the "Remainder Partnership
Interests" and "Remainder Economic Interests" which have not been conveyed
prior to the Termination Date shall, to the extent legally possible, be
conveyed at a "Closing" for the lesser of (i) the Allocations with respect to
the "Remainder Partnership Interests" and "Remainder Economic Interests" in the
Warehouse Partnerships being purchased on the Termination Date and (ii) the
amount of the Warehouse Funds on the Termination Date.
(c) To the extent all or any portion of the Warehouse
Reserve is releasable under the terms of this Agreement and Warehouse Funds are
on deposit in the C-M Escrow Account, notwithstanding any other conditions to
the contrary contained in the Warehouse Purchase Agreements, such Warehouse
Funds shall be paid to RSH as the Allocation for the interests in the Warehouse
Partnership with respect to which the Warehouse Reserve has been released;
provided, however, that RSH shall continue to be obligated to perform all his
obligations under the Warehouse Purchase Agreements.
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<PAGE> 22
ARTICLE 8. RELEASE OF ESCROW FUNDS TO RSH
8.1 RSH Escrow Release. Funds held in the RSH Escrow
Account shall be paid to RSH, and released from the Lien under the Settlement
Documents, on the earlier to occur of (i) the date which is 30 months after the
date on which $5.0 million was first on deposit in the RSH Escrow Account, (ii)
the date on which the Reserved Obligation described under Section 4.1(a)(iv)
shall cease in its entirety to be a Reserved Obligation pursuant to Section
4.1(b)(iv) and (iii) the date on which any such funds become RSH Available
Funds.
8.2 C-M Escrow Release. (a) When and to the extent RSH
Available Funds become available under the terms of this Agreement, such funds
shall be released to RSH as provided in the Escrow Agreement. The first $16.0
million of RSH Available Funds and other RSH Available Funds after the
Warehouse Funds have been delivered pursuant to Section 8.2(b) (the "Settlement
Funds") shall be released to RSH in consideration of the deliveries of RSH
pursuant to Section 1.1 of the Settlement Agreement. Upon such release, such
funds shall no longer be collateral for any of the Obligations.
(b) When and to the extent there are Warehouse Funds that
become available under the terms of this Agreement, such amounts shall be
released to RSH as provided in the Escrow Agreement in satisfaction of the
obligations of Dart under the terms and conditions of the Warehouse Purchase
Agreements. It is understood and agreed that the purchase price due and
payable under the Warehouse Purchase Agreements may be reduced as provided in
Section 7.3. Upon such release, such funds shall no longer be collateral for
any of the Obligations.
ARTICLE 9. TERMINATION DATE
9.1 Termination Date Acquisition. In the event any
Property or Joint Venture remains unsold on the Termination Date, then on the
Termination Date Cabot-Morgan shall immediately become the managing general
partner of any Joint Venture organized as a general partnership and the sole
general partner of any Joint Venture organized as a limited partnership and
shall have the right to sell any unsold Property or Joint Venture pursuant to
the procedures set forth in Section 4.04 of each JV Agreement without the
consent of RSH, the CP/Partnerships or any other partner in such Joint
Ventures.
9.2 Termination Date. (a) On the Termination Date
Escrow Funds equal in amount to the amount of unpaid Obligations due and
payable as of the Termination Date shall be released to Dart for payment of
such Obligations. After the Termination Date Escrow Funds received upon any
sale of the Properties pursuant to
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<PAGE> 23
Section 9.1 shall be deposited into the Escrow Accounts and shall be released
as provided in Section 9.2(b).
(b) After the Termination Date Escrow Funds shall be
released: (i) to Dart in accordance with Section 6.1; or (ii) to RSH in
accordance with Article 8.
(c) In the event that on or after the Termination Date
the Warehouse Reserve continues to exist and no action or proceeding is
pending, or no period remains in which to appeal an order, with respect to the
Warehouse Reserve established with respect to any Warehouse Property, Escrow
Funds equal in amount to the Warehouse Reserve for such Warehouse Property
shall be released to RSH.
(d) After the Termination Date RSH may substitute for the
Retained Distributions a letter of credit, bond or other form of security, in
each case in form and substance satisfactory to the Dart Parties, as security
for the remaining Reserved Obligations.
ARTICLE 10. COVENANTS
10.1 Further Assurances. RSH and the Dart Parties each
shall execute and deliver, and RSH shall cause to be executed and delivered,
promptly such additional documents, assignments, certificates and instruments
as the other party to this Agreement may reasonably request in order to
effectuate more effectively the transactions contemplated by the Master
Agreement Documents.
10.2 No Voluntary Bankruptcy of RSH. RSH covenants to
the Dart Parties that none of RSH, the RSH Entities, the Joint Ventures, the
Greenbriar Limited Partnerships or the CP/Partnerships has 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 or its inability, to pay his or its debts as they become due; or
(iii) make a general assignment for the benefit of creditors.
10.3 Joint Ventures. (a) So long as Cabot-Morgan remains
a partner in the Joint Ventures (including any successor to any Joint Venture),
RSH will not take, or will not cause to be taken, any action requiring the
consent of partners pursuant to Section 4.03 of each JV Agreement, unless
consented to in advance in writing by Cabot-Morgan, which consent shall not be
unreasonably withheld.
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<PAGE> 24
(b) RSH on behalf of himself and the CP/Partnerships
hereby irrevocably waives any rights granted to the CP/Partnerships under any
Joint Venture Agreement of the Joint Ventures, as in effect prior to amendment
and restatement pursuant to the JV Agreements, which would arise as a
consequence of any "change of control" (as such term is defined in the
respective Joint Venture Agreements as in effect prior to the consummation of
the transactions contemplated by this Agreement) of Cabot-Morgan.
10.4 Specific Performance. The Dart Parties and RSH each
acknowledge and agree that in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the Dart Parties 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 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. The Dart Parties and RSH each 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.
10.5 Reporting Covenants. On or before September 1 of
each year RSH shall deliver or cause to be delivered to Dart an Affidavit of
Financial Condition of RSH, in form and substance substantially similar to, and
prepared on a basis consistent with the accounting procedures applied in, the
Affidavit of Financial Condition delivered by RSH to Dart in connection with
the entering into of the Settlement Agreement and the other Settlement
Documents.
ARTICLE 11. MISCELLANEOUS
11.1 Expenses. Except as otherwise provided in the
Settlement Documents, the parties shall pay their own respective expenses
incurred in connection with this Agreement and the transactions hereunder,
including, without limitation, any sales, transfer or other similar taxes and
fees for accountants and attorneys.
11.2 Calculation of Amounts. The amount of Retained
Distributions, Escrow Funds, Reserved Obligations, Obligations, Liquidated
Reserved Obligations, Attributed Interest, Warehouse Reserve, Cabot-Morgan
Retention, RSH Available Funds, the amounts to be placed in the RSH Escrow
Account pursuant to Section 3.1 or other amounts calculated pursuant to this
Agreement shall be calculated by Dart (i) as of the last day of each calendar
quarter, (ii) as of any other date determined by Dart or (iii) as
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<PAGE> 25
of the date Dart receives any notice from RSH requesting that a calculation be
made following events (other than accrual of interest) which RSH believes would
result in RSH Available Funds. The amounts so calculated, and any related
backup documentation, shall be delivered by Dart to RSH (the "Dart Calculation
Notice") within ten business days after the date of calculation and RSH shall
have fifteen business days after delivery of such notice in which to agree to
or dispute any such calculation (such calculation to be deemed final and
binding if not disputed by RSH within such time period) (the "RSH Calculation
Notice"). In the event Dart and RSH cannot agree on any such calculation or
Dart fails to deliver a calculation requested by RSH, the determination of the
calculation may be referred by either Dart or RSH to an accounting firm of
nationally-recognized standing agreed upon by Dart and RSH. In the event Dart
and RSH fail to mutually agree on an accounting firm within thirty days of the
date Dart delivered notice of the calculations to RSH, then at the end of such
period each of Dart and RSH shall designate an accounting firm of
nationally-recognized standing and shall deliver notice of such designation to
the other party. If either party fails to so designate an accounting firm, the
accounting firm which is timely designated shall determine such calculation.
If each party has timely designated an accounting firm, such accounting firms
shall jointly designate within ten days a third accounting firm of
nationally-recognized standing to determine such calculation. The
determination of the accounting firm designated in accordance with the
preceding procedure shall be final and binding on the parties hereto and shall
be delivered to the parties hereto (the "Final Calculation Notice") and the
Escrow Agent. The amount of Escrow Funds, if any, which are determined to be
payable in accordance with Article 6, Article 8 or Article 9 shall be disbursed
as provided in the Escrow Agreement.
11.3 Cross Default. The Settlement Agreement, this
Agreement and the other Settlement Documents constitute one integrated whole.
RSH agrees that a material breach under any of the Settlement Documents by RSH,
any RSH Obligor or any partnership (general or limited), limited liability
company or corporation controlled by RSH shall constitute a material breach
under each other Settlement Document including this Agreement. The Dart
Parties agree that a material breach under any of the Settlement Documents by
Dart, Cabot-Morgan or any partnership (general or limited), limited liability
company or corporation controlled by Dart shall constitute a material breach
under each other Settlement Document including this Agreement.
11.4 Reinstatement; Liens. This Agreement and the
Obligations hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance by RSH or any other RSH
Obligor of the Obligations, or any part thereof (including the receipt of any
collateral or proceeds thereof), 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
- 25 -
<PAGE> 26
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. RSH and the other RSH Obligors shall not
contest or support any other natural person, partnership, limited liability
company, corporation, joint venture, trust, estate, joint-stock company,
unincorporated organization or government, or any agency or political
subdivision thereof (a "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 RSH or any RSH Obligor to
Dart, Cabot-Morgan or any escrow agent, bailee or collateral agent of any of
them.
11.5 Initial Recourse to Collateral.
(a) Notwithstanding any of the provisions of the
Settlement Documents, but subject to the limitations and conditions set forth
in this Section, Dart and Cabot-Morgan hereby agree that upon the occurrence of
any Event of Default (other than an Event of Default under paragraphs 8.e. and
f. of the Promissory Notes) Dart and Cabot-Morgan will attempt to satisfy the
Obligations from the collateral granted under the Settlement Documents for the
Obligations (the "Collateral") prior to seeking judgment personally against RSH
or any of RSH's assets other than the Collateral; provided, however, that the
personal liability of RSH shall be limited as and to the extent provided in the
$37 Million Note and the $27.4 Million Note. In the event that Dart or
Cabot-Morgan are "prevented from enforcing" (as defined below) any rights or
remedies with respect to the Collateral or, after enforcing such rights and
remedies, any Obligations remain unpaid, then Dart and Cabot-Morgan shall be
entitled to enforce any claim for the Obligations (including a deficiency
claim) against RSH personally or against any or all of RSH's assets.
(b) For purposes of this Section "prevented from
enforcing" shall mean (i) the filing of any claim or commencement of any
proceeding by RSH or any RSH Obligor asserting a defense to any Obligation or
to the enforcement of any right or remedy granted under the Settlement
Documents with respect to the Obligations, (ii) the filing of any claim or
commencement of any proceeding by any other Person (A) seeking to prevent the
enforcement of any right or remedy granted under the Settlement Documents with
respect to the Obligations or (B) asserting any claim or interest in any of the
Collateral, including the commencement of any bankruptcy, insolvency or other
creditor's proceeding described as an Event of Default under paragraphs 8.e.
and f. of the Promissory Notes, or (iii) the failure of Dart and/or
Cabot-Morgan to sell or otherwise dispose of, for cash or such other
consideration as is permitted by the applicable Settlement Document, any of the
Collateral within six months after Dart or Cabot-Morgan has commenced a private
or public sale
- 26 -
<PAGE> 27
of the Collateral pursuant to the terms of the Settlement Document pursuant to
which a Lien has been granted (whether as a consequence of the auction or other
sale proceeding failing to result in bids for unsold Collateral or the failure
of a successful bidder in any such proceeding to perform under such bid or
otherwise). This Section shall not impose upon Dart or Cabot-Morgan any other
duties with respect to the custody or disposition of any Collateral other than
as and to the extent provided in the Settlement Document pursuant to which a
Lien is granted in such Collateral. In the event RSH shall become a "debtor"
under any proceeding under the U.S. Bankruptcy Code (11 U.S.C. Section 101 et
seq.), as amended from time to time, or any successor statute, the provisions
of this Section shall cease to be in effect and Dart and Cabot-Morgan shall be
entitled to assert and prove any claim against RSH to the full extent of the
Obligations without any limitation.
11.6 Notices. Any notices or consents required or
permitted by this 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 (answerback required) as follows, unless any
such address is changed by notice hereunder:
If to the Dart Parties:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: President
and
Attn: Corporate Secretary
Facsimile: 301-733-2707
with copies to:
Stephen J. Brogan, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
Facsimile: 202-737-2832
If to RSH:
Mr. Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
Facsimile: 202-833-3013
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<PAGE> 28
with a copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street
8th Floor
Wilmington, DE 19801
Facsimile: 302-425-6464
11.7 Governing Law. This 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.
11.8 Survival of Representations and Warranties. The
covenants, agreements, representations and warranties of the parties hereto
made in this Agreement shall survive the closing of the transactions
contemplated hereby.
11.9 Amendments. This Agreement may be amended only by
a written agreement executed by the parties hereto.
11.10 Entire Agreement. This 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 Agreement and the other Settlement
Documents, and there are no promises, agreements, conditions, undertakings,
warranties or representations, oral or written, express or implied, between
them other than as herein set forth.
11.11 Severability. If this Agreement or any other
Settlement Document or any one or more of the provisions contained in this
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.
11.12 Binding Effect. This Agreement, and the documents
and instruments delivered pursuant hereto, shall inure to the benefit of, and
shall be binding upon, their respective heirs, executors, administrators,
successors (including any representative, executor or administrator of RSH's
estate) and assigns of the parties.
11.13 Waiver. No waiver of any of the provisions of this
Agreement or any other agreement referred to herein shall be valid unless in
writing and signed by the party against whom it is sought to be enforced. 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> 29
11.14 Exhibits and Schedules. The Exhibits attached to
this Agreement are incorporated herein and shall be part of this Agreement for
all purposes.
11.15 Headings. The headings in this Agreement, 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
Agreement. Unless otherwise specified, references in this Agreement to
Sections or Exhibits are references to Sections of, or Exhibits to, this
Agreement.
11.16 Appointment as Agent for Cabot-Morgan. Cabot-Morgan
hereby (i) designates and appoints Dart to act as Cabot-Morgan's agent, bailee
and collateral agent for purposes of perfecting any pledge and assignment of
collateral under the Settlement Documents and (ii) authorizes Dart to exercise
any and all rights, powers and remedies of Cabot-Morgan under the Settlement
Documents on behalf of Cabot-Morgan. In furtherance of the foregoing
authorization Dart is authorized to designate and appoint any agent, bailee or
collateral agent on behalf of Dart and Cabot-Morgan, as Dart in its discretion
determines necessary or appropriate.
11.17 Counterparts. This 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.
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<PAGE> 30
IN WITNESS WHEREOF, RSH, Dart and Cabot-Morgan have executed,
or have caused this Agreement to be executed on their behalf, on the date first
above written.
/s/ Ronald S. Haft
----------------------------------------
RONALD S. HAFT
DART GROUP CORPORATION
By:/s/ Robert A. Marmon
-------------------------------------
Name:
Title:
CABOT-MORGAN REAL ESTATE COMPANY
By:/s/ Robert A. Marmon
-------------------------------------
Name:
Title:
- 30 -
<PAGE> 31
EXHIBIT A-1
THE CP/PARTNERSHIPS
1. CP/Greenbriar Office Investments Limited Partnership, a Virginia
limited partnership.
2. CP/Greenbriar Retail Investments Limited Partnership, a Virginia
limited partnership.
3. Combined Properties/Greenway Center Limited Partnership, a
District of Columbia limited partnership.
4. Combined Properties/Briggs Chaney Plaza Limited Partnership, a
District of Columbia limited partnership.
5. CP/Bull Run Limited Partnership, a Maryland limited partnership.
- 31 -
<PAGE> 32
EXHIBIT A-2
CP/PARTNERSHIP INTERESTS CLAIMED BY RSH
1. CP/Greenbriar Office Investments Limited Partnership:
thirty-three percent (33%) personally as a limited partner.
2. CP/Greenbriar Retail Investments Limited Partnership:
thirty-three percent (33%) personally as a limited partner.
3. Combined Properties/Greenway Center Limited Partnership: one
percent (1%) personally as a general partner; and thirty-two and one-third
percent (32-1/3%) personally as a limited partner.
4. Combined Properties/Briggs Chaney Plaza Limited Partnership: one
percent (1%) personally as a general partner; and ninety-seven percent (97%)
personally as a limited partner.
5. CP/Bull Run Limited Partnership: ninety-seven and six-one
hundredths percent (97.06%) personally as a limited partner.
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<PAGE> 33
EXHIBIT A-3
RSH ENTITIES AND RSH ENTITIES' INTERESTS
RSH ENTITIES
1. CP/Greenbriar Office, Inc., a Virginia corporation.
2. CP Properties Holdings Limited Partnership, a Delaware limited
partnership.
3. CP/Greenbriar Retail, Inc., a Virginia corporation.
4. CP Holdings MD, Inc., a Virginia corporation.
5. HCP Partner MD, Inc., a Delaware corporation.
6. Bull Run, Inc., a Maryland corporation.
For all purposes of this Agreement JV Management, L.L.C., a Delaware
limited liability company, shall be included in the term "RSH Entity".
RSH ENTITIES INTERESTS
1. CP/Greenbriar Office Investments Limited Partnership:
(a) CP/Greenbriar Office, Inc., a Virginia corporation,
claims ownership of a one percent (1%) general
partner interest.
(b) CP Properties Holdings Limited Partnership, a
Delaware limited partnership, claims ownership of a
sixty-six percent (66%) limited partner interest.
2. CP/Greenbriar Retail Investments Limited Partnership:
(a) CP/Greenbriar Retail, Inc., a Virginia corporation,
claims ownership of a one percent (1%) general
partner interest.
(b) CP Properties Holdings Limited Partnership, a
Delaware limited partnership, claims ownership of a
sixty-six percent (66%) limited partner interest.
3. Combined Properties/Greenway Center Limited Partnership: CP
Properties Holdings Limited Partnership, a Delaware limited partnership, claims
ownership of a sixty-six and two-thirds percent (66-2/3%) limited partner
interest.
- 33 -
<PAGE> 34
4. Combined Properties/Briggs Chaney Plaza Limited Partnership:
(a) CP Holdings MD, Inc., a Virginia corporation, claims
ownership of a one percent (1%) limited partner
interest.
(b) HCP Partner MD, Inc., a Delaware corporation, claims
ownership of a one percent (1%) limited partner
interest.
5. CP/Bull Run Limited Partnership: Bull Run, Inc., a Maryland
corporation, claims ownership of a two and ninety four-one hundredths percent
(2.94%) general partner interest.
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<PAGE> 35
EXHIBIT A-4
JOINT VENTURES
1. CM/CP Greenbriar Office Joint Venture, a Delaware general
partnership between Cabot-Morgan and CP/Greenbriar Office Investments Limited
Partnership (Greenbriar Corporate Center in Fairfax County, Virginia). CM/CP
Greenbriar Office Joint Venture owns a 99.9999% interest in Combined
Properties/Greenbriar Office Limited Partnership, a District of Columbia
limited partnership which owns the Property set forth on Exhibit B attributable
to CM/CP Greenbriar Office Joint Venture.
2. CM/CP Greenbriar Retail Joint Venture, a Delaware general
partnership between Cabot-Morgan and CP/Greenbriar Retail Investments Limited
Partnership (Greenbriar Town Center in Fairfax County, Virginia). CM/CP
Greenbriar Retail Joint Venture owns a 99.999% interest in Combined
Properties/Greenbriar Limited Partnership, a District of Columbia limited
partnership which owns the Property set forth on Exhibit B attributable to
CM/CP Greenbriar Retail Joint Venture.
3. CM/CP Greenway Center Joint Venture, a Delaware general
partnership between Cabot-Morgan and Combined Properties/Greenway Center
Limited Partnership (Greenway Shopping Center in Prince George's County,
Maryland).
4. CM/CP Briggs Chaney Plaza Joint Venture, a Delaware general
partnership between Cabot-Morgan and Combined Properties/Briggs Chaney Plaza
Limited Partnership (Briggs Chaney Plaza in Montgomery County, Maryland).
5. CM/CP Bull Run Joint Venture, a Delaware general partnership
between Cabot-Morgan and CP/Bull Run Limited Partnership (Bull Run Plaza in
Prince William County, Virginia).
CM/CP Greenbriar Office Joint Venture and CM/CP Greenbriar Retail Joint Venture
are sometimes referred to herein as the "Greenbriar Joint Ventures" and
Combined Properties/Greenbriar Office Limited Partnership and Combined
Properties/Greenbriar Limited Partnership are sometimes referred to herein as
the "Greenbriar Limited Partnerships". Combined Properties/Greenbriar Office
Limited Partnership, Combined Properties/Greenbriar Limited Partnership, CM/CP
Greenway Center Joint Venture, CM/CP Briggs Chaney Plaza Joint Venture and
CM/CP Bull Run Joint Venture are sometimes referred to herein as the "Property
Owning Entities".
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<PAGE> 36
EXHIBIT A-5
OWNERSHIP OF CP/PARTNERSHIPS ALLEGED BY HERBERT H. HAFT
<TABLE>
<CAPTION>
CP/PARTNERSHIP INTERESTS
-------------- ---------
<S> <C> <C>
1. CP/Greenbriar Office CP/Greenbriar Office, Inc.
Investments Limited 1% general partner interest
Partnership HHH
33% limited partner interest
RSH
66% limited partner interest
2. CP/Greenbriar Retail CP Greenbriar Retail, Inc.
Investments Limited 1% general partner interest
Partnership HHH
33% limited partner interest
RSH
66% limited partner interest
3. Combined Properties/ HHH
Greenway Center 0.50% general partner interest
Limited Partnership RSH
1.50% general partner interest
HHH
32.83% limited partner interest
RSH
65.16% limited partner interest
4. Combined Properties/ HHH
Briggs Chaney Plaza 0.50% general partner interest
Limited Partnership RSH
1.50% general partner interest
HHH
32.83% limited partner interest
RSH
65.16% limited partner interest
5. CP/Bull Run Limited Bull Run, Inc.
Partnership 1% general partner interest
HHH
33% limited partner interest
RSH
66% limited partner interest
</TABLE>
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<PAGE> 37
EXHIBIT B
THE PROPERTIES
1. Combined Properties/Greenbriar Office Limited Partnership is
the owner of fee simple title to the property known as Greenbriar Corporate
Center in Fairfax County, Virginia.
2. Combined Properties/Greenbriar Limited Partnership is the
owner of fee simple title to the property known as Greenbriar Town Center in
Fairfax County, Virginia.
3. CM/CP Greenway Center Joint Venture is the owner of fee simple
title to the property known as Greenway Shopping Center in Prince George's
County, Maryland.
4. CM/CP Briggs Chaney Plaza Joint Venture is the owner of fee
simple title to the property known as Briggs Chaney Plaza in Montgomery County,
Maryland.
5. CM/CP Bull Run Joint Venture is the owner of fee simple title
to the property known as Bull Run Plaza in Prince William County, Virginia.
As used in this Agreement, the "Properties" shall include:
All improvements, structures and fixtures now constructed and
completed or under construction with respect to and situated on the land
described on Exhibits B-1 to B-5, inclusive (the "Land"), including (without
limitation) all buildings or other improvements located thereat (herein
collectively referred to as the "Improvements").
All rights of the Property Owning Entities under all leases to
which any of the Property Owning Entities is a party or has an interest and
covering any portion of the Land and all security deposits, contract rights,
licenses, permits, certificates and all other intangible rights which are owned
by the Property Owning Entities and which are appurtenant to the Land and/or
the Improvements, including (without limitation) all names, marks, trade names,
trademarks and telephone numbers and listings which are used exclusively by any
Property Owning Entity in connection with the operation of the Land or
Improvements.
All equipment, machinery, automobiles, furniture, fixtures and
all other tangible personal property now owned by the Property Owning Entities
and situated on the Land or used or to be used in connection therewith or with
the Improvements.
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<PAGE> 1
EXHIBIT 10.15
ESCROW AND SECURITY AGREEMENT
THIS ESCROW AND SECURITY AGREEMENT (this "Agreement"), dated
as of this 6th day of October, 1995, is made by and among RONALD S. HAFT
("RSH"), the entities controlled by RSH set forth on the signature pages hereto
(the "RSH Entities"; and together with RSH, the "RSH Partners"), DART GROUP
CORPORATION, a Delaware corporation ("Dart" ) in its individual capacity and as
collateral agent and bailee for the Dart Parties (defined below)(in such
capacity, the "Secured Party"), CABOT-MORGAN REAL ESTATE COMPANY, a Delaware
corporation ("Cabot-Morgan"; together with Dart, the "Dart Parties") and
SETTLEMENTCORP, a Maryland corporation ("SettlementCorp").
WHEREAS, Dart and RSH 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
Agreement, have entered into that certain Settlement Agreement as of even date
herewith pursuant to which Dart and RSH 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 RSH, Dart
and certain of their respective affiliates have entered into certain other
agreements and documents, including the Real Estate Master Agreement (the
"Master Agreement"), as of even date herewith among RSH, Dart and Cabot-Morgan,
the Pledge Agreements (as defined in the Master Agreement) and this 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, pursuant to the Master Agreement and the Pledge
Agreements, the RSH Partners and the Dart Parties have agreed, among other
things, that (i) certain payments to be made to Cabot-Morgan by the Joint
Ventures (as defined in the Master Agreement) and (ii) certain payments to be
made, directly or indirectly, to the RSH Partners by the Joint Ventures, are to
be paid to an escrow agent and to be released by such escrow agent upon the
occurrence of certain specified events as set forth herein;
WHEREAS, the RSH Partners and the Dart Parties desire to
appoint SettlementCorp as the escrow agent under this Agreement upon the terms
and conditions set forth herein;
WHEREAS, the Dart Parties desires to appoint SettlementCorp as
the Dart Parties' collateral agent and bailee under this Agreement upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the parties do hereby agree as follows:
<PAGE> 2
1. DEFINITIONS
Capitalized terms used herein without definition shall have
the meanings ascribed thereto in the Master Agreement. 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. As applicable,
singulars used throughout this Agreement shall be considered plurals and
vice-versa.
2. APPOINTMENT AND DUTIES OF SETTLEMENTCORP
(a) The RSH Partners and the Dart Parties hereby appoint
SettlementCorp to act as escrow agent (the "Escrow Agent") on the terms and
conditions hereinafter set forth, and SettlementCorp hereby accepts such
appointment as the Escrow Agent.
(b) The Secured Party hereby appoints SettlementCorp as
Secured Party's collateral agent and bailee (the "Collateral Agent") for
purposes of perfecting and maintaining Secured Party's Liens on the Pledged
Collateral (as defined in Section 5) granted thereon for the benefit of the
Dart Parties, and SettlementCorp hereby accepts such appointment as Collateral
Agent. Each RSH Partner does hereby irrevocably authorize and consent to
SettlementCorp acting as both the Collateral Agent for the Dart Parties and the
Escrow Agent pursuant to the terms of this Agreement.
(c) SettlementCorp's duties and responsibilities, in its
capacity as Escrow Agent and Collateral Agent, shall be limited to those
expressly set forth in this Agreement and SettlementCorp shall not be subject
to, nor obliged to recognize, any other agreement covering the subject matter
hereof.
(d) SettlementCorp is authorized, in its sole discretion,
to disregard any and all notices, claims, instructions, demands or directions
(individually and collectively, "Directions") given by any of the RSH Partners
or the Dart Parties, or by any other Person, except (i) such Directions as are
specifically provided for herein, and (ii) a Final Order (as defined below) of
a court of law. If the delivery of any document subject hereto is at any time
stayed or enjoined by order of a court, or in case the Final Order of a court
shall be made or entered affecting any such document, then and in any of such
events, SettlementCorp is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgment or decree of any court which
SettlementCorp determines is not subject to further review or appeal and is
binding upon SettlementCorp (a "Final Order"). In reaching such determination,
SettlementCorp, in its sole discretion, may obtain
- 2 -
<PAGE> 3
the advice of counsel of its own choosing (which may be counsel for the Dart
Parties).
(e) If SettlementCorp believes it to be reasonably
necessary to consult with counsel concerning any of its duties in connection
with this Agreement, or in case SettlementCorp becomes involved in litigation
on account of being Escrow Agent or Collateral Agent hereunder or on account of
having received property subject hereto, then, in either case, the attorneys'
and accountants' fees incurred by SettlementCorp (including the fair value of
legal services rendered by SettlementCorp), if any, shall be borne half by the
RSH Partners and half by the Dart Parties.
3. LIABILITY AND RELIANCE
(a) SettlementCorp shall not, in its capacity as Escrow
Agent or Collateral Agent hereunder, be personally liable for any act taken or
omitted hereunder absent gross negligence or willful misconduct on its part.
(b) SettlementCorp shall not be responsible for the
sufficiency, form, accuracy, execution, validity or genuineness of any
Direction or document given to SettlementCorp hereunder, nor shall
SettlementCorp be responsible or liable in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any such Direction or document.
SettlementCorp shall also be fully protected in relying upon any Direction or
document believed by it in good faith to be genuine and valid and shall be
fully protected in acting in accordance with any Direction or document given to
SettlementCorp hereunder.
(c) Upon delivery or return of the Pledged Collateral and
all funds on deposit in the escrow accounts created pursuant to this Agreement,
including any investments of such funds (collectively, the "Escrow Funds"),
pursuant to the terms of this Agreement, SettlementCorp shall have no further
responsibility or liability hereunder.
4. DEPOSIT OF DISTRIBUTIONS; INVESTMENT
(a) (i) Cabot-Morgan hereby agrees that all distributions or
sales proceeds required by Section 3.3 of the Master Agreement to be paid to an
escrow account established hereunder (the "C-M Distributions") shall be paid
by Cabot-Morgan to the interest-bearing Escrow Account of SettlementCorp at
Riggs National Bank of Washington, D.C. ("Bank") designated as Bank Account No.
76703060 and entitled "SettlementCorp, as escrow agent pursuant to the Escrow
and Security Agreement among Dart Parties and RSH Partners" (the "C-M Escrow
Account").
- 3 -
<PAGE> 4
(ii) Each RSH Partner hereby agrees that all distributions or
sales proceeds required by (A) Section 3.1 of the Master Agreement or (B) the
Pledge Agreements to be paid, after an Event of Default or a Revocation
Closing, to an escrow account established hereunder (the "RSH Partner
Distributions") shall be paid by such RSH Partner to the interest-bearing
Escrow Account of SettlementCorp at Bank designated as Bank Account No.
76703108 and entitled "SettlementCorp, as collateral agent and escrow agent
pursuant to the Escrow and Security Agreement among Dart Parties and RSH
Partners" (the "RSH Escrow Account"; together with the C-M Escrow Account, the
"Escrow Accounts").
(iii) In furtherance of such agreements Cabot-Morgan and each
RSH Partner hereby authorizes JV Management, L.L.C., a Delaware limited
liability company and the managing general partner of each Joint Venture, to
pay the C-M Distributions and the RSH Partner Distributions directly to the C-M
Escrow Account and RSH Escrow Account, respectively, and JV Management L.L.C.,
on behalf of the Joint Ventures, hereby agrees to make such payments to the
respective Escrow Accounts in accordance with the requirements of this
Agreement and the Master Agreement. SettlementCorp shall continue to hold all
funds deposited in the Escrow Accounts in escrow until such time as the funds
are either to be delivered to the RSH Partners and/or Cabot-Morgan or Dart in
accordance with the terms and conditions of this Agreement.
(b) Unless and until any Escrow Funds in the C-M Escrow
Account are released to the RSH Partners in accordance with this Agreement, the
Escrow Funds in the C-M Escrow Account shall be owned solely by Cabot-Morgan.
(c) During the term of this Agreement, the Escrow Funds
shall be continuously invested and reinvested by SettlementCorp in (i) United
States Treasury bills with a maturity of less than one year; and (ii) such
other investments as Dart and RSH may jointly direct SettlementCorp by written
notice. All interest or profit earned on such investments shall be credited to
the Escrow Funds to be disbursed on the terms and subject to the conditions of
this Agreement. All interest or profit earned on investment of funds deposited
in the RSH Escrow Account shall constitute Pledged Collateral.
5. PLEDGE AND ASSIGNMENT
To secure the prompt payment and performance of all
Obligations now existing or hereafter arising, each RSH Partner does hereby
irrevocably transfer, pledge and assign to the Secured Party, for the benefit
of the Dart Parties, and grants to the Secured Party, for the benefit of the
Dart Parties, a security interest in, all of such RSH Partner's right, title
and interest in and to the following (the "Pledged Collateral"):
- 4 -
<PAGE> 5
i) all RSH Partner Distributions paid or payable to such RSH
Partner at any time and all other funds on deposit at any time in the
RSH Escrow Account;
ii) all notes, certificates and other instruments from time to
time representing the investment of funds in the RSH Escrow Account;
iii) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of the RSH Escrow Account and the foregoing
investments; and
iv) to the extent not covered by clauses (i) through (iii)
above, all proceeds of any or all of the foregoing collateral.
Collateral Agent shall hold the Pledged Collateral as Secured Party's
collateral agent and bailee for purposes of perfecting and maintaining Secured
Party's Liens on the Pledged Collateral for the benefit of the Dart Parties.
In furtherance of the foregoing, each of the RSH Partners
hereby acknowledges and agrees that, except as specifically provided in this
Agreement, it has divested, and hereby does divest, itself of all dominion and
control over and with respect to the Pledged Collateral and that the Secured
Party shall have exclusive dominion and control over the Pledged Collateral
subject to the provisions of this Agreement. Except as provided in Section 8.1
of the Master Agreement, so long as any Obligation remains in effect or unpaid,
the RSH Partners shall have no right, title or interest from and after the date
hereof in or to the Pledged Collateral.
All rights of the Secured Party in the Pledged Collateral
granted under this Agreement shall, to the maximum extent allowed by applicable
law, be absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of any Obligation or any Settlement Document or any other
agreement or instrument relating thereto; (ii) any change in the time, manner
or place of payment of, or in any other term of, all or any part of the
Obligations, or any other amendment or waiver of or any consent to any
departure from any Settlement Document; (iii) any exchange, release or
nonperfection of any other collateral for all or any part of the Obligations;
or (iv) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, any RSH Partner or other obligor in respect of
any of the Obligations or of this pledge and assignment.
- 5 -
<PAGE> 6
6. DELIVERY OF ESCROW FUNDS
(a) Escrow Agent shall immediately upon receipt deliver to
Dart all funds deposited into the C-M Escrow Account until such time as both
Dart and RSH deliver Directions to Escrow Agent advising Escrow Agent that the
principal of and interest on the $11.6 Million Note is paid in full; provided,
however, upon the receipt of evidence from RSH that the $11.6 Million Note has
been paid in full the Escrow Agent shall terminate such disbursements upon
written notice from RSH. Upon the determination by Dart that funds in any
Escrow Account are payable to Dart and/or Cabot-Morgan in accordance with
Section 6.1 and the other provisions of the Master Agreement (other than
payments under the $11.6 Million Note) and the receipt of either (i) a copy of
the RSH Calculation Notice agreeing to all or a portion of such awards or (ii)
a copy of the Final Calculation Notice, Dart shall submit to Escrow Agent and
RSH a notice signed by a duly authorized officer of Dart stating the amount of
Escrow Funds to be released, to whom (the "Escrow Payee") such Escrow Funds
shall be released and the Obligation to which such Escrow Funds will be
applied. Escrow Agent shall deliver all payments to the Escrow Payee not later
than the second Business Day following the date on which Escrow Agent receives
notice from Dart specifying such payment. In the event any obligation to make
payments under the $11.6 Million Note remains outstanding at the time Dart
instructs Escrow Agent to make other payments pursuant to this Section 6(a),
the Dart Parties and the RSH Partners agree that such funds shall be allocated
first to the payment of Obligations other than the payments under the $11.6
Million Note.
(b) Upon the determination by Dart that there are RSH
Available Funds in the Escrow Accounts which should be released to RSH in
accordance with Article 8 of the Master Agreement, Dart shall submit to Escrow
Agent and RSH the Dart Calculation Notice stating the amount of the Escrow
Payment to be made to RSH. Escrow Agent shall deliver all payments to RSH not
later than the second Business Day following the date on which Escrow Agent
receives the Dart Calculation Notice. If either (i) RSH provides to Dart and
Escrow Agent a RSH Calculation Notice disputing Dart's calculation or (ii) Dart
fails to deliver a calculation requested by RSH, the resolution of the amount
due to RSH shall be determined in accordance with Section 11.2 of the Master
Agreement. The Escrow Agent shall pay to RSH the difference between (A) the
amount set forth in the Final Calculation Notice and (B) any amounts previously
distributed to RSH pursuant to the Dart Calculation Notice within 2 Business
Days of its receipt of the Final Calculation Notice.
(c) Upon delivery by Escrow Agent of monies from the
Escrow Funds in the Escrow Account pursuant to Section 6(a) or (b), Escrow
Agent shall have no obligation with respect to the application of such monies
by the recipient thereof or its designee. Escrow Agent shall liquidate any
investments necessary to provide monies in order to make any payments required
by this
- 6 -
<PAGE> 7
Agreement. Escrow Agent shall not be liable for any loss due to fluctuations
in market value or penalties due to early redemption. Nothing contained herein
shall be deemed to obligate Escrow Agent to pay or transfer any monies
hereunder unless the same have been received by Escrow Agent pursuant to the
provisions of this Agreement. Escrow Agent shall have no duty or obligation to
collect any amounts, which at any time are to be deposited with it and shall
not be responsible for any defaults hereunder by any other party.
(d) Escrow Agent shall immediately deliver the Escrow
Funds to RSH upon receipt by Escrow Agent of written notice from Dart that the
Obligations secured by this Agreement have been paid in full or are no longer
in effect.
(e) All funds released to the Dart Parties by Escrow
Agent to satisfy Obligations shall be released first from the RSH Escrow
Account unless the instructions from Dart specify that all or a portion of a
payment shall be made from the C-M Escrow Account.
7. RIGHTS WITH RESPECT TO PLEDGED COLLATERAL
(a) Defense of Lien. The RSH Partners shall
defend the Pledged Collateral against and take such other action as is
necessary to remove any Lien at any time placed upon the Pledged Collateral
other than the Liens created by this Agreement and the Pledge Agreements. The
RSH Partners shall defend the right, title and interest of the Collateral
Agent, Secured Party and the Dart Parties in and to the Pledged Collateral,
including without limitation, the proceeds thereof, against the claims of all
Persons. The RSH Partners shall indemnify and hold harmless the Collateral
Agent, Dart Parties from and against any claims caused by acts of the RSH
Partners or any of their respective affiliates which result in any Lien being
placed upon the Pledged Collateral.
(b) Secured Party Appointed Attorney-in-Fact. Each RSH
Partner hereby irrevocably appoints the Secured Party such RSH Partners's
attorney-in-fact, with full authority in the place and stead of such RSH
Partner and in the name of such RSH Partner, the Secured Party or otherwise,
from time to time in the Secured Party's discretion, to take any action and to
execute any instrument which the Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement relating to the Pledged
Collateral, the foregoing appointment being coupled with an interest. Each RSH
Partner hereby authorizes the Secured Party to bring any appeal or action or to
pursue any claim against any person in the name of such RSH Partner to enforce
any of the rights assigned pursuant to this Agreement. If any RSH Partner
fails to perform any agreement contained in this Agreement, the Secured Party
may itself perform, or cause to be performed, such agreement, and any costs,
fees, expenses, damages or other liabilities incurred by the Secured Party
shall
- 7 -
<PAGE> 8
be payable by the RSH Partners with interest thereon accrued at the rate of
eight percent (8%) per annum.
(c) Remedies. In addition to the rights and remedies
provided for in this Agreement, the Secured Party and the Dart Parties shall
have all other rights and remedies provided for in any other Settlement
Document or by law, including, without limitation, all of the rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
the District of Columbia.
(d) The RSH Partners shall pay to the Secured Party all
costs, fees, expenses, damages or other liabilities incurred by the Secured
Party in connection with the enforcement of any of the provisions of this
Agreement. The Secured Party agrees to distribute any proceeds of the sale of
the Pledged Collateral in accordance with this Agreement and the RSH Partners
shall remain liable for any deficiency following the sale of the Pledged
Collateral.
8. LIMITATIONS
It is intended that the assignments and security interests
created under this Agreement and the Pledge Agreement are pledges of general
intangibles governed by Section 9-318 of the Uniform Commercial Code, as
adopted in any jurisdiction relevant to this Agreement. However, if and to the
extent the provisions of this Agreement or the Pledge Agreement would allow any
other partner in any Subject Partnership to invoke a right of first offer or
first refusal with respect to such interests and such other partner indicates a
desire to do so, then, without further action by the parties hereto, the
provisions of this Agreement and the Pledge Agreement with respect to such
interests shall be suspended, and, if necessary, null and void, with respect to
that Subject Partnership until such time as such right of first offer or first
refusal is inapplicable or waived.
9. TERMINATION
Upon the final discharge or payment of all Obligations and the
delivery or return of all Escrow Funds (including the Pledged Collateral) in
accordance with Section 6(d), this Agreement shall cease, terminate and be of
no further force or effect. This Agreement shall continue in effect
notwithstanding the occurrence of any Revocation Closing (as defined in the
Settlement Agreement) pursuant to Section 1.5 of the Settlement Agreement.
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<PAGE> 9
10. CONFLICTS
If at any time the SettlementCorp shall receive conflicting
Directions or documents with respect to the Escrow Funds and cannot determine
the proper course of action to take hereunder, or if for any other reason
SettlementCorp shall in good faith be unable to determine the party or parties
entitled to receive the Escrow Funds or any part thereof, it may refuse to make
any delivery or return thereof and retain the Escrow Funds safely in its
possession until it shall have received Directions in writing concurred in by
all parties, or until directed by a Final Order of a court of competent
jurisdiction, whereupon SettlementCorp shall make such disposition of the
Escrow Funds in accordance with such Directions or such Final Order.
11. ESCROW FEES
SettlementCorp shall be entitled to the fees for its services
in acting as Escrow Agent and Collateral Agent and Collateral Agent hereunder
as are agreed to from time to time between SettlementCorp and Dart.
SettlementCorp shall be reimbursed for all expenses reasonably incurred by it
in connection with the performance of its duties and obligations hereunder.
All fees and expenses shall be borne half by the RSH Partners and half by the
Dart Parties.
12. STATEMENTS; INFORMATION Escrow Agent and RSH Partners shall
forward to Secured Party, within five (5) days of receipt of same, copies of
all statements and enclosures received from SettlementCorp in connection with
the Escrow Accounts, including, without limitation, copies of the monthly bank
statements.
13. RESIGNATION BY ESCROW AGENT/COLLATERAL AGENT
If at any time SettlementCorp elects, in its sole discretion,
to no longer serve as the Escrow Agent and Collateral Agent under this
Agreement, SettlementCorp shall notify each of the parties hereto of its desire
to terminate its position and duties hereunder whereupon Dart shall appoint a
successor Escrow Agent and Collateral Agent within thirty (30) days thereof
that shall be subject to the same terms and conditions of this Agreement. Upon
the appointment of a successor Escrow Agent and Collateral Agent, the delivery
by SettlementCorp of the Escrow Funds in the Escrow Accounts to the successor
Escrow Agent and Collateral Agent and the rendering of the accounting required
by Section 15 hereof, SettlementCorp shall be discharged from all of its
obligations hereunder. Upon receipt of the funds in the Escrow Accounts and
any other property, the successor to SettlementCorp as Escrow Agent and
Collateral Agent will thereupon be bound by the provisions as if named herein.
- 9 -
<PAGE> 10
14. TERMINATION OF APPOINTMENT OF ESCROW AGENT The Secured Party
and/or RSH Partners (with Secured Party's written consent) may terminate the
appointment of SettlementCorp as Escrow Agent hereunder by notifying
SettlementCorp, specifying the date such termination will take effect and the
Secured Party may terminate the appointment of SettlementCorp as Collateral
Agent hereunder by notifying SettlementCorp, specifying the date such
termination will take effect. In the event of such termination pursuant to
this Section, the Secured Party will appoint a successor within twenty (20)
days of such notice and SettlementCorp in its capacity as Escrow Agent and
Collateral Agent will turn over and deliver to its successor all of the Escrow
Funds in the Escrow Accounts and all property held by it pursuant to this
Agreement and render the accounting required by Section 15 hereof. Upon
receipt of the funds in the Escrow Accounts and any other property, the
successor to Escrow Agent will thereupon be bound by the provisions hereof as
fully as if named herein.
15. ACCOUNTING. In the event of the resignation or termination of
Escrow Agent or upon termination of this Agreement, Escrow Agent will render to
the RSH Partners, the Secured Party and to the successor escrow agent, if any,
an accounting in writing of the funds in the Escrow Accounts and all other
property held by it pursuant to this Agreement and all distributions therefrom.
16. INDEMNIFICATION
The RSH Partners and the Dart Parties shall jointly and
severally indemnify and hold SettlementCorp harmless from and against any
damage, cost, liability or expense (including, but not limited to, reasonable
legal fees which it may incur by reason of its acting hereunder, except with
respect to actions or omissions taken or suffered by SettlementCorp in bad
faith, in willful disregard of the terms of this Agreement or involving gross
negligence on SettlementCorp's part), without prejudice to any right which any
party may have to recover from any other party for any such damage, cost,
liability, expense or legal fees.
17. CROSS DEFAULT.
The Settlement Agreement, this Agreement and the other
Settlement Documents constitute one integrated whole. Each RSH Partner agrees
that a material breach under any of the Settlement Documents by RSH or any
other RSH Obligor shall constitute a material breach under each other
Settlement Document including this Agreement. The Dart Parties agree that a
material breach under any of the Settlement Documents by Dart, Cabot-Morgan or
any Person controlled by Dart shall constitute a material breach under each
other Settlement Document including this Agreement.
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<PAGE> 11
18. REINSTATEMENT; LIENS.
This 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 by RSH or any other RSH Obligor, or
any part thereof (including the receipt of any collateral or proceeds 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. The RSH Partners 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 RSH or
any other RSH Obligor to Dart, Cabot-Morgan, SettlementCorp, as the Collateral
Agent under this Agreement, or any other escrow agent, bailee or collateral
agent of any of them.
19. NOTICES
Any notices or consents required or permitted by this
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 (answerback required) as follows, unless any such address is changed
by notice hereunder:
If to the Dart Parties:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: President
and
Attn: Corporate Secretary
Facsimile: 301-733-2707
with copies to:
Stephen J. Brogan, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
Facsimile: 202-737-2832
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<PAGE> 12
If to any RSH Partner:
c/o Mr. Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
Facsimile: (202) 833-3013
with a copy to:
Stuart M. Grant, Esq.
Blank, Rome, Comisky & McCauley
1220 Market Street
8th Floor
Wilmington, DE 19801
Facsimile: 302-425-6464
If to SettlementCorp:
c/o Todd Deckelbaum
5301 Wisconsin Avenue
Chevy Chase, MD 26015
20. GOVERNING LAW; JURISDICTION
This 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 District of Columbia, without
giving effect to its conflict of law rules. The parties hereto submit to the
jurisdiction of the U.S. Federal courts situated in the District of Columbia
and the courts of the District of Columbia.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The covenants, agreements, representations and warranties of
the parties hereto made in this Agreement shall survive the closing of the
transactions contemplated hereby.
22. AMENDMENT; WAIVER; REMEDIES
This Agreement may be amended only by a written agreement
executed by SettlementCorp and the other parties hereto. No delay on the part
of any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof. No waiver of any of the provisions of this
Agreement or any other agreement referred to herein shall be valid unless in
writing and signed by the party against whom it is sought to be enforced. The
waiver by any party hereto of any matter provided
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<PAGE> 13
for herein shall not be deemed to be a waiver of any other matter provided for
herein.
23. RIGHT OF SETOFF Escrow Agent does not have nor shall it have
any rights of setoff with respect to the Accounts, any such rights being hereby
expressly waived.
24. ENTIRE AGREEMENT
This Agreement 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 Agreement and the other
Settlement Documents, and there are no promises, agreements, conditions,
undertakings, warranties or representations, oral or written, express or
implied, between them other than as herein set forth.
25. SEVERABILITY
If any one or more of the provisions contained in this
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.
26. 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 heirs, executors, administrators, successors (including any
representative, executor or administrator of RSH's estate) and permissible
assigns of the parties. The RSH Partners and Dart Parties may not assign their
respective obligations or delegate their respective duties hereunder.
27. HEADINGS
The headings in this Agreement are solely for convenience of
reference and shall not be given any effect in the construction or
interpretation of this Agreement. Unless otherwise specified, references in
this Agreement to Sections are references to the Sections of this Agreement.
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<PAGE> 14
28. COUNTERPARTS
This 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.
IN WITNESS WHEREOF, the parties have executed, or have caused
this Agreement to be executed on their behalf, as of the date first above
written.
DART GROUP CORPORATION
By: /s/ Robert A. Marmon
------------------------------
Name:
Title:
CABOT-MORGAN REAL ESTATE COMPANY
By: /s/ Robert A. Marmon
------------------------------
Name:
Title:
SETTLEMENTCORP, as Escrow Agent and
Collateral Agent
By: /s/ Todd S. Deckelbaum
------------------------------
Name:
Title:
RSH PARTNERS:
/s/ Ronald S. Haft
----------------------------------
RONALD S. HAFT
COMBINED PROPERTIES/GREENWAY CENTER
LIMITED PARTNERSHIP
By: /s/ Ronald S. Haft
-------------------------------
Ronald S. Haft
General Partner
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<PAGE> 15
COMBINED PROPERTIES/BRIGGS CHANEY
PLAZA LIMITED PARTNERSHIP
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
General Partner
CP/GREENBRIAR RETAIL INVESTMENTS
LIMITED PARTNERSHIP
By: CP/GREENBRIAR RETAIL, INC.
General Partner
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
President
CP/GREENBRIAR OFFICE INVESTMENTS
LIMITED PARTNERSHIP
By: CP/GREENBRIAR OFFICE, INC.
General Partner
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
President
CP/BULL RUN LIMITED PARTNERSHIP
By: BULL RUN, INC.
General Partner
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
President
JV MANAGEMENT, L.L.C.
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
Manager
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<PAGE> 16
CP/GREENBRIAR RETAIL, INC.
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
President
CP/GREENBRIAR OFFICE, INC.
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
President
BULL RUN, INC.
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
President
CM/CP GREENBRIAR RETAIL JOINT VENTURE
By: JV MANAGEMENT, L.L.C.,
General Partner
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
Manager
CM/CP GREENBRIAR OFFICE JOINT VENTURE
By: JV MANAGEMENT, L.L.C.,
General Partner
By: /s/ Ronald S. Haft
----------------------------------
Ronald S. Haft
Manager
- 16 -
<PAGE> 1
EXHIBIT 10.16
Pennsy Drive Warehouses II,
III and III Addition
PURCHASE AGREEMENT [PENNSY DRIVE WAREHOUSES]
THIS PURCHASE AGREEMENT [PENNSY DRIVE WAREHOUSES] (the "Agreement") is
made this 6th day of October, 1995, by and between RONALD S. HAFT, personally
("Seller"), and DART GROUP CORPORATION ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller owns that certain parcel of land and improvements
located thereon more particularly described on Exhibit A attached hereto and
incorporated herein (the "Property"); and
WHEREAS, Seller and Purchaser desire to enter into this Agreement to
set forth their understanding regarding the transfer of the Property to Pennsy
Newco (hereinafter defined) and the transfer to Purchaser of all of Seller's
right, title and interest in and to Pennsy Newco on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the foregoing, One Dollar ($1.00),
the mutual promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser hereby agree as follows:
1. CONVEYANCE OF PROPERTY. On the date hereof, Seller shall
convey fee title to the Property to Pennsy Drive Warehouses, L.L.C., a Delaware
limited liability company ("Pennsy Newco"). The organizational documents of
Pennsy Newco are attached hereto as Exhibit B. Said conveyance shall be a
capital contribution by Seller to Pennsy Newco. Said conveyance shall be
subject to the approval of the holder of the Underlying Loan Documents (as set
forth on Exhibit C attached hereto), if applicable, as more fully set forth in
Section 5.3 below.
2. PAYMENT OF PROSPECTIVE ECONOMIC BENEFITS. Seller acknowledges
that the organizational documents of Pennsy Newco allocate ninety-nine percent
(99%) of cash flow from operations (the "Prospective Economic Benefits") to
Purchaser. Seller shall retain the right to receive proceeds from capital
transactions and the return of his capital account. To better secure to
Purchaser the benefits of that allocation, Seller covenants that he will not
take any action with respect to Pennsy Newco from and after the date hereof
without first obtaining the written approval of Purchaser; provided further,
that Seller will not fail to take any action with respect to Pennsy Newco that
<PAGE> 2
Purchaser may request from and after the date hereof. The foregoing covenants
are coupled with an interest and the rights granted to Purchaser thereunder are
irrevocable.
3. PURCHASE AND SALE OF MEMBERSHIP INTERESTS. On the Closing
Date, Seller shall sell, and Purchaser shall purchase, all of Seller's interest
as a member in Pennsy Newco (such interest being a "Remainder Interest") and
all of the economic and other beneficial interests appurtenant thereto,
including any return of Seller's capital contribution (each a "Remainder
Economic Interest"). Seller and Purchaser or Purchaser's designee shall take
all action necessary or appropriate to admit Purchaser as a substituted member
in Pennsy Newco with respect to the Remainder Interests and as an assignee with
respect to the Remainder Economic Interests.
4. CONSIDERATION.
4.1 The consideration payable by Purchaser to Pennsy
Newco for the admission of Purchaser to Pennsy Newco shall be one percent (1%)
of the Property's value (as determined by the current real estate tax
assessment). Such consideration shall be paid immediately following the
recording of the special warranty deed for the Property.
4.2 The consideration for the allocation to Purchaser
of the Prospective Economic Benefits is the settlement of various claims which
the parties have against each other with respect to various stock options,
employment agreements, real estate transactions and related matters, all as
more fully set forth in a separate Settlement Agreement of even or approximate
date herewith between Seller and Purchaser (the "Settlement Agreement") and in
a Real Estate Master Agreement of even or approximate date herewith among
Seller, Purchaser and Cabot Morgan Real Estate Company (the "Real Estate Master
Agreement")
4.3 The consideration for the conveyance to Purchaser
of the Remainder Interests and Remainder Economic Interests is the payment to
Seller of the sum of $12,133,333.00, subject to reduction pursuant to the Real
Estate Master Agreement and/or subject to reduction on a dollar-for-dollar
basis for all proceeds from capital transactions received by Seller from Pennsy
Newco ($12,133,333.00, as it may be so reduced, being hereinafter referred to
as the "Allocation"), which shall be paid to Seller as provided in Section 9
hereof. The Allocation shall not change, regardless of any action taken by
Purchaser with respect to Pennsy Newco, even if such action enhances or reduces
the value of the Property.
5. FUTURE COOPERATION.
5.1 Seller, at Purchaser's sole cost and expense,
shall reasonably cooperate in any examinations, investigations
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<PAGE> 3
and inquiries and join in any and all applications for licenses, permits and
consents with respect to the Property which Purchaser applies for in its own
name, in the name of Pennsy Newco, or on behalf of the Property if and when
reasonably requested to do so by Purchaser.
5.2 On the date of this Agreement, Combined Properties
Incorporated ("CPI") is in bankruptcy under Chapter 11 of the U.S. Bankruptcy
Code in proceedings pending in the U.S. Bankruptcy Court for the District of
Maryland, Southern Division. Seller shall be solely responsible for ensuring,
at his own expense and as promptly as possible, that (a) CPI shall no longer be
subject to any bankruptcy proceedings or said bankruptcy court shall have
approved or authorized the termination of any management contract(s) relating
to the Property to the extent, if any, that such approval or authorization is
necessary, and (b) the approval of the mortgagee has been obtained, if
necessary, to the termination of such management contract(s), subject to the
terms of Section 5.3 below. Seller further agrees to use diligent efforts to
do so and to cause CPI to cooperate in Seller's efforts. Until such time as
such management contracts with CPI are terminated, (i) Seller shall pay any and
all management and other fees payable to CPI in connection with the Property,
(ii) Seller shall promptly reimburse Purchaser and/or Pennsy Newco for any and
all management and other fees they pay to CPI, together with interest as set
forth below, and (iii) to the extent any reimbursement is still not paid on the
earlier of the Closing Date or the date the Allocation is payable to Seller
pursuant to the terms of the Real Estate Master Agreement, the Allocation shall
be reduced by (A) any management or other fee paid from and after the date
hereof by Purchaser to CPI, and/or (B) Purchaser's pro rata share of any
management or other fee paid by Pennsy Newco to CPI, in each case together with
interest thereon as set forth below. All payments under this Section shall
bear interest thereon from the date the underlying payment was made to CPI at
the prime rate announced from time to time by Citibank, N.A. (or its
successors) plus two percent (2%) per annum. Purchaser acknowledges that it
shall cooperate with Seller, at Seller's sole cost and expense, to implement
the provisions of this Section 5.2.
5.3 Seller agrees to cooperate with Purchaser, at
Seller's own cost and expense, in obtaining the approval of the lender under
the Underlying Loan Documents to the transactions contemplated hereunder, to
the extent such approval is required by the terms of the Underlying Loan
Documents. Notwithstanding the foregoing to the contrary, Purchaser shall be
responsible for paying any reasonable fees and expenses imposed by any lender
in connection with obtaining such approval. Purchaser agrees to cooperate with
Seller, at Purchaser's own cost and expense, in obtaining the foregoing
approval, but the foregoing does not require Purchaser to assume any liability
for said loan.
5.4 Seller acknowledges that the warehouse located on
the Property encroaches approximately 11.9 feet onto certain
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<PAGE> 4
real property owned by Seventy-Fifth Avenue Associates Limited Partnership and
known by street address as 3300 75th Avenue, Landover, Maryland. Promptly
after the execution of this Agreement, Seller, at his sole cost and expense,
shall cause the Property and 3300 75th Avenue to be resubdivided and/or
replatted in order to cure such encroachment and to cause a corrective deed(s)
to be executed, acknowledged and delivered to Pennsy Newco by Seventy-Fifth
Avenue Associates Limited Partnership.
6. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants the following to Purchaser as
of the date hereof, notwithstanding any independent investigation which
Purchaser may have conducted (but subject to the last paragraph of this
Section):
6.1 Seller is the owner of legal and beneficial title
to the Property and is lawfully seized of the Property as of the date of this
Agreement. Except for the Underlying Loan Documents and the matters shown on
Schedule B-2 attached to the title insurance commitment listed on Exhibit F,
the Property is free and clear of any and all liens, encumbrances, pledges,
security interests or adverse claims of any kind or character, and there are no
claims which could result in a lien or encumbrance of any kind thereon.
6.2 (a) Seller is the owner of legal and beneficial
title to the Remainder Interests and the Remainder Economic Interests, is
lawfully seized of the Remainder Interests and the Remainder Economic
Interests as of the date of this Agreement, and will continue to be so seized
with respect to the Remainder Interests and the Remainder Economic Interests
until each such Interest is conveyed to Purchaser under this Agreement.
(b) All of the Prospective Economic Benefits are
free and clear of all liens, encumbrances, pledges, hypothecations, and other
claims and security interests of all types.
(c) On the date hereof and on the applicable
Closing Date(s) the Remainder Interests and Remainder Economic Interests are
and will be free and clear of all liens, encumbrances, pledges, hypothecations
and other claims and security interests of all types.
(d) Seller has the power and authority to
allocate to Purchaser all of the Prospective Economic Interests and to pledge,
convey or cause the conveyance of the Remainder Interests, the Remainder
Economic Interests, and fee title to the Property, all as provided herein.
6.3 Seller is fully authorized and empowered to
execute and deliver this Agreement and all documents contemplated to be
executed by Seller hereunder; the execution and performance
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<PAGE> 5
hereunder by Seller will not constitute a breach or default under, or conflict
with, any agreement to which Seller is a party or by which Seller is bound, or
under any law, regulation, court order or similar constraint applicable to
Seller; Seller has complete and unencumbered right and power to consummate the
transactions provided for herein without the approval, consent, order or
authorization of, or designation, registration or filing with, any person or
entity or any governmental or quasi-governmental authority; and this Agreement
is binding on and enforceable against Seller in accordance with its terms.
Without limiting the foregoing, the transactions contemplated by this Agreement
will not result in any claim against Purchaser or its parent, subsidiary or
affiliated entities except for any claim which may be filed by Herbert H. Haft;
Seller believes any such claim to be without merit and will vigorously defend
against any such claim at Seller's own expense and/or cooperate at Seller's own
expense with Purchaser in Purchaser's defense of any such claim, subject to any
different allocation of expense under that certain Litigation Cooperation
Agreement of even or approximate date herewith between Seller and Purchaser.
6.4 Except as noted on Exhibit G, the loan evidenced
by the Underlying Loan Documents is in good standing and no situation exists
or, with the passage of time or the giving of notice (or both) could exist,
which would constitute a default thereunder or cause the acceleration thereof.
Seller has delivered to Purchaser true, accurate and complete copies of the
Underlying Loan Documents.
6.5 Except as shown on Exhibit G, there are no
defaults (or situations which, with the passage of time or the giving of notice
(or both), could constitute defaults), claims, actions, litigation or
proceedings, actual, pending or to the best of Seller's knowledge, threatened,
and there are no outstanding judgments or rulings, by any organization, entity,
person, individual or governmental agency which would affect the Prospective
Economic Benefits, the Remainder Interests, the Remainder Economic Interests
or, to the best of Seller's actual knowledge, the Property or any part thereof.
6.6 No assessment, special assessment or tax shall be
permitted to become a lien on the Remainder Interests or the Remainder Economic
Interests prior to the applicable conveyances thereof under this Agreement.
6.7 Subject to the terms of the leases described on
Exhibit H attached hereto and incorporated herein, Seller has made full payment
for the installation or the consumption of all utilities with respect to the
Property for which Seller is required to make payment.
6.8 To the best of Seller's actual knowledge, the
Property and every part thereof complies with all applicable laws, ordinances,
regulations, statutes, codes, rules and restrictions relating thereto, and no
permit, agreement, lease,
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<PAGE> 6
waiver, contract or certificate of occupancy will be terminated, revoked or
forfeited by reason of this Agreement or the consummation of the transactions
set forth herein.
6.9 All leasing commissions for the Property have been
paid.
6.10 Except for the Underlying Loan Documents and any
leases described on Exhibit H, there are no leases, contracts or agreements
with or binding on the Property. The leases listed on Exhibit I attached
hereto and incorporated herein have expired or been terminated and are of no
further force and effect.
6.11 All bills and claims for labor performed and
materials furnished to Seller or to Landmor, Inc. or to Haft Equities-General
Limited Partnership or to CPI with respect to the Property for all periods
prior to the date hereof have been paid in full, and there are no mechanics'
liens or materialmen's liens, whether or not perfected, on or affecting any
portion of the Property as a result of any labor performed or materials
provided to Seller or to Landmor, Inc. or to Haft Equities-General Limited
Partnership or to CPI. Seller shall provide Purchaser's title insurer with
such affidavits and other evidence as it may reasonably require so as to enable
Purchaser's title insurer to furnish Pennsy Newco with title policies without
exception for mechanics' or materialmen's liens arising from labor performed or
materials furnished to Seller or to Landmor, Inc. or to Haft Equities-General
Limited Partnership or to CPI with respect to the Property.
6.12 Seller's United States taxpayer identification
number and address are set forth following his signature on this Agreement,
Seller is not a "foreign person" as defined in Section 1445 of the Internal
Revenue Code (the "Code"), and Seller will execute and deliver an affidavit to
the same effect. In the event Seller is a "foreign person" (as defined above)
or does not execute and deliver the foregoing affidavit, Purchaser may pay such
sums directly from the Allocation and execute such notices, certificates,
letters or other instruments in its own behalf or as attorney-in-fact for
Seller as may be necessary in order to comply with the withholding provisions
of Section 1445 of the Code. Under penalty of perjury, Seller certifies that
the taxpayer identification number provided for him beneath his signature line
is correct for purposes of Section 6045 of the Code.
6.13 Except as disclosed in the Complaint filed in the
Pennsy Warehouse Lawsuit (as defined in Exhibit G), to the best of Seller's
actual knowledge Seller has never used, processed, released, discharged,
generated, stored or disposed of any Hazardous Substance (as hereinafter
defined) on, under or about the Property or from the Property to any other
location, and no Hazardous Substance has been used, processed, released,
discharged, generated, stored or disposed of on the Property by any other
person or entity. As used in this Agreement,
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<PAGE> 7
"Hazardous Substance" shall mean and include all hazardous or toxic substances,
wastes or materials, any pollutants or contaminants (including, without
limitation, asbestos, PCBs, petroleum products and by-products, and raw
materials which include hazardous constituents), or any other similar
substances or materials which are included under or regulated by any local,
state or federal law, rule or regulation pertaining to environmental
regulation, contamination, clean-up or disclosure, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Resource Conversation and Recovery Act, the Toxic Substances Control
Act, and the Federal Insecticide, Fungicide and Rodenticide Act, as any of the
foregoing has heretofore been or is hereafter amended.
6.14 To the best of Seller's actual knowledge, the
Property is not affected by any lease, concession, license, permit, agreement,
opinion, statute or regulation of any kind (other than zoning ordinances) which
limits the use or development of the Property.
6.15 To the best of Seller's actual knowledge, the
Property has full and free access to and from public highways, streets or
roads, and there is no pending or threatened governmental or private proceeding
which would impair or result in the termination of such access.
6.16 To the best of Seller's actual knowledge: neither
the whole nor any portion of the Property is currently subject to temporary
requisition or use by any governmental authority or has been condemned or taken
in any proceeding similar to a condemnation proceeding; there is not now
pending any condemnation, requisition or similar proceeding affecting the
Property or any portion thereof; and Seller has received no notice and have no
actual knowledge that any such proceeding is contemplated.
6.17 To the best of Seller's actual knowledge, there is
no pending or threatened designation or application for designation with any
Federal, local or governmental institution whereby the Property would be
declared a historic structure or the area in which the Property is located
declared a historic district so as to in any way restrict or impede the right
to alter or demolish the Improvements.
6.18 To the best of Seller's actual knowledge, the
Property is served by public water, storm sewer and sanitary sewer facilities
and by telephone, gas, steam and electric services of public utilities, all
provided directly from public ways, in good working order, in quantities
adequate to service the Property, and in compliance with all legal
requirements.
6.19 To the best of Seller's actual knowledge, the
Property's zoning classification permits the current use of the Property.
Seller has received no notice of and has no actual
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<PAGE> 8
knowledge of any contemplated change with respect to the zoning of the
Property, the availability of utility service to the Property, or any other
matter which would materially adversely affect the Property.
6.20 To the best of Seller's actual knowledge, no
portion of the Property lies within the 100-year flood plain or any area
categorized as flood prone by the Federal Emergency Management Agency.
In the event Purchaser becomes aware of a breach of any warranty or
representation of Seller prior to any conveyance under this Agreement and
elects to close that conveyance notwithstanding such breach, Purchaser will be
deemed to have waived such breach for all purposes with respect to that
conveyance. With respect to any alleged breach of Seller's warranties and
representations of which Purchaser becomes actually aware only after a
conveyance, Purchaser agrees that prior to the exercise of any right or remedy
with respect to such alleged breach which has survived that conveyance pursuant
to Section 18 of this Agreement, Purchaser will give Seller written notice of
such alleged breach and will give Seller a reasonable time in light of the
circumstances to cure the condition, circumstance or event which gave rise to
such breach, provided Seller will at all times diligently and in good faith
attempt to cure such breach or provide adequate protection to Purchaser to
protect or indemnify it from all damages and adverse effects of such breach.
If Seller cures the breach or otherwise provides such protection, then such
breach will be deemed cured and waived for all purposes. Purchaser
acknowledges that its parent, subsidiary or affiliated entities are lessees of
the Property (subject to the Pennsy Warehouse Lawsuit) and that the
representations and warranties set forth above with respect to the Property do
not amend or otherwise affect the obligations of said parent, subsidiary or
affiliated entities as tenants or Seller as landlords under said leases.
7. TITLE.
7.1 On the date hereof and again on the Closing Date,
title to the Remainder Interests and the Remainder Economic Interests must be
held by Seller and must be conveyed free of liens, encumbrances, pledges,
hypothecations and other claims and security interests of any type. On the
date hereof good and marketable title to the Property must be held by Seller
and must be free of liens, encumbrances, pledges, hypothecations and other
claims and security interests of any type except as shown on Exhibit F. Seller
shall cause an owner's title insurance policy for the Property to be obtained
simultaneously with the conveyance of the Property to Pennsy Newco.
7.2 If title is not in the condition described in the
preceding Section, Seller shall correct the title defects at his own expense
and, to the extent Seller fails to do so, any
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<PAGE> 9
cost incurred by Purchaser in curing the title defects may be offset against
the Allocation.
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.
8.1 The obligation of Purchaser to execute and deliver
the Pennsy Newco operating agreement and to perform the other covenants and
obligations to be performed by it on the date hereof shall be subject to all
other conditions set forth in this Agreement and to the condition that Seller
shall have executed and delivered to Purchaser an amendment to the current
lease(s) between Seller and Purchaser as set forth in Exhibits J-1, J-2, and
J-3 attached hereto and incorporated herein. Said lease amendments shall be
subject to the consent of the holder of the applicable Underlying Loan
Documents, as more fully set forth in Section 5.3 above. All or any such
conditions precedent may be waived, in whole or in part, by notice from
Purchaser to Seller.
8.2 The obligation of Purchaser to acquire the
Remainder Interests and Remainder Economic Interests and to perform the other
covenants and obligations to be performed by it on the Closing Date shall be
subject to all other conditions set forth in this Agreement and to the
condition that all of the terms and conditions of the Real Estate Master
Agreement shall be satisfied and Seller shall be entitled to the payment of the
Allocation as more particularly set forth therein. All or any of such
conditions precedent may be waived, in whole or in part, by notice from
Purchaser to Seller.
9. CLOSING DATE.
9.1 The closing ("Closing") of the conveyance of the
Remainder Interests and the Remainder Economic Interests shall occur
simultaneously with the sale of the last of the five (5) properties owned on or
immediately prior to the date hereof by CM/CP Briggs Chaney Joint Venture
(Briggs Chaney Plaza in Montgomery County, Maryland), CM/CP Bull Run Joint
Venture (Bull Run Plaza in Prince William County, Virginia), CM/CP Greenbriar
Office Joint Venture (Greenbriar Corporate Center in Fairfax County, Virginia),
CM/CP Greenbriar Retail Joint Venture (Greenbriar Town Center in Fairfax
County, Virginia) and CM/CP Greenway Joint Venture (Greenway Shopping Center in
Prince George's County, Maryland) (each, a "Cabot Morgan Property"), but not
later than the date that is five (5) years after the date hereof. The
Allocation under this Agreement shall be offset against any net proceeds
allocated to Cabot Morgan Real Estate Company (or its successors or assigns)
from the sale of the Cabot Morgan Properties to the extent any such sale occurs
or to the repayment of the $27.4 Million Note, the $37 Million Note and the
$11.6 Million Note (each as defined in the Settlement Agreement) or offset
against Seller's covenant to pay Purchaser $2 million, all as more particularly
set forth in the Settlement Agreement; the foregoing right of offset is coupled
with an interest and the
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<PAGE> 10
rights granted to Seller under this sentence are irrevocable. If the Cabot
Morgan Properties are not sold on or before the date that is five (5) years
after the date hereof, then Closing shall nevertheless occur on the date that
is five (5) years after the date hereof, subject to the terms and conditions of
the Real Estate Master Agreement.
9.2 Notwithstanding Section 9.1 above to the contrary,
the Closing Date with respect to the Remainder Interests and Remainder Economic
Interests may be accelerated as provided in the Real Estate Master Agreement.
9.3 Notwithstanding Section 9.1 above to the contrary,
if a "Revocation Closing" occurs under the Settlement Agreement, then the
Closing Date with respect to the Remainder Interests and the Remainder Economic
Interests shall occur on the earlier of (a) the date so elected by Seller or
(b) the Revocation Maturity Date of the $37 Million Note (as defined therein).
If the Closing Date is determined under this Section, then the Allocation under
this Agreement shall be offset against Seller's obligations under the $37
Million Note.
9.4 The Closing hereunder shall occur at 10:00 A.M.,
Washington, D.C. time, at the offices of Jones, Day, Reavis & Pogue, 1450 G
Street, N.W., Washington, D.C. 20005. The date on which the Closing occurs
shall be the "Closing Date" hereunder.
10. PRORATIONS OF EXPENSES; COSTS.
10.1 Recordation and transfer taxes, if any, for the
conveyance of title to the Property to Pennsy Newco shall be paid by Seller.
Seller shall also pay all expenses of clearing title to the Property. All
title insurance premiums and other costs for the conveyance of the Property to
Pennsy Newco shall be paid by Seller. Recordation and transfer taxes, if any,
for the conveyance of the Remainder Interest and/or the Remainder Economic
Interest shall be shared equally between Seller and Purchaser.
10.2 Purchaser shall not be obligated to continue the
policies or adjust the premiums of any insurance policies on the Property.
However, if such policies are continued by Purchaser after the date hereof or
after the Closing Date, as the case may be, the premiums therefore shall be
adjusted as of midnight preceding that date.
10.3 Seller and Purchaser shall each bear their own
costs in connection with the transactions described herein, including, but not
limited to the fees and expenses of their respective counsel in connection with
this Agreement and any litigation arising therefrom (except as otherwise set
forth in Section 19.9 below).
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<PAGE> 11
11. CLOSING.
11.1 On the date hereof, Seller shall deliver to
Purchaser, in addition to all other documents or material required by the terms
of this Agreement, the following:
(a) An opinion of Latham & Watkins, or other
comparable counsel to Seller reasonably acceptable to Purchaser, in form and
substance as attached hereto as Exhibit K.
(b) A special warranty deed conveying the
Property to Pennsy Newco.
(c) A blanket conveyance, bill of sale and
assignment conveying the personal property and intangible property relating to
the Property to Pennsy Newco.
(d) An assignment of lease for the Property from
Landmor, Inc. to Seller and an assignment of lease for the Property from Seller
to Pennsy Newco.
(e) UCC-1 financing statements evidencing the
encumbrance on the Remainder Interests and Remainder Economic Interests created
by this Agreement.
(f) All reports, affidavits and certificates
required by the Code and any other Federal, State or local laws pertaining to
this transaction.
(g) An owner's affidavit in form customarily
required by Pennsy Newco's title insurer, and such other affidavits as may be
necessary or appropriate for Purchaser to obtain non-imputation endorsements to
its title insurance policies with respect to matters known to Seller, an
indemnification agreement by Seller to the title insurer regarding the
insurability of marketable title to the Property, and such settlement
statements, forms and other instruments, in recordable form or otherwise, as
may be reasonably required by Purchaser, its title insurer or the settlement
agent as a condition of Closing.
11.2 At the Closing, Seller shall deliver to Purchaser,
in addition to all other documents or material required by the terms of this
Agreement, the following:
(a) An opinion of Latham & Watkins, or other
comparable counsel to Seller reasonably acceptable to Purchaser, in form and
substance as attached hereto as Exhibit L.
(b) Assignments in the form attached hereto as
Exhibits M and N.
(c) An amendment to the operating agreement of
Pennsy Newco and an amendment to the certificate of formation of Pennsy Newco
in form suitable for filing in the appropriate
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<PAGE> 12
records, implementing and evidencing the substitution of Purchaser for Seller
and the admission of Purchaser as a member in Pennsy Newco, and granting all
consents, approvals or waivers of rights necessary or appropriate to accomplish
the same.
(d) All reports, affidavits and certificates
required by the Code and any other Federal, State or local laws pertaining to
this transaction.
11.3 On the date hereof and at the Closing(s),
Purchaser shall deliver such instruments, in recordable form or otherwise, as
may be reasonably required by Seller, Pennsy Newco's title insurer, or the
settlement agent as a condition of conveying the Property to Pennsy Newco or of
Closing.
12. DEFAULT.
12.1 If:
(a) Seller shall fail to perform any of the
covenants or agreements to be performed by Seller;
(b) title to any Prospective Economic Benefits,
Remainder Interests and/or Remainder Economic Interests is encumbered or
otherwise unmarketable for any reason (unless waived or deemed waived by
Purchaser as provided elsewhere in this Agreement);
(c) except with respect to any litigation
regarding the enforceability of this Agreement by any party other than Seller,
on the Closing Date there is any litigation adversely affecting the Remainder
Interests or the Remainder Economic Interests;
then in any such event, in addition to any legal or equitable remedies it may
have (including specific performance, which the parties agree is an appropriate
remedy given the circumstances under which this Agreement is entered into and
that Purchaser or its parent or affiliates are the sole tenants of the
Property), Purchaser may require Seller to cure the default or to compensate
Purchaser with monetary damages for any loss, cost, damage or expense Purchaser
incurs or may incur as a consequence of the default. Purchaser may not
terminate this Agreement. If Purchaser nevertheless proceeds to Closing with
respect to any unmarketable Remainder Interests and/or Remainder Economic
Interests, then a pro rata portion of the Allocation for said Remainder
Interests and/or Remainder Economic Interests shall be credited against the
Allocation otherwise attributable to the Remainder Interests and/or the
Remainder Economic Interests. Purchaser shall also have such remedies with
respect to the Retained Distributions and C-M Escrow Account as may be provided
for in the Real Estate Master Agreement.
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<PAGE> 13
12.2 If Purchaser shall default in any of its
obligations hereunder, then, in addition to any legal or equitable remedies
Seller may have, including specific performance (which the parties agree is an
appropriate remedy given the circumstances under which this Agreement is
entered into and that Purchaser or its affiliates are the sole tenants of the
Property), Seller may claim monetary damages for any loss, cost, damage or
expense Seller incurs as a consequence of the default. Seller may not
terminate this Agreement.
13. [INTENTIONALLY OMITTED]
14. BROKERS. Seller and Purchaser each represent and warrant to
the other that no agent or broker has acted on its behalf in connection with
this Agreement or the transactions contemplated herein (including, in the case
of Seller, CPI). Each party to this Agreement shall defend, indemnify and hold
harmless the other party against claims of any agents or brokers alleging to
have acted on behalf of the indemnifying party. The foregoing indemnity by
Seller applies to any claim made by CPI against any party hereto, whether CPI
claims to have been engaged by Seller or any other person.
15. INDEMNIFICATION BY SELLER. Seller shall defend, indemnify and
hold Purchaser harmless from and against any and all claims, demands, actions,
suits, proceedings, judgments, liabilities, settlement amounts, damages,
losses, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or in connection with any representation and
warranty made by Seller in Section 6 not being materially true on the date
hereof, the foregoing indemnification to be in addition to Purchaser's remedies
set forth in Section 12.1 for Seller's default. The foregoing indemnification
shall be implemented as set forth in the Settlement Agreement.
16. INDEMNIFICATION BY PURCHASER. Purchaser shall defend,
indemnify and hold Seller harmless from and against any claims, demands,
actions, suits, proceedings, judgments, liabilities, settlement amounts,
damages, losses, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or in connection with any representation and
warranty made by Purchaser in Section 13 not being materially true on the date
hereof, the foregoing indemnification to be in addition to Seller's remedies
set forth in Section 12.2 for Purchaser's default. The foregoing
indemnification shall be implemented as set forth in the Settlement Agreement.
17. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties relating to the transfer of the Property, the
Prospective Economic Benefits, the Remainder
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<PAGE> 14
Interests, the Remainder Economic Interests, the lease amendments and the
termination of the management contract with CPI relating to the Property. All
Exhibits attached to this Agreement are part of this Agreement and incorporated
by this reference for all purposes. However, this Agreement is entered into
simultaneously with certain agreements (including, without limitation, the
Settlement Agreement, the Real Estate Master Agreement, the Disputed
Partnership Interest Purchase Agreement [Warehouses] dated of even or
approximate date herewith between Seller and Purchaser, and the Purchase
Agreement [Warehouse Partnership Interests] dated of even or approximate date
herewith between Seller and Purchaser relating to certain other warehouse
properties) as part of an integrated resolution of various real estate-related
issues; this Agreement and said other agreement(s) are different elements of
the same contractual transaction, although divided for the convenience of the
parties into separate documents. Any material breach by Seller of the terms of
this Agreement, after taking into account the Warehouse Reserve under the Real
Estate Master Agreement, shall be a material breach of all other agreements
entered into in connection with this transaction, including (without
limitation) the Settlement Agreement and the Real Estate Master Agreement, and
vice versa. With respect to the Property, the Prospective Economic Benefits,
the Remainder Interests, the Remainder Economic Interests, the lease amendments
and the termination of the management contract with CPI relating to the
Property, all prior negotiations between the parties are merged in this
Agreement and there are no promises, agreements, conditions, undertakings,
warranties or representations, oral or written, express or implied, between
them other than as herein set forth. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the
parties hereto. No waiver of any of the provisions of this Agreement or any
other agreement referred to herein shall be valid unless in writing and signed
by the party against whom it is sought to be enforced. In the event of any
conflict between the terms of the Settlement Agreement and the Real Estate
Master Agreement (on the one hand) and the terms of this Agreement (on the
other hand), the terms of the Settlement Agreement and of the Real Estate
Master Agreement shall control.
18. SURVIVAL. The covenants, agreements and indemnities set forth
in, or made pursuant to, this Agreement shall survive the date hereof, each
Closing, and the filing or recording of any documents indefinitely, except
that: (a) any representation and warranty by Seller with respect to the
Property shall only survive for two (2) years after the actual conveyance of
the Property to Pennsy Newco; (b) any representation and warranty by Seller
with respect to the Remainder Interests or the Remainder Economic Interests
shall only survive for two (2) years after the Closing Date; and (c) all other
representations and warranties by either party shall only survive the date
hereof for a period of two (2) years.
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<PAGE> 15
19. MISCELLANEOUS.
19.1 This Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the respective successors of the parties
hereto. This Agreement shall not be assigned by either party. Purchaser shall
have the right to designate any parent, subsidiary or affiliated person or
entity to acquire any Interest or to be a member of Pennsy Newco under this
Agreement, and title to the applicable Remainder Interest, Remainder Economic
Interest or Property shall be issued in the name of any such designee(s). Any
such designee shall be a beneficiary of all of Seller's representations,
warranties, covenants and other agreements in this Agreement.
19.2 All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given to the following addresses and addressees (or to such other
addresses as notice may be given of from time to time):
<TABLE>
<S> <C>
If to Purchaser: Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: President
and
Attn: General Counsel
with copies to: Kenneth J. Ayres, Esq.
and
Steven A. Teitelbaum, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
If to Seller: Mr. Ronald S. Haft
c/o Combined Properties
Incorporated
1899 L Street, N.W.
Ninth Floor
Washington, D.C. 20036
with a copy to: Arne Sorensen, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
</TABLE>
Notices shall be deemed to have been given at the time of receipt (refusal to
accept delivery, or inability to make delivery because of an incorrect or
outdated address provided by the intended recipient, shall constitute receipt).
19.3 This Agreement shall be construed in accordance
with the internal laws of the State of Maryland (the situs of the Property and
the governing law for the other purchase agreements referenced in Section 17
above), without regard to conflicts of
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<PAGE> 16
laws, notwithstanding that Pennsy Newco is a Delaware limited liability
company, that Purchaser is a Delaware corporation, and that Seller is a
resident of the District of Columbia.
19.4 If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision herein shall remain in full force and effect.
19.5 The captions of this Agreement are inserted for
convenience of reference only and do not define, describe or limit the scope or
the intent of this Agreement or any term hereof.
19.6 This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
19.7 Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender shall
include the other gender where appropriate.
19.8 If the final date of any period provided for
herein for the performance of an obligation or for the taking of any action
falls on a Saturday, Sunday or banking holiday, then the time of such period
shall be deemed extended to the next day which is not a Saturday, Sunday or
banking holiday.
19.9 In the event that a legal action is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
collect its costs of court, including reasonable attorneys fees.
IN WITNESS WHEREOF, the parties have duly executed and sealed
this Agreement as of the day and year first above written.
<TABLE>
<S> <C>
PURCHASER:
---------
ATTEST: DART GROUP CORPORATION
- ------
By: /s/ Robert A. Marmon
- ------------------------------ ------------------------------
[Corporate Seal] Name:
Title:
</TABLE>
-16-
<PAGE> 17
<TABLE>
<S> <C>
WITNESS: SELLER:
- ------- ------
/s/ Ronald S. Haft (Seal)
- ------------------------------ ----------------------------
RONALD S. HAFT, personally
Taxpayer identification number:
###-##-####
Address (for purposes of Section 6.12
only, not for notice purposes):
2435 California Street, N.W.
Washington, D.C. 20008
</TABLE>
The undersigned, being a wholly-owned subsidiary of Dart Group Corporation,
hereby guaranties the performance of Dart Group Corporation under the foregoing
Purchase Agreement [Pennsy Drive Warehouses].
<TABLE>
<S> <C>
ATTEST: CABOT MORGAN REAL ESTATE COMPANY
By: /s/ Robert A. Marmon
- ------------------------------ --------------------------
[Corporate Seal] Name:
Title:
</TABLE>
-17-
<PAGE> 1
EXHIBIT 10.17
Pennsy Drive Warehouse I
75th Avenue Headquarters
75th Avenue Wooded Lot
Bridgeview Warehouse
Ontario Warehouse
PURCHASE AGREEMENT [WAREHOUSE PARTNERSHIP INTERESTS]
THIS PURCHASE AGREEMENT [WAREHOUSE PARTNERSHIP INTERESTS] (the
"Agreement") is made this 6th day of October, 1995, by and between RONALD S.
HAFT, personally ("Seller"), and DART GROUP CORPORATION ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the owner of the interests set forth on Exhibit A-2
(the "Undisputed Interests") in the Partnerships set forth on Exhibit A-1;
WHEREAS, each Partnership is the owner of the "Property" ascribed to
it on Exhibit B;
WHEREAS, Purchaser desires to buy (or, with respect to certain Interim
Interests and Properties as more fully set forth below, obtain an option to
buy) and Seller is willing to sell the Undisputed Interests, the Undisputed
Economic Interests (all as hereinafter defined) and/or the Properties on the
terms and conditions hereinafter set forth, it being the intent of the parties
that Seller is to convey good and marketable title to the Undisputed Interests
and the Economic Interests appurtenant thereto (the "Undisputed Economic
Interests");
NOW, THEREFORE, in consideration of the foregoing, One Dollar ($1.00),
the mutual promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser hereby agree as follows:
1. CONVEYANCE OF PROPERTIES.
1.1 At any time following the entry of a Final Order
(hereinafter defined) by the U.S. Bankruptcy Court for the District of
Maryland, Southern Division (the "Bankruptcy Court") as more fully set forth in
Section 6.5 below confirming the Plan of Reorganization (hereinafter defined)
for the "75th Avenue Headquarters" (as defined on Exhibit B-2) or at any time
following the occurrence of any event which makes Bankruptcy Court approval
unnecessary, Purchaser may elect to have Seller
<PAGE> 2
cause Seventy-Fifth Avenue Associates Limited Partnership to convey fee title
to the 75th Avenue Headquarters to 75th Avenue Headquarters, L.L.C., a Delaware
limited liability company ("Headquarters Newco"). Seller shall promptly cause
such conveyance to occur if Purchaser so elects. The organizational documents
of Headquarters Newco are attached hereto as Exhibit C. Said conveyance shall
be a capital contribution by said Partnership to Headquarters Newco. Unless
the need for approval is superseded by the Plan of Reorganization and Final
Order, said conveyance shall be subject to the approval of the holder of the
Underlying Loan Documents applicable to the 75th Avenue Headquarters (as set
forth on Exhibit G attached hereto). For purposes of this Agreement, "Final
Order" means an order by the Bankruptcy Court as to which (a) no appeal has
been taken or motion for reconsideration filed within the period allowed for
such an appeal or motion, or (b) if an appeal has been taken or reconsideration
sought, no stay of such order pending appeal or motion for reconsideration has
been obtained, or (c) if a stay of such order has been obtained, such stay has
expired or been vacated.
1.2 At any time following the entry of a Final Order by
the Bankruptcy Court as more fully set forth in Section 6.5 below confirming
the Plan of Reorganization for the "Wooded Lot" (as defined on Exhibit B-3) or
at any time following the occurrence of any event which makes Bankruptcy Court
approval unnecessary, Purchaser may elect to have Seller cause Seventy-Fifth
Avenue Associates Limited Partnership to convey fee title to the Wooded Lot to
75th Avenue Wooded Lot, L.L.C., a Delaware limited liability company ("Wooded
Lot Newco"). Seller shall promptly cause such conveyance to occur if Purchaser
so elects. The organizational documents of Wooded Lot Newco are attached
hereto as Exhibit D. Said conveyance shall be a capital contribution by said
Partnership to Wooded Lot Newco. Unless the need for approval is superseded by
the Plan of Reorganization and Final Order, said conveyance shall be subject to
the approval of the holder of the Underlying Loan Documents applicable to the
Wooded Lot (as set forth on Exhibit G attached hereto).
1.3 At any time following the entry of a Final Order by
the Bankruptcy Court as more fully set forth in Section 6.5 below confirming
the Plan of Reorganization for the "Bridgeview Warehouse" (as defined on
Exhibit B-4) or at any time following the occurrence of any event which makes
Bankruptcy Court approval unnecessary, Purchaser may elect to have Seller cause
American National Bank and Trust Company of Chicago to convey fee title to the
Bridgeview Warehouse to Bridgeview Warehouse, L.L.C., a Delaware limited
liability company ("Bridgeview Newco"). Seller shall promptly cause such
conveyance to occur if Purchaser so elects. The organizational documents of
Bridgeview Newco are attached hereto as Exhibit E. Said conveyance shall be a
capital contribution by Trak Chicago Limited Partnership I to Bridgeview Newco.
Unless the need for approval is superseded by the Plan of Reorganization and
Final Order, said conveyance shall be subject
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<PAGE> 3
to the approval of the holder of the Underlying Loan Documents applicable to
the Bridgeview Warehouse (as set forth on Exhibit G attached hereto).
1.4 Immediately following the entry of a Final Order by
the Bankruptcy Court as more fully set forth in Section 6.5 below confirming
the Plan of Reorganization for the "Ontario Warehouse" (as defined on Exhibit
B-5) or immediately upon the occurrence of any event which makes Bankruptcy
Court approval unnecessary, Seller shall cause Combined Properties/Ontario
Limited Partnership to convey fee title to the Ontario Warehouse to Ontario
Warehouse, L.L.C., a Delaware limited liability company ("Ontario Newco"). The
organizational documents of Ontario Newco are attached hereto as Exhibit F.
Said conveyance shall be a capital contribution by said Partnership to Ontario
Newco. Unless the need for approval is superseded by the Plan of
Reorganization and Final Order, said conveyance shall be subject to the
approval of the holder of the Underlying Loan Documents applicable to the
Ontario Warehouse (as set forth on Exhibit G attached hereto).
2. LEASE AMENDMENTS.
2.1 Upon the entry of a Final Order by the Bankruptcy
Court as more fully set forth in Section 6.5 below confirming the Plan of
Reorganization for the 75th Avenue Headquarters, but immediately prior to the
conveyance of the 75th Avenue Headquarters to Headquarters Newco as provided in
Section 1.1 above, Seller shall cause Seventy-Fifth Avenue Associates Limited
Partnership to execute and deliver an amendment to the current lease(s) between
Seventy-Fifth Avenue Associates Limited Partnership and Dart Group Corporation
as set forth in Exhibit H attached hereto and incorporated herein. Unless the
need for such consent is superseded by the Plan of Reorganization and Final
Order, said lease amendment shall be subject to the consent of the holder of
the applicable Underlying Loan Documents.
2.2 Upon the entry of a Final Order by the Bankruptcy
Court as more fully set forth in Section 6.5 below confirming the Plan of
Reorganization for the 75th Avenue Wooded Lot, but immediately prior to the
conveyance of the 75th Avenue Wooded Lot to Wooded Lot Newco as provided in
Section 1.2 above, Seller shall cause Seventy-Fifth Avenue Associates Limited
Partnership to execute and deliver an amendment to the current lease(s) between
Seventy-Fifth Avenue Associates Limited Partnership and Dart Group Corporation
as set forth in Exhibit I attached hereto and incorporated herein. Unless the
need for such consent is superseded by the Plan of Reorganization and Final
Order, said lease amendment shall be subject to the consent of the holder of
the applicable Underlying Loan Documents.
2.3 Upon the entry of a Final Order by the Bankruptcy
Court as more fully set forth in Section 6.5 below confirming the
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<PAGE> 4
Plan of Reorganization for the Bridgeview Warehouse, but immediately prior to
the conveyance of the Bridgeview Warehouse to Bridgeview Newco as provided in
Section 1.3 above, Seller shall cause Trak Chicago Limited Partnership I to
execute and deliver an amendment to the current lease(s) between Trak Chicago
Limited Partnership I and Dart Group Corporation and Trak Auto Corporation as
set forth in Exhibit J attached hereto and incorporated herein. Unless the
need for such consent is superseded by the Plan of Reorganization and Final
Order, said lease amendment shall be subject to the consent of the holder of
the applicable Underlying Loan Documents.
2.4 Upon the entry of a Final Order by the Bankruptcy
Court as more fully set forth in Section 6.5 below confirming the Plan of
Reorganization for the Ontario Warehouse, but immediately prior to the
conveyance of the Ontario Warehouse to Ontario Newco as provided in Section 1.4
above, Seller shall cause Combined Properties/Ontario Limited Partnership to
amend the lease(s) between Combined Properties/Ontario Limited Partnership and
Dart Group Corporation and/or Trak Auto Corporation as set forth in Exhibit K.
Unless the need for such consent is superseded by the Plan of Reorganization
and Final Order, said lease amendment shall be subject to the consent of the
holder of the applicable Underlying Loan Documents.
2.5 If "Pennsy Warehouse I" (as defined on Exhibit B-1)
is ever conveyed to a Newco as set forth in Section 6.2 below, then immediately
prior to such conveyance, Seller shall cause 3301 Pennsy Drive Associates
Limited Partnership to amend the lease between the 3301 Pennsy Drive Associates
Limited Partnership and Dart Group Corporation and/or Trak Auto Corporation as
set forth in Exhibit L. Said lease amendment shall be subject to the consent
of the holder of the applicable Underlying Loan Documents.
2.6 Seller releases and waives, and, to the extent he
controls the same, shall cause CP Entities Limited Partnership and any other
entity which may own an interest in any Partnership (to the extent Seller
controls the same, CP Entities Limited Partnership any other such entity being
hereinafter referred to as an "RSH Controlled Entity," it being understood that
Herbert H. Haft disputes the existence of the RSH Controlled Entities) to
release and waive, any right to consent to any lease amendment under this
Section 2 or under Section 6.2 below, and any claim of breach of fiduciary duty
or other claim against Purchaser or a Newco in connection therewith.
3. PAYMENT AND PLEDGE OF PROSPECTIVE ECONOMIC BENEFITS.
3.1 Seller covenants to deliver to Purchaser all cash
flow from operations which Seller may hereafter derive from his Undisputed
Interests in the Partnerships (the "Prospective Economic Benefits"), but Seller
retains his rights to receive
-4-
<PAGE> 5
proceeds from capital transactions and the return of his capital accounts
(until such time as the applicable Undisputed Economic Interests are assigned
under this Agreement). Seller further covenants to deliver to each Partnership
a notice in the form attached hereto as Exhibit M notifying each recipient to
make payments of the Prospective Economic Benefits directly to Purchaser or its
designees from time to time.
3.2 In addition, Seller hereby pledges to Purchaser a
present security interest in the Prospective Economic Benefits, the Remainder
Entity Interests (hereinafter defined), the Undisputed Interests and Undisputed
Economic Interests as set forth in the applicable Uniform Commercial Code; such
interest is given to secure the performance of Seller's obligations under this
Agreement to convey ownership and/or the economic and other benefits of
ownership, both before and after Closing(s) hereunder, and to secure the
repayment of the $27.4 Million Note, the $37 Million Note and the $11.6 Million
Note (each as defined in the Settlement Agreement (as hereinafter defined)),
and is therefore coupled with an interest and irrevocable. To further evidence
such security interest, Seller shall simultaneously with the execution of this
Agreement enter into the Pledge of Undisputed Interests attached as Exhibit N.
3.3 As part of the assignment of Prospective Economic
Benefits, Seller further covenants that he will not take, or cause any RSH
Controlled Entity to take, any action with respect to the Partnerships from and
after the date hereof without first obtaining the written approval of Purchaser
or its designees; provided further, that Seller will not fail to take any
action with respect to the Partnerships that Purchaser may request from and
after the date hereof; and, provided further, that Seller shall cause the RSH
Controlled Entities to take such action with respect to the Partnerships as
Purchaser may request from and after the date hereof. Without limiting the
foregoing, to the extent Seller remains a general partner of a Partnership with
any control over the management thereof, Seller shall cause that Partnership in
accordance with its respective organizational documents to continue to operate
its business in the ordinary course, including (without limitation)
distributing cash flow and proceeds from capital events to the partners on a
regular basis if and when available. The foregoing covenants are coupled with
an interest and the rights granted to Purchaser thereunder are irrevocable.
3.4 It is intended that the assignment, pledge and
security interest created under Sections 3.1 and 3.2 above and the Pledge of
Undisputed Interests referenced therein are pledges of general intangibles
governed by Section 9-318 of the Uniform Commercial Code, as adopted in any
jurisdiction relevant to this Agreement. However, if and to the extent the
provisions of Sections 3.1 and 3.2 above or such Pledge of Undisputed Interests
would allow any other partner in a Partnership to invoke a right of first offer
or first refusal with respect to the Prospective
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<PAGE> 6
Economic Benefits and such other partner indicates a desire to do so, then,
without further action by the parties hereto, the provisions of Sections 3.1
and 3.2 above and such Pledge of Undisputed Interests shall be suspended, and,
if necessary, null and void, with respect to that Partnership until such time
as such right of first offer or first refusal is inapplicable or waived.
4. PURCHASE AND SALE OF REMAINDER INTERESTS.
4.1 On the Closing Date(s) or as soon thereafter as
all necessary consents of partners have been obtained or made unnecessary by
final order of the Bankruptcy Court or any other court having jurisdiction,
Seller shall sell, and Purchaser shall purchase, all of the Undisputed
Interests in the Partnerships except the Interim Partnership Interests (as
hereinafter defined), and all of the economic and other beneficial interests
appurtenant thereto. All necessary partners' consents for Seventy-Fifth Avenue
Associates Limited Partnership are deemed to have been given by this Agreement.
(The Undisputed Interests so acquired, less the Interim Partnership Interests,
are hereinafter referred to as the "Remainder Partnership Interests". Seller's
economic and other beneficial interests in the Partnerships (the "Economic
Interests"), less the Interim Economic Interests (as hereinafter defined), are
hereinafter referred to as the "Remainder Economic Interests.")
4.2 Notwithstanding Section 4.1 above to the contrary,
if and to the extent Section 4.1 or the implementation of its provisions would
give rise to a right of first offer or right of first refusal on the part of
any third party who desires to exercise that right, then Section 4.1 shall,
without further action by the parties, be automatically suspended or null and
void with respect to the Remainder Partnership Interests and/or Remainder
Economic Interests to which the third party desires to exercise such right.
Seller hereby gives his consent to the conveyances set forth in Section 4.1 and
waives all rights of first offer or first refusal he may have with respect
thereto. To the extent he has the power and authority to do so, Seller hereby
causes each Partnership and each RSH Controlled Entity to consent to the
conveyances set forth in Section 4.1 and to waive all rights of first offer or
first refusal they may have with respect thereto.
5. CONSIDERATION.
5.1 The consideration payable by Purchaser to each
Newco for the admission of Purchaser or its designee to a Newco shall be one
percent (1%) of each Property's value (as determined by the current real estate
tax assessment). Such consideration shall be paid immediately following the
recording of the special warranty deed (for Properties located in Maryland and
Illinois),
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<PAGE> 7
or the warranty deed (for the Ontario Warehouse), as the case may be.
5.2 The consideration for (a) the payment and pledge
of the Prospective Economic Benefits, and (b) the conveyance to Purchaser of
the Interim Partnership Interests (hereinafter defined) and Interim Economic
Interests (hereinafter defined) is the settlement of various claims which the
parties have against each other with respect to various stock options,
employment agreements, real estate transactions and related matters, all as
more fully set forth in a separate Settlement Agreement of even or approximate
date herewith between Seller and Purchaser (the "Settlement Agreement") and in
a Real Estate Master Agreement of even or approximate date herewith among
Seller, Purchaser and Cabot Morgan Real Estate Company (the "Real Estate Master
Agreement").
5.3 Subject to such adjustment as may be provided for
elsewhere in this Agreement, the consideration to be paid for the conveyance to
Purchaser of the Remainder Partnership Interests and the Remainder Economic
Interests is the sum of $18,873,334.00, subject to reduction as set forth in
the Real Estate Master Agreement and/or subject to reduction on a
dollar-for-dollar basis for any proceeds of capital transactions received by
Seller or any RSH Controlled Entity, which shall be allocated as follows for
purposes of this Agreement (the "Allocation") and which shall be paid to Seller
as provided in Section 10 hereof:
3301 Pennsy Drive Associates Limited Partnership (Pennsy Drive
Warehouse I): $1,440,000.00 (subject to reduction as set
forth above);
Seventy-Fifth Avenue Associates Limited Partnership (75th
Avenue Headquarters): $10,000,000.00 (subject to reduction as
set forth above);
Seventy-Fifth Avenue Associates Limited Partnership (Wooded
Lot): $366,667.00 (subject to reduction as set forth above);
Trak Chicago Limited Partnership I (the Bridgeview Warehouse):
$2,800,000.00 (subject to reduction as set forth above); and
Combined Properties/Ontario Limited Partnership (the Ontario
Warehouse): $4,266,667.00 (subject to reduction as set forth
above).
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<PAGE> 8
6. FUTURE COOPERATION.
6.1 Seller, at Purchaser's sole cost and expense,
shall reasonably cooperate and, to the extent within Seller's control, shall
cause each Partnership and each RSH Controlled Entity to reasonably cooperate,
in any examinations, investigations and inquiries and join in any and all
applications for licenses, permits and consents with respect to the Properties
which Purchaser applies for in its own name, in the name of any Newco, or on
behalf of the Properties if and when reasonably requested to do so by
Purchaser.
6.2 If and when Seller may be legally capable of
causing 3301 Pennsy Drive Associates Limited Partnership to convey fee title to
Pennsy Warehouse I, Seller shall promptly so inform Purchaser, shall join with
Purchaser in creating new limited partnerships or limited liability companies
(in Purchaser's sole and absolute discretion) substantially similar in form and
substance to the other Newcos created hereunder, and shall cause said
Partnership to convey its Property to a Newco as a capital contribution. Said
conveyance(s) shall be subject to the approval(s) of the then-holders of any
mortgage loan(s) encumbering said Property.
6.3 Seller hereby covenants to not cause any of the
Partnerships, or to the extent Seller can prevent the same, allow a third party
to cause any of the Partnerships, to amend, revise, modify, terminate, extend,
refinance or otherwise affect the Underlying Loan Documents relating to the
Properties (as more fully set forth on Exhibit G) unless such amendment,
revision, modification, termination, extension or refinancing has been approved
by the tenant of such Property in accordance with the terms of the applicable
lease.
6.4 On the date of this Agreement, Combined Properties
Incorporated ("CPI") is in bankruptcy under Chapter 11 of the U.S. Bankruptcy
Code in proceedings pending in the Bankruptcy Court. Seller shall be solely
responsible for ensuring, at his own expense and as promptly as possible, that
(a) CPI shall no longer be subject to any bankruptcy proceedings or the
Bankruptcy Court shall have approved or authorized the termination of all
management contracts between CPI and the Partnerships or any other party with
respect to the Properties to the extent, if any, that such approval or
authorization is required, and (b) the approval of the mortgagees have been
obtained, if necessary, to the termination of such management contracts,
subject to the terms of Section 6.6 below. Seller further agrees to use
diligent efforts to do so and to cause CPI to cooperate in Seller's efforts.
Until such time as such management contracts with CPI are terminated, (i)
Seller shall pay any and all management and other fees payable to CPI in
connection with the Property, (ii) Seller shall promptly reimburse Purchaser,
Trak Auto Corporation, any Newco and/or any Partnership in which Purchaser or
its designee is a general or
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<PAGE> 9
limited partner for any and all management and other fees they pay to CPI,
together with interest as set forth below, and (iii) to the extent any
reimbursement is still not paid on the earlier of the Closing Date or the date
the Allocation is payable to Seller pursuant to the terms of the Real Estate
Master Agreement, the Allocation shall be reduced by (A) any management or
other fee paid from and after the date hereof by Purchaser or Trak Auto
Corporation to CPI, and/or (B) Purchaser's or Purchaser's designee's pro rata
share of any management or other fee paid by any Newco or Partnership to CPI if
Purchaser or Purchaser's designee is a member of the Newco or a general or
limited partner in such Partnership, in each case together with interest
thereon as set forth below. All payments under foregoing clauses (ii) and
(iii) under this Section shall bear interest thereon from the date the
underlying payment was made to CPI at the prime rate announced from time to
time by Citibank, N.A. (or its successors) plus two percent (2%) per annum.
Purchaser acknowledges that it shall cooperate with Seller, at Seller's sole
cost and expense, to implement the provisions of this Section 6.4. Seller
releases and waives and shall cause each RSH Controlled Entity to release and
waive, any right to consent to any contract termination under this Section 6.4
and any claim of breach of fiduciary duty or other claim against Purchaser, any
Partnership or a Newco in connection therewith.
6.5 On the date of this Agreement each Partnership
(except 3301 Pennsy Drive Associates Limited Partnership) is in bankruptcy
under Chapter 11 of the U.S. Bankruptcy Code in proceedings pending in the
Bankruptcy Court. Seller shall use his best efforts to ensure, at his own
expense, that all Bankruptcy Court approvals are obtained for the transactions
described herein, including, but not limited to, the conveyance of the
Properties and the lease amendments described herein. Seller further agrees to
use diligent efforts to do so. The plan of reorganization ("Plan of
Reorganization") filed with the Bankruptcy Court for each Partnership or
Property shall include, at a minimum: (a) the conveyance of the applicable
Property to the applicable Newco; (b) the lease amendments described herein
with respect to each Property; and (c) a negation or overriding of those
portions of the partnerships agreements of Seventy-Fifth Avenue Associates
Limited Partnership, 75th Avenue Tier II Limited Partnership, Trak Chicago
Limited Partnership I, and Trak Chicago Tier II Limited Partnership, and any
other agreement that may also address the rights of Robert M. Haft and/or Linda
G. Haft to approve or disapprove of any sale, refinancing, joint venturing or
other action of any sort with respect to a Property. No Plan of Reorganization
shall be filed without the consent of Purchaser, which consent shall not be
unreasonably withheld or delayed as long as such proposed plan includes items
(a), (b) and (c) above. Notwithstanding the foregoing, for purposes of
Sections 1 and 2 of this Agreement, the Plan of Reorganization for a Property
or a Partnership means a plan of reorganization that includes only items (a)
and (b) above. Seller shall promptly and diligently take whatever action may
be necessary or
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<PAGE> 10
desirable in order to implement any Final Order of the Bankruptcy Court with
respect to any Property/Partnership. Purchaser may waive the foregoing
conditions precedent with respect to any Newco, Partnership, Undisputed
Interests or Undisputed Economic Interests.
6.6 Seller agrees to cooperate with Purchaser, at
Seller's own cost and expense, and to cause each RSH Controlled Entity to
cooperate with Purchaser, at Seller's own cost and expense, in obtaining the
approval of each lender under the Underlying Loan Documents to (a) the
aforesaid lease amendments, (b) the payment and pledge of the Prospective
Economic Benefits, (c) the conveyance of the Undisputed Interests and the
Undisputed Economic Interests, (d) the termination of the management contracts
between the Partnerships and CPI, and (e) all other matters contemplated by
this Agreement. Notwithstanding the foregoing to the contrary, Purchaser shall
be responsible for paying any fees and expenses imposed by any lender in
connection with obtaining such approval.
6.7 Seller hereby approves and waives any right of
first offer or first refusal, and Seller hereby causes the RSH Controlled
Entities to approve and waive any right of first offer or first refusal, with
respect to any acquisition by Purchaser or its parent, subsidiary or affiliated
entities of any of Herbert H. Haft's claimed interests (or any appurtenances
thereto) in any of the Partnerships or in any RSH Controlled Entity.
6.8 (a) If and when Seller is legally capable of
doing so, Seller shall sell, and Purchaser shall purchase, a one percent (1%)
interest (the "Interim Partnership Interest") as a general partner in each
Partnership such that Purchaser shall be the sole general partner in each such
Partnership (except for 3301 Pennsy Drive Associates Limited Partnership, in
which Herbert H. Haft may also be a general partner in addition to Purchaser).
Each such conveyance shall, however, be postponed, to the extent necessary,
until such time as all such consents applicable to that particular conveyance
are obtained. Notwithstanding the foregoing sentences, however, Purchaser may,
in its sole and absolute discretion, elect to not acquire, or to defer its
acquisition of, the Interim Partnership Interests in Seventy-Fifth Avenue
Associates Limited Partnership and/or in Trak Chicago Limited Partnership I;
Purchaser's election(s) under this sentence may be made at any time and the
length of any deferral(s) shall be in Purchaser's sole and absolute discretion.
Seller hereby grants his own consent to such conveyances and causes each RSH
Controlled Entity to give its consent to such conveyances.
6.9 As and when conveyances of the Interim Partnership
Interests occur, Seller shall sell, and Purchaser shall purchase, all of the
economic and other beneficial interests appurtenant to the Interim Partnership
Interests being then conveyed to Purchaser (the "Interim Economic Interests").
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<PAGE> 11
Purchaser shall thereupon become an assignee with respect to the Interim
Economic Interests. If Purchaser has elected to not acquire, or to defer the
acquisition of, any Interim Partnership Interest as set forth in Section 6.8
above, then the assignment of the Interim Economic Interest appurtenant thereto
shall nevertheless occur as and when the conveyances of the related Interim
Partnership Interests would otherwise have occurred. The parties acknowledge
that the conveyance of the Interim Economic Interests (and, as set forth
elsewhere, the conveyance of the Remainder Economic Interests) may be redundant
to the conveyance of the Interim Partnership Interests (and the conveyance of
the Remainder Partnership Interests), and somewhat redundant to the payment and
pledge of the Prospective Economic Benefits, but agree that they are separate
conveyances so that the transfer of the Interim Economic Interests and
Remainder Economic Interests shall occur even if the transfer of the
Prospective Economic Benefits or the Interim Partnership Interests and the
Remainder Partnership Interests do not occur or are not effective for any
reason.
6.10 Seller and/or Robert M. Haft and/or Linda G. Haft,
or an entity owned by one or more of them, is the owner of the approximately
three (3) acre tract ("Parcel D") located between the 75th Avenue Headquarters
and the Wooded Lot. Parcel D was leased by Dart Drug Stores, Inc. pursuant to
that certain Lease Amendment dated December 18, 1984 between Combined
Properties Limited Partnership (as agent for the unnamed owner-landlord) and
Dart Drug Stores, Inc. (as the tenant). Seller grants Purchaser the option to
acquire all of Seller's right, title and interest in and to Parcel D at any
time for a purchase price of One Dollar ($1.00) to be paid at the time of
conveyance. If Seller owns a fee interest in Parcel D or has the power and
authority to cause any entity that owns a fee interest in Parcel D to convey
its fee title, Seller shall convey his fee interest, or cause such entity to
convey its fee interest, to Purchaser by special warranty deed and otherwise in
the manner set forth in this Agreement for conveyances of the Properties. If
Seller owns only an interest in an entity that owns fee title to Parcel D and
Seller cannot cause that entity to convey fee title, then Seller shall convey
his interest to Purchaser by assignment of partnership interests, membership
interests or stock, as the case may be, in the manner set forth in this
Agreement for the assignment of the Partnership Interests. If Purchaser
exercises its option under this Section, closing of the option herein granted
shall occur at such time and place as Purchaser shall elect in its reasonable
discretion.
7. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants the following to Purchaser as
of the date hereof, notwithstanding any independent investigation which
Purchaser may have conducted (but subject to the last paragraph of this
Section):
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7.1 Each Partnership is duly organized, validly
existing and in good standing in the jurisdiction of its formation (as shown on
Exhibit A-1), and is authorized to do business and in good standing in the
jurisdiction in which its Property is located (as shown on Exhibit B). The
partnership agreements and certificates of limited partnership, all as amended
to the date hereof, are set forth on Exhibit A-3 and true and complete copies
thereof have been delivered to Purchaser. Seller is the sole general partner
of Seventy-Fifth Avenue Associates Limited Partnership and of Trak Chicago
Limited Partnership I.
7.2 Except as set forth in the following sentence,
each Partnership is the owner of legal and beneficial title to its Property and
is lawfully seized of its Property as of the date of this Agreement. Legal
title to the Bridgeview Warehouse is owned by American National Bank and Trust
Company of Chicago under an unrecorded trust agreement #62787 dated November 8,
1984, and Trak Chicago Limited Partnership I is the sole beneficiary of that
trust; Seller has delivered a true, correct and complete copy of said trust
agreement to Purchaser. Except for the Underlying Loan Documents and the
matters shown on the Schedules B-2 attached to the title insurance commitments
listed on Exhibit O, the Properties are free and clear of any and all liens,
encumbrances, pledges, security interests or adverse claims of any kind or
character, and there are no claims which could result in a lien or encumbrance
of any kind thereon.
7.3 The Property attributed to it on Exhibit B is the
sole asset of each Partnership, no Partnership is qualified to do business in
any jurisdiction other than the State in which its Property is located, and no
Partnership does business anywhere other than said jurisdiction.
7.4 (a) Seller is, directly or indirectly, the owner
of legal and beneficial title to the Prospective Economic Benefits, the
Undisputed Interests and the Undisputed Economic Interests, is lawfully seized
of the Prospective Economic Benefits, the Undisputed Interests and the
Undisputed Economic Interests as of the date of this Agreement, and will
continue to be so seized with respect to the Undisputed Interests and the
Undisputed Economic Interests until each such Interest is conveyed under this
Agreement.
(b) All of the Prospective Economic Benefits, the
Interim Partnership Interests and Interim Economic Interests are free and clear
of all liens, encumbrances, pledges, hypothecations, and other claims and
security interests of all types.
(c) On the date hereof and on the applicable
Closing Date(s) the Remainder Partnership Interests and the Remainder Economic
Interests are and will be free and clear of
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all liens, encumbrances, pledges, hypothecations and other claims and security
interests of all types.
(d) Seller has the power and authority to pledge,
convey or cause the conveyance of the Prospective Economic Benefits, the
Undisputed Interests and the Undisputed Economic Interests, and fee title to
the 75th Avenue Headquarters, the Wooded Lot and the Bridgeview Warehouse.
7.5 Except as set forth in the Underlying Loan
Documents: Seller is fully authorized and empowered to execute and deliver
this Agreement and all documents to be executed by Seller hereunder; the
execution and performance hereunder by Seller and the RSH Controlled Entities
will not constitute a breach or default under, or conflict with, any agreement
to which Seller or any RSH Controlled Entities are parties or by which any of
them are bound, or under any law, regulation, court order or similar constraint
applicable to Seller or the RSH Controlled Entities; Seller and each RSH
Controlled Entity has complete and unencumbered right and power to consummate
the transactions provided for herein without the approval, consent, order or
authorization of, or designation, registration or filing with, any person or
entity or any governmental or quasi-governmental authority except as set forth
elsewhere in this Agreement with respect to bankruptcy; and this Agreement is
binding on and enforceable against Seller in accordance with its terms.
Without limiting the foregoing, the transactions contemplated by this Agreement
will not result in any claim against Purchaser or its parent, subsidiary or
affiliated entities except for any claim which may be filed by Herbert H. Haft;
Seller believes any such claim to be without merit and will vigorously defend
against any such claim at Seller's own expense and/or cooperate at Seller's own
expense with Purchaser in Purchaser's defense of any such claim, subject to any
different allocation of expense under that certain Litigation Cooperation
Agreement of even or approximate date herewith between Seller and Purchaser.
7.6 The Partnerships have no debts or liabilities
other than the Underlying Loan Documents, their guaranties of Seller's and
Herbert H. Haft's obligations as indemnitors of Gloria, Linda and Robert Haft
under that certain Indemnification Agreement dated as of July 31, 1994, and
those incurred prior to the date hereof in the ordinary course of business,
which latter debts and liabilities shall be paid solely by Seller even if
invoiced after the date hereof. Except as noted on Exhibit P, the loans
evidenced by the Underlying Loan Documents and all of such other obligations
are in good standing and no situation exists or, with the passage of time or
the giving of notice (or both) could exist, which would constitute a default
thereunder or cause the acceleration thereof. Seller has delivered to
Purchaser true, accurate and complete copies of the Underlying Loan Documents
and of said Indemnification Agreement.
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7.7 Except as shown on Exhibit P, there are no
defaults (or situations which, with the passage of time or the giving of notice
(or both), could constitute defaults), claims, actions, litigation or
proceedings, actual, pending or to the best of Seller's knowledge, threatened,
and there are no outstanding judgments or rulings, by any organization, entity,
person, individual or governmental agency which would affect the Prospective
Economic Benefits, the Undisputed Interests, the Undisputed Economic Interests
or, to the best of Seller's actual knowledge, the Properties or any part
thereof.
7.8 Except with respect to the tax returns for
calendar year 1994, each Partnership has filed all tax returns and paid all
taxes, fees, special assessments or other governmental impositions. No
assessment, special assessment or tax shall be permitted to become a lien on
the Undisputed Interests, or the Undisputed Economic Interests prior to the
applicable conveyances thereof under this Agreement.
7.9 Subject to the terms of the leases between the
Partnerships and Purchaser and its affiliates, each Partnership has made full
payment for the installation or the consumption of all utilities for which the
Partnership is required to make payment (or for which Seller or any other RSH
Controlled Entity is required to make payment with respect to the Undisputed
Interests and Undisputed Economic Interests to be conveyed by it).
7.10 To the best of Seller's actual knowledge, each
Partnership has complied with all applicable laws, ordinances, regulations,
statutes, codes, rules and restrictions relating to its Property and every part
thereof, and no permit, agreement, lease, waiver, contract, or certificate of
occupancy will be terminated, revoked or forfeited by reason of this Agreement
or the consummation of the transactions set forth herein.
7.11 Seller and each RSH Controlled Entity (or their
respective predecessors-in-interest) has made all capital contributions to the
Partnerships required of it and has received all distributions to which it is
entitled, and Seller and the RSH Controlled Entities have not made any loan to
or otherwise advanced any money to or on behalf of any Partnership.
7.12 All leasing commissions for the Properties have
been paid.
7.13 The Partnerships have no employees.
7.14 Except for the Underlying Loan Documents, any
leases with Purchaser or its affiliates listed on Exhibit Q attached hereto and
incorporated herein, the guaranties set forth in Section 7.6 above, and the
management contracts with CPI, there are no leases, contracts or agreements
with or binding the Partnerships.
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7.15 All bills and claims for labor performed and
materials furnished to the Partnerships or to CPI for the benefit of the
Properties for all periods prior to the date hereof have been paid in full, and
there are no mechanics' liens or materialmen's liens, whether or not perfected,
on or affecting any portion of the Properties as a result of any labor
performed or materials provided to the Partnerships or to CPI. Seller shall
provide Purchaser's title insurer with such affidavits and other evidence as it
may reasonably require so as to enable Purchaser's title insurer to furnish the
Partnerships with title policies without exception for mechanics' or
materialmen's liens arising from labor performed or materials furnished to the
Partnerships or to CPI.
7.16 Seller's United States taxpayer identification
number and address are set forth following his signature on this Agreement,
Seller is not a "foreign person" as defined in Section 1445 of the Internal
Revenue Code (the "Code"), and Seller will execute and deliver and cause each
RSH Controlled Entity (if applicable) and/or Partnership to execute and deliver
an affidavit to the same effect. In the event any Seller, RSH Controlled
Entity (if applicable) or Partnership is a "foreign person" (as defined above)
or does not execute and deliver the foregoing affidavit, Purchaser may pay such
sums directly from the Allocation and execute such notices, certificates,
letters or other instruments in its own behalf or as attorney-in-fact for that
Seller, RSH Controlled Entity (if applicable) or Partnership as may be
necessary in order to comply with the withholding provisions of Section 1445 of
the Code. Under penalty of perjury, Seller certifies that the taxpayer
identification number provided for him beneath his signature line is correct
for purposes of Section 6045 of the Code.
7.17 Except as disclosed in the Complaint filed in the
Pennsy Warehouse Lawsuit (as defined in Exhibit P), to the best of Seller's
actual knowledge the Partnerships, Seller and each RSH Controlled Entity have
never used, processed, released, discharged, generated, stored or disposed of
any Hazardous Substance (as hereinafter defined) on, under or about any
Property or from any Property to any other location, and no Hazardous Substance
has been used, processed, released, discharged, generated, stored or disposed
of on any Property by any other person or entity. As used in this Agreement,
"Hazardous Substance" shall mean and include all hazardous or toxic substances,
wastes or materials, any pollutants or contaminants (including, without
limitation, asbestos, PCBs, petroleum products and by-products, and raw
materials which include hazardous constituents), or any other similar
substances or materials which are included under or regulated by any local,
state or federal law, rule or regulation pertaining to environmental
regulation, contamination, clean-up or disclosure, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Resource
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Conversation and Recovery Act, the Toxic Substances Control Act, and the
Federal Insecticide, Fungicide and Rodenticide Act, as any of the foregoing has
heretofore been or is hereafter amended.
7.18 To the best of Seller's actual knowledge, the
Properties are not affected by any lease, concession, license, permit,
agreement, opinion, statute or regulation of any kind (other than zoning
ordinances) which limits the use or development of the Properties.
7.19 To the best of Seller's actual knowledge, each
Property has full and free access to and from public highways, streets or
roads, and there is no pending or threatened governmental or private proceeding
which would impair or result in the termination of such access.
7.20 To the best of Seller's actual knowledge: neither
the whole nor any portion of any Property is currently subject to temporary
requisition or use by any governmental authority or has been condemned or taken
in any proceeding similar to a condemnation proceeding; there is not now
pending any condemnation, requisition or similar proceeding affecting any
Property or any portion thereof; and Seller and the RSH Controlled Entities
have received no notice and have no actual knowledge that any such proceeding
is contemplated.
7.21 To the best of Seller's actual knowledge, there is
no pending or threatened designation or application for designation with any
Federal, local or governmental institution whereby any Property would be
declared a historic structure or the area in which any Property is located
declared a historic district so as to in any way restrict or impede the right
to alter or demolish the Improvements.
7.22 To the best of Seller's actual knowledge, the
Properties are served by public water, storm sewer and sanitary sewer
facilities and by telephone, gas, steam and electric services of public
utilities, all provided directly from public ways, in good working order, in
quantities adequate to service the Properties, and in compliance with all legal
requirements.
7.23 To the best of Seller's actual knowledge, each
Property's zoning classification permits the current use of that Property.
Seller has received no notice of and has no actual knowledge of any
contemplated change with respect to the zoning of any Property, the
availability of utility service to the Properties, or any other matter which
would materially adversely affect any Property.
7.24 To the best of Seller's actual knowledge, no
portion of the Properties lies within the 100-year flood plain or any area
categorized as flood prone by the Federal Emergency Management Agency.
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In the event Purchaser becomes aware of a breach of any warranty or
representation of Seller prior to any conveyance under this Agreement and
elects to close that conveyance notwithstanding such breach, Purchaser will be
deemed to have waived such breach for all purposes with respect to that
conveyance. With respect to any alleged breach of Seller's warranties and
representations of which Purchaser becomes actually aware only after a
conveyance, Purchaser agrees that prior to the exercise of any right or remedy
with respect to such alleged breach which has survived that conveyance pursuant
to Section 19 of this Agreement, Purchaser will give Seller written notice of
such alleged breach and will give Seller a reasonable time in light of the
circumstances to cure the condition, circumstance or event which gave rise to
such breach, provided Seller will at all times diligently and in good faith
attempt to cure such breach or provide adequate protection to Purchaser to
protect or indemnify it from all damages and adverse effects of such breach.
If Seller cures the breach or otherwise provides such protection, then such
breach will be deemed cured and waived for all purposes. Purchaser
acknowledges that its parent, subsidiary or affiliated entities are lessees of
the Properties (subject to the Pennsy Warehouse Lawsuit) and that the
representations and warranties set forth above with respect to the Properties
do not amend or otherwise affect the obligations of said parent, subsidiary or
affiliated entities as tenants or the Partnerships as landlords under said
leases.
8. TITLE.
8.1 On the date hereof and again on the Closing
Date(s), title to the Undisputed Interests and the Undisputed Economic
Interests must be held by Seller and must be conveyed free of liens,
encumbrances, pledges, hypothecations and other claims and security interests
of any type except as shown on Exhibit O. On the date hereof good and
marketable title to the Properties must be held by the Partnerships in the
cases of Pennsy Drive Warehouse I, the 75th Avenue Headquarters, the Wooded Lot
and the Ontario Warehouse, or in the case of the Bridgeview Warehouse, by
American National Bank and Trust Company of Chicago as trustee for Trak Chicago
Limited Partnership I, as applicable, and must be free of liens, encumbrances,
pledges, hypothecations and other claims and security interests of any type
except as shown on Exhibit O. Each Partnership must hold an owner's title
insurance policy for its Property or obtain one as a condition to the execution
and delivery of this Agreement.
8.2 If title is not in the condition described in the
preceding Section, Seller shall correct the title defects at his own expense
and, to the extent Seller fails to do so, any cost incurred by Purchaser in
curing the title defects may be offset against the amount to be paid to that
grantor under Section 5.1 and/or against the Allocation for Undisputed
Interests/Undisputed Economic Interests hereafter conveyed.
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8.3 Seller agrees that in all events the distribution
of the amount to be paid under Section 5.1 and the Allocation for any Property
or Remainder Partnership Interests/Remainder Economic Interests is solely his
own responsibility and that Purchaser shall have no liability or obligation
with respect thereto, even though Purchaser may be the general partner of the
Partnership to which an Allocation is applicable.
9. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. The
obligation of Purchaser to pay the Allocation, acquire the Remainder Interests
and Remainder Economic Interests and to perform the other covenants and
obligations to be performed by it on the Closing Date(s) shall be subject to
the condition that all of the terms and conditions of the Real Estate Master
Agreement shall be satisfied and Seller shall be entitled to the payment of the
Allocation as more particularly set forth therein, and to the satisfaction of
all other conditions set forth in this Agreement (all or any of which may be
waived, in whole or in part, by notice from Purchaser to Seller).
10. CLOSING DATE.
10.1 The closing(s) ("Closing(s)") of the conveyance of
the Remainder Partnership Interests and the Remainder Economic Interests shall
occur simultaneously with the sale of the last of the five (5) properties owned
on or immediately prior to the date hereof by CM/CP Briggs Chaney Joint Venture
(Briggs Chaney Plaza in Montgomery County, Maryland), CM/CP Bull Run Joint
Venture (Bull Run Plaza in Prince William County, Virginia), CM/CP Greenbriar
Office Joint Venture (Greenbriar Corporate Center in Fairfax County, Virginia),
CM/CP Greenbriar Retail Joint Venture (Greenbriar Town Center in Fairfax
County, Virginia) and CM/CP Greenway Joint Venture (Greenway Shopping Center in
Prince George's County, Maryland) (each, a "Cabot Morgan Property"), but not
later than the date which is five (5) years after the date of this Agreement;
provided, however, in the event the Final Order of the Bankruptcy Court
approves a Plan of Reorganization for any Partnership and/or Property that
includes the conveyance of the Remainder Partnership Interests and the
Remainder Economic Interests, then in such event the Closing shall occur on the
effective date of such Plan of Reorganization for such Partnership/Property.
The Allocation under this Agreement shall be offset against any net proceeds
allocated to Cabot Morgan Real Estate Company (or its successors or assigns)
from the sale of the Cabot Morgan Properties to the extent any such sale occurs
or to the repayment of the $27.4 Million Note, the $37 Million Note and the
$11.6 Million Note or offset against Seller's covenant to pay Purchaser $2
million, all as more particularly set forth in the Settlement Agreement; the
foregoing right of offset is coupled with an interest and the rights granted to
Seller under this sentence are irrevocable.
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10.2 (a) Notwithstanding Section 10.1 above to the
contrary, if the Cabot Morgan Properties are not sold on or before the date
which is five (5) years after the date of this Agreement, then Closing shall
nevertheless occur on the date which is five (5) years after the date of this
Agreement, subject to the terms and conditions of the Real Estate Master
Agreement and to the following subparagraphs of this section.
(b) If all of the Closings (except for any
closing which Purchaser has elected to waive) have not occurred on or before
the date which is five (5) years after the date of this Agreement (or such
later date to which Purchaser may have deferred a particular Closing) and: (i)
the reason for any such failure is that a court of competent jurisdiction has
issued a final, non-appealable order declaring either (A) that Herbert H. Haft
owns a Remainder Partnership Interest or a Remainder Economic Interest to be
conveyed or (B) that Herbert H. Haft is a partner in a particular Partnership
and it is indisputable that Herbert H. Haft, as such a partner, can either
veto the conveyance envisioned under this Agreement or would have a right of
first offer or right of first refusal with respect to that conveyance; and (ii)
there are still balances in the Retained Distributions and/or the C-M Escrow
Account under the Real Estate Master Agreement sufficient to give Purchaser the
value ascribed to the unmarketable Remainder Partnership Interest and/or
Remainder Economic Interest (as more fully set forth in the Real Estate Master
Agreement); then no Closing shall occur under this Agreement with respect to
the unmarketable Remainder Partnership Interest and/or Remainder Economic
Interest, this Agreement shall be terminated with respect to said unmarketable
Interests only, and Purchaser shall be entitled to the appropriate amount of
the Retained Distributions and/or the C-M Escrow Account under the Real Estate
Master Agreement.
(c) If all of the Closings (except for any
closing which Purchaser has elected to waive) have not occurred on or before
the date which is five (5) years after the date of this Agreement (or such
later date to which Purchaser may have deferred a particular Closing) and: (i)
the reason for any such failure is that a court of competent jurisdiction has
issued a final, non-appealable order declaring either (A) that Herbert H. Haft
owns a Remainder Partnership Interest or a Remainder Economic Interest to be
conveyed or (B) that Herbert H. Haft is a partner in a particular Partnership
and it is indisputable that Herbert H. Haft, as such a partner, can either
veto the conveyance envisioned under this Agreement or would have a right of
first offer or right of first refusal with respect to that conveyance; and (ii)
there is an insufficient balance in the Retained Distributions and/or the C-M
Escrow Account under the Real Estate Master Agreement to give Purchaser the
value ascribed to the unmarketable Remainder Partnership Interest and/or
Remainder Economic Interest (as more fully set forth in the Real Estate Master
Agreement); then no Closing shall occur under this Agreement with respect to
the unmarketable Remainder Partnership
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Interest and/or Remainder Economic Interest and Purchaser shall be entitled to
all of its rights and remedies against Seller pursuant to Section 13 below (but
subject to Sections 3.4 and 4.2).
(d) If all of the Closings (except for any
closing which Purchaser has elected to waive) have not occurred on or before
the date which is five (5) years after the date of this Agreement (or such
later date to which Purchaser may have deferred a particular Closing) and the
reason for any such failure is anything other than a reason set forth in
preceding subsections (b) and (c), then Purchaser shall have the option, in its
sole and absolute discretion, to either (i) extend the date of Closing to a
date of its choosing or (ii) no Closing shall occur under this Agreement with
respect to the unmarketable Remainder Partnership Interest and/or Remainder
Economic Interest and Purchaser shall be entitled to all of its rights and
remedies against Seller pursuant to Section 13 below.
10.3 Notwithstanding Section 10.1 above to the
contrary, the Closing Date with respect to particular Remainder Partnership
Interests/Remainder Economic Interests may be accelerated as provided in the
Real Estate Master Agreement.
10.4 Notwithstanding Section 10.1 above to the
contrary, if a "Revocation Closing" occurs under the Settlement Agreement, then
the Closing Date with respect to all of the Remainder Partnership Interests and
all of the Remainder Economic Interests shall occur on the earlier of (a) the
date so elected by Seller or (b) the Revocation Maturity Date of the $37
Million Note (as defined therein). If the Closing Date is determined under
this Section, then the Allocation under this Agreement shall be offset against
Seller's obligations under the $37 Million Note.
10.5 All Closings hereunder shall occur at 10:00 A.M.,
Washington, D.C. time, at the offices of Jones, Day, Reavis & Pogue, 1450 G
Street, N.W., Washington, D.C. 20005. Each date on which a Closing occurs with
respect to any Remainder Partnership Interests/Remainder Economic Interest
shall be the "Closing Date" with respect thereto.
11. PRORATIONS OF EXPENSES; COSTS.
11.1 Recordation and transfer taxes, if any, for the
conveyance of title to Pennsy Warehouse I to 3301 Pennsy Drive Associates
Limited Partnership shall be paid by Seller. Seller shall also pay all
expenses of clearing title to any Property. Purchaser shall pay all
recordation and transfer taxes for conveying any Property to a Newco. All
title insurance premiums and other costs for the conveyance of Pennsy Drive
Warehouse I to 3301 Pennsy Drive Associates Limited Partnership shall be paid
by Seller. All title insurance premiums and other costs for the conveyances of
Properties to Newcos shall be paid by the
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applicable Newcos. All other title insurance premiums and other costs under
Section 8.1 shall be borne by the Partnership that owns the applicable
Property.
11.2 Purchaser shall not be obligated to continue the
policies or adjust the premiums of any insurance policies on the Properties.
However, if such policies are continued by Purchaser after the date hereof or
after the Closing Date, as the case may be, the premiums therefore shall be
adjusted as of midnight preceding that date.
11.3 Seller and Purchaser shall each bear their own
costs in connection with the transactions described herein, including, but not
limited to the fees and expenses of their respective counsel in connection with
this Agreement and any litigation arising therefrom (except as otherwise set
forth in Section 20.9 below). Notwithstanding the foregoing, Purchaser agrees
to reimburse Seller for costs incurred by Seller in connection with complying
with the provisions of Sections 4.1, 6.8, and 6.9 hereof other than attorney's
fees and expenses; provided, however, any transfer taxes imposed as a result of
the transfers set forth in such Sections shall be paid fifty percent (50%) by
Seller and fifty percent (50%) by Purchaser.
12. CLOSING.
12.1 On the date hereof (or on such later date as the
condition precedent set forth in Section 6.5 above is satisfied, waived or
irrelevant) or upon the conveyance of a Property to a Newco, as applicable, or
on such other date as may be specifically set forth below, Seller shall deliver
to Purchaser, in addition to all other documents or material required by the
terms of this Agreement, the following:
(a) Opinions of Sutherland, Asbill & Brennan
and/or Latham & Watkins, or other comparable counsel to Seller and the RSH
Controlled Entities reasonably acceptable to Purchaser in form and substance as
attached hereto as Exhibit R. (Notwithstanding the parenthetical in the first
sentence of this Section 12.1, all of the opinion letters required by this
subsection are to be delivered to Purchaser simultaneously with the execution
of this Agreement.)
(b) Operating agreements for Headquarters Newco,
Wooded Lot Newco, Bridgeview Newco and Ontario Newco.
(c) Deeds conveying the 75th Avenue Headquarters
(if Purchaser exercises its option with respect thereto), the Wooded Lot (if
Purchaser exercises its option with respect thereto), the Bridgeview Warehouse
(if Purchaser exercises its option with respect thereto) and the Ontario
Warehouse to Headquarters Newco, Wooded Lot Newco, Bridgeview
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Newco and Ontario Newco, respectively. Said deeds shall be the types referred
to in Section 5.1.
(d) A blanket conveyance, bill of sale and
assignment conveying the personal property and intangible property relating to
each Property to the applicable Newco.
(e) If Purchaser exercises its option with
respect to the Bridgeview Warehouse, an instruction letter to American National
Bank and Trust Company of Chicago concerning the Bridgeview Warehouse in the
form attached hereto as Exhibit S.
(f) An assignment by Combined Properties/Ontario
Limited Partnership, a Maryland limited partnership, to Combined
Properties/Ontario Limited Partnership, a District of Columbia limited
partnership, of all of said Maryland partnership's right, title and interest in
and to its lease with Trak Auto Corporation for the Ontario Warehouse.
(Notwithstanding the parenthetical in the first sentence of this Section 12.1,
the assignment required by this subsection are to be delivered to Purchaser
simultaneously with the execution of this Agreement.)
(g) Assignments of leases for the 75th Avenue
Headquarters, the Wooded Lot, the Bridgeview Warehouse and the Ontario
Warehouse from Seventy-Fifth Avenue Associates Limited Partnership,
Seventy-Fifth Avenue Associates Limited Partnership, Trak Chicago Limited
Partnership I and Combined Properties/Ontario Limited Partnership,
respectively, to Headquarters Newco, Wooded Lot Newco, Bridgeview Newco and
Ontario Newco, respectively, to the extent that the Newcos have acquired the
Properties affected by said leases.
(h) The Pledge of Undisputed Interests referenced
in Section 3. (Notwithstanding the parenthetical in the first sentence of this
Section 12.1, the Pledge of Undisputed Interests is to be delivered to
Purchaser simultaneously with the execution of this Agreement.)
(i) The direct payment notice referenced in
Section 3.1. (Notwithstanding the parenthetical in the first sentence of this
Section 12.1, the direct payment notice is to be delivered to Purchaser
simultaneously with the execution of this Agreement.)
(j) UCC-1 financing statements evidencing the
encumbrance on the Prospective Economic Benefits, the Undisputed Interests and
the Undisputed Economic Interests created by this Agreement and the Pledge of
Undisputed Interests referenced in Section 3. (Notwithstanding the
parenthetical in the first sentence of this Section 12.1, the financing
statements are to be delivered to Purchaser simultaneously with the execution
of this Agreement.)
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(k) All reports, affidavits and certificates
required by the Code and any other Federal, State or local laws pertaining to
this transaction including (without limitation): a non-foreign affidavit under
Section 1445 of the Code; a California Withholding Exemption Certificate (Form
590) or, if Seller is a non-California resident, a certificate issued by the
California Franchise Tax Board pursuant to California Revenue and Taxation Code
Sections 18805 and 26131 stating either the amount of withholding required from
Seller's proceeds or that Seller is exempt from such withholding requirement;
and a Preliminary Change of Ownership Report for any Property located in
California.
(l) An owner's affidavit (when fee title to a
Property is conveyed to a Newco) in form customarily required by any Newco's
title insurer, and such other affidavits as may be necessary or appropriate for
Purchaser to obtain non-imputation endorsements to its title insurance policies
with respect to matters known to Seller and/or the RSH Controlled Entities, and
such settlement statements, forms and other instruments, in recordable form or
otherwise, as may be reasonably required by Purchaser, its title insurer or the
settlement agent as a condition of acquiring the Properties, the Interim
Partnership Interests/Interim Economic Interests or of Closing.
(m) Such documents as may be necessary or
appropriate under the applicable partnership agreements to give each of 75th
Avenue Tier II Limited Partnership and Trak Chicago Tier II Limited Partnership
no share of profits, losses or other economic benefits or rights arising from
said partnerships' interests in Seventy-Fifth Avenue Associates Limited
Partnership and Trak Chicago Limited Partnership I, respectively, except to the
extent the foregoing would be inconsistent with each such Tier II limited
partnership's negative tax basis capital account in said Partnerships.
(Notwithstanding the parenthetical in the first sentence of this Section 12.1,
the documents to be delivered under this subsection are to be delivered to
Purchaser simultaneously with the execution of this Agreement.)
12.2 At the Closing(s), Seller shall deliver to
Purchaser, in addition to all other documents or material required by the terms
of this Agreement, the following:
(a) Opinions of Sutherland, Asbill & Brennan
and/or Latham & Watkins, or other comparable counsel to Seller and the RSH
Controlled Entities reasonably acceptable to Purchaser: (i) in form and
substance as attached hereto as Exhibit T for the Interim Partnership
Interests/Interim Economic Interests; and (ii) in form and substance as
attached hereto as Exhibit U for the Remainder Partnership Interests/Remainder
Economic Interests.
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<PAGE> 24
(b) For all Undisputed Interests and Undisputed
Economic Interests to be conveyed, assignments in the form attached hereto as
Exhibits V and W.
(c) For all Undisputed Interests which are
conveyed, such amendments to the agreements of limited partnership of the
Partnerships and amendments to each Partnership's certificate of limited
partnership in form suitable for filing in the appropriate records,
implementing and evidencing the addition and/or substitution of Purchaser for
Seller, and the admission of Purchaser as a partner in the Partnership, and
granting all consents, approvals or waivers of rights necessary or appropriate
to accomplish the same, to the extent Seller has power and authority to do the
foregoing.
(d) All reports, affidavits and certificates
required by the Code and any other Federal, State or local laws pertaining to
this transaction.
12.3 On the date hereof and at the Closing(s),
Purchaser shall deliver such instruments, in recordable form or otherwise, as
may be reasonably required by Seller, Purchaser's title insurer, or the
settlement agent as a condition of conveying the Properties to the Newcos, the
Interim Partnership Interests/Interim Economic Interests or of Closing.
12.4 Seller shall file any required State
unincorporated business franchise (or similar) tax returns and a Federal income
tax return for each Partnership for all years through the date the Interim
Partnership Interests therein are conveyed to Purchaser and shall also file all
tax returns that may be outstanding for any prior year(s). If necessary,
Purchaser shall execute any such returns prepared by Seller, but Purchaser
shall not be required to make any investigation into the accuracy or
truthfulness of such returns. Purchaser shall not be deemed to have made any
representation or warranty as to such accuracy or truthfulness, nor have agreed
to any liability for any taxes payable in respect to any taxable years ending
on or prior to the date thereof.
12.5 The parties acknowledge that the consummation of
the conveyance of the Remainder Partnership Interests may result in a
termination of a Partnership pursuant to Section 708 of the Code, and the
closing of the Partnership's taxable year for Federal income tax purposes.
Purchaser shall file any required State unincorporated business franchise (or
similar) tax returns and a Federal income tax return for each Partnership for
all years from and after the conveyance of the Interim Partnership Interest
through the Closing Date for that Partnership. If necessary, Seller shall
execute any such returns prepared by Purchaser, but Seller shall not be
required to make any investigation into the accuracy or truthfulness of such
returns. Seller shall not be deemed to have made any representation or
warranty as to such accuracy or truthfulness.
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<PAGE> 25
13. DEFAULT.
13.1 If:
(a) Seller shall fail to perform any of the
covenants or agreements to be performed by Seller;
(b) title to any Prospective Economic Benefits,
Undisputed Interests and/or Undisputed Economic Interests is encumbered or
otherwise unmarketable for any reason (unless waived or deemed waived by
Purchaser as provided elsewhere in this Agreement);
(c) title to the applicable Property is not in
the condition required by this Agreement;
(d) except with respect to any litigation
regarding the enforceability of this Agreement by any party other than Seller,
on the Closing Date(s) there is any litigation adversely affecting any Property
or the Undisputed Interests;
then in any such event, in addition to any legal or equitable remedies it may
have (including specific performance, which the parties agree is an appropriate
remedy given the circumstances under which this Agreement is entered into and
that Purchaser or its parent or affiliates are the sole tenants of the
Properties), Purchaser may require Seller to cure the default or to compensate
Purchaser with monetary damages for any loss, cost, damage or expense Purchaser
incurs or may incur as a consequence of the default. If Purchaser nevertheless
proceeds to Closing with respect to any unmarketable Economic Interests, then a
pro rata portion of the Allocation for said Remainder Economic Interests shall
be credited against the Allocation otherwise attributable to the unmarketable
Economic Interests. Purchaser may not terminate this Agreement. The
provisions of this Section are subject to the provisions of Section 10.2 above.
13.2 If Purchaser shall default in any obligation
hereunder, then, in addition to any legal or equitable remedies Seller may
have, including specific performance (which the parties agree is an appropriate
remedy given the circumstances under which this Agreement is entered into and
that Purchaser or its affiliates are the sole tenants of the Properties),
Seller may claim monetary damages for any loss, cost, damage or expense Seller
incurs as a consequence of the default. Notwithstanding the foregoing,
however, Seller may not terminate this Agreement.
14. [INTENTIONALLY OMITTED]
15. BROKERS. Seller and Purchaser each represent and warrant to
the other that no agent or broker has acted on its
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<PAGE> 26
behalf in connection with this Agreement or the transactions contemplated
herein (including, in the case of Seller, CPI). Each party to this Agreement
shall defend, indemnify and hold harmless the other party and the Partnerships
against claims of any agents or brokers alleging to have acted on behalf of the
indemnifying party. The foregoing indemnity by Seller applies to any claim
made by CPI against any party hereto or against any Partnership, whether CPI
claims to have been engaged by Seller, an RSH Controlled Entity, a Newco or a
Partnership.
16. INDEMNIFICATIONS BY SELLER. Seller shall defend, indemnify
and hold Purchaser and each of the Partnerships harmless from and against any
and all claims, demands, actions, suits, proceedings, judgments, liabilities,
settlement amounts, damages, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) arising out of or in connection with
the following:
(a) the Indemnification Agreement and guaranties
thereof referenced in Section 7.6; and
(b) the distribution of the amount to be paid under
Section 5.1 and the Allocation; and
(c) the tax returns described in Section 12.4 above
(or the failure to file returns) or the execution thereof by Purchaser; and
(d) (i) any representation and warranty made by Seller
in Section 7 not being materially true on the date hereof; and (ii) any default
or alleged default (whether or not any notice or cure period with respect
thereto has expired) arising or accruing prior to the applicable Closing Date
(A) by any Partnership, (B) by Seller on behalf of any RSH Controlled Entity,
or (C) by Seller in his capacity as a partner, shareholder, member, director,
officer, employee or other principal or agent of any Partnership or any RSH
Controlled Entity; and
(e) any tax liability incurred by Robert M. Haft
and/or Linda G. Haft arising from their capacities as partners in 75th Avenue
Tier II Limited Partnership and/or Trak Chicago Tier II Limited Partnership as
a result of any transaction, event or act contemplated by this Agreement,
including (without limitation) the contributions of the 75th Avenue
Headquarters, the Wooded Lot and the Bridgeview Warehouse to Newcos, and/or
Purchaser or its parent, affiliate or sister entities guarantying or otherwise
agreeing to be liable for any debt now or hereafter owed by Seventy-Fifth
Avenue Associates Limited Partnership and/or Trak Chicago Limited Partnership I
or their Newco successors.
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<PAGE> 27
The foregoing indemnifications are in addition to Purchaser's remedies
set forth in Section 13.1 above for default by Seller, if Seller does not cure
the default and a transfer occurs. The foregoing indemnifications shall be
implemented as set forth in the Settlement Agreement.
17. INDEMNIFICATIONS BY PURCHASER. Purchaser shall defend,
indemnify and hold Seller harmless from and against any claims, demands,
actions, suits, proceedings, judgments, liabilities, settlement amounts,
damages, losses, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or in connection with the following:
(a) any claim that the lease amendments described in
Section 2 above are a breach of Seller's fiduciary duty to the Partnerships;
and
(b) the tax returns described in Section 12.5 above
(or the failure to file returns) or the execution thereof by Seller and the RSH
Controlled Entities; and
(c) any liability arising or accruing in connection
with (i) Purchaser's ownership of a Undisputed Interest if such liability
arises or accrues after the date said Undisputed Interest is conveyed to
Purchaser under this Agreement or (ii) Purchaser's management of Headquarters
Newco, Wooded Lot Newco or Bridgeview Newco. Notwithstanding the foregoing,
however, this Section does not apply to any otherwise indemnified matter that
Seller may incur from a claim by Robert M. Haft and/or Linda G. Haft (or their
successors or assigns) arising from their capacities as partners in 75th Avenue
Tier II Limited Partnership and/or Trak Chicago Tier II Limited Partnership and
related to any tax liability triggered by any sale, contribution, joint venture
or other act undertaken by said partnerships or by the Partnerships in which
they are partners or with respect to the Properties they own, unless the
following conditions are met: (i) the applicable Property has been transferred
to a Newco and the Plan of Reorganization as approved by the Bankruptcy Court
does not include item (c) from Section 6.5, or Purchaser has been substituted
for Seller as the general partner in Seventy-Fifth Avenue Associates Limited
Partnership and/or Trak Chicago Limited Partnership I, as applicable, by an
assignment of the Interim Partnership Interests under this Agreement; and (ii)
Purchaser, as manager of the Newco or as such general partner as set forth in
the preceding clause breaches the partnership agreement of 75th Avenue Tier II
Limited Partnership and/or Trak Chicago Tier II Limited Partnership; and (iii)
that breach gives rise to the aforesaid tax liability. In addition, the
foregoing indemnities under this subparagraph do not apply to any transaction,
event or act contemplated by this Agreement, including (without limitation)
those enumerated in Section 16(e) above.
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<PAGE> 28
The foregoing indemnifications are in addition to Seller's remedies
set forth in Section 13.2 for Purchaser's default. The foregoing
indemnifications shall be implemented as set forth in the Settlement Agreement.
18. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties relating to the transfer of the Properties, the
Prospective Economic Benefits, the Interim Interests, the Remainder Interests
and the lease amendments for the Properties. All Exhibits attached to this
Agreement are part of this Agreement and incorporated by this reference for all
purposes. However, this Agreement is entered into simultaneously with certain
agreements (including, without limitation, the Settlement Agreement, the Real
Estate Master Agreement, the Disputed Partnership Interest Purchase Agreement
[Warehouses] dated of even or approximate date herewith between Seller and
Purchaser, and the Purchase Agreement [Pennsy Drive Warehouses] dated of even
or approximate date herewith between Seller and Purchaser relating to certain
other warehouse properties) as part of an integrated resolution of various real
estate-related issues; this Agreement and said other agreement(s) are different
elements of the same contractual transaction, although divided for the
convenience of the parties into separate documents. Any material breach by
Seller of the terms of this Agreement, after taking into account the Warehouse
Reserve under the Real Estate Master Agreement, shall be a material breach of
all other agreements entered into in connection with this transaction,
including (without limitation) the Settlement Agreement and the Real Estate
Master Agreement, and vice versa. With respect to the Properties, the
Prospective Economic Benefits, the Interim Interests, the Remainder Interests
and the lease amendments for the Properties, all prior negotiations between the
parties are merged in this Agreement and there are no promises, agreements,
conditions, undertakings, warranties or representations, oral or written,
express or implied, between them other than as herein set forth. No change or
modification of this Agreement shall be valid unless the same is in writing and
signed by the parties hereto. No waiver of any of the provisions of this
Agreement or any other agreement referred to herein shall be valid unless in
writing and signed by the party against whom it is sought to be enforced. In
the event of any conflict between the terms of the Settlement Agreement and the
Real Estate Master Agreement (on the one hand) and the terms of this Agreement
(on the other hand), the terms of the Settlement Agreement and Real Estate
Master Agreement shall control.
19. SURVIVAL. The covenants, agreements and indemnities set forth
in, or made pursuant to, this Agreement shall survive the date hereof, each
Closing, and the filing or recording of any documents indefinitely, except
that: (a) any representation and warranty by Seller with respect to an
Undisputed Interest or an Undisputed Economic Interest or the Property to which
they relate
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<PAGE> 29
shall only survive for two (2) years after the actual conveyance of that
particular Interest or Property hereunder; and (b) all other representations
and warranties by either party shall only survive the date hereof for a period
of two (2) years.
20. MISCELLANEOUS.
20.1 This Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the respective successors of the parties
hereto. This Agreement shall not be assigned by either party. Purchaser shall
have the right to designate any parent, subsidiary or affiliated person or
entity to acquire any Interest or to be a member of a Newco under this
Agreement, and title to the applicable Undisputed Interest, Undisputed Economic
Interest or Property shall be issued in the name of any such designee(s). Any
such designee shall be a beneficiary of all of Seller's representations,
warranties, covenants and other agreements in this Agreement.
20.2 All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given to the following addresses and addressees (or to such other
addresses as notice may be given of from time to time):
If to Purchaser: Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: President
and
Attn: General Counsel
with copies to: Kenneth J. Ayres, Esq.
and
Steven A. Teitelbaum, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
If to Seller: Mr. Ronald S. Haft
c/o Combined Properties
Incorporated
1899 L Street, N.W.
Ninth Floor
Washington, D.C. 20036
with a copy to: Arne Sorensen, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Notices shall be deemed to have been given at the time of receipt (refusal to
accept delivery, or inability to make delivery
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<PAGE> 30
because of an incorrect or outdated address provided by the intended recipient,
shall constitute receipt).
20.3 This Agreement shall be construed in accordance
with the internal laws of the State of Maryland, without regard to conflicts of
laws. The parties acknowledge that Maryland law is chosen, even with respect
to those Partnerships and Properties which are not in Maryland, because
Maryland has the most contacts with the transactions contemplated herein.
20.4 If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision herein shall remain in full force and effect. The parties
expressly acknowledge and agree that this Agreement has been entered into with
respect to the Partnerships and Properties solely for the convenience of the
parties and not in order to create any additional rights in any person other
than the parties hereto. The terms and conditions of this Agreement with
respect to each Partnership and Property shall be interpreted separately such
that if any provision of this Agreement with respect to any Partnership and/or
Property is ever held to be invalid or unenforceable, the provisions of this
Agreement with respect to the remaining Partnerships and/or Properties shall be
unaffected by such invalidity or unenforceability.
20.5 The captions of this Agreement are inserted for
convenience of reference only and do not define, describe or limit the scope or
the intent of this Agreement or any term hereof.
20.6 This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
20.7 Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender shall
include the other gender where appropriate.
20.8 If the final date of any period provided for
herein for the performance of an obligation or for the taking of any action
falls on a Saturday, Sunday or banking holiday, then the time of such period
shall be deemed extended to the next day which is not a Saturday, Sunday or
banking holiday.
20.9 In the event that a legal action is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
collect its costs of court, including reasonable attorneys fees.
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<PAGE> 31
IN WITNESS WHEREOF, the parties have duly executed and sealed
this Agreement as of the day and year first above written.
<TABLE>
<S> <C>
PURCHASER:
---------
ATTEST: DART GROUP CORPORATION
- ------
By: /s/ Robert A. Marmon
- -------------------------- ------------------------------
[Corporate Seal] Name:
Title:
WITNESS: SELLER:
- ------- ------
/s/ Ronald S. Haft (Seal)
- -------------------------- ----------------------------
RONALD S. HAFT, personally
Taxpayer identification number:
###-##-####
Address (for purposes of Section 7.16
only, not for notice purposes):
2435 California Street, N.W.
Washington, D.C. 20008
</TABLE>
The undersigned, being a wholly-owned subsidiary of Dart Group Corporation,
hereby guaranties the performance of Dart Group Corporation under the foregoing
Purchase Agreement [Warehouse Partnership Interests].
<TABLE>
<S> <C>
ATTEST: CABOT MORGAN REAL ESTATE COMPANY
By: /s/ Robert A. Marmon
- -------------------------- ----------------------------
[Corporate Seal] Name:
Title:
</TABLE>
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<PAGE> 1
EXHIBIT 10.18
DISPUTED PARTNERSHIP INTEREST PURCHASE AGREEMENT [WAREHOUSES]
THIS DISPUTED PARTNERSHIP INTEREST PURCHASE AGREEMENT [WAREHOUSES]
(the "Agreement") is made this 6th day of October, 1995, by and between RONALD
S. HAFT, personally ("Seller"), and DART GROUP CORPORATION ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the owner of the interests set forth on Exhibit A-2
(the "Undisputed Interests") in the Partnerships and/or limited liability
company set forth on Exhibit A-1;
WHEREAS, Seller claims that he or the entities set forth on Exhibit
A-3 are also the owners of the interests in the Partnerships as set forth on
Exhibit A-3 ("RSH's Claimed Partnership Interests"), the ownership of which is
disputed by Herbert H. Haft;
WHEREAS, Herbert H. Haft claims that Seller is also the owner of the
interests in the Partnerships as set forth on Exhibit A-4 ("HHH's Claimed
Ownership by RSH") in addition to the Undisputed Interests but in lieu of the
RSH's Claimed Partnership Interests;
WHEREAS, Seller is the owner of a one percent (1%) interest as a
limited partner in each of Trak Chicago Tier II Limited Partnership and 75th
Avenue Tier II Limited Partnership (the "Tier II LP Interests");
WHEREAS, RSH's Claimed Partnership Interests, HHH's Claimed Ownership
by RSH, and the Tier II LP Interests are hereinafter referred to collectively
as the "Disputed Partnership Interests" (it being agreed that the interests in
Pennsy Drive Warehouses, L.L.C. are not subject to this Agreement);
WHEREAS, Purchaser desires to buy and Seller is willing to sell the
Disputed Partnership Interests, it being the intent of the parties that Seller
is to quitclaim and cause the entities named on Exhibit A-3 (collectively, the
"Selling Entities") to quitclaim the Disputed Partnership Interests and the
economic interests appurtenant thereto (the "Disputed Economic Interests");
NOW, THEREFORE, in consideration of the foregoing, One Dollar ($1.00),
the mutual promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser hereby agree as follows:
<PAGE> 2
1. PURCHASE AND SALE OF PARTNERSHIP INTERESTS.
1.1 (a) Seller shall assign, sell, transfer and
otherwise convey to Purchaser, and Seller shall cause each Selling Entity to
assign, sell, transfer and otherwise convey to Purchaser, on a quitclaim basis
(except as set forth in Section 4 below), all of Seller's and/or such Selling
Entity's right, title and interest, if any, in the Disputed Partnership
Interests and Disputed Economic Interests at the Closing(s) (hereinafter
defined) as provided in Section 5 hereof.
(b) Seller acknowledges that Purchaser's acquisition
of the Disputed Partnership Interests and Disputed Economic Interests owned or
claimed by 75th Avenue Tier II Limited Partnership and Trak Chicago Tier II
Limited Partnership (as shown on Exhibit A-3) will trigger material adverse tax
consequences to Seller. Seller hereby waives and releases Purchaser from any
claims, liability, or responsibility with respect thereto.
1.2 Notwithstanding Section 1.1 above to the contrary, if
and to the extent Section 1.1 or the implementation of its provisions would
give rise to a right of first offer or right of first refusal on the part of
any third party who desires to exercise that right, then Section 1.1 shall,
without further action by the parties, be automatically suspended or null and
void with respect to the Disputed Partnership Interests and/or Disputed
Economic Interests to which the third party desires to exercise such right.
Seller hereby gives his consent to the conveyances set forth in Section 1.1 and
waives all rights of first offer or first refusal he may have with respect
thereto. To the extent he has the power and authority to do so, Seller hereby
causes each Partnership and each Selling Entity to consent to the conveyances
set forth in Section 1.1 and to waive all rights of first offer or first
refusal they may have with respect thereto.
1.3 Seller hereby approves and waives any right of first
offer or first refusal, and, to the extent he can control the Selling Entities,
Seller hereby causes the Selling Entities to approve and waive any right of
first offer or first refusal, with respect to any acquisition by Purchaser or
its parent, subsidiary or affiliated entities of any of Herbert H. Haft's
claimed interests (or any appurtenances thereto) in any of the Partnerships or
in any Selling Entity.
2. PAYMENT AND PLEDGE OF PROSPECTIVE ECONOMIC BENEFITS.
2.1 Seller covenants to deliver to Purchaser all cash
flow from operations which Seller and each Selling Entity may hereafter derive
from his or its Disputed Interests in the Partnerships (the "Prospective
Economic Benefits"), but Seller and each Selling Entity retains his/its rights
to receive proceeds from capital transactions and the return of his/its
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<PAGE> 3
capital accounts (until such time as the applicable Disputed Economic
Interests are assigned under this Agreement). Seller further covenants to
deliver to each Partnership a notice in the form attached hereto as Exhibit D
notifying each recipient to make payments of the Prospective Economic Benefits
directly to Purchaser or its designees from time to time; notwithstanding
anything in this Agreement to the contrary, said notice shall be delivered on
the date hereof.
2.2 In addition, Seller hereby pledges, and hereby causes
each Selling Entity to pledge, to Purchaser a present security interest in the
Prospective Economic Benefits, the Remainder Entity Interests (hereinafter
defined), the Disputed Interests and Disputed Economic Interests as set forth
in the applicable Uniform Commercial Code; such interest is given to secure the
performance of Seller's and the Selling Entities' obligations under this
Agreement to convey ownership and/or the economic and other benefits of
ownership, both before and after Closing(s) hereunder, and to secure the
repayment of the $27.4 Million Note, the $37 Million Note and the $11.6 Million
Note (each as defined in the Settlement Agreement (as hereinafter defined)),
and is therefore coupled with an interest and irrevocable. To further evidence
such security interest, Seller shall simultaneously with the execution of this
Agreement enter into and cause each Selling Entity to enter into the Pledge
Agreement attached as Exhibit E.
2.3 As part of the assignment of Prospective Economic
Benefits, Seller further covenants that he will not take, or cause any Selling
Entity to take, any action with respect to the Partnerships from and after the
date hereof without first obtaining the written approval of Purchaser or its
designees; provided further, that Seller will not fail to take any action with
respect to the Partnerships that Purchaser may request from and after the date
hereof; and, provided further, that Seller shall cause the Selling Entities to
take such action with respect to the Partnerships as Purchaser may request from
and after the date hereof. Without limiting the foregoing, to the extent
Seller remains a general partner of a Partnership with any control over the
management thereof, Seller shall cause that Partnership in accordance with its
respective organizational documents to continue to operate its business in the
ordinary course, including (without limitation) distributing cash flow and
proceeds from capital events to the partners on a regular basis if and when
available. The foregoing covenants are coupled with an interest and the rights
granted to Purchaser thereunder are irrevocable.
2.4 It is intended that the assignment, pledge and
security interest created under Sections 2.1 and 2.2 above and the Pledge
Agreement referenced therein are pledges of general intangibles governed by
Section 9-318 of the Uniform Commercial Code, as adopted in any jurisdiction
relevant to this Agreement. However, if and to the extent the provisions of
Sections 2.1 and 2.2 above or such Pledge Agreement would allow any other
partner
-3-
<PAGE> 4
in a Partnership to invoke a right of first offer or first refusal with respect
to the Prospective Economic Benefits and such other partner indicates a desire
to do so, then, without further action by the parties hereto, the provisions of
Sections 2.1 and 2.2 above and such Pledge Agreement shall be suspended, and,
if necessary, null and void, with respect to that Partnership until such time
as such right of first offer or first refusal is inapplicable or waived.
3. CONSIDERATION. The consideration for the conveyance of the
Disputed Partnership Interests and the Disputed Economic Interests and the
agreements set forth herein with respect to the Prospective Economic Benefits
is: (a) the settlement of various claims which the parties have against each
other with respect to various stock options, employment agreements, real estate
transactions and related matters, all as more fully set forth in a separate
Settlement Agreement of even or approximate date herewith between Seller and
Purchaser (the "Settlement Agreement") and in a Real Estate Master Agreement
[Real Estate] of even or approximate date herewith among Seller, Purchaser and
Cabot Morgan Real Estate Company (the "Real Estate Master Agreement"); and (b)
the following cash (to be paid only in accordance with the Real Estate Master
Agreement) allocated as follows:
(i) to the Disputed Partnership Interests and the
Disputed Economic Interests in 3301 Pennsy Drive Associates Limited
Partnership: $10.00.
(ii) to the Disputed Partnership Interests and the
Disputed Economic Interests in Seventy-Fifth Avenue Associates Limited
Partnership and in 75th Avenue Tier II Limited Partnership: $10.00.
(iii) to the Disputed Partnership Interests and the
Disputed Economic Interests in Trak Chicago Limited Partnership I and in Trak
Chicago Tier II Limited Partnership: $10.00.
(iv) to the Disputed Partnership Interests and the
Disputed Economic Interests in Combined Properties/Ontario Limited Partnership:
$10.00.
4. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants the following to Purchaser as
of the date hereof, notwithstanding any independent investigation which
Purchaser may have conducted (but subject to the last paragraph of this
Section):
4.1 As to RSH's Claimed Partnership Interests and the
Disputed Economic Interests appurtenant thereto, Seller believes in good faith
that he or a Selling Entity is the legal and
-4-
<PAGE> 5
beneficial owner of RSH's Claimed Partnership Interests and the Disputed
Economic Interests appurtenant thereto, and Seller will continue to maintain
that claim to the applicable Closing Date(s) (hereinafter defined) and
thereafter. Without limiting the foregoing, Seller never agreed, verbally, in
writing or otherwise, to admit Herbert H. Haft as a partner (general or
limited) in any of the Partnerships and Seller shall diligently prosecute the
lawsuit known as Herbert H. Haft v. Ronald S. Haft, 94CA9883 and 94CA12666,
pending in District of Columbia Superior Court.
4.2 Except to the extent Herbert H. Haft disputes
ownership as shown on Exhibits A-3 through A-5, and except as set forth in the
Underlying Loan Documents (as defined in the Warehouse Purchase Agreement (as
hereinafter defined)): Seller is fully authorized and empowered to execute and
deliver this Agreement and all documents contemplated to be executed by Seller
hereunder; the execution and performance hereunder by Seller and the Selling
Entities will not constitute a breach or default under, or conflict with, any
agreement to which Seller or any Selling Entities are parties or by which any
of them are bound, or under any law, regulation, court order or similar
constraint applicable to Seller or the Selling Entities; Seller and each
Selling Entity has complete and unencumbered right and power to consummate the
transactions provided for herein without the approval, consent, order or
authorization of, or designation, registration or filing with, any person or
entity or any governmental or quasi-governmental authority except as set forth
elsewhere in this Agreement with respect to bankruptcy; and this Agreement is
binding on and enforceable against Seller in accordance with its terms.
In the event Purchaser becomes aware of a breach of any
warranty or representation of Seller prior to any conveyance under this
Agreement and elects to close that conveyance notwithstanding such breach,
Purchaser will be deemed to have waived such breach for all purposes with
respect to that conveyance. With respect to any alleged breach of Seller's
warranties and representations of which Purchaser becomes actually aware only
after a conveyance, Purchaser agrees that prior to the exercise of any right or
remedy with respect to such alleged breach which has survived that conveyance
pursuant to Section 13 of this Agreement, Purchaser will give Seller written
notice of such alleged breach and will give Seller a reasonable time in light
of the circumstances to cure the condition, circumstance or event which gave
rise to such breach, provided Seller will at all times diligently and in good
faith attempt to cure such breach or provide adequate protection to Purchaser
to protect or indemnify it from all damages and adverse effects of such breach.
If Seller cures the breach or otherwise provides such protection, then such
breach will be deemed cured and waived for all purposes.
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<PAGE> 6
5. CLOSING DATE.
5.1 The closing(s) ("Closing(s)") of the transactions
contemplated herein shall occur (a) with respect to any Disputed Partnership
Interest or Disputed Economic Interest which is a general partner's interest,
as and when the undisputed Interim Partnership Interest and/or Interim Economic
Interest (as such terms are defined in the Purchase Agreement [Warehouse
Partnership Interests] dated of even or approximate date herewith between
Seller and Purchaser with respect to certain warehouses described therein (the
"Warehouse Purchase Agreement")) is to be conveyed pursuant to the terms of the
Warehouse Purchase Agreement, but not later than the date that is five (5)
years after the date hereof, or (b) with respect to all other Disputed
Partnership Interests and Disputed Economic Interests, as and when the transfer
of the Remainder Partnership Interests and Remainder Economic Interests (as
such terms are defined in the Warehouse Purchase Agreement) are to be conveyed
pursuant to the terms of the Warehouse Purchase Agreement, but not later than
the date that is five (5) years after the date hereof.
5.2 All Closings hereunder shall occur at 10:00 A.M.,
Washington, D.C. time, at the offices of Jones, Day, Reavis & Pogue, 1450 G
Street, N.W., Washington, D.C. 20005. Each date on which a Closing occurs with
respect to any Disputed Partnership Interest and Disputed Economic Interest
shall be the "Closing Date" with respect thereto.
6. COSTS. Seller and Purchaser shall each bear their own costs
in connection with the transactions described herein, including, but not
limited to the fees and expenses of their respective counsel in connection with
this Agreement and any litigation arising therefrom (except as otherwise set
forth in Section 14.9 below).
7. CLOSING.
7.1 On the date hereof, Seller shall deliver to Purchaser:
(a) The Pledge Agreement referenced in Section 2.
(b) the direct payment notice referenced in Section 2.
(c) UCC-1 financing statements evidencing the
encumbrance on the Prospective Economic Benefits, the Disputed Interests and
the Disputed Economic Interests created by this Agreement and the aforesaid
Pledge Agreement.
7.2 At the applicable Closing(s), Seller shall deliver to
Purchaser, in addition to all other documents or material required by the terms
of this Agreement, the following:
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<PAGE> 7
(a) For all Disputed Partnership Interests and
Disputed Economic Interests to be conveyed, assignments in the form attached
hereto as Exhibits B and C.
(b) For all Disputed Partnership Interests which are
conveyed, such amendments to the agreements of limited partnership of the
Partnerships and amendments to each Partnership's certificate of limited
partnership in form suitable for filing in the appropriate records,
implementing and evidencing the addition and/or substitution of Purchaser for
Seller and the Selling Entities, and the admission of Purchaser as a partner in
the Partnership, and granting all consents, approvals or waivers of rights
necessary or appropriate to accomplish the same, to the extent Seller has power
and authority to do the foregoing.
(c) All reports, affidavits and certificates
required by the Code and any other Federal, State or local laws pertaining to
this transaction.
7.3 On the date hereof and at the Closing(s), Purchaser
shall deliver such instruments, in recordable form or otherwise, as may be
reasonably required by Seller, Purchaser's title insurer, or the settlement
agent as a condition of Closing.
8. DEFAULT.
8.1 If Seller shall fail to perform any of the covenants
or agreements to be performed by Seller, then in any such event, in addition to
any legal or equitable remedies it may have (including specific performance,
which the parties agree is an appropriate remedy given the circumstances under
which this Agreement is entered into and that Purchaser or its parent or
affiliates are the sole tenants of the Properties (as defined in the Warehouse
Purchase Agreement)), Purchaser may require Seller to cure the default or to
compensate Purchaser with monetary damages for any loss, cost, damage or
expense Purchaser incurs or may incur as a consequence of the default.
Purchaser may not terminate this Agreement.
8.2 If Purchaser shall default in its obligation to close
hereunder, then, in addition to any legal or equitable remedies Seller may
have, including specific performance (which the parties agree is an appropriate
remedy given the circumstances under which this Agreement is entered into and
that Purchaser or its parent or affiliates are the sole tenants of the
Properties), Seller may claim monetary damages for any loss, cost, damage or
expense Seller incurs as a consequence of the default. Seller may not
terminate this Agreement.
9. BROKERS. Seller and Purchaser each represent and warrant to
the other that no agent or broker has acted on its behalf in connection with
this Agreement or the transactions
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<PAGE> 8
contemplated herein (including, in the case of Seller, Combined Properties
Incorporated ("CPI")). Each party to this Agreement shall defend, indemnify
and hold harmless the other party and the Partnerships against claims of any
agents or brokers alleging to have acted on behalf of the indemnifying party.
The foregoing indemnity by Seller applies to any claim made by CPI against any
party hereto or against any Partnership, whether CPI claims to have been
engaged by Seller, a Selling Entity, or a Partnership.
10. INDEMNIFICATIONS BY SELLER. Seller shall cause each of the
Selling Entities to, and Seller shall, defend, indemnify and hold Purchaser and
each of the Partnerships harmless from and against any and all claims, demands,
actions, suits, proceedings, judgments, liabilities, settlement amounts,
damages, losses, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or in connection with the following:
(a) any representation and warranty made by Seller in
Section 4 not being materially true on the date hereof; and
(b) any default or alleged default (whether or not any notice
or cure period with respect thereto has expired) arising or accruing prior to
the date hereof (i) by any Partnership or by Seller on behalf of any Selling
Entity, or (ii) by Seller in his capacity as a partner, shareholder, member,
director, officer, employee or other principal or agent of any Partnership or
Selling Entity, the foregoing indemnifications to be in addition to Purchaser's
remedies set forth in Section 8.1 above for default by Seller, if Seller does
not cure the default and a transfer occurs.
The procedure for enforcing the foregoing indemnities shall be as set forth in
the Settlement Agreement.
11. INDEMNIFICATIONS BY PURCHASER. Purchaser shall defend,
indemnify and hold Seller harmless from and against any claims, demands,
actions, suits, proceedings, judgments, liabilities, settlement amounts,
damages, losses, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or in connection with any representation and
warranty made by Purchaser in Section 9 not being materially true on the date
hereof, the foregoing indemnification to be in addition to Seller's remedies
set forth in Section 8.2 for Purchaser's default. The procedure for enforcing
the foregoing indemnities shall be as set forth in the Settlement Agreement.
12. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties relating to the transfer of the Disputed
Partnership Interests and the Disputed Economic Interests and the Prospective
Economic Benefits appurtenant thereto. All Exhibits attached to this Agreement
are part of
-8-
<PAGE> 9
this Agreement and incorporated by this reference for all purposes. However,
this Agreement is entered into simultaneously with certain agreements
(including, without limitation, the Settlement Agreement and the Real Estate
Master Agreement, and the Warehouse Purchase Agreement and the Purchase
Agreement [Pennsy Drive Warehouses] dated of even or approximate date herewith
between Seller and Purchaser relating to certain property located in Landover,
Maryland, Bridgeview, Illinois and Ontario, California) as part of an
integrated resolution of various real estate-related issues; this Agreement and
said other agreement(s) are different elements of the same contractual
transaction, although divided for the convenience of the parties into separate
documents. Any material breach by Seller of the terms of this Agreement, after
taking into account the Warehouse Reserve under the Real Estate Master
Agreement, shall be a material breach of all other agreements entered into in
connection with this transaction, including (without limitation) the Settlement
Agreement and the Real Estate Master Agreement, and vice versa. With respect
to the Disputed Partnership Interests and the Disputed Economic Interests and
the Prospective Economic Benefits appurtenant thereto, all prior negotiations
between the parties are merged in this Agreement and there are no promises,
agreements, conditions, undertakings, warranties or representations, oral or
written, express or implied, between them other than as herein set forth. No
change or modification of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any of the provisions
of this Agreement or any other agreement referred to herein shall be valid
unless in writing and signed by the party against whom it is sought to be
enforced. In the event of any conflict between the terms of the Settlement
Agreement and the Real Estate Master Agreement (on the one hand) and the terms
of this Agreement (on the other hand), the terms of the Settlement Agreement
and the Real Estate Master Agreement shall control.
13. SURVIVAL. The covenants, agreements and indemnities set forth
in, or made pursuant to, this Agreement shall survive the date hereof, each
Closing, and the filing or recording of any documents indefinitely, except
that: (a) any representation and warranty by Seller with respect to a Disputed
Partnership Interest or a Disputed Economic Interest shall only survive for two
(2) years after the actual conveyance of that particular Interest hereunder;
and (b) all other representations and warranties by either party shall only
survive the date hereof for a period of two (2) years.
14. MISCELLANEOUS.
14.1 This Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the respective successors of the parties
hereto. This Agreement shall not be assigned by either party. Purchaser shall
have the right to designate any parent, subsidiary or affiliated person or
entity to acquire any
-9-
<PAGE> 10
Disputed Partnership Interest or Disputed Economic Interest and title to the
applicable Disputed Partnership Interest or Disputed Economic Interest shall be
issued in the name of any such designee(s). Any such designee shall be a
beneficiary of all of Seller's representations, warranties, covenants and other
agreements in this Agreement.
14.2 All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given to the following addresses and addressees (or to such other
addresses as notice may be given of from time to time):
If to Purchaser: Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: President
and
Attn: General Counsel
with copies to: Kenneth J. Ayres, Esq.
and
Steven A. Teitelbaum, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
If to Seller: Mr. Ronald S. Haft
c/o Combined Properties
Incorporated
1899 L Street, N.W.
Ninth Floor
Washington, D.C. 20036
with a copy to: Arne Sorensen, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Notices shall be deemed to have been given at the time of receipt (refusal to
accept delivery, or inability to make delivery because of an incorrect or
outdated address provided by the intended recipient, shall constitute receipt).
14.3 This Agreement shall be construed in accordance with
the internal laws of the State of Maryland, without regard to conflicts of
laws. The parties acknowledge that Maryland law is chosen, even with respect
to those Partnerships which are not in Maryland, because Maryland has the most
contacts with the transactions contemplated herein.
14.4 If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to
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<PAGE> 11
persons or circumstances other than those to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision
herein shall remain in full force and effect. The parties expressly
acknowledge and agree that this Agreement has been entered into with respect to
all of the Partnerships solely for the convenience of the parties and not in
order to create any additional rights in any person other than the parties
hereto. The terms and conditions of this Agreement with respect to each
Partnership shall be interpreted separately such that if any provision of this
Agreement with respect to any Partnership is ever held to be invalid or
unenforceable, the provisions of this Agreement with respect to the remaining
Partnerships shall be unaffected by such invalidity or unenforceability.
14.5 The captions of this Agreement are inserted for
convenience of reference only and do not define, describe or limit the scope or
the intent of this Agreement or any term hereof.
14.6 This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
14.7 Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender shall
include the other gender where appropriate. All agreements, covenants, and
representations and warranties of Seller and the Selling Entities shall be
joint and several among the persons making the same.
14.8 If the final date of any period provided for herein
for the performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of such period shall be
deemed extended to the next day which is not a Saturday, Sunday or banking
holiday.
14.9 In the event that a legal action is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
collect its costs of court, including reasonable attorneys fees.
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<PAGE> 12
IN WITNESS WHEREOF, the parties have duly executed and sealed
this Agreement as of the day and year first above written.
PURCHASER:
---------
ATTEST: DART GROUP CORPORATION
- ------
By: /s/ Robert A. Marmon
- ----------------------- ----------------------------
[Corporate Seal] Name:
Title:
WITNESS: SELLER:
- ------- ------
/s/ Ronald S. Haft (Seal)
- ----------------------- ----------------------------
RONALD S. HAFT, personally
The undersigned, being a wholly-owned subsidiary of Dart Group Corporation,
hereby guaranties the performance of Dart Group Corporation under the foregoing
Disputed Partnership Interest Purchase Agreement [Warehouses].
ATTEST: CABOT MORGAN REAL ESTATE COMPANY
By: /s/ Robert A. Marmon
- -------------------- --------------------------
[Corporate Seal] Name:
Title:
-12-
<PAGE> 1
EXHIBIT 10.19
TERMINATION OF EMPLOYMENT AGREEMENT
This Termination of Employment Agreement (the "Agreement"), dated as
of October 6, 1995, is made and entered into by and between Dart Group
Corporation, a Delaware corporation ("Employer"), and Ronald S. Haft
("Employee").
WHEREAS, Employer and Employee are parties to that certain Employment
Agreement, dated as of August 1, 1993, and as amended as of the date hereof
(the "Employment Agreement");
WHEREAS, Section 7(i) of the Agreement provides that Employer and
Employee may terminate the Agreement at any time by mutual written consent; and
WHEREAS, Employer and Employee each desire to terminate the Employment
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. The Employment Agreement is hereby terminated without any
further obligation thereunder on the part of either Employer or Employee and is
hereafter of no force and effect.
2. Employee hereby waives any right to any pro rata portion of
any bonus as provided under Section 7(h) of the Employment Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement or caused this Agreement to be executed on its behalf as of the day
and year first above written.
DART GROUP CORPORATION
By: /s/ Robert A. Marmon
-------------------------
Robert A. Marmon
Treasurer and Chief Financial
Officer
/s/ Ronald S. Haft
-------------------------
Ronald S. Haft
<PAGE> 1
EXHIBIT 10.20
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT, dated as of this 6th day of October, 1995
(the "Subscription 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"), RSH is assigning
and transferring to Dart, contemporaneously herewith, the 172,730 shares (the
"Redemption Class B Shares") of Class B Common Stock, $1.00 par value per
share, of Dart that RSH purchased in July 1993 (the "Purchase") from Herbert H.
Haft ("HHH") and which are held of record by RSH;
WHEREAS, HHH has filed a claim for rescission of the Purchase in
Herbert H. Haft v. Ronald S. Haft, Civ. A. No. 94CA9883 (D.C. Super. Ct. 17,
1995);
WHEREAS, pursuant to that certain Settlement Agreement, Dart is
loaning $37,925,710 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, pursuant to the Settlement Agreement, RSH is placing all
shares of Dart Class A Common Stock, $1.00 par value per share, owned by RSH
(the "RSH Class A Shares") and all shares of Dart Class B Common Stock owned by
RSH (the "RSH Class B Shares") in a voting trust pursuant to that certain
Voting Trust Agreement, of even date herewith (the "Voting Trust Agreement"),
<PAGE> 2
by and among RSH, Dart and Larry G. Schrafan and Sidney B. Silverman, as Voting
Trustees;
WHEREAS, pursuant to that certain Stock and Trust Certificate Pledge
Agreement, of even date herewith (the "Stock and Trust Certificate Pledge
Agreement"), made by RSH in favor of the Voting Trustees, as collateral agent
and bailee, for Dart and Cabot-Morgan Real Estate Company, as security for the
payment and performance of RSH's obligations under the $37 Million Note and
certain other obligations of RSH, RSH is pledging and granting to Dart,
contemporaneously herewith, a security interest in all of his right, title and
interest in and to the RSH Class A Shares, the RSH Class B Shares, 288,312
shares of Dart Class A Common Stock (the "New Class A Shares") to be issued to
RSH pursuant to this Subscription Agreement, and the trust certificates issued
to him under the Voting Trust Agreement;
WHEREAS, pursuant to that certain Buy/Sell/Offering Agreement, of even
date herewith (the "Buy/Sell/Offering Agreement"), between RSH and Dart, RSH
may sell to Dart the RSH Class A Shares, the RSH Class B Shares and the New
Class A Shares; and
WHEREAS, pursuant to the Settlement Agreement, RSH and Dart have
agreed to enter into this Subscription 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. Subscription. RSH hereby subscribes for and agrees to
purchase the New Class A Shares from Dart subject to the terms
2
<PAGE> 3
and conditions hereof (the "Subscription"). Dart hereby accepts the
Subscription, subject to the terms and conditions hereof, and acknowledges
receipt of the Redemption Class B Shares as full consideration for the
Subscription and the issuance and delivery of the New Class A Shares pursuant
hereto.
2. Board Approval. (a) Dart's obligation to issue and deliver
the New Class A Shares pursuant to the Subscription is subject to the adoption
by Dart's Board of Directors (the "Board") of a resolution authorizing such
issuance and delivery of the New Class A Shares. Dart represents and warrants
that the Executive Committee of its Board of Directors, which consists of a
majority of the members of the Board, has unanimously adopted a resolution
approving this Subscription Agreement and recommending that the Board promptly
approve a resolution authorizing the issuance and delivery of the New Class A
Shares pursuant to the Subscription.
(b) If the Board does not adopt a resolution authorizing the
issuance and delivery of the New Class A Shares pursuant to the Subscription,
or the New Class A Shares are not issued for any reason (other than as provided
in Section 3 and Section 6 hereof) pursuant to the Subscription prior to a
closing of any of the Simultaneous Purchase, the Put Option or the Call Option
(each as defined in the Buy/Sell/Offering Agreement), then the Subscription and
Dart's acceptance thereof shall automatically terminate. In such event, the
amount of Twenty-Four Million One Hundred Eighty-Two Thousand Two Hundred
Dollars ($24,182,200) (the "Forgiven Principal") of the outstanding principal
amount of the $37 Million Note, and all interest
3
<PAGE> 4
accrued on the Forgiven Principal under the terms of the $37 Million Note,
shall automatically be forgiven, and RSH shall be entitled to no other remedy
or relief as a result of the termination of the Subscription.
3. Issuance of New Class A Shares. Unless the Subscription has
previously terminated pursuant to Section 2 or Section 6 of this Subscription
Agreement, the New Class A Shares shall be issued and delivered pursuant to the
Subscription, and Dart shall issue a stock certificate representing the New
Class A Shares in the name of the Voting Trustees and deliver such certificate
to the Voting Trustees, immediately upon the adoption by the Board of a
resolution authorizing the issuance and delivery of the New Class A Shares
pursuant to the Subscription or, if at the time the Board adopts such a
resolution a preliminary or permanent injunction or other order issued by a
court of competent jurisdiction is in effect prohibiting the issuance of the
New Class A Shares, on the first day after the Board's adoption of such
resolution on which no such injunction or order is in effect.
4. Pledge and Repurchase of New Class A Shares. Upon the
issuance of the New Class A Shares to the Voting Trustees for the benefit of
RSH, such shares (without any need for further action on the part of RSH) shall
be pledged to Dart pursuant to the Stock and Trust Certificate Pledge Agreement
and shall be subject to the terms of the Put/Call/Offering Agreement.
5. Restricted Securities. (a) RSH represents that he is
acquiring the New Class A Shares for his own account with the present intention
of holding such securities in accordance with
4
<PAGE> 5
the Voting Trust Agreement and the Buy/Sell/Offering Agreement and that he does
not have any intention of selling such securities in a public distribution in
violation of federal or state securities laws.
(b) The certificate representing the New Class A Shares
will be imprinted with a legend in substantially the following form:
The securities represented by this certificate may
not be transferred except in a transaction registered
under the Securities Act of 1933, as amended, or an
exemption from registration under that act. Any
sale, assignment, transfer, pledge or other
disposition of the shares represented by this
certificate is restricted by the terms specified in
(i) that certain Stock and Trust Certificate Pledge
Agreement, dated 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, (ii) that certain Voting Trust Agreement,
dated October 6, 1995, by and among Ronald S. Haft,
Dart Group Corporation and Larry G. Schafran and
Sidney B. Silverman, as Voting Trustees and (iii)
that certain Buy/Sell/Offering Agreement, dated
October 6, 1995, by and between Dart Group
Corporation and Ronald S. Haft.
6. Termination. This Subscription Agreement and the Subscription
shall terminate, and the parties hereto will have no further obligations
hereunder, should delivery to HHH of the Redemption Class B Shares (or
substitute shares therefor) be required and made pursuant to a final judgment
by a court of competent jurisdiction that HHH is the owner of the Redemption
Class B Shares.
7. Miscellaneous.
(a) Notice. Notices under this Subscription Agreement
shall be deemed duly given (if so given) if delivered in person,
5
<PAGE> 6
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
Facsimile: 301-733-2707
If to RSH:
Ronald S. Haft
2435 California Street, N.W.
Washington, D.C. 20008
Facsimile: (202) 234-1222
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.
(b) 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.
(c) Cross-Default. This Subscription Agreement, the
Settlement Agreement and all agreements and documents relating thereto
(collectively, the "Agreements") 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.
(d) Assignment. No party hereto may assign any of
his/its rights or obligations under this Subscription Agreement without the
prior written consent of the other party. This Subscription Agreement shall be
binding upon the respective
6
<PAGE> 7
parties hereto, their heirs, executors, administrators, successors and assigns.
(e) Governing Law. This Subscription 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.
(f) Severability of Provisions. If any term, provision,
covenant or restriction of this Subscription 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 Subscription
Agreement shall remain in full force and effect and shall not be affected,
impaired or invalidated.
(g) Effect of Headings. The descriptive headings
contained herein are for convenience only and shall not affect in any way the
meaning or interpretation of this Subscription Agreement.
(h) Amendment in Writing. In accordance with its terms,
this Subscription Agreement may be amended, but only in a writing that is
signed by each of the parties hereto.
(i) Integration. This Subscription Agreement and the
other Agreements set forth the entire understanding of the parties hereto and
supersedes all prior understandings or agreements, whether written or oral,
with respect to the subject matter hereof.
(j) Counterparts. This Subscription Agreement may be
executed in two counterparts, each of which shall be deemed to be
7
<PAGE> 8
an original, but each of which together shall constitute one and the same
document.
IN WITNESS WHEREOF, RSH has executed and Dart has caused this
Subscription Agreement to be duly executed on the day and year first above
written.
DART GROUP CORPORATION
By /s/ Robert A. Marmon
---------------------------
Robert A. Marmon
Treasurer and
Chief Financial Officer
/s/ Ronald S. Haft
------------------------------
RONALD S. HAFT
8
