<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 17, 1997
----------------------------
DART GROUP CORPORATION
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-1946 53-0242973
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
</TABLE>
3300 75th Avenue, Landover, Maryland 20785
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 226-1200
----------------------------
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(Former name or former address, if changed since last report).
The exhibit index appears on page [5].
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<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.
Item 5. Other Events
Settlement Agreements
On October 6, 1997, Dart Group Corporation ("Dart") announced
settlements (the "Settlements") with Herbert H. Haft and Ronald S. Haft pursuant
to a settlement agreement with Herbert H. Haft (the "HHH Settlement Agreement"),
a First Supplemental Settlement Agreement with Ronald S. Haft (the "First
Supplemental Agreement") and a Second Supplemental Settlement Agreement with
Ronald S. Haft (the "Second Supplemental Agreement"). The closing of the
transactions contemplated in the Settlement Agreement, First Supplemental
Agreement and Second Supplemental Agreement, which have been approved by Dart's
Board of Directors, is subject to court approval. A press release announcing the
Settlements is incorporated by reference and attached hereto as Exhibit 99.1.
If the Settlements are approved by the Delaware Court of Chancery, then
upon closing Herbert H. Haft will (a) sell to Dart all of his shares of, and
options to purchase, Dart Class A Common Stock, and his capital stock of Dart's
subsidiaries Trak Auto Corporation and Crown Books Corporation, (b) retire from
all of his positions with Dart and its subsidiary corporations, (c) relinquish
his claim to voting control of Dart, and (d) terminate his employment agreement
with Dart. In addition, all outstanding litigation and disputes between Dart
and Herbert H. Haft will be resolved. As consideration for the Settlements,
Dart will pay Herbert H. Haft approximately $28 million upon closing, of which
amount $9.25 million may be deferred until June 1, 1998 if the closing occurs
before then. Dart also will make a $10 million loan to a partnership owned by
Herbert H. Haft and Ronald S. Haft. The HHH Settlement Agreement, the First
Supplemental Agreement and the Second Supplemental Agreement are each
incorporated by reference and attached hereto as Exhibits 99.2, 99.3 and 99.4,
respectively.
In connection with the Second Supplemental Agreement, Dart and Ronald
S. Haft entered into an Amendment to Voting Trust Agreement amending the Voting
Trust Agreement dated as of October 6, 1995 among Dart, Ronald S. Haft, Larry G.
Schafran and Sidney B. Silverman as initial voting trustees. A copy of the
Amendment to Voting Trust Agreement is incorporated by reference and attached
hereto as Exhibit 99.5.
The closing of the Settlements is not expected to occur before December
1997 and could be delayed until sometime in 1998. There can be no assurance as
to whether or when court approval of the Settlement will be obtained, and there
can be no assurance that the closing of the Settlement will occur. The
description of the Settlements and the Amendment to Voting Trust Agreement set
forth herein does not purport to be complete and is qualified in its entirety by
the provisions of the HHH Settlement Agreement, the First Supplemental
Agreement, the Second Supplemental Agreement and the Amendment to Voting Trust
Agreement.
Composition of Board of Directors
On October 21, 1997 certain changes were made in the composition of
Dart's Board of Directors as more fully set forth in the Press Release issued
by Dart on October 22, 1997, a copy of which is incorporated herein by
reference and attached hereto as Exhibit 99.6.
- 2 -
<PAGE> 3
Item 7. Financial Statements and Exhibits
Exhibit 99.1 Press Release, dated October 17, 1997, of
Dart Group Corporation announcing settlements
with Herbert H. Haft and Ronald S. Haft and
appointment of Richard B. Stone as acting CEO
Exhibit 99.2 Settlement Agreement, dated as of October 17,
1997, by and between Dart Group Corporation
and Herbert H. Haft.
Exhibit 99.3 First Supplemental Agreement, dated as of
October 15, 1997, made by and among Ronald
S. Haft and Dart Group Corporation
Exhibit 99.4 Second Supplemental Settlement, dated as of
October 15, 1997, is made by and between
Ronald S. Haft and Dart Group Corporation
Exhibit 99.5 Amendment to Voting Trust Agreement
Exhibit 99.6 Press Release, dated October 22, 1997, of
Dart Group Corporation announcing certain
changes in the composition of Dart Group
Corporation's Board of Directors
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<PAGE> 4
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: /s/ MARK A. FLINT
----------------------------
Mark A. Flint
Senior Vice President and
Chief Financial Officer
Date: October 31, 1997
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<PAGE> 5
DART GROUP CORPORATION
Form 8-K
Exhibit Index
Exhibit 99.1 Press Release, dated October 17, 1997, of
Dart Group Corporation announcing settlements
with Herbert H. Haft and Ronald S. Haft and
appointment of Richard B. Stone as acting CEO
Exhibit 99.2 Settlement Agreement, dated as of October 17,
1997, by and between Dart Group Corporation
and Herbert H. Haft.
Exhibit 99.3 First Supplemental Agreement, dated as of
October 15, 1997, made by and among Ronald
S. Haft and Dart Group Corporation
Exhibit 99.4 Second Supplemental Settlement, dated as of
October 15, 1997, is made by and between
Ronald S. Haft and Dart Group Corporation
Exhibit 99.5 Amendment to Voting Trust Agreement
Exhibit 99.6 Press Release, dated October 22, 1997, of
Dart Group Corporation announcing certain
changes in the composition of Dart Group
Corporation's Board of Directors
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<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
DART GROUP ANNOUNCES SETTLEMENT WITH HERBERT HAFT
AND APPOINTMENT OF RICHARD B. STONE AS ACTING CEO
Landover, MD... October 17, 1997 ... The Executive Committee of the
Board of Directors of Dart Group Corporation (NASDAQ: DARTA), consisting of
Senator Richard B. Stone, Douglas M. Bregman, Esq. and Bonita A. Wilson, today
announced that it has entered into a Settlement Agreement with Herbert Haft.
If the settlement is approved by the Delaware Court of Chancery, then upon
closing Herbert Haft will retire from all of his positions with Dart and its
subsidiary corporations. The positions he will relinquish include his
positions as Chairman and Chief Executive Officer of Dart, Co-Chairman of
Shoppers Food Warehouse Corp., and Chairman of Trak Auto Corporation and Crown
Books Corporation. Herbert Haft also will relinquish his claim to voting
control of Dart upon closing of the settlement.
Dart's Board has appointed Richard B. Stone to serve as Acting Chief
Executive Officer pending closing of the settlement with Herbert Haft. Mr.
Stone also has been named Chairman of the Executive Committee of Dart's Board
of Directors.
At the closing of the settlement, Herbert Haft will sell to the Company
all 122,747 of his shares of Dart Class A Common Stock and options to purchase
a total of approximately 129,750 shares of Dart Class A Common Stock, and
substantially lesser holdings in Trak Auto and Crown Books. Herbert Haft's
employment agreement with Dart will terminate at closing, and all outstanding
litigation and disputes between Dart and Herbert Haft will be resolved. Mr.
Haft will also assign certain real estate interests to the Company.
Dart will pay Herbert Haft approximately $28 million if the settlement
closes, of which amount $9.25 million may be deferred until June 1, 1998 if the
closing occurs before then. Dart also will make a $10 million loan to a
partnership owned by Herbert and Ronald Haft, which loan will be personally
guaranteed by Ronald Haft and will be secured by such partnership's interests
in three shopping centers located in suburban Washington, D.C. and by a
one-half indirect interest in an office building in Lanham, Maryland leased by
Shoppers Food Warehouse Corp. Herbert Haft will also receive an additional
$11.6 million from escrowed funds previously paid by Dart to Ronald Haft as
part of its October 1995 settlement with Ronald Haft (and $700,000 interest on
those funds).
Closing of the settlement between Dart and Herbert Haft is subject to
final and non-appealable action by the Delaware Court of Chancery or the
Delaware Supreme Court approving all of the terms of the settlement,
terminating certain putative derivative actions pending with respect to Dart in
the Delaware Court of Chancery, and approving the October 1995 settlement
between Dart and Ronald Haft and the supplemental settlement between Dart and
Ronald Haft.
- 1 -
<PAGE> 2
The closing of the settlement is not expected to occur before December 1997 and
could be delayed until sometime in 1998. There can be no assurance as to
whether or when court approval of the settlement will be obtained, and there
can be no assurance that the closing of the settlement will occur.
Dart also announced that it has entered into supplemental settlement
arrangements with Ronald Haft. These arrangements will permit the shares now
held in a Voting Trust for the benefit of Ronald S. Haft to be transferred to
the Corporation upon the later of the closing and January 1998, which will
terminate the Voting Trust. Assuming this occurs, no shares of Dart's Class B
voting stock will be outstanding. It is contemplated that the shares of Dart's
Class A common stock, which now are non-voting, will have the right to vote in
the election of directors and other matters after the closing of Dart's
settlement with Herbert Haft.
Dart's supplemental settlement arrangements with Ronald Haft also will
permit the completion of bankruptcy plans of reorganization for the
partnerships owning Dart's headquarters building in Landover, Maryland and a
warehouse leased by Dart's subsidiary, Trak Auto Corporation, in Bridgeview,
Illinois. Under these bankruptcy plans, the Corporation will pay a total of
$7.0 million to reduce outstanding institutional mortgage loans on these
properties, which will thereafter be wholly-owned by Dart affiliates. The
supplemental settlement arrangements with Ronald Haft also will provide for a
$2.2 million payment to Dart from escrowed funds previously earmarked for
Ronald Haft.
A portion of the cost of these transactions may be allocated to Trak
Auto Corporation and, possibly, Crown Books Corporation, which are subsidiaries
of Dart. No such allocations have yet been determined.
Herbert Haft said, "Senator Stone has had a distinguished career as a
U.S. Senator, a diplomat, a lawyer and a businessman. I wish him all the best
and for the success of the companies."
Dart is the majority owner of Trak Auto Corporation (NASDAQ: TRKA) and
Crown Books Corporation (NASDAQ: CRWN), and the sole owner of Shoppers Food
Warehouse Corp. and Total Beverage Corp.
Contact: Marina Ein
202-223-2922
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<PAGE> 1
EXHIBIT 99.2
===============================================================================
SETTLEMENT AGREEMENT
by and between
HERBERT H. HAFT
and
DART GROUP CORPORATION
(SUBJECT TO ARTICLE VIII HEREOF)
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Dated as of October 16, 1997
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
ARTICLE II
IMMEDIATE EFFECTIVENESS IN PART; VARIOUS TRANSACTIONS, ON AND AFTER CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.1. Certain Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------
SECTION 2.2. Closing Date Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------
ARTICLE III
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.1. Closing Process; Interrelationship of Settlements. . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------------------------------
SECTION 3.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------
SECTION 3.3. Conditions Precedent to Dart's Obligation
-----------------------------------------
to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------
SECTION 3.4. Conditions Precedent to HHH's Obligations
-----------------------------------------
to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.1. Representations and Warranties of HHH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------------------------------
SECTION 4.2. Representations and Warranties of Dart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------------------------
SECTION 4.3. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------
ARTICLE V
COOPERATION; OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1. Pending Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
------------------
SECTION 5.2. New Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--------------
SECTION 5.3. Cooperation and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------------
SECTION 5.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
------------------
SECTION 5.5. Liquidation Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------------------
ARTICLE VI
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.1. Indemnification by HHH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------------
SECTION 6.2. Indemnification by Dart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------------
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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SECTION 6.3. Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-------------------------
SECTION 6.4. Remedies to be Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------------------
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.1. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------
SECTION 7.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------
SECTION 7.3. Drafting Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------
SECTION 7.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-------
SECTION 7.5. Amendment and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------------
SECTION 7.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------
SECTION 7.7. Survival of Representations and
-------------------------------
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------
SECTION 7.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-------------
SECTION 7.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------
SECTION 7.10. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
SECTION 7.11. Specific Performance; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------------------------
SECTION 7.12. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-----------
SECTION 7.13. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----
SECTION 7.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------
SECTION 7.15. Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.1. Limited Right of Dart to Terminate
----------------------------------
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
---------
SECTION 8.2. HHH Bound. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
---------
</TABLE>
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<PAGE> 4
SETTLEMENT AGREEMENT BETWEEN
DART GROUP CORPORATION AND HERBERT H. HAFT
<TABLE>
<CAPTION>
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INDEX OF EXHIBITS
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Exhibit No. Description Section Reference
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1 HHH Stock Ownership Recital
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2 Pending Litigation Recital
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3 CPI Debtors Recital
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4 Form of Assignment of Warehouse Interests Section 1.1
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5 Form of Limited-Purpose Power of Attorney Section 1.1
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6 List of Motor Vehicles Section 1.1
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7 Pre-closing Administrative Assistant and Chauffeur Services for HHH Section 2.1(a)(i)
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8A Form of Arthur Andersen Letter Upon Signing Section 2.1(a)(ii)
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8B Form of Arthur Andersen Letter Upon Closing Section 2.1(a)(ii)
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9 Personal Effects Section 2.1(a)(iii)
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10 Form of Termination of Employment Agreement Sections 2.1(b), 3.3(m)
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11 Form of Assignment, Waiver, Consent and Disclaimer Section 2.1(e)
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12 Form of Assignment of Shares Sections 2.2(a)(ii),
3.3(f), 3.3(j)
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13 Form of Options Renunciation Sections 2.2(a), 3.3(g)
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14 Form of Mutual Release Section 2.2(a)(v), 2.2(b)(v)
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</TABLE>
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<TABLE>
<S> <C> <C>
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15 Form of Proxy Renunciation Section 2.2(a)(vi)
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16 Form of Letter of Resignation Sections 2.2(a)(ix), 3.3(1)
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17 Form of Estoppel Certificates Sections 2.2(a) (x), 2.2(b)(iii)
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18 Form of HHH Closing Representation Certificate Section 2.2(a)(xi)
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19 Form of Release of Indemnification Contribution Section 2.2(a)(xii)
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20 Tax Withholding Sections 2.2(b), 3.4(c)
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21 Form of Promissory Note Sections 2.2(b) (i) (A) - (C)
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22 Form of Pledge Agreement Sections 2.2(b)(i) (D) - (F)
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23 Life Insurance Policies Section 2.2(b)(vi)
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24 Form of Dart Closing Representation Certificate Section 2.2(b)(ix)
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25 Form of Total Beverage Option Section 2.2 (b)(x)
- ----------------------------------------------------------------------------------------------------------------------
26 Exceptions to HHH Representations and Warranties Sections 4.1(b),
4.1(c), 4.1(d),
4.1(f), 4.1(g),
4.1(h)
- ----------------------------------------------------------------------------------------------------------------------
27 Exceptions to Dart Representations and Warranties Sections 4.2(c), 4.2(d), 4.2(e)
- ----------------------------------------------------------------------------------------------------------------------
28 Form of Acknowledgment of Agreement and Representation by Counsel Section 3.3(n)
- ----------------------------------------------------------------------------------------------------------------------
29 [Intentionally Omitted] [Intentionally Omitted]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 6
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") dated as of October 16,
1997, by and between HERBERT H. HAFT ("HHH") and DART GROUP CORPORATION, a
Delaware corporation ("Dart").
WITNESSETH:
WHEREAS, HHH owns the number of shares of stock of Dart and Dart
Affiliates and options to purchase the number of shares of stock of Dart and
Dart Affiliates, in each case as set forth on EXHIBIT 1;
WHEREAS, HHH is a director of Dart, is the Chief Executive Officer of
Dart pursuant to an Employment Agreement effective as of April 1, 1974 between
HHH and Dart (as amended, the "Employment Agreement") and is a director of Dart
and a director and officer of various Dart Affiliates;
WHEREAS, HHH and Dart are parties to the pending cases identified on
EXHIBIT 2 (the "Pending Litigation");
WHEREAS, Ronald S. Haft ("RSH") and Dart have entered into a Settlement
Agreement dated as of October 6, 1995 (the "Dart/RSH Settlement Agreement");
WHEREAS, Dart and certain of its subsidiaries, Crown Books Corporation,
Trak Auto Corporation, Dart/SFW Corp., SFW Holding Corp. and Shoppers Food
Warehouse Corp., have closed a settlement agreement with Robert M. Haft, Gloria
G. Haft and Linda G. Haft pursuant to which such individuals agree, among other
things, to sell all of their Dart B Shares (as defined herein) to Dart (the
"Dart/Other Hafts Settlement Agreement");
WHEREAS, RSH and Dart have (or are expected to have) entered into a
First Supplemental Settlement Agreement (the "Dart/RSH First Supplemental
Agreement"), setting forth certain agreements and transactions between them in
connection with the Dart/Other Hafts Settlement Agreement;
<PAGE> 7
WHEREAS, RSH and Dart have (or are expected to have) entered into a
Second Supplemental Settlement Agreement (the "Dart/RSH Second Supplemental
Agreement") setting forth certain agreements and transactions between them in
connection with this Agreement;
WHEREAS, HHH and RSH entered into a Settlement Agreement dated as of
August 16, 1996, which has subsequently been amended by a First Amendment dated
August 19, 1996 and a Second Amendment dated April 23, 1997;
WHEREAS, the Persons listed on EXHIBIT 3 (the "CPI Debtors") are
debtors in Chapter 11 cases (the "Chapter 11 Cases") pending in the Bankruptcy
Court (as defined below);
WHEREAS, HHH and Dart wish to terminate the Employment Agreement and
settle the Pending Litigation and all other disputes as between HHH on the one
hand and Dart and the Dart Affiliates on the other on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Acquisition Company" is defined in SECTION 2.1(d)(i).
"Affiliate" means, as to any Person, any Person controlled by such
Person.
"Agreement" has the meaning set forth in the recitals.
"Assets" has the meaning set forth in SECTION 4.1(d) hereof.
"Assignment of Warehouse Interests" means an instrument substantially
in the form of EXHIBIT 4 to be executed and
- 2 -
<PAGE> 8
delivered by HHH to Dart, relating to the assignment and transfer of the HHH
Warehouse/Office Building Interests.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq., as in effect from time to time.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Maryland (through authority delegated to it by the United States
District Court for the District of Maryland), or any court or tribunal
subsequently constituted to adjudicate matters arising under the Bankruptcy
Code or any successor bankruptcy laws promulgated by the Congress of the United
States and which assumes jurisdiction over the Chapter 11 Cases.
"Business Day" means any day that is not a Saturday, a Sunday or a
United States federal holiday.
"Chapter 11 Cases" has the meaning set forth in the recitals.
"Closing" has the meaning set forth in SECTION 3.2.
"Closing Date" means the date of the Closing.
"Contingency" has the meaning set forth in SECTION 2(a)(i)(B).
"Costs" has the meaning set forth in SECTION 6.1.
"CPI" means Combined Properties, Incorporated, a District of Columbia
corporation.
"CPI Debtors" has the meaning set forth in the recitals.
"Crown" means Crown Books Corporation, a Delaware corporation.
"Dart" has the meaning set forth in the recitals.
"Dart A Shares" means the shares of Dart's Class A Common Stock, par
value $1.00 per share.
- 3 -
<PAGE> 9
"Dart Affiliate" means each direct and indirect subsidiary of Dart,
except for any subsidiary whose primary function is the direct or indirect
ownership of any one or more of the properties known as 3301 Pennsy Drive,
Seventy-Fifth Avenue Headquarters (including the so-called Wooded Lot),
Bridgeview Warehouse, Trak Ontario Warehouse, and Pennsy Drive Warehouses II,
III and III Addition.
"Dart B Shares" means shares of Dart's Class B Common Stock, par value
$1.00 per share.
"Dart B Share Proxy" means the Irrevocable Proxy dated July 28, 1993
granted by RSH to HHH in respect of 172,730 Dart B Shares.
"Dart Indemnitees" has the meaning set forth in SECTION 6.1.
"Dart/Other Hafts Agreement" has the meaning set forth in the recitals.
"Dart/RSH Settlement Agreement" has the meaning set forth in the
recitals.
"Dart/RSH First Supplemental Agreement" has the meaning set forth in
the recitals.
"Dart/RSH Second Supplemental Agreement" has the meaning set forth in
the recitals.
"DPW" means Davis Polk & Wardwell.
"Employment Agreement" has the meaning set forth in the recitals.
"Escrow Agent" means Settlementcorp, as escrow agent under the Escrow
Agreement.
"Escrow Agreement" means the Escrow Agreement [$11.6 Million] dated as
of October 6, 1995 among RSH, Dart and Settlementcorp.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GGH" means Gloria G. Haft.
"HHH" has the meaning set forth in the recitals.
"HHH Indemnitees" has the meaning set forth in SECTION 6.2.
"HHH Warehouse/Office Building Interests" means any and all right,
title and interest, direct or indirect, of HHH in and to those certain
properties known as Seventy-Fifth Avenue Headquarters, the so-called Wooded Lot
in Landover, Maryland, Bridgeview Warehouse, Trak Ontario Warehouse, Pennsy
Drive Warehouse I, and Pennsy Drive Warehouses II, III and III Addition, and
any partnerships or other entities owning direct or indirect interests in said
properties, including, without limitation, HHH's general and limited
partnership interests in 3301 Pennsy Drive Associates Limited Partnership, a
Maryland limited partnership.
"Indemnification Agreement" means the Indemnification Agreement dated
September 21, 1994 between HHH and Dart.
"Indemnified Party" has the meaning set forth in SECTION 6.3.
"Indemnifying Party" has the meaning set forth in SECTION 6.3.
"June Note" has the meaning set forth in SECTION 2.2(b)(i)(B).
"LGH" means Linda G. Haft.
"Liens" has the meaning set forth in SECTION 4.1(d).
"Limited-Purpose Power of Attorney" means the Limited-Purpose Power of
Attorney in the form of EXHIBIT 5 hereto.
"Options" has the meaning set forth in SECTION 3.3(h).
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"Other Plans of Reorganization" is defined in SECTION 3.3(b)(i).
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Pending Litigation" has the meaning set forth in the recitals.
"Plan of Reorganization" means the Fourth Revised Amended Joint Plan or
Reorganization confirmed by the Bankruptcy Court by order entered on July 15,
1997, in Case no. 95-1-3122-DK and certain jointly administered cases.
"Pledged Class A Shares" has the meaning set forth in SECTION
2.2(b)(i)(D).
"RMH" means Robert M. Haft.
"RSH" has the meaning set forth in the recitals.
"RSH Note" means the Promissory Note dated July 28, 1993 executed by
RSH in favor of HHH in the principal amount of $11,054,720.
"Settlement Documents" means this Agreement and the documents and
undertakings delivered at the Closing, including without limitation the
releases contemplated by SECTION 2.2(a)(v) AND 2.2(b)(v) and the Assignment of
Warehouse Interests.
"SFW" means Shoppers Food Warehouse Corp., a Delaware corporation.
"Shares" means all shares of capital stock of Dart and each Dart
Affiliate owned beneficially by HHH, including 122,747 Dart A Shares, 500
shares of Trak common stock and 500 shares of Crown common stock.
"Special Transaction" means the closing of any disposition of assets,
merger or other transaction pursuant to which Dart or
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any Dart Affiliate ceases to own or control all or any part of SFW, except for
sales of assets in the ordinary course of business as heretofore conducted.
"Total" means Total Beverage G.B., a Delaware corporation.
"Trak" means Trak Auto Corporation, a Delaware corporation.
"Vehicles" means the motor vehicles listed on EXHIBIT 6 hereto.
"Vehicular Setoff" has the meaning set forth in SECTION 2.2(b)(ii)
hereof.
ARTICLE II
IMMEDIATE EFFECTIVENESS IN PART; VARIOUS
TRANSACTIONS, ON AND AFTER CLOSING
SECTION 2.1. Certain Matters.
(a) (i) Continued Salary, Reinstatable Incumbency Etc. (A) For the
period from the execution and delivery of this Agreement by HHH and Dart until
the Closing Date HHH shall continue to receive salary from Dart at the annual
rate of $1,281,127 and salary from Trak at the annual rate of $250,000 and all
of his benefits (but not including any bonus or options, payment of which HHH
hereby agrees to defer during the pendency of this Agreement prior to its
Closing or termination and -- only upon Closing -- to waive) under the terms of
the Employment Agreement and Dart shall provide HHH with the services of an
administrative assistant and a chauffeur on the terms and conditions set forth
in EXHIBIT 7.
(B) From and after the execution and delivery of this Agreement by
Dart and HHH, HHH shall, subject to the rights of automatic reinstatement set
forth below, and without waiving any of his rights under the Employment
Agreement except as expressly provided herein, (I) accede to the performance by
Richard B. Stone ("Senator Stone") of all the rights, duties and functions of
Chief Executive Officer of Dart, all of which performances shall be automatic
upon such execution and delivery and (II)
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until the Closing not engage in any activities in the management or operations
of Dart and its subsidiaries, except (a) to participate in the activities of
the Boards of Directors of Dart and its Affiliates and (b) as authorized by the
Board of Directors or Executive Committee of Dart and (c) as requested by
Senator Stone, it being understood that the foregoing limits on participation
in management and operations shall cease automatically upon termination of this
Agreement for any reason without the Closing having occurred. In connection
with the foregoing it is expressly understood (1) that HHH will remain as a
director and sole Chairman of the Board of each of such corporations, including
without limitation that he will remain as a director of SFW, until the Closing
(except that he concurs that Senator Stone may be elected as Co-Chairman of SFW
at any time, with HHH stepping down from his role as a Co-Chairman of SFW at
the Closing), (2) that if this Agreement shall have terminated for any reason
without the Closing having occurred HHH shall be automatically reinstated into
the performance of all the rights, duties and functions of Chief Executive
Officer of Dart with Senator Stone's performance of such functions, rights and
duties automatically to end upon such contingency ("Contingency"), (3) HHH is
engaging in the foregoing reversible accession solely in a spirit of good will
to bring to a conclusion the protracted negotiations which led to the execution
and delivery of this Agreement and (4) HHH does not hereby waive, supplement or
modify any of his rights under the Employment Agreement (including without
limitation his rights to compensation and benefits under his Employment
Agreement, subject to Section 2.1(a)(i)(A) hereof), except the right to act as
Chief Executive Officer pending the Closing and except the right to participate
in operations and management, except as aforesaid, pending the Closing, subject
to automatic reinstatement as described above.
(C) Dart has no objection to HHH withdrawing funds from the Escrow
Agreement at any time prior to the Closing, subject to the understanding that
Dart reserves all its rights to make all assertions and claims as to the
consequences thereof if the Closing does not occur (and HHH reserves all of his
defenses to such assertions and claims) and to the understanding that the
duties of HHH and Dart to close this transaction shall be unaffected by any
such withdrawal.
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(ii) Use of Arthur Andersen. (A) Effective upon the execution and
delivery of this Agreement by Dart and HHH, Dart will send to Arthur Andersen
LLP a letter in the form of EXHIBIT 8A and will cause each Dart Affiliate to,
forbear from making or reinstating any objections to Arthur Andersen LLP
providing tax return preparation services to HHH regarding his personal taxes,
and services in connection with any audits of past personal tax returns of HHH,
at the sole cost and expense of HHH, and (B) at the Closing, Dart will send
Arthur Andersen LLP a letter in the form of EXHIBIT 8B, and after Closing,
neither Dart nor any Dart Affiliate will interpose any objection to HHH using
the services of Arthur Andersen LLP for any purpose; and
(iii) Personal Effects. Dart shall permit a mover selected by HHH to
pack and deliver to HHH at such address or addresses in the District of
Columbia metropolitan area (including suburbs) specified by HHH to such mover,
all of the furniture, paintings, memorabilia and other personal property
located at 3300 75th Avenue, Landover, Maryland and identified on EXHIBIT 9,
such personal property, during such delivery, to be fully insured by HHH at his
own cost and expense. The items identified on EXHIBIT 9 as belonging to HHH
may be moved pursuant to this SECTION 2.1(a)(iii) at HHH's written instruction
at any time; any or all of the items identified on EXHIBIT 9 as belonging to
Dart or a Dart Affiliate may be moved pursuant to this SECTION 2.1(a)(iii) at
HHH's written instruction at any time on or within thirty (30) days after the
Closing upon receipt by Dart from HHH of payment therefor in the amounts
specified on EXHIBIT 9. At closing, Dart shall pay HHH $5,000 to be applied
towards packing and moving costs for such personal property, but Dart shall not
otherwise be responsible for any of the packing or moving costs and shall have
no responsibility for any damage to the personal property that may occur during
the packing and moving process. Notwithstanding any other provision of this
SECTION 2.1(a)(iii), neither Dart nor any Affiliate of Dart shall be under any
obligation to release or deliver any property to HHH unless and until a
stipulation of dismissal signed by First Union shall have been entered by the
Circuit Court of Prince Georges County terminating all writs of garnishment of
property issued on behalf of First Union against Dart, Trak and Crown. Dart
agrees that it has arranged with the Washington Redskins for the outright
transfer to HHH of four
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season tickets to Redskins games. The seats to which HHH succeeded are at Jack
Kent Cooke Stadium in Section 426, Row 18, Seats No. 13, 14, 15 and 16, Account
No. 190389. Dart agrees that it will not, and will not permit any person
acting on its behalf or on behalf of any Dart Affiliate, to interfere or
attempt to interfere with HHH's entitlement to these tickets or the quiet
enjoyment thereof.
(b) Resignation. On the Closing Date, HHH shall resign from each of
his positions as an officer or director of Dart and each Dart Affiliate, and
the Employment Agreement shall terminate without further liability of either
party to the other thereunder. On the Closing Date, Dart and HHH shall execute
and deliver a Termination of Employment Agreement in the form of EXHIBIT 10.
(c) Continued Indemnification. Notwithstanding the termination of
the Employment Agreement, Dart hereby confirms and agrees that HHH shall be
entitled, after he shall cease to hold directorships and/or officerships with
Dart and the Dart Affiliates, to enjoy the benefit of the indemnification
obligations of Dart under the certificate of incorporation and bylaws of Dart
in each case as in effect on the date hereof, and under the Delaware General
Corporation Law and the Indemnification Agreement for indemnification against
any liabilities arising out of his being or having been an officer, employee or
director of Dart or any Dart Affiliate; provided, however, that this SECTION
2.1(c) shall not waive any defenses Dart or any Dart Affiliate might have to
any claim by HHH to indemnification. Dart further agrees that prior to the
Closing Date it shall not, and thereafter shall not, amend, supplement or
otherwise modify, and shall not permit any Dart Affiliate to amend, supplement
or otherwise modify, its certificate of incorporation or bylaws if such
amendment, supplement or other modification would adversely affect the
indemnification rights of HHH thereunder. Neither Dart nor any Dart Affiliate
shall amend or modify any policy of directors and officers liability insurance
that has been in existence prior to the date of this Agreement in any way that
would adversely affect HHH's rights thereunder. To the fullest extent permitted
by Delaware law, Dart hereby unconditionally and irrevocably agrees to pay,
within five
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days of written demand, upon receipt of any undertakings by HHH to repay then
required by applicable law, all amounts payable by way of indemnity, including
without limitations awards, judgments and settlements and legal fees and
disbursements, costs of investigation, travel costs, and fees of expert
witnesses incurred by HHH in connection with the defense loss or settlement of
any action, suit or proceeding (whether commenced or threatened, and including
investigations) for which he claims a right of indemnification.
(d) HHH Restrictions. Except for an option to purchase an interest
in Total as provided in SECTION 2.2(b)(x) and except for HHH's record and/or
beneficial ownership, as of the date hereof, of shares of (and options to
acquire shares of) Dart, Trak, Crown, Total Beverage Corporation and Total, if
any, and except for HHH's right, hereby acknowledged by Dart, to exercise his
rights and remedies under the pledge and security agreement, executed and
delivered by Dart pursuant to SECTION 2.2(b)(i) in accordance with the terms
thereof for a period commencing with the execution and delivery of this
Agreement and continuing through the tenth anniversary of the date hereof, HHH
shall not, singly, through a partnership or otherwise as part of any group,
directly or indirectly:
(i) Purchase, acquire or own, or offer or agree to purchase, acquire
or own, any securities of Dart, Crown or Trak 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 or Trak, or a subsidiary or affiliate of any thereof, that
contemplates the acquisition of control of such corporation, partnership or
other entity by Dart, Crown or Trak or any such subsidiary or Affiliate, or a
business combination involving such corporation, partnership or other entity
and Dart, Crown or Trak 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 HHH; provided, however, that a corporation,
partnership or other entity shall not be deemed an Acquisition
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<PAGE> 17
Company if (A) at the date of the first public announcement of such memorandum
of intent, agreement in principle or similar type of written understanding, HHH
either 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 HHH (alone or with other
members of a group) had on file with the Securities and Exchange Commission, if
required by law, a Schedule 13D indicating such beneficial ownership, or (B)
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
2.1(d) with respect to the acquisition or ownership of Restricted Securities of
Dart, Crown or Trak, (x) in the event that HHH acquires such Restricted
Securities in connection with an acquisition by Dart, Crown or Trak of an
Acquisition Company or the securities of an Acquisition Company by an exchange
offer or otherwise, HHH 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 (y) in the event HHH acquires such Restricted Securities in
connection with an acquisition by Dart, Crown or Trak 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, HHH may hold such Restricted Securities indefinitely;
provided, however, the provisions of this SECTION 2.1(d) shall continue to
prohibit any further purchase, acquisition or ownership of Restricted
Securities of Dart, Crown and Trak. 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.
(ii) 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 Exchange Act) in opposition to a
recommendation of a majority of the directors of Dart, Crown, Trak or any
Acquisition Company with respect to any matter;
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<PAGE> 18
(iii) Initiate, propose or otherwise solicit stockholders for the
approval of one or more stockholder proposals with respect to Dart, Crown, Trak
or any Acquisition Company, as described in Rule 14A-8 under the Exchange Act;
(iv) Acquire or affect the control of Dart, Crown, Trak 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,
Trak or any Acquisition Company; or
(v) Encourage any person, firm, corporation, group or other entity
to engage in any of the actions covered by clauses (i) through (iv) of this
SECTION 2.1(d).
(e) At the Closing, HHH shall execute and deliver to Dart a Waiver,
Consent and Disclaimer in the form of EXHIBIT 11 hereto.
(f) In the event that, prior to Closing, Dart shall effectuate or
permit to occur any disposition, whether through merger, sale of assets, sale
or exchange of shares or otherwise, of all or any part of Total, Trak or Crown
or any of their respective subsidiaries or their respective assets, Dart (or
the Dart Affiliate receiving the proceeds of such transaction) shall hold,
until HHH shall have received all funds he is entitled to hereunder at Closing
or until the termination of this Agreement, all net proceeds("net" meaning
after the payment of all costs and expenses of the transaction, the retirement
of any debt required to be retired out of the proceeds of such transaction by
agreements or indentures in force prior to July 1, 1997 (or by any revolving
credit agreement entered into at any time providing for not more than
$25,000,000 in credit for SFW and/or its subsidiaries) and after other
application of proceeds to reduce other liabilities attributable to the
business sold which it is reasonable to reduce), including cash and other
property, and invest and reinvest the same in debt securities with a maturity
of 90 days or less (i) backed by the full faith and credit of the United
States, or (ii) commercial paper ranked in the highest ratings category by both
Moody's and Standard & Poor's or (iii) certificates of deposit, issued by banks
100% owned by bank
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holding companies whose debt securities are rated in one of the three highest
categories by both Moody's and Standard & Poor's. Interest and discounts
earned and collected on the foregoing investments are not required to be
reinvested but may be retained by Dart or the applicable Dart Affiliate and
used in the business. Dart shall issue to HHH on the fifth day of every
calendar month a written report certified as true and correct to the best of
their knowledge and belief by Dart's Chairman of the Executive Committee and
its Chief Financial Officer showing for the preceding calendar month (A) all
gross proceeds received from the transactions referred to in the immediately
preceding sentence received during the preceding calendar month, (B) a
reasonably itemized accounting for all amounts taken out of gross proceeds
before a figure for net proceeds, and (C) a listing of all investments held
during such month in accordance with this paragraph and at the end thereof,
together with a reasonably itemized accounting of the investment and
reinvestments made during such month and the amounts of earned and collected
discount not reinvested for such month. All non-cash assets received from any
such transaction shall be held by Dart, with all cash proceeds invested and
reinvested as provided above. Dart will not, and will not permit any of its
Affiliates to create or suffer to exist, any lien, claim, charge or encumbrance
on any of the foregoing investments and non-cash assets until after HHH shall
have received all the funds payable to him at Closing. Nothing in the
preceding provisions of this SECTION 2.1(f) shall preclude the transfer by a
Dart Affiliate to Dart of any net proceeds as defined above, so long as Dart
holds, invests and reports about such proceeds it receives and complies with
the foregoing the same as such Dart Affiliate would have been required to had
such net proceeds not been so transferred or paid by way of dividend.
(g) Prior to the Closing: (a) Dart will not, and will not permit any
of its Affiliates to make, any Restricted Payment as defined in Event of
Default (f) of EXHIBIT 21; (b) Dart will not, and will not permit any of its
Affiliates, to amend its Certificate of Incorporation; and (c) Dart will not,
and will not permit, any of its Affiliates to issue, sell or otherwise transfer
any shares of its own capital stock or any shares of its Affiliates unless the
net proceeds realized on such issue, sale
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or other transfer are held, invested, used and reported on as required by
SECTION 2.1(f) for release at Closing to Dart or its Affiliate, as the case may
be, but only if HHH shall have been paid all cash due him at the Closing
provided that if a share sale referred to above also falls within the scope of
SECTION 2.1(f), then SECTION 2.1(f) governs and this SECTION 2.1(g) does not.
SECTION 2.2. Closing Date Transactions.
(a) Deliveries by HHH. On the Closing Date:
(i) Delivery to the Escrow Agent. HHH shall deliver to the Escrow
Agent the RSH Note.
(ii) Delivery of the Dart A Shares. HHH shall (A) assign and
transfer to Dart the Shares, free of all liens, security interests,
encumbrances, claims and restrictions whatsoever, by delivering to Dart the
certificates representing the same, endorsed for transfer to Dart or
accompanied by appropriate signed stock powers, in either case with a signature
guarantee, and (B) deliver to Dart additional documents in the form of EXHIBIT
12 hereto as Dart may reasonably request confirming that he assigns and
transfers to Dart any and all right, title and interest he may have, directly
or indirectly, to other shares of stock of Dart or any Dart Affiliate that are
or have been the subject of any disputes among HHH and any one or more of GGH,
LGH, RMH or trusts for any of their respective children.
(iii) Dart Option Renunciation. HHH shall terminate all of HHH's
options to purchase Dart A Shares by (A) executing and delivering to Dart
appropriate instruments of renunciation of such options and all other
co-investment rights of any description and other necessary documents
evidencing the termination of such options and co-investment rights, in the
form of EXHIBIT 13 and (B) delivering to Dart, for each of the option
agreements representing such options, a signed original copy of such option
agreement or an affidavit signed by HHH reasonably satisfactory to Dart that
such option agreement has been lost or destroyed.
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(iv) Affiliate Option Renunciation. HHH shall terminate all of HHH's
options to purchase shares of Dart's subsidiaries by (A) executing and
delivering to the Escrow Agent appropriate instruments of renunciation of such
options and all other co-investment rights of any description and other
necessary documents evidencing the termination of such options and
co-investment rights, in the form of EXHIBIT 13, it being understood that
nothing in this subsection (a) is in derogation of HHH's rights regarding
Total, as set forth in SECTION 2.2(b)(x), and (B) delivering to Dart, for each
of the option agreements representing such options, a signed original copy of
such option agreement or an affidavit signed by HHH reasonably satisfactory to
Dart that such option agreement has been lost or destroyed.
(v) Mutual Release. HHH shall execute and deliver to Dart and each
of the Dart Affiliates listed on EXHIBIT 14 a Mutual Release in the form of
EXHIBIT 14.
(vi) Proxy Renunciation. HHH will deliver to Dart an instrument of
renunciation of the Dart B Share Proxy in the form of EXHIBIT 15 hereto.
(vii) Legal Bills. HHH will deliver to Dart documentation in
reasonable detail supporting up to $90,000 in fees and disbursements of DPW for
services in assisting HHH at board meetings of Dart and Dart Affiliates and for
reviewing and commenting on drafts of filings by Dart and Dart Affiliates with
the Securities and Exchange Commission, since September 1994.
(viii) Warehouses. HHH shall execute and deliver to Dart the
Assignment of Warehouse Interests and the Limited-Purpose Power of Attorney.
(ix) Resignations. HHH shall execute and deliver to Dart letters of
resignation from his positions as officer and director of Dart and each Dart
Affiliate, in the form of EXHIBIT 16.
(x) Estoppel Documents. Subject to prior due diligence satisfactory
to HHH (which will be completed prior to Closing), HHH shall execute and
deliver to each Dart Affiliate which is a lessee of retail space in either or
both of the Landmark and Fair
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<PAGE> 22
City properties estoppel/no-controversy certificates relating to space leased
or subleased by it, in the form of EXHIBIT 17 hereto, in exchange for the
estoppel/no controversy certificates contemplated by SECTION 2.2(b)(iii) below.
(xi) Closing Representation Certificates. HHH shall execute and
deliver Closing Representation Certificates in the forms attached hereto as
EXHIBIT 18.
(xii) Waiver, Consent and Disclaimer. At the Closing, HHH will
execute and deliver the Assignment, Waiver, Consent and Disclaimer in the Form
of EXHIBIT 11 hereto.
(xiii) Contribution Agreement. HHH shall execute and deliver a
Contribution Agreement in the form attached hereto as EXHIBIT 19 on behalf of
each of the partnerships set forth therein.
(b) Deliveries by Dart. On the Closing Date, subject to applicable
tax withholding in the maximum amount of $2,536,390 as specified in EXHIBIT 20:
(i) Cash Payment and Note Deliveries by Dart. (A)
Dart shall pay to HHH, in cash, in immediately available funds, the
amount of $18,829,000, (less the Vehicular Setoff and less the amount
payable to LGH pursuant to the direction set forth in the last sentence
of this Section 2.2(b)(i)(A)). Notwithstanding the foregoing, if prior
to the Closing Dart has made $1,259,381 of tax withholdings from its
settlement payment to LGH for her five (5) putative Dart/SFW stock
options and paid such amount to tax agencies in respect of HHH's tax
liability in respect of such settlement payment, then HHH hereby
irrevocably directs that $629,692 of the amount payable by Dart to him
under Section 2.2(b)(i)(A) shall instead be payable to LGH on the
Closing Date provided, however, that if prior to Closing Dart shall
have closed the disposition of assets, merger or other transaction
pursuant to which Dart or any Dart Affiliate ceases to own or control
all or any part of SFW, except for sales of assets in the ordinary
course of business as heretofore conducted, then Dart shall pay HHH, in
cash, at
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closing, the additional sum of $9,250,000 and the June Note (as defined
below) shall not be issued.
(B) If and only if Dart shall not have closed the
disposition of interests in SFW described in Section 2.2(b)(i)
immediately above, Dart shall execute and deliver to HHH its
full-recourse secured note (the "June Note"), in the form of EXHIBIT 21
hereto, in the principal amount of $9,250,000, payable on the earlier
of June 1, 1998 or a Special Transaction, which June Note shall bear
simple interest from and after the Closing Date, payable monthly in
arrears, at 5% per annum; provided that June Note shall be subject to
mandatory prepayment upon the occurrence of any Special Transaction.
(C) [Intentionally omitted]
(D) To secure the June Note Dart will (I) execute and
deliver to a bank or brokerage firm mutually acceptable to Dart and
HHH, as Security Perfection Agent, its pledge and security agreement in
the form of EXHIBIT 22 hereto, pledging to HHH the 122,747 Dart Class A
Shares purchased by Dart from HHH pursuant to this Agreement (the
"Pledged Class A Shares") and shares of common stock of Trak (or, if
Dart no longer holds Trak stock, then shares of common stock of the
corporation which holds Dart's shares of stock in SFW, which is SFW
Holding Corp.) and (II) deliver to such Security Perfection Agent
certificates for such shares, registered in the name of Dart, duly
endorsed for transfer accompanied by appropriate signed stock powers
(in either case, with signatures guaranteed by Medallion Signature
Guaranty), it being understood that the number of shares pledged to HHH
and delivered to the Security Perfection Agent as collateral for the
June Note shall be that number of shares the value of which,
determined, in the case of Trak, by reference to the average of the
closing
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<PAGE> 24
bid/asked prices on the thirty (30) trading days immediately prior to
the Closing Date or any later date of determination, equals at least
$20,000,000 (or such larger amount, if any, as may be required to
comply with applicable laws and regulations) determined by reference to
the average of the closing bid/asked prices on the thirty (30) trading
days immediately prior to the Closing Date or such later date of
determination and in the case of any other shares determined by a fair
and reasonable method in compliance with applicable law as determined
by majority vote of the independent directors of Dart.
(E) [Intentionally omitted]
(F) [Intentionally omitted]
(G) Dart shall pay in immediately available funds, the sum
of the amount of all HHH's accrued but unpaid base salary from the last
date of payment to the Closing Date.
(ii) Vehicles. In full satisfaction of any obligation by
Dart to provide HHH with a car under the Employment Agreement, Dart
shall transfer clear and good title (except for any encumbrances
created by HHH) to each of the Vehicles to HHH, registered in his name
and titled in the District of Columbia, in exchange for which Dart
shall receive a total of $62,000. This transaction shall occur at any
time on or prior to the Closing Date as HHH shall elect by written
notice to Dart. It is anticipated that Dart will (A) receive $15,000
of the purchase price from RMH and (B) if the transaction occurs at
Closing, reduce the sum referred to in SECTION 2.2(b)(i)(a) by the
amount of $47,000 (the "Vehicular Setoff") as payment of the other
$47,000 of the purchase price. HHH may, in his sole discretion, elect
not to purchase the Vehicles as contemplated by this SECTION 2.2(b)(ii)
if any of them has been stolen or damaged or if he wishes for any other
reason not to purchase the Vehicles.
(iii) Estoppel Certificates. Subject to prior due diligence
satisfactory to Dart's Affiliates (which will be completed prior to
Closing), Dart will cause each Dart Affiliate which is a lessee of
retail space in either or both of the Landmark and Fair City properties
to deliver to HHH or his designee estoppel/no-controversy certificates
relating to space leased or subleased by it, in the form of EXHIBIT 17
hereto, in exchange for the estoppel/
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<PAGE> 25
no-controversy certificates contemplated by SECTION 2.2(a)(x) above;
(iv) Garnishment. After (A) a final order of satisfaction
or (B) a stipulation of dismissal signed by First Union has been
entered by the Circuit Court for Prince George's County terminating all
writs of garnishment of wages issued on behalf of First Union against
Dart, Trak and Crown, Dart will reasonably cooperate with HHH to have
all of HHH's wages previously withheld by Dart, Trak and Crown and
deposited with the Clerk of the Circuit Court for Prince George's
County (inclusive of interest earned on such sums, if any, while on
deposit with the Court) turned over to HHH.
(v) Mutual Release. Dart shall, and Dart shall cause each
of the Dart Affiliates listed on EXHIBIT 14 to, execute and deliver to
HHH a Mutual Release in the form of EXHIBIT 14;
(vi) Life Insurance. Dart will permit HHH, after the
Closing, to (A) continue the life insurance policies (the "Insurance
Policies") on his life set forth in EXHIBIT 23 in whole or in part, at
his election, if and to the extent such continuation is permitted by
those policies without cost to Dart or any Dart Affiliates and (B)
assign the Insurance Policies to GGH upon delivery by GGH to Dart of
security documentation (including financing statements on Form UCC-1)
satisfactory to Dart to secure loans described below that have not been
repaid; provided, however, that the cash value of the policies and all
death benefits thereunder will be subject to a first priority perfected
security interest to secure HHH's obligation on a non-recourse basis to
repay Dart for all premiums heretofore paid on the Insurance Policies,
which obligation the parties acknowledge is in the total amount of
$1,068,313 as of the date of this Agreement; and provided further that
HHH (and his assigns) shall be responsible on a non-recourse basis for
outstanding policy loans and shall be prohibited from taking new policy
loans until Dart has been fully repaid the premiums that it paid. GGH
shall not be required to deliver such security documentation to Dart if
HHH shall have delivered to Dart an
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<PAGE> 26
irrevocable designation of Dart as sole beneficiary under each
Insurance Policy, which irrevocable designation shall have been
acknowledged by the issuer of such Insurance Policy and if such
designation is made, Dart shall deliver to GGH any cash proceeds
received by it under the Insurance Policies that, in the aggregate,
exceed $1,068,313. HHH shall not be personally liable for the loans
listed in EXHIBIT 23.
(vii) Escrow Funds. Dart shall notify the Escrow Agent that
Dart has no objection to the delivery to HHH (or to any other Person as
HHH may instruct in writing) (A) all Escrow Funds (as defined in the
Escrow Agreement) in the amount of $11,619,274.00, and (B) if the
Escrow Agent has received written consent from RSH to do so, $700,000
of the interest earned or accrued on the Escrow Funds since October 6,
1995;
(viii) Legal Fees. Dart shall reimburse HHH in the manner
provided in SECTION 7.1, up to $90,000 for reasonable fees of DPW for
reviewing filings made by Dart with the Securities and Exchange
Commission and assisting HHH with Board meetings of Dart and Dart
Affiliates since September 1994, if HHH shall have provided Dart with
reasonable evidence to support such reimbursement.
(ix) Closing Representation Certificates. Dart shall
execute and deliver the Closing Representation Certificates in the
forms attached hereto as EXHIBIT 24.
(x) Total Option. Dart will deliver to HHH an option to
purchase an interest in Total, which shall be the same as that to which
RMH was declared entitled in his litigation with Dart in the United
States District Court for the District of Delaware, mutatis mutandis.
Such option and the terms of its exercise will be as provided in
EXHIBIT 25 hereto.
(xi) Dart will, at HHH's instructions, wire cash payable to
him at Closing to Gloria G. Haft and Davis Polk & Wardwell, in amounts
and to banks, as instructed in writing by HHH.
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<PAGE> 27
ARTICLE III
CONDITIONS
SECTION 3.1. Closing Process; Interrelationship of Settlements.
(a) Standstill Order. The parties acknowledge that this Agreement and the
obligation of Dart and each Dart Affiliate to consummate the transactions
contemplated hereby, are subject to compliance with an order of the Delaware
Court of Chancery (the "Standstill Order") entered on December 6, 1995 that
requires Dart to refrain from taking or recognizing specified actions and, in
particular, Section 8 of the Standstill Order that requires Dart to give not
less than seven (7) days' notice of certain "extraordinary transactions" to the
other parties to the lawsuits contesting the Dart/RSH Settlement Agreement.
Within two (2) Business Days after the date of execution and delivery of each
of this Agreement, the Dart/RSH First Supplemental Agreement and the Dart/RSH
Second Supplemental Agreement, Dart shall send written notice of the
transactions contemplated thereby in accordance with the terms of Section 8 of
the Standstill Order. Notwithstanding any other provision of this Agreement,
neither Dart nor any Dart Affiliate shall be obligated to enter into any
agreement or perform any transaction or action contemplated hereby (other than
SECTION 2.1(a)) until such time as the seven (7) day notice period under
Section 8 of the Standstill Order has expired, or if later, such date as no
temporary restraining order, preliminary injunction, permanent injunction or
other court order is in effect that restrains Dart or any Dart Affiliate from
entering into such agreement or performing such transaction or action.
(b) Deliveries on Closing Date. On the Closing Date, each of the
parties shall simultaneously deliver to each other all of the agreements,
instruments and other documents each is specifically required to deliver to the
other on the Closing Date pursuant to SECTION 2.2 of this Agreement.
SECTION 3.2. Closing. The closing (the "Closing") shall occur at
the offices of Jones, Day, Reavis & Pogue, 1450 G Street, N.W., Washington,
D.C. 20005 or such other location as
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<PAGE> 28
the parties may agree on a date mutually acceptable to the parties within
forty-five (45) days after the date on which conditions to closing under
SECTIONS 3.4(a) AND 3.4(b) shall have been fulfilled (or waived in writing by
the party entitled to waive); provided, that neither party shall be obligated
to close unless all of the conditions to such party's obligation to close set
forth in SECTION 3.3 OR 3.4, as the case may be, are satisfied or waived by
such party in writing.
SECTION 3.3. Conditions Precedent to Dart's Obligation to Close.
Dart's obligation to close shall be subject to the fulfillment (or written
waiver by it, at its sole discretion) on or before the Closing Date, of each of
the following conditions precedent:
(a) Litigation. (i) the Delaware Court of Chancery shall have
entered orders satisfactory in form and substance to Dart:
(A) approving all of the terms of the Dart/RSH Settlement
Agreement, all of the terms of the Dart/RSH First
Supplemental Agreement, all of the terms of the
Dart/RSH Second Supplemental Agreement and all of the
terms of this Agreement as fair and reasonable to Dart
and its subsidiaries in a proceeding pursuant to Rule
23.1 of the Rules of the Court of Chancery of the
State of Delaware;
(B) dismissing as against all defendants, with prejudice,
the lawsuits captioned Alan R. Kahn and the Tudor
Trust v. Herbert Haft, et al., Civ. A. No. 13154 (Del.
Ch. filed Sept. 29, 1993) and Robert M. Haft v.
Ronald S. Haft, et al., Civ. A. No. 13268 (Del. Ch.);
(C) dismissing, without prejudice as against defendant
Michael Klein and with prejudice as against all other
defendants, the lawsuit captioned Lou v. Herbert H.
Haft, et al., Civ. A. No. 13761 (Del. Ch. filed Sept.
23, 1994);
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<PAGE> 29
(D) dismissing as against all defendants, with prejudice,
the lawsuits captioned Gloria Haft, et al. v. Larry
Schafran, et al., Civ. A. No. 14620 (Del. Ch.);
Herbert H. Haft v. Dart Group Corporation, et al.,
Civ. A. No. 14685 (Del. Ch.); and Ronald S. Haft v.
Herbert H. Haft and Dart Group Corporation, Civ. A.
No. 14425 (Del. Ch.); and
(ii) each of such orders shall have become final and not subject to
further appeal or rehearing.
(b) Other Plans of Reorganization.
(i) The orders entered by the Bankruptcy Court on June 12,
1997 confirming the debtor's revised third amended plan of reorganization for
each of (A) Seventy-Fifth Avenue Associates Limited Partnership, a Maryland
limited partnership, and (B) Trak Chicago Limited Partnership I, an Illinois
limited partnership (together, the "Other Plans of Reorganization"), shall be
final and not subject to further appeal or rehearing;
(ii) the terms and conditions of the Other Plans of
Reorganization shall not have been amended or modified from the forms confirmed
by the Bankruptcy Court prior to the date hereof without the written approval
of Dart; and
(iii) the Other Plans of Reorganization shall have become
effective and consummated substantially in accordance with their respective
terms, in all material respects;
(c) the closings under the Dart/Other Hafts Agreement and the
Dart/RSH First Supplemental Agreement shall have occurred, and all of the
actions and transactions to occur under the Dart/RSH Second Supplemental
Agreement (and the Amendment to Voting Trust Agreement to be entered into
pursuant thereto) on or prior to the Closing Date shall occur simultaneously on
the Closing Date or shall have occurred.
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<PAGE> 30
(d) HHH shall have performed in all material respects the duties
imposed on him by this Agreement to be performed by him on or before the
Closing Date.
(e) HHH shall have tendered to Dart certificates representing the
Shares free of all Liens, duly endorsed by HHH to Dart or a Dart Affiliate, as
the case may be, with HHH's signature guaranteed thereon.
(f) HHH shall have executed and delivered to Dart documents in the
form of EXHIBIT 12 confirming that he assigns and transfers any and all
interest he may have in any other shares of capital stock of Dart (including
shares subject to dispute with other Haft family members) and each Dart
Affiliate.
(g) HHH shall have executed and delivered to Dart instruments in the
form of the EXHIBIT 13 canceling all outstanding options held by HHH to
purchase stock of Dart, Trak and Crown and any co-investment rights or other
rights with respect to Total, Total Beverage Corporation, SFW, Dart/SFW Corp.
and SFW Holding Corp., except as provided in SECTION 2.2(b)(x).
(h) HHH shall have tendered to Dart a signed original copy of each
of the agreements representing options (the "Options") to purchase 129,750 Dart
A Shares, 6,668 shares of Trak common stock and 30,000 shares of Crown common
stock, or for each such agreement for which a signed original copy is not so
tendered, an affidavit signed by HHH reasonably satisfactory to Dart that such
option agreement has been lost or destroyed.
(i) HHH shall have executed and delivered to Dart the releases set
forth in SECTION 2.2(a)(v) above.
(j) HHH shall have executed and delivered to Dart an instrument of
renunciation of the Dart B Share Proxy in the form of EXHIBIT 15.
(k) HHH shall have executed and delivered to Dart the Assignment of
Warehouse Interests in the form attached hereto as EXHIBIT 4 and the
Limited-Purpose Power of Attorney in the form attached hereto as EXHIBIT 5.
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<PAGE> 31
(l) HHH shall have executed and delivered to Dart a letter resigning
his positions as a director and/or officer of Dart and each Dart Affiliate in
the form of EXHIBIT 16.
(m) HHH shall have executed and delivered to Dart the Termination of
Employment Agreement in the form attached hereto as EXHIBIT 10.
(n) HHH shall have executed and delivered to Dart an acknowledgment,
in the form attached hereto as EXHIBIT 28, that he has read each of the
documents delivered at the Closing, he has been fully represented by counsel
in connection with the transactions contemplated by this Agreement and he
shall not take the position at any time that any of the documents that HHH
executed in connection with this Agreement were not in keeping with his
understanding or do not reflect his agreement.
(o) HHH shall execute and deliver documents, in form and substance
satisfactory to Dart, acknowledging receipt of all cash and other property
received by him at the Closing.
(p) HHH shall execute and delivered to Dart at Closing such
documents agreed upon by the parties hereto in a letter dated the date hereof.
(q) HHH shall have delivered to Dart a duplicate original of life
insurance policy no. 61413731 issued on the life of HHH by John Hancock Mutual
Life Insurance Company and execute and deliver all such documents (including
UCC-1 financing statements) requested by Dart to create a perfected security
interest (subject to no other consensual Liens) in the proceeds from each of
the Insurance Policies in favor of Dart. In the alternative, HHH shall have
delivered to Dart an irrevocable designation of Dart as sole beneficiary under
each Insurance Policy to the extent of, but not in excess of the then unpaid
principal and interest due on policy loans due in respect of such Insurance
Policy, which irrevocable designation shall have been acknowledged by the
issuer of such Insurance Policy.
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<PAGE> 32
SECTION 3.4. Conditions Precedent to HHH's Obligations to Close.
HHH's obligation to close shall be subject to the fulfillment (or waiver by
him, at his sole discretion), on or before the Closing Date, of each of the
following conditions precedent:
(a) Litigation. (i) The Delaware Court of Chancery shall have
entered orders reasonably satisfactory in form and substance to HHH:
(A) approving all of the terms of this Agreement as fair
and reasonable to Dart and its subsidiaries in a
proceeding pursuant to Rule 23.1 of the Rules of the
Court of Chancery of the State of Delaware;
(B) dismissing as against all defendants, with prejudice,
the lawsuits captioned Alan R. Kahn and the Tudor
Trust v. Herbert Haft, et al., Civ. A. No. 13154 (Del.
Ch. filed Sept. 29, 1993); Robert M. Haft v. Ronald S.
Haft, et al., Civ. A. No. 13268 (Del. Ch.);
(C) dismissing, without prejudice as against defendant
Michael Klein and with prejudice as against all other
defendants, the lawsuit captioned Lou v. Herbert H.
Haft, et al., Civ. A. No. 13761 (Del. Ch. filed Sept.
23, 1994);
(D) dismissing as against all defendants, with prejudice,
the lawsuits captioned Gloria Haft, et al. v. Larry
Schafran, et al., Civ. A. No. 14620 (Del. Ch.);
Herbert H. Haft v. Dart Group Corporation, et al.,
Civ. A. No. 14685 (Del. Ch.); and Ronald S. Haft v.
Herbert H. Haft and Dart Group Corporation, Civ. A.
No. 14425 (Del. Ch.); and
(ii) each of such orders shall have become final and not subject to
further appeal or rehearing.
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<PAGE> 33
(b) Plan of Reorganization.
(i) [Intentionally omitted]
(ii) [Intentionally omitted]
(iii) [Intentionally omitted]
(c) Receipt of Escrowed Funds. HHH shall have received the Escrow
Funds, if consented to by RSH in accordance with SECTION 2.2(b)(vii), $700,000
interest earned or accrued thereon since October 6, 1995 and the payments
and/or promissory note deliveries required to be made by Dart at Closing
pursuant to SECTION 2.2(b)(i), less any required tax withholdings specified in
EXHIBIT 20.
(d) Performance. Dart shall have performed in all material respects
the duties imposed on it by this Agreement to be performed by it on or before
the Closing Date, except that HHH shall be obligated to close even if Dart
shall have failed to perform any of its duties under the following sections
("Stipulated Duties") on or before the Closing Date:
<TABLE>
<CAPTION>
---------------------------------------------------------
SECTION NO. FOR
DELIVERY BY DART SUBJECT
---------------------------------------------------------
<S> <C>
2.2(b)(ii) Vehicles
---------------------------------------------------------
2.1(a)(iii) Personal effects
---------------------------------------------------------
2.1(a)(ii) Use of Arthur Andersen
---------------------------------------------------------
2.2(b)(vi) Life insurance
---------------------------------------------------------
2.2(b)(x) Total option
---------------------------------------------------------
2.2(b)(viii) Legal fees
---------------------------------------------------------
2.2(b)(iii) Estoppel Certificates
---------------------------------------------------------
</TABLE>
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<PAGE> 34
It is expressly understood that, even though HHH's obligation to close is not
excused by any such failure to perform by Dart, Dart's obligations to HHH in
respect of the Stipulated Duties are not diminished, released or otherwise
affected by the fact that HHH has a duty to close despite Dart's
non-performance. The occurrence of the Closing shall not waive or alter any of
HHH's rights and HHH shall be entitled to pursue all available remedies against
Dart by reason of any non-performance in respect of the Stipulated Duties,
provided, however, that any recovery by HHH shall be limited to specific
performance and actual money damages for breach.
(e) Other Closings. The closings under the Dart/Other Hafts
Agreement, the Dart/RSH First Supplemental Agreement and the Dart/RSH Second
Supplemental Agreement shall have occurred or shall occur simultaneously.
(f) $10 Million Loan. (i) The closing of the $10 million loan from
Dart to the HHH/RSH Tier II Limited Partnership, a Maryland limited
partnership, which will own and pledge to Dart 99% of the equity interests in
the Sully Plaza, Maryland City and Rolling Valley shopping centers, shall have
occurred (which loan shall be 100% without recourse to HHH), simultaneously
with the Closing, pursuant to the Dart/RSH Second Supplemental Agreement and
the Loan Agreement attached as Exhibit C to the Dart/RSH Second Supplemental
Agreement and (ii) RSH shall concurrently prepay or shall have previously
prepaid in full the $10,000,000 in principal amount of notes issued by him to
HHH which by their terms are required to be prepaid upon receipt by RSH of such
$10 million loan.
(g) Dart shall execute and deliver documents acknowledging receipt
of all cash and other property received by it at the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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<PAGE> 35
SECTION 4.1. Representations and Warranties of HHH. HHH will
represent and warrant as follows on the Closing Date and, as to the matters set
forth in clauses (a), (b) and (e) below, represents and warrants the same on
the date hereof:
(a) Valid and Binding Obligations. This Agreement has been duly
executed and delivered by HHH and constitutes a legal, valid and binding
obligation of HHH enforceable against HHH in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
similar laws of general application affecting the remedies of creditors
generally, and except that, in the discretion of the court, equitable remedies
may not be available for the enforcement thereof. The Settlement Documents
(other than this Agreement) to which HHH is or will be a party are or, when
executed and delivered by HHH, will be valid and binding obligations of HHH,
enforceable against HHH in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws of general application affecting the remedies of creditors generally, and
except that, in the discretion of the court, equitable remedies may not be
available for the enforcement thereof.
(b) No Interference. Except as described on EXHIBIT 26, the
execution, delivery and performance by HHH of each of the Settlement Documents
to which HHH is or will be a party, and the consummation of the transactions
contemplated thereby, 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 HHH is a
party or (ii) any law, regulation, order, judgment, writ, decree, decision or
award by which HHH is bound.
(c) No Approvals. Except as described in EXHIBIT 26, 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
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<PAGE> 36
performance by HHH of the Settlement Documents and the consummation by HHH of
the transactions contemplated thereby.
(d) Title. (i) There are on October 6, 1997 no Liens (as defined
below) created by the signature of HHH or imposed by operation of law against
HHH other than Liens in favor of GGH and Liens on the Dart A Shares included in
the Assets which were originally created to secure First Union Bank ("First
Union Lien"). Except for such Liens, HHH has on October 6, 1997 good and
marketable title to all of the Assets, free and clear of Liens.
(ii) HHH will upon Closing have good and marketable title to all of
the assets being transferred by him to Dart at the Closing (the "Assets"), free
and clear of liens, charges, security interests, restrictions, claims or
encumbrances of any kind ("Liens"), and HHH has not taken any action that could
give rise to any such Lien; provided that HHH makes no representation or
warranty with respect to the HHH Warehouse/Office Building Interests except as
set forth in the Assignment of Warehouse Interests.
(e) Options. Except as described in EXHIBIT 26, HHH owns, and at
all times prior to the Closing will own, good and marketable title to all of
the Options free and clear of any Lien. HHH has not taken and will not take
any action that could give rise to such Lien. HHH does not own and does not
have any right to acquire any other shares of the capital stock of Dart or any
Dart Affiliate except the Options. Upon consummation of the transactions
contemplated by this Agreement at the Closing, HHH shall not beneficially own,
directly or indirectly, any interest in any shares of capital stock (or any
right to acquire any shares of capital stock) of Dart or any Dart Affiliate
other than his rights under (and any interests acquired pursuant to) the pledge
and security agreement executed and delivered by Dart pursuant to SECTION
2.2(h)(i).
(f) Absence of Certain Liens. HHH will on the Closing Date have no
liabilities, obligations or commitments, including, without limitation, those
for taxes of any kind, that, if adversely determined or not discharged or
performed by HHH, will create any Lien on or against any of the Assets.
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<PAGE> 37
(g) No Partnership Commitments. To the best knowledge of HHH, there
will on the Closing Date be no liability, commitment or obligation of HHH or
any partnership of which HHH is or has been a general partner, that affects or
could affect any of the Assets.
(h) No Litigation. There will on the Closing Date be no actions,
suits, proceedings, investigations or claims pending or, to the knowledge of
HHH, threatened against HHH or, to the knowledge of HHH, any other party, or
involving any of the Assets, that affect or could affect any of the Assets in
any respect, or that relate to any of the transactions contemplated by this
Agreement and that, if successful, could restrain or prohibit the consummation
of such transactions, and neither HHH nor any Assets is subject to any order,
judgment, writ, decree, decision or award that affects or could affect any of
the Assets in any respect; provided that HHH makes no representation or
warranty with respect to the HHH Warehouse/Office Building Interests except as
set forth in the Assignment of Warehouse Interests.
(i) HHH does not have the present intention to do any of the
following: (a) apply for, or consent in writing to, the appointment of a
receiver, trustee or liquidator; (b) file a voluntary petition seeking relief
under the Bankruptcy Code or be unable, or admit in writing his inability, to
pay his debts as they become due; or (c) make a general assignment for the
benefit of creditors.
(j) The delivery by HHH of certificates at the Closing representing
the Shares in the manner provided in SECTION 2.2(a)(ii) will transfer to Dart
or a Dart Affiliate, as the case may be, good, valid and marketable title to
such shares, free and clear of Liens, except the security interest in stock
securing the June Note.
SECTION 4.2. Representations and Warranties of Dart. Dart will
represent and warrant as follows on the Closing Date and, as to the matters set
forth in clauses (a), (b), (c) and (f) below, on the date hereof:
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<PAGE> 38
(a) Organization and Good Standing. Dart is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Valid and Binding Obligations. Assuming that all conditions
precedent to Closing set forth in SECTION 3.3(a) shall have been fulfilled, as
to which no representation or warranty is made, each of (i) the Settlement
Documents, (ii) the note issued by Dart to HHH on the Closing Date and (iii)
the pledge and security agreement provided to HHH on the Closing Date to which
Dart is or will be a party are or, when executed and delivered by Dart will be
the valid and binding obligations of Dart, enforceable against Dart in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws of general application
affecting the remedies of creditors generally, and except that, in the
discretion of the court, equitable remedies may not be available for the
enforcement thereof.
(c) No Interference. Except as described in EXHIBIT 27, the
execution, delivery and performance by Dart of the Settlement Documents to
which Dart is or will be a party and the consummation of the transactions
contemplated thereby 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 is a
party or (ii) any law, regulation, order, judgment, writ, decree, decision or
award by which Dart is bound.
(d) No Approvals. Except as described in EXHIBIT 27, 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 of the Settlement Documents
to which Dart is or will be a party or the consummation by Dart of the
transactions contemplated thereby.
- 33 -
<PAGE> 39
(e) No Litigation. Except as set forth in EXHIBIT 27, there are no
actions, suits, proceedings, investigations or claims pending or, to the
knowledge of Dart, threatened against Dart or, to the knowledge of Dart, any
other party, that relate to any of the transactions contemplated hereby and
that, if successful, could restrain or prohibit the consummation of such
transactions.
(f) Absence of Certain Intentions. Dart 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 Bankruptcy Code or be unable, or admit in
writing its inability, to pay its debts as they become due; or (iii) make a
general assignment for the benefit of creditors.
SECTION 4.3. Additional Covenants.
(a) HHH covenants that, on or before the Closing, he will cause all
of his liabilities to GGH which are secured by Liens on the Assets to be paid
in full.
(b) HHH further covenants (I) that he will create no consensual
Liens on any one or more of the Assets prior to Closing, except to secure a
lender or lenders for one or more new-money loans substantially all of the
proceeds of which are applied to pay in full the liabilities to GGH referred to
above ("bridge loan") and (II) that if he takes down a bridge loan and the same
is secured by Liens on any of the Assets, he will, at or before Closing cause
all liabilities to the holder or holders of the bridge loan which are secured
by Liens on the Assets to be paid in full.
(c) HHH hereby consents that if at Closing there exist any
consensual Liens created by HHH on any of the Assets other than those referred
to above and HHH fails to pay all good-faith uncontested liabilities secured by
all such Liens and if any of such liabilities not contested in good faith by
HHH to GGH or a holder or holders of a bridge loan shall not have been paid in
full by HHH, then HHH consents to Dart applying proceeds otherwise payable to
HHH to the extent necessary to pay down in
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<PAGE> 40
full all such then-unpaid liabilities not contested in good faith by HHH.
(d) Dart covenants that it will not attempt to apply or have applied
any amounts payable to HHH at Closing for use to eliminate the First Union Lien
for which HHH understands RSH has agreed with HHH that RSH will be responsible.
ARTICLE V
COOPERATION; OTHER MATTERS
SECTION 5.1. Pending Litigation. Within six (6) business days
after execution of the last to be executed of this Agreement, the Dart/Other
Hafts Agreement, the Dart/RSH First Supplemental Agreement and the Dart/RSH
Second Supplemental Agreement, counsel for Dart shall prepare and, subject to
approval thereof by counsel for HHH, file appropriate papers with the
appropriate courts to approve this Agreement and the transactions contemplated
hereby (these papers to be prepared at the sole cost and expense of Dart,
except that HHH will be responsible for his own legal fees in reviewing the
same). At or promptly after the execution and delivery of this Agreement, Dart
and HHH shall cooperate in the preparation, delivery and filing of appropriate
pleadings and stipulations to stay, if possible, all Pending Litigation during
the period prior to the Closing or the termination of this Agreement. Neither
party shall use the stay of any Pending Litigation pursuant to this Agreement
as a basis for arguing that the other party failed to prosecute or that such
party has been prejudiced by the lapse of time. Dart and HHH shall cooperate
in the preparation, delivery and filing of appropriate papers with the
appropriate courts for the dismissal with prejudice of all Pending Litigation
except that Dart and HHH shall request that the lawsuit captioned Lou v.
Herbert H. Haft, et al., C.A. No. 13761 (Del. Ch. filed Sept. 23, 1994) be
dismissed without prejudice as against defendant Michael Klein and with
prejudice as against all other defendants.
SECTION 5.2. New Litigation. Except for claims concerning
enforcement of this Agreement, neither party shall initiate any new litigation
claims against the other party prior to Closing or the termination of this
Agreement. The parties agree that the
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time periods prescribed in any statutes of limitations relevant to any claims
they may have against each other are tolled and shall not run from the date of
this Agreement until Closing or the termination of this Agreement.
SECTION 5.3. Cooperation and Support. (a) Subject to clause (d)
below, HHH and Dart shall each support the achievement of fulfillment of all
conditions precedent to Closing before the Bankruptcy Court and the Delaware
Court of Chancery and any other court or tribunal which shall be asked to
assert jurisdiction over the same.
(b) Subject to clause (d) below, Dart and HHH will each cooperate in
the defense of any litigation instituted by any Person challenging, and will
not challenge in any court proceeding this Agreement, the Dart/RSH Settlement
Agreement, the Dart/Other Hafts Agreement, the Dart/RSH First Supplemental
Agreement, the Dart/RSH Second Supplemental Agreement or any of the
transactions contemplated thereby provided, that all legal fees and costs
incurred in such defense of Dart's counsel and expert witnesses, if any, (other
than for HHH's and RSH's personal counsel) shall be paid by Dart. Effective
upon execution and delivery of this Agreement by both HHH and Dart, HHH agrees
not to object, and effective upon such execution and delivery HHH consents, to
any settlement among Dart, Crown, Trak, Dart/SFW Corp., SFW Holding Corp., SFW,
RMH, GGH and LGH provided, however that nothing in the foregoing consent
requires HHH to enter into any agreement or incur any liability or obligation.
If any challenges to the transactions contemplated hereby are made after the
Closing, HHH's sole rights in respect thereof shall be governed by his
indemnification rights provided for in SECTION 2.1(c) above.
(c) Subject to clause (d) below, HHH hereby agrees to cooperate, in
his individual capacity and in his capacities as a stockholder, director,
officer and employee of Dart, with Dart in the full implementation of the
transactions contemplated by this Agreement, the Dart/RSH Settlement Agreement,
the Dart/RSH First Supplemental Agreement, the Dart/RSH Second Supplemental
Agreement and the Dart/Other Hafts Agreement and the financing thereof.
(d) Nothing in this SECTION 5.3 shall require HHH or Dart to waive
any attorney-client privilege. Nothing in this SECTION 5.3
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<PAGE> 42
shall require HHH to take any action in his capacity as a director of Dart or
any Dart Affiliate that HHH determines to be inconsistent with the exercise of
his independent judgment as a fiduciary. HHH shall not be required by this
SECTION 5.3 to take or not take any action individually or as a stockholder,
director, officer or employee of Dart if he reasonably determines, based on
written advice of counsel experienced in corporate law, that such action or
inaction would violate any duties imposed on him by law.
(e) In addition, subject to clause (d) above, HHH will cooperate
fully and promptly (including voting in favor of) and not interfere with the
confirmation and consummation of the Other Plans of Reorganization, provided
that no transfers of cash or other consideration thereunder may be payable to
or for the account of RSH or any one or more CPI Debtors unless and until the
Closing shall have occurred.
(f) Each of Dart and HHH shall use reasonable efforts to fulfill all
conditions to closing that are within the power of such party to fulfill;
provided, however, that this SECTION 5.3(f) shall not require Dart or HHH to
waive any conditions to closing and shall not require Dart or HHH to make any
payments or incur any costs not expressly required by this Agreement.
Notwithstanding the foregoing, neither this SECTION 5.3(f) nor any other
provision of this Agreement shall require Dart to agree to any terms, waive any
conditions or fail to perform any of its obligations with respect to the
Dart/Other Hafts Agreement, the Dart/RSH First Supplemental Agreement or the
Dart/RSH Second Supplemental Agreement, it being specifically acknowledged that
the Dart/Other Hafts Agreement may require Dart to close the transactions
pursuant thereto on a date prior to the Closing Date and whether or not the
Closing will occur.
(g) Subject to clause (d) above, HHH shall cooperate fully and
promptly and not interfere with the amended plans of reorganization for the
75th Avenue/Wooded Lot and Bridgeview Warehouses approved by RSH and Dart,
which may become effective prior to the Closing.
(h) Subject to clause (d) above, from and after the date of this
Agreement, HHH will agree not to object to or interfere in any way with, and
will agree to provide any consents that may be reasonably requested by Dart in
connection with any financing,
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<PAGE> 43
stock sale, asset sale or other similar transactions by Dart and/or any of its
subsidiaries after approval by a majority of the members of the Board of
Directors of Dart, SFW, Trak or Crown.
(i) Subject to clause (d) above, if and to the extent that clauses
(g) and (h) of this SECTION 5.3 are deemed to be inconsistent with any other
clause of this SECTION 5.3, clauses (g) and (h) shall take precedence.
SECTION 5.4. Further Assurances. HHH and Dart each shall execute
and deliver, or 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 Settlement Documents.
SECTION 5.5. Liquidation Distributions. In the event that after
the Closing the Board of Directors of Dart, after adopting a plan of complete
liquidation or after dissolution of Dart has been authorized in accordance with
Section 275 of the Delaware General Corporation Law (or any successor or
comparable statutory provision then applicable), may determine to pay a
liquidating distribution to the shareholders of Dart, then Dart may elect to
cap any and all actual and contingent liabilities that it or any Dart
Affiliates or any of their respective affiliates may have to HHH by the
establishment of a reserve fund for such purpose in the aggregate amount of
$1,000,000, it being understood that any unused portion of such reserve fund
may be withdrawn by or on behalf of Dart (or any liquidating trustee for Dart)
or distributed to Dart's stockholders at any time after December 31, 2002;
provided, that establishment of the reserve fund shall not cap any obligations
under the promissory note issued by Dart pursuant to SECTION 2.2(b)(i)(B) AND
(C) of this Agreement and any indemnification obligations for claims that are
pending, or are threatened or asserted in writing, and of which Dart has
written notice before the reserve fund is established.
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<PAGE> 44
ARTICLE VI
INDEMNIFICATION
SECTION 6.1. Indemnification by HHH. HHH shall defend, indemnify
and hold Dart, each of its subsidiaries and each of their respective officers,
employees, directors, agents and representatives (the "Dart Indemnitees")
harmless from and against any and all 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 in any material
respect of HHH contained in any of the Settlement Documents, or any certificate
or other instrument furnished to any Dart Indemnitee by or on behalf of HHH
pursuant to any of the Settlement Documents.
SECTION 6.2. Indemnification by Dart. Dart shall defend, indemnify
and hold HHH and his agents and representatives (the "HHH Indemnitees")
harmless from and against any and all Costs asserted against or incurred by any
HHH Indemnitee, directly or indirectly, arising out of or resulting from any
inaccuracy in or breach of any of the representations, warranties or covenants
in any material respect of Dart contained in any of the Settlement Documents,
or any certificate or other instrument furnished to any HHH Indemnitee by or on
behalf of Dart pursuant to any of the Settlement Documents.
SECTION 6.3. Indemnification Procedure. As soon as is reasonably
practicable after any HHH Indemnitee or any Dart Indemnitee becomes aware of
any claim that it has to recover Costs under this ARTICLE 6, such HHH
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 Indemnified Party from obtaining indemnification under
this ARTICLE 6, except to the extent that such Indemnified Party's failure has
materially prejudiced the Indemnifying Party's rights or materially increased
its liabilities and
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<PAGE> 45
obligations hereunder. In the event of a third-party claim which is subject to
indemnification under this ARTICLE 6, 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 the
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.
SECTION 6.4. Remedies to be Cumulative. The remedies to any
Indemnified Party provided herein shall be in addition to, and not in lieu of
any other remedies to which such Indemnified Party is entitled at law or in
equity for any breach or non-compliance by any Indemnifying Party with the
provisions of any of the Settlement Documents, provided, however, that no claim
by a Dart Indemnitee shall constitute a defense to or set off against any
payment obligation of Dart under the June Note unless the same shall be based
solely on wrongful conduct by HHH after the Closing Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Payments. All payments to either party under this
Agreement shall be made on the date when due in immediately available funds to
such party's account, or such other account, as such party shall theretofore
have specified in accordance with the provisions of SECTION 7.4.
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<PAGE> 46
SECTION 7.2. Expenses. Except as otherwise expressly provided for
herein, each party shall pay its 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; provided, however, that any transfer or recordation taxes
payable in connection with the transfer by HHH of his interest in the Warehouse
Interest known as Pennsy I will be paid 50% by HHH and 50% by Dart.
SECTION 7.3. Drafting Party. Each party stipulates that it has
been represented in the negotiations for and the preparation of this Agreement
by counsel of their own choosing; that they have read the Agreement or have had
it read to them by their counsel; that they have had it fully explained to them
by their counsel; and that they are fully aware of its contents and of its
legal effect. Accordingly, HHH and Dart agree that the rule that the language
of this Agreement be interpreted against the drafting party shall not apply.
SECTION 7.4. 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, and by telefax as follows, unless any such address is
changed by notice hereunder:
To HHH:
Herbert H. Haft
2501 30th Street, N.W.
Washington, D.C. 20008
Telefax: 202-234-7197
With copies to:
Marshall Ruben, Esq.
Ruben, Johnson & Morgan, P.C.
City Place II
Hartford, CT 06103
Telefax: 860-275-6884
and
Stephen H. Case, Esq.
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<PAGE> 47
Davis Polk & Wardwell
1300 I ("Eye") Street, N.W.
Washington, D.C. 20005
Telefax: 202-962-7111
To Dart:
Dart Group Corporation
3300 75th Avenue
Landover, MD 20785
Attention: Chief Financial Officer
and
Attention: General Counsel
Telefax: 301-772-3910
With a copy to:
Kenneth J. Ayres, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
Telefax: 202-737-2832
SECTION 7.5. Amendment and Waivers. This Agreement may be amended
or supplemented only by a written instrument duly executed by or on behalf of
each party hereto. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No
waiver by either HHH or Dart of such party's rights under any provision of this
Agreement shall constitute a waiver of such party's rights under such provision
at any other time or the waiver of such party's rights under any other
provision of this Agreement. No failure or delay by HHH or Dart in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law or equity.
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<PAGE> 48
SECTION 7.6. Severability. If any one or more provisions of this
Agreement or any agreement, document or instrument delivered pursuant hereto
(including without limitation the Mutual Releases in the form of EXHIBIT 14)
shall be declared invalid, illegal or unenforceable in whole, in part or in any
respect, the validity, legality and enforceability of all remaining provisions
shall not in any way be affected or impaired.
SECTION 7.7. Survival of Representations and Warranties. The
representations and warranties and covenants of the parties hereto shall
survive the Closing Date.
SECTION 7.8. Governing Law. This Agreement and the documents and
instruments delivered pursuant hereto (except as otherwise provided therein)
shall be governed by and construed in accordance with the laws of the State of
Delaware.
SECTION 7.9. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This
Agreement constitutes the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
SECTION 7.10. Successors. This Agreement shall be binding upon and
inure to the benefit of Dart and its successors and assigns and HHH and his
estate, administrators, executors, legal representatives in incapacity
proceedings, beneficiaries, heirs and other successors in interest.
SECTION 7.11. Specific Performance; Remedies. (a) HHH and Dart each
acknowledge and agree that in the event of any breach of this Agreement or any
other Settlement Document, the non-breaching party would be irreparably harmed
and could not be made whole by monetary damages. It is accordingly agreed that
HHH and Dart, in addition to any other remedy to which they may be entitled to
at law or in equity, shall be entitled to compel specific performance
(including by temporary restraining orders) of this Agreement or any other
Settlement Document 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 could have jurisdiction over such action,
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<PAGE> 49
in any court of the United States or any state having subject matter
jurisdiction.
(b) If this Agreement terminates without the Closing having
occurred, neither party shall have any liability for damages arising out of
this Agreement except for actual damages directly caused by such party's breach
of its express obligations set forth in this Agreement.
(c) HHH and Dart 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.
SECTION 7.12. Termination. (a) Either party may terminate this
Agreement at any time prior to Closing by written notice to the other if at the
time such notice is delivered to any of the Dart/Other Hafts Settlement
Agreement, the Dart/RSH First Supplemental Agreement or the Dart/RSH Second
Supplemental Agreement shall have been terminated or become unenforceable.
(b) Either party may terminate this Agreement at any time prior to
Closing by written notice to the other: (i) if the other party shall have
failed in any material way to perform its obligations under this Agreement and
shall have failed to cure such failure within ten (10) days after written
notice thereof from the other party; (ii) if the Dart/Other Hafts Settlement
Agreement, the Dart/RSH First Supplemental Agreement or the Dart/RSH Second
Supplemental Agreement shall have terminated without closing otherwise than by
reason of default by Dart or any Dart Affiliate; (iii) if the conditions
precedent set forth in Sections 3.3(a) and 3.3(b) and SECTIONS 3.4(a) AND
3.4(b) shall not have been fulfilled on or before June 15, 1998; (iv) if all of
the express conditions to such party's obligation to close set forth in
SECTIONS 3.3 OR 3.4, as the case may be, shall not have been satisfied by June
30, 1998; provided, however, that if the Delaware Court of Chancery shall have
issued a ruling on the application for approval of this Agreement or any
related matters, and any applications for rehearing, notices of appeal or other
similar proceedings with respect thereto have been made or filed
("post-judgment review") then each of the two deadline dates set forth above
shall automatically be extended until the fifteenth Business Day after the
entry of its order on the approval of this Agreement or final resolution of all
such post-judgment review, as the case may be, with the understanding that
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<PAGE> 50
each of the above dates, if so postponed, will each be postponed to the same
date as the other; or (v) if the Closing shall not have occurred by 11:59 p.m.
(EST) on December 31, 1998.
SECTION 7.13. Time. Time is of the essence in this Agreement.
SECTION 7.14. Assignment. Neither party may assign its rights
hereunder, except that Dart may assign any of its rights under this Agreement
to any Person, who at the time of such assignment, is a Dart Affiliate. The
obligations under this Agreement shall not be the obligations of any Dart
Affiliate.
SECTION 7.15. Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any Person, other than
the parties hereto, any right or remedies under or by reason of this Agreement.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give either of the parties hereto any right or remedies under or by
reason of any agreement to which it is not a party.
ARTICLE VIII
SECTION 8.1. Limited Right of Dart to Terminate Agreement. (a)
Notwithstanding any other provision of this Agreement, none of the
representations and warranties, covenants, agreements, obligations or
commitments of Dart set forth in this Agreement shall be effective if (i) after
Dart shall have given written notice of this Agreement pursuant to Section 8 of
the Standstill Order to the other Persons subject to the Standstill Order, any
of such Persons shall have timely filed any objection to this
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<PAGE> 51
Agreement pursuant thereto and (ii) Dart, in good faith, determines
that there might be sufficient merit in such objection that it is in the best
interests for Dart to declare, by written notice to HHH, that it has elected to
invoke this clause (a) and declare this Agreement to have been null and void,
ab initio, whereupon, after the giving of such notice, this Agreement shall be
null and void, ab initio.
(b) This Agreement shall be null, void and of no effect, ab initio, if
on or before the eighth (8th) Business Day after the date of execution and
delivery hereof by Dart, the Delaware Court of Chancery issues any order, writ,
injunction or decree restraining, enjoining or prohibiting in any way the
effectiveness of this Agreement or the consummation of any of the transactions
contemplated by this Agreement.
SECTION 8.2. HHH Bound. All of the provisions of this Agreement
shall be binding on and effective with respect to HHH from the date stated in
the first sentence of this Agreement. HHH hereby acknowledges that adequate
and valid consideration has been received for his agreement to be bound to all
of the provisions of this Agreement from this date, notwithstanding Dart's
right to elect not to be bound pursuant to SECTION 8.1.
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<PAGE> 52
IN WITNESS WHEREOF, HHH and Dart have executed (or caused to be
executed on its behalf) this Agreement as of the date first above written.
/S/ Herbert H. Haft
------------------------------
Herbert H. Haft
DART GROUP CORPORATION
By: /S/ Ellliot R. Arditti
----------------------------
Name: Elliot R. Arditti
Title: Sr. Vice President
Corporate Secretary
Approved and Recommended
/S/ Richard B. Stone
- ------------------------
Richard B. Stone,
as Voting Trustee
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<PAGE> 53
EXHIBIT 1
HHH STOCK OWNERSHIP
Dart Group Corporation
122,747 shares of Class A common stock
Options to purchase 129,750 shares of Class A common stock
Trak Auto Corporation
500 shares of common stock
Options to purchase 6,668 shares of common stock
Crown Books Corporation
500 shares of common stock
Options to purchase 30,000 shares of common stock
<PAGE> 54
EXHIBIT 2
Pending Litigation
1. Kahn v. Herbert Haft, C.A. No. 13154 (Del. Ch. filed Sept. 29, 1993).
2. Lou v. Herbert Haft, C.A. No. 13761 (Del. Ch. filed Sept. 23, 1994).
3. Robert Haft v. Ronald Haft, C.A. No. 13268 (Del. Ch. filed Nov. 23,
1993).
4. Ronald Haft v. Herbert Haft, C.A. No. 14425 (Del. Ch. filed July 18,
1995).
5. Herbert Haft v. Dart Group Corp., C.A. No. 14685 (Del. Ch. filed Nov.
6, 1995).
6. Gloria Haft v. Larry Schafran, C.A. No. 14620 (Del. Ch. filed Oct. 18,
1995).
7. Dart Group Corp. v. Herbert Haft, C.A. No. CAL95-02302 (Prince George's
County, Md. Cir. Ct. filed Feb. 10, 1995).
8. Dart Group Corp. v. Herbert Haft, C.A. No. CAL96-26474 (Prince George's
County, Md. Cir. Ct. filed Dec. 17, 1996).
9. Dart Group Corp. v. Herbert Haft, C.A. No. 96-CV-2788 (D.D.C. filed
Dec. 17, 1996).
<PAGE> 55
EXHIBIT 3
CPI DEBTORS
Combined Properties Incorporated
Combined Properties Limited Partnership
Haft Equities-Bladen Limited Partnership
Combined Properties/Ontario Limited Partnership
Haft Equities-Rose Hill Limited Partnership
Haft Equities-Sully Plaza Limited Partnership
Combined Properties/Reseda Associates Limited Partnership
Trak Chicago Limited Partnership I
Combined Properties/Silver Hill Limited Partnership
Charles County Associates Limited Partnership
Penn-Daw Associates Limited Partnership
Seventy-Fifth Avenue Associates Limited Partnership
1751 Columbia Road Limited Partnership
Sugarland Plaza Limited Partnership
Rock Creek Village Associates Limited Partnership
<PAGE> 56
EXHIBIT 11
WAIVER, CONSENT AND DISCLAIMER BY HERBERT H. HAFT
THIS WAIVER, CONSENT AND DISCLAIMER BY HERBERT H. HAFT ("Waiver,
Consent and Disclaimer") is made as of the _____ day of September, 1997 by
HERBERT H. HAFT, personally ("HHH"), for the benefit and in favor of each of
RONALD S. HAFT ("RSH"), DART GROUP CORPORATION ("Dart"), and TRAK AUTO
CORPORATION.
WITNESSETH:
WHEREAS, Dart and HHH have entered into a Settlement Agreement dated
September ___, 1997 (the "Settlement Agreement") wherein they agree to settle
certain disputes on terms and conditions set forth therein; and
WHEREAS, in furtherance of the consummation of the Settlement Agreement
and the transactions provided for therein, HHH makes this Waiver, Consent and
Disclaimer.
NOW, THEREFORE, in consideration of the foregoing, one Dollar ($1.00)
in hand paid, the reliance by RSH, Dart and Trak Auto Corporation on the
contents of this Waiver, Consent and Disclaimer, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, HHH
hereby states as follows:
1. The foregoing recitals are incorporated in the text of this Waiver, Consent
and Disclaimer as if fully set forth herein.
2. HHH hereby waives, disclaims and disavows any right, title or interest,
direct or indirect, in any shares of Dart Class B Common Stock formerly held by
Haft Equities-General Limited Partnership and distributed by HHH to RSH, Robert
M. Haft, and Linda G. Haft pursuant to HHH's letter dated August 4, 1993, a copy
of which is attached hereto as Exhibit A. HHH hereby consents to the delivery to
Dart by RSH on behalf of himself and as the duly authorized representative of
Haft Equities General Limited Partnership of a written waiver of any claim of
right, title or interest in and to such shares.
3. HHH hereby confirms and acknowledges that he has no objection to the
dismissals of RSH and Combined Properties, Incorporated ("CPI") as defendants in
that certain case styled Dart Group Corporation v. Herbert H. Haft, et. al.,
Case No. 95-02302, pending in the Circuit Court for Prince George's County,
<PAGE> 57
Maryland (the "Pennsy Case"), and in furtherance thereof, HHH agrees that he
will at Dart's and RSH's request advise the court that he does not oppose
motions filed by Dart in the Pennsy Case on or about October 20, 1995, or
renewals thereof, to dismiss Dart's claims against RSH and CPI and the
counterclaims of RSH and CPI against Dart.
4. This Waiver, Consent and Disclaimer and the contents hereof are irrevocable
and effective as of the date hereof, and the same may be relied upon by Dart
Group Corporation, Trak Auto Corporation and such other persons and entities as
have an interest in the subject matter hereof.
5. In making this Waiver, Consent and Disclaimer, HHH hereby acknowledges and
affirms that he has read the same, and has had its contents explained to him to
his satisfaction by his own legal counsel, that he has received adequate, fair,
good and valuable consideration in respect hereof, and that it is HHH's
intention that the waivers, consents, disclaimers, acknowledgments and
affirmations herein contained shall be forever binding upon him, his
representatives, successors and assigns, and operate as an estoppel for all
purposes with respect to the matters herein contained.
-------------------------------
HERBERT H. HAFT, personally
CITY OF WASHINGTON
DISTRICT OF COLUMBIA
On this ____ day of September, 1997, before me personally appeared
Herbert H. Haft, known to me (or satisfactorily proven) to be the person whose
name is subscribed to the above Waiver, Consent and Disclaimer of Herbert H.
Haft, and acknowledged that he executed the same for the purposes therein
contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
-------------------------------
Notary Public
My Commission Expires:
- ---------------------
2
<PAGE> 58
EXHIBIT 14
FORM OF
MUTUAL RELEASE
THIS MUTUAL RELEASE (this "RELEASE"), dated as of _____________1, 1997,
by and among (1) each of Dart Group Corporation, a Delaware corporation
("DART"), Crown Books Corporation, a Delaware corporation, Trak Auto
Corporation, a Delaware corporation, Dart/SFW Corp., a Delaware corporation, SFW
Holding Corp., a Delaware corporation, Shoppers Food Warehouse Corp., a Delaware
corporation, and Total Beverage Corporation, a Delaware corporation
(collectively, the "DART COMPANIES"), and (2) Herbert H. Haft ("HHH") is being
delivered pursuant to that certain Settlement Agreement, dated July 14, 1997, by
and between Dart Group Corporation and HHH (the "SETTLEMENT AGREEMENT"). Except
as otherwise defined herein, capitalized terms used in this Release shall have
the meanings ascribed to such terms in the Settlement Agreement.
WITNESSETH:
WHEREAS, Dart and HHH are parties to the Settlement Agreement, pursuant
to which they have agreed to the settlement of certain lawsuits and other
disputes between HHH and the Dart Companies, on the terms and subject to the
conditions set forth therein;
WHEREAS, to implement the Settlement Agreement the parties hereto have
agreed to enter into this Release.
NOW, THEREFORE, for and in consideration of Dart and HHH entering into
the Settlement Agreement and of the closing of the transactions contemplated
thereby, for the promises and agreements therein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Release by Dart and Affiliates. The Dart Companies, for (a)
themselves and their respective administrators, successors, assigns and
Affiliates, and (b) their respective present and former officers, directors,
employees, stockholders, attorneys (excluding Wilmer, Cutler & Pickering and its
partners ("WCP")) and agents, as provided in this Section 1 and in Section 6
(collectively, the "DART RELEASE PARTIES"), hereby permanently, irrevocably and
- ----------------------
1 To be dated the Closing Date
<PAGE> 59
unconditionally release and forever discharge HHH, and his heirs, executors,
administrators, successors, assigns and present and former employees, attorneys
(excluding WCP) and agents (collectively, the "HHH 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, at law or in equity, whether
known or unknown, now existing or which may hereafter arise under the laws of
the United States (including without limitation the federal securities laws),
any State or territory thereof including without limitation their respective
securities laws, or any other jurisdiction, for or by reason of any matter,
cause, or thing whatsoever on or prior to the date hereof, or that may arise
after the date hereof based on facts occurring, or omissions made, prior to the
date hereof, regardless of whether future damages may result therefrom, except
as provided in Section 5 hereof (collectively, "Claims") against the HHH Release
Parties, or any one or more of them,
SECTION 2. Release by HHH and Affiliates.
(a) HHH, for himself and all of the other HHH Release Parties,
hereby permanently, irrevocably and unconditionally releases and forever
discharges (subject to the limitations set forth in Sections 5 and 6 and the
ensuing provisions of this Section 2) the Dart Release Parties from any and all
manner of Claims against the Dart Release Parties or any one or more of them,
except that GGH, LGH, RMH and RSH is each released by the foregoing provisions
of this paragraph only from any one or more Claims arising solely out of acts or
omissions occurring in his or her capacity as officer, director, employee,
attorney, agent or stockholder of any one or more of the Dart Companies, it
being understood that all Claims arising out of acts or omissions by any one or
more of them occurring in their capacities as individuals or in any capacity
other than as an officer, director, employee, attorney, agent or stockholder for
any one or more of the Dart Companies are expressly not released by this
paragraph.
(b) HHH, for himself and all of the other HHH Release Parties,
hereby permanently, irrevocably and unconditionally releases and forever
discharges each entity that is currently or hereafter becomes controlled by, and
50% or more of the equity interests in which are or become owned by, any one or
more of HHH, GGH, LGH, RMH or RSH or any combination of them and subsequently
becomes directly or indirectly controlled by, and 50% or more of the equity
interests in which are or become owned by, any one or more of the Dart Companies
(a "DART ACQUIRED ENTITY"), from any and all manner of Claims (except as
provided in Sections 5 or 6 hereof) that any HHH Release Party may now or
hereafter have in connection with the Heads of Agreement, the Heads of Agreement
II, and/or that certain Indemnification Agreement, dated as of July 31,
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<PAGE> 60
1994, by HHH and Ronald S. Haft for the benefit of Gloria, Robert and Linda Haft
(as guaranteed by various partnerships and corporations, including, without
limitation, Combined Properties/Ontario Limited Partnership, 3301 Pennsy Drive
Associates Limited Partnership, Haft/Equities-Sully Plaza Limited Partnership,
Combined Properties/Forbes Boulevard Limited Partnership and CP/Forbes
Boulevard), that certain Settlement Agreement dated as of August 16, 1996,
between RSH and HHH, and any other agreement pursuant to which any entity which
is now or hereafter becomes a Dart Acquired Entity is jointly, severally, or
jointly and severally liable as guarantors or indemnitors with respect to any
obligations of RSH, HHH or any entity directly or indirectly controlled by RSH
or HHH. This release shall not be effective as to any Dart Acquired Entity
unless and until one or more Dart Release parties shall have at any time on or
after the date hereof, individually or collectively, directly or indirectly,
controlled or owned 50% of the equity interests of such Dart Acquired Entity. As
used herein, "Entity" does not include an individual human being.
SECTION 3. Non-assignment. Each of the Dart Release Parties represents
and warrants to the HHH Release Parties that such Dart Release Party has not
assigned or transferred to any other person or entity any claim such Dart
Release Party has 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 HHH
Release Parties. Likewise, each HHH Release Party has not assigned or
transferred to any other person or entity any claim such HHH Release Party has
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.
SECTION 4. Non-acquisition. Each of the Dart Release Parties covenants
to each of the HHH Release Parties that such Dart Release Party will not
knowingly acquire, purchase or otherwise obtain any claim arising out of or by
reason of any matter, cause or thing whatsoever against any of the HHH Release
Parties. Likewise, each of the HHH Release Parties covenants to the Dart release
Parties that such HHH Release Party will not knowingly acquire, purchase or
otherwise obtain any claim arising out of or by reason of any matter, cause or
thing whatsoever against any of the Dart Release Parties. Claims arising under
the Settlement Documents shall be excluded form the covenants set forth in this
Section 4.
SECTION 5. Excluded Claims. Notwithstanding any other provisions of
this Release, this Release shall not affect any rights or claims of any Dart
Release Party or any HHH Release Party arising under or preserved in Section 2.1
of the Settlement Documents.
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<PAGE> 61
SECTION 6. No Release of Other Hafts or Partnerships or Corporations
other than Dart and Dart Affiliates. Notwithstanding any other provision of this
Release, neither GGH, LGH, RMH or RSH, nor any partnerships or corporations
other than Dart and Dart Affiliates shall be deemed to be among the persons
constituting either Dart Release Parties, Dart Acquired Entities or HHH Release
Parties for purposes of this Release, provided, that GGH, LGH, RMH and RSH shall
constitute Dart Release Parties for purposes of all matters (a) arising out of
or relating to their prior positions as officers, directors, employees, agents
or stockholders of any of the Dart Companies or (b) with respect to which they
at any time have a right of indemnification from or against any of the Dart
Companies as officers, directors, employees, agents or designees. Nothing in
this Release shall be construed to affect any Claims by the Dart Release
Parties, Dart Acquired Entities or the HHH Release Parties against or any one or
more of GGH, LGH, RMH and RSH and any one or more partnerships or corporations
other than Dart and Affiliates of Dart to which this Release has become
effective, except that the HHH Release Parties hereby release all claims they
may have against any of GGH, LGH, RMH and RSH (a) arising out of or relating to
their prior positions as offices, directors, employees, agents or shareholders
of any of the Dart Companies or (b) with respect of which they at any time have
a right of indemnification as officers, directors, employees, agents or
designees from or against any of the Dart Companies, it being understood that
the immediately preceding subclauses (a) and (b) shall not in any manner
constitute a release by the HHH Release Parties of any of GGH, RMH, LGH, or RSH
to the extent of any obligations of any such parties to HHH created under any
one or more of Heads of Agreement, Heads of Agreement II and/or that certain
Indemnification Agreement dated as of July 31, 1994 by HHH and RSH for the
benefit of GGH, RMH and LGH. Without limitation of the foregoing, nothing in
this document releases RSH or any Combined Entities from any obligations
incurred by them or liabilities they may have under the Settlement Agreement
dated as of August 16, 1996, as amended, including without limitation,
obligations and liabilities under all agreements and documents executed,
delivered and released in connection with the closing held under such Settlement
Agreement.
SECTION 7. Waivers. No delay on the part of a party hereto in
exercising any right, power or privilege granted hereunder shall operate as a
waiver thereof, and no purported waiver of any default, breach or violation of
any term or provision contained herein shall be deemed to be a waiver of such
term or provision unless the waiver is in writing and signed by the waiving
party. No such waiver shall in any event be deemed a waiver of any subsequent or
other default, breach or violation. The rights or remedies herein expressly
specified are cumulative and not exclusive of any other rights and remedies
which the parties would otherwise have.
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<PAGE> 62
SECTION 8. Severability; Enforceability. In case any provision of this
Release shall be held to be illegal, invalid or unenforceable under present or
future laws effective while this Release remains in effect, the legality,
validity and Enforce ability of the remaining provisions will no in any way be
affected or impaired thereby.
SECTION 9. Governing Law. THIS RELEASE WILL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS
PRINCIPLES CONCERNING CONFLICTS OF LAW, AND ANY ACTIONS UNDER THIS RELEASE SHALL
BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF DELAWARE OR THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE.
SECTION 10. No Limitation by Other Releases. The Dart Release Parties
and the HHH Release Parties specifically recognize that any and all releases
specifically mentioned herein in no way shall be construed to limit this Release
as to any claims not specifically mentioned herein, as it is the intent of the
Dart Release Parties and the HHH Release Parties to release any and all claims,
known or unknown, against each other.
SECTION 11. Due Diligence. The Dart Release Parties and the HHH Release
Parties specifically warrant that they have exercised due diligence to ascertain
the extent of rights, if any, concerning any claims against each other,
including but not limited to any and all claims which are, were, or could have
been asserted prior to the date of this Release, and hereby forever waive the
right to bring such claims, whether or not specifically mentioned in this
Release.
SECTION 12. Different Facts. The Dart Release Parties and the HHH
Release Parties specifically acknowledge that the facts with respect to which
this Release is executed may turn out to be other than or different from the
facts now known to or believed by them to be true, and that they therefore
expressly assume the risk of the facts turning out to be different and agree
that this Release shall be in all respects effective and not subject to
termination or rescission by reason of any different facts.
SECTION 13. Counterparts. This Release 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> 63
IN WITNESS WHEREOF, the undesigned have executed, or have caused this
Release to be executed on their behalf, on the date first written above.
Attest: DART GROUP CORPORATION
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Richard B. Stone
Chairman of the Executive
Committee of the Board of Directors
Attest: CROWN BOOKS CORPORATION
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Richard B. Stone
Chairman of the Executive
Committee of the Board of Directors
Attest: TRAK AUTO CORPORATION
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Richard B. Stone
Chairman of the Executive
Committee of the Board of Directors
Attest: DART/SFW CORP.
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Name:
Title:
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<PAGE> 64
Attest: SFW HOLDING CORP.
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Name:
Title:
Attest: SHOPPERS FOOD WAREHOUSE CORP.
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Name:
Title:
Attest: TOTAL BEVERAGE CORPORATION
By:
- ------------------------------- -------------------------------
Elliot R. Arditti, Secretary Name:
Title:
- ------------------------------- ----------------------------------
Witness HERBERT H. HAFT
7
<PAGE> 65
EXHIBIT 19
CONTRIBUTION AND SUBORDINATION AGREEMENT
THIS CONTRIBUTION AND SUBORDINATION AGREEMENT (this "Agreement"), dated
__________ __, 1997, is made by and among, Dart Group Corporation, A Delaware
corporation ("Dart"), HHH/RSH Tier II Limited Partnership, a Maryland limited
partnership (the "Retained Partnership"), Ronald S. Haft (RSH"), Herbert H. Haft
("HHH"), the Releasing Guarantors listed on Schedule 1 hereto and the Released
Guarantors listed on Schedule 2 hereto.
Recitals
A. It is contemplated that Dart may make a $10 million loan (the "RSH/HHH
Loan") pursuant to the RSH/HHH Loan Agreement (as such term is defined
in the Settlement Agreement dated as of August 18, 1997, among Dart,
certain Affiliates of Dart, Robert M. Haft, Gloria G. Haft and Linda G.
Haft (the "Settlement Agreement")), repayment of which would be secured
in party by, among other things, all of HHH and RSH's rights, title and
interest in and to the Collateral (as defined in Section 2(a) of this
Agreement) and the Retained Partnership.
B. All of the parties to this Agreement, except Dart and the Retained
Partnership, are parties to an Indemnification Agreement, dated as of
July 31, 1994 (the "Indemnification Agreement"), under which HHH and
RSH agreed to indemnify Robert M. Haft ("RMH"), Gloria G. Haft ("GGH")
and Linda G. Haft ("LGH") and collectively "RGH") with respect to,
among other things, "all claims . . . made or incurred by, or asserted
against, any of [RGL]" in connection with all liabilities or
obligations that RMH, LGH or GGH may have in connection with "all
partnership, corporate and individually held interest of the Haft
Family in that collection of entities, through which the Haft Family
owns, operates or manages their privately held warehouses (the
"Combined Entities") . . . ." The Combined Entities, which include
guaranteed these indemnification obligations of HHH and RSH to RGL.
Each of the Combined Entities has certain rights to seek contribution
from the other Combined Entities in the event that it pays more than
its share of any of the guaranteed indemnification obligations.
C. If Dart makes the RSH/HHH Loan, the Retained Partnership, pursuant to
the terms and provisions of that certain Retained Partnership Guaranty,
will become a Guarantor under the Indemnification Agreement.
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<PAGE> 66
D. Dart is unwilling to make the RSH/HHH Loan unless the Releasing
Guarantors (1) release all rights of contribution they may have against
the Released Guarantors, and (2) subordinate any claims they now have,
or may hereafter have in the Collateral to the claims of Dart.
Agreements
NOW THEREAFTER, to induce Dart to enter into the RGL Settlement
Agreement, to enter into the RSH/HHH Loan Agreement and to make the loans
contemplated thereunder, the parties hereto hereby agree as follows:
1. Release of Released Guarantors. Each of the Releasing guarantors
irrevocably and unconditionally hereby releases each of the Released Guarantors
from any and all manner of claims, demands, damages, actions, causes of action,
contracts, agreements, charges, sums of money, claims for attorney's fees and
lawsuits of every kind and description whatsoever, in law or equity, whether
known or unknown, for contribution, or otherwise (a "Claim") under, or in
connection with, the Indemnification Agreement, that certain Settlement
Agreement dated as of August __, 1997 between RSH and HHH, and any other
agreements pursuant to which any of the Released Guarantors are jointly,
severally, or jointly and severally liable in any respect to HHH, RSH, RMH, GGH,
LGH or any entity directly or indirectly controlled by one or more of such
persons.
2. Subordination of Claims.
(a) Subordination of Claims. Any Claim, however arising, which any
Releasing Guarantor may now or hereafter have in or against or with respect to
any of the Collateral shall be subject, junior and subordinate to any Claim that
Dart or any affiliate of Dart now or hereafter has against the Guarantors for,
or with respect to any Collateral for, the obligations owing to Dart under the
RSH/HHH Loan and to any unsecured Claim or Dart or any affiliate of Dart against
any Guarantor or the Retained Partnership to the extent that Dart or such
affiliate has any secured or unsecured Claims arising in connection with or
relating to the RSH/HHH Loan. The term "Collateral" shall mean: (i) all general
and limited partnership interest or shares in Combined Property/Forbes Limited
Partnership, CP/Forbes Boulevard, Inc., Haft/Equities-Sully Plaza Limited
Partnership, Combined Property/Ontario Limited Partnership and 3301 Pennsy Drive
Associates Limited Partnership (collectively, the "Collateral Entities"); and
(ii) all property of and interests in the property of the Collateral Entities
and of the Retained Partnership, whenever acquired and wherever located, that is
collateral security for the indebtedness to Dart arising under the RSH/HHH Loan,
including, without limitation, any direct or indirect interests in the Rolling
Valley, Maryland
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City and Sully shopping centers and the 4600 Forbes Boulevard office building
(but excluding any other property or interest of RSH, HHH or of the Releasing
guarantors that may hereafter be acquired by any of the Collateral Entities or
the Retained Partnership, if and to the extent such acquisition was for less
than fair value.
(b) Extent of Subordination. The subordinations and priorities
specified herein are applicable irrespective of the time, manner or order of
attachment or perfection of any security interest in the Collateral, or the time
or order of filing of any financing statements, or the giving or failure to give
notice of the acquisition or expected acquisition of any purchase money security
interest or other security interest. Such subordinations and priorities shall
remain effective notwithstanding the amendment or modification of the documents
governing the FSH/HHH Loan or governing the grant of any security interest in
the Collateral to secure repayment of the indebtedness arising under the RSH/HHH
Loan or the commencement of a case by or against either Dart of any obligor
under the RSH/HHH Loan under Title 11 of the United States Code or any similar
insolvency or moratorium laws; except that such subordination shall not be
effective to the extent that Dart hereafter increases the principal amount owing
under the RSH/HHH Loan or extends the maturity date thereof.
(c) Standstill. Until all of the obligations owed to Dart, or any
affiliate of Dart, under the HHH/RSH Loan have been paid in full, no Releasing
Guarantor shall accept any payment from the Retained Partnership or any entity
constituting (or the partnership interest in which, or capital stock of which,
constitute) a part of the Collateral. Each Releasing Guarantor agrees to refrain
from taking any action against the Collateral unless it shall have obtained
Dart's prior written consent or Dart shall have been repaid in full for all
amounts owing under the RSH/HHH Loan. No Releasing Guarantor shall obtain or
take any action to obtain any judgment under which it could attach or seize any
of the Collateral in any way until Dart shall have been repaid in full for all
amounts owing under the RSH/HHH Loan. If, prior to the repayment in full of the
RSH/HHH Loan, an RGH Release Party has been granted or otherwise obtains
possession of Collateral then, in addition to any obligations or remedies
imposed or provided under the Uniform Commercial Code (the "UCC") or other
applicable law, the RGL Release Parties shall hold such Collateral, any right,
title or interest therein and any proceeds thereof in trust for the Dart
Companies (the "Trust Property"), and turn over such Trust Property to the Dart
Companies as soon as practicable.
(d) Rights on Default. Each Releasing Guarantor acknowledges that
Dart has and is entitled to exercise all of the rights and remedies of a secured
creditor under the UCC with respect to the Collateral,
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<PAGE> 68
including, without limitation, the right to take possession of and dispose of
the Collateral after an event of default, and to accept the Collateral as
discharge of the obligations under the RSH/HHH Loan to the extent permitted
under the UCC. If Dart were to elect to sell the Collateral in a public or
private sale, conducted in accordance with the UCC, any purchaser of all or any
part of the Collateral shall take such Collateral free and clear of all rights
and interests of any of the Releasing Guarantors (including, without limitation,
any rights or interests of any of the RGL Releasing Guarantors in the property
or assets of any of the Collateral Partnerships(, and the Releasing Guarantors
shall have such rights and interests in and to the proceeds of any such sale,
after payment in full of all obligations owed to Dart or any affiliate of Dart
under the HHH/RSH Loan, as may be provided under the UCC.
3. No Challenge to Dart Company Rights in the Collateral.
No Releasing Guarantor shall challenge the attachment, validity,
perfection, priority or extent of any Claim of Dart or any affiliate of Dart in
the Collateral or with respect to the Retained Partnership in any judicial,
administrative or alternative dispute resolution proceeding.
4. Waivers.
No delay on the part of a party hereto in exercising any right, power
or privilege granted hereunder shall operate as a waiver thereof, and no
purported waiver of any default, breach or violation of any term or provision
contained herein shall be deemed to be a waiver of such term or provision unless
the waiver is in writing and signed by the waiving party. No such waiver shall
in any event be deemed a waiver of any subsequent or other default, breach or
violation. The rights or remedies herein expressly specified are cumulative and
not exclusive of any other rights and remedies which the parties would otherwise
have.
5. Severability; Enforceability.
In case any provision of this Agreement shall be held to be illegal,
invalid or unenforceable under present or future laws effective while this
Agreement remains in effect, the legality, validity and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.
6. Governing Law.
This Agreement will be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, without regard to its principles
concerning conflicts of law, and any actions under this Agreement may be
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<PAGE> 69
brought in the courts of the Commonwealth of Virginia or the United States
District Court for the Eastern District of Virginia.
7. Different Facts.
Each Releasing guarantor specifically acknowledges that the facts with
respect to which this Agreement is executed may turn out to be other than or
different from the facts now known to or believed by it to be true, and that it
therefore expressly assumes the risk of the facts turning out to be different
and agrees that this Agreement shall be in all respects effective and not
subject to termination or rescission by reason of any different facts.
8. Notices.
Notices given in connection with this Agreement shall be in writing and
be deemed to have been given when actually received by telecopy or otherwise or
five (5) days after being deposited in the United States mail, postage prepaid,
addressed to a party hereto at the address set forth below such party's
signature to this Agreement, or to such other address designated by such party
by notice to each other party.
9. 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.
10. Additional Parties.
HHH agrees that on and after the date hereof he shall cause any
entities that he now or hereafter controls, directly or indirectly, which
entities are or become indemnitors/guarantors under the Indemnification
Agreement to become parties hereto and to execute and deliver to Dart, the
Retained Partnership and RSH a counterpart hereof.
RSH agrees that on and after the date hereof, he shall cause any
entities that he now or hereafter controls, directly or indirectly, which
entities are or become indemnitors/guarantors under the Indemnification
Agreement to become parties hereto and to execute and deliver to Dart, the
Retained Partnership and HHH a counterpart hereof.
11. Amendments.
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This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties hereto.
In WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DART GROUP CORPORATION
By:
-----------------------------------
Name:
Title:
Address:
------------------------------
-----------------------------------
-----------------------------------
COMBINED PROPERTIES/ONTARIO HAFT EQUITIES-BLADEN LIMITED
LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
6
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3301 PENNSY DRIVE ASSOCIATES LEE AND HARRISON PARTNERSHIP
LIMITED PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
HAFT/EQUITIES SULLY PLAZA ROCK CREEK VILLAGE
LIMITED PARTNERSHIP ASSOCIATES LIMITED
PARTNERSHIP
By: CP Holdings VA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
COMBINED PROPERTIES/FORBES HAFT EQUITIES-ROSE HILL
BOULEVARD LIMITED LIMITED PARTNERSHIP
PARTNERSHIP
By: CP/Forbes Boulevard, Inc., By: CP Holdings VA, Inc., General
General Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
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CP/FORBES BOULEVARD INC.
By: _________________________
Ronald S. Haft, President
Address:
------------------------------
------------------------------
------------------------------
COMBINED PROPERTIES/RESEDA 1751 COLUMBIA ROAD LIMITED
ASSOCIATES LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings VA, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
COMBINED CHARLES COUNTY ASSOCIATES
PROPERTIES/MONTEBELLO LIMITED PARTNERSHIP
LIMITED PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
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PENN-DAW ASSOCIATES LIMITED
PARTNERSHIP
By: CP Holdings VA, Inc., General
Partner
By: _________________________
Ronald S. Haft, President
Address:
------------------------------
------------------------------
------------------------------
COMBINED PROPERTIES/SILVER ARROW LEASE ACQUISITION
HILL LIMITED PARTNERSHIP LIMITED PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
COMBINED PROPERTIES/40 WEST CP ACQUISITION LIMITED
LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
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COMBINED CP/GREENBRIAR RETAIL
PROPERTIES/GREENWAY CENTER INVESTMENTS LIMITED
LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Greenbriar Retail Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
COMBINED PROPERTIES/BRIGGS CM/CP GREENBRIAR OFFICE
CHANEY PLAZA LIMITED INVESTMENTS LIMITED
PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Greenbriar Office Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
COMBINED PROPERTIES VIRGINIA SUGARLAND PLAZA LIMITED
PLAZA LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings VA, Inc., General By: Sugarland Plaza Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
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COMBINED PROPERTIES/BULL RUN CAPITAL RESOURCES LIMITED
LIMITED PARTNERSHIP PARTNERSHIP
By: Bull Run, Inc., General By: Capital Resources I Corp., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
CP ACQUISITION II LIMITED COMBINED PROPERTIES LIMITED
PARTNERSHIP PARTNERSHIP
By: CPALP, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
MCLEAN CHAIN BRIDGE LIMITED RETAIL LEASE ACQUISITION
PARTNERSHIP LIMITED PARTNERSHIP
By: CP Holdings VA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: _________________________ By: _________________________
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
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TRAK CHICAGO LIMITED COMBINED PROPERTIES
PARTNERSHIP I INCORPORATED
By: CP Holdings MD, Inc., General By: _________________________
Partner Ronald S. Haft, President
By: _________________________ Address:
Ronald S. Haft, President ------------------------------
------------------------------
------------------------------
Address:
------------------------------
------------------------------
------------------------------
HAFT EQUITIES GENERAL LIMITED CP/GREENBRIAR OFFICES, INC.
PARTNERSHIP
By: CP Holdings MD, Inc., General By: _________________________
Partner Ronald S. Haft, President
By: _________________________ Address:
Ronald S. Haft, President ------------------------------
------------------------------
------------------------------
Address:
------------------------------
------------------------------
------------------------------
SEVENTY-FIFTH AVENUE LIMITED CP/GREENBRIAR RETAIL, INC.
PARTNERSHIP
By: CP Holdings MD, Inc., General By: _________________________
Partner Ronald S. Haft, President
By: _________________________ Address:
Ronald S. Haft, President ------------------------------
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Address:
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RSH/HHH TIER II LIMITED CPALP, INC.
PARTNERSHIP
By: By:
----------------------------------- ------------------------------------
,President Ronald S. Haft, President
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Address: Address:
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BULL RUN, INC.
By: ________________________
Ronald S. Haft, President
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The undersigned, Herbert H. Haft, hereby agrees to be bound by the
terms of this Agreement personally and in his capacity as an officer and general
partner of the Combined Entities to the extent that the undersigned is an
officer or general partner of any of the Combined Entities.
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Herbert H. Haft
The undersigned, Ronald S. Haft, hereby agrees to be bound by the terms
of this Agreement personally and in his capacity as an officer and general
partner of the Combined Entities to the extent that the undersigned is an
officer or general partner of any of the Combined Entities.
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Ronald S. Haft
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EXHIBIT 21
FORM OF JUNE NOTE
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PROMISSORY NOTE
$9,250,000 ____________ ___, 1997(1)
FOR VALUE RECEIVED, DART GROUP CORPORATION, a Delaware corporation
(the "MAKER"), promises to pay to the order of Herbert H. Haft, or assigns (the
"PAYEE" or the "HOLDER"), at 2501 30th Street, Washington, D.C. 20008, or at
such other place as the Holder of this Note may from time to time designate by
written notice delivered to the Maker, on June 1, 1998 (the "MATURITY DATE"),
the principal amount of Nine Million Two Hundred Fifty Thousand and 00/100
Dollars ($9,250,000), or so much thereof as may remain outstanding, together
with simple interest on the unpaid principal amount hereof from (and including)
the date hereof to (but excluding) the date the entire unpaid principal amount
hereof shall have been paid in full, at a rate per annum (computed on the basis
of a 360-day year comprised of twelve 30-day months) equal to five percent
(5%).
Interest due under this Note shall be payable monthly, in arrears,
commencing on ___________, 1997,(2) and continuing on the first day of each
month thereafter and on the Maturity Date, when the entire unpaid principal
amount hereof, together with all accrued and unpaid interest thereon, shall
be due and payable in full. All payment hereunder shall be made in lawful
money of the United States of America and in immediately available funds,
without any offset, reduction, deduction or diminution.
This Note is the June Note issued pursuant Section 2.2(b)(i)(B) to
that certain Settlement Agreement, dated as of _______, 1997, between the Maker
and the Payee (the "SETTLEMENT AGREEMENT"), and is secured by the collateral
described in that certain Pledge and Security Agreement granted by Maker to
Payee pursuant to Section 2.2(b)(i)(D) of the Settlement Agreement, of even
date herewith, (the "PLEDGE AGREEMENT"). The Holder is entitled to the
benefits of the Pledge Agreement, and reference is made thereto for a
description of the collateral and the rights and remedies of the Holder
thereunder. All capitalized terms used herein and not otherwise defined shall
have the meanings set forth (or incorporated by reference) in the Settlement
Agreement.
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(1) To be dated the Closing Date.
(2) To be dated the first day of the first month after month in which the
Closing Date occurs.
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This Note shall be subject to prepayment at the option of the Maker,
in whole or in part and without penalty, at any time and from time to time.
The entire unpaid principal amount of this Note, and all accrued and
unpaid interest hereon, shall be subject to mandatory prepayment upon the
occurrence of a Special Transaction.
The occurrence of one or more of the following events, for any reason
whatsoever, shall be an event of default ("EVENT OF DEFAULT") hereunder:
(a) The Maker fails to make any payment of principal on any Note
when due and payable, whether at the Maturity Date, upon mandatory prepayment
or by acceleration;
(b) The Maker fails to make any payment of interest on any Note
and such failure continues for more than twenty (20) days after the same shall
be due and payable;
(c) The Maker fails to make any payment of interest or principal
on any indebtedness of Maker for borrowed money (other than indebtedness owed
by Maker to any Affiliate of Maker) and such failure continues for more than
thirty (30) days after any applicable grace periods;
(d) The Maker is unable to pay its debts generally as they become
due, files a petition to take advantage of any insolvency statute, makes an
assignment for the benefit of its creditors, or files a petition or answer
seeking reorganization or arrangement or similar relief under the federal
bankruptcy laws or under the provisions of any other law for the relief or aid
of debtors; or
(e) A court of competent jurisdiction enters an order, judgment or
decree appointing a custodian, receiver, trustee, liquidator or conservator of
the Maker and such order, judgment or decree continues unstayed and in effect
for a period of sixty (60) days, or approves a petition filed against any of
the Maker seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws, or under the provisions of any other law for the
relief or aid of debtors, which petition is not dismissed within sixty (60)
days or there is commenced against the Maker any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal bankruptcy
laws, or under the provisions of any other law for the relief or aid of
debtors, which proceeding or petition remains undismissed for a period of sixty
(60) days; or
(f) Dart shall, or shall permit Trak, Crown, SFW or any other Dart
Affiliate to, make any Restricted Payment. As used herein the term
"Restricted Payment" means any distribution (whether in cash or in any other
form of
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consideration or asset) or payment in respect of any of shares of capital stock
(including without limitation by way of dividend, redemption, repurchase,
exchange, split or otherwise) other than (a) regular cash dividends declared
and paid no more often than once per quarter on Class A stock of Dart in
amounts no greater than those declared for the quarter ended July 31, 1997 or
(b) Restricted Payments to Dart or to a Subsidiary of Dart all of the issued
and outstanding capital stock of which is owned by Dart or another wholly-owned
subsidiary of Dart or (c) at or after the date of issuance of this Note to
Herbert H. Haft or his designee, but not before that date, one or more
Restricted Payments by Trak and/or Crown of which Dart receives not less than
its pro rata portion (based on its proportion of stock ownership in Trak and/or
Crown, as the case may be), and which involve payments to shareholders of Trak
and/or Crown other than Dart totaling not more than $7.5 million in the
aggregate..
At any time when an Event of Default has occurred and is continuing,
the Holder may by written notice to the Maker declare the entire unpaid
principal amount hereof, and all accrued and unpaid interest hereon, to be
accelerated, whereupon (1) the entire unpaid principal amount hereof, and all
accrued and unpaid interest hereon, shall be immediately due and payable, and
(2) the Holder shall be entitled to exercise any one or more of the rights and
remedies exercisable upon an Event of Default under the Pledge Agreement, or as
provided at law or in equity. Failure to exercise said option or to pursue
such other rights and remedies shall not constitute a waiver of such option or
such other rights and remedies or of the right to exercise any of the same in
the event of any subsequent Event of Default.
The Maker promises to pay all costs and expenses (including without
limitation reasonable attorneys' fees and disbursements) reasonably incurred by
the Payee, after the occurrence of an Event of Default, in connection with the
collection hereof or in the protection or realization of any collateral now or
hereafter given as security for the repayment hereof (including without
limitation the collateral provided under the Pledge Agreement).
Any payment on this Note coming due on a Saturday, a Sunday, or a day
which is a legal holiday in the State of Delaware or the State of Maryland
shall be made on the next succeeding business day, and any extension of the
time of payment shall be included in the computation of interest hereunder.
Each Obligor (which term shall include the Maker and all makers,
sureties, guarantors, endorsers, and other persons assuming obligations
pursuant to this Note) under this Note hereby waives presentment, protest,
demand, notice of dishonor, and all other notices, and all defenses and pleas
on the grounds of any extension or extensions of the time of payments or the
due dates of this Note, in whole or in part, before or after maturity, with or
without notice. No renewal or
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extension of this Note, no release or surrender of any collateral given as
security for this Note, no release of any Obligor, and no delay in enforcement
of this Note or in exercising any right or power hereunder or under the Pledge
Agreement, shall affect the liability of any Obligor.
No single or partial exercise by the Holder of any right hereunder or
under the Pledge Agreement shall preclude any other or further exercise thereof
or the exercise of any other rights. No delay or omission on the part of the
Holder in exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Note.
Any notice under this Note shall be given in the manner set forth in
Section 11 of the Pledge Agreement.
Whenever used herein, the words "Maker" and "Holder" and "Obligor"
shall be deemed to include their respective successors and assigns.
This Note shall be governed by and construed under and in accordance
with the laws of the State of Delaware.
The Maker hereby agrees that any action or proceeding under this Note
may be commenced against it in any court of record within the State of
Delaware. Nothing herein shall affect the right of the Holder to commence
legal proceedings or otherwise proceed against the Maker in any other
jurisdiction or court.
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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed on its behalf as of the day and year first hereinabove set forth.
[SEAL]
ATTEST: DART GROUP CORPORATION
By: By:
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Secretary Name:
Title:
DISTRICT OF COLUMBIA ) SS:
I, _______________, Notary Public in and for the jurisdiction aforesaid,
do hereby certify that _________________________, who is personally well known
to me as the person named as _________________ of Dart Group Corporation, the
Maker in the foregoing Note bearing date the ___ day of ____________ 1997,
personally appeared before me in said jurisdiction, and as said
______________________ and by virtue of the authority vested in him/her,
acknowledged said Note to be the act and deed of said corporation, and that
he/she delivered the same as such.
Witness my hand and official seal this _____ day of ___________ 1997.
-----------------------------------
Notary Public
(Notarial Seal) My Commission Expires
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EXHIBIT 22
FORM OF
SECURED NOTE PLEDGE AND SECURITY AGREEMENT
THIS SECURED NOTES PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is
made and entered into this ____ day of ________, 199_(1) by DART GROUP
CORPORATION, a Delaware corporation ("PLEDGOR"), in favor of the holders of
that certain June Promissory Note, of even date herewith, of Pledgor to the
order of HHH due June 1, 1998 in the principal amount of $9,250,000 (the "JUNE
NOTE"). The holders of the Secured Notes are hereinafter collectively referred
to as the Secured Party.
W I T N E S S E T H :
WHEREAS, Pledgor has entered into a Settlement Agreement (as such may
be modified, amended or supplemented from time to time, the "SETTLEMENT
AGREEMENT") with HHH, dated as of ___________, 1997,* pursuant to which, among
other things, Pledgor has issued the Secured Notes to HHH; and
WHEREAS, all capitalized terms used herein and not defined shall have
the meanings set forth (or incorporated by reference) in the Secured Notes.
NOW, THEREFORE, in consideration of the benefits accruing to Pledgor,
the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby
makes the following representations and warranties to the Secured Party and
hereby covenants and agrees with the Secured Party as follows:
SECTION 1. Security for Obligations. This Agreement is made by
Pledgor to secure:
(a) the full and prompt payment and performance when due
(whether at the Maturity Date, by mandatory prepayment or by
acceleration) of all obligations of Pledgor to Secured Party under the
Secured Notes; and
(b) the full and prompt performance when due of all
obligations of Pledgor to Secured Party under this Agreement; and
(b) in the event of any proceeding for the collection or
enforcement of any of the obligations referred to in clause (i) above
after an Event of Default shall have occurred and be continuing, the
reasonable
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(1) To be dated the Closing Date.
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expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing or realizing on the Collateral (as hereinafter
defined) or of any exercise by the Secured Party of such person's
rights hereunder with respect thereto, together with reasonable
attorneys' fees and court costs.
All such obligations, sums and expenses set forth in clauses (a) and
(b) of this Section 1 are hereinafter collectively referred to as the "SECURED
OBLIGATIONS".
SECTION 2. Certain Definitions.
As used herein, the term "PLEDGED STOCK" shall mean the shares of
common stock owned by the Pledgor and listed on Schedule A to this Agreement,
as such Pledged Stock may be adjusted from time to time as provided on Schedule
A, and the certificates representing such Pledged Stock.
As used herein, the term "ISSUER" shall mean, with respect to any of
the Pledged Stock, the entity listed as the "ISSUER" of such Pledged Stock on
Schedule A.
SECTION 3. Pledge.
3.1. Pledge. To secure the Secured Obligations and for the purposes
set forth in Section 1 hereof, Pledgor hereby pledges and assigns and grants to
the Secured Party a first priority continuing security interest in all of the
following, whether now existing or hereafter acquired (collectively, the
"COLLATERAL"):
(a) the Pledged Stock;
(b) all cash, securities, interest, dividends, distributions,
rights and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Stock; and
(c) to the extent not otherwise included, all proceeds of any
or all of the foregoing.
3.2. Delivery of Stock Certificates.
(a) Simultaneously with the execution and delivery of this
Agreement, Pledgor is delivering to the Agent (as hereinafter defined), as
agent for the Secured Party, certificates for shares of the Pledged Stock,
registered in the name of Pledgor, accompanied by stock powers duly executed by
Pledgor in blank, with
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Pledgor's signature guaranteed by a Medallion Signature Guaranty, together with
any documentary tax stamps and any other documents necessary to cause the
Secured Party to have a good, valid and perfected first lien on, pledge of and
security interest in the Pledged Stock.
(b) Upon the occurrence and during the continuance of an Event of
Default, any or all of the shares of the Pledged Stock may, at the option of
the Secured Party, be registered in the name of the Secured Party or in the
name of his nominee, and Pledgor hereby covenants that, in such event, upon
demand of the Secured Party, Pledgor shall cause the Issuer to effect such
registration.
3.3. Substitution. At the option of Pledgor, Pledgor may at any
time deliver to the Secured Party a letter of credit in the face amount equal
to the outstanding principal amount of the Secured Notes plus the amount of all
unpaid interest thereon scheduled to accrue through the Maturity Date, which
letter of credit shall expire not sooner than seven (7) days after the Maturity
Date and shall otherwise contain such customary terms, and be issued by such
financial institution, as are reasonably acceptable to the Secured Party. Upon
receipt by the Secured Party of such letter of credit, (a) the Agent shall
promptly, upon notice from Pledgor, deliver to Pledgor all of the Collateral
(including, without limitation, the Pledged Stock) then in the possession of
the Agent and (b) the Secured Party shall duly assign, transfer and deliver to
Pledgor (without recourse and without any representation or warranty) the
Collateral then in his possession.
SECTION 4. Appointment of Agent/Escrow Agreement.
The Secured Party shall appoint _________________________ (together
with its successors and assigns, the "AGENT") as his agent for the purpose of
(a) retaining physical possession of the certificates representing the Pledged
Stock, which may be held (subject to Section 3.2(b) hereof) in the name of the
Pledgor, duly endorsed in blank or in favor of the Secured Party or any nominee
or nominees of the Secured Party or an agent appointed by the Secured Party,
and (b) holding and applying any other Collateral in accordance with the terms
of this Agreement. The agreement by which the Agent agrees to serve in such
capacity, and any amendments thereof, shall be in form and substance mutually
satisfactory to both Pledgor and the Secured Party, and neither Pledgor nor the
Secured Party shall enter into any other agreement with the Agent with respect
to the subject matter hereof without the prior written consent of the other.
The costs and expenses of the Agent shall be paid by Pledgor.
SECTION 5. Voting Rights, Dividends and Distributions.
5.1. Voting Rights. Prior to (a) the occurrence of an Event of
Default and (b) the lapse of ten days thereafter, Pledgor shall be entitled to
exercise any and all
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voting and other consensual rights and powers pertaining to the Pledged Stock
or any part thereof and the other Collateral; provided, however, that no vote
shall be cast or any consent, waiver or ratification given or any action taken
which would violate (or cause Pledgor to violate) any of the terms of this
Agreement. After the occurrence of an Event of Default, Pledgee shall be the
sole Person entitled to vote.
5.2. No Dividends or Distributions. All dividends and distributions
made on or in respect of the Pledged Stock, and any and all cash and other
property received in exchange for or redemption of any of the Pledged Stock,
shall be delivered to Agent to be held and applied, as part of the Collateral,
as set forth in this Agreement.
SECTION 6. Remedies on Default.
6.1. Sale of Collateral.
(a) If at any time an Event of Default shall have occurred and be
continuing and shall have resulted in acceleration of the maturity of the
Secured Obligations, then, in addition to having all of the rights of a secured
party upon default under the Uniform Commercial Code as then in effect in any
applicable jurisdiction (the "UCC"), the Secured Party may, to the extent
permitted by law, without being required to give any notice to Pledgor except
as expressly provided below:
(i) apply any cash held by the Secured Party hereunder in
the manner provided in Section 6.2 below; and
(ii) if there shall be no such cash or if the cash so
applied shall be insufficient to pay in full the items specified
in such Section 6.2, collect, receive, appropriate and realize
upon the Collateral or any part thereof, and sell, assign,
contract to sell or otherwise dispose of and deliver the
Collateral or any part thereof, in one or more portions, at public
or private sale or at any broker's board, on any securities
exchange or elsewhere, for cash, upon credit or for future
delivery, and at such price or prices as the Secured Party may
reasonably deem best, and, subject to Section 6.1(h) hereof, the
Secured Party may (except as otherwise provided by law) be the
purchaser of any or all of the Collateral so sold and thereafter
may hold the same, absolutely, free from any right or claim of
whatsoever kind.
(b) In the event of a sale of the Pledged Stock as aforesaid, the
Secured Party is authorized, at any such sale, if the Secured Party deems it
advisable so to do in order that such sale may be effected in such manner as to
comply with all applicable state and federal securities laws, to restrict the
number of prospective
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bidders or purchasers and/or further restrict such prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to the distribution or
resale of the Pledged Stock, and may otherwise require that such sale be
conducted subject to restrictions as to such other matters as the Secured Party
may reasonably deem necessary in order that such sale may be effected in such
manner as to comply with all applicable state and federal securities laws.
Upon any such sale, the Secured Party shall have the right to deliver, assign
and transfer to the purchaser thereof the Pledged Stock so sold.
(c) Pledgor hereby acknowledges that, notwithstanding that a higher
price might be obtained for the Pledged Stock at a public sale than at a
private sale or sales, the making of a public sale of the Pledged Stock may be
subject to registration requirements under federal and state securities laws
and similar other legal restrictions compliance with which would require such
actions on the part of Pledgor, would entail such expenses, and would subject
the Secured Party, any underwriter through whom the Pledged Stock may be sold
and any controlling person of any thereof to such liabilities, as would make a
public sale or the Pledged Stock impractical. Accordingly, Pledgor hereby
acknowledges that (i) private sales of the Pledged Stock made by the Secured
Party in accordance with the provisions of this Section 6.1 may be at prices
and on other terms less favorable to the seller than if the Pledged Stock were
sold at public sale; and (ii) the Secured Party shall have no obligation to
take any steps in order to permit the Pledged Stock to be sold at a public
sale.
(d) Each purchaser or Collateral at any such sale made in accordance
with the provisions of this Section 6.1 shall hold the property sold,
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of Pledgor. Upon any sale of Collateral by the
Secured Party made in accordance with the provisions of this Section 6.1
(whether by virtue of the power or sale herein granted, pursuant to judicial
process or otherwise), the receipt of the Secured Party or any agent thereof
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold, and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Secured Party or agent or be answerable in any way for the
misapplication or nonapplication thereof. The Secured Party shall give Pledgor
not less than ten (10) days' prior written notice of the Secured Party's
intention to make any public or private sale of Collateral and Pledgor shall
have the right, during the period following receipt of such notice until the
date of any public sale specified in such notice, or in the case of any private
sale, until such time as the Secured Party shall have entered into an agreement
for the sale of Collateral (or any portion thereof), to redeem the Collateral
by payment in full of the Secured Obligations and all amounts described in
Section 6.2(a) hereof. Such notice, in case of public sale, shall state the
time and place fixed for such sale,
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and, in case of sale at broker's board, on a securities exchange, or elsewhere,
shall state the board, exchange or other location at which such sale is to be
made and the day on which the Collateral, or that portion thereof so being
sold, will first be offered for sale at such location, and such notice shall be
deemed to be reasonable notification of such matters.
(e) Any public sale of Collateral shall be held at such time or
times within the ordinary business hours and at such place or places as the
Secured Party may fix in the notice of such sale. Any sale of the Collateral
held by the Secured Party may be sold in one lot as an entirety or in parts, as
the Secured Party may determine. The Secured Party shall not be obligated to
make any sale pursuant to any such notice. The Secured Party may, without
notice or publication, adjourn any sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the same may be so adjourned.
In case of any sale of all or any part of the Collateral on credit or for
future delivery, the Collateral so sold may be retained by the Secured Party
until the selling price is paid by the purchaser thereof, but the Secured Party
shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice.
(f) The Secured Party, instead of exercising the power of sale
herein conferred upon him, may proceed by a suit or suits at law or in equity
to foreclose this Agreement and sell the Collateral held by the Secured Party,
or any portion thereof, under a judgment or decree of court or courts of
competent jurisdiction.
(g) On any sale of the Collateral, the Secured Party is hereby
authorized to comply with any limitation or restriction in connection with such
sale that the Secured Party may be advised by counsel in writing is necessary
in order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any Governmental Authority
or officer or court.
(h) Notwithstanding anything contained herein to the contrary, the
Secured Party hereby agrees (i) not to purchase the Collateral if a third party
has made an offer to purchase the Collateral at a price which would repay in
full the Secured Obligations and all amounts described in Section 6.2(a) hereof
and (ii) that if the Secured Party does purchase the Collateral, he will sell,
transfer or otherwise dispose of the Pledged Stock within six (6) months after
the date of acquisition thereof.
(i) If an Event of Default shall have occurred and be continuing,
Dart will, at the Secured Party's request, use its reasonable efforts to file a
registration statement the form of which is, under the rules and regulations of
the Securities
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and Exchange Commission, suitable for effecting a public offering in which
stock constituting any part of the Collateral (hereafter "Stock Collateral")
shall be offered for sale and to cause such registration statement to become
effective within 120 days after the filing of such registration statement. In
connection with such registration of the Stock Collateral:
(i) Dart shall indemnify and hold harmless each Secured
Party and any underwriter (as defined in the Securities Act of
1933, as amended (the "Act")) for such Secured Party from and
against any and all losses, damages, liabilities, claims, costs or
expenses (each a "Loss" and collectively "Losses"), to which such
Secured Party or any such underwriter becomes subject under the
Act or otherwise, insofar as such Losses are caused by any untrue
statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that Dart will not be liable in any such case to the
extent that any such Losses arise out of or are based upon (A) an
untrue statement or omission made in conformity with information
furnished by the Secured Party seeking indemnification in writing
specifically for use in the preparation of a registration
statement or (B) a Secured Party's failure to deliver a copy of
the registration statement, prospectus or any amendments or
supplements thereto; and
(ii) Each Secured Party shall indemnify and hold harmless
Dart, its officers, directors and agents, each other Secured
Party, and any underwriter, from and against any and all Losses to
which such indemnified person or entity becomes subject under the
Act or otherwise which are caused by any untrue statement of any
material fact contained in such registration statement, any
prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent
that such untrue statement or omission was so made in reliance
upon written information furnished by such indemnifying Secured
Party for use in the preparation of such registration statement.
6.2 Application of Proceeds. The proceeds of any collection, recovery,
receipt, appropriation, realization or sale of the Collateral as aforesaid
shall be applied as follows:
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(a) First, to the payment of all reasonable costs and
expenses of every kind incurred by the Secured Party in connection
therewith or incidental to the care, safekeeping or otherwise of
any of the Collateral required to be paid by Pledgor hereunder,
including, without limitation, reasonable attorneys' fees and
expenses;
(b) Second, to the payment to the Secured Party in
satisfaction of the Secured Obligations owed to the Secured Party;
and
(c) Third, to the payment of any surplus then remaining
from such proceeds to Pledgor, unless otherwise required by law or
directed by a court of competent jurisdiction;
provided, however, that Pledgor shall be liable for any deficiency if such
proceeds are insufficient to satisfy all of the Secured Obligations.
SECTION 7. Remedies Cumulative.
Each right, power and remedy of the Secured Party provided for in this
Agreement or the Secured Notes or now or hereafter existing at law or in equity
or by statute shall be cumulative and concurrent and shall be in addition to
every other such right, power or remedy. The exercise or beginning of the
exercise by the Secured Party of any one or more of the rights, powers or
remedies provided for in this Agreement or the Secured Notes or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Secured Party of all such
other rights, powers and remedies, and no failure or delay on the part of the
Secured Party to exercise any such right, power or remedy shall operate as a
waiver thereof.
SECTION 8. Duties of the Secured Party.
The rights conferred on the Secured Party hereunder are solely to
protect the Secured Party's interest in the Collateral as security for the
Secured Obligations and shall not impose any duty upon the Secured Party to
exercise any such rights. The Secured Party shall not have any duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any of the Collateral,
except that with respect to the custody, safekeeping and physical preservation
of any Collateral in the Secured Party's possession, under Section 9-207 of the
UCC or otherwise, the sole duty of the Secured Party shall be to deal with it
in the same manner as the Secured Party deals with similar securities and
property for the Secured Party's own account. To the fullest extent permitted
by law, the Secured Party shall not be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so and shall not
be under any obligation to sell or otherwise dispose of any
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<PAGE> 92
Collateral upon the request of Pledgor or otherwise. The Secured Party shall
be accountable only for amounts that the Secured Party actually receives as a
result of the exercise of such powers, and the Secured Party shall not be
responsible to Pledgor for any act or failure to act with respect to the
Collateral, other than the Secured Party's negligence or willful misconduct.
SECTION 9. Further Assurances.
Pledgor agrees that it will join with the Secured Party in executing
and will file and refile under the UCC such financing statements, continuation
statements and other documents in such offices as the Secured Party may
reasonably deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the security interest in the Collateral
created hereunder, and hereby authorizes the Secured Party to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of Pledgor where permitted by law, and agrees to do such
further acts and things and to execute and deliver to the Secured Party such
additional conveyances, assignments, agreements and instruments as such person
may reasonably require or deem advisable to effectuate the purposes of this
Agreement or to further assure and confirm unto the Secured Party his rights,
powers and remedies hereunder.
SECTION 10. Termination; Release.
Upon the Termination Date (as defined below), this Agreement shall
terminate and (a) the Agent, at the request of Pledgor, shall promptly deliver
to Pledgor all of the Collateral (including, without limitation, the Pledged
Stock) then in the possession of the Agent, and (b) the Secured Party, at the
request of Pledgor, shall promptly execute and deliver to Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Secured Party and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, the term "TERMINATION DATE" shall mean the date upon which the
Secured Notes are paid in full and all other Secured Obligations, if any, then
owing shall have been paid in full.
SECTION 11. Notices.
All notices, demands, requests, or other communications which may be
or are required to be given, served or sent by any party to any other party
pursuant to this Agreement or the Secured Notes shall be in writing and shall
be delivered by nationally recognized overnight courier, mailed by first class,
registered or
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certified mail, return receipt requested, postage prepaid, or transmitted by
hand delivery, addressed as follows:
If to the Maker or the Pledgor:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attention: Corporate Secretary
with a copy (which shall not constitute notice) to:
Stephen J. Brogan, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005
If to the Holder or the Secured Party:
Herbert H. Haft
2501 30th Street, N.W.
Washington, D.C. 20008
with a copy (which shall not constitute notice) to:
Stephen H. Case, Esq.
Davis Polk & Wardwell
1300 I (Eye) Street, N.W.
Washington, D.C. 20005
If to Agent:
-------------------------------------
-------------------------------------
-------------------------------------
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication which shall be given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt or statement of messenger being deemed
conclusive, but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
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SECTION 12. Amendment.
No amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification or discharge is sought.
SECTION 13. Benefit and Assignment.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
SECTION 14. Waiver.
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instruments
given in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any other party hereto unless made in writing and signed
by the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
SECTION 15. Severability.
If any part of any provision of this Agreement shall be invalid or
unenforceable in any respect, such part shall be ineffective to the extent of
such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions of this
Agreement.
SECTION 16. Governing Law.
THIS AGREEMENT, THE RIGHTS AND OBLIGATION OF THE PARTIES HERETO, AND
ANY CLAIMS OR DISPUTES RELATING THERETO, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
SECTION 17. Interpretation.
All pronouns and any variations thereof of this Agreement shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.
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SECTION 18. Headings.
Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
SECTION 19. Submission to Jurisdiction.
PLEDGOR AND THE SECURED PARTY HEREBY SUBMIT TO THE NONEXCLUSIVE
JURISDICTION OF A COURT OF RECORD IN THE STATE OF DELAWARE OR IN THE COURTS OF
THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE, FOR THE PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. PLEDGOR AND THE SECURED PARTY IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 20. Execution.
This Agreement may be executed in as many counterparts as may be
required, and it shall not be necessary that the signatures of, or on behalf
of, each party, or that the signatures of all persons required to bind any
party, appear on each counterpart; but it shall be sufficient that the
signature of, or on behalf of, each party, or that the signatures of the
persons required to bind any party, appear on one or more of the counterparts.
All counterparts shall collectively constitute a single agreement.
IN WITNESS WHEREOF, Pledgor and the Secured Party has executed or
caused this Secured Notes Pledge and Security Agreement to be duly executed as
of the date first above written.
[SEAL] DART GROUP CORPORATION
Attest:
By: By:
------------------------------ -----------------------------
Corporate Secretary Name:
Title:
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<PAGE> 96
SECURED PARTY
--------------------------------
Herbert H. Haft
DISTRICT OF COLUMBIA ) SS:
I, ________________________________, Notary Public in and for the
jurisdiction aforesaid, do hereby certify that _____________________________,
who is personally well known to me as the person named as _________________ of
Dart Group Corporation, party to the foregoing Secured Notes Pledge and
Security Agreement bearing date the _______ day of ______________, 1997,
personally appeared before me in said jurisdiction, and as said _______________
and by virtue of the authority vested in him/her, acknowledged said Secured
Notes Pledge and Security Agreement to be the act and deed of said corporation,
and that he/she delivered the same as such.
Witness my hand and official seal this _____ day of ______________,
1997.
------------------------------------
Notary Public
(Notarial Seal) My Commission Expires
DISTRICT OF COLUMBIA ) SS:
I, ________________________________, Notary Public in and for the
jurisdiction aforesaid, do hereby certify that Herbert H. Haft, who is
personally known to me, party to the foregoing Secured Notes Pledge and
Security Agreement bearing date the _______ day of ______________, 1997,
personally appeared before me in said jurisdiction, and acknowledged said
Secured Notes Pledge and Security Agreement to be his act and deed, and that he
delivered the same as such.
Witness my hand and official seal this _____ day of ______________,
1997.
------------------------------------
Notary Public
(Notarial Seal) My Commission Expires
13
<PAGE> 97
SCHEDULE A
(to Secured Note Pledge
and Security Agreement)
PLEDGED STOCK
A. Initial Pledged Stock. The Pledged Stock securing the obligations of the
Pledgor to Secured Party shall initially consist of certain of the
outstanding and issued common stock of Pledgor and Trak Auto Corporation,
a Delaware corporation ("TRAK") (or if Dart shall have sold any part of
Trak, then SFW Holding Corp. ("SFWH"), which Pledged Stock is owned by
Pledgor, as follows:
Pledged Stock Issuer
1. $20,000,000 worth of shares of common stock of Trak
Trak (or SFWH) (or such greater amount as
may be required to comply with applicable laws and
regulations); and
2. 122,247 shares of Class A Common Stock of Pledgor
Pledgor.
B. Adjustments to Pledged Stock. On the first business day of each month
following the date of the Agreement until the Secured Notes are paid in
full (each such date being a "DETERMINATION DATE"), Pledgor shall deliver
by fax to Pledgee a written statement of Pledgor's determination of the
Collateral Value (as defined below). If (1) on any Determination Date
the Collateral Value is not equal to the Required Collateral Valuation
Amount (as defined below) and (2) HHH has not sent to Pledgor sooner than
the fifth business day after such first business day a written objection
as to Pledgor's determination of value, then on the sixth business day
after such Determination date:
(i) if the Collateral Value is less than the Required Collateral
Valuation Amount, Pledgor shall deliver to the Security
Perfection Agent certificates evidencing such additional number
of shares of common stock of Trak registered in the name of
Pledgor (duly endorsed for transfer or accompanied by signed
stock powers (in either case, with signatures guaranteed by
Medallion Signature Guaranty)) as shall be necessary for the
Collateral Value as of such Determination Date to equal the
Required Collateral Valuation Amount; provided, however, that
Pledgor shall not be obligated to deliver more than 3,962,246
<PAGE> 98
shares of the common stock of Trak as collateral for any
obligations of Pledgor to Secured Party whether arising under
this Agreement, the Secured Notes, any other agreement or
promissory note, or otherwise; and
(ii) if the Collateral Value as of any Determination Date is greater
than the Required Collateral Valuation Amount, the Security
Perfection Agent shall return to Pledgor certificates evidencing
such number of shares of common stock of Trak (together with any
endorsements or other stock powers as shall have been delivered
in connection with such common stock by Pledgor) as shall be
necessary for the Collateral Value as of such Determination Date
to equal the Required Collateral Valuation Amount.
C. Certain Definitions. For purposes of this Schedule A, the following
terms shall have the meanings set forth below:
(i) "COLLATERAL VALUE" for any Determination Date shall be an amount
equal to the sum of 100% of the aggregate value of the shares of
common stock of Trak constituting a part of the Pledged Stock,
determined by reference to the average of the closing bid/asked
prices as reported on the NASDAQ (or any other national
securities exchange) for the thirty (30) trading days
immediately prior to such Determination Date; plus the value of
any cash constituting a part of the Collateral.
(ii) "REQUIRED COLLATERAL VALUATION" means an amount equal to 200%
(or such higher percentage, if any, as may at any time be
required by applicable law or regulation) of the then aggregate
principal amount outstanding under the Secured Note.
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<PAGE> 1
EXHIBIT 99.3
FIRST SUPPLEMENTAL SETTLEMENT AGREEMENT
This First Supplemental Settlement Agreement (this "First
Supplemental Agreement"), dated as of October 15, 1997, is made by and among
RONALD S. HAFT ("RSH") and DART GROUP CORPORATION, a Delaware corporation
("Dart"), for purposes of supplementing and modifying that certain Settlement
Agreement dated as of October 6, 1995 between RSH and Dart (the "RSH/Dart
Settlement Agreement"). Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
RSH/Dart Settlement Agreement.
WITNESSETH:
WHEREAS, Dart and RSH entered into the RSH/Dart Settlement
Agreement to settle certain lawsuits and other disputes between RSH and Dart
and its affiliates.
WHEREAS, on October 18, 1995 Robert M. Haft ("RMH"), Gloria G.
Haft ("GGH") and Linda G. Haft ("LGH"; RMH, GGH and LGH collectively referred
to as the "RGL Individuals") filed a lawsuit captioned Gloria Haft, et al. v.
Larry Schafran, et al., Civ. A. No. 14620 (Del. Ch.), challenging certain of
the transactions pursuant to the RSH/Dart Settlement Agreement, contending that
such transactions had the effect of placing majority voting control of Dart in
the hands of the RGL Individuals and seeking a judicial declaration that
directors selected by the RGL Individuals are the properly empowered directors
of Dart (the "Section 225 Lawsuit");
WHEREAS, on November 6, 1995 Herbert H. Haft ("HHH") filed a
lawsuit captioned Herbert H. Haft v. Dart Group Corporation, et al., Civ. A.
No. 14685 (Del. Ch.), challenging the transactions pursuant to the RSH/Dart
Settlement Agreement (the "HHH Settlement Lawsuit");
WHEREAS, in connection with the Section 225 Lawsuit and the
HHH Settlement Lawsuit, the Delaware Court of Chancery entered an order (the
"Standstill Order") on December 6, 1995 that requires Dart to refrain from
taking or recognizing specified actions and that, in Section 8 of the
Standstill Order, requires Dart to give not less than seven (7) days' notice of
certain "extraordinary transactions" to the other parties to such lawsuits;
WHEREAS, on or about August 18, 1997, Dart and the RGL
Individuals and certain family trusts controlled by one or more of the RGL
Individuals (the "Family Trusts") entered into a settlement agreement pursuant
to which Dart, the RGL Individuals and the Family Trusts agreed to settle
certain lawsuits and other disputes between and among them on the terms, and
subject to the conditions, set forth therein (the "RGL/Dart Settlement
<PAGE> 2
Agreement"), and on September 26, 1997 Dart, the RGL Individuals and the Family
Trusts closed under the RGL/Dart Settlement Agreement;
WHEREAS, there are presently pending as of the date of this
First Supplemental Agreement three bankruptcy cases in the United States
Bankruptcy Court for the District of Maryland (the "Bankruptcy Court") styled,
respectively, In re Seventy-Fifth Avenue Associates Limited Partnership, Case
No. 95-1-3103-DK (the "Seventy-Fifth Avenue Case"), In re Trak Chicago Limited
Partnership I, Case No. 95-1-3099-DK (the "Trak Chicago Case"), and In re
Combined Properties/Ontario Limited Partnership, Case No. 95-1-3095-DK (the
"Ontario Case") (collectively, the "Warehouse Bankruptcy Cases");
WHEREAS, by final order entered on or about June 12, 1997, the
Bankruptcy Court confirmed plans of reorganization in the Seventy-Fifth Avenue
Case and the Trak Chicago case (together, the "Warehouse Plans"), such plans to
become effective upon the satisfaction of certain conditions precedent set
forth therein.
NOW THEREFORE, for and 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, the parties hereto agree as follows:
ARTICLE 1. FIRST SUPPLEMENTAL SETTLEMENT.
1.1 SETTLEMENT TRANSACTIONS. The parties hereto agree
that the agreements contemplated by this First Supplemental Agreement shall be
implemented on the First Supplemental Closing Date (as defined in Section
1.3(b)) by the execution and delivery of the documents and the performance of
the transactions set forth below, at the times, in accordance with the
procedures and subject to the conditions set forth in this Section 1.1 and
Sections 1.2 and 1.3. In the event that the First Supplemental Closing Date
does not occur on or before October 31, 1997, this First Supplemental Agreement
and all of its terms and provisions shall be null and void and of no further
legal effect, unless on or prior to October 31, 1997 Dart and RSH shall have
each executed and delivered to the other a written agreement to extend the
First Supplemental Closing Date.
(a) The parties shall execute and deliver a First Amendment
to Purchase Agreement [Warehouse Partnership Interests], a First
Amendment to Disputed Partnership Interests Purchase Agreement
[Warehouses], and a First Amendment to Purchase Agreement [Pennsy
Warehouses] in the forms attached to this First Supplemental Agreement
as Exhibit A, Exhibit B, and Exhibit C, respectively.
(b) The parties shall execute and deliver, and Dart shall
cause Cabot-Morgan to execute and deliver, a First Amendment to Real
Estate Master Agreement ("First Amendment to REMA") amending the Real
Estate Master Agreement dated as of October 6, 1995 (the "REMA") in the
form attached to this First Supplemental Agreement as Exhibit D.
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<PAGE> 3
(c) Dart shall concurrently receive in cash $2,200,000 from
the C-M Escrow Account, and RSH shall have have no right, title or
interest in such cash payment.
(d) Dart shall, and RSH shall cause Dart to, receive delivery
of (i) the original of that certain stock certificate No. 4 dated June
28, 1985 for 75,738 shares of Dart Class B Common Stock, which
certificate is in the name of Haft Equities General Limited
Partnership, duly endorsed for transfer or accompanied by appropriate
stock powers in blank on behalf of Haft Equities General Limited
Partnership or, in the event such original certificate has been lost,
an affidavit of lost certificate in form and substance reasonably
acceptable to Dart, and (ii) a written waiver of any claim of any
right, title or interest in and to such shares, in the form of Exhibit
E hereto, executed by RSH on behalf of himself and on behalf of Haft
Equities General Limited Partnership in his capacity as general
partner.
(e) Section 1.5(c) of the RSH/Dart Settlement Agreement shall
hereby be deemed to be amended and modified as provided in Section
8.2(f) of the REMA, as amended by the First Amendment to REMA.
1.2 CLOSING PROCESS; CONDITIONS; INTERRELATIONSHIP OF
SETTLEMENTS.
(a) STANDSTILL ORDER. The parties acknowledge that this First
Supplemental Agreement and the obligation of Dart and its affiliates and RSH to
close the transactions contemplated hereby, are subject to compliance by Dart
with Section 8 of the Standstill Order. Within two (2) business days after the
date of execution and delivery of this First Supplemental Agreement, Dart shall
send written notice of the transactions contemplated by this First Supplemental
Agreement in accordance with the terms of Section 8 of the Standstill Order,
unless all parties entitled to notice pursuant to Section 8 of the Standstill
Order shall have executed and delivered to Dart a written waiver of such notice
in form acceptable to Dart.
Notwithstanding any other provision of this First Supplemental Agreement,
neither the Dart Parties (as defined in the REMA) nor any of their affiliates
nor RSH shall be obligated to enter into any agreement or perform any
transaction contemplated by Section 1.1 or 1.3 until such time as the seven (7)
day notice period under Section 8 of the Standstill Order has expired or the
date that the written waiver of such notice shall have been executed and
delivered by all parties entitled to such notice pursuant to section 8 of the
Standstill Order, or if later, such date as no temporary restraining order,
preliminary injunction, permanent injunction or other court order (any of the
foregoing referred to as a "Settlement Injunction") is in effect that restrains
Dart or any affiliate of Dart from entering into such agreement or performing
such transaction.
(b) NO SEVERABILITY OF SUPPLEMENTAL SETTLEMENT DOCUMENTS.
The parties intend that the execution and delivery of the Supplemental
Settlement Documents (as defined in Section 1.3(a)), other than this First
Supplemental Agreement, and the performance of the transactions contemplated by
this First Supplemental Agreement are mutually dependent on
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<PAGE> 4
each other and that no Supplemental Settlement Document (other than this First
Supplemental Agreement) shall become effective, and none of the transactions
contemplated hereby to occur on the First Supplemental Closing Date shall be
consummated, unless all the transactions contemplated by this First
Supplemental Agreement and the other Supplemental Settlement Documents to occur
on the First Supplemental Closing Date are consummated simultaneously.
1.3 CLOSING.
(a) Dart and RSH agree to execute and deliver the documents
and instruments and consummate the transactions set forth in Section 1.1 (all
such documents, together with this First Supplemental Agreement and the
documents and instruments executed pursuant thereto, referred to herein as the
"Supplemental Settlement Documents") to which either is a party at a closing
(the "First Supplemental Closing") that shall take place at the offices of
Jones, Day, Reavis & Pogue, 1450 G Street, N.W., Washington, D.C. 20005 on the
First Supplemental Closing Date, as defined below, subject to the outside date
set forth in Section 1.1 hereof. Except as otherwise provided herein, all
payments to be made as part of the closing of the transactions contemplated by
the Supplemental Settlement Documents 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.
(b) The First Supplemental Closing shall occur on the "First
Supplemental Closing Date", which shall be the date on which the Warehouse
Plans shall have become effective in accordance with their terms, subject to
the outside closing date set forth in Section 1.1 hereof, it being the
intention of the parties that the Effective Date of each of the Warehouse Plans
(as defined therein, respectively) and the First Supplemental Closing Date
shall all occur simultaneously.
(c) On the date of the First Supplemental Closing the parties
shall execute and deliver the Supplemental Settlement Documents and consummate
the transactions set forth in Section 1.1. The obligation of the Dart Parties
and their affiliates and RSH to consummate the First Supplemental Closing, and
the effectiveness of any Supplemental Settlement Document (other than this
First Supplemental Agreement), shall be subject to the satisfaction in full of
the following conditions, on or before the outside closing date set forth in
Section 1.1 hereof:
(i) SUPPLEMENTAL SETTLEMENT DOCUMENTS. Each of the
Supplemental Settlement Documents shall have been executed and
delivered;
(ii) ACKOWLEDGEMENTS OF EFFECTIVENESS OF PLANS OF
REORGANIZATION. RSH and Dart shall have caused to be executed and
exchanged between them Acknowledgements of Effectiveness for the Plans
in the forms attached hereto as Exhibit F;
(iii) PLANS OF REORGANIZATION. The terms and
conditions of the Warehouse Plans shall not have been amended, waived
or modified from the form of the Warehouse Plans confirmed by orders of
the Bankruptcy Court entered on or about
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<PAGE> 5
June 12, 1997 without the written approval of Dart; all conditions
precedent to the effectiveness of the Warehouse Plans and Dart's and/or
Trak Auto Corporation's obligations thereunder shall have been
satisfied in full but for closings having occurred with respect to the
settlement agreements described in Section 13.01 (d) of each such Plan,
it being the intention of the parties to this First Supplemental
Agreement that such closings shall be simultaneous with the First
Supplemental Closing; and the Warehouse Plans shall otherwise remain in
full force and effect in accordance with their respective terms; and
(iv) RSH ESCROW ACCOUNT. On the First Supplemental
Closing Date, $1,550,180 of the funds in the RSH Escrow Account shall
be disbursed to Dart in consideration of the withholding obligation
arising from the termination of the Options for 197,048 Class B Shares
pursuant to Section 8.2(a) of REMA, as amended by the First Amendment
to REMA (and upon such disbursement, RSH shall have no right, title or
interest in or claim to the funds so disbursed), and the balance of the
funds in the RSH Escrow Account shall be disbursed to RSH. RSH shall
indemnify Dart with respect to all such disbursements in accordance
with the provisions of Article 6 of this First Supplemental Agreement
and Section 10 of the First Amendment to REMA
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF DART
Dart, and if appropriate, Cabot-Morgan Real Estate Company
("Cabot-Morgan"), (each a "Dart Party"), represents and warrant to RSH, as of
the date hereof and on the First Supplemental Closing Date, that:
2.1 ORGANIZATION AND EXISTENCE. The Dart Party is a
corporation duly organized and validly existing under the laws of the State of
Delaware.
2.2 AUTHORIZATION. This First Supplemental Agreement has
been duly executed and delivered by Dart, and the other Supplemental Settlement
Documents to which the Dart Party will be a party will, at the time of their
delivery, be duly executed and delivered by it; the execution and delivery of
the Supplemental Settlement Documents to which it is or will be a party have
been duly authorized by all necessary corporate action.
2.3 BINDING EFFECT. This First Supplemental Agreement
is, and when executed and delivered by Dart, the other Supplemental Settlement
Documents to which the Dart Party will be a party will be, valid and binding
obligations of such Dart Party, enforceable against such Dart Party in
accordance with their respective 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.
2.4 ABSENCE OF CONFLICT. The execution, delivery and
performance by such Dart Party of the Supplemental Settlement Documents to
which such Dart Party is or will be a party and the consummation of the
transactions contemplated thereby will not breach, violate
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<PAGE> 6
or conflict with any provision of, give rise to any right of acceleration of
any obligation under or constitute a default under (or constitute 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), or require the consent or waiver of
any other party to, (i) any mortgage, lease, note, contract, agreement or
instrument to which such Dart Party is a party; or (ii) any law, regulation,
order, judgment, writ, decree, decision or award by which such Dart Party is
bound.
2.5 NO CONSENTS. Except for the Standstill Order, 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 such Dart Party of
the Supplemental Settlement Documents to which such Dart Party is or will be a
party, or the consummation by such Dart Party of the transactions contemplated
thereby.
2.6 LITIGATION. Except for the Section 225 Lawsuit, the
HHH Settlement Lawsuit and the proceedings referred to in Section 1.3(b) and
the Warehouse Bankruptcy Cases, there are no actions, suits, proceedings,
investigations or claims pending or, to the knowledge of such Dart Party,
threatened against it, that relate to any of the transactions contemplated by
the Supplemental Settlement Documents and that, if successful, could restrain
or prohibit the consummation of such transactions.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF RSH
RSH represents and warrants to Dart, and, as appropriate, Cabot-Morgan,
as of the date hereof and on the Closing Date, that:
3.1 BINDING EFFECT. This First Supplemental Agreement
is, and when executed by RSH, the other Supplemental Settlement Documents to
which RSH will be a party will be, valid and binding obligations of RSH,
enforceable against RSH in accordance with their respective 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.
3.2 ABSENCE OF CONFLICT. The execution, delivery and
performance by RSH of the Supplemental Settlement Documents to which he is or
will be a party and the consummation of the transactions contemplated thereby
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), or require the consent or
waiver of any other party to, (i) any mortgage, lease, note, contract,
agreement or instrument to which RSH is a party; or (ii) any law, regulation,
order, judgment, writ, decree, decision or award by which RSH is bound.
3.3 NO CONSENTS. No consent, waiver, release, approval,
order or authorization of, or notification to, any third party or any
government or government agency is
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<PAGE> 7
required in connection with the execution, delivery or performance by RSH of
the Supplemental Settlement Documents to which he is or will be a party, or the
consummation by RSH and the RSH Children Trusts of the transactions
contemplated thereby.
3.4 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 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 on or against any of the interests of
the RSH Obligors subject to the Pledge Agreements or the Warehouse Documents
(collectively, the "RSH Interests"). RSH is not a general partner of any
partnership whose liabilities (including contingent liabilities as guarantor
for any debt of any third party) exceed 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, that affects or could affect any
of the RSH Interests in any respect.
3.5 LITIGATION. (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 RSH
Interests that affect or could affect any of the RSH Interests in any respect,
or that relate to any of the transactions contemplated by the Supplemental
Settlement Documents and that, if successful, could restrain or prohibit the
consummation of such transactions, and (b) none of RSH or any of the RSH
Interests is subject to any order, judgment, writ, decree, decision or award
that affects or could affect any of the RSH Interests in any respect.
3.6 NO VOLUNTARY BANKRUPTCY OF RSH. None of RSH or the RSH
Obligors 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.
ARTICLE 4. COVENANTS
4.1 COOPERATION. The parties shall cooperate in the
defense of any litigation challenging the validity of this First Supplemental
Agreement, the RGL/Dart Settlement Agreement or the RSH/Dart Settlement
Agreement and the transactions contemplated hereby and thereby. RSH hereby (a)
consents to the RGL/Dart Settlement Agreement and the transactions contemplated
thereby, (b) agrees to not file any lawsuit or initiate any proceeding
challenging the RGL/Dart Settlement Agreement or any of the transactions
contemplated thereby, and (c) waives and releases any claims he may have
against Dart, its affiliates, directors and officers arising out of or in
connection with the RGL/Dart Settlement Agreement and the transactions
contemplated thereby except for that certain right of indemnity under Section
7.4 of the Real Estate Master Agreement, as amended by the First Amendment to
Real
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<PAGE> 8
Estate Master Agreement, pursuant to which Dart has agreed to indemnify RSH
against fifty percent (50%) of any claims by Robert M. Haft or Linda G. Haft
for a "gross-up" of income taxes due on payments of $4,400,000 in the aggregate
made to such individuals by Dart with respect to Seventy-Fifth Avenue
Associates Limited Partnership, Trak Chicago Limited Partnership I, 75th Avenue
Tier II Limited Partnership or Trak Chicago Tier II Limited Partnership.
4.2 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 First Supplemental Agreement may reasonably request
in order to effectuate more effectively the transactions contemplated by the
Supplemental Settlement Documents.
4.3 SPECIFIC PERFORMANCE. The Dart Parties and RSH each
acknowledge and agree that in the event of any breach of this First
Supplemental Agreement or any other Supplemental Settlement Document, 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 First Supplemental Agreement or any other
Supplemental Settlement Document 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 non-exclusive personal
jurisdiction in any such action brought in the Delaware Court of Chancery or
the United States District Court for the District of Delaware.
4.4 LIQUIDATION DISTRIBUTIONS. (a) In the event that
at any time after both the First Supplemental Closing and the closing of the
Simultaneous Purchase, the Put Option or the Call Option (each as defined in
the Buy/Sell/Offering Agreement) the Board of Directors of Dart (as distinct
from any of its subsidiaries or affiliates), after adopting a plan of complete
liquidation or after dissolution of Dart has been authorized in accordance with
Section 275 of the Delaware General Corporation Law (or any successor or
comparable statutory provision then applicable), may determine to pay a
liquidating distribution to the shareholders of Dart (the "Liquidating
Distribution"), then Dart, at its election in its sole discretion, after
providing notice to RSH in the same manner and at the same time as any notice
of liquidation provided to Dart's shareholders, may elect, simultaneously with
the payment of such Liquidating Distribution, to cap any and all actual and
contingent liabilities that it or any Dart Affiliates or any of their
respective affiliates may have to RSH for any reason, or to any other parties
arising out of the RSH/Dart Settlement Agreement and the transactions pursuant
thereto, by the establishment of a reserve fund for such purpose in the Reserve
Amount (as defined below), it being understood that any unused portion of such
reserve fund may be withdrawn by or on behalf of Dart (or any liquidating
trustee for Dart) or distributed to Dart's shareholders at any time after
December 31, 2002. For purposes of this Section 4.4(a), the Reserve Amount
shall be $1,000,000; provided, that if Dart commits funds in an escrow, trust,
letter of credit or similar arrangement for the payment, after the
8
<PAGE> 9
Liquidating Distribution, of indemnification claims by members of the Executive
Committee or other members of Dart's Board of Directors, then the Reserve
Amount shall be equal to the greater of (i) one-third of the amount of funds so
committed or (ii) $1,000,000.
(b) The establishment of a reserve fund in accordance with clause
(a) of this Section 4.4 shall be effective to limit to the amount in such
reserve fund any and all actual and contingent liabilities that Dart or any
Dart Affiliates or any of their respective affiliates may have to RSH for any
reason, or to any other parties arising out of the RSH/Dart Settlement
Agreement and the transactions pursuant thereto, other than to the extent set
forth in clause (c) below; provided that each of the following conditions shall
have been satisfied: (i) notice of Dart's intention to make a Liquidating
Distribution (the "Liquidating Distribution Notice") was given no earlier than
one (1) year after the date of the First Supplemental Closing, and (ii) the
Liquidation Date shall have occurred no earlier than 240 calendar days after
the Liquidating Distribution Notice was given.
(c) Notwithstanding anything contained herein to the contrary,
nothing in this Section 4.4 shall limit (i) Dart's obligations to indemnify RSH
for pending or threatened claims of which Dart has written notice not later
than 60 days before the Liquidation Date or (ii) the coverage of RSH under any
policy of directors and officers liability insurance policy in effect at any
time.
ARTICLE 5. EFFECTIVENESS
5.1 LIMITED INITIAL EFFECTIVENESS OF AGREEMENT.
(a) Notwithstanding any other provision of this First Supplemental
Agreement, none of the agreements, obligations or commitments of Dart set forth
in this First Supplemental Agreement shall be effective on or prior to October
26, 1997 (except that Dart shall be obligated to give written notice of this
First Supplemental Agreement pursuant to Section 8 of the Standstill Order to
the other persons subject to the Standstill Order, not later than October 18,
1997 , unless all parties entitled to notice pursuant to Section 8 of the
Standstill Order shall have executed and delivered to Dart a written waiver of
such notice in form acceptable to Dart).
(b) This Agreement shall be null, void and of no effect, ab
initio, if on or before October 26, 1997 the Delaware Court of Chancery issues
any order, writ, injunction or decree restraining, enjoining or prohibiting in
any way the effectiveness of this First Supplemental Agreement or the
consummation of any of the transactions contemplated by this First Supplemental
Agreement.
5.2 RSH BOUND
All of the provisions of this First Supplemental Agreement shall be
binding on and effective with respect to RSH from the date stated in the first
sentence of this First Supplemental Agreement. RSH hereby acknowledges that
adequate and valid consideration
9
<PAGE> 10
has been received for his agreement to be bound to all of the provisions of
this First Supplemental Agreement from this date, notwithstanding Dart's right
to elect not to be bound pursuant to Section 5.1.
ARTICLE 6. RSH INDEMNIFICATION AS TO CERTAIN ESCROW ACCOUNTS
6.1 RSH hereby agrees that he shall defend, indemnify and hold Dart,
its respective subsidiaries and affiliates, and each of their respective
officers, employees, directors, agents and representatives (the "Dart Parties")
harmless from and against any and all 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 Party,
directly or indirectly, that arises from or in connection with any actual or
prospective release, distribution, withdrawal or other disposition of funds in
either the C-M Escrow Account or the RSH Escrow Account, as such terms are
defined in the REMA (whether to, in favor of, or for the benefit of RSH, Dart
or other person or entity) and that is based upon a claim or assertion that
such actual or prospective release, distribution, withdrawal or other
disposition violates or is subject to any security interest, lien or right of
Herbert H. Haft, Robert M. Haft, Mary Z. Haft, Linda G. Haft, New Frontiers
Investments LLC, Acquiport Midatlantic Retail, Inc., and any other person or
entity. As soon as is reasonably practicable after any Dart Party becomes
aware of any claim that it has to recover Costs under this Section 6.1, such
Dart Party shall notify RSH 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 Dart Party to
promptly give RSH such notice shall not preclude such Dart Party from obtaining
indemnification under this Section 6.1, except to the extent that such failure
has materially prejudiced RSH's rights or materially increased RSH's
liabilities and obligations hereunder. In the event of a third party claim
which is subject to indemnification under this Section 6.1, RSH shall have the
right, upon agreeing in writing that he is obligated to fully indemnify the
Dart Party for the full amount of the claim (to the extent such claim is proven
or settled) and providing satisfactory evidence to the Dart Party that RSH has
sufficient financial resources to provide such indemnification and defend such
claim properly, to assume the defense of such claim by counsel of his own
choosing reasonably acceptable to Dart. The Dart Party and RSH shall cooperate
with one another in the defense of such claim, including the settlement of the
matter on the basis stipulated by RSH (with RSH being responsible for all costs
and expenses of such settlement). If RSH within a reasonable time after notice
of a claim fails to vigorously defend the Dart Party, the Dart 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 RSH.
ARTICLE 7. MISCELLANEOUS
7.1 RELATIONSHIP TO SETTLEMENT DOCUMENTS. This First
Supplemental Agreement and (if and when executed, delivered and effective in
accordance with the terms hereof) each of the Supplemental Settlement Documents
shall constitute "Settlement Documents" under the RSH/Dart Settlement
Agreement, the REMA and the other Settlement Documents. Without limiting the
foregoing, the indemnification provisions of Article 4 of the
10
<PAGE> 11
RSH/Dart Settlement Agreement shall apply to this First Supplemental Agreement
and the other Supplemental Settlement Documents. Except as modified or
supplemented by this First Supplemental Agreement and (if and when executed,
delivered and effective in accordance with the terms hereof) the other
Supplemental Settlement Documents, the RSH/Dart Settlement Agreement, the REMA
and the other Settlement Documents shall each remain in full force and effect,
and no other changes shall have been deemed to have been effected by this First
Supplemental Agreement, or (if applicable) the other Supplemental Settlement
Documents.
7.2 EXPENSES. Except as otherwise expressly provided in
the Supplemental Settlement Documents, the parties shall pay their own
respective expenses incurred in connection with this First Supplemental
Agreement and the transactions hereunder, including, without limitation, any
fees for accountants and attorneys.
7.3 CROSS DEFAULT. The RSH/Dart Settlement Agreement,
this First Supplemental Agreement, the other Supplemental Settlement Documents
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 First Supplemental 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 First Supplemental
Agreement.
7.4 NOTICES. Any notices or consents required or
permitted by this First Supplemental 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:
11
<PAGE> 12
If to the Dart Parties:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: Chairman of the Executive
Committee
and
Attn: Corporate Secretary
Facsimile: 301-733-2707
with copies 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:
Mr. Ronald S. Haft
58 La Gorce Circle
Miami Beach, Florida 33141
Facsimile: 305-865-4024
with a copy to:
Stuart M. Grant, Esq.
Grant & Eisenhofer, P.A.
1220 Market Street
Suite 500
Wilmington, Delaware 19801
Facsimile: 302-622-7100
7.5 GOVERNING LAW. This First Supplemental 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, without regard to conflict of laws principles.
7.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
covenants, agreements, representations and warranties of the parties hereto
made in this First Supplemental Agreement shall survive until the second
anniversary of the First Supplemental Closing Date.
7.7 AMENDMENTS. This First Supplemental Agreement may be
amended only by a written agreement executed by the parties hereto.
12
<PAGE> 13
7.8 ENTIRE AGREEMENT. This First Supplemental 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, all prior negotiations between the parties are
merged in this First Supplemental 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.
7.9 SEVERABILITY. If this First Supplemental Agreement or
any other Settlement Document or any one or more of the provisions contained in
this First Supplemental 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.
7.10 BINDING EFFECT. This First Supplemental 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.
7.11 WAIVER. No waiver of any of the provisions of this
First Supplemental 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.
7.12 EXHIBITS. The Exhibits attached to this First
Supplemental Agreement are incorporated herein and shall be part of this First
Supplemental Agreement for all purposes.
7.13 HEADINGS. The headings in this First Supplemental
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 First Supplemental Agreement. Unless otherwise
specified, references in this First Supplemental Agreement to Sections or
Exhibits are references to Sections of, or Exhibits to, this First Supplemental
Agreement.
7.14 COUNTERPARTS. This First Supplemental 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.
7.15 CHANCERY COURT APPROVAL. Dart shall (i) reasonably
promptly after the execution and delivery of both the First Supplemental
Settlement Agreement and the settlement agreement between Dart and Herbert
Haft, apply to the Delaware Court of Chancery for approval of the Settlement
Agreement, as amended by the First Supplemental Settlement Agreement, and
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<PAGE> 14
the settlement agreement between Dart and Herbert H. Haft, and (ii) use
reasonable efforts to obtain Delaware Chancery Court approval of the
above-referenced settlement agreements at the earliest date reasonably
practicable; provided, that nothing in this sentence shall require Dart to
waive any conditions to closing set forth in, to agree to any amendments of, or
to make any payments or incur any costs not expressly required by either the
Settlement Agreement, as amended by the First Supplemental Settlement
Agreement, or the settlement agreement between Dart and Herbert H. Haft; and
provided further, that any potential liability of Dart for breach of this
sentence shall be completely eliminated if Dart shall waive the condition set
forth in clause (ii) of the first sentence of Section 8 of the First Amendment
to REMA at any time on or before March 31, 1998.
IN WITNESS WHEREOF, RSH and Dart have executed this First
Supplemental Agreement, or have caused this First Supplemental Agreement to be
executed on their behalf, as of the date first above written.
/s/ Ronald S. Haft
--------------------------------------
RONALD S. HAFT
DART GROUP CORPORATION
By: /s/Richard B. Stone
---------------------------------
Name: Richard B. Stone
Title: Chief Executive Officer
/s/ Elliot Arditti
---------------------------------
Sr. Vice President and
Corporate Secretary
14
<PAGE> 15
EXHIBIT A
FIRST AMENDMENT TO PURCHASE AGREEMENT
[WAREHOUSE PARTNERSHIP INTERESTS]
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT [WAREHOUSE PARTNERSHIP
INTERESTS] (this "Amendment") is made as of October __, 1997 by and between
RONALD S. HAFT, personally ("Seller"), and DART GROUP CORPORATION
("Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to that certain Purchase
Agreement [Warehouse Partnership Interests] dated as of October 6, 1995 (the
"Agreement");
WHEREAS, pursuant to that certain First Supplemental Settlement
Agreement dated as of October 15, 1997 (the "First Supplemental Settlement
Agreement"), Seller and Purchaser have resolved various disputes between them
and agreed to modify certain documents relating to the Settlement Agreement
between Seller and Purchaser dated as of October 6, 1995;
WHEREAS, the parties desire to amend the Agreement so as to reflect and
implement the foregoing.
NOW, THEREFORE, in consideration of the premises, One Dollar ($1.00),
the terms hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. To the extent any provision of the Agreement is in conflict
with or inconsistent with the First Supplemental Settlement Agreement or the
First Amendment to Real Estate Master Agreement of even or approximate date
hereof (the "First Amendment to REMA"), the Agreement is superseded and the
terms of the First Supplemental Settlement Agreement and the First Amendment to
REMA shall control.
2. Plans of reorganization under chapter 11 of the Bankruptcy
Code (the "Plans") have been confirmed and, simulateous herewith, are becoming
effective with respect to Seventy-Fifth Avenue Associates Limited Partnership
("75th Avenue LP") and Trak Chicago Limited Partnership I ("Trak Chicago").
The Plans are filed in the United States Bankruptcy Court for thr District of
Maryland, Southern Division, as Case Nos. 95-1-3103-DK (for 75th Avenue LP) and
95-1-3099-DK (for Trak Chicago). To the extent any provision of the Agreement
is in conflict with or inconsistent with the Plans or any document executed or
delivered in connection therewith, the Agreement is superseded and the terms of
the Plans or applicable document shall control; provided, however, that the
assignment of leases to be executed by 75th Avenue LP and Trak Chicago,
respectively, to implement the Plans shall
<PAGE> 16
provide that third-party claims, if any, which are not discharged in bankruptcy
but which would be indemnified under the respective leases shall be retained by
75th Avenue LP and Trak Chicago, respectively, but that any such liability of
Dart or any Dart Affiliate (as defined in the Settlement Agreement, as amended)
or any of their respective affiliates shall be deemed an actual or contingent
liability that is subject to the election to cap liabilities set forth in
Section 4.4 of the First Supplemental Settlement Agreement.
3. Section 1.4 of the Agreement is hereby amended by adding to
the first sentence thereof, immediately preceding the term "('Ontario Newco')",
the following clause: ",which shall be solely-owned, at Purchaser's option, by
Purchaser, Trak Auto Corporation, or a designee of either Purchaser or Trak
Auto Corporation". Section 1.4 of the Agreement is hereby further amended by
deleting therefrom the following two sentences: "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." Exhibit F is
hereby deleted from the Agreement.
4. Section 2.4 of the Agreement is hereby amended by inserting at
the beginning thereof the words "Unless Purchaser elects not to so require,"
and by changing the first letter of the immediately-following word "Upon" to
lower case.
5. Section 4.1 of the Agreement is hereby amended by inserting at
the beginning thereof the words "Except as Purchaser may elect not to so
require in the case of Combined Properties/Ontario Limited Partnership," and by
changing the first letter of the immediately-following word "On" to lower case.
6. Section 5.3 of the Agreement is hereby amended by changing the
Allocation, as defined therein, to read as follows:
"3301 Pennsy Drive Associates Limited Partnership (Penssy Drive
Warehouse I: Zero (-0-) Dollars;
Seventy-Fifth Avenue Associates Limited Partnership (75th Avenue
Headquarters and Wooded Lot): $15,550,000 (subject to reduction as set
forth above);
Trak Chicago Limited Partnership I (the Bridgeview Warehouse):
$4,200,000 (subject to reduction as set forth above);
Combined Properties/Ontario Limited Partnership (the Ontario
Warehouse): $3,300,000 (subject to reduction as set forth above)."
7. Section 6.5 of the Agreement is hereby amended as follows:
(a) Item (b) thereof is changed so as to read: "(b) except
as Purchaser may otherwise elect in the case of the Ontario Warehouse,
the lease amendments described herein with respect to each Property;"
and
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<PAGE> 17
(b) Item (b) is further changed by deleting the sentence
beginning "Notwithstanding the foregoing" and replacing it with:
"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, and Dart may elect in the case of the Ontario Property
to omit item (b)."
8. Section 6.8 of the Agreement is hereby amended by adding at
the beginning thereof the words "At Purchaser's election," and by deleting the
parenthetical "(a)" and changing the first letter of the immediately-following
word "If" to lower case.
9. Section 6.9 of the Agreement is hereby amended by adding at
the beginning thereof the words "At Purchaser's election," and by changing the
first letter of the immediately-following word "As" to lower case.
10. This Amendment shall be a part of, and interpreted in
accordance with, the Agreement except that if there is a conflict or
inconsistency between this Amendment and the Agreement, the terms of this
Amendment shall control. Except as set forth herein, the Agreement has not
been and is not hereby supplemented, amended or otherwise modified. As amended
herein, the Agreement is ratified and confirmed as being in full force and
effect.
11. This Amendment 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 this Amendment under seal
as of the date first set forth above.
WITNESS: SELLER:
- ------------------------- ------------------------- (Seal)
RONALD S. HAFT, personally
PURCHASER:
ATTEST: DART GROUP CORPORATION
By:
- ----------------------- -----------------------------
[Corporate Seal] Name:
Title:
3
<PAGE> 18
EXHIBIT B
FIRST AMENDMENT TO DISPUTED PARTNERSHIP
INTERESTS PURCHASE AGREEMENT [WAREHOUSES]
THIS FIRST AMENDMENT TO DISPUTED PARTNERSHIP INTERESTS PURCHASE
AGREEMENT [WAREHOUSES] (this "Amendment") is made as of October __, 1997 by and
between RONALD S. HAFT, personally ("Seller"), and DART GROUP CORPORATION
("Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to that certain Disputed
Partnership Interests Purchase Agreement [Warehouses] dated October 6, 1995
(the "Agreement");
WHEREAS, pursuant to that certain First Supplemental Settlement
Agreement dated as of October 15, 1997 (the "First Supplemental Settlement
Agreement"), Seller and Purchaser have resolved various disputes between them
and agreed to modify certain documents relating to the Settlement Agreement
between Seller and Purchaser dated as of October 6, 1995;
WHEREAS, the parties desire to amend the Agreement so as to reflect and
implement the foregoing.
NOW, THEREFORE, in consideration of the foregoing, One Dollar ($1.00),
the terms hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. To the extent any provision of the Agreement is in conflict
with or inconsistent with the First Supplemental Settlement Agreement or the
First Amendment to Real Estate Master Agreement of even or approximate date
hereof (the "First Amendment to REMA"), the Agreement is superseded and the
terms of the First Supplemental Settlement Agreement or the First Amendment to
REMA shall control.
2. Plans of reorganization under chapter 11 of the Bankruptcy
Code (the "Plans") have been confirmed and, simulateous herewith, are becoming
effective with respect to Seventy-Fifth Avenue Associates Limited Partnership
("75th Avenue LP") and Trak Chicago Limited Partnership I ("Trak Chicago").
The Plans are filed in the United States Bankruptcy Court for thr District of
Maryland, Southern Division, as Case Nos. 95-1-3103-DK (for 75th Avenue LP) and
95-1-3099-DK (for Trak Chicago). To the extent any provision of the Agreement
is in conflict with or inconsistent with the Plans or any document executed or
delivered in connection therewith, the Agreement is superseded and the terms of
the Plans or applicable document shall control.
<PAGE> 19
3. Section 1.1(a) of the Agreement is hereby amended by inserting
at the beginning thereof the words "At Purchaser's election with respect to
each Selling Entity," and by changing the word "each" to "such" in the clause
beginning "Seller shall cause each Selling Entity...".
4. This Amendment shall be a part of, and interpreted in
accordance with, the Agreement except that if there is a conflict or
inconsistency between this Amendment and the Agreement, the terms of this
Amendment shall control. Except as set forth herein, the Agreement has not
been and is not hereby supplemented, amended or otherwise modified. As amended
herein, the Agreement is ratified and confirmed as being in full force and
effect.
5. This Amendment 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 this Amendment under seal
as of the date first set forth above.
WITNESS: SELLER:
- ------------------------- ------------------------- (Seal)
RONALD S. HAFT, personally
PURCHASER:
ATTEST: DART GROUP CORPORATION
By:
- ----------------------- -----------------------------
[Corporate Seal] Name:
Title:
2
<PAGE> 20
EXHIBIT C
FIRST AMENDMENT TO PURCHASE AGREEMENT
[PENNSY DRIVE WAREHOUSES]
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT [PENNSY DRIVE WAREHOUSES]
(this "Amendment") is made as of October __, 1997 by and between RONALD S.
HAFT, personally ("Seller"), and DART GROUP CORPORATION ("Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to that certain Purchase
Agreement [Pennsy Drive Warehouses] dated as of October 6, 1995 (the
"Agreement");
WHEREAS, pursuant to that certain First Supplemental Settlement
Agreement dated as of October 15, 1997 (the "First Supplemental Settlement
Agreement"), Seller and Purchaser have resolved various disputes between them
and agreed to modify certain documents relating to the Settlement Agreement
between Seller and Purchaser dated as of October 6, 1995;
WHEREAS, the parties desire to amend the Agreement so as to reflect and
implement the foregoing.
NOW, THEREFORE, in consideration of the premises, One Dollar ($1.00),
the terms hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. To the extent any provision of the Agreement is in conflict
with or inconsistent with the First Supplemental Settlement Agreement or the
First Amendment to Real Estate Master Agreement dated October __, 1997 (the
"First Amendment to REMA"), the Agreement is superseded and the terms of the
First Supplemental Settlement Agreement and the First Amendment to REMA shall
control.
2. Section 4.3 of the Agreement is hereby amended by deleting the
dollar amount "$12,133,333" in the each place where it appears and substituting
therefor the dollar amount "$11,350,000" in each such place.
<PAGE> 21
3. This Amendment shall be a part of, and interpreted in
accordance with, the Agreement except that if there is a conflict or
inconsistency between this Amendment and the Agreement, the terms of this
Amendment shall control. Except as set forth herein, the Agreement has not
been and is not hereby supplemented, amended or otherwise modified. As amended
herein, the Agreement is ratified and confirmed as being in full force and
effect.
11. This Amendment 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 this Amendment under seal
as of the date first set forth above.
WITNESS: SELLER:
- ------------------------- ------------------------- (Seal)
RONALD S. HAFT, personally
PURCHASER:
ATTEST: DART GROUP CORPORATION
By:
- ----------------------- -----------------------------
[Corporate Seal] Name:
Title:
2
<PAGE> 22
EXHIBIT D
CONTRIBUTION AND SUBORDINATION AGREEMENT
THIS CONTRIBUTION AND SUBORDINATION AGREEMENT (this "Agreement"), dated
__________ __, 1997, is made by and among, Dart Group Corporation, A Delaware
corporation ("Dart"), HHH/RSH Tier II Limited Partnership, a Maryland limited
partnership (the "Retained Partnership"), Ronald S. Haft (RSH"), Herbert H.
Haft ("HHH"), the Releasing Guarantors listed on Schedule 1 hereto and the
Released Guarantors listed on Schedule 2 hereto.
Recitals
A. It is contemplated that Dart may make a $10 million loan (the "RSH/HHH
Loan") pursuant to the RSH/HHH Loan Agreement (as such term is defined
in the Settlement Agreement dated as of August 18, 1997, among Dart,
certain Affiliates of Dart, Robert M. Haft, Gloria G. Haft and Linda G.
Haft (the "Settlement Agreement")), repayment of which would be secured
in party by, among other things, all of HHH and RSH's rights, title and
interest in and to the Collateral (as defined in Section 2(a) of this
Agreement) and the Retained Partnership.
B. All of the parties to this Agreement, except Dart and the Retained
Partnership, are parties to an Indemnification Agreement, dated as of
July 31, 1994 (the "Indemnification Agreement"), under which HHH and
RSH agreed to indemnify Robert M. Haft ("RMH"), Gloria G. Haft ("GGH")
and Linda G. Haft ("LGH") and collectively "RGH") with respect to,
among other things, "all claims . . . made or incurred by, or asserted
against, any of [RGL]" in connection with all liabilities or
obligations that RMH, LGH or GGH may have in connection with "all
partnership, corporate and individually held interest of the Haft
Family in that collection of entities, through which the Haft Family
owns, operates or manages their privately held warehouses (the
"Combined Entities") . . . ." The Combined Entities, which include
guaranteed these indemnification obligations of HHH and RSH to RGL.
Each of the Combined Entities has certain rights to seek contribution
from the other Combined Entities in the event that it pays more than
its share of any of the guaranteed indemnification obligations.
C. If Dart makes the RSH/HHH Loan, the Retained Partnership, pursuant to
the terms and provisions of that certain Retained Partnership Guaranty,
will become a Guarantor under the Indemnification Agreement.
D. Dart is unwilling to make the RSH/HHH Loan unless the Releasing
Guarantors (1) release all rights of contribution they may have against
the Released Guarantors, and (2) subordinate any claims they now have,
or may hereafter have in the Collateral to the claims of Dart.
<PAGE> 23
Agreements
NOW THEREAFTER, to induce Dart to enter into the RGL Settlement
Agreement, to enter into the RSH/HHH Loan Agreement and to make the loans
contemplated thereunder, the parties hereto hereby agree as follows:
1. Release of Released Guarantors. Each of the Releasing
guarantors irrevocably and unconditionally hereby releases each of the Released
Guarantors from any and all manner of claims, demands, damages, actions, causes
of action, contracts, agreements, charges, sums of money, claims for attorney's
fees and lawsuits of every kind and description whatsoever, in law or equity,
whether known or unknown, for contribution, or otherwise (a "Claim") under, or
in connection with, the Indemnification Agreement, that certain Settlement
Agreement dated as of August __, 1997 between RSH and HHH, and any other
agreements pursuant to which any of the Released Guarantors are jointly,
severally, or jointly and severally liable in any respect to HHH, RSH, RMH,
GGH, LGH or any entity directly or indirectly controlled by one or more of such
persons.
2. Subordination of Claims.
(a) Subordination of Claims. Any Claim, however arising,
which any Releasing Guarantor may now or hereafter have in or against or with
respect to any of the Collateral shall be subject, junior and subordinate to
any Claim that Dart or any affiliate of Dart now or hereafter has against the
Guarantors for, or with respect to any Collateral for, the obligations owing to
Dart under the RSH/HHH Loan and to any unsecured Claim or Dart or any affiliate
of Dart against any Guarantor or the Retained Partnership to the extent that
Dart or such affiliate has any secured or unsecured Claims arising in
connection with or relating to the RSH/HHH Loan. The term "Collateral" shall
mean: (i) all general and limited partnership interest or shares in Combined
Property/Forbes Limited Partnership, CP/Forbes Boulevard, Inc.,
Haft/Equities-Sully Plaza Limited Partnership, Combined Property/Ontario
Limited Partnership and 3301 Pennsy Drive Associates Limited Partnership
(collectively, the "Collateral Entities"); and (ii) all property of and
interests in the property of the Collateral Entities and of the Retained
Partnership, whenever acquired and wherever located, that is collateral
security for the indebtedness to Dart arising under the RSH/HHH Loan,
including, without limitation, any direct or indirect interests in the Rolling
Valley, Maryland City and Sully shopping centers and the 4600 Forbes Boulevard
office building (but excluding any other property or interest of RSH, HHH or of
the Releasing guarantors that may hereafter be acquired by any of the
Collateral Entities or the Retained Partnership, if and to the extent such
acquisition was for less than fair value.
(b) Extent of Subordination. The subordinations and
priorities specified herein are applicable irrespective of the time, manner or
order of attachment or perfection of any security interest in the Collateral,
or the time or order of filing of any financing statements, or the giving or
failure to give notice of the acquisition or expected acquisition of any
purchase money security interest or other security interest. Such
subordinations and priorities shall remain effective notwithstanding the
amendment or modification of the documents governing the FSH/HHH Loan or
governing the grant of any security interest in the Collateral to secure
repayment of the indebtedness arising under the RSH/HHH Loan or the
commencement of a case by or against either Dart of any obligor under the
RSH/HHH Loan under Title 11 of the United
<PAGE> 24
States Code or any similar insolvency or moratorium laws; except that such
subordination shall not be effective to the extent that Dart hereafter
increases the principal amount owing under the RSH/HHH Loan or extends the
maturity date thereof.
(c) Standstill. Until all of the obligations owed to
Dart, or any affiliate of Dart, under the HHH/RSH Loan have been paid in full,
no Releasing Guarantor shall accept any payment from the Retained Partnership
or any entity constituting (or the partnership interest in which, or capital
stock of which, constitute) a part of the Collateral. Each Releasing Guarantor
agrees to refrain from taking any action against the Collateral unless it shall
have obtained Dart's prior written consent or Dart shall have been repaid in
full for all amounts owing under the RSH/HHH Loan. No Releasing Guarantor
shall obtain or take any action to obtain any judgment under which it could
attach or seize any of the Collateral in any way until Dart shall have been
repaid in full for all amounts owing under the RSH/HHH Loan. If, prior to the
repayment in full of the RSH/HHH Loan, an RGH Release Party has been granted or
otherwise obtains possession of Collateral then, in addition to any obligations
or remedies imposed or provided under the Uniform Commercial Code (the "UCC")
or other applicable law, the RGL Release Parties shall hold such Collateral,
any right, title or interest therein and any proceeds thereof in trust for the
Dart Companies (the "Trust Property"), and turn over such Trust Property to the
Dart Companies as soon as practicable.
(d) Rights on Default. Each Releasing Guarantor
acknowledges that Dart has and is entitled to exercise all of the rights and
remedies of a secured creditor under the UCC with respect to the Collateral,
including, without limitation, the right to take possession of and dispose of
the Collateral after an event of default, and to accept the Collateral as
discharge of the obligations under the RSH/HHH Loan to the extent permitted
under the UCC. If Dart were to elect to sell the Collateral in a public or
private sale, conducted in accordance with the UCC, any purchaser of all or any
part of the Collateral shall take such Collateral free and clear of all rights
and interests of any of the Releasing Guarantors (including, without
limitation, any rights or interests of any of the RGL Releasing Guarantors in
the property or assets of any of the Collateral Partnerships(, and the
Releasing Guarantors shall have such rights and interests in and to the
proceeds of any such sale, after payment in full of all obligations owed to
Dart or any affiliate of Dart under the HHH/RSH Loan, as may be provided under
the UCC.
3. No Challenge to Dart Company Rights in the Collateral.
No Releasing Guarantor shall challenge the attachment, validity,
perfection, priority or extent of any Claim of Dart or any affiliate of Dart in
the Collateral or with respect to the Retained Partnership in any judicial,
administrative or alternative dispute resolution proceeding.
4. Waivers.
No delay on the part of a party hereto in exercising any right, power
or privilege granted hereunder shall operate as a waiver thereof, and no
purported waiver of any default, breach or violation of any term or provision
contained herein shall be deemed to be a waiver of such term or provision
unless the waiver is in writing and signed by the waiving party. No such
waiver shall in any event be deemed a waiver of any subsequent or other
default, breach or violation. The rights or remedies herein expressly
specified are cumulative and not exclusive of any other rights and remedies
which the parties would otherwise have.
<PAGE> 25
5. Severability; Enforceability.
In case any provision of this Agreement shall be held to be illegal,
invalid or unenforceable under present or future laws effective while this
Agreement remains in effect, the legality, validity and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.
6. Governing Law.
This Agreement will be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, without regard to its principles
concerning conflicts of law, and any actions under this Agreement may be
brought in the courts of the Commonwealth of Virginia or the United States
District Court for the Eastern District of Virginia.
7. Different Facts.
Each Releasing guarantor specifically acknowledges that the facts with
respect to which this Agreement is executed may turn out to be other than or
different from the facts now known to or believed by it to be true, and that it
therefore expressly assumes the risk of the facts turning out to be different
and agrees that this Agreement shall be in all respects effective and not
subject to termination or rescission by reason of any different facts.
8. Notices.
Notices given in connection with this Agreement shall be in writing and
be deemed to have been given when actually received by telecopy or otherwise or
five (5) days after being deposited in the United States mail, postage prepaid,
addressed to a party hereto at the address set forth below such party's
signature to this Agreement, or to such other address designated by such party
by notice to each other party.
9. 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.
10. Additional Parties.
HHH agrees that on and after the date hereof he shall cause any
entities that he now or hereafter controls, directly or indirectly, which
entities are or become indemnitors/guarantors under the Indemnification
Agreement to become parties hereto and to execute and deliver to Dart, the
Retained Partnership and RSH a counterpart hereof.
RSH agrees that on and after the date hereof, he shall cause any
entities that he now or hereafter controls, directly or indirectly, which
entities are or become indemnitors/guarantors under the Indemnification
Agreement to become parties hereto and to execute and deliver to Dart, the
Retained Partnership and HHH a counterpart hereof.
<PAGE> 26
11. Amendments.
This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties hereto.
In WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DART GROUP CORPORATION
By:
---------------------------------
Name:
Title:
Address:
-----------------------------
-----------------------------
-----------------------------
<TABLE>
<S> <C>
COMBINED PROPERTIES/ONTARIO HAFT EQUITIES-BLADEN LIMITED
LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
3301 PENNSY DRIVE ASSOCIATES LEE AND HARRISON PARTNERSHIP
LIMITED PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
HAFT/EQUITIES SULLY PLAZA LIMITED PARTNERSHIP ROCK CREEK VILLAGE ASSOCIATES LIMITED
PARTNERSHIP
By: CP Holdings VA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/FORBES BOULEVARD LIMITED HAFT EQUITIES-ROSE HILL LIMITED PARTNERSHIP
PARTNERSHIP
By: CP/Forbes Boulevard, Inc., General By: CP Holdings VA, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
CP/FORBES BOULEVARD INC.
By:
---------------------------
Ronald S. Haft, President
Address:
-------------------------------
-------------------------------
-------------------------------
COMBINED PROPERTIES/RESEDA 1751 COLUMBIA ROAD LIMITED PARTNERSHIP
ASSOCIATES LIMITED PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings VA, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/MONTEBELLO LIMITED CHARLES COUNTY ASSOCIATES LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
<PAGE> 27
<TABLE>
<S> <C>
PENN-DAW ASSOCIATES LIMITED PARTNERSHIP
By: CP Holdings VA, Inc., General
Partner
By:
-----------------------------
Ronald S. Haft, President
Address:
-------------------------------
COMBINED PROPERTIES/SILVER HILL LIMITED ARROW LEASE ACQUISITION LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/40 WEST LIMITED PARTNERSHIP CP ACQUISITION LIMITED PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/GREENWAY CENTER LIMITED CP/GREENBRIAR RETAIL INVESTMENTS LIMITED
PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Greenbriar Retail, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/BRIGGS CM/CP GREENBRIAR OFFICE INVESTMENTS LIMITED
CHANEY PLAZA LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP/Greenbriar Office, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES VIRGINIA PLAZA LIMITED SUGARLAND PLAZA LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings VA, Inc., General By: Sugarland Plaza, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/BULL RUN LIMITED CAPITAL RESOURCES LIMITED PARTNERSHIP
PARTNERSHIP
By: Bull Run, Inc., General By: Capital Resources I Corp., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
CP ACQUISITION II LIMITED PARTNERSHIP COMBINED PROPERTIES LIMITED PARTNERSHIP
By: CPALP, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
MCLEAN CHAIN BRIDGE LIMITED PARTNERSHIP RETAIL LEASE ACQUISITION LIMITED PARTNERSHIP
By: CP Holdings VA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
TRAK CHICAGO LIMITED PARTNERSHIP I COMBINED PROPERTIES INCORPORATED
By: CP Holdings MD, Inc., General By:
Partner -----------------------------
Ronald S. Haft, President
By:
--------------------------- Address:
Ronald S. Haft, President ---------------------------------
---------------------------------
Address: ---------------------------------
----------------------------------
----------------------------------
----------------------------------
HAFT EQUITIES GENERAL LIMITED PARTNERSHIP CP/GREENBRIAR OFFICES, INC.
By: CP Holdings MD, Inc., General By:
Partner -----------------------------
By: Ronald S. Haft, President
---------------------------
Ronald S. Haft, President Address:
---------------------------------
Address: ---------------------------------
---------------------------------- ---------------------------------
----------------------------------
----------------------------------
SEVENTY-FIFTH AVENUE LIMITED PARTNERSHIP CP/GREENBRIAR RETAIL, INC.
By: CP Holdings MD, Inc., General By:
Partner -----------------------------
Ronald S. Haft, President
By:
--------------------------- Address:
Ronald S. Haft, President ---------------------------------
---------------------------------
Address: ---------------------------------
----------------------------------
----------------------------------
----------------------------------
RSH/HHH TIER II LIMITED PARTNERSHIP CPALP, INC.
By: By:
--------------------------- -----------------------------
, President Ronald S. Haft, President
---------------
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
BULL RUN, INC.
By:
---------------------------
Ronald S. Haft, President
</TABLE>
<PAGE> 29
The undersigned, Herbert H. Haft, hereby agrees to be bound by the
terms of this Agreement personally and in his capacity as an officer and
general partner of the Combined Entities to the extent that the undersigned is
an officer or general partner of any of the Combined Entities.
------------------------------------
Herbert H. Haft
The undersigned, Ronald S. Haft, hereby agrees to be bound by the terms
of this Agreement personally and in his capacity as an officer and general
partner of the Combined Entities to the extent that the undersigned is an
officer or general partner of any of the Combined Entities.
------------------------------------
Ronald S. Haft
<PAGE> 1
EXHIBIT 99.4
SECOND SUPPLEMENTAL SETTLEMENT AGREEMENT
This Second Supplemental Settlement Agreement (this "Second
Supplemental Agreement"), dated as of October 15, 1997, is made by and between
RONALD S. HAFT ("RSH") and DART GROUP CORPORATION, a Delaware corporation
("Dart"), for purposes of supplementing and modifying that certain Settlement
Agreement dated as of October 6, 1995 between RSH and Dart the "RSH/Dart
Settlement Agreement"), as supplemented and modified by that certain First
Supplemental Settlement Agreement, dated on or about October 15, 1997 by and
between RSH and Dart. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
RSH/Dart Settlement Agreement.
WITNESSETH:
WHEREAS, Dart and RSH entered into the RSH/Dart Settlement
Agreement to settle certain lawsuits and other disputes between RSH and Dart
and its affiliates.
WHEREAS, on November 6, 1995 Herbert H. Haft ("HHH") filed a
lawsuit captioned Herbert H. Haft v. Dart Group Corporation, et al., Civ. A.
No. 14685 (Del. Ch.), challenging the transactions pursuant to the RSH/Dart
Settlement Agreement (the "HHH Settlement Lawsuit");
WHEREAS, in connection with the HHH Settlement Lawsuit and
other litigation challenging the transactions pursuant to the RSH/Dart
Settlement Agreement, the Delaware Court of Chancery entered an order (the
"Standstill Order") on December 6, 1995 that requires Dart to refrain from
taking or recognizing specified actions and that, in Section 8 of the
Standstill Order, requires Dart to give not less than seven (7) days' notice of
certain "extraordinary transactions" to the other parties to such lawsuits;
WHEREAS, concurrently with the execution and delivery of this
Second Supplemental Agreement, Dart and HHH are entering into a settlement
agreement pursuant to which Dart and HHH agree to settle the HHH Settlement
Lawsuit and certain other lawsuits and other disputes between them on the
terms, and subject to the conditions, set forth therein (the "HHH/Dart
Settlement Agreement");
WHEREAS, RSH desires that Dart enter into and consummate the
transactions contemplated by the HHH/Dart Settlement Agreement in order to
terminate the HHH Settlement Lawsuit and enable him to realize certain
substantial economic benefits of the RSH/Dart Settlement Agreement, which have
been unavailable to him as a result of HHH's claims that will be resolved
pursuant to the HHH/Dart Settlement Agreement;
WHEREAS, RSH wishes to induce Dart to make the $10 million
loan contemplated by this Second Supplemental Agreement; and
<PAGE> 2
WHEREAS, the consummation of the transactions contemplated by
this Second Supplemental Agreement is a condition precedent to the closing of
the transactions contemplated by the HHH/Dart Settlement Agreement;
NOW, THEREFORE, for and 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, the parties hereto agree as follows:
ARTICLE 5. SECOND SUPPLEMENTAL SETTLEMENT.
5.1 CERTAIN DEFINITIONS. As used in this Second
Supplemental Agreement, the terms "HHH Closing" and "HHH Closing Date" mean
respectively, the "Closing" and the "Closing Date" as defined in the HHH/Dart
Settlement Agreement.
5.2 SETTLEMENT TRANSACTIONS.
(a) AMENDMENT TO VOTING TRUST AGREEMENT. Simultaneously with the
execution and delivery of this Second Supplemental Agreement, the parties shall
execute and deliver an amendment to the Voting Trust Agreement in the form of
EXHIBIT A hereto (the "Voting Trust Amendment").
(b) AMENDMENT TO BUY/SELL/OFFERING AGREEMENT. At the time of the
HHH Closing, the parties shall execute and deliver an amendment to the
Buy/Sell/Offering Agreement in the form of EXHIBIT B hereto (the "Buy/Sell
Amendment"). The parties agree that the Denial Period (as defined in the
Buy/Sell/Offering Agreement) that has been in existence since January 18, 1997,
shall be deemed to have commenced on January 9, 1997 and to continue until at
least the later of January 1, 1998, or the Closing Date or, if this Second
Supplemental Agreement shall terminate, the date on which such termination
occurs; provided, however, that in no event shall this provision result in an
earlier termination of such Denial Period than would otherwise occur under the
terms of the Buy/Sell/Offering Agreement.
(c) $10 MILLION LOAN. At the time of the HHH Closing, (i) Dart
shall, and RSH shall cause the HHH/RSH Tier II Limited Partnership to, execute
and deliver a Loan Agreement, substantially in the form of EXHIBIT C hereto
(the "Loan Agreement"), (ii) RSH shall execute and deliver the Guaranty (as
defined in the Loan Agreement), (iii) contingent upon the cooperation of HHH,
Gloria G. Haft and other parties to the Loan Documents (as defined in the Loan
Agreement), the closing of the $10 million loan by Dart to the HHH/RSH Tier II
Limited Partnership shall occur in accordance with the terms of the Loan
Agreement, and (iv) RSH shall prepay in full (unless previously prepaid in
full) the $10,000,000 in principal amount of notes issued by him to HHH which
by their terms are required to be prepaid upon the closing of the $10 million
loan by Dart to the HHH/RSH Tier II Limited Partnership; provided, however,
that (i) the consent of the Hermans under the Loan Agreement shall not be
required, (ii) any and all references to recording the Negative Pledges shall
be deleted and the form of the lender consent shall be as executed by JP
Morgan, (iii) the minimum exercise price applicable to the Forbes buy/sell
shall be $4,000,000 and Dart shall cooperate with RSH in structuring any
acquisition of
2
<PAGE> 3
all of the partnership interests by Dart from the Hermans and RSH so that RSH
may implement a like-kind exchange under the same terms and restrictions as are
set forth n the First Amendment to the Real Estate Master Agreement with
respect to like-kind exchanges, and (iv) Dart shall waive its right to the
additional interest kicker if the Loan is repaid during the first 5 years.
(d) CONTRIBUTION AGREEMENT. At the time of the HHH Closing, Dart
shall execute and deliver the Contribution Agreement, in the form of EXHIBIT D
hereto (the "Contribution Agreement"), and RSH shall execute and deliver the
Contribution Agreement individually and on behalf of each of the Releasing
Guarantors listed on Schedule 1 thereto and each of the Released Guarantors
listed on Schedule 2 thereto.
(e) EFFECTIVENESS. Neither the obligations of the parties under
this Article 2, the Voting Trust Amendment nor the Buy/Sell Amendment shall
become effective unless and until the HHH/Dart Settlement Agreement shall
become effective.
5.3 HHH/DART SETTLEMENT. Notwithstanding any other provision of
this Second Supplemental Agreement, RSH acknowledges and agrees that (i)
neither Dart nor any of its affiliates has made any express or implied
representation, warranty or covenant as to whether or not the HHH/Dart
Settlement Agreement will become effective or if it becomes effective, whether
the transactions contemplated thereby will be consummated (and Dart hereby
expressly disclaims any such representation, warranty or covenant) and (ii)
neither Dart nor any of its affiliates shall have any liability to RSH in the
event (A) the HHH/Dart Settlement Agreement does not become effective or (B) a
closing under the HHH/Dart Settlement Agreement does not occur and/or the
transactions contemplated thereby are not consummated.
ARTICLE 6. COVENANTS
6.1 COOPERATION. The parties shall cooperate in the
defense of any litigation challenging the validity of this Second Supplemental
Agreement, the Voting Trust Amendment, the Loan Agreement, the Buy/Sell
Amendment, the Contribution Agreement, the HHH/Dart Settlement Agreement or the
RSH/Dart Settlement Agreement and the transactions contemplated hereby and
thereby. RSH hereby (a) consents to the HHH/Dart Settlement Agreement and the
transactions contemplated thereby, (b) agrees to not file any lawsuit or
initiate any proceeding challenging the HHH/Dart Settlement Agreement or any of
the transactions contemplated thereby, and (c) waives and releases any claims
he may have against Dart, its affiliates, directors and officers or against HHH
arising out of or in connection with the HHH/Dart Settlement Agreement and the
transactions contemplated thereby.
6.2 FURTHER ASSURANCES. RSH and Dart each shall promptly
execute and deliver, and RSH shall cause to be promptly executed and delivered,
such additional documents, assignments, certificates and instruments as the
other party to this Second Supplemental Agreement may reasonably request in
order to effectuate more effectively the transactions contemplated by this
Second Supplemental Agreement, the Voting Trust Amendment and the Buy/Sell
Amendment.
3
<PAGE> 4
6.3 SPECIFIC PERFORMANCE. Dart and RSH each acknowledge
and agree that in the event of any breach of this Second Supplemental
Agreement, the Voting Trust Amendment or the Buy/Sell Amendment or the
Contribution 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 each of this Second Supplemental Agreement,
the Voting Trust Amendment, the Buy/Sell Amendment or the Contribution
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 each consent to non-exclusive personal jurisdiction in any such action
brought in the Delaware Court of Chancery or the United States District Court
for the District of Delaware.
ARTICLE 7. MISCELLANEOUS
7.1 RELATIONSHIP TO SETTLEMENT DOCUMENTS. Except as
modified or supplemented by this Second Supplemental Agreement, the RSH/Dart
Settlement Agreement, as amended by the First Supplemental Settlement
Agreement, shall remain in full force and effect, and no other changes shall
have been deemed to have been effected by this Second Supplemental Agreement.
7.2 EXPENSES. Except as provided in the RSH/Dart
Settlement Agreement, the parties shall pay their own respective expenses
incurred in connection with this Second Supplemental Agreement and the
transactions hereunder, including, without limitation, any fees for accountants
and attorneys.
7.3 NOTICES. Any notices or consents required or
permitted by this Second Supplemental 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:
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<PAGE> 5
If to Dart:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attn: Chairman of the Executive
Committee
and
Attn: Corporate Secretary
Facsimile: 301-733-2707
with copies 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:
Mr. Ronald S. Haft
58 La Gorce Circle
Miami Beach, Florida 33141
Facsimile: 305-865-4024
with a copy to:
Stuart M. Grant, Esq.
Grant & Eisenhofer, P.A.
1220 Market Street
Suite 500
Wilmington, Delaware 19801
Facsimile: 302-622-7100
7.4 GOVERNING LAW. This Second Supplemental 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, without regard to conflict of laws principles.
7.5 AMENDMENTS. This Second Supplemental Agreement may be
amended only by a written agreement executed by the parties hereto.
7.6 ENTIRE AGREEMENT. This Second Supplemental Agreement
sets forth the entire understanding of the parties hereto, and supersedes all
prior agreements between them, with respect to the subject matter hereof, all
prior negotiations between the parties with respect to the subject matter
hereof are merged in this Second Supplemental Agreement and the other
Settlement Documents, and there are no promises, agreements, conditions,
undertakings,
5
<PAGE> 6
warranties or representations, oral or written, express or implied, between
them other than as herein set forth.
7.7 SEVERABILITY. If any one or more of the provisions
contained in this Second Supplemental Agreement is 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 thereby.
7.8 BINDING EFFECT. This Second Supplemental 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.
7.9 WAIVER. No waiver of any of the provisions of this
Second Supplemental 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.
7.10 HEADINGS. The headings in this Second Supplemental
Agreement are solely for convenience of reference and shall not be given any
effect in the construction or interpretation of this Second Supplemental
Agreement. Unless otherwise specified, references in this Second Supplemental
Agreement to Sections, Exhibits or Schedules are references to Sections of, or
Exhibits or Schedules to, this Second Supplemental Agreement.
7.11 COUNTERPARTS. This Second Supplemental 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, RSH and Dart have executed this Second
Supplemental Agreement, or have caused this Second Supplemental Agreement to be
executed on their behalf, as of the date first above written.
/s/ Ronald S. Haft
-----------------------------------------
RONALD S. HAFT
DART GROUP CORPORATION
By: /s/Richard B. Stone
---------------------------------
Name: Richard B. Stone
Title: Chief Executive Officer
/s/ Elliot Arditti
---------------------------------
Sr. Vice President and
Corporate Secretary
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<PAGE> 7
EXHIBIT A
REFER TO EXHIBIT 99.5 OF THIS CURRENT REPORT ON FORM 8-K FOR THE EXECUTED
DRAFT OF THE AMENDMENT TO VOTING TRUST AGREEMENT.
<PAGE> 8
EXHIBIT B
AMENDMENT TO BUY/SELL/OFFERING AGREEMENT
This AMENDMENT TO BUY/SELL/OFFERING AGREEMENT (this "Buy/Sell
Amendment"), dated as of this ___ day of ______, 199_, by and between Dart
Group Corporation ("Dart") and Ronald S. Haft ("RSH").
WITNESSETH:
WHEREAS, Dart and RSH entered into that certain Settlement Agreement,
dated as of October 6, 1995 (the "RSH/Dart Settlement Agreement"), for the
purpose of, inter alia, settling certain lawsuits and other disputes between
them;
WHEREAS, in connection with the RSH/Dart Settlement Agreement, Dart and
RSH entered into that certain Buy/Sell/Offering Agreement, dated as of October
6, 1995 (the "Buy/Sell/Offering Agreement");
WHEREAS, on October 18, 1995, Robert M. Haft, Gloria G. Haft and Linda
G. Haft (collectively, "RGL") filed a lawsuit captioned Gloria Haft, et al. v.
Larry Schafran, et al., Civ. A. No. 14620 (Del. Ch.), challenging the legal
effect of certain of the transactions pursuant to the RSH/Dart Settlement
Agreement (the "Section 225 Lawsuit");
<PAGE> 9
WHEREAS, on November 6, 1995, Herbert H. Haft ("HHH") filed a lawsuit
captioned Herbert H. Haft v. Dart Group Corporation, et al., Civ. A. No. 14685
(Del. Ch.), challenging the transactions pursuant to the RSH/Dart Settlement
Agreement (the "HHH Settlement Lawsuit");
WHEREAS, Dart and certain of its subsidiaries have entered into, and
consummated the closing under, a Settlement Agreement, dated August 18, 1997,
with RGL pursuant to which, inter alia, Dart has purchased a total of 104,976
shares of Dart Class B Common Stock for a total price of approximately $14.7
million and consummated certain other settlement transactions with RGL
involving additional payments by Dart and/or its subsidiaries totalling more
than $35 million, and RGL have dismissed the Section 225 Lawsuit;
WHEREAS, Dart and HHH have entered into a Settlement Agreement, dated
as of October 9, 1997 (the "HHH/Dart Settlement Agreement"), pursuant to which,
inter alia, HHH has agreed to relinquish his claim to power to vote shares of
Dart Class B Common Stock and to terminate the HHH Settlement Lawsuit, and Dart
has agreed to consummate certain other settlement transactions with HHH
involving payments by Dart and/or its subsidiaries totalling more than $27
million and a loan by Dart of $10 million.
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<PAGE> 10
WHEREAS, in connection with the execution and delivery of the HHH/Dart
Settlement Agreement, Dart and RSH entered into that certain Second
Supplemental Settlement Agreement, dated October 9, 1997, which provides for
the execution and delivery of this Buy/Sell Amendment;
WHEREAS, the execution and delivery of this Buy/Sell Amendment is a
condition precedent to the closing of the transactions contemplated by the
HHH/Dart Settlement Agreement;
WHEREAS, Dart and RSH wish to amend the Buy/Sell/Offering Agreement as
set forth herein.
NOW THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Amendment of Buy/Sell/Offering Agreement. [(a)] Section 7(a)
of the Buy/Sell/Offering Agreement shall hereby be amended by deleting the date
"December 31, 1999" and substituting therefor the date "December 31, 1997."
[(b) The first sentence of Section 7(b) of the Buy/Sell/Offering
Agreement shall hereby be amended by deleting the words "within fifteen (15)
days of the date of the Call Exercise Notice" and by adding the following at
the end thereof: "; provided that any Call Exercise Notice specifying a closing
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<PAGE> 11
date in January, 1998, may be given at any time on or after ______, 1997,(1)
and any other Call Exercise Notice shall specify a closing date within fifteen
(15) days of the date of such Call Exercise Notice."](2)
2. Effectiveness. The amendment to the Buy/Sell/Offering
Agreement set forth in Section 1 of this Buy/Sell Amendment shall be effective
immediately upon the execution and delivery of this Buy/Sell Amendment.
3. Counterparts. This Buy/Sell Amendment 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, RSH and Dart have executed this Buy/Sell Amendment,
or have caused this Buy/Sell Amendment to be executed on their behalf, on the
date first above written.
------------------------------------
RONALD S. HAFT
DART GROUP CORPORATION
By:
---------------------------
Name:
Title:
---------------------
- --------------
(1) This will be the date of the Amendment to Buy/Sell/Offering Agreement.
(2) If the Amendment to Buy/Sell/Offering Agreement is entered into after
December 31, 1997, Section 7(b) will not need to be amended.
<PAGE> 12
EXHIBIT C
LOAN AGREEMENT
This LOAN AGREEMENT (this "Agreement") is entered into as of the ____
day of _______, 1997 by and between DART GROUP CORPORATION, a Delaware
corporation ("Lender") and HHH/RSH TIER II LIMITED PARTNERSHIP, a Maryland
limited partnership ("Borrower").
Recitals
WHEREAS, Borrower desires to borrow funds from Lender to enable
Borrower to purchase from Combined Properties Limited Partnership promissory
notes as hereinafter described; and
WHEREAS, Lender desires to make funds available to Borrower for the
foregoing purpose in an amount not to exceed $10 million in accordance with the
terms and conditions provided herein.
NOW THEREFORE, in consideration of the respective agreements of Lender
and Borrower, the parties hereby agree as follows:
8. CERTAIN DEFINITIONS. In addition to the terms defined elsewhere in
this Agreement, as used herein, the following terms shall have the indicated
definitions unless otherwise specifically defined herein:
(a) "Affiliate" or "Affiliated" shall mean a person or entity
who is in control of, under common control with, or controlled by another
person or entity. However, Lender and its subsidiaries (including Crown Books
Corporation, Shoppers Food Warehouse Corporation, Total Beverage Corporation
and Trak Auto Corporation) shall not be deemed to be Affiliated with any member
of the Haft family for purposes of this Agreement.
(b) "Agreement and Consent" shall mean that certain Agreement
and Consent dated of even or approximate date herewith
<PAGE> 13
executed by the Haft Parties for the benefit of Lender, as it may hereafter be
amended.
(c) "Applicable Interest Rate" shall mean eight percent
(8%) per annum, compounded annually.
(d) "Appraised Value" of a Property shall mean the
appraised value of the applicable Property(ies) as if sold to a bona-fide third
party in an arms-length transaction as encumbered by any then-existing
financing that is to be assumed by a buyer or repaid, and without consideration
of any costs, expenses or taxes payable upon a sale, which appraised value
shall be determined by an MAI appraiser mutually acceptable to Lender and
Borrower with at least ten years experience in the field with no personal or
financial interest in Borrower, Lender or any Property. The appraiser shall be
instructed to appraise the Property on an "as is" fair market value basis in
conformance with the Code of Professional Ethics and Standards as set forth by
the Appraisal Institute. Borrower shall pay the cost of such appraisal.
(e) "Arms-Length Sale" shall mean the sale of a Property
or Properties to a person or entity not Affiliated with Borrower or Borrower's
partners (or any of their respective Affiliates) at the time of such sale in an
arms-length negotiated transaction.
(f) "Business Day" shall mean any day of the year on which
commercial banks are not required or authorized to close in Maryland.
(g) "Environmental Reports" shall mean the following
studies with respect to the Properties: (i) with respect to Sully Plaza, the
Phase I Environmental Site Assessment for Sully Plaza, Lee Jackson Memorial
Highway and Centerville Road, Chantilly, Virginia, MAC Project No. 96177,
prepared by MAC Corporation of Virginia, dated October 15, 1996; (ii) with
respect to Maryland City, the Phase I Environmental Site Assessment for
Maryland City Plaza, Fort Meade Road and Red Clay Road, Laurel, Maryland, MAC
Project No. 96179, prepared by MAC Corporation of Virginia, dated October 15,
1996; and (iii) with respect to Rolling Valley, the Phase I Environmental Site
Assessment for Rolling Valley Mall, Old Keene Mill Road and Shiplett Boulevard,
Burke, Virginia, MAC Project No. 96178, prepared by MAC Corporation of
Virginia, dated October 15, 1996. There is no Environmental Report for 4600
Forbes Boulevard.
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<PAGE> 14
(h) "Equivalent Receipts" shall mean
non-cash receipts, and such non-cash receipts shall be valued in an amount
equal to the net proceeds received upon disposition, or if the same are not
disposed of by the end of the year in which such non-cash receipts are
received, then at fair market value as of such date.
(i) "Existing Mortgages" shall mean: (i) with respect to
Rolling Valley Mall, that certain Deed of Trust and Security Agreement and
Assignment of Leases and Rents dated May 20, 1994 executed by Combined
Properties Limited Partnership, a Maryland limited partnership, for the benefit
of Rolling City securing a loan in the original principal amount of
$18,500,000.00; (ii) with respect to Maryland City Plaza, that certain Deed of
Trust and Security Agreement and Assignment of Leases and Rents dated May 20,
1994 executed by Combined Properties Limited Partnership, a Maryland limited
partnership, for the benefit of Rolling City securing a loan in the original
principal amount of $12,250,000.00; (iii) with respect to Sully Plaza, that
certain Deed of Trust, Assignment of Rents and Security Agreement dated
December 3, 1987 executed by Haft/Equities-Sully Plaza Limited Partnership, a
Virginia limited partnership, for the benefit of Metropolitan securing a loan
in the original principal amount of $11,000,000.00; and (iv) with respect to
4600 Forbes Boulevard, that certain Purchase Money Deed of Trust and Security
Agreement dated December 10, 1990 executed by 4600 Forbes Boulevard Joint
Venture, a District of Columbia general partnership, for the benefit of
Combined Properties Incorporated securing a loan in the original principal
amount of $8,100,000.00, as subsequently assigned to American National
Insurance Company and amended in that certain Modification and Restatement of
Deed of Trust and Security Agreement dated as of January 17, 1991.
(j) "4600 Forbes Boulevard" shall mean that certain land
and improvements, together with all appurtenances thereto, located at 4600
Forbes Boulevard, Lanham, Maryland, such land being more particularly described
on Exhibit G attached hereto, owned by 4600 Forbes Boulevard Joint Venture, a
District of Columbia general partnership ("4600 Forbes Boulevard Joint
Venture").
(k) "Gross Revenues" shall mean all money, gross income,
consideration, Equivalent Receipts and other things of value received by, or
paid to or for the account or benefit of Borrower or its agents (or 99% of
those received by HESPLP and/or
3
<PAGE> 15
MC/RVM Associates Limited Partnership, whichever is greater) from any and all
sources with respect to the ownership, leasing, occupancy and operation of the
Properties or any portion thereof or any interest therein, or any source other
than a Property, calculated on the cash basis method of accounting applied on a
consistent basis, including, without limiting the generality of the foregoing,
the following: rentals (including base rentals, charge backs, percentage rent,
additional rent pass-throughs, escalations, fees and charges for services) and
all other payments made by lessees or occupants of the Properties (exclusive of
security and other deposits made by lessees of space in the Properties
deposited and maintained in separate escrow accounts until, and to the extent,
actually forfeited); late charges and interest paid on rentals; payments for
services; rentals, cash and other receipts from licenses, concessions, parking,
vending machines and similar items; any payments by tenants of or on account of
Qualified Expenses; other fees, charges or payments not deemed to be rental
under a lease but paid for, or in connection with, the use of space in the
Properties or any portion thereof; payments made as consideration, in whole or
in part, for the cancellation, modification, extension or renewal of leases;
actual cash proceeds received by Borrower and not applied to the repayment of
any debt secured by a mortgage on the Properties or any part thereof from any
insurance or condemnation award with respect to any damage or taking to all or
any portion of the Properties (the amount of such proceeds applied toward
restoration, however, shall be excluded from Gross Revenues); proceeds of
rental value insurance and business interruption insurance; amounts paid by
lessees of the Properties pursuant to escalation or other adjustment or
pass-through provisions in their respective leases or on account of maintenance
or service charges, taxes, assessments, utilities, air conditioning and
heating, and other administrative, management, operating, leasing and
maintenance expenses for the Properties; actual cash refunds of taxes received
by Borrower; actual cash dividends on insurance policies received by Borrower;
administrative fees paid to Borrower by or on behalf of lessees; and all other
receipts of any kind whether similar or dissimilar to those enumerated above
arising from or in connection with the ownership, leasing, occupancy or
operation of the Properties or any portion thereof, which may directly or
indirectly inure to the benefit of Borrower. As used herein, the terms "lease"
and "lessee" shall be interpreted to include within Gross Revenues payments
from or in respect of all use or occupancy agreements concerning the Properties
or any portions thereof.
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<PAGE> 16
(l) "Guarantors" shall mean RSH, RSH GP LLC and the HHH
Trust.
(m) "Guaranty" shall mean that certain Guaranty dated of
even or approximate date herewith executed by RSH, RSH GP LLC and the HHH
Trust, jointly and severally, for the benefit of Lender in connection with the
Loan, as it may hereafter be amended.
(n) "Haft-family Loan" shall mean the outstanding
principal amount, not to exceed Ten Million Dollars ($10,000,000), plus any
accrued and unpaid interest earned thereon to the date hereof, evidenced by:
that certain Subordinated Promissory Note, dated _____________, 1997, made by
RSH to the order of Borrower in the original principal amount of $6,000,000, as
endorsed to Combined Properties Limited Partnership, as further endorsed to
Herbert H. Haft, held on a subordinated basis to the Loan; and that certain
Series 1 Promissory Note, dated ____________, 1997, made by RSH to the order of
Borrower in the original principal amount of $4,000,000, as endorsed to
Combined Properties Limited Partnership, as further endorsed to Herbert H.
Haft, as further endorsed to Gloria G. Haft, held on a pari passu basis with
the Loan; such promissory notes and other loan documents relating thereto not
to contain terms and conditions more favorable to the payee thereunder than the
terms and conditions of the Loan Documents.
(o) "Haft Parties" shall mean HESPLP, MC/RVM Associates
Limited Partnership, Borrower, RSH GP LLC, RSH, the HHH Trust, Combined
Properties/Forbes Boulevard Limited Partnership, and CP/Forbes Boulevard, Inc.,
a District of Columbia corporation.
(p) "HCP Notes" shall mean those five (5) Promissory
Notes, and all amendments, allonges, replacements, substitutions and
refinancings thereof, payable to Capital Resources Limited Partnership, dated
August 15, 1994, by the following makers in the specified amounts:
(i) Charles County Associates Limited Partnership,
original principal amount of $1,381,629.00.
(ii) CP Acquisition Limited Partnership, original
principal amount of $3,406,248.00.
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<PAGE> 17
(iii) Combined Properties/Reseda Associates Limited
Partnership, original principal amount of $3,334,142.00.
(iv) Arrow Lease Acquisition Limited Partnership,
original principal amount of $3,430,741.00.
(v) CP Entities Limited Partnership, original
principal amount of $2,627,213.00.
Borrower represents and warrants that: the Promissory Note dated August 15,
1994 made by CP Acquisition II Limited Partnership to Capital Resources Limited
Partnership in the original principal amount of $1,998,268.00; the Promissory
Note dated August 15, 1994 made by Penn-Daw Associates Limited Partnership to
Capital Resources Limited Partnership in the original principal amount of
$452,945.00; the Promissory Note dated August 15, 1994 made by HESPLP to
Capital Resources Limited Partnership in the original principal amount of
$51,272.00; the Promissory Note dated August 15, 1994 made by 1751 Columbia
Road Limited Partnership to Capital Resources Limited Partnership in the
original principal amount of $298,479.00; the Promissory Note dated August 15,
1994 made by Combined Properties/Silver Hill Limited Partnership to Capital
Resources Limited Partnership in the original principal amount of
$1,200,616.00; and the Promissory Note dated August 15, 1994 made by Combined
Properties/Forbes Boulevard Limited Partnership to Capital Resources Limited
Partnership in the original principal amount of $337,764.00 have all been
repaid, and the proceeds thereof invested in the properties owned by (or used
to pay off debts owed by) the makers thereof, the other makers of the HCP
Notes, and/or the Partnerships.
(q) "HESPLP" shall mean Haft/Equities-Sully Plaza Limited
Partnership, a Virginia limited partnership.
(r) "Hazardous Substance" shall mean and include all
hazardous or toxic substances, wastes or materials, any pollutants or
contaminates (including, without limitation, friable 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
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<PAGE> 18
Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, as any
of the foregoing has heretofore been or is hereafter amended.
(s) "HHH Trust" shall mean the Herbert H. Haft Tier II
Irrevocable Trust 1997.
(t) "Loan Documents" shall mean collectively this
Agreement, the Note, the Pledge Agreements, the Guaranty, the Agreement and
Consent, the Negative Pledges, Uniform Commercial Code financing statements,
the amendments to the management agreements referred to in Section 13(f) below,
and the direct pay letters of even or approximate date herewith by Combined
Properties Limited Partnership to RSH and to Capital Resources Limited
Partnership regarding the Pledged Notes, as they may hereafter be amended,
supplemented or otherwise modified from time to time, and any documents
hereafter entered into and agreed by the parties to be a Loan Document.
(u) "Maryland City Plaza" shall mean that certain real
property located in Laurel, Maryland more particularly described in Exhibit A
attached hereto and incorporated herein, together with all improvements located
thereon and appurtenances related thereto.
(v) "Maturity Date" shall mean (i) unless the Note shall
be accelerated sooner pursuant to any provision hereof or thereunder or
pursuant to any provision of any of the other Loan Documents, the date which is
ten (10) years after the date of the Note, or (ii) if such acceleration occurs,
the date of such acceleration.
(w) "Metropolitan" shall mean Metropolitan Life Insurance
Company.
(x) "Negative Pledges" shall mean (i) that certain
Restrictive Covenant executed by MC/RVM Associates Limited Partnership for the
benefit of Lender, (ii) that certain Restrictive Covenant executed by HESPLP
for the benefit of Lender, and (iii) that certain Restrictive Covenant executed
by 4600 Forbes Boulevard Joint Venture, a District of Columbia general
partnership, for the benefit of Lender, all of even or approximate date
herewith, as any of them may hereafter be amended.
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<PAGE> 19
(y) "Net Operating Income" means Gross Revenues less the
Qualified Expenses for the period of time involved.
(z) "Net Property Value" shall mean:
(i) in the event of an Arms-Length Sale, the Net
Sales Proceeds from such Sale;
(ii) in the event of a Sale which is not an
Arms-Length Sale, the greater of (A) the Appraised Value of such
Property(ies) less (I) the amount of all reasonable costs (including a
real estate broker's commission, Virginia grantor's tax (with respect
to the Properties located in Virginia), 1/2 of the transfer and
recordation taxes (with respect to the Properties located in Maryland),
recording charges and other reasonable and customary settlement
charges) actually incurred by the applicable Partnership in connection
with such Sale, and (II) all principal and interest owed by the
applicable Partnership to the mortgagee(s) of such Property(ies), or
(B) the Net Sales Proceeds of such Property(ies); or
(iii) solely for purposes of Section 4 of this
Agreement, the Appraised Value of the Properties less (A) the amount of
all reasonable costs (including a real estate broker's commission,
title fees, transfer fees, recording charges and other reasonable and
customary settlement charges) which would be incurred by the
Partnerships if the Properties were sold, and (B) all principal and
interest owed by the Partnerships to the mortgagees of the Properties.
(aa) "Net Sales or Refinancing Proceeds" shall mean the
gross sales price or loan amount for any part or all of a Property(ies) (prior
to adjustment for taxes, rents, expenses or any other matter) (together with
the value of all other property or consideration received by a Partnership in
connection with such Sale or Refinancing), together with all payments or other
consideration paid to a Partnership, their respective general partners or any
Affiliate in connection with such Sale or Refinancing (e.g. payments for
noncompetition agreements or termination of a management agreement) less: (i)
any real estate broker's commission payable by a Partnership to a
non-Affiliated broker pursuant to such transfer (not to exceed reasonable
market rates for purposes of this calculation); (ii) (A) in the case of
8
<PAGE> 20
a Refinancing or an Arms-Length Sale, the actual Maryland and/or Virginia
recordation and transfer taxes paid by HESPLP or MC/RVM Associates Limited
Partnership or half of those paid by 4600 Forbes Boulevard Joint Venture and
(B) in a non-Arms-Length Sale, the Virginia grantor's tax (with respect to Sale
of the Properties located in Virginia) and/or 1/2 of the transfer and
recordation taxes (with respect to the Sale of the Properties located in
Maryland), and (C) in either case, the actual recording charges and other
reasonable and customary settlement fees payable by HESPLP or MC/RVM Associates
Limited Partnership or half of those paid by 4600 Forbes Boulevard Joint
Venture pursuant to such transfer; (iii) all principal and interest owed at the
closing by a Partnership to the Existing Mortgagee of such Property or to such
other mortgagee as may hereafter be approved by Lender in accordance with the
terms of this Agreement; (iv) loan commitment fees, points and reasonable
mortgage brokers' fees payable to unrelated third parties incident to a
Refinancing; (v) reasonable legal fees of the Partnerships incident to a Sale,
and reasonable legal fees of the Partnerships and any lender's counsel incident
to a Refinancing; (vi) market rate title insurance premiums and survey costs
incident to a Refinancing; (vii) customary closing adjustments apportioning
real estate taxes and utility bills; and (viii) the "disposition fee" and
"mortgage brokerage fee" payable to Combined Properties Incorporated for its
own account as shown on Exhibit K attached hereto.
(bb) "Note" shall mean that promissory note substantially
in the form attached here as Exhibit B executed by Borrower in favor of Lender
evidencing the indebtedness of Borrower to Lender, as it may hereafter be
amended.
(cc) "Obligations" shall mean all duties, covenants and
responsibilities due to Lender by Borrower with respect to the Loan and/or this
Agreement.
(dd) "Partnerships" shall mean HESPLP, MC/RVM Associates
Limited Partnership, and 4600 Forbes Boulevard Joint Venture.
(ee) "Pledge Agreements" shall mean (i) that certain Pledge
and Assignment of Partnership Interests dated of even or approximate date
herewith executed by Borrower for the benefit of Lender, (ii) those certain
Pledges and Assignments of Partnership Interests dated of even or approximate
date herewith executed by RSH for the benefit of Lender, (iii) that certain
Pledge and
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<PAGE> 21
Assignment of Partnership Interests dated of even or approximate date herewith
executed by the HHH Trust for the benefit of Lender, (iv) that certain Pledge
and Assignment of Partnership Interests dated of even or approximate date
herewith executed by RSH GP LLC for the benefit of Lender, (v) that certain
Pledge and Assignment of Member Interests dated of even or approximate date
herewith executed by RSH for the benefit of Lender, (vi) that certain Pledge
and Assignment of Partnership Interests (CP/Forbes) by Combined
Properties/Forbes Boulevard Limited Partnership for the benefit of Lender,
(vii) that certain Pledge and Assignment of Partnership Interests (CP/Forbes
Inc.) dated of even or approximate date herewith executed by CP/Forbes
Boulevard, Inc. for the benefit of Lender, (viii) that certain Pledge and
Assignment of Stock dated of even or approximate date herewith executed by RSH
for the benefit of Lender, and (ix) that certain Pledge Agreement (Debt
Instruments) dated of even or approximate date herewith executed by Borrower
for the benefit of Lender, as any of them may hereafter be amended.
(ff) "Pledged Notes" means those Promissory Notes payable
to Combined Properties Limited Partnership (i) by RSH dated July 30, 1993 in
the original principal amount of $10,118,687.00, and (ii) by Capital Resources
Limited Partnership dated August 15, 1994 in the original principal amount of
$13,017,529.00, as the same may hereafter be replaced, amended, restated or
otherwise modified (no such replacement, amendment, restatement or other
modification being permitted without Lender's consent in its sole and absolute
discretion).
(gg) "Principal Amount" shall mean the aggregate unpaid
principal balance of the Note at the time in question, including accrued but
unpaid interest thereon.
(hh) "Property" shall mean any one or all of Rolling Valley
Mall, Maryland City Plaza, Sully Plaza and/or 4600 Forbes Boulevard.
(ii) "Qualified Expenses" shall mean 99% of the expenses
incurred in connection with the ownership, operation and maintenance of the
Properties (other than 4600 Forbes Boulevard) as set forth below:
(i) the payment of all reasonable and normal
operating expenses for the Properties, including (without limitation)
(A) debt service payments to the Existing Mortgagees and other future
mortgagees permitted by Section
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14(c) below or otherwise approved by Lender in accordance with the
terms of this Agreement, (B) tax and other loan escrows, (C) tenant
improvements and allowances to the extent not paid for from any
reserves maintained under clause (E) below, (D) leasing commissions,
management fees, accounting, legal and other professional fees to the
extent not paid for from any reserves maintained under clause (E) below
(provided, however, that to the extent any of the foregoing commissions
or fees are to be paid to Combined Properties Incorporated, to any
member of the Haft family, or to any Affiliate of any member of the
Haft family, the commission or fee shall be in accordance with the
schedule attached hereto as Exhibit K or in accordance with such other
schedule, if any, proposed by Borrower as Lender may hereafter approve
in its sole and absolute discretion), and (E) the establishment of
reserves approved by any current mortgagee or Lender-approved future
mortgagee, but such reserves shall not be less than $10.00 per square
foot of vacant space then existing in the Properties and $7.00 per
square foot of space attributable to leases at the Properties that
terminate within twelve months from the date of any calculation of net
cash flow, such reserves to be in the alternative (and not additive)
and to be used only for the purposes set forth in clauses (C) and (D)
above;
(ii) capital expenditures on the Properties, but only
to the extent the same are not paid for from any reserve established
under paragraph (i) above;
(iii) the distributions or repayments, but without
interest or other return on investment, to partners in Borrower,
HESPLP, or MC/RVM Associates Limited Partnership in the amount of any
capital contributions or loans made to cover such reasonable and normal
operating expenses at any of the Properties; and
(iv) distributions made by RSH in the ordinary course
of business if such distributions are immediately recontributed to or
loaned to HESPLP or MC/RVM Associates Limited Partnership, or to
Borrower on their behalf, to cover other expenses that would otherwise
be a Qualified Expense hereunder.
Subject to the foregoing clauses (i), (iii) and (iv), notwithstanding anything
herein stated or implied to the contrary or provided in Borrower's partnership
agreement or elsewhere, no
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preferential return or allocation or other payment, however called, payable to
any member of the Haft family or to any Affiliate of the Haft family shall be a
Qualified Expense or otherwise deducted from Gross Revenues in calculating Net
Operating Income.
(jj) "Refinancing" shall mean any loan made to Borrower or
any Partnership secured by a lien on a Property (other than an Existing
Mortgage).
(kk) "Rolling City" shall mean Rolling City Funding
Company.
(ll) "Rolling Valley Mall" shall mean that certain real
property located in Burke, Virginia more particularly described in Exhibit C
attached hereto and incorporated herein, together with all improvements located
thereon and appurtenances related thereto.
(mm) "RSH" shall mean Ronald S. Haft.
(nn) "RSH GP LLC" shall mean RSH GP LLC, a Delaware limited
liability company, the sole general partner of Borrower.
(oo) "Sale" shall mean the sale or other transfer of all or
any part of a Property.
(pp) "Sully Plaza" shall mean that certain real property
located in Fairfax County, Virginia more particularly described in Exhibit D
attached hereto and incorporated herein, together with all improvements located
thereon and appurtenances related thereto.
9. PRINCIPAL REPAYMENT; MANDATORY PREPAYMENTS.
(a) Unless sooner paid, on the Maturity Date the entire
outstanding Principal Amount of the Loan, together with all unpaid accrued
interest, fees, costs and expenses secured by the Loan Documents and/or
provided for therein or herein, shall be immediately due and payable without
notice or demand.
(b) Upon the Sale or Refinancing of all or any part of a
Property, Borrower shall make a mandatory prepayment to Lender in an amount
equal to the Net Sales or Refinancing Proceeds.
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(c) Borrower shall make mandatory prepayments on the Loan
in an amount equal to any amounts paid to Borrower from the maker(s) of the
Pledged Notes. Borrower shall instruct, and shall cause Combined Properties
Limited Partnership to instruct, the makers of the Pledged Notes to make those
payments directly to Lender. In the event Borrower or Combined Properties
Limited Partnership receives such payments directly from the maker of the
Pledged Note, such payments shall be forwarded to Lender within two (2)
business days thereafter.
(d) Borrower shall make mandatory prepayments on the Loan
from and after the fifth (5th) anniversary of the date hereof to the extent
there is any Net Operating Income on a semi-annual basis.
(e) Borrower shall make mandatory prepayments on the Loan
in an amount equal to any amounts prepaid to Borrower, to Combined Properties
Limited Partnership and/or to Capital Resources Limited Partnership from the
makers of the HCP Notes, less any proceeds that have: (i) been pledged to
another creditor pursuant to Combined Properties Limited Partnership's
confirmed plan of reorganization, or the confirmed plans of reorganization for
the makers of the HCP Notes, in U.S. Bankruptcy Court for the District of
Maryland, Case No. 95-1-3122-DK (Combined Properties Limited Partnership); Case
No. 95-1-3101-DK (Charles County Associates Limited Partnership); Case No.
97-1-3200-DK (CP Acquisition Limited Partnership); Case No. 95-1-3098-DK
(Combined Properties/Reseda Associates Limited Partnership); and Case No.
97-1-3198-DK (Arrow Lease Acquisition Limited Partnership); or (ii) been used
for capital improvements, tenant lease-up or other customary operating
expenses, or will be used as a reserve for a Qualified Expense pursuant to
Section 1(ai)(i)(E) above, at the Properties or at a property owned by any
maker of an HCP Note or by Combined Properties Limited Partnership.
(f) Borrower shall make mandatory prepayments as set forth
in the Pledge Agreements if the Forbes Buy/Sell (as defined therein) is
invoked.
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10. INTEREST RATE; INTEREST PAYMENTS.
(a) Commencing as of the date hereof and continuing until
repayment in full of all sums due under this Agreement, the Principal Amount
shall bear interest at the Applicable Interest Rate. Payments of interest only
on the Principal Amount shall be payable to Lender on the first day of each
calendar month from and after the date hereof.
(b) Notwithstanding Section 3(a) above, during the period
commencing on the date hereof and ending on the date which is the fifth (5th)
anniversary of the date of this Agreement, Borrower shall pay to Lender, on the
first day of each calendar month, interest only on the Principal Amount at the
rate of four percent (4%) per annum. The difference between the interest
payable under Section 3(a) above and that paid under this subsection shall
accrue and be added to the Principal Amount but without any interest thereon
until such fifth (5th) anniversary. (By way of example and not of limitation,
if no principal payments are made for the first five years, then: the
difference between the earn rate under Section 3(a) above and the pay rate
under this subsection is 8% - 4% = 4%/year; 4%/year times $10,000,000 =
$400,000 of deferred accrued interest becoming principal, without further
interest accruing, per year; $400,000/year times 5 years = $2,000,000 of
additional principal; $10,000,000 of original principal + $2,000,000 of
additional principal = an aggregate principal balance of $12,000,000 after 5
years, all of which thereafter bears interest and is payable at 8%/year per
Section 3(a) above.)
11. ADDITIONAL INTEREST. Upon repayment of the Loan in full,
whether before, on or after the Maturity Date (without hereby implying that the
Loan will not be in default if not paid in full on the Maturity Date), Borrower
shall pay to Lender, as "Additional Interest," an amount equal to the
difference between (i) the amount that Lender would have received if the
Applicable Interest Rate throughout the term of the Loan was eleven percent
(11%) per annum, compounded monthly, and (ii) the amount of interest actually
paid to Lender by Borrower with respect to the Loan; provided, however, the
obligation to pay Additional Interest pursuant to the provisions of this
Section shall be limited to the extent by which the Net Property Value exceeds
(x) the original Principal Amount plus accrued interest thereon at the
Applicable Interest Rate plus (y) the original principal balance plus accrued
interest thereon at a rate not to exceed the Applicable Interest Rate under all
Haft-family Loans.
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12. LATE CHARGE. In the event that any payment due under the
terms of this Agreement (except the payment due on the Maturity Date) is not
received by Lender within five (5) days after the date such non-Maturity Date
payment is due (inclusive of the date when due), Borrower shall pay to Lender
on demand a late charge equal to five percent (5%) of such payment or the
maximum rate provided by law. In the event that any payment due under the
terms of this Agreement on the Maturity Date is not received by Lender within
thirty (30) days after the Maturity Date (inclusive of the Maturity Date),
Borrower shall pay to Lender on demand a late charge equal to five percent (5%)
of such payment or the maximum rate provided by law.
13. DEFAULT INTEREST RATE. Upon the occurrence of an Event of
Default (hereinafter defined), all amounts due hereunder shall bear interest
thereafter until such Event of Default is cured at a rate which is at all times
equal to three percent (3%) per annum in excess of the rate of interest
announced publicly by Citibank, N.A. in New York, New York from time to time as
Citibank N.A.'s base rate or prime rate (which is not necessarily the lowest
rate offered to borrowers by Citibank, N.A.).
14. PREPAYMENT. Borrower may prepay the Principal Amount in whole
or in part, at any time or from time to time without premium or penalty.
15. MANNER AND APPLICATION OF PAYMENTS. All payments on account
of the Loan shall be paid in lawful money of the United States of America in
immediately available funds, without offset, deduction or recoupment. All
payments, including prepayments, made on account of the Loan, regardless of how
the same may be designated by Borrower, shall be applied first to the payment
of any late charge, costs, expenses and all other amounts (other than principal
and interest) due hereunder, second, to the payment of accrued and unpaid
interest then due hereunder, and the remainder, if any, shall be applied to the
outstanding Principal Amount; provided, however, if an Event of Default has
occurred, Lender shall have the right to apply such payments in such order as
Lender shall determine in its sole discretion. If any payment of principal,
interest or other amounts to be made hereunder shall become due on a day other
than a Business Day, such payment may be made on the next succeeding Business
Day (unless the result of such extension of time would be to extend the date
for such payment into another calendar month or beyond the Maturity Date; in
any such event, payment shall be made on the Business Day immediately preceding
the day on which such
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payment would otherwise have been due) and such extension of time shall in such
case be included in computing the interest, if any, in connection with such
payment.
16. LOAN DOCUMENTS. The Obligations are evidenced by, secured by
and guaranteed by the Loan Documents.
17. WAIVER.
(a) Borrower and all endorsers, guarantors, and other parties
who may now or in the future be primarily or secondarily liable for the payment
of the Obligations (whether one or more hereinafter called an "Obligor") hereby
jointly and severally waive, to the extent permitted by applicable law:
(i) presentment, protest and demand, notice of
protest, notice of demand and of dishonor and non-payment of the Note
and expressly agree that the Note or any payment thereunder may be
extended from time to time without in any way affecting the liability
of Borrower, guarantors and endorsers;
(ii) to the extent allowed by law, the benefits of
any law or rule intended for such Obligor's advantage or protection as
an obligor hereunder or providing for such Obligor's release or
discharge from liability hereon, in whole or in part, on account of any
facts or circumstances other than full and complete payment of all
amounts due hereunder, including, but not limited to, all rights to the
benefits of any statute of limitations and any moratorium,
appraisement, exemption or homestead law now provided or which may
hereafter be provided by any federal or state statute or decision,
including but not limited to exemptions provided by or allowed under
the United States Bankruptcy Code both as to themselves personally and
as to all of its or their property, whether real or personal, against
the enforcement and collection of the Obligations and any and all
extensions, renewals and modifications hereof; provided, however, that
the foregoing waiver shall not apply to any one homestead claimed by
RSH in the State of Florida;
(iii) any and all defenses based on the failure of
Lender to diligently collect the sums due hereunder;
(iv) all other defenses available to sureties and
guarantors generally.
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(b) Each Obligor (i) agrees that Lender, at any time or
times, without notice to it or its consent, may grant extensions of time,
without limit as to the number or the aggregate period of such extensions, for
the payment of any principal or interest due hereon, or other accommodations
with respect to the indebtedness evidenced hereby, and (ii) consents to all
renewals, extensions, releases, restatements, rearrangements, or substitutions
of security, in whole or in part, with or without notice, before or after
maturity hereof and to all partial payments on the Loan, whether before or
after maturity.
(c) No renewal or extension of the Note, no release of
collateral securing repayment of the Note, and no delay in enforcement of the
Note or in exercising any right, power or remedy hereunder or under any other
Loan Document, provided by applicable law, or otherwise shall affect the
liability of any Obligor.
18. RECORDS; REPORTS AND AUDITS; MAINTENANCE OF RECORDS. Borrower
shall keep and maintain or will cause to be kept and maintained on a fiscal
year basis in accordance with generally accepted accounting principles
consistently applied proper and accurate books, records and accounts reflecting
all of the financial affairs of Borrower and the Partnerships in connection
with their business. Lender, its agents, accountants and attorneys shall have
the right from time to time upon three (3) Business Days prior notice at all
times during regular business hours to examine such books, records and accounts
at the office of Borrower or other person maintaining such books, records and
accounts and to make copies or extracts thereof as Lender shall desire;
provided, however, that so long as there shall not have occurred as Event of
Default or other event, or condition which with the giving of notice or lapse
of time, or both, would constitute an Event of Default, Lender shall not
exercise such right more than three (3) times in any twelve (12) month period.
Borrower will furnish Lender annually, within one hundred twenty (120) days
next following the end of each fiscal year, with: (a) the audited income
statements (containing a fully itemized statement of profit and loss and of
surplus) and balance sheets of Borrower and each Partnership, and the cash flow
statement in respect of the businesses for such fiscal year, all of which shall
be certified by a certified public accountant reasonably satisfactory to Lender
as having been prepared in accordance with generally accepted accounting
principles consistently applied; (b) the balance sheet of each of the
individual Guarantors for
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such fiscal year all of which shall be in form similar to those statements
presented to Lender on or before the date hereof in connection with the making
of the Loan; (c) a detailed rent roll for each Property (which shall include a
list of all expiring leases and their respective dates of expiration); (d) a
detailed operating budget with respect to the businesses for the current fiscal
year; and (e) copies of the most recently filed federal and state tax returns
of Borrower, each Partnership, and each of the individual Guarantors. Borrower
shall furnish to Lender, within ten (10) days after request, such further
detailed information covering the operation of the business and the financial
affairs of Borrower and each Partnership, any partner of Borrower, and any
Guarantor, as may be reasonably requested by Lender.
19. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower
represents and warrants as of the date hereof:
(a) That Borrower is a duly organized and validly existing
limited partnership under the laws of the State of Maryland and is duly
qualified to transact business in the Commonwealth of Virginia; that the
limited partnership agreement of Borrower dated __________, 1997, a true,
correct and complete copy of which being attached hereto and incorporated
herein as Exhibit E, has not been amended or modified; that the limited
partnership certificate of Borrower dated ___________, 1997, as filed among the
appropriate records of the jurisdiction of its organization, a true, correct
and complete copy of which being attached hereto and incorporated herein as
Exhibit F, has not been amended or modified; that all of the general partner
interests in Borrower are owned by RSH GP LLC and are not subject to any lien,
claim, option, pledge or other contract affecting the ownership thereof; that
all of the limited partner interests in Borrower are owned by RSH and the HHH
Trust, and, except as pledged as collateral for the Haft-family Loan, are not
subject to any lien, claim, option, pledge or other contract affecting the
ownership thereof.
(b) That Borrower is the owner of 99% of the partnership
interests in HESPLP, the owner in fee simple of Sully Plaza, and MC/RVM
Associates Limited Partnership, the owner in fee simple of Maryland City Plaza
and Rolling Valley Mall, respectively, including any improvements and related
appurtenances thereon located in the Commonwealth of Virginia and the State of
Maryland, as more particularly identified in Exhibits D, A and C, respectively
attached hereto and
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incorporated herein as Sully Plaza, Maryland City Plaza and Rolling Valley
Mall; that 4600 Forbes Boulevard Joint Venture is the owner in fee simple of
the premises, including any improvements and related appurtenances thereon
located in the State of Maryland, as more particularly identified on Exhibit G
as 4600 Forbes Boulevard; that possession has been peaceable and undisturbed,
and to Borrower's knowledge the title thereto has never been disputed,
questioned or rejected, nor does the undersigned know of any facts by reason of
which said possession or title might be disturbed or questioned, or by reason
of which any claim to the Properties or any part thereof or any interest
therein adverse to Borrower or the Partnerships might arise or be set up; that
no person, firm or corporation has any contract for the purchase of, or any
claim to or against the Properties or any part thereof, and that the same are
now free and clear of any and all taxes, encumbrances or liens by mortgage,
deed of trust, judgment, decree, statute, levy under any execution, or by
virtue of any proceedings by or against Borrower or a Partnership in any
federal or state court or filed in the office of the clerk of any county in the
Commonwealth of Virginia or the States of Delaware or Maryland or with the
Recorder of Deeds for the District of Columbia, as appropriate, and of all
other liens of every nature and description except as set forth on Exhibit H
attached hereto and incorporated herein.
(c) That the chattels, fixtures, furniture, equipment and
personalty in, upon and used in connection with the Properties are free and
clear of any and all liens, claims and encumbrances of whatsoever kind or
nature, except as set forth on Exhibit H attached hereto and incorporated
herein.
(d) That Borrower and the Partnerships have fully complied
with all material terms, conditions and covenants of all instruments affecting
title to the Properties and chattels, have not received written notice of any
default thereunder and, to the best of their knowledge, are not in any way in
default thereunder.
(e) That there are no judgments or decrees or attachments or
orders of any court or officer for the payment of money against Borrower or to
which it is a party, unsatisfied or not canceled of record in any of the
courts, or before any officer, of the United States or of the Commonwealth of
Virginia and the States of Delaware and Maryland, or any suit or proceeding
pending anywhere affecting Borrower and that any judgments found of record
against any person under the name or
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names of Borrower are not against Borrower, but against another person or
entity of similar name; that no proceedings in bankruptcy have been instituted
by or against Borrower, nor has Borrower made an assignment or assignments for
the benefit of creditors; that Borrower is solvent.
(f) That, except for work done in the ordinary course of
business for which payment is to be made in the ordinary course of business, no
work has been performed at or materials furnished to the Properties or any part
thereof which may give rise to a claim or lien for materials supplied or for
labor or services performed.
(g) That the execution, delivery and performance of the Loan
Documents will not result in a violation or breach of or constitute a default
under any court order, writ, judgment or decree issued by any competent
judicial, quasi-judicial or other governmental body, agency or authority, and
further will not result in a violation or breach of or constitute a default
under any mortgage, contract, agreement or other instrument by which any party
thereto (other than Lender) may be bound or by which any of its assets may be
bound.
(h) That all persons who executed the Loan Documents (other
than on behalf of Lender), including the Note evidencing the Loan, have the
capacity and the authority to execute the Note and the other Loan Documents and
to bind the parties thereto thereunder without further approvals or
authorizations.
(i) That Borrower is acting with respect to the execution and
performance of the Loan Documents solely in Borrower's own right as principal,
and not as agent, broker, or attorney-in-fact or otherwise.
(j) That Borrower and the Partnerships have been and are
presently engaged exclusively directly or indirectly in the business of real
estate ownership, development and management with regard to the Properties.
(k) That the proceeds of the Loan will be used solely for the
purpose of paying $10,000,000 to Herbert H. Haft in payment of certain
promissory notes given to him in the Haft-family Loan and that, upon such
payment being made, the outstanding principal, interest and other amounts under
the Haft-family Loan will be no more than Ten Million Dollars ($10,000,000.00)
plus any accrued but unpaid interest thereon.
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(l) That, except as may be set forth on any title commitment
listed on Exhibit L attached hereto, each Property consists of an integral land
area, with no voids, slivers, strips or gores not owned in fee simple
(including legal and equitable title) by the Partnerships and that there are no
lapses or voids in the description of any Property.
(m) That there are no pending or, to Borrower's knowledge,
threatened annexation or condemnation proceedings or other litigation or
proceedings against or affecting any part or all of the Properties, except
there is one pending road widening relating to Sully Plaza but it will not have
a material adverse effect on Sully Plaza.
(n) That each Property is zoned as set forth on Exhibit I
attached hereto and incorporated herein and that such zoning is in good
standing and full force and effect and permits the current use of such Property
(the "Current Use").
(o) That, to Borrower's knowledge, there are no pending or
proposed ordinances, rules, regulations or other actions on the part of any
governmental body, department or agency having jurisdiction over the Properties
or any part thereof that would adversely affect the value of the Properties or
the ability and right of the Partnerships to operate the Current Use on the
Properties.
(p) That all applicable subdivision regulations, zoning
ordinances and other applicable laws have been complied with in the Current Use
on the Properties; and that all necessary building, use, sewer and other
permits have been issued for the Current Use, and that such permits are in good
standing and in full force and effect.
(q) That Borrower has not received any notice of, and to the
best of Borrower's knowledge there are no, violations of any law, ordinance, or
governmental regulation (including but not limited to building and zoning
ordinances and regulations) restricting or regulating or prohibiting the
occupancy, use or enjoyment of the Properties or regulating the character or
dimensions or location of any improvement now erected on the Properties or any
part thereof.
(r) That no notice has been received by Borrower or any of
the Partnerships from any public authority or any insurance company of the
existence of any condition or situation
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which required work to be done or other acts to be performed to cure an
unsatisfactory condition with respect to the Properties or any part thereof
which remains undone at the date hereof.
(s) That all licenses, permits and authorizations required
from local utility companies or municipal authorities have been obtained to
insure that necessary telephone, drainage, gas, and/or electric, sewer and
water facilities are available to each Property in quantities sufficient for
the Current Use of such Property.
(t) That, to the best of Borrower's knowledge, all utilities
and drainage facilities are located on or contiguous to each Property, without
the need for off-site easements across property other than such Property.
(u) That there exists adequate vehicular and pedestrian
access to and from each Property, to and from all adjoining streets and roads
without governmental prohibition or restriction, and without the requirement of
further dedications for future widenings or of obtaining easement rights across
property other than such Property.
(v) That there are no reciprocal parking agreements affecting
the Properties or any part thereof except as shown on Exhibit H with respect to
4600 Forbes Boulevard, Lanham, Maryland.
(w) That, except as disclosed in the Environmental Reports or
to the extent the same does not involve reportable quantities under applicable
law: the Partnerships have never used, processed, released, discharged,
generated, stored or disposed of any Hazardous Substance (hereinafter defined)
on, under or about the Properties or any part thereof or from the Properties or
any part thereof to any other location; to Borrower's knowledge no Hazardous
Substances have been used, processed, released, discharged, generated, stored
or disposed of on the Properties or any part thereof by any other person or
entity except as customarily done by tenants in the normal course of business
and in compliance with applicable law; and to Borrower's knowledge no Hazardous
Substances are currently located on the Properties or any part thereof.
(x) That the Loan has been duly guaranteed by the Guarantors
pursuant to the Guaranty; that except as set forth on Exhibit J attached hereto
and incorporated herein, there are no
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judgments or decrees or attachments or orders of any court or officer for the
payment of money against the Guarantors, or any of them, or to which the
Guarantors, or any of them, are a party which are unsatisfied or not cancelled
of record in any of the courts, or before any officer, of the United States or
of the States of Maryland and Delaware, the District of Columbia and the
Commonwealth of Virginia, or in any suit or proceeding pending anywhere
affecting the Guarantors, or any of them, and that any judgments found of
record against any person or entity under the name or names of the Guarantors,
or any of them, and not listed on Exhibit J are not against the Guarantors, but
against another person or entity of similar name; that no proceedings in
bankruptcy have been instituted by or against the Guarantors, or any of them,
nor have the Guarantors, or any of them, made an assignment or assignments for
the benefit of creditors; that the individuals comprising the Guarantors are
solvent.
20. COVENANTS OF BORROWER. Borrower covenants and agrees with
Lender as follows:
(a) Borrower shall maintain in good standing its
existence, franchises, rights and privileges under the laws of the jurisdiction
of its organization and its rights to transact business in the State of
Maryland and the Commonwealth of Virginia. Borrower shall not, and shall not
permit the Partnerships or Combined Properties/Forbes Boulevard Limited
Partnership or CP/Forbes Boulevard, Inc. to, dissolve, terminate or otherwise
dispose, directly or indirectly or by operation of law, of all or substantially
all of its or their assets except as set forth in Section 14(b) below or in any
other Loan Document to which Combined Properties/Forbes Boulevard Limited
Partnership or CP/Forbes Boulevard, Inc. is a party, or, without giving Lender
at least sixty (60) days prior written notice, change its or their legal
structure or name. Borrower shall not admit, or allow any of the Partnerships
or Combined Properties/Forbes Boulevard Limited Partnership to admit, any new
partner therein, nor shall Borrower allow any new shareholder in CP/Forbes
Boulevard, Inc. or any new member in RSH GP LLC. Borrower shall not amend its,
nor permit the amendment of the Partnerships' or Combined Properties/Forbes
Boulevard Limited Partnership's partnership agreements (or their limited
partnership certificates) in any way that could adversely affect (i) Borrower's
ability to repay the Loan or perform its other obligations under the Loan
Documents, (ii) the collateral pledged under the Loan Documents or (iii)
Lender's rights and remedies
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under the Loan Documents, without the prior written consent of Lender.
(b) Borrower will comply with all covenants, obligations
and restrictions set forth in the Existing Mortgages or any Refinancing
thereof, including, but not limited to, the covenants regarding maintenance and
repair, payment of taxes and assessments, insurance requirements, and
compliance with applicable laws.
(c) Borrower will provide Lender with a copy of any notice
of default received by Borrower from the holder of any mortgage encumbering the
Properties or any portion thereof within two (2) Business Days after receipt
thereof by Borrower.
(d) Borrower shall make the capital expenditures
contemplated by the terms of the bankruptcy plans of reorganization applicable
to each Property as and when required thereunder, as such plans of
reorganization have been approved by Lender.
(e) Borrower shall comply and shall cause the Partnerships
to comply in all material respects with all covenants and obligations of the
landlord set forth in all leases of space in the Properties or any portion
thereof.
(f) Borrower shall cause the Partnerships to amend their
existing respective management agreements with Combined Properties Incorporated
to provide (or enter into new management agreements with Combined Properties
Incorporated providing) that, if Lender or any successor to Lender (whether at
foreclosure sale or otherwise) gains control of any such Partnership, the
management agreement between that Partnership and Combined Properties
Incorporated may be terminated by that Partnership without cause and without
payment of any termination fee or penalty of any type on not less than thirty
(30) days written notice to Combined Properties Incorporated. The foregoing
does not supersede the rights of any mortgagee under an Existing Mortgage.
(g) Borrower shall cause Capital Resources Limited
Partnership to amend the HCP Notes made by HESPLP and by Combined
Properties/Forbes Boulevard Limited Partnership to provide that if Lender or
any successor to Lender (whether at foreclosure sale or otherwise) gains
control of either of such partnerships, the HCP Note made by that partnership
shall automatically be deemed
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cancelled and all debt evidenced thereto or incurred pursuant thereto forgiven.
21. NEGATIVE COVENANTS OF BORROWER. Borrower covenants and agrees
with Lender that it shall not:
(a) Terminate, cancel, amend, modify or otherwise alter
any of the management agreements related to the Properties entered into with
Combined Properties Incorporated without the prior written consent of Lender
(except pursuant to a plan of reorganization approved by Lender) or enter into
a new management agreement affecting one or more of the Properties without the
prior written consent of Lender.
(b) Permit the Partnerships to, whether voluntarily or
involuntarily, sell, grant, convey, assign or otherwise transfer, by operation
of law or otherwise, the Properties or any part thereof, without the prior
written consent of Lender except as an Arms-Length Sale to an unrelated third
party with the Net Sales Proceeds being paid to Lender or, in the absence of an
Arms-Length Sale, with the Net Property Value under Section 1(y)(ii) above
being paid to Lender.
(c) Permit the Partnerships to enter into a Refinancing
with respect to the Properties or any part thereof without the prior written
consent of Lender unless such refinancing is on commercially reasonable terms
(including, without limitation, requiring regular principal amortization, not
containing any participation or equity kicker, and otherwise being made on such
terms as life insurance companies are making permanent mortgage loans on the
date hereof), at market rates, and is structured in such a way so as to not
adversely prejudice Lender's interests with the Net Refinancing Proceeds being
paid to Lender. In no event shall any second mortgage financing be permitted.
Borrower shall not and shall not permit the Partnerships to permit any lien,
encumbrance, charge, assessment or imposition (other than the Existing
Mortgages or such permitted Refinancing) to become due and payable out of or in
respect of, or become a lien on, the Properties or any part thereof without the
prior written consent of Lender.
(d) Permit any Partnership to enter into any new lease
with respect to more than 50,000 square feet of space in the Properties or any
portion thereof without the prior written consent of Lender.
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<PAGE> 37
(e) Permit or allow, or permit or allow the Partnerships
to permit or allow, any Hazardous Substance to (i) affect, (ii) be generated on
or deposited upon, (iii) be incorporated into, (iv) be transported to or from,
or (v) be stored on the Properties or any portion thereof, except as
customarily done by tenants in the normal course of business and in compliance
with applicable law; provided, however, that Borrower shall not be in default
of this subsection if a non-Affiliate does any of the foregoing without
Borrower's knowledge or with Borrower's knowledge but Borrower is unable to
prevent it.
(f) Prepay any Haft-family Loan without the prior written
consent of Lender except when required to do so by the terms of the loan
documents applicable to that Haft-family Loan.
(g) Nor shall Borrower permit any Partnership or any
partner of any Partnership to indemnify or guaranty the obligations of any
third party except as specifically contemplated by the Loan Documents.
22. EVENTS OF DEFAULT. The occurrence of any one or more
of the following events shall constitute an event of default (individually, an
"Event of Default" and collectively, the "Events of Default") under this
Agreement:
(a) Lender has not actually received any payments (other
than payments due on the Maturity Date) due and payable by Borrower to Lender
under the terms of this Agreement including, but not limited to, payments of
principal and interest (including Additional Interest), within five (5) days
after giving written notice to Borrower that any such payment is overdue;
provided, however, that Lender need not give such notice more than two (2)
times in any calendar year and thereafter during any calendar year an Event of
Default shall exist if Lender has not actually received any payments (other
than payments due on the Maturity Date) due and payable by Borrower to Lender
under the terms of this Agreement including, but not limited to, payments of
principal and interest (including Additional Interest), within five (5) days
after the date due;
(b) Lender has not actually received all payments due and
payable at the Maturity Date, including, but not limited to, the Principal
Amount, accrued interest thereon and Additional Interest;
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<PAGE> 38
(c) failure of Borrower to perform, observe or comply with
any non-monetary agreement, covenant or promise made under this Agreement or
under any of the other Loan Documents and not covered elsewhere in this section
if such failure continues beyond any applicable notice and cure period set
forth elsewhere in this Agreement or the Loan Documents or, if no notice and
cure period is specified, if such failure continues for more than thirty (30)
days after written notice thereof is given to Borrower; provided, however, that
no Event of Default shall exist if such failure is not reasonably capable of
being cured in such thirty (30) day period but Borrower begins its cure within
such period and thereafter diligently prosecutes such cure to successful
completion within an additional sixty (60) day period;
(d) the occurrence of a default or an event of default by
any party other than Borrower under the terms and conditions of any of the
other Loan Documents (including, without limitation, the Guaranty), which
default or event of default remains uncured beyond any applicable grace and/or
cure period provided therefor;
(e) if Borrower has made any representation or warranty in
this Agreement or any other Loan Document that contains any untrue statement of
a material fact or omits a material fact necessary to make such representation
or warranty not misleading in a material and adverse manner;
(f) if Borrower or any Partnership 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 Loan Documents, except as may be expressly permitted by
this Agreement, without the prior written consent of Lender;
(g) the occurrence of any default under any other
borrowing if the result of such default would permit the acceleration of the
maturity of any note, loan or other agreement between Borrower or any
Partnership and any person other than Lender;
(h) the filing of any petition or relief under the United
States Bankruptcy Code or any similar Federal or State statute by Borrower or
the failure of Borrower to generally pay its debts as such debts become due;
27
<PAGE> 39
(i) the filing of any petition or relief under the United
States Bankruptcy Code or any similar Federal or State statute against Borrower
which is not discharged or dismissed within sixty (60) days after institution
thereof;
(j) the making of any application for the appointment of a
receiver for, or of a general assignment for the benefit of creditors by, or
the insolvency of, Borrower;
(k) the dissolution of Borrower;
(l) if any execution or attachment is levied against any
property of Borrower or any Partnership, and such execution or attachment is
not set aside, discharged or stayed within thirty (30) days after the same is
levied; or
(m) unless adequately covered by insurance in the opinion
of Lender, the entry of a final judgment for the payment of money involving
more than $300,000.00 against Borrower or any Partnership and the failure by
Borrower or such Partnership to discharge the same, or cause it to be
discharged, or bonded off to Lender's satisfaction, within thirty (30) days
from the date of the order, decree or process under which or pursuant to which
such judgment was entered.
23. REMEDIES.
(a) Upon the occurrence of an Event of Default, at the option
of Lender all amounts payable by Borrower to Lender under the terms of this
Agreement shall immediately become due and payable by Borrower to Lender
without notice to Borrower or any other person, and Lender shall have all of
the rights, powers and remedies available under the terms of this Agreement,
any of the other Loan Documents and all applicable laws.
(b) If Lender exercises its remedies under this Agreement
or any other Loan Document, then, notwithstanding anything to the contrary
contained in any Loan Document or in any partnership agreement or certificate
of limited partnership, certificate or articles of incorporation, operating
agreement or other organizational document of any signatory to any Loan
Document, or in any agreement between members of the Haft family or their
Affiliates, whether or not disclosed to Lender before the making of the Loan,
neither Lender nor any entity that is or comes under the control of Lender
shall be bound to make any distributions, allocations, or other payments to any
member of
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<PAGE> 40
the Haft family or any Affiliate of any member of the Haft family under any
such document or agreement, or be bound to protect the tax position of any
member of the Haft family or any Affiliate of any member of the Haft family.
The foregoing includes, without limitation, any obligation of RSH, Borrower or
any partner in Borrower to protect Herbert H. Haft's tax position with respect
to Borrower or any of its assets.
24. EXPENSES; INDEMNIFICATION.
(a) Borrower promises to pay to Lender on demand by Lender
all reasonable costs and expenses incurred by Lender in connection with the
collection and enforcement of this Agreement or any portion thereof or the
enforcement of any other Loan Document, including, without limitation, all
reasonable attorneys' fees and expenses, investigation costs, and all court
costs, whether or not suit is filed hereon, whether before or after the
Maturity Date, or whether in connection with bankruptcy, insolvency or appeal,
or whether collection is made against Borrower or any Guarantor or endorser or
any other person primarily or secondarily liable hereunder.
(b) Borrower shall defend, indemnify and hold Lender
harmless from and against all fines, liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses imposed upon or incurred by or
asserted against Lender by reason of any matter whatsoever relating to this
Agreement, the Loan Documents and/or the Properties or the use, non-use or
condition of any thereof (except to the extent caused by the gross negligence
or willful misconduct of Lender or its agents) and/or by reason of any failure
by Borrower to perform any Obligations.
(c) Borrower agrees to indemnify and hold Lender harmless
from and against all fines and penalties and liabilities, including all
foreseeable and unforeseeable consequential damages and any other damages,
costs, and losses, including reasonable attorneys fees, directly or indirectly
and in whole or in part arising out of or attributable to Hazardous Substances
existing beneath or on the surface of the Properties or any part thereof at any
time or the migration thereof within or from the Properties at any time,
including, without limitation, the cost of any remedial, removal, response,
abatement, clean-up, investigative and monitoring costs and any other related
costs and expenses. If any action, suit or other proceeding is brought against
Lender by reason of any such occurrence, Lender shall have the right, at
Borrower's expense,
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<PAGE> 41
to defend against such proceeding or require Borrower, at Borrower's expense,
to defend such proceeding by counsel designated by Lender.
(d) The provisions of this Section shall survive repayment
of the Loan.
25. SECURITY; GUARANTY. The Loan is secured by, among other
things, the Pledge Agreements and is guaranteed by the Guaranty.
26. REMEDIES CUMULATIVE. Each right, power, and remedy of Lender
as provided for in this Agreement or any of the other Loan Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative
and concurrent and shall be in addition to every other right, power, or remedy
provided for in this Agreement or any of the other Loan Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by Lender of any one or more of such rights, powers, or remedies
shall not preclude the simultaneous or later exercise by Lender of any or all
such other rights, powers, or remedies. No failure or delay by Lender to
insist upon the strict performance of any term, condition, covenant, or
agreement of this Agreement or any of the other Loan Documents, or to exercise
any right, power, or remedy consequent upon a breach thereof, shall constitute
a waiver of any such term, condition, covenant, or agreement or of any such
breach, or preclude Lender from exercising any such right, power, or remedy at
a later time or times. By accepting payment after the due date of any amount
payable under the terms of this Agreement, Lender shall not be deemed to waive
the right either to require prompt payment when due of all other amounts
payable under the terms of this Agreement or to declare an Event of Default for
the failure to effect such prompt payment of any such other amount. No
provision hereof may be waived or modified orally, but all such waivers or
modifications shall be in writing, expressly waiving or modifying such
provision and signed by the party against whom enforcement of any waiver or
modification is sought. No course of dealing or conduct shall be effective to
amend, modify, waive, release, or change any provisions of this Agreement.
27. GOVERNING LAW; CONSENT TO JURISDICTION. The provisions of
this Agreement shall be construed, interpreted and enforced in accordance with
the laws of the State of Maryland, without regard to conflicts of laws, as the
same may be in effect from time to
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<PAGE> 42
time. Borrower irrevocably submits to the non-exclusive jurisdiction of any
state or federal court sitting in the State of Maryland or in the State of
Delaware over any suit, action, or proceeding arising out of or relating to
this Agreement or any other Loan Document. Borrower hereby agrees that Lender
shall have the option, in its sole discretion, to lay the venue of any such
suit, action or proceeding in any of the aforementioned courts. Borrower
irrevocably waives, to the fullest extent permitted by law, any objection that
Borrower may now or hereafter have to laying the venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum. Borrower agrees that a final judgment (for which there is
no more right of appeal) in any such suit, action or proceeding brought in such
a court shall be conclusive and binding upon Borrower.
28. SERVICE OF PROCESS.
(a) Borrower hereby irrevocably designates and appoints
RSH as Borrower's authorized agent to accept and acknowledge on Borrower's
behalf service of any and all process that may be served in any suit, action,
or proceeding instituted in connection with this Agreement or any other Loan
Document in any state or federal court sitting in the State of Maryland or in
the State of Delaware. If such agent shall cease so to act, Borrower shall
irrevocably designate and appoint without delay another such agent satisfactory
to Lender and shall promptly deliver to Lender evidence in writing of such
agent's acceptance of such appointment and its agreement that such appointment
shall be irrevocable.
(b) Borrower hereby consents to process being served in
any suit, action, or proceeding instituted in connection with this Agreement or
any other Loan Document by the mailing of a copy thereof by certified mail,
postage prepaid, return receipt requested, to the agent hereinabove designated
and appointed by Borrower as Borrower's agent for service of process. Borrower
irrevocably agrees that such service shall be deemed to be service of process
upon Borrower in any such suit, action, or proceeding. Nothing in this
Agreement shall affect the right of Lender to serve process in any manner
otherwise permitted by law and nothing in this Agreement will limit the right
of Lender otherwise to bring proceedings against Borrower in the courts of any
other jurisdiction or jurisdictions. Initiating such proceeding or taking such
action in any other jurisdiction or
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<PAGE> 43
state shall not, however, constitute a waiver of the agreement contained
herein that the laws of the State of Maryland shall govern the rights and
obligations of the parties hereunder.
29. NOTICE. Any notice, request, or demand to or upon Borrower or
Lender shall be in writing and shall be deemed given upon receipt (refusal to
accept delivery or inability to make delivery because of an incorrect or
outdated address provided by the intended recipient constituting receipt)
addressed as follows, unless any such address is changed by written notice
hereunder:
If to Lender: Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20875
Attn: President
and
Attn: General Counsel
with a copy to: Kenneth J. Ayres, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Washington, D.C. 20005-2088
If to Borrower: c/o Mr. Ronald S. Haft
58 La Gorce Circle
Miami Beach, Florida 33141
with a copy to: Jay Lefkowitz, Esq.
Kirkland & Ellis
655 15th Street, N.W.
Washington, D.C. 20005
30. INVALIDITY OF ANY PART. If this Agreement or any other Loan
Document or any one or more of the provisions contained in this Agreement or
any other Loan 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. Notwithstanding the
foregoing, if interest in excess of such maximum legal rate of interest
permitted to be charged Borrower under applicable laws shall be paid or payable
hereunder, then the rate imposed hereunder shall be reduced to such maximum
legal rate, and if from any circumstances Lender shall ever receive as interest
an amount which would exceed the maximum lawful rate, such amount which would
be deemed excessive interest shall be applied to the
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<PAGE> 44
reduction of the unpaid principal balance due hereunder and not to the payment
of interest.
31. COMMERCIAL PURPOSES. Borrower represents, covenants and
warrants that the use of the proceeds of the Loan is a business or commercial
purpose and not a household or consumer purpose, that the Loan is not secured
by residential real property, and that the Loan is a "commercial loan" as
defined in Section 12-101(c) of the Commercial Law Article of the Annotated
Code of Maryland.
32. MISCELLANEOUS.
(a) This Agreement and the documents and instruments
delivered pursuant hereto inure to the benefit of, and shall be binding upon,
the respective heirs, executors, administrators, successors and assigns of
Borrower and Lender. Any reference to any partnership, limited liability
company, trust, corporation or other entity, or to any natural person, shall
also be deemed to be a reference to its successors, assigns, heirs, or personal
representatives. Without limiting the generality of the foregoing, Lender
shall have the right to sell, transfer and/or assign this Agreement and the
other Loan Documents without the consent of Borrower.
(b) Time is of the essence as to each of the provisions
hereof.
(c) When the context or construction of the terms of this
Agreement so require, all words used in the singular herein shall be deemed to
have been used in the plural and the masculine shall include the feminine and
neuter. The captions herein set forth are for convenience only and shall not
be deemed to define, limit, or describe the scope or intent of this Agreement.
(d) This Agreement and the other Loan 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
Loan 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.
(e) No waiver of any of the provisions of this Agreement
or any other agreement referred to herein shall be
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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.
(f) This Agreement may be amended only by a written
agreement executed by the parties hereto.
(g) Notwithstanding the entry of any judgment under or in
connection with this Agreement, the outstanding principal balance of the Loan
shall continue to bear interest at the applicable rate or rates of interest
provided for in this Agreement unless required by law to bear a lower rate of
interest.
(h) 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.
(i) 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.
(j) Whenever this Agreement or any other Loan Document
requires a party to act reasonably, to not unreasonably withhold its consent,
to pay reasonable costs, expenses or fees, or otherwise uses or implies a
"reasonableness" standard and the parties disagree over whether such standard
has been met, the party challenging the reasonableness of the other party's
actions or challenging any cost, expense or fee charged to it or levied on it
shall have the burden of proof of proving the unreasonableness thereof and the
standard of proof shall be a "clearly erroneous" standard, which shall mean a
standard higher than the usual civil "preponderance of the evidence" or "more
likely than not" standard but lower than a criminal "beyond a reasonable doubt"
standard.
33. CONFESSION OF JUDGMENT. UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT, BORROWER HEREBY AUTHORIZES ANY ATTORNEY DESIGNATED BY LENDER OR ANY
CLERK OF ANY COURT OF RECORD TO APPEAR FOR BORROWER IN ANY COURT OF RECORD AND
TO CONFESS JUDGMENT WITHOUT PRIOR HEARING AGAINST BORROWER IN FAVOR OF
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<PAGE> 46
LENDER FOR AND IN THE AMOUNT OF THE OUTSTANDING PRINCIPAL AMOUNT, ALL INTEREST
ACCRUED AND UNPAID THEREON, INCLUDING ADDITIONAL INTEREST, ALL OTHER AMOUNTS
PAYABLE BY BORROWER TO LENDER UNDER THE TERMS OF THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, AND COSTS OF SUIT. THE AUTHORITY AND POWER TO APPEAR FOR
AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE
EXERCISES THEREOF OR BY ANY IMPERFECT EXERCISE THEREOF AND SHALL NOT BE
EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO. SUCH AUTHORITY MAY BE
EXERCISED ON ONE OR MORE OCCASIONS OR FROM TIME TO TIME IN THE SAME OR
DIFFERENT JURISDICTIONS AS OFTEN AS LENDER SHALL DEEM NECESSARY OR DESIRABLE,
FOR ALL OF WHICH THIS AGREEMENT SHALL BE A SUFFICIENT WARRANT.
34. WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO WHICH IT AND LENDER MAY BE PARTIES ARISING OUT
OF OR IN ANY WAY PERTAINING TO THIS AGREEMENT, THE LOAN OR THE LOAN DOCUMENTS.
IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS,
INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
35. REPRESENTATIONS OF BORROWER. BORROWER REPRESENTS AND WARRANTS
THAT THE WAIVER OF TRIAL BY JURY AND THE CONFESSION OF JUDGMENT CONTAINED
HEREIN ARE KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER, AND BORROWER
HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR AGREEMENTS HAVE BEEN MADE
BY ANY INDIVIDUAL TO INDUCE THE WAIVER OF TRIAL BY JURY OR CONFESSION OF
JUDGMENT OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER
REPRESENTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN
THE MAKING OF THE WAIVER OF TRIAL BY JURY AND THE CONFESSION OF JUDGMENT BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THE WAIVER OF TRIAL BY JURY AND THE CONFESSION OF
JUDGMENT WITH SUCH COUNSEL.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by its duly authorized
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<PAGE> 47
member(s), partner(s) or officer(s), as the case may be, as of the date first
written above.
BORROWER:
HHH/RSH TIER II LIMITED PARTNERSHIP
WITNESS: By: RSH GP LLC, its General Partner
By: (Seal)
- -------------------- -----------------------
Ronald S. Haft
Manager and Sole Member
LENDER:
ATTEST: DART GROUP CORPORATION
By: (Seal)
- -------------------- -----------------------
Name:
Title:
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<PAGE> 48
STATE OF ______________ *
* TO WIT:
COUNTY OF _____________ *
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
does hereby certify that Ronald S. Haft, being authorized to do so, has
executed the foregoing and annexed document on behalf of Borrower as the act
and deed of Borrower, for the purposes therein contained by signing the name of
Borrower in the capacity set forth above as the authorized general partner
thereof.
GIVEN UNDER MY HAND AND OFFICIAL SEAL this ___ day of
____________, 1997.
--------------------------------
Notary Public
My Commission Expires:
--------------
[NOTARIAL SEAL]
37
<PAGE> 49
STATE OF ______________ *
* TO WIT:
COUNTY OF _____________ *
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
does hereby certify that ____________________, being authorized to do so, has
executed the foregoing and annexed document on behalf of Lender as the act and
deed of Lender, for the purposes therein contained by signing the name of
Lender in the capacity set forth above.
GIVEN UNDER MY HAND AND OFFICIAL SEAL this ___ day of
____________, 1997.
--------------------------------
Notary Public
My Commission Expires:
--------------
[NOTARIAL SEAL]
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<PAGE> 50
EXHIBIT B
PROMISSORY NOTE
$10,000,000.00 _____________, 1997
FOR VALUE RECEIVED, the undersigned, HHH/RSH TIER II LIMITED
PARTNERSHIP, a Maryland limited partnership (the "Borrower"), promises
unconditionally to pay to the order of DART GROUP CORPORATION, its successors
and assigns (the "Lender," which term shall mean the holder at any particular
time of this Note), the principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) (the "Loan") on the Maturity Date as defined in the Loan
Agreement or as otherwise provided in the Loan Agreement.
Borrower agrees to pay interest on the Loan from the date of the Loan
until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Loan Agreement referred to
below.
Both principal and interest are payable on the date when due in lawful
money of the United States of America to Lender at 3300 75th Avenue, Landover,
Maryland 20785 or at such other place, either within or without the State of
Maryland as Lender may from time to time designate.
Borrower hereby waives presentment, demand, protest and any notice of
any kind and agrees to pay all amounts of principal of and interest on this
Note without setoff, deduction counterclaim or defense of any kind.
This Note is the Note referred to in, and is entitled to the benefits
of, the Loan Agreement of even or approximate date herewith (the "Loan
Agreement"), between Borrower and Lender, and the Guaranty and the other Loan
Documents as defined in the Loan Agreement referred to therein and entered into
pursuant thereto. The Loan Agreement, among other things, (i) provides,
subject to the conditions set forth therein, for the making of the Loan by
Lender to Borrower, the indebtedness of Borrower resulting from such Loan being
evidenced by a promissory note, (ii) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon
the
<PAGE> 51
terms and conditions therein specified and (iii) provides for the Loan to be
secured by collateral in accordance with the provisions of the Loan Agreement
and the other Loan Documents.
This Note shall be governed by and construed in accordance with the
laws of the State of Maryland without regard to conflicts of laws, and has been
duly executed and delivered for value by Borrower.
HHH/RSH TIER II LIMITED PARTNERSHIP
WITNESS: By: RSH GP LLC, its General Partner
By: (Seal)
- -------------------- -----------------------
Ronald S. Haft
Manager and Sole Member
2
<PAGE> 52
EXHIBIT D
CONTRIBUTION AND SUBORDINATION AGREEMENT
THIS CONTRIBUTION AND SUBORDINATION AGREEMENT (this "Agreement"), dated
__________ __, 1997, is made by and among, Dart Group Corporation, A Delaware
corporation ("Dart"), HHH/RSH Tier II Limited Partnership, a Maryland limited
partnership (the "Retained Partnership"), Ronald S. Haft (RSH"), Herbert H.
Haft ("HHH"), the Releasing Guarantors listed on Schedule 1 hereto and the
Released Guarantors listed on Schedule 2 hereto.
Recitals
A. It is contemplated that Dart may make a $10 million loan (the "RSH/HHH
Loan") pursuant to the RSH/HHH Loan Agreement (as such term is defined
in the Settlement Agreement dated as of August 18, 1997, among Dart,
certain Affiliates of Dart, Robert M. Haft, Gloria G. Haft and Linda G.
Haft (the "Settlement Agreement")), repayment of which would be secured
in party by, among other things, all of HHH and RSH's rights, title and
interest in and to the Collateral (as defined in Section 2(a) of this
Agreement) and the Retained Partnership.
B. All of the parties to this Agreement, except Dart and the Retained
Partnership, are parties to an Indemnification Agreement, dated as of
July 31, 1994 (the "Indemnification Agreement"), under which HHH and
RSH agreed to indemnify Robert M. Haft ("RMH"), Gloria G. Haft ("GGH")
and Linda G. Haft ("LGH") and collectively "RGH") with respect to,
among other things, "all claims . . . made or incurred by, or asserted
against, any of [RGL]" in connection with all liabilities or
obligations that RMH, LGH or GGH may have in connection with "all
partnership, corporate and individually held interest of the Haft
Family in that collection of entities, through which the Haft Family
owns, operates or manages their privately held warehouses (the
"Combined Entities") . . . ." The Combined Entities, which include
guaranteed these indemnification obligations of HHH and RSH to RGL.
Each of the Combined Entities has certain rights to seek contribution
from the other Combined Entities in the event that it pays more than
its share of any of the guaranteed indemnification obligations.
C. If Dart makes the RSH/HHH Loan, the Retained Partnership, pursuant to
the terms and provisions of that certain Retained Partnership Guaranty,
will become a Guarantor under the Indemnification Agreement.
D. Dart is unwilling to make the RSH/HHH Loan unless the Releasing
Guarantors (1) release all rights of contribution they may have against
the Released Guarantors, and (2) subordinate any claims they now have,
or may hereafter have in the Collateral to the claims of Dart.
<PAGE> 53
Agreements
NOW THEREAFTER, to induce Dart to enter into the RGL Settlement
Agreement, to enter into the RSH/HHH Loan Agreement and to make the loans
contemplated thereunder, the parties hereto hereby agree as follows:
1. Release of Released Guarantors. Each of the Releasing
guarantors irrevocably and unconditionally hereby releases each of the Released
Guarantors from any and all manner of claims, demands, damages, actions, causes
of action, contracts, agreements, charges, sums of money, claims for attorney's
fees and lawsuits of every kind and description whatsoever, in law or equity,
whether known or unknown, for contribution, or otherwise (a "Claim") under, or
in connection with, the Indemnification Agreement, that certain Settlement
Agreement dated as of August __, 1997 between RSH and HHH, and any other
agreements pursuant to which any of the Released Guarantors are jointly,
severally, or jointly and severally liable in any respect to HHH, RSH, RMH,
GGH, LGH or any entity directly or indirectly controlled by one or more of such
persons.
2. Subordination of Claims.
(a) Subordination of Claims. Any Claim, however arising,
which any Releasing Guarantor may now or hereafter have in or against or with
respect to any of the Collateral shall be subject, junior and subordinate to
any Claim that Dart or any affiliate of Dart now or hereafter has against the
Guarantors for, or with respect to any Collateral for, the obligations owing to
Dart under the RSH/HHH Loan and to any unsecured Claim or Dart or any affiliate
of Dart against any Guarantor or the Retained Partnership to the extent that
Dart or such affiliate has any secured or unsecured Claims arising in
connection with or relating to the RSH/HHH Loan. The term "Collateral" shall
mean: (i) all general and limited partnership interest or shares in Combined
Property/Forbes Limited Partnership, CP/Forbes Boulevard, Inc.,
Haft/Equities-Sully Plaza Limited Partnership, Combined Property/Ontario
Limited Partnership and 3301 Pennsy Drive Associates Limited Partnership
(collectively, the "Collateral Entities"); and (ii) all property of and
interests in the property of the Collateral Entities and of the Retained
Partnership, whenever acquired and wherever located, that is collateral
security for the indebtedness to Dart arising under the RSH/HHH Loan,
including, without limitation, any direct or indirect interests in the Rolling
Valley, Maryland City and Sully shopping centers and the 4600 Forbes Boulevard
office building (but excluding any other property or interest of RSH, HHH or of
the Releasing guarantors that may hereafter be acquired by any of the
Collateral Entities or the Retained Partnership, if and to the extent such
acquisition was for less than fair value.
(b) Extent of Subordination. The subordinations and
priorities specified herein are applicable irrespective of the time, manner or
order of attachment or perfection of any security interest in the Collateral,
or the time or order of filing of any financing statements, or the giving or
failure to give notice of the acquisition or expected acquisition of any
purchase money security interest or other security interest. Such
subordinations and priorities shall remain effective notwithstanding the
amendment or modification of the documents governing the FSH/HHH Loan or
governing the grant of any security interest in the Collateral to secure
2
<PAGE> 54
repayment of the indebtedness arising under the RSH/HHH Loan or the
commencement of a case by or against either Dart of any obligor under the
RSH/HHH Loan under Title 11 of the United States Code or any similar insolvency
or moratorium laws; except that such subordination shall not be effective to
the extent that Dart hereafter increases the principal amount owing under the
RSH/HHH Loan or extends the maturity date thereof.
(c) Standstill. Until all of the obligations owed to
Dart, or any affiliate of Dart, under the HHH/RSH Loan have been paid in full,
no Releasing Guarantor shall accept any payment from the Retained Partnership
or any entity constituting (or the partnership interest in which, or capital
stock of which, constitute) a part of the Collateral. Each Releasing Guarantor
agrees to refrain from taking any action against the Collateral unless it shall
have obtained Dart's prior written consent or Dart shall have been repaid in
full for all amounts owing under the RSH/HHH Loan. No Releasing Guarantor
shall obtain or take any action to obtain any judgment under which it could
attach or seize any of the Collateral in any way until Dart shall have been
repaid in full for all amounts owing under the RSH/HHH Loan. If, prior to the
repayment in full of the RSH/HHH Loan, an RGH Release Party has been granted or
otherwise obtains possession of Collateral then, in addition to any obligations
or remedies imposed or provided under the Uniform Commercial Code (the "UCC")
or other applicable law, the RGL Release Parties shall hold such Collateral,
any right, title or interest therein and any proceeds thereof in trust for the
Dart Companies (the "Trust Property"), and turn over such Trust Property to the
Dart Companies as soon as practicable.
(d) Rights on Default. Each Releasing Guarantor
acknowledges that Dart has and is entitled to exercise all of the rights and
remedies of a secured creditor under the UCC with respect to the Collateral,
including, without limitation, the right to take possession of and dispose of
the Collateral after an event of default, and to accept the Collateral as
discharge of the obligations under the RSH/HHH Loan to the extent permitted
under the UCC. If Dart were to elect to sell the Collateral in a public or
private sale, conducted in accordance with the UCC, any purchaser of all or any
part of the Collateral shall take such Collateral free and clear of all rights
and interests of any of the Releasing Guarantors (including, without
limitation, any rights or interests of any of the RGL Releasing Guarantors in
the property or assets of any of the Collateral Partnerships(, and the
Releasing Guarantors shall have such rights and interests in and to the
proceeds of any such sale, after payment in full of all obligations owed to
Dart or any affiliate of Dart under the HHH/RSH Loan, as may be provided under
the UCC.
3. No Challenge to Dart Company Rights in the Collateral.
No Releasing Guarantor shall challenge the attachment, validity,
perfection, priority or extent of any Claim of Dart or any affiliate of Dart in
the Collateral or with respect to the Retained Partnership in any judicial,
administrative or alternative dispute resolution proceeding.
4. Waivers.
No delay on the part of a party hereto in exercising any right, power
or privilege granted hereunder shall operate as a waiver thereof, and no
purported waiver of any default, breach or violation of any term or provision
contained herein shall be deemed to be a waiver of such term
3
<PAGE> 55
or provision unless the waiver is in writing and signed by the waiving party.
No such waiver shall in any event be deemed a waiver of any subsequent or other
default, breach or violation. The rights or remedies herein expressly
specified are cumulative and not exclusive of any other rights and remedies
which the parties would otherwise have.
5. Severability; Enforceability.
In case any provision of this Agreement shall be held to be illegal,
invalid or unenforceable under present or future laws effective while this
Agreement remains in effect, the legality, validity and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.
6. Governing Law.
This Agreement will be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, without regard to its principles
concerning conflicts of law, and any actions under this Agreement may be
brought in the courts of the Commonwealth of Virginia or the United States
District Court for the Eastern District of Virginia.
7. Different Facts.
Each Releasing guarantor specifically acknowledges that the facts with
respect to which this Agreement is executed may turn out to be other than or
different from the facts now known to or believed by it to be true, and that it
therefore expressly assumes the risk of the facts turning out to be different
and agrees that this Agreement shall be in all respects effective and not
subject to termination or rescission by reason of any different facts.
8. Notices.
Notices given in connection with this Agreement shall be in writing and
be deemed to have been given when actually received by telecopy or otherwise or
five (5) days after being deposited in the United States mail, postage prepaid,
addressed to a party hereto at the address set forth below such party's
signature to this Agreement, or to such other address designated by such party
by notice to each other party.
9. 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.
10. Additional Parties.
HHH agrees that on and after the date hereof he shall cause any
entities that he now or hereafter controls, directly or indirectly, which
entities are or become indemnitors/guarantors
4
<PAGE> 56
under the Indemnification Agreement to become parties hereto and to execute and
deliver to Dart, the Retained Partnership and RSH a counterpart hereof.
RSH agrees that on and after the date hereof, he shall cause any
entities that he now or hereafter controls, directly or indirectly, which
entities are or become indemnitors/guarantors under the Indemnification
Agreement to become parties hereto and to execute and deliver to Dart, the
Retained Partnership and HHH a counterpart hereof.
11. Amendments.
This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties hereto.
In WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DART GROUP CORPORATION
By:
--------------------------------
Name:
Title:
Address:
----------------------------
----------------------------
----------------------------
COMBINED PROPERTIES/ONTARIO HAFT EQUITIES-BLADEN LIMITED
LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- ---------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
--------------------------- ---------------------------
--------------------------- ---------------------------
--------------------------- ---------------------------
5
<PAGE> 57
<TABLE>
<S> <C>
3301 PENNSY DRIVE ASSOCIATES LEE AND HARRISON PARTNERSHIP
LIMITED PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
HAFT/EQUITIES SULLY PLAZA LIMITED PARTNERSHIP ROCK CREEK VILLAGE ASSOCIATES LIMITED
PARTNERSHIP
By: CP Holdings VA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/FORBES BOULEVARD LIMITED HAFT EQUITIES-ROSE HILL LIMITED PARTNERSHIP
PARTNERSHIP
By: CP/Forbes Boulevard, Inc., General By: CP Holdings VA, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
6
<PAGE> 58
<TABLE>
<S> <C>
CP/FORBES BOULEVARD INC.
By:
---------------------------
Ronald S. Haft, President
Address:
----------------------------------
----------------------------------
----------------------------------
COMBINED PROPERTIES/RESEDA 1751 COLUMBIA ROAD LIMITED PARTNERSHIP
ASSOCIATES LIMITED PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings VA, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/MONTEBELLO LIMITED CHARLES COUNTY ASSOCIATES LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings CA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
7
<PAGE> 59
<TABLE>
<S> <C>
PENN-DAW ASSOCIATES LIMITED PARTNERSHIP
By: CP Holdings VA, Inc., General
Partner
By:
-----------------------------
Ronald S. Haft, President
Address:
---------------------------------
---------------------------------
---------------------------------
COMBINED PROPERTIES/SILVER HILL LIMITED ARROW LEASE ACQUISITION LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/40 WEST LIMITED PARTNERSHIP CP ACQUISITION LIMITED PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
8
<PAGE> 60
<TABLE>
<S> <C>
COMBINED PROPERTIES/GREENWAY CENTER LIMITED CP/GREENBRIAR RETAIL INVESTMENTS LIMITED
PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP Greenbriar Retail, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES/BRIGGS CM/CP GREENBRIAR OFFICE INVESTMENTS LIMITED
CHANEY PLAZA LIMITED PARTNERSHIP PARTNERSHIP
By: CP Holdings MD, Inc., General By: CP/Greenbriar Office, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
COMBINED PROPERTIES VIRGINIA PLAZA LIMITED SUGARLAND PLAZA LIMITED PARTNERSHIP
PARTNERSHIP
By: CP Holdings VA, Inc., General By: Sugarland Plaza, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
9
<PAGE> 61
<TABLE>
<S> <C>
COMBINED PROPERTIES/BULL RUN LIMITED CAPITAL RESOURCES LIMITED PARTNERSHIP
PARTNERSHIP
By: Bull Run, Inc., General By: Capital Resources I Corp., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
CP ACQUISITION II LIMITED PARTNERSHIP COMBINED PROPERTIES LIMITED PARTNERSHIP
By: CPALP, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
MCLEAN CHAIN BRIDGE LIMITED PARTNERSHIP RETAIL LEASE ACQUISITION LIMITED PARTNERSHIP
By: CP Holdings VA, Inc., General By: CP Holdings MD, Inc., General
Partner Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
10
<PAGE> 62
<TABLE>
<S> <C>
TRAK CHICAGO LIMITED PARTNERSHIP I COMBINED PROPERTIES INCORPORATED
By: CP Holdings MD, Inc., General
Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
HAFT EQUITIES GENERAL LIMITED PARTNERSHIP CP/GREENBRIAR OFFICES, INC.
By: CP Holdings MD, Inc., General
Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
SEVENTY-FIFTH AVENUE LIMITED PARTNERSHIP CP/GREENBRIAR RETAIL, INC.
By: CP Holdings MD, Inc., General
Partner
By: By:
--------------------------- -----------------------------
Ronald S. Haft, President Ronald S. Haft, President
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
</TABLE>
11
<PAGE> 63
<TABLE>
<S> <C>
RSH/HHH TIER II LIMITED PARTNERSHIP CPALP, INC.
By: By:
--------------------------- -----------------------------
, President Ronald S. Haft, President
---------------
Address: Address:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
BULL RUN, INC.
By:
---------------------------
Ronald S. Haft, President
</TABLE>
12
<PAGE> 64
The undersigned, Herbert H. Haft, hereby agrees to be bound by the
terms of this Agreement personally and in his capacity as an officer and
general partner of the Combined Entities to the extent that the undersigned is
an officer or general partner of any of the Combined Entities.
--------------------------------
Herbert H. Haft
The undersigned, Ronald S. Haft, hereby agrees to be bound by the terms
of this Agreement personally and in his capacity as an officer and general
partner of the Combined Entities to the extent that the undersigned is an
officer or general partner of any of the Combined Entities.
--------------------------------
Ronald S. Haft
13
<PAGE> 1
EXHIBIT 99.5
AMENDMENT TO VOTING TRUST AGREEMENT
This AMENDMENT TO VOTING TRUST AGREEMENT (this "Voting Trust
Amendment"), dated as of the 15th day of October, 1997, by and between Ronald
S. Haft (the "Beneficiary") and Dart Group Corporation ("Dart").
WITNESSETH:
WHEREAS, Dart and the Beneficiary entered into that certain Settlement
Agreement, dated as of October 6, 1995 (the "RSH/Dart Settlement Agreement"),
for the purpose of, inter alia, settling certain lawsuits and other disputes
between them;
WHEREAS, in connection with the RSH/Dart Settlement Agreement, the
Beneficiary and Dart, together with Larry G. Schafran and Sidney B. Silverman,
as the initial voting trustees (the "Interim Voting Trustees"), entered into
that certain Voting Trust Agreement, dated as of October 6, 1995 (the "Voting
Trust Agreement");
WHEREAS, in December 1995 the Interim Voting Trustees appointed Richard
B. Stone as Voting Trustee under the Voting Trust Agreement, in accordance with
Section 9(a) of the Voting Trust Agreement, and resigned as Interim Voting
Trustees, in accordance with Section 9(c) of the Voting Trust Agreement;
<PAGE> 2
WHEREAS, on October 18, 1995, Robert M. Haft, Gloria G. Haft and Linda
G. Haft (collectively, "RGL") filed a lawsuit captioned Gloria Haft, et al. v.
Larry Schafran, et al., Civ. A. No. 14620 (Del. Ch.), challenging the legal
effect of the Voting Trust Agreement, claiming that shares of Dart Class B
Common Stock held by RGL represented majority voting control of Dart and
seeking a judicial declaration that directors selected by RGL were the properly
empowered directors of Dart (the "Section 225 Lawsuit");
WHEREAS, on November 6, 1995, Herbert H. Haft ("HHH") filed a lawsuit
captioned Herbert H. Haft v. Dart Group Corporation, et al., Civ. A. No. 14685
(Del. Ch.), challenging the transactions pursuant to the RSH/Dart Settlement
Agreement (the "HHH Settlement Lawsuit");
WHEREAS, Dart and certain of its subsidiaries have entered into, and
consummated the closing under, a Settlement Agreement, dated August 18, 1997,
with RGL pursuant to which, inter alia, Dart has purchased a total of 104,976
shares of Dart Class B Common Stock for a total price of approximately $14.7
million and consummated certain other settlement transactions with RGL
involving additional payments by Dart and/or its subsidiaries totalling more
than $35 million, and RGL have dismissed the Section 225 Lawsuit;
2
<PAGE> 3
WHEREAS, Dart and HHH are entering into a Settlement Agreement, dated
on or about the date hereof (the "HHH/Dart Settlement Agreement"), pursuant to
which, inter alia, HHH has agreed to relinquish his claim to power to vote
shares of Dart Class B Common Stock and to terminate the HHH Settlement
Lawsuit, and Dart has agreed to consummate certain other settlement
transactions with HHH involving payments by Dart and/or its subsidiaries
totalling more than $27 million and a loan by Dart of $10 million.
WHEREAS, in connection with the execution and delivery of the HHH/Dart
Settlement Agreement, Dart and the Beneficiary entered into that certain Second
Supplemental Settlement Agreement, dated as of October 15, 1997, which provides
for the execution and delivery of this Voting Trust Amendment;
WHEREAS, the execution and delivery of this Voting Trust Amendment, and
the amendment of Dart's Certificate of Incorporation contemplated hereby, are
conditions precedent to the closing of the transactions contemplated by the
HHH/Dart Settlement Agreement;
WHEREAS, the fourth recital to the Voting Trust Agreement anticipates
"an orderly transition of the corporate governance of
3
<PAGE> 4
Dart from domination by the previous holders of Dart's Class B Common Stock or
their affiliates";
WHEREAS, Section 12 of the Voting Trust Agreement provides that the
Voting Trust Agreement may be amended by a written agreement executed by the
Beneficiary and Dart, and that any such amendment of the Voting Trust Agreement
that is not also executed by the Voting Trustees shall not be effective until
the earlier of written acceptance thereof by the Voting Trustee or 10 days
after delivery of written notice of the amendment to the Voting Trustees; and
WHEREAS, Dart and the Beneficiary wish to amend the Voting Trust
Agreement as set forth herein.
NOW THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Amendment of Voting Trust Agreement. The Voting Trust
Agreement shall hereby be amended by adding the following new paragraphs (c)
and (d) at the end of Section 4 of the Voting Trust Agreement:
(c) Notwithstanding any other provision of this Agreement,
upon the adoption by the Board of Directors of Dart of a resolution
setting forth, and declaring the advisability of, an amendment to the
Certificate of Incorporation of Dart, as amended, to provide the holder
of each outstanding share of Dart's Class A Common Stock with
4
<PAGE> 5
the right to vote in the election of directors and all other matters on
the same basis as the holder of each outstanding share of Dart's Class
B Common Stock, the Voting Trustee shall be required to vote all of the
Trust Shares (to the full extent the Trust Shares are entitled to be
voted) in favor of such amendment, either by written consent of
majority stockholder in lieu of a meeting pursuant to Section 228 of
the Delaware General Corporation Law or at a special meeting of
stockholders called for such purpose, so as to cause such amendment to
become effective immediately at the time of the HHH Closing (as defined
in that certain Second Supplemental Settlement Agreement, dated as of
October 15, 1997, by and between the Beneficiary and Dart).
"(d) Notwithstanding any other provision of this Agreement,
after an amendment of Dart's Certificate of Incorporation referenced in
paragraph (c) of this Section 4 has become effective, the Voting
Trustees shall not be entitled to vote any of the Trust Shares in any
election of directors or on any other matter, unless all of the Trust
Shares are voted in the same proportion as the other outstanding shares
of Dart that are voted in such election or on such matter, so that the
voting of the Trust Shares in such election or on such matter shall not
change the outcome."
2. Effectiveness. Dart is hereby authorized to deliver written
notice of this Voting Trust Amendment to Richard B. Stone, as Voting Trustee
under the Voting Trust Agreement. In accordance with Section 12 of the Voting
Trust Agreement, the amendment of the Voting Trust Agreement set forth in
Section 1 of this Voting Trust Amendment shall be effective immediately upon
the earlier of (i) the written acceptance of such amendment by Richard B.
Stone, as Voting Trustee, or (ii) ten (10) days after written notice of this
Voting Trust Amendment is delivered to
5
<PAGE> 6
Richard B. Stone pursuant to the first sentence of this Section 2.
3. Counterparts. This Voting Trust Amendment 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 Beneficiary and Dart have executed this
Amendment, or have caused this Amendment to be executed on their behalf, on the
date first above written.
/S/ Ronald S. Haft
------------------------------------------
RONALD S. HAFT
DART GROUP CORPORATION
By: /s/ Richard B. Stone
---------------------------------
Name: Richard B. Stone
Title: Chief Executive Officer
/s/ Elliot Arditti
--------------------------------------
Sr. Vice President and
Corporate Secretary
6
<PAGE> 1
EXHIBIT 99.6
FOR IMMEDIATE RELEASE
DART GROUP ANNOUNCES ELECTION OF LINOWES AND METZENBAUM
TO BOARD OF DIRECTORS
Landover, MD. . . October 22, 1997 . . . Dart Group Corporation
(NASDAQ: DARTA), announced that Harry M. Linowes and Howard M. Metzenbaum have
been elected to fill newly created positions on its Board of Directors. The
other directors of Dart are Herbert H. Haft (Chairman), Richard B. Stone,
Douglas M. Bregman, Ronald S. Haft and Bonita A. Wilson.
It was also announced that Mr. Linowes and Senator Metzenbaum also
have been elected to fill new positions on the Boards of Directors of Trak Auto
Corporation (NASDAQ: TRKA) and Crown Books Corporation (NASDAQ: CRWN), which
are majority-owned by Dart, as well as on the Boards of Directors of Shoppers
Food Warehouse Corp. and Total Beverage Corp., which are wholly-owned by Dart.
The election of Mr. Linowes and Senator Metzenbaum to these Board
positions is subject to an order by the Delaware Court of Chancery pursuant to
a Standstill Order issued by the Court in December 1995 in pending litigation
regarding the ultimate control of Dart. Dart will seek such an order from the
Court.
In addition, Richard B. Stone, who replaced Larry G. Schafran as a
Director of Dart earlier this month, has also now replaced Mr. Schafran as a
Director of Trak Auto Corporation, Crown Books Corporation, Shoppers Food
Warehouse Corp. and Total Beverage Corp. Senator Stone has also assumed the
positions of Acting Chief Executive Officer and Chairman of the Executive
Committee of Trak Auto Corporation and Chairman of the Executive Committee of
Crown Books Corporation. He previously assumed the positions of Acting Chief
Executive Officer and Chairman of the Executive Committee of Dart.
Mr. Linowes, a Certified Public Accountant, is a consultant who served
successively as Managing Partner and Senior Partner of BDO Seidman, L.L.P. from
1986 to 1996. Previously, he was Managing Partner of Leopold & Linowes until
that firm's merger with BDO Seidman in 1986. He has served in a number of
leadership positions in professional organizations in the accounting field,
including as Chairman of the Executive Committee of CPA Associates and
President of the D.C. Institute of Certified Public Accountants.
<PAGE> 2
- 2 -
Howard M. Metzenbaum, former United States Senator from Ohio,
currently is Chairman of the Consumer Federation of America. Prior to his
election to the Senate, Senator Metzenbaum was a co-founder and Chairman of the
Board of the Airport Parking Company of America (APCOA). After the merger of
APCOA into the International Telephone and Telegraph Corporation, Senator
Metzenbaum became Chairman of the Board of ITT Consumer Services Corporation.
He also was Chairman of the Board of ComCorp.
Contact: Marina Ein
202-223-2922
