-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PxUuTsfsP3HaxCSBfatNU4L7O3a1YWfAMIbssJQHJ4L9QMiEttUXwj5oTqbFVDVs VWHV6eQMWS26XmY/BCt45w== 0000950152-98-006190.txt : 19980729 0000950152-98-006190.hdr.sgml : 19980729 ACCESSION NUMBER: 0000950152-98-006190 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19980727 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELDER BEERMAN STORES CORP CENTRAL INDEX KEY: 0000032020 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 310271980 STATE OF INCORPORATION: OH FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-57447 FILM NUMBER: 98671905 BUSINESS ADDRESS: STREET 1: 3155 ELBEE RD CITY: DAYTON STATE: OH ZIP: 45439 BUSINESS PHONE: 9372962700 MAIL ADDRESS: STREET 1: 3155 EL BEE ROAD CITY: DAYTON STATE: OH ZIP: 45439 S-1/A 1 THE ELDER-BEERMAN STORES CORP. S-1/AMENDMENT 2 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1998 REGISTRATION NO. 333-57447 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ THE ELDER-BEERMAN STORES CORP. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OHIO 5311 31-0271980 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION INCORPORATION CLASSIFICATION CODE NUMBER) NO.) OR ORGANIZATION)
3155 EL-BEE ROAD DAYTON, OHIO 45439 (937) 296-2700 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) SCOTT J. DAVIDO SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY THE ELDER-BEERMAN STORES CORP. 3155 EL-BEE ROAD DAYTON, OHIO 45439 (937) 296-2700 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPIES TO: CHRISTOPHER M. KELLY JOHN J. JENKINS Jones, Day, Reavis & Pogue Calfee, Halter & Griswold LLP 901 Lakeside Avenue 800 Superior Avenue Cleveland, Ohio 44114 Cleveland, Ohio 44114 (216) 586-3939 (216) 622-8200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after this Registration Statement becomes effective. ------------------ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------ CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(3) - --------------------------------------------------------------------------------------------------------------------------------- Common Shares, no par value (including Preferred Share Purchase Rights to purchase shares of Class A Preferred Shares, no par value)..................................... 3,220,000 shares $26.125 $84,122,500 $24,816.14 - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(1) Includes 420,000 shares that the Underwriters may purchase to cover over-allotments, if any. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933 using the average of the high and low prices of the Common Shares on the Nasdaq National Market on July 8, 1998. (3) Of this amount, the Registrant paid $24,164.87 concurrently with the initial filing of this Registration Statement on June 22, 1998. ------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses (except for the Securities and Exchange Commission registration fee, the National Association of Securities Dealers, Inc. filing fee and the Nasdaq National Market listing fee) payable by the Company in connection with the distribution of the Common Shares: Securities and Exchange Commission Registration Fee......... $ 24,816 National Association of Securities Dealers, Inc. Filing Fee....................................................... 8,913 Nasdaq National Market Listing Fee.......................... 17,500 Printing and Engraving Costs................................ 275,000 Accounting Fees and Expenses................................ 125,000 Legal Fees and Expenses..................................... 500,000 Blue Sky Qualification Fees and Expenses.................... 5,000 Transfer Agent Fees......................................... 5,000 Miscellaneous Expenses...................................... 38,771 ---------- Total............................................. $1,000,000 ==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Code of Regulations provides for the indemnification of the directors and officers of the Company, and persons serving at the request of the Board of Directors as a director, trustee, officer, employee, or agent of another entity, for claims against them arising from and after the Effective Date to the fullest extent permitted by Ohio law. Under Ohio law, a director is not liable for monetary damages unless it is proven by clear and convincing evidence that his action or failure to act was undertaken with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation. There is, however, no comparable provision limiting the liability of officers or other agents of a corporation. Under Ohio law, Ohio corporations are authorized to indemnify directors, officers, and agents within prescribed limits and must indemnify them under certain circumstances. Determinations regarding discretionary indemnification are to be made by a majority vote of a quorum of disinterested directors or, if a quorum is not available, by independent counsel, the shareholders, the court of common pleas, or the court in which the proceeding was brought. Ohio law does not provide statutory authorization for a corporation to indemnify directors and officers for settlements, fines, or judgments in the context of derivative suits. It provides, however, that directors (but not officers) are entitled to mandatory advancement of expenses, including attorneys' fees, incurred in defending any action, including derivative actions, brought against the director, provided the director agrees to cooperate with the corporation concerning the matter and to repay the amount advanced if it is proved by clear and convincing evidence that his act or failure to act was done with deliberate intent to cause injury to the corporation or with reckless disregard for the corporation's best interests. Ohio law does not authorize payment of expenses or judgments to an officer or other agent after a finding of negligence or misconduct in a derivative suit absent a court order. Indemnification is required, however, to the extent such person succeeds on the merits. In all other cases, if a director or officer acted in good faith and in a manner he reasonably believed to be in (or not opposed to) the best interests of the company, indemnification is discretionary except as otherwise provided by a company's articles of incorporation, code of regulations, or by contract except with respect to the advancement of expenses of directors. In addition to the statutory right to indemnify, Ohio law provides express authority for Ohio corporations to procure not only insurance policies, but also to furnish protection similar to insurance, including trust funds, letters of credit, and self-insurance, or to provide similar protection such as indemnity against loss of insurance. II-1 3 The obligations of the Company to indemnify any person serving as one of its directors, officers, or employees as of or following the Petition Date, by reason of such person's prior or future service in such a capacity, or as a director, officer, or employee of another corporation, partnership, or other legal entity, to the extent provided in the applicable articles of incorporation, code of regulations, or similar constituent documents or by statutory law or written agreement of or with the Company, were deemed and treated as executory contracts and were assumed by the Company or applicable subsidiary of the Company pursuant to the Plan and section 365 of the Bankruptcy Code as of the Effective Date. Accordingly, such indemnification obligations survived and were unaffected by entry of the confirmation order, irrespective of whether such indemnification is owed for an act or event occurring before or after the Petition Date. The obligations of the Company or applicable subsidiary of the Company to indemnify any person who, as of the Petition Date, was no longer serving as a director or officer of such entity, which indemnity obligation arose by reason of such person's prior service in any such capacity, or as a director, officer, or employee of another corporation, partnership, or other legal entity, whether provided in the applicable articles of incorporation, code of regulations, or similar constituent documents or by statutory law (including Texas law with respect to Margo's and Ohio law with respect to the other Old Elder-Beerman Companies), written agreement, policies, or procedures of or with such entity, terminated and were discharged pursuant to section 502(e) of the Bankruptcy Code or otherwise, as of the Effective Date; provided, however, that, to the extent that such indemnification obligations no longer gave rise to contingent Claims that can be disallowed pursuant to section 502(e) of the Bankruptcy Code, such indemnification obligations were deemed and treated as executory contracts that were rejected by the applicable entity pursuant to the Plan and section 365 of the Bankruptcy Code, as of the Effective Date, and any Claims arising from such indemnification obligations (including any rejection damage claims) were subject to the bar date provisions of the Plan. The Company entered into indemnification agreements, effective as of the Effective Date, with each of its directors and executive officers and each of the directors and executive officers of the Company's subsidiaries. The indemnification agreements provide for, among other things, (a) the indemnification of the indemnitee by the Company for conduct in the capacities described above, (b) the advancement of attorneys' fees and other expenses, and (c) the establishment, upon approval by the Board of Directors at its option, of trusts or other funding mechanisms to fund the Company's indemnification obligations thereunder. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. Except as set forth below, the Company does not have any recent sales of unregistered securities. The issued and outstanding Common Shares and the Series A Warrants and Series B Warrants (as defined in the Plan) were issued pursuant to the Plan in satisfaction of certain allowed claims against, or interests in, the Company. Based upon the exemptions provided by section 1145 of the Bankruptcy Code, the Company believes that none of such securities were required to be registered under the Securities Act in connection with their issuance and distribution pursuant to the Plan. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. A. Exhibit Index EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ----------- ------------------------------------------------------------ 1 Form of Underwriting Agreement 2(a) Third Amended Joint Plan of Reorganization of The Elder-Beerman Stores Corp. and its Subsidiaries dated November 17, 1997 (previously filed as Exhibit 2 to the Company's Form 10 filed on November 26, 1997 (the "Form 10"), and incorporated herein by reference) 2(b) Agreement and Plan of Merger By and Among The Elder-Beerman Stores Corp., The Elder-Beerman Acquisition Corp. and Stone & Thomas dated June 18, 1998 2(c) First Amendment to Agreement and Plan of Merger By and Among The Elder-Beerman Stores Corp., The Elder-Beerman Acquisition Corp., and Stone & Thomas dated July 27, 1998.
II-2 4 3(a) Amended Articles of Incorporation (previously filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (the "Form 10-K") and incorporated herein by reference) 3(b) Amended Code of Regulations (previously filed as Exhibit 3(b) to the Form 10 and incorporated herein by reference) 4(a) Stock Certificate for Common Share (previously filed as Exhibit 4(a) to the Company's Form 10/A-1 filed on January 23, 1998 (the "Form 10/A-1") and incorporated herein by reference) 4(c) Rights Agreement By and Between The Elder-Beerman Stores Corp. and Norwest Bank Minnesota, N.A., dated as of December 30, 1997 (previously filed as Exhibit 4(c) to the Form 10-K and incorporated herein by reference) 4(d) Warrant Agreement by and Between Beerman-Peal Holdings, Inc. and the Elder-Beerman Stores Corp. for 249,809 Common Shares at a strike price of $12.80 per share dated December 30, 1997 (previously filed as Exhibit 4(d) to the Form 10-K and incorporated herein by reference) 4(e) Warrant Agreement by and Between Beerman-Peal Holdings, Inc. and the Elder-Beerman Stores Corp. for 374,713 Common Shares at a strike price of $14.80 per share dated December 30, 1997 (previously filed as Exhibit 4(e) to the Form 10-K and incorporated herein by reference) 5 Opinion of Jones, Day, Reavis and Pogue 10(a)(i) Pooling and Servicing Agreement Among The El-Bee Receivables Corporation, The El-Bee Chargit Corp. and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(a)(i) to the Form 10/A-1 and incorporated herein by reference) 10(a)(ii) Series 1997-1 Supplement Among The El-Bee Receivables Corporation, The El-Bee Chargit Corp. and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(a)(ii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(iii) Certificate Purchase Agreement Among The El-Bee Receivables Corporation, Corporate Receivables Corporation, The Liquidity Providers Named Herein, CitiCorp North American, Inc. and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(a)(iii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(iv) Loan Agreement Among The El-Bee Receivables Corporation, The El-Bee Chargit Corp., Bankers Trust Company, The Collateral Investors Parties Hereto and CitiCorp North America, Inc., dated as of December 30, 1997 (previously filed as Exhibit 10(a)(iv) to the Form 10/A-1 and incorporated herein by reference) 10(a)(v) Intercreditor Agreement By and Among The El-Bee Chargit Corp., The Elder-Beerman Stores Corp., Bankers Trust Company, CitiCorp USA, Inc., CitiCorp North America, Inc., Corporate Receivables Corporation and the Liquidity Providers Named Herein, dated as of December 30, 1997 (previously filed as Exhibit 10(a)(v) to the Form 10/A-1 and incorporated herein by reference) 10(a)(vi) Parent Undertaking Agreement Among The Elder-Beerman Stores Corp. and Bankers Trust Company, dated as of December 30, 1997 (previously filed as Exhibit 10(a)(vi) to the Form 10/A-1 and incorporated herein by reference) 10(a)(vii) Purchase Agreement (Chargit) Among The El-Bee Chargit Corp. and The El-Bee Receivables Corporation, dated as of December 30, 1997 (previously filed as Exhibit 10(a)(vii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(viii) Purchase Agreement (Elder-Beerman) Among The Elder-Beerman Stores Corp. and The El-Bee Chargit Corp., dated as of December 30, 1997 (previously filed as Exhibit 10(a)(viii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(ix) Subordinated Note Between The El-Bee Receivables Corporation and The El-Bee Chargit Corp, dated December 30, 1997 (previously filed as Exhibit 10(a)(ix) to the Form 10/A-1 and incorporated herein by reference)
II-3 5 10(b)(i) Credit Agreement Among The Elder-Beerman Stores Corp., The Lenders Party Hereto, Citibank, N.A. and CitiCorp USA, Inc., dated as of December 30, 1997 (previously filed as Exhibit 10(b)(i) to the Form 10/A-1 and incorporated herein by reference) 10(b)(ii) Borrower Pledge Agreement Made by The Elder-Beerman Stores Corp. to Citibank, N.A., dated December 30, 1997 (previously filed as Exhibit 10(b)(ii) to the Form 10/A-1 and incorporated herein by reference) 10(b)(iii) Chargit Pledge Agreement Made By The El-Bee Chargit Corp. to Citibank, N.A., dated December 30, 1997 (previously filed as Exhibit 10(b)(iii) to the Form 10/A-1 and incorporated herein by reference) 10(b)(iv) Security Agreement Made By The Elder-Beerman stores Corp., The El-Bee Chargit Corp., The Bee-Gee Shoe Corp. in Favor of CitiCorp USA, Inc., dated December 30, 1997 (previously filed as Exhibit 10(b)(iv) to the Form 10/A-1 and incorporated herein by reference) 10(b)(v) Subsidiary Guaranty Made by The El-Bee Chargit Corp., dated December 30, 1997 (previously filed as Exhibit 10(b)(v) to the Form 10/A-1 and incorporated herein by reference) 10(b)(vi) Subsidiary Guaranty Made by The Bee-Gee Shoe Corp., dated December 30, 1997 (previously filed as Exhibit 10(b)(vi) to the Form 10/A-1 and incorporated herein by reference) 10(b)(vii) Form of Revolving Note (previously filed as Exhibit 10(b)(vii) to the Form 10/A-1 and incorporated herein by reference) 10(b)(viii) Letter Agreement Re: Assignment of Account By and Between The Elder-Beerman Stores Corp., CitiCorp USA, Inc., and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(b)(viii) to the Form 10/A-1 and incorporated herein by reference) 10(c) Form of Employment Agreement for Senior Vice Presidents (previously filed as Exhibit 10(c) to the Form 10 and incorporated herein by reference) 10(d) Form of Employment Agreement for Executive Vice Presidents (previously filed as Exhibit 10(d) to the Form 10 and incorporated herein by reference) 10(f) Form of Director Indemnification Agreement (previously filed as Exhibit 10(f) to the Form 10 and incorporated herein by reference) 10(g) Form of Officer Indemnification Agreement (previously filed as Exhibit 10(g) to the Form 10 and incorporated herein by reference) 10(h) Form of Director and Officer Indemnification Agreement (previously filed as Exhibit 10(h) to the Form 10 and incorporated herein by reference) 10(i) The Elder-Beerman Stores Corp. Equity and Performance Incentive Plan, Effective December 30, 1997 (previously filed as Exhibit 10(i) to the Form 10-K and incorporated herein by reference) 10(j) Form of Restricted Stock Agreement for Non-Employee Director (previously filed as Exhibit 10(j) to the Form 10 and incorporated herein by reference) 10(k) Form of Restricted Stock Agreement (previously filed as Exhibit 10(k) to the Form 10 and incorporated herein by reference) 10(l) Form of Deferred Shares Agreement (previously filed as Exhibit 10(l) to the Form 10 and incorporated herein by reference) 10(m) Form of Nonqualified Stock Option Agreement for Non-Employee Director (previously filed as Exhibit 10(m) to the Form 10 and incorporated herein by reference) 10(n) Form of Nonqualified Stock Option Agreement (previously filed as Exhibit 10(n) to the Form 10 and incorporated herein by reference) 10(o) Employee Stock Purchase Plan (previously filed as Exhibit 10(o) to the Form 10 and incorporated herein by reference)
II-4 6 10(p) Comprehensive Settlement Agreement By and Among The Debtors, The ESOP and the ESOP Committee and the Shareholders of The Elder-Beerman Stores Corp., dated as of December 30, 1997 (previously filed as Exhibit 10(p) to the Form 10-K and incorporated herein by reference) 10(q) Tax Indemnification Agreement By and Among The Elder-Beerman Stores Corp., the Direct and Indirect Subsidiaries of Elder-Beerman, Beerman-Peal Holdings, Inc., The Beerman-Peal Corporation, Beerman Investments, Inc., The Beerman Corporation and The Individuals, Partnerships and Trusts named Herein dated as of December 15, 1997 (previously filed as Exhibit 10(q) to the Form 10 and incorporated herein by reference) 10(r) Tax Sharing Agreement By and Among The Elder-Beerman Stores Corp., The Bee-Gee Shoe Corp. and The El-Bee Chargit Corp., dated as of December 30, 1997 (previously filed as Exhibit 10(r) to the Form 10 and incorporated herein by reference) 10(s) Employment Agreement Between The Elder-Beerman Stores Corp. and John A. Muskovich, dated December 30, 1997 (previously filed as Exhibit 10(s) to the Form 10-K and incorporated herein by reference) 10(t) Amended and Restated Employment Agreement Between The Elder-Beerman Stores Corp. and Frederick J. Mershad, dated December 30, 1997 (previously filed as Exhibit 10(t) to the Form 10-K and incorporated herein by reference) 21 Subsidiaries of the Company* 23(a) Consent of Counsel (included in Exhibit 5 hereto) 23(b) Consent of Deloitte & Touche LLP, independent auditors for the Company 23(c) Consent of Deloitte & Touche LLP, independent auditors for Stone & Thomas 24 Powers of Attorney*
- --------------- * Previously filed B. Financial Statement Schedules None. ITEM 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes that: (1) For the purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall he deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-5 7 (c) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. II-6 8 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DAYTON, STATE OF OHIO, ON THIS 24TH DAY OF JULY, 1998. THE ELDER-BEERMAN STORES CORP. By: /s/ Scott J. Davido ------------------------------------ Scott J. Davido Senior Vice President, General Counsel and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON JULY 24, 1998.
SIGNATURE TITLE --------- ----- * Chairman of the Board of Directors and Chief - ----------------------------------------------------- Executive Officer (Principal Executive Frederick J. Mershad Officer) * President, Chief Operating Officer, and Chief - ----------------------------------------------------- Financial Officer; Director John A. Muskovich (Principal Financial Officer) * Senior Vice President, Controller - ----------------------------------------------------- (Principal Accounting Officer) Steven D. Lipton * Director - ----------------------------------------------------- Stewart M. Kasen * Director - ----------------------------------------------------- Steven C. Mason * Director - ----------------------------------------------------- Thomas J. Noonan, Jr. * Director - ----------------------------------------------------- Bernard Olsoff * Director - ----------------------------------------------------- Laura H. Pomerantz * Director - ----------------------------------------------------- Jack A. Staph * Director - ----------------------------------------------------- John J. Wiesner
* This Amendment No. 2 to the Registration Statement has been signed on behalf of the above-named directors and officers of the Company by Scott J. Davido, Senior Vice President, General Counsel and Secretary of the Company, as attorney-in-fact pursuant to a power of attorney filed with the Securities and Exchange Commission as Exhibit 24 to this Amendment No. 2 to the Registration Statement. Dated: July 24, 1998 By: /s/ Scott J. Davido ---------------------------------------------------- Scott J. Davido Attorney-in-Fact
II-7 9 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------- ---------------------- 1 Form of Underwriting Agreement* 2(a) Third Amended Joint Plan of Reorganization of The Elder-Beerman Stores Corp. and its Subsidiaries dated November 17, 1997 (previously filed as Exhibit 2 to the Company's Form 10 filed on November 26, 1997 (the "Form 10"), and incorporated herein by reference) 2(b) Agreement and Plan of Merger By and Among The Elder-Beerman Stores Corp., The Elder-Beerman Acquisition Corp. and Stone & Thomas dated June 18, 1998 2(c) First Amendment to Agreement and Plan of Merger By and Among The Elder-Beerman Stores Corp., The Elder-Beerman Acquisition Corp., and Stone & Thomas dated July 27, 1998. 3(a) Amended Articles of Incorporation (previously filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (the "Form 10-K") and incorporated herein by reference) 3(b) Amended Code of Regulations (previously filed as Exhibit 3(b) to the Form 10 and incorporated herein by reference) 4(a) Stock Certificate for Common Share (previously filed as Exhibit 4(a) to the Company's Form 10/A-1 filed on January 23, 1998 (the "Form 10/A-1") and incorporated herein by reference) 4(c) Rights Agreement By and Between The Elder-Beerman Stores Corp. and Norwest Bank Minnesota, N.A., dated as of December 30, 1997 (previously filed as Exhibit 4(c) to the Form 10-K and incorporated herein by reference) 4(d) Warrant Agreement by and Between Beerman-Peal Holdings, Inc. and the Elder-Beerman Stores Corp. for 249,809 Common Shares at a strike price of $12.80 per share dated December 30, 1997 (previously filed as Exhibit 4(d) to the Form 10-K and incorporated herein by reference) 4(e) Warrant Agreement by and Between Beerman-Peal Holdings, Inc. and the Elder-Beerman Stores Corp. for 374,713 Common Shares at a strike price of $14.80 per share dated December 30, 1997 (previously filed as Exhibit 4(e) to the Form 10-K and incorporated herein by reference) 5 Opinion of Jones, Day, Reavis & Pogue 10(a)(i) Pooling and Servicing Agreement Among The El-Bee Receivables Corporation, The El-Bee Chargit Corp. and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(a)(i) to the Form 10/A-1 and incorporated herein by reference) 10(a)(ii) Series 1997-1 Supplement Among The El-Bee Receivables Corporation, The El-Bee Chargit Corp. and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(a)(ii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(iii) Certificate Purchase Agreement Among The El-Bee Receivables Corporation, Corporate Receivables Corporation, The Liquidity Providers Named Herein, CitiCorp North American, Inc. and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(a)(iii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(iv) Loan Agreement Among The El-Bee Receivables Corporation, The El-Bee Chargit Corp., Bankers Trust Company, The Collateral Investors Parties Hereto and CitiCorp North America, Inc., dated as of December 30, 1997 (previously filed as Exhibit 10(a)(iv) to the Form 10/A-1 and incorporated herein by reference) 10(a)(v) Intercreditor Agreement By and Among The El-Bee Chargit Corp., The Elder-Beerman Stores Corp., Bankers Trust Company, CitiCorp USA, Inc., CitiCorp North America, Inc., Corporate Receivables Corporation and the Liquidity Providers Named Herein, dated as of December 30, 1997 (previously filed as Exhibit 10(a)(v) to the Form 10/A-1 and incorporated herein by reference)
10
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------- ---------------------- 10(a)(vi) Parent Undertaking Agreement Among The Elder-Beerman Stores Corp. and Bankers Trust Company, dated as of December 30, 1997 (previously filed as Exhibit 10(a)(vi) to the Form 10/A-1 and incorporated herein by reference) 10(a)(vii) Purchase Agreement (Chargit) Among The El-Bee Chargit Corp. and The El-Bee Receivables Corporation, dated as of December 30, 1997 (previously filed as Exhibit 10(a)(vii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(viii) Purchase Agreement (Elder-Beerman) Among The Elder-Beerman Stores Corp. and The El-Bee Chargit Corp., dated as of December 30, 1997 (previously filed as Exhibit 10(a)(viii) to the Form 10/A-1 and incorporated herein by reference) 10(a)(ix) Subordinated Note Between The El-Bee Receivables Corporation and The El-Bee Chargit Corp, dated December 30, 1997 (previously filed as Exhibit 10(a)(ix) to the Form 10/A-1 and incorporated herein by reference) 10(b)(i) Credit Agreement Among The Elder-Beerman Stores Corp., The Lenders Party Hereto, Citibank, N.A. and CitiCorp USA, Inc., dated as of December 30, 1997 (previously filed as Exhibit 10(b)(i) to the Form 10/A-1 and incorporated herein by reference) 10(b)(ii) Borrower Pledge Agreement Made by The Elder-Beerman Stores Corp. to Citibank, N.A., dated December 30, 1997 (previously filed as Exhibit 10(b)(ii) to the Form 10/A-1 and incorporated herein by reference) 10(b)(iii) Chargit Pledge Agreement Made By The El-Bee Chargit Corp. to Citibank, N.A., dated December 30, 1997 (previously filed as Exhibit 10(b)(iii) to the Form 10/A-1 and incorporated herein by reference) 10(b)(iv) Security Agreement Made By The Elder-Beerman stores Corp., The El-Bee Chargit Corp., The Bee-Gee Shoe Corp. in Favor of CitiCorp USA, Inc., dated December 30, 1997 (previously filed as Exhibit 10(b)(iv) to the Form 10/A-1 and incorporated herein by reference) 10(b)(v) Subsidiary Guaranty Made by The El-Bee Chargit Corp., dated December 30, 1997 (previously filed as Exhibit 10(b)(v) to the Form 10/A-1 and incorporated herein by reference) 10(b)(vi) Subsidiary Guaranty Made by The Bee-Gee Shoe Corp., dated December 30, 1997 (previously filed as Exhibit 10(b)(vi) to the Form 10/A-1 and incorporated herein by reference) 10(b)(vii) Form of Revolving Note (previously filed as Exhibit 10(b)(vii) to the Form 10/A-1 and incorporated herein by reference) 10(b)(viii) Letter Agreement Re: Assignment of Account By and Between The Elder-Beerman Stores Corp., CitiCorp USA, Inc., and Bankers Trust Company, dated December 30, 1997 (previously filed as Exhibit 10(b)(viii) to the Form 10/A-1 and incorporated herein by reference) 10(c) Form of Employment Agreement for Senior Vice Presidents (previously filed as Exhibit 10(c) to the Form 10 and incorporated herein by reference) 10(d) Form of Employment Agreement for Executive Vice Presidents (previously filed as Exhibit 10(d) to the Form 10 and incorporated herein by reference) 10(f) Form of Director Indemnification Agreement (previously filed as Exhibit 10(f) to the Form 10 and incorporated herein by reference) 10(g) Form of Officer Indemnification Agreement (previously filed as Exhibit 10(g) to the Form 10 and incorporated herein by reference) 10(h) Form of Director and Officer Indemnification Agreement (previously filed as Exhibit 10(h) to the Form 10 and incorporated herein by reference) 10(i) The Elder-Beerman Stores Corp. Equity and Performance Incentive Plan, Effective December 30, 1997 (previously filed as Exhibit 10(i) to the Form 10-K and incorporated herein by reference)
11
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------- ---------------------- 10(j) Form of Restricted Stock Agreement for Non-Employee Director (previously filed as Exhibit 10(j) to the Form 10 and incorporated herein by reference) 10(k) Form of Restricted Stock Agreement (previously filed as Exhibit 10(k) to the Form 10 and incorporated herein by reference) 10(l) Form of Deferred Shares Agreement (previously filed as Exhibit 10(l) to the Form 10 and incorporated herein by reference) 10(m) Form of Nonqualified Stock Option Agreement for Non-Employee Director (previously filed as Exhibit 10(m) to the Form 10 and incorporated herein by reference) 10(n) Form of Nonqualified Stock Option Agreement (previously filed as Exhibit 10(n) to the Form 10 and incorporated herein by reference) 10(o) Employee Stock Purchase Plan (previously filed as Exhibit 10(o) to the Form 10 and incorporated herein by reference) 10(p) Comprehensive Settlement Agreement By and Among The Debtors, The ESOP and the ESOP Committee and the Shareholders of The Elder-Beerman Stores Corp., dated as of December 30, 1997 (previously filed as Exhibit 10(p) to the Form 10-K and incorporated herein by reference) 10(q) Tax Indemnification Agreement By and Among The Elder-Beerman Stores Corp., the Direct and Indirect Subsidiaries of Elder-Beerman, Beerman-Peal Holdings, Inc., The Beerman-Peal Corporation, Beerman Investments, Inc., The Beerman Corporation and The Individuals, Partnerships and Trusts named Herein dated as of December 15, 1997 (previously filed as Exhibit 10(q) to the Form 10 and incorporated herein by reference) 10(r) Tax Sharing Agreement By and Among The Elder-Beerman Stores Corp., The Bee-Gee Shoe Corp. and The El-Bee Chargit Corp., dated as of December 30, 1997 (previously filed as Exhibit 10(r) to the Form 10 and incorporated herein by reference) 10(s) Employment Agreement Between The Elder-Beerman Stores Corp. and John A. Muskovich, dated December 30, 1997 (previously filed as Exhibit 10(s) to the Form 10-K and incorporated herein by reference) 10(t) Amended and Restated Employment Agreement Between The Elder-Beerman Stores Corp. and Frederick J. Mershad, dated December 30, 1997 (previously filed as Exhibit 10(t) to the Form 10-K and incorporated herein by reference) 21 Subsidiaries of the Company* 23(a) Consent of Counsel (included in Exhibit 5 hereto) 23(b) Consent of Deloitte & Touche LLP, independent auditors for the Company 23(c) Consent of Deloitte & Touche LLP, independent auditors for Stone & Thomas 24 Powers of Attorney*
- --------------- * Previously filed EX-1.1 2 EXHIBIT 1.1 1 Exhibit 1.1 THE ELDER-BEERMAN STORES CORP. 2,800,000 Common Shares* UNDERWRITING AGREEMENT ---------------------- July ___, 1998 McDonald & Company Securities, Inc. Warburg Dillon Read LLC Johnson Rice & Company L.L.C. As Representatives of the Several Underwriters c/o McDonald & Company Securities, Inc. McDonald Investment Center 800 Superior Avenue Cleveland, Ohio 44114 Dear Sirs: 1. INTRODUCTORY. The Elder-Beerman Stores Corp., an Ohio corporation (the "Company"), proposes to issue and sell 2,800,000 of its common shares, no par value (the "Common Shares"), which are authorized but unissued, to the public through the underwriters named in Schedule A annexed hereto (the "Underwriters") for whom you are acting as the Representatives. The 2,800,000 Common Shares to be purchased from the Company are hereinafter referred to as the "Firm Stock." The Company also proposes to sell to the Underwriters, at their option, an aggregate of not more than 420,000 additional Common Shares, which are hereinafter referred to as the "Option Stock." The Firm Stock and the Option Stock are hereinafter collectively referred to as the "Stock" and are more fully described in the Registration Statement and the Prospectus (as hereinafter defined). The Company hereby confirms its several agreements with you, acting as the Representatives of the Underwriters. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Underwriters that: (a) The Company does not own or control, directly or indirectly, any corporation, association or other entity other than those listed in Exhibit 21 to the Registration - ------------------ * Plus an option to purchase up to 420,000 additional shares to cover over-allotments. 2 Statement (as hereinafter defined). The Company has been duly organized and is validly existing as a corporation in good standing under the laws of Ohio with power and authority to own and lease its properties and conduct its business as described in the Prospectus (as hereinafter defined). Each of the Company's subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of its respective jurisdiction of incorporation, with power and authority to own and lease its properties and conduct its respective business. The Company and each of its subsidiaries are duly qualified to do business as a foreign corporation and are in good standing in all jurisdictions in which the Company or such subsidiary owns or leases real property or in which the conduct of business, as presently being conducted, requires such qualification (except for those jurisdictions in which the failure to so qualify will not in the aggregate have a material adverse effect on the Company or such subsidiary). Except as disclosed in the Registration Statement, the Company does not own, directly or indirectly, any equity securities or securities convertible into or exchangeable for equity securities of any other corporation, partnership, joint venture, Massachusetts or other business trust or any other business enterprise. (b) This Agreement has been duly and validly authorized, executed and delivered on behalf of the Company. (c) The Company has prepared and filed with the Securities and Exchange Commission (the "Commission"), in accordance with the provisions of the Securities Act of 1933, as amended (the "Act"), and the Rules and Regulations of the Commission thereunder (as hereinafter defined), a registration statement on Form S-1 (Registration No. 333-57447) including a preliminary prospectus relating to the Company's Stock, and such amendments to such registration statement as may have been required prior to the date hereof have been similarly prepared and filed with the Commission. The registration statement as amended at the time when it becomes effective, or, if applicable, as amended at the time the most recent post-effective amendment to such registration statement filed with the Commission prior to the execution and delivery of this Agreement became effective (the "Effective Date"), and including information (if any) contained in a prospectus subsequently filed with the Commission pursuant to Rule 424(b) under the Act, and deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Act is hereinafter referred to as the "Registration Statement"; the prospectus in the form first used to confirm sales of Stock, whether or not filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter referred to as the "Prospectus." If an abbreviated registration statement is prepared and filed with the Commission in accordance with Rule 462(b) under the Act (an "Abbreviated Registration Statement"), the term "Registration Statement" as used in this Agreement includes the Abbreviated Registration Statement. (d) As of the Effective Date, and at all times subsequent thereto up to and including the respective Closing Dates (as hereinafter defined) of the offering, (i) the Registration Statement and the Prospectus, and any amendments thereof or supplements thereto, will in all material respects conform to the requirements of the Act and the applicable rules, regulations and interpretive releases of the Commission thereunder (the "Rules and Regulations"); (ii) the Registration Statement or any amendment thereof or supplement thereto, -2- 3 did not or will not contain, as the case may be, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) the Prospectus or any amendment thereof or supplement thereto, did not or will not, as the case may be, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations, warranties or agreements as to information contained in the Registration Statement or the Prospectus or any such amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company through you as the Representatives specifically for use in the preparation thereof. (e) The Company has a duly authorized and outstanding capitalization as set forth under "Capitalization" in the Prospectus except for changes due to payments required by debt agreements, or as otherwise provided in the Prospectus; all of the outstanding Common Shares are duly authorized and validly issued, fully paid and nonassessable, are free of any preemptive rights, rights of first refusal or similar rights, were issued and sold in compliance with the applicable Federal and state securities laws and conform in all material respects to the description in the Prospectus; except as described in the Prospectus, there are no outstanding options, warrants or other rights calling for the issuance of, and there are no commitments, plans or arrangements to issue any shares of capital stock of the Company or any security convertible or exchangeable or exercisable for capital stock of the Company. There are no holders of securities of the Company who, by reason of the filing of the Registration Statement have the right (and have not waived such right) to request the Company to include in the Registration Statement securities owned by them, other than such rights as have been satisfied by the inclusion of securities in the Registration Statement. (f) The Common Shares of the Company conform in substance to all statements in relation thereto contained in the Registration Statement and the Prospectus; the Stock to be sold by the Company hereunder has been duly authorized and, when issued and delivered pursuant to this Agreement, will be validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus. All corporate action required to be taken for the issuance of the Stock by the Company has been validly and sufficiently taken. No preemptive rights of security holders of the Company exist with respect to the issuance and sale of the Stock by the Company pursuant hereto. (g) All the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned by the Company free and clear of all liens, encumbrances, equities, security interests, or claims; and there are no outstanding options, warrants or other rights calling for the issuance of, and there are no commitments, plans or arrangements to issue, any shares of capital stock of any subsidiary or any security convertible or exchangeable or exercisable for capital stock of any subsidiary; except as disclosed in the Registration Statement and except for the shares of stock of each subsidiary owned by the Company, neither the Company nor any subsidiary owns, directly or indirectly, any shares of capital stock of any corporation or has any equity interest in any firm, partnership, joint venture, association or other entity. -3- 4 (h) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth or contemplated in the Prospectus, (i) neither the Company nor any of its subsidiaries has incurred any material liabilities or obligations, direct or contingent, nor have any of them entered into any material transaction, (ii) there has not been any material change in the capital stock of the Company and its subsidiaries or any material adverse change in the business or the financial position or results of operations of the Company and its subsidiaries, taken as a whole and (iii) no loss or damage (whether or not insured) to the property of the Company and its subsidiaries have been sustained which materially and adversely affects the operations of the Company and its subsidiaries, taken as a whole. (i) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms and provisions of, or constitute a default under, (i) the Articles of Incorporation or the Code of Regulations of the Company, or the organizational documents of any of its subsidiaries, or (ii) any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound, or (iii) any order, rule or regulation applicable to the Company or any of its subsidiaries of any court or of any federal or state regulatory body or administrative agency or other governmental body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except, in the case of clauses (ii) and (iii), for such breaches or defaults as will not have a material adverse effect on the consummation of the transactions herein contemplated and the fulfillment of the terms hereof by the Company. (j) The financial statements of the Company and Stone & Thomas included in the Registration Statement and the Prospectus fairly present the financial position and results of operations of the Company on a consolidated basis and Stone & Thomas at the respective dates and for the respective periods to which they apply, and such financial statements have been prepared in conformity with generally accepted accounting principles consistently applied throughout the periods involved. The pro forma financial statements of the Company included in the Prospectus comply in all material respects with the applicable requirements of Rules 11-01 and 11-02 of Regulation S-X of the Commission and fairly present the information shown therein at the dates and for the periods to which they apply, and have been prepared to give effect to certain assumptions and proposed transactions made on reasonable bases which are described in the Prospectus, and the pro forma adjustments have been properly applied on the bases described therein. (k) Deloitte & Touche LLP, who have examined and expressed their opinion on the financial statements of the Company referenced in their opinions set forth in the Prospectus, are independent accountants within the meaning of the Act and the Rules and Regulations. (l) The Company and its subsidiaries hold all necessary material authorizations, approvals, orders, licenses, certificates and permits of and from all governmental -4- 5 regulatory officials and bodies (collectively the "licenses") required for the conduct of its business as described in the Prospectus, and all such licenses are valid and in full force and effect, and the Company and its subsidiaries have no reason to believe they are not operating in compliance in all material respects with the terms and provisions of such licenses and with all material laws, regulations, orders and decrees applicable to the Company and its subsidiaries, and their respective businesses and assets. (m) Neither the Company nor any of its subsidiaries is in violation of any applicable Federal, state or local laws, statutes, rules, regulations or ordinances relating to public health, safety or the environment, including, without limitation, relating to releases, discharges, emissions or disposal to air water, land or groundwater, to the withdrawal or use of groundwater, to the use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to the treatment, storage, disposal or management of hazardous substances (including, without limitation, petroleum, crude oil or any fraction thereof, or other hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or other controlled, prohibited or regulated substances, which violation would have a material adverse effect on the business, condition (financial or other) or results of operations of the Company and its subsidiaries, or which might materially and adversely affect the consummation of the transactions contemplated by this Agreement. In addition, and irrespective of such compliance, neither the Company nor any of its subsidiaries is subject to any liabilities for environmental remediation or clean-up, including any liability or class of liability of the lessee under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or the Resource Conservation and Recovery Act of 1976, as amended, which liability would have a material adverse effect on the business, condition (financial or other) or results of operations of the Company and its subsidiaries, or which might materially and adversely affect the consummation of the transactions contemplated by this Agreement. (n) There are no legal or governmental actions, suits or proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its subsidiaries, or any of their executive officers or directors is a party or of which the business or property (including, without limitation, any of the licenses referred to in (l) above) of the Company or any of its subsidiaries or any of the Company's or any of its subsidiaries' employees is the subject which if decided adversely, would have a material adverse effect on the business, condition (financial or other) or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth in the Prospectus. (o) Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or its Code of Regulations or other organizational documents, and no material default exists by the Company or any of its subsidiaries in the due performance and observance of any term, covenant or condition of any agreement material to the Company and its subsidiaries to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound. (p) The Company and its subsidiaries have good title to, or valid and enforceable leasehold estates in, all properties and assets used for their businesses (including the -5- 6 property described in the Prospectus as being owned or leased by the Company), in each case free and clear of all liens, encumbrances and defects other than those set forth or referred to in the Registration Statement or Prospectus or those which do not materially affect the value of such property or leasehold and do not materially interfere with the use made or proposed to be made of such property or leasehold by the Company and its subsidiaries; and all of the leases and subleases under which the Company and its subsidiaries hold such properties are in full force and effect. (q) Other than as set forth in the Prospectus, the Company and its subsidiaries own or possess, or can acquire on reasonable terms, the patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets, applications and other unpatented or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, and trade names (collectively, "Proprietary Rights") used in or necessary for the conduct of their businesses as now conducted and as proposed to be conducted as described in the Prospectus; the Company and its subsidiaries have the right to use all Proprietary Rights used in or necessary for the conduct of their businesses without infringing the rights of any person or violating the terms of any licensing or other agreement to which the Company or any of its subsidiaries is a party, and to the knowledge of the Company no person is infringing upon any Proprietary Right which the Company or any of its subsidiaries has the sole and exclusive right to use; no charges, claims or litigation have been asserted or to the knowledge of the Company threatened against the Company or any of its subsidiaries contesting the right of the Company or any of its subsidiaries to use, or the validity of, any Proprietary Right or challenging or questioning the validity or effectiveness of any license or agreement pertaining thereto or asserting the misuse thereof, and, to the Company's knowledge, no valid basis exists for the assertion of any such charge, claim or litigation; all licenses and other agreements to which the Company or any of its subsidiaries is a party relating to Proprietary Rights are in full force and effect and constitute valid, binding and enforceable obligations of the Company or such subsidiary, and, to the Company's knowledge, the other respective parties thereto, and there have not been and there currently are not any defaults which would have a material adverse effect on the Company and its subsidiaries, and no event has occurred which (whether by notice or lapse of time or both) would constitute a default under any license or other agreement affecting Proprietary Rights used in or necessary for the conduct of the businesses of the Company and its subsidiaries by any party; and except as set forth in the Prospectus, the validity, continuation and effectiveness of all such licenses and other agreements and the current terms thereof will not be affected by the transactions contemplated by this Agreement. (r) No approval, authorization, consent or other order of any public board or body (other than a Nasdaq National Market Notification Form for Listing of Additional Shares or in connection with or in compliance with the provisions of the Act and the securities or Blue Sky laws of various jurisdictions) is legally required for the sale of the Stock by the Company. (s) The Common Shares have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended, and have been authorized for trading over-the- -6- 7 counter on the Nasdaq National Market ("Nasdaq"), and the Stock has been authorized for trading on the Nasdaq, subject only to official notice of issuance. (t) The Company and its subsidiaries have filed on a timely basis all necessary federal, state and local income tax returns required to be filed through the date hereof and have paid all taxes shown as due thereon; and no tax deficiency has been asserted against the Company or any of its subsidiaries, nor does the Company know of any tax deficiency which is likely to be asserted against the Company or any of its subsidiaries which if determined adversely to the Company or such subsidiary could materially adversely affect the business, prospects, properties, assets, results of operations or condition (financial or otherwise) of the Company and its subsidiaries. All tax liabilities are adequately provided for on the books of the Company. (u) The Company and each of its subsidiaries maintain insurance of the types and in the amounts generally deemed adequate for their respective businesses and, to the best of the Company's knowledge, consistent with insurance coverage maintained by similar companies in similar businesses. (v) The Company has obtained the agreement of each of its executive officers and directors that, for a period of 180 days from the date of the Prospectus, subject to certain limited exceptions, such persons will not, without the prior written consent of McDonald & Company Securities, Inc., directly or indirectly sell, offer to sell, grant any option for the sale of, or otherwise dispose of any of the Company's Common Shares (including, without limitation, shares of Common Shares which may be deemed to be beneficially owned by such persons in accordance with the 1934 Act Regulations) or any securities convertible into Common Shares. (w) To the best of the Company's knowledge, no labor problem exists with its employees or is threatened or imminent that could materially adversely affect the Company and its Subsidiaries. (x) Neither the Company nor any of its officers, directors or affiliates (as defined in the Act and the Rules and Regulations), has taken or will take, directly or indirectly, any action designed to stabilize or manipulate, or which has constituted, or might in the future reasonably be expected to cause or result in, stabilization or manipulation of, the price of the Stock of the Company in order to facilitate the sale or resale of the Stock or otherwise. (y) The Company's system of internal accounting controls is sufficient to meet the broad objectives of internal accounting control insofar as those objectives pertain to the prevention or detection of errors or irregularities in amounts that would be material in relation to the Company's financial statements, and, to the best of the Company's knowledge, neither the Company nor any employee or agent of the Company or any of its subsidiaries has made any payment of funds of the Company or any of its subsidiaries or received or retained any funds and no funds of the Company or any of its subsidiaries have been set aside to be used for any payments in violation of any law, rule or regulation. -7- 8 (z) Neither the Company nor any of its subsidiaries is an "investment company" under the Investment Company Act of 1940, as amended. (aa) All contracts and documents which are required to be filed as exhibits to the Registration Statement have been so filed. 3. SALE, PURCHASE AND DELIVERY OF STOCK. (a) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company hereby agrees to sell to each Underwriter, and each Underwriter, severally and not jointly, agrees to purchase from the Company the respective number of shares of the Firm Stock set forth opposite the Underwriter's name in Schedule A hereto, at a price of $______ per share. (b) The Company will deliver the Firm Stock to you for the respective accounts of the several Underwriters at the office of McDonald & Company Securities, Inc., McDonald Investment Center, 800 Superior Avenue, Cleveland, Ohio 44114, at 10:00 A.M., Cleveland time, or to your designee at a specified place at the same time, against payment of the purchase price at the place of such Closing, by wire transfer in immediately available funds to the account designated by the Company in writing on the third full business day after the effective date of the Registration Statement (or, if the Firm Stock is priced after 4:30 p.m., Cleveland time on the effective date of the Registration Statement, the fourth full business day after the effective date of the Registration Statement), or at such other time not later than seven full business days after such initial public offering as you shall determine, such time and place being herein referred to as the "Closing Date." The certificates for the Firm Stock so to be delivered will be in such denominations and registered in such names as you may specify to the Company at or before 3:00 P.M., Cleveland time, on the second full business day prior to the Closing Date. Such certificates will be made available for checking and packaging at least 24 hours prior to the Closing Date. (c) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase, severally and not jointly, up to 420,000 additional shares in the aggregate of the Option Stock at the purchase price set forth in Section 3(a) hereof, for use solely in covering any over-allotments made by the Underwriters in the sale and distribution of the Firm Stock. The option granted hereunder may be exercised at any time (but not more than once) within 30 days after the date the Registration Statement becomes effective, upon written or telegraphic notice by the Representatives to the Company setting forth the aggregate number of shares of the Option Stock as to which the Underwriters are exercising the option and the time and place at which certificates will be delivered, such time (which, unless otherwise determined by you and the Company, shall not be earlier than three nor later than seven full business days after the exercise of said option) being herein called the "Second Closing Date." The number of shares of the Option Stock to be sold by the Company to each Underwriter and purchased by such Underwriter from the Company shall be the same percentage of the total number of shares of the Option Stock to be purchased by the several Underwriters on the Second Closing Date as such Underwriter purchased of the total number of shares of the Firm Stock, as adjusted by the -8- 9 Representatives to avoid fractions and to reflect any adjustment required by Section 11 hereof. The Company will deliver certificates for the shares of the Option Stock being purchased by the several Underwriters to you on the Second Closing Date at the place and time of such Closing, or to your designee at a specified place at the same time, against payment of the purchase price at the place of such Closing, by wire transfer in immediately available funds to the account designated by the Company in writing. The certificates for the Option Stock so to be delivered will be in such denominations and registered in such names as you may specify to the Company at or before 3:00 P.M., Cleveland time, on the second full business day prior to the Second Closing Date. Such certificates will be made available for checking and packaging at least 24 hours prior to the Second Closing Date. The option granted hereby may be cancelled by you as the Representatives of the several Underwriters, as to the shares of the Option Stock for which the option is unexercised, at any time prior to the expiration of the 30-day period, upon notice to the Company. 4. OFFERING BY UNDERWRITERS. Subject to the terms and conditions hereof, the several Underwriters agree that (i) they will offer the Stock to the public as set forth in the Prospectus as soon after the Registration Statement becomes effective as may be practicable, but in no event later than 5:00 p.m., Cleveland time, on the 15th business day subsequent to the date that the Registration Statement becomes effective, and (ii) they will offer and sell the Stock to the public only in those jurisdictions, and in such amounts, where due qualification and/or registration has been effected or an exemption from such qualification and/or registration is available under the applicable securities or Blue Sky laws of such jurisdiction; it being understood, however, that such agreement only covers the initial sale of the Stock by the Underwriters and not any subsequent sale of such Stock in any trading market which may develop after the public offering. 5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each of the Underwriters that: (a) The Company will make every reasonable effort to cause the Registration Statement to become effective and will advise you when it is effective under the Act. The Company will not file any amendment to the Registration Statement, or supplement to the Prospectus, of which you have not been previously advised and furnished with a copy, or to which you have reasonably objected in writing. (b) The Company will advise you promptly of any request of the Commission for amendment of the Registration Statement or Prospectus or for additional information and of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose of which it has knowledge, and the Company will make every reasonable effort to prevent the issuance of any such stop order and to obtain as soon as possible the lifting thereof, if issued. (c) The Company will comply, to the best of its ability, with the Act so as to permit the continuance of sales of and dealings in the Stock under the Act for such -9- 10 period as may be required by the Act; whenever it is necessary to amend or supplement the Prospectus to make the statements therein not misleading, furnish, without charge to you as the Representatives, either amendments to the Prospectus or supplemental information, so that the statements in the Prospectus as so amended or supplemented will not be misleading; and file a post-effective amendment to the Registration Statement whenever such an amendment may be required and furnish, without charge to you, a reasonable number of copies of any such amendment and related Prospectus. (d) Not later than the 45th day following the end of the fiscal quarter first occurring after the first anniversary of the Effective Date, the Company will make generally available to its security holders and deliver to you an earnings statement (which need not be audited) covering a period of at least 12 months beginning not earlier than the Effective Date which shall satisfy the provisions of Section 11(a) of the Act and/or Rule 158 promulgated under the Act. (e) The Company will furnish to you copies of the Registration Statement (two of which will be signed and will include all exhibits thereto), each preliminary prospectus, the Prospectus, all amendments of and supplements to such documents, and all correspondence between the Commission and the Company or its counsel or accountants relating thereto, in each case as soon as available and in such quantities as you may reasonably request. (f) For a period of three years from the date of the Prospectus, the Company will deliver to you (i) within 90 days after the end of each fiscal year, consolidated balance sheets, statements of income, statements of cash flow and statements of changes in stockholders' equity of the Company and its consolidated subsidiaries, if any, as at the end of and for such year and the last preceding year, all in reasonable detail and certified by independent accountants, (ii) within 45 days after the end of each of the first three quarterly periods in each fiscal year, unaudited consolidated balance sheets and statements of income, statements of cash flow and statements of changes in stockholders' equity of the Company and its consolidated subsidiaries, if any, as at the end of and for such period, all in reasonable detail, (iii) as soon as available, all such proxy statements, financial statements and reports as the Company shall send or make available to its stockholders or the stockholders of any subsidiary any of whose stock is owned by any person other than the Company or any subsidiary, and (iv) copies of all annual or periodic reports as the Company or any subsidiary shall file with the Commission as required by the Act, the Exchange Act and any rules or regulations thereunder, which are available for public inspection at the Commission, or any material reports filed in connection with the Company's listing on any stock exchange; PROVIDED, HOWEVER, that if the Company delivers to you all documents required by this clause (iv), the Company will be deemed to have satisfied its obligations under clauses (i) and (ii) above. (g) The Company will apply the net proceeds from the sale of the Stock sold by it in the manner set forth in the Prospectus, and will comply with any reporting obligations as may be required by Rule 463 under the Act. -10- 11 (h) If, at the time that the Registration Statement becomes effective, any information shall have been omitted therefrom in reliance upon Rule 430A promulgated under the Act, then not later than the Commission's close of business on the second business day following the execution of this Agreement, the Company will prepare, and file or transmit for filing with the Commission in accordance with Rule 430A and Rule 424(b) promulgated under the Act, copies of an amended Prospectus or, if required by such Rule 430A, a post-effective amendment (including an amended Prospectus), containing all information so omitted. (i) The Company will file with the NASD all documents and notices required of companies that have issued securities that are traded in the over-the-counter market and quotations for which are reported by the Nasdaq. (j) The Company will cooperate with you and your counsel to qualify the Stock for sale under the securities or Blue Sky laws of such jurisdictions within the United States as you reasonably designate, including furnishing such information and executing such instruments as may be required, and will continue such qualifications in effect for a period of at least three months from the date hereof; provided, however, the Company shall not be required to register or qualify as a foreign corporation or as a dealer in securities nor, except as to matters and transactions relating to the offer and sale of the Stock, consent to a service of process in any jurisdiction. (k) For a period of 180 days from the date of the Prospectus, the Company will not publicly sell, except with your prior written consent, any Common Shares or securities convertible into Common Shares for cash, except pursuant to the exercise of any outstanding stock options of the Company that are described in the Prospectus. 6. PAYMENT OF EXPENSES. The Company will pay or cause to be paid all costs and expenses incident to the performance of the obligations of the Company hereunder, including, but not limited to, the reasonable fees and disbursements of its counsel; the reasonable fees, costs and expenses of preparing, printing and delivering the certificates for the Stock; the reasonable fees, costs and expenses of the transfer agent and registrar for the Common Shares; the reasonable fees and disbursements of its accountants; the filing fees and reasonable expenses incurred in connection with the qualification, registration or exemption of the Stock under state securities or Blue Sky laws and the fees and disbursements of counsel for the Underwriters in connection with such qualification, registration or exemption and the preparation and printing of the preliminary and final Blue Sky Surveys; the filing fees paid by the Underwriters, in connection with the review of the terms of the underwriting arrangements by the NASD; the costs and expenses in connection with the preparation, printing and filing of the Registration Statement (including exhibits thereto) and the Prospectus and the furnishing to the Underwriters of such copies of each preliminary and final Prospectus as the Underwriters may reasonably require; and the costs and expenses in connection with the printing of this Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement and other documents distributed to the Underwriters. -11- 12 7. CONDITIONS OF THE OBLIGATION OF THE UNDERWRITERS. The obligations of the several Underwriters to purchase and pay for the Firm Stock on the Closing Date and the Option Stock on the Second Closing Date shall be subject to the condition that the representations and warranties made by the Company herein are true and correct as of the date hereof and as of the respective Closing Dates, to the condition that the written statements of Company officers made pursuant to the provisions hereof are true and correct, and to the performance by the Company of their obligations hereunder and to the following additional conditions: (a) The Registration Statement shall have become effective not later than 5:00 P.M., Cleveland time, on the date of this Agreement, or at such later time as shall have been consented to by you, and prior to each Closing Date no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or shall be pending, or to the knowledge of the Company or you, shall be contemplated by the Commission. (b) You shall not have advised the Company that the Registration Statement or Prospectus or any amendment thereof or supplement thereto contains an untrue statement of fact which, in the reasonable opinion of Calfee, Halter & Griswold LLP, counsel for the Underwriters, is material, or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) You shall have received as of each Closing Date (or prior thereto as indicated) the following: (i) An opinion of Jones, Day, Reavis & Pogue, dated the respective Closing Dates, to the effect that: (aa) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Ohio with corporate power and authority to own its properties and conduct its business as described in the Prospectus. (bb) The authorized capital stock of the Company is as set forth under "Capitalization" in the Prospectus; all issued and outstanding Common Shares of the Company have been duly authorized and validly issued, are free of preemptive rights of stockholders, rights of first refusal or similar rights and are fully paid and nonassessable. Except as described in the Prospectus, there are no outstanding options, warrants or other rights calling for the issuance of, and there are no commitments, plans or arrangements to issue any shares of capital stock of the Company or any security convertible or exchangeable or exercisable for capital stock of the Company. To the best of such counsel's knowledge, there are no holders of securities of the Company who, by reason of the filing of the Registration Statement have the right (and have not waived such right) to request the Company to include in the Registration Statement securities owned by them, other than such rights as have been satisfied by the inclusion of securities in the Registration Statement. -12- 13 (cc) The Common Shares of the Company to be issued and sold by the Company hereunder have been duly authorized, and, when issued, delivered and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable. No preemptive rights of security holders of the Company exist with respect to the issuance and sale of the stock by the Company pursuant to this Agreement. The Common Shares of the Company conform to the description thereof contained in the Prospectus and the certificates for the Common Shares of the Company (including the Stock) are in due and legal form under Ohio law. (dd) The Company has the corporate power and authority to enter into and perform this Agreement, and to issue and deliver the Stock as provided herein. The execution, delivery and performance of this Agreement by the Company has been duly authorized by all necessary action of the Company. (ee) The Registration Statement has become effective under the Act and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act. (ff) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms and provisions of, or constitute a default under, any material indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party and of which such counsel has knowledge after reasonable investigation, or the Articles of Incorporation or Code of Regulations of the Company, or the organizational documents of any of its subsidiaries, or, to the knowledge of such counsel, any order, rule or regulation binding upon the Company or any of its subsidiaries of any court or of any federal or state regulatory body or administrative agency or other governmental body having jurisdiction over the Company or any of its subsidiaries or the properties of any of them, except for such breaches or defaults as will not have a material adverse effect on the consummation of the transactions herein contemplated and the fulfillment of the terms hereof by the Company. (gg) All approvals, consents and orders of all governmental bodies required in connection with the valid authorization, issuance and sale of the Stock as contemplated by this Agreement have been obtained, except such as may be required under the securities or Blue Sky laws of any jurisdiction as to which such counsel need express no opinion. (hh) The Company is not required to be registered as an "investment company" or is not a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (ii) Such counsel is of the opinion that the statements contained in the Prospectus under the caption "Description of Capital Stock" and Item 15 in part II of the Registration Statement, insofar as they purport to summarize the provisions of the -13- 14 documents referred to therein, present fair summaries of such provisions. (jj) In the course of the preparation by the Company of the Registration Statement and the Prospectus, such counsel participated in discussions with officers, directors and employees of the Company, representatives of Deloitte & Touche LLP, the independent accountants who examined certain of the financial statements of the Company and its subsidiaries included in the Registration Statement and the Prospectus, counsel for the Underwriters and your representatives concerning the information contained in the Registration Statement and Prospectus and the proposed responses to various items in Form S-1 under the Act. Based upon such counsel's examination of the Registration Statement and the Prospectus, such counsel's investigations made in connection with the preparation of the Registration Statement and the Prospectus and such counsel's participation in the discussions referred to above, such counsel is of the opinion that the Registration Statement and the Prospectus (in each case, except for (i) the financial statements, financial schedules and other financial and statistical information included therein and (ii) the information referred to under the caption "Experts" as having been included therein on the authority of Deloitte & Touche LLP, as experts, as to which such counsel expresses no opinion) at the time the Registration Statement became effective under the Act, and at the time the Prospectus was filed pursuant to Rule 424(b) under the Act, respectively, complied as to form in all material respects with the Act and the rules and regulations thereunder. (kk) Such counsel does not know of any litigation or any governmental proceedings or investigations, pending or threatened, required to be described in the Prospectus that are not described as required, or of any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. (ll) Such counsel has not independently verified and is not passing upon, and does not assume any responsibility for the accuracy, completeness, or fairness of the information contained in the Registration Statement and Prospectus, except and as to the extent set forth in paragraph (ii) above with respect to the description of the Common Shares contained in the Prospectus. Based upon such counsel's examinations, investigations and participation in the discussions described above, however, no facts have come to such counsel's attention that cause such counsel to believe that the Registration Statement (except for (i) the financial statements, financial schedules and other financial and statistical information included therein and (ii) the information referred to under the caption "Experts" as having been included therein on the authority of Deloitte & Touche LLP, as experts, as to which such counsel expresses no view), at the time it became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (with the foregoing exceptions) as of its date or as of the date hereof contained or contains any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. -14- 15 In rendering such opinion, such counsel may (A) limit its opinion to the Federal laws of the United States of America and the laws of the State of Ohio; (B) rely as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent specified in such opinion, if at all, upon an opinion or opinions of other counsel, familiar with the applicable laws; and (C) rely as to matters of fact on certificates of officers of the Company and certificates or other written statements of officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company and its subsidiaries. The opinion of such counsel for the Company shall state that the opinion of any such other counsel is in form satisfactory to such counsel and, in their opinion, you and they are justified in relying thereon. (ii) An opinion of Scott J. Davido, Esq., General Counsel of the Company, dated the respective Closing Dates, to the effect that: (aa) To the best of his knowledge, the Company and its subsidiaries hold and are in compliance with all necessary material authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies (collectively, the "licenses") required for the conduct of its business as described in the Prospectus, except where the failure to so hold or comply with any license would not have, individually or in the aggregate, a material adverse effect on the business, condition (financial or other) or results of operations of the Company and its subsidiaries, taken as a whole. (bb) Each of the Company's subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of its respective jurisdiction of incorporation, with power and authority to own and lease its properties and conduct its respective business. The Company and each of its subsidiaries are duly qualified to do business as a foreign corporation and are in good standing in all jurisdictions in which their ownership or lease of property or their conduct of business, as presently being conducted requires such qualification (except for those jurisdictions in which the failure to so qualify will not in the aggregate have a material adverse effect on the Company and its subsidiaries). (cc) All the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned by the Company free and clear of all liens, encumbrances, equities, security interests, or claim; and there are no outstanding options, warrants or other rights calling for the issuance of, and, to such counsel's knowledge, there are no commitments, plans or arrangements to issue, any shares of capital stock of any subsidiary or any security convertible or exchangeable or exercisable for capital stock of any subsidiary; except as disclosed in the Registration Statement and except for the shares of stock of each subsidiary owned by the Company, neither the Company nor any subsidiary owns, directly or indirectly, any shares of capital stock of any corporation or has any equity interest in any firm, partnership, joint venture, association or other entity. -15- 16 (dd) Except as set forth in the Prospectus, such counsel does not know of any past, pending or threatened action, suit, proceeding, inquiry or investigation before any court or before or by any public, regulatory or governmental body or board against or involving the business or property of the Company or any of its subsidiaries which, if successful, could have a material adverse effect on the business, condition (financial or other) or results of operations of the Company and its subsidiaries, taken as a whole. (ee) No facts have come to the attention of such counsel which would lead such counsel to believe that either the Registration Statement at the time it became effective and at the Closing Date or the Second Closing Date, as the case may be, contained an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as of the date thereof and as of the Closing Date or the Second Closing Date, as the case may be, contained an untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief or opinion with respect to the financial statements and schedules and other financial data included therein). In rendering such opinion, such counsel may (A) limit his opinion to the Federal laws of the United States of America and the laws of the State of Ohio; (B) rely as to matters involving the application of laws other than the laws of the United States and jurisdictions in which he is admitted, to the extent specified in such opinion, if at all, upon an opinion or opinions of other counsel, familiar with the applicable laws; and (C) rely as to matters of fact on certificates of officers of the Company. The opinion of Mr. Davido shall state that the opinion of any such other counsel is in form satisfactory to him and, in his opinion, you and they are justified in relying thereon. (iii) Such opinion or opinions of Calfee, Halter & Griswold LLP, counsel for the Underwriters, dated the respective Closing Dates, with respect to the sufficiency of all corporate proceedings and other legal matters relating to this Agreement, the validity of the Stock, the Registration Statement, the Prospectus, and other related matters as you may reasonably request, and the Company shall have furnished to such counsel such documents as they may request for the purpose of enabling them to pass upon such matters. In connection with such opinions, such counsel may rely on representations or certificates of officers of the Company. (iv) A certificate of the Company executed by the principal executive officer and the principal financial and accounting officer of the Company, dated each respective Closing Date, to the effect that: (aa) The representations and warranties of the Company in Section 2 of this Agreement are true and correct as of each respective Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to each respective Closing Date. -16- 17 (bb) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the respective signers of the certificate, are contemplated under the Act. (cc) The signers of the certificate have carefully examined the Registration Statement and the Prospectus; no facts have come to their attention which would lead them to believe that either the Registration Statement at the time it became effective (or any amendment thereof or supplement thereto made prior to the Closing Date or the Second Closing Date, as the case may be, as of the date of such amendment or supplement) contained an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as of the date thereof (or any amendment thereof or supplement thereto made prior to the Closing Date or the Second Closing Date, as the case may be, as of the date of such amendment or supplement) contained an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; since the latest respective dates as of which information is given in the Registration Statement, there has been no material adverse change in the financial position, business or results of operations of the Company and its subsidiaries, except as set forth in or contemplated by the Prospectus; and since the Effective Date of the Registration Statement there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been set forth. (v) Letters from Deloitte & Touche LLP dated respectively the date of this Agreement and each respective Closing Date, addressed to you and in form and substance previously approved by you, with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (d) Prior to the Closing Date, the Company shall have furnished to you such further certificates and documents as you may reasonably request. (e) Prior to each Closing Date no stop orders suspending the qualification of the Stock under the securities or Blue Sky laws of the states in which the Stock is to be offered and sold shall have been issued and no proceedings for that purpose shall have been instituted or shall be pending, or to the knowledge of the Company or you, shall be contemplated by the applicable state securities administrators. If any condition of the Underwriters' obligations specified in Section 7 to be satisfied prior to any Closing Date is not so satisfied, this Agreement may be terminated by you prior to such Closing Date, by notice in writing or by telegram confirmed in writing to the Company. All such opinions, certificates, letters and documents furnished to you pursuant to this Section 7 will be in compliance with the provisions hereof only if they are in all material -17- 18 respects satisfactory to you and to Calfee, Halter & Griswold LLP, counsel for the Underwriters, as to which both you and such counsel shall act reasonably. The Company will furnish you with such executed and conformed copies of such opinions, certificates, letters and documents as you may request. You, on behalf of the Underwriters, may waive in writing the compliance by the Company of any one or more of the foregoing conditions or extend the time for their performance. 8. REPRESENTATIONS OF THE UNDERWRITERS. Each of the Underwriters severally represents and warrants to the Company that the information furnished to the Company in writing by such Underwriters or by you expressly for use in the preparation of the Registration Statement or the Prospectus does not, and any amendments thereof or supplements thereto thus furnished will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Through you each Underwriter has only furnished to the Company expressly for such use, the statements made in the last paragraph of the cover page of the Prospectus and the statements relating to the terms of the offering by the several Underwriters set forth in the first, second, sixth, seventh and eighth paragraphs under the caption "Underwriting" in the Prospectus. 9. TERMINATION OF AGREEMENT. (a) This Agreement shall become effective: (i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at the time this Agreement is executed and delivered, it is necessary for the registration statement or a post-effective amendment thereto to be declared effective before the offering of the Stock may commence, when notification of the effectiveness of the registration statement or such post-effective amendment has been released by the Commission. At any time before the happening of such occurrence, the Company may, by notice to you, terminate this Agreement; and at any time prior to such time, you, as the Representatives of the several Underwriters, may, by notice to the Company, terminate this Agreement. (b) This Agreement may also be terminated by you, as the Representatives of the several Underwriters, by notice to the Company on or after the Effective Date of the Registration Statement and prior to each respective Closing Date, if at any time during such period any of the following has occurred: (i) except as disclosed in or contemplated by the Registration Statement, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company and its subsidiaries taken as a whole or the earnings, business affairs, management or business prospects of the Company and its subsidiaries taken as a whole, whether or not arising in the ordinary course of business; (ii) any outbreak of hostilities or escalation in existing hostilities anywhere in the world or other national or international calamity or crisis or change in economic or political conditions, if the effect of such outbreak, escalation, calamity, crisis or change on the financial markets in the United States would, in your reasonable judgment, make it impracticable to offer for sale or to enforce contracts made by the Underwriters for the resale of the Stock agreed to be purchased hereunder; (iii) any general suspension of trading in securities on the New York Stock -18- 19 Exchange or the American Stock Exchange or the Nasdaq or any general limitation on prices for such trading or any general restrictions on the distribution of securities, all to such a degree as would in your reasonable judgment materially adversely affect the market for the Stock; or (iv) a banking moratorium shall have been declared by either Federal, Ohio or New York State authorities. This Agreement may also be terminated as provided in Sections 7 and 11 hereof. If this Agreement shall be terminated by you other than pursuant to Section 9(b)(ii), (iii) or (iv) because of any failure on the part of the Company to comply with any of the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company shall pay, in addition to the costs and expenses referred to in Section 6, all reasonable out-of-pocket expenses incurred by the Underwriters in contemplation of the performance by them of their obligations hereunder, including but not limited to the reasonable fees and disbursements of counsel for the Underwriters, the Underwriters' reasonable printing and traveling expenses and postage, telegraph and telephone charges relating directly to the offering contemplated by the Prospectus, and also including reasonable advertising expenses of the Representatives incurred after the Effective Date of the Registration Statement and so relating, it being understood that such out-of-pocket expenses shall not include any compensation, salaries or wages of the officers, partners or employees of any of the Underwriters. Only such out-of-pocket expenses as shall be accounted for by the Underwriters shall be paid to the Underwriters by the Company. The Company shall not in any event be liable to the several Underwriters for damages on account of loss of anticipated profits arising out of the transactions contemplated by this Agreement. 10. INDEMNIFICATION. (a) The Company will indemnify and hold harmless each Underwriter, and each person, if any, who controls each Underwriter within the meaning of the Act, against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based in whole or in part on, or arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any related preliminary prospectus (if used prior to the Effective Date), the Prospectus or any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and, subject to the provisions of Section 10(c), will reimburse upon demand each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 10(a) with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter or to the benefit of any person controlling such Underwriter in respect of any loss, claim, damage, liability or action asserted by a person who purchases shares of the Stock from such Underwriter, if such Underwriter failed to -19- 20 send or give a copy of the Prospectus (as the same may then be amended or supplemented) to such person with or prior to written confirmation of the sale to such person; and provided, further, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission or alleged omission made in the Registration Statement, any preliminary prospectus, the Prospectus or any amendment thereof or supplement thereto in reliance upon or in conformity with written information furnished to the Company by an Underwriter specifically for use in the preparation thereof, as referred to in the last sentence of Section 8 hereof. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of the Act, each of its directors, and each of its officers who have signed the Registration Statement against any losses, claims, damages or liabilities to which the Company, or any such director or officer may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus, the Prospectus, or any amendment thereof or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any preliminary prospectus, the Prospectus or any amendment thereof or supplement thereto in reliance upon or in conformity with written information furnished to the Company by such Underwriter through you, as the Representatives of the Underwriters, specifically for use in the preparation thereof, as referred to in the last sentence of Section 8 of this Agreement; and will reimburse the Company and each such director or officer for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which the Underwriters may otherwise have. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section, notify each party against whom indemnification is to be sought in writing of the commencement thereof; but the omission so to notify an indemnifying party will not relieve it from any liability which they may have to any indemnified party otherwise than under this Section. In case any such action is brought against any indemnified party, and it notifies the Company of the commencement thereof, the Company will be entitled to participate in, and to the extent that it may wish, to assume the defense thereof, with counsel approved by such indemnified party (which approval shall not be unreasonably withheld), and after notice from the Company to such indemnified party of its election so to assume the defense thereof, the Company will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof except as provided below and except for the reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but -20- 21 the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of counsel by such indemnified party has been authorized in writing by the indemnifying parties, (ii) the named parties to any such action include both the indemnifying party and the indemnified party, and the indemnified party shall have reasonably concluded based on the written advise of counsel that there is an actual or potential conflict of interest between the indemnifying parties and the indemnified party in the conduct of the defense of such action (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the defense of such action within a reasonable time after notice of the commencement thereof, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying parties. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one or separate but similar or related actions in the same jurisdiction arising out of the same allegations or circumstances. Anything in this Section to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent. (d) In order to provide for contribution in circumstances in which the indemnification provided for in this Section is for any reason held to be unavailable from the Company or the Underwriters or is insufficient to hold harmless a party indemnified hereunder, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provisions (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company, any contribution received by the Company from persons, other than the Underwriters, who may also be liable for contribution, including persons who control the Company within the meaning of the Act, officers of the Company who signed the Registration Statement and directors of the Company) to which the Company and one or more of the Underwriters may be subject, in such proportions as is appropriate to reflect the relative benefits received by the Company and the Underwriters from the offering of the Stock or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in this Section, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Underwriters shall be deemed to be in the same proportion as (x) the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and (y) the underwriting discounts and commissions received by the Underwriters, respectively, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company and of the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omissions or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or -21- 22 omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 10(d) were determined by pro rata allocation even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 10(d), (i) in no case shall any Underwriter (except as may be provided in the Agreement Among Underwriters) be liable or responsible for any amount in excess of the underwriting discounts and commissions applicable to the Stock purchased by such Underwriter hereunder and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person, if any, who was not guilty of such fraudulent misrepresentation. For purposes of this Section 10(d), each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of Section 15 of the Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) of this Section 10(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 10(d), notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 10(d) or otherwise. No party shall be liable for contribution for any settlement of any action or claim effected without its written consent. 11. DEFAULT OF THE UNDERWRITERS. If any Underwriter or Underwriters default in their obligations to purchase the Stock hereunder and arrangements satisfactory to you and the Company, evidenced by a writing or writings signed by you and the Company, for the purchase of such Stock by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the party of any non-defaulting Underwriter and the Company (except that the Company shall be liable for the expenses to be paid by it pursuant to the provisions of Section 6), provided, however, that if the number of shares of the Stock which all such defaulting Underwriters have agreed but failed to purchase shall not exceed 10% of the number of shares of the Firm Stock or the Option Stock, as the case may be, agreed to be purchased pursuant to this Agreement (other than the shares agreed to be taken up hereunder which the defaulting Underwriters failed to purchase) by all non-defaulting Underwriters, the non-defaulting Underwriters shall be obligated proportionately to take up and pay for the shares of the Firm Stock or the Option Stock which such defaulting Underwriters failed to purchase. If any such default occurs, either you or the Company shall have the right to postpone the Closing Date for not more than seven business days in order that the necessary changes in the Registration Statement, Prospectus and any other documents, as well as any other arrangement, may be effected. As used in this Agreement, the term "Underwriters" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from its liability to the other several Underwriters and the Company for its default hereunder. -22- 23 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective indemnities, agreements, representations and warranties of the Company and the several Underwriters, set forth in or made pursuant to this Agreement, will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter, the Company or any of its officers or directors or any controlling person, and will survive delivery of and payment for the Stock and, in the case of the agreements contained in Sections 6, 9 and 10 hereof, will survive any termination of this Agreement. 13. NOTICES. All communications hereunder will be in writing and, if sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed to you at McDonald & Company Securities, Inc., McDonald Investment Center, 800 Superior Avenue, Cleveland, Ohio 44114, Attention: Daniel F. Austin, with a copy to Calfee, Halter & Griswold LLP, 1400 McDonald Investment Center, 800 Superior Avenue, Cleveland, Ohio 44114, Attention: Thomas F. McKee, Esq., or if sent to the Company, will be mailed, delivered or telegraphed and confirmed to the Company at 3155 El-Bee Road, Dayton, Ohio 45439, Attention: Scott J. Davido, Senior Vice President, General Counsel and Secretary, with a copy to Jones, Day, Reavis & Pogue, 901 Lakeside Avenue, Cleveland, Ohio 44114, Attention: Christopher M. Kelly. 14. SUCCESSORS, GOVERNING LAW. This Agreement will inure solely to the benefit of and be binding upon the parties hereto and the officers and directors and controlling persons referred to in Section 10 hereof and their respective successors, assigns, heirs, executors and administrators, and no other persons will have any right or obligation hereunder. This Agreement will be governed by and construed in accordance with the laws of the State of Ohio, without giving effect to the principles of conflicts of laws thereof. 15. EXECUTION IN COUNTERPARTS. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 16. AUTHORITY OF THE REPRESENTATIVES. You represent and warrant that you have been authorized by the several Underwriters to enter into this Agreement on their behalf and to act for them in the manner hereinbefore provided. -23- 24 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed copies hereof, whereupon it will become a binding agreement by and among the Company and the several Underwriters in accordance with its terms. Very truly yours, THE ELDER-BEERMAN STORES CORP. By: -------------------------------- Its: ------------------------------- The foregoing Agreement is hereby confirmed and accepted by us in Cleveland, Ohio, acting on our own behalf and as the Representatives of the several Underwriters named on Schedule A annexed hereto, as of the date first above written. McDONALD & COMPANY SECURITIES, INC. WARBURG DILLON READ LLC JOHNSON RICE & COMPANY L.L.C. As Representatives of the Several Underwriters BY: McDONALD & COMPANY SECURITIES, INC. By: ------------------------------------ Managing Director -24- 25 SCHEDULE A UNDERWRITERS Number of Shares to Underwriter be Purchased ----------- ------------ McDonald & Company Securities, Inc....................... Warburg Dillon Read LLC ................................. Johnson Rice & Company L.L.C............................. Total ................................. A-1 EX-2.B 3 EXHIBIT 2(B) 1 Exhibit 2(b) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER By and Among The Elder-Beerman Stores Corp., The Elder-Beerman Acquisition Corp., Stone & Thomas and Wilbur S. Jones, Jr. and G. Ogden Nutting, as Representatives --------------------- Dated: June 18, 1998 -------------------- - ------------------------------------------------------------------------------- 2
TABLE OF CONTENTS Page ARTICLE I. MERGER................................................................................................1 1.1 Merger..........................................................................................1 1.2 Closing.........................................................................................1 1.3 Certificate of Merger/Articles of Merger........................................................2 1.4 Effects of the Merger...........................................................................2 1.5 Articles of Incorporation.......................................................................2 1.6 Bylaws..........................................................................................2 1.7 Officers........................................................................................2 1.8 Directors.......................................................................................2 1.9 Effect on Capital Stock.........................................................................2 (a) Common Stock of Merger Sub.............................................................2 (b) Cancellation of Treasury Shares and Parent-Owned Shares................................3 (c) Conversion of S&T Common Shares........................................................3 (d) Redemption of S&T Preferred Shares.....................................................3 (e) Dissenting Shares......................................................................3 1.10 Exchange of Certificates........................................................................3 (a) Exchange Agent.........................................................................3 (b) Letters of Transmittal; Surrender of Certificates......................................4 (c) Cancellation and Retirement of Shares; No Further Rights...............................4 (d) Investment of Exchange Fund............................................................4 (e) Termination of Exchange Fund...........................................................5 (f) No Liability...........................................................................5 (g) Withholding Rights.....................................................................5 1.11 Escrow..........................................................................................5 1.12 Reservation of Right to Revise Transaction......................................................6 ARTICLE II. REPRESENTATIONS AND WARRANTIES.......................................................................7 2.1 Representations and Warranties of S&T...........................................................7 (a) Organization, Standing and Corporate Power.............................................7 (b) Authority..............................................................................7 (c) Conflicts; Defaults....................................................................7 (d) Consents and Approvals.................................................................8 (e) Capital Structure......................................................................8 (f) Title and Related Matters..............................................................8 (g) Real Property..........................................................................9 (h) Contracts..............................................................................9 (i) Financial Statements..................................................................10 (j) Liabilities...........................................................................11 (k) Trade Creditor Accounts...............................................................11 (l) Litigation............................................................................11 (m) Compliance with Laws..................................................................11 (n) Brokers, Finders and Agents...........................................................12 (o) Employees and Employee Plans..........................................................12 (p) Environmental and Safety Compliance...................................................13
3 (q) Changes in Circumstances..............................................................13 (r) Taxes.................................................................................14 (s) Insurance.............................................................................14 (t) Approvals.............................................................................15 (u) Copies of Documents...................................................................15 (v) Insider Interests.....................................................................15 (w) Disclosure............................................................................15 (x) Merger Approval.......................................................................15 2.2 Representations and Warranties of Parent.......................................................15 (a) Organization and Standing; Corporate Power and Authority..............................16 (b) Authority.............................................................................16 (c) Conflicts; Defaults...................................................................16 (d) Consents and Approvals................................................................16 (e) Disclosure............................................................................16 2.3 General........................................................................................16 ARTICLE III. CONDITIONS TO CLOSING..............................................................................17 3.1 Conditions to Parent's and Merger Sub's Obligations............................................17 (a) Representations and Warranties........................................................17 (b) Covenants.............................................................................17 (c) Material Adverse Change...............................................................17 (d) Consents..............................................................................17 (e) HSR Consent...........................................................................17 (f) No Proceeding or Litigation...........................................................17 (g) Certificate of S&T....................................................................17 (h) Investigations........................................................................17 (i) Certificate; Documents................................................................18 (j) Approval of S&T's Stockholders; Dissenters' Rights....................................18 (k) Delivery of Employee Plan Documents...................................................18 (l) Delivery of Real Property Instruments and Agreements..................................18 3.2 Conditions to S&T's Obligations................................................................18 (a) HSR Consent...........................................................................18 (b) Representations and Warranties........................................................18 (c) Covenants.............................................................................18 (d) No Proceeding or Litigation...........................................................18 (e) Certificates; Documents...............................................................18 (f) Approval of Merger Sub's Stockholder..................................................19 (g) Certificate of Parent.................................................................19 ARTICLE IV. CLOSING.............................................................................................19 4.1 Documents to be Delivered by S&T...............................................................19 4.2 Documents to be Delivered by Parent and Merger Sub.............................................20 4.3 Other Documents to be Delivered at Closing.....................................................21
ii 4 ARTICLE V. COVENANTS OF S&T.....................................................................................21 5.1 Conduct of Business............................................................................21 (a) Obligations for Borrowed Money........................................................21 (b) Employee Matters......................................................................21 (c) Sale of Assets........................................................................22 (d) Commitments...........................................................................22 (e) Leased Facilities.....................................................................22 (f) Encumbrances..........................................................................22 (g) Litigation............................................................................22 (h) Representations and Warranties........................................................22 (i) Amendments............................................................................22 (j) Capital Structure.....................................................................22 (k) Reorganization........................................................................22 (l) Accounting............................................................................23 (m) Commitments...........................................................................23 5.2 Supplemental Disclosure........................................................................23 5.3 Closing........................................................................................23 5.4 Maintenance of Insurance.......................................................................23 5.5 Inventories....................................................................................23 5.6 No Shopping....................................................................................23 5.7 Further Assurances.............................................................................24 ARTICLE VI. COVENANTS OF PARENT.................................................................................24 6.1 Maintenance of, and Access to, Records.........................................................24 6.2 Closing........................................................................................24 ARTICLE VII. CERTAIN ADDITIONAL COVENANTS.......................................................................24 7.1 Expenses; Transfer Taxes.......................................................................24 7.2 Press Releases and Disclosure..................................................................25 7.3 Regulatory Approvals...........................................................................25 7.4 Environmental Inspection and Assessment; Compliance Actions....................................25 (a) Inspection............................................................................25 (b) Environmental Report..................................................................26 (c) Merger Consideration Adjustment.......................................................27 7.5 Certain Information to be Provided.............................................................27 7.6 Stockholders Meeting/Unanimous Written Consent.................................................27 7.7 Access to Information; Confidentiality.........................................................28 ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER.................................................................28 8.1 Termination....................................................................................28 8.2 Effect of Termination..........................................................................29 8.3 Amendment......................................................................................29 8.4 Extension; Waiver..............................................................................30 8.5 Procedure for Termination, Amendment, Extension or Waiver......................................30
iii 5 ARTICLE IX. MISCELLANEOUS.......................................................................................30 9.1 Amendments.....................................................................................30 9.2 Entire Agreement...............................................................................30 9.3 Governing Law..................................................................................30 9.4 Notices........................................................................................30 9.5 Counterparts...................................................................................31 9.6 Assignment.....................................................................................32 9.7 Waivers........................................................................................32 9.8 Third Parties..................................................................................32 9.9 Schedules, Addenda and Exhibits................................................................32 9.10 Headings.......................................................................................32 9.11 Certain Definitions............................................................................32 9.12 Remedies Not Exclusive.........................................................................33 9.13 Gender and Number..............................................................................33
iv 6 List of Exhibits Exhibit A Form of Escrow Agreement v 7 List of Schedules Schedule 2.1(a)(i) Subsidiaries Schedule 2.1(a)(ii) Articles and Bylaws of S&T and Subsidiaries Schedule 2.1(e) Warrants, Options Schedule 2.1(f) Liens Schedule 2.1(g) Real Estate and Leases Schedule 2.1(h) Contracts Schedule 2.1(i) Financial Statements Schedule 2.1(j) Liabilities Schedule 2.1(l) Litigation Schedule 2.1(m) Compliance with Laws Schedule 2.1(n) Brokers, Finders and Agents Schedule 2.1(o) Employee Plans Schedule 2.1(p) Environmental Matters Schedule 2.1(q) Changes in Circumstances Schedule 2.1(r)(i) Tax Liabilities Schedule 2.1(r)(ii) Tax Returns Schedule 2.1(s) Insurance Schedule 2.1(t) Approvals Schedule 2.1(v) Insider Interests Schedule 3.1(c) Material Adverse Changes Schedule 5.1(a) Obligations for Borrowed Money Schedule 9.11(a) Directors, Officers, Merchandise Managers, Buyers and Store Managers vi 8 AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN OF MERGER, dated as of June 18, 1998 (the "Agreement"), is by and among Stone & Thomas, a West Virginia corporation ("S&T"), The Elder-Beerman Stores Corp., an Ohio corporation ("Parent"), The Elder-Beerman Acquisition Corp., a West Virginia corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and G. Ogden Nutting and Wilbur S. Jones, Jr., as Representatives (as hereinafter defined). W I T N E S S E T H: - - - - - - - - - - WHEREAS, S&T presently conducts the business (the "Business") of selling consumer and household goods at retail in 21 department stores located in West Virginia, Virginia, Kentucky and Ohio; and WHEREAS, the respective Boards of Directors of Parent, Merger Sub and S&T have each determined that the merger of Merger Sub with and into S&T (the "Merger") and the other transactions contemplated hereby are consistent with, and in furtherance of, their respective business strategies and goals and are in the best interests of their respective stockholders; and WHEREAS, the respective Boards of Directors of Parent, Merger Sub and S&T have each approved the Merger, upon the terms and subject to the conditions set forth in this Agreement; and WHEREAS, Parent and S&T desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger; NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Parent, Merger Sub and S&T, upon the terms and subject to the conditions contained herein, hereby agree as follows: ARTICLE I. MERGER ----------------- 1.1 MERGER. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the West Virginia Corporation Act (the "WVCA"), the Merger shall be effected and Merger Sub shall be merged with and into S&T at the Effective Time (as defined in Section 1.3 below). At the Effective Time, the separate corporate existence of Merger Sub shall cease and S&T shall be the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the WVCA. 1.2 CLOSING. Unless this Agreement is terminated pursuant to Article VIII, and subject to the satisfaction or waiver of all of the conditions in Article III, the closing of the Merger (the "Closing") will take place at 10:00 a.m., Eastern time, on the second business day (the "Closing Date") following satisfaction or waiver of the conditions set forth in Article III, unless another time or date is agreed to by the parties hereto. The Closing will be held at the offices of Jones, Day, 1 9 Reavis & Pogue, 1900 Huntington Center, 41 South High Street, Columbus, Ohio or at such other location as may be designated by Parent. 1.3 CERTIFICATE OF MERGER/ARTICLES OF MERGER. On the Closing Date, S&T and Merger Sub shall cause articles of merger meeting the requirements of Section 31-1-34 of the WVCA (the "Articles of Merger") to be properly executed and filed in accordance with the WVCA. The Merger shall be effective, for corporate law purposes, at the time and on the date of the filing of the Articles of Merger in accordance with the WVCA (the "Effective Time"). 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in the applicable provisions of the WVCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all property of S&T and Merger Sub shall vest in the Surviving Corporation, and all liabilities of S&T and Merger Sub shall become the liabilities of the Surviving Corporation. 1.5 ARTICLES OF INCORPORATION. The articles of incorporation of S&T in effect immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Corporation (the "Articles") until thereafter changed or amended in accordance with the provisions thereof and applicable law; PROVIDED, HOWEVER, that Article First of the Articles of S&T shall be amended to read as follows: The name of the corporation is Elder-Beerman West Virginia, Inc. 1.6 BYLAWS. The bylaws of S&T in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation (the "Bylaws") until thereafter changed or amended in accordance with the provisions thereof and of the Articles and applicable law. 1.7 OFFICERS. The officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation and shall hold office until their successors are duly elected or appointed and qualified in the manner provided in the Articles or the Bylaws or as otherwise provided by law, or until their earlier death, resignation or removal. 1.8 DIRECTORS. The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation and shall serve until their successors are duly elected or appointed and qualified in the manner provided in the Articles or the Bylaws or as otherwise provided by law, or until their earlier death, resignation or removal. 1.9 EFFECT ON CAPITAL STOCK. The manner of converting the shares of capital stock of S&T and Merger Sub upon the Merger shall, by virtue of the Merger and without any action on part of the holder thereof, be as follows: (a) COMMON STOCK OF MERGER SUB. Each share of common stock, without par value, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. 2 10 (b) CANCELLATION OF TREASURY SHARES AND PARENT-OWNED SHARES. Each share of common stock, without par value, of S&T ("S&T Common Shares") and each share of preferred stock, par value $100 per share, of S&T ("S&T Preferred Shares" and, together with the S&T Common Shares, the "Shares") issued and outstanding immediately prior to the Effective Time that is owned by S&T or any Subsidiary (as defined in Section 9.11) of S&T or by Parent, Merger Sub or any other Subsidiary of Parent (other then shares in trust accounts, managed accounts, custodial accounts and the like that are beneficially owned by third parties) shall be canceled and retired automatically and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor. (c) CONVERSION OF S&T COMMON SHARES. Each S&T Common Share issued and outstanding immediately prior to the Effective Time (other than S&T Common Shares to be canceled and retired in accordance with Section 1.9(b)) shall be converted (subject to the adjustments to the aggregate Merger Consideration (as defined in this Section 1.9(c)) contained in Sections 1.9(d), 1.11, 2.1(n), 7.1 and 7.4 hereof) into the right to receive, on the terms and subject to the conditions set forth in Section 1.10, the sum of (i) $595.49, and (ii) (x) the aggregate amount of any funds disbursed upon the termination of the Escrow Agreement (as defined in Section 1.11), subject in all respects to the provisions of the Escrow Agreement (the "Merger Consideration"), divided by (y) 30,227.25. (d) REDEMPTION OF S&T PREFERRED SHARES. Each S&T Preferred Share issued and outstanding immediately prior to the Effective Time (other than S&T Preferred Shares to be canceled and retired in accordance with Section 1.9(b)) shall be redeemed by S&T, effective immediately prior to the Effective Time, for an amount (the "Redemption Amount") equal to such S&T Preferred Share's par value (i.e, One Hundred Dollars ($100) per S&T Preferred Share). The Merger Consideration shall be reduced by the Redemption Amount. (e) DISSENTING SHARES. All of the Shares outstanding immediately prior to the Effective Time that are held by stockholders of S&T who shall have properly asserted dissenters' rights with respect thereto under Section 31-1-123 of the WVCA (collectively, the "Dissenting Shares") shall not be converted into the right to receive such shares' pro rata portion of the Merger Consideration or the Redemption Amount, as applicable, pursuant to the Merger, but shall be entitled to receive payment of the fair value of such shares in accordance with the provisions of such Section 31-1-123 of the WVCA; PROVIDED, HOWEVER, that any Dissenting Shares so held by stockholders of S&T who shall thereafter withdraw their demand for payment for such shares or lose their right to such payment as provided in such Section 31-1-123 of the WVCA shall be deemed converted, as of the Effective Time, into the right to receive such shares' pro rata portion of the Merger Consideration or the Redemption Amount, as applicable, that such holder would have been entitled to receive as a result of the Merger. If any holder of Dissenting Shares shall become entitled to receive payment for such shares pursuant to Section 31-1-123 of the WVCA, such payment shall be made by the Surviving Corporation. 1.10 EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Prior to or concurrently with the Effective Time, Parent shall enter into an agreement with such bank or trust company as may be designated by Parent 3 11 (the "Exchange Agent"), which agreement shall provide that Parent deposit with the Exchange Agent, as of the Effective Time and for the benefit of the holders of Shares, for exchange in accordance with this Section 1.10, through the Exchange Agent, the Merger Consideration (other than the Escrow Funds (as defined in Section 1.11(a))) (sometimes hereinafter referred to as the "Exchange Fund"). (b) LETTERS OF TRANSMITTAL; SURRENDER OF CERTIFICATES. As soon as reasonably practicable after the Effective Time, Parent shall instruct the Exchange Agent to mail to each holder of record (other than holders of Shares to be canceled in accordance with Section 1.9(b)) of a certificate or certificates that, immediately prior to the Effective Time, evidence outstanding Shares (the "Certificates"): (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent, and shall be in such form and have such other provisions as Parent may reasonably specify); and (ii) instructions for effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent together with such letter of transmittal, duly executed, and such other customary documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor a pro rata share of the Exchange Fund and any funds disbursed to S&T upon the termination of the Escrow Agreement, subject in all respect to the provisions of the Escrow Agreement, and the Certificate so surrendered shall forthwith be canceled. If payment is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall (i) pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the surrendered Certificate or (ii) establish to the satisfaction of Parent and the Surviving Corporation that such taxes have been paid or are not applicable. (c) CANCELLATION AND RETIREMENT OF SHARES; NO FURTHER RIGHTS. As of the Effective Time, all Shares issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a Certificate theretofore representing any such Shares shall cease to have any rights with respect thereto (including without limitation the right to vote), other than the right to receive (other than with respect to Shares canceled in accordance with Section 1.9(b)) on the terms and subject to the conditions set forth in this Section 1.10, its portion of the Merger Consideration following surrender of such Certificate in accordance with Section 1.10(b), and until so surrendered, each such Certificate shall represent for all purposes only such right. No interest shall be paid or accrued on any cash payable upon the surrender of any Certificate. The Merger Consideration paid following the surrender for exchange of Certificates in accordance with the terms of this Section 1.10 shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares theretofore represented by such Certificates. (d) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any cash included in the Exchange Fund, as directed by Parent, in (i) direct obligations of the United States of America, (ii) obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iii) commercial paper rated the highest quality by either Moody's Investors Services, Inc. or Standard & Poor's Corporation or (iv) certificates of deposit, bank repurchase agreements or bankers' acceptances of commercial banks 4 12 with capital exceeding $500 million. Any net earnings from the investment of the Exchange Fund shall be the property of, and paid over to, pursuant to provisions of Section 1.9(c) and the Escrow Agreement, the holders of Certificates in their respective pro rata proportions. (e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that remains undistributed to the holders of Certificates for 180 days after the Effective Time shall be delivered to Parent, upon demand, and any holders of Certificates that have not theretofore complied with this Section 1.10 shall thereafter look only to Parent, and only as general unsecured creditors thereof, for payment of their claim for their pro rata share of the Merger Consideration and any net earnings from the investment of the Exchange Fund. (f) NO LIABILITY. None of Parent, Merger Sub, the Surviving Corporation or the Exchange Agent shall be liable to any person in respect of any payments or distributions payable from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which any cash or property payable in respect of such Certificate under this Section 1.10 would otherwise escheat to or become the property of any domestic or foreign governmental agency or regulatory authority ("Governmental Entity")), any cash or property payable in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. (g) WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold, or cause to be deducted or withheld, from the consideration otherwise payable pursuant to this Agreement to any holder of Shares or Certificates such amounts as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of applicable state, local or foreign tax law. To the extent that amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to such holders in respect of which such deduction and withholding was made. 1.11 ESCROW. (a) Prior to or concurrently with the Effective Time: (i) Parent and S&T shall enter into an escrow agreement, in the form attached hereto as EXHIBIT A (the "Escrow Agreement"), with such escrow agent as may be designated by Parent (the "Escrow Agent") and G. Ogden Nutting and Wilbur S. Jones, Jr., as representatives of the holders of Shares (the "Representatives"); and (ii) subject to Section 7.4(c)(iv), Parent shall deposit with the Escrow Agent, pursuant to the Escrow Agreement, Three Million Dollars ($3,000,000) in immediately available funds (the "Escrow Funds"). Upon being deposited with the Escrow Agent pursuant to the Escrow Agreement, the Escrow Funds and any and all earnings thereon and proceeds thereof held by the Escrow Agent (collectively, the "Escrowed Property") shall be subject in all respects to the provisions of the Escrow Agreement and shall be held and disbursed by the Escrow Agent in accordance with the provisions of the Escrow Agreement. In accordance with the provisions of the Escrow Agreement, the Escrowed Property shall be held in escrow by the Escrow Agent for a period of eighteen (18) months after which time any remaining Escrowed Property will be disbursed, on a pro 5 13 rata basis, to the Certificate holders; PROVIDED, HOWEVER, that such portion of the Escrowed Property sufficient to completely discharge the amount of any claim for indemnification made by written demand before the expiration of such 18-month period (as provided in Section 1.11(b) and the Escrow Agreement) shall be held in escrow by the Escrow Agent beyond the 18-month period until such claim has been fully resolved. On the Closing Date, to provide a fund to reimburse all out-of-pocket expenses incurred by the Representatives in connection with their service as Representatives, Parent shall pay to the Representatives the sum of One Hundred Thousand Dollars ($100,000), which amount shall be deducted from the aggregate Merger Consideration otherwise to be deposited into the Exchange Fund and any unused portions of such amount shall by distributed by the Representatives to the holders of Shares in proportion to their Proportionate Share (as defined in the Escrow Agreement) at the termination of the Escrow Agreement. (b) Parent (on behalf of itself or any of its affiliates or any of their respective directors, officers, representatives, employees or agents) will be entitled to recover from time to time in accordance with the provisions of the Escrow Agreement, from the Escrowed Property, such portions of the Escrowed Property as may be necessary to fully indemnify the Parent and its affiliates and their respective directors, officers, representatives, employees and agents and hold each of them harmless from and against any and all claims, actions, suits, demands, assessments, judgments, losses, liabilities, damages, costs and expenses (including interest, penalties, reasonable attorneys' fees, reasonable accounting fees and reasonable investigation costs) (collectively, "Losses") resulting or arising from, relating to or incurred by Parent or any of its affiliates or any of their respective directors, officers, representatives, employees or agents in connection with the Merger, this Agreement or any document related hereto (including without limitation, any breach of any representation, warranty, covenant, obligation or agreement of S&T contained in this Agreement or any document related hereto) and by whomever asserted (including without limitation, S&T, the Representatives and any former, current or future stockholder of S&T). In accordance with the provisions of the Escrow Agreement, any dispute with respect to a claim for indemnification by the Parent that is not resolved by Parent and S&T within the time periods prescribed in the Escrow Agreement shall be submitted to arbitration for resolution. (c) Subject to the additional limitations set forth in Section 7.4, S&T shall not be required to indemnify the Parent under Section 1.11(b) and the provisions of the Escrow Agreement for any Losses unless and until the amount of such Losses equals $25,000 in the aggregate (the "Threshold Amount") in which event S&T shall be obligated to indemnify Parent, and Parent may assert its right to indemnification to the full extent of all Losses, including Losses that are less than the Threshold Amount. 1.12 RESERVATION OF RIGHT TO REVISE TRANSACTION. If each of Parent, Merger Sub and S&T agree, the parties hereto, prior to the receipt of the approval by Parent's and S&T's stockholders of the Merger, may change the method of effecting the business combination between S&T and Parent, and each party shall cooperate in such efforts; PROVIDED, HOWEVER, that no such change shall (i) alter or change the amount or kind of consideration to be issued to holders of the Shares as provided for in this Agreement or (ii) materially delay the consummation of the transactions contemplated by this Agreement. 6 14 ARTICLE II. REPRESENTATIONS AND WARRANTIES ------------------------------------------ 2.1 REPRESENTATIONS AND WARRANTIES OF S&T. S&T hereby represents and warrants to Parent and Merger Sub that: (a) ORGANIZATION, STANDING AND CORPORATE POWER. S&T and each subsidiary of S&T is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has full corporate power and authority to operate the Business, to own or lease the assets, properties, rights and interests used in the operation of the Business (the "Acquired Assets") and to carry on the Business as now being conducted. Except as disclosed on Schedule 2.1(a)(i), entitled "Subsidiaries," S&T owns no interest, direct or indirect, in any other business enterprise, firm or corporation, and is the only business enterprise, firm or corporation through which the Business (or any business competing with or similar to the Business) is conducted, or which owns, leases or uses assets related to the Business. S&T and each subsidiary of S&T is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or leasing of its properties and assets or the operation of the Business requires such qualification or licensing. The copies of the articles of incorporation and bylaws or comparable governing documents of S&T and each of S&T's Subsidiaries, included in Schedule 2.1(a)(ii), entitled "Articles and Bylaws of S&T and Subsidiaries," attached to this Agreement are true, correct and complete. (b) AUTHORITY. S&T has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and all other agreements and instruments executed and delivered or to be executed and delivered by S&T in connection herewith (the "Transaction Documents") and the consummation by S&T of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of S&T, subject, in the case of the Merger, to the adoption of this Agreement by S&T's stockholders. This Agreement has been duly executed and delivered by S&T and, assuming that this Agreement constitutes a valid and binding obligation of Parent and Merger Sub, constitutes a valid and binding obligation of S&T, enforceable against S&T in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (c) CONFLICTS; DEFAULTS. (i) Subject to S&T obtaining the Consents (as defined in Section 2.1(t)), neither the execution and delivery of this Agreement and the Transaction Documents by S&T, nor the performance by S&T of the transactions contemplated hereby or thereby, will violate, conflict with or constitute a default under any of the terms of the articles of incorporation or bylaws or comparable governing documents of S&T and S&T's Subsidiaries, or any provisions of, or result in the acceleration of any obligation under, any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including, without limitation, the Contracts (as defined in Section 2.1(h)), or any order, judgment or decree, relating to the Business or the Acquired Assets, or by which S&T or a Subsidiary of S&T or the Acquired Assets are bound. 7 15 (ii) Neither the execution and delivery of this Agreement and the Transaction Documents by S&T nor the performance by S&T of the transactions contemplated hereby or thereby will: (A) result in the creation or imposition of any Liens or Claims (as hereinafter defined) in favor of any third Person or entity upon any of the Acquired Assets; (B) violate any law, statute, judgment, decree, order, rule or regulation of any Governmental Authority; (C) constitute an event that, after notice or lapse or time or both, would result in such violation, conflict, default, acceleration, or creation or imposition of Liens or Claims; (D) constitute an event that, after notice of lapse of time or otherwise would create, or cause to be exercisable or enforceable, any option, agreement or right of any kind to purchase any of the Acquired Assets. Neither S&T nor any of S&T's Subsidiaries is in violation of or in default under its respective articles of incorporation, bylaws or comparable charter documents, or any provision of any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including without limitation the Contracts, or any order, judgment or decree, relating to the Business or the Acquired Assets, or by which S&T, S&T's Subsidiaries or the Acquired Assets are bound, or in the payment of any of S&T's or S&T's Subsidiaries' monetary obligations or debts relating to the Business, and there exists no condition or event which, after notice or lapse of time or both, would result in any such violation or default. (d) CONSENTS AND APPROVALS. No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity that has not been received or made is required by or with respect to S&T or any of its Subsidiaries in connection with the execution and delivery of this Agreement by S&T or the consummation by S&T of the transactions contemplated hereby, except for: (i) the filing of premerger notification and report forms under the Hart- Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (ii) the filing of the Articles of Merger with the West Virginia Secretary of State and appropriate documents with the relevant authorities of other states in which S&T is qualified to do business; and (iii) such other consents, approvals, authorizations, filings or notices as are specified in Section 2.1(t), entitled "Approvals." (e) CAPITAL STRUCTURE. The authorized capital stock of S&T consists solely of (i) 50,000 S&T Common Shares, of which 42,317 are issued, of which 30,227.25 are outstanding as of the date hereof and 12,089.75 are owned by S&T as treasury stock, and (ii) 6,000 S&T Preferred Shares, of which 530 are outstanding as of the date hereof. The Shares are the only authorized classes of capital stock of S&T. Except as set forth in Schedule 2.1(e) entitled "Warrants, Options," S&T has no outstanding warrants, rights, options, calls, commitments or other arrangements evidencing the right to acquire any shares of capital stock or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of capital stock. All the Shares are validly issued, fully paid, nonassessable and not subject to preemptive rights. All Shares are free of any Liens, including without limitation any claims, charges, encumbrances or assessments of any nature whatsoever. (f) TITLE AND RELATED MATTERS. The Acquired Assets constitute all of the assets, properties, rights and interests necessary to conduct the Business in substantially the same manner as conducted by S&T prior to the date of this Agreement. To the best of S&T's knowledge, all of the Acquired Assets used in connection with the operation of the Business (including without limitation the assets reflected on the Unaudited Balance Sheet (as hereinafter defined)) are in good operating condition and repair, subject to normal wear and tear consistent with the age of the 8 16 properties or assets, and are adequate and sufficient for the uses to which they are put in the Business. None of the Acquired Assets have any material defects or are in need of maintenance or repair, except for ordinary, routine maintenance and repairs that are not material in nature or cost. S&T has good, marketable and exclusive title to, and the valid and enforceable power and unqualified right to use each of the Acquired Assets and the Acquired Assets are free and clear of all Liens and Claims of any kind or nature whatsoever, except for: (i) current real estate Taxes (as defined herein) or governmental charges or levies that are a Lien but not yet due and payable; (ii) Liens disclosed as securing specified liabilities on the Unaudited Balance Sheet and notes thereto with respect to which no default exists; (iii) Liens disclosed on Schedule 2.1(f), entitled "Liens," attached hereto; and (iv) minor imperfections of title, if any, none of which are substantial in amount, or materially detract from the value or impair the use of the property subject thereto or the operation of the Business and that have arisen only in the ordinary and normal course of business consistent with past practice (the Liens described in clauses (i), (ii), (iii) and (iv) being collectively referred to herein as "Permitted Liens"). The consummation of the transactions contemplated by this Agreement will not adversely affect such title or rights, or any terms of the applicable agreements (whether written or oral) evidencing, creating or granting such title or rights. Except as disclosed on Schedule 2.1(f), entitled "Liens," none of the Acquired Assets are subject to, or held under, any lease, mortgage, security agreement, conditional sales contract or other title retention agreement, or are other than in the sole possession and under the sole control of S&T. S&T has the right under valid and existing leases to occupy, use or control all properties and assets leased by it and included in the Acquired Assets. (g) REAL PROPERTY. Schedule 2.1(g), entitled "Real Estate and Leases," attached hereto, contains a true, correct and complete list of all instruments and agreements creating any interest or right in real property relating to the Business, or owned, leased or occupied by S&T, and all easements, buildings, structures, fixtures and improvements related thereto. All and any property owned by S&T appearing on such Schedule is hereinafter referred to as the "Fee Property," and all and any property leased by S&T appearing on such Schedule is hereinafter referred to as the "Leased Property". True, correct and complete copies of the instruments and agreements identified in such Schedule have been delivered to Parent and Merger Sub. Each such instrument and agreement is in full force and effect and is a legal, binding and enforceable obligation of the parties thereto, and no event has occurred that constitutes or, with the giving of notice or passage of time, or both, would constitute a default or breach thereunder. Except as disclosed on Schedule 2.1(g), entitled "Real Estate and Leases," all lease agreements with respect to Leased Property to which S&T or any S&T Subsidiary is a party (the "Lease Agreements") have not been modified, altered, terminated or revoked and are in full force and effect. S&T, or a Subsidiary of S&T, as the present tenant under the Lease Agreements, is not in default under, or in breach of, any of the terms of the Lease Agreements, and there are no existing facts or conditions that could give rise to any such breach or default, or any claim against S&T or any S&T Subsidiary, under the Lease Agreements. (h) CONTRACTS. Schedule 2.1(h), entitled "Contracts," attached hereto, contains a complete list or description of: (i) each license, contract, agreement, commitment and undertaking (whether written or oral) relating to the Business or to which S&T or any Subsidiary of S&T is a party (A) that involves the purchase of inventories or the sale of products, and involves aggregate future payments in excess of $10,000, or that extends for a period of more than three months and cannot be canceled by S&T without further payment or penalty, or (B) that does not involve the purchase of inventories or the sale of products, and involves aggregate future payments 9 17 in excess of $10,000 or extends for a period of more than three months and cannot be canceled by S&T without further payment or penalty; (ii) each loan or credit agreement, security agreement, guaranty, indenture, mortgage, pledge or other agreement or instrument evidencing indebtedness of S&T or any Subsidiary of S&T, to which S&T or any Subsidiary of S&T is a party; (iii) any conditional sale or other title retention agreement, equipment obligation, or lease purchase agreement involving (in the aggregate) amounts in excess of $10,000 relating to S&T or any Subsidiary of S&T or the Business, or to which S&T or any Subsidiary of S&T is a party; (iv) any power of attorney given by S&T or any Subsidiary of S&T to any Person, firm or corporation or otherwise relating to the Business or the Acquired Assets; (v) any non-competition, restrictive covenant or other agreement that restricts S&T or any Subsidiary of S&T or any other entity from conducting the Business anywhere in the world; (vi) each contract, agreement, commitment or undertaking presently in effect, whether or not fully performed, between S&T or any Subsidiary of S&T and any current or former officer, director, consultant or other employee (or group thereof) retained or employed in connection with the Business, or any current or former stockholder (or group of stockholders) of S&T or any Subsidiary of S&T; and (vii) any other contract, agreement, commitment or undertaking material to the condition (financial or otherwise), results of operations, properties, assets, liabilities, business or prospects of the Business (the items described in clauses (i) through (vii) being herein collectively referred to as the "Contracts"). (i) FINANCIAL STATEMENTS. Schedule 2.1(i), entitled "Financial Statements," attached hereto, contains the following financial statements (collectively, together with the notes thereto and the financial statements to be delivered pursuant to Section 5.2(b), the "Financial Statements"): (i) the unaudited Consolidated Balance Sheet of S&T (the "Unaudited Balance Sheet") as of May 30, 1998 (the "Balance Sheet Date"), the unaudited consolidated Statement of Income for the four months ended May 30, 1998 and the unaudited Consolidated Statement of Cash Flows for the four months ended May 30, 1998; (ii) unaudited Consolidated Balance Sheet of S&T for the year ended January 31, 1998, the unaudited Consolidated Statement of Income for the year ended January 31, 1998 and the unaudited Consolidated Statement of Cash Flows for the year ended January 31, 1998; and (iii) unaudited Consolidated Balance Sheet of S&T for the year ended February 1, 1997, the unaudited Consolidated Statement of Income for the year ended February 1, 1997 and the unaudited Consolidated Statement of Cash Flows for the year ended February 1, 1997 (collectively, the "Unaudited Financial Statements"). Each of the Financial Statements is true, complete and correct in all material respects, was prepared from the books and records kept by S&T for the Business and fairly presents the financial position of S&T as of such dates and the results of S&T's operations and S&T's cash flows for the periods then ended in accordance with Generally Accepted Accounting Principles ("GAAP") consistently applied (except, in the case of the Unaudited Financial Statements, for normally recurring year-end adjustments, which adjustments will not be material, either individually or in the aggregate). Except as set forth in the Schedules delivered pursuant to this Agreement or the Financial Statements, since the Balance Sheet Date, there has been no material adverse change in the condition (financial or otherwise), results of operations, properties, assets, liabilities, business or prospects of S&T, nor has there been any event or condition of any character that has materially and adversely affected, or that is likely to materially and adversely affect, the condition (financial or otherwise), results of operations, properties, assets, liabilities, business or prospects of S&T or the Business. The Unaudited Balance Sheet reflects all properties and assets, real, personal or mixed, that are currently used in connection with the Business, except for: (i) inventory purchased or sold consistent with past practice and in the ordinary and normal course 10 18 of business since the Balance Sheet Date; (ii) other properties and assets (other than capital assets) not in excess of $10,000 (in the aggregate) purchased or sold since Balance Sheet Date consistent with past practice and in the ordinary and normal course of business; (iii) capital assets purchased since Balance Sheet Date in an amount not in excess of $25,000 (in the aggregate); and (iv) purchase commitments disclosed on Schedule 2.1(j), entitled "Liabilities." (j) LIABILITIES. S&T has no liabilities or obligations of any nature whatsoever, whether absolute, accrued, contingent or otherwise, related to or connected with the Business or the Acquired Assets, and whether known or unknown, including without limitation liabilities for Taxes, unusual forward or long-term commitments, or unrealized or anticipated losses from any unfavorable conditions or occurrences, or from write-downs or write-offs of assets (including all accounts receivable, unpaid interest accrued on any such accounts receivable and any security or collateral related thereto (collectively, the "Accounts Receivable") and inventories), except for those (i) reflected or reserved on the Unaudited Balance Sheet and Notes thereto, (ii) incurred or accrued since the Balance Sheet Date in the ordinary and normal course of S&T's business in transactions involving the purchase or sale by S&T of goods and services in amounts that do not exceed $50,000 in the aggregate and which transactions are consistent with the representations, warranties, covenants, obligations and agreements contained in this Agreement, or (iii) set forth on Schedule 2.1(j), entitled "Liabilities," attached hereto, and there exists no event or circumstance that, after notice or lapse of time or both, might create any other obligations or liabilities of S&T. (k) TRADE CREDITOR ACCOUNTS. To the best of S&T's knowledge, the trade creditor debit balances reflected on the books and records of S&T as of the Balance Sheet Date are true, correct and accurate as of the date thereof (the "Trade Creditor Debts"), and the full amounts of such Trade Creditor Debts may be used by the Surviving Corporation after the Effective Date as payment for merchandise and inventory ordered from such trade creditors. (l) LITIGATION. Except as set forth on Schedule 2.1(l), entitled "Litigation," attached hereto, S&T is not subject to any order of, or written agreement or memorandum or understanding with, any Governmental Authority, and there exists no litigation, action, suit, claim or proceeding pending, or, to the best of S&T's knowledge, any litigation, action, suit, investigation, claim or proceeding threatened against or affecting S&T, the Business or the Acquired Assets, or any employee associated with the Business or the Acquired Assets, or that would affect the transactions contemplated by this Agreement, at law or in equity or before any Governmental Authority, including without limitation claims for product warranty, product liability, antitrust, unfair competition, price discrimination or other liability or obligation related to products, whether supplied or sold by S&T, any of its Subsidiaries or Affiliates or any of their respective predecessors-in-interest in respect of the Business, or that would adversely affect the transactions contemplated by this Agreement, and no one has grounds to assert any such litigation, action, suit, claim or proceeding. (m) COMPLIANCE WITH LAWS. Except as set forth on Schedule 2.1(m), entitled "Compliance with Laws," attached hereto, to the best of S&T's knowledge, the Business has been conducted, the Acquired Assets have been maintained and S&T is currently in compliance with all applicable Laws (including without limitation all laws relating to zoning, building codes, civil rights, occupational health and safety, antitrust, consumer protection, currency exchange, equal opportunity, pensions, securities and trading-with-the-enemy). 11 19 (n) BROKERS, FINDERS AND AGENTS. Except as set forth on Schedule 2.1(n), entitled "Brokers, Finders and Agents," attached hereto, S&T is not directly or indirectly obligated to anyone acting as a broker or finder or in any other similar capacity in connection with this Agreement or the transactions contemplated hereby. The Merger Consideration shall be reduced by the amount of any obligations set forth on Schedule 2.1(n). (o) EMPLOYEES AND EMPLOYEE PLANS. Schedule 2.1(o), entitled "Employee Plans," attached hereto, contains a true and complete list of: (i) all employees of S&T, together with a description of their respective job titles and responsibilities and annual compensation (including salaries, bonuses, consulting or directors' fees and incentive or deferred compensation); and (ii) all the employee benefit plans (as that phrase is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) maintained or contributed to for the benefit of any current or former employee, officer or director of S&T or any of its Subsidiaries ("ERISA Plans") and any other benefit or compensation plan, program or arrangement maintained or contributed to for the benefit of any current or former employee, officer or director of S&T or any of its Subsidiaries (ERISA Plans and such other plans being referred to as "Employee Plans"). S&T has furnished or made available to Parent and its representatives a true, correct and complete copy of every document pursuant to which each Employee Plan is established or operated (including any summary plan descriptions), a written description of any Employee Plan for which there is no such written document and the three most recent annual reports, financial statements and actuarial valuations with respect to each Employee Plan. Except as set forth on Schedule 2.1(o): (i) none of the ERISA Plans is a "multiemployer plan" within the meaning of ERISA; (ii) none of the Employee Plans promises or provides retiree health benefits or retiree life insurance benefits to any person; (iii) none of the Employee Plans provides for payment of a benefit, the increase of a benefit amount, the payment of a contingent benefit or the acceleration of the payment or vesting of a benefit by reason of the execution of this Agreement or the consummation of the transactions contemplated by this Agreement; (iv) neither S&T nor any of its Subsidiaries has an obligation to adopt, or is considering the adoption of, any new Employee Plan or, except as required by law, the amendment of an existing Employee Plan; (v) each ERISA Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that it is so qualified, and nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such ERISA Plan; (vi) each Employee Plan has been operated in accordance with its terms and the requirements of all applicable law; 12 20 (vii) neither S&T nor any of its Subsidiaries or members of their "controlled group" has incurred any direct or indirect liability under, arising out of or by operation of Title IV of ERISA in connection with the termination of, or withdrawal from, any ERISA Plan or other retirement plan or arrangement, and no fact or event exists that could reasonably be expected to give rise to any such liability; (viii) the aggregate accumulated benefit obligations of each ERISA Plan subject to Title IV of ERISA (as of the date of the most recent annual actuarial valuation prepared for such ERISA Plan in conjunction with such ERISA Plan's annual report and based on the discount rate and other actuarial assumptions used in such valuation) do not exceed the fair market value of the assets of such ERISA Plan (as of the date of such valuation) and assuming such ERISA Plan remains in existence; (ix) neither S&T nor any of its Subsidiaries is aware of any claims relating to the Employee Plans, other than routine claims for benefits; and (x) none of the Employee Plans provide for benefits or other participation therein, and S&T has received no claims or demands for participation in or benefits under any Employee Plan, by any individual classified or treated by S&T as an independent contractor. (p) ENVIRONMENTAL AND SAFETY COMPLIANCE. Except as disclosed on Schedule 2.1(p), entitled "Environmental Matters," attached hereto, neither S&T, nor, to the best of S&T's knowledge, any other previous owner, tenant, occupant or user of the real property, including Leased Property, listed on Schedule 2.1(g), entitled "Real Estate and Leases" (hereinafter collectively referred to as the "Property") nor any other Person, has engaged in or permitted any operations or activities upon, or any use or occupancy of the Property, or any portion thereof, resulting in the emission, release, discharge, dumping or disposal of any Hazardous Materials (as hereinafter defined) on, under, in or about the Property, nor have any Hazardous Materials migrated from the Property to, upon, about or beneath other properties, nor have any Hazardous Materials migrated or threatened to migrate from other properties to, upon, about or beneath the Property. For purposes of this Section 2.1(p), the term "Hazardous Material" means any substance: (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; (ii) that is or has been identified as a potential "hazardous waste," "hazardous substance," pollutant or contaminant under any federal, applicable state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. ss.ss. 9601 et seq.) and/or the Resource Conservation and Recovery Act (42 U.S.C. ss.ss. 6901 et seq.); or (iii) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, reactive, or otherwise hazardous and has been identified as regulated by any Governmental Authority. (q) CHANGES IN CIRCUMSTANCES. Except as disclosed on Schedule 2.1(q), entitled "Changes in Circumstances," attached hereto, since the Balance Sheet Date, there has been no material adverse change in the condition (financial or otherwise), results of operations, properties, assets, liabilities, business or prospects of S&T, nor has there been any event or condition of any character that has materially and adversely affected, or that is likely to materially and adversely affect, 13 21 the condition (financial or otherwise), results of operations, properties, assets, liabilities, business or prospects of S&T or the Business. Since the Balance Sheet Date, S&T has conducted the Business and maintained the Acquired Assets in accordance with the provisions of Section 5.1. (r) TAXES. (i) Except as set forth on Schedule 2.1(r)(i), entitled "Tax Liabilities," (i) all federal, state, local, and foreign Tax returns and reports (collectively, "Tax Returns") that are or were required to be filed before the Closing by, or with respect to, S&T have been timely filed or caused to be filed; (ii) all Taxes owed by S&T for the taxable periods covered by such Tax Returns (whether or not shown to be due on such Tax Returns) have been paid; (iii) the assets of S&T are not subject to any Liens, whether or not perfected, for any Taxes or assessments or similar government charges; (iv) all Tax Returns of S&T relating to taxable years that remain open are true and correct; (v) as of the date hereof, there are no material pending or threatened audits, claims, deficiencies or adjustments against S&T relating to any liability for Taxes; (vi) S&T has not granted any extensions of the statute of limitations for the assessment or collection of any Taxes which remain in effect; (vii) no claim has ever been made by a taxing authority in a jurisdiction where S&T does not file Tax Returns that S&T is or may be subject to Tax in such jurisdiction; (viii) S&T has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code; (ix) S&T has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6652 of the Code; (x) S&T has never been a member of an affiliated group filing a consolidated federal income Tax Return or has any liability for the Taxes of any other entity under Treas. Reg. ss. 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise; and (xi) S&T has never agreed to an adjustment under Section 481 of the Code with respect to a change in method of accounting. (ii) The amount of any damages for any breach of the representations and warranties in this Section 2.1(r) shall be satisfied by first offsetting such damages with those S&T net operating loss carryovers ("NOLs"), to the extent such NOLs are available after application to offset gains on dispositions of assets, and then by asserting claims against the Escrowed Property in accordance with the Escrow Agreement. True and correct copies of all Tax Returns for S&T in respect of all years not barred by the statute of limitations have heretofore been delivered to Parent and Merger Sub and all such Tax Returns are listed in Schedule 2.1(r)(ii), entitled "Tax Returns," attached hereto. For the purposes of this Agreement, "Tax" or "Taxes" means all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits taxes, customs duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign). (s) INSURANCE. Schedule 2.1(s), entitled "Insurance," attached hereto, contains a list of all insurance policies (specifying the location, insured, insurer, amount of coverage, type of insurance and policy number) maintained by S&T. All such policies are in full force and effect, all premiums with respect thereto covering all periods up to and including the date of Closing 14 22 have been paid, and no notice of cancellation or termination has been received with respect to any such policy. (t) APPROVALS. Schedule 2.1(t), entitled "Approvals," attached hereto, sets forth a list of all Consents that must be obtained or satisfied by S&T for the consummation of the transactions contemplated by this Agreement, including without limitation all Consents that must be obtained pursuant to Section 2.1(d) (the "Consents"). All Consents prescribed by any Law or any contract, agreement, commitment or undertaking and that must be obtained or satisfied by S&T for the consummation of the transactions contemplated by this Agreement, or for the continued performance by it of their rights and obligations thereunder, have been, or shall by the Closing have been, made, obtained and satisfied. (u) COPIES OF DOCUMENTS. S&T has delivered to Parent and Merger Sub true, correct and complete copies of all contracts, agreements and other documents listed in the Schedules to, or referenced in, this Agreement and all modifications and amendments thereto. (v) INSIDER INTERESTS. Except as set forth in Schedule 2.1(v), entitled "Insider Interests," attached hereto, no officer, director or employee of S&T, or affiliate of any officer, director or employee of S&T: (i) has any material interest in any property, real or personal, tangible or intangible, including without limitation inventions, patents, trademarks or trade names, used in the Business or pertaining to S&T; or (ii) has entered into a material contract, arrangement or understanding, other than with respect to compensation, with S&T. (w) DISCLOSURE. None of the information supplied or to be supplied by S&T specifically for inclusion or incorporation by reference in, or that may be deemed to be incorporated by reference in the registration statement on Form S-1 (the "Registration Statement") to be filed with the Securities and Exchange Commission ("SEC") by Parent in connection with its public offering will, at the time the Registration Statement is filed with the SEC, at any time that it is amended or supplemented and at the time it becomes effective under the Securities Exchange Act of 1933, as amended (the "Securities Act"), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. No representation or warranty made by S&T contained in this Agreement or in any Transaction Document contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements and facts contained herein or therein, in light of the circumstances in which they were or are made, not false or misleading. (x) MERGER APPROVAL. S&T has received unanimous written consent or irrevocable proxies from the requisite number of holders of Shares necessary to approve the Merger pursuant to the WVCA. 2.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and warrants to S&T that: 15 23 (a) ORGANIZATION AND STANDING; CORPORATE POWER AND AUTHORITY. Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. (b) AUTHORITY. Each of Parent and Merger Sub has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the Transaction Documents and the consummation by each of Parent and Merger Sub of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of each of Parent and Merger Sub. This Agreement has been duly executed and delivered by each of Parent and Merger Sub and, assuming that this Agreement constitutes a valid and binding obligation of S&T, constitutes a valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (c) CONFLICTS; DEFAULTS. Neither the execution and delivery of this Agreement or any Transaction Document by Parent or Merger Sub, nor the performance of their respective obligations hereunder or thereunder, will conflict with or constitute a default under any of the terms of Parent's or Merger Sub's Articles of Incorporation, as amended, or Code of Regulations. (d) CONSENTS AND APPROVALS. No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity that has not been received or made is required by or with respect to Parent or Merger Sub in connection with the execution and delivery of this Agreement by Parent and Merger Sub or the consummation by Parent and Merger Sub of the transactions contemplated hereby, except for: (i) the filing of premerger notification and report forms under the HSR Act; and (ii) the filing of the certificate of merger with the Secretary of State of Ohio and appropriate documents with the relevant authorities of other states in which Parent or Merger Sub is qualified to do business. (e) DISCLOSURE. No representation or warranty made by Parent or Merger Sub contained in this Agreement or in any other writing furnished pursuant hereto contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements and facts contained herein or therein, in light of the circumstances in which they were or are made, not false or misleading. 2.3 GENERAL. The representations and warranties of the parties hereto made in this Agreement, subject to the exceptions thereto, shall not be affected by any information furnished to, or any investigation conducted by, any of them or their representatives in connection with the subject matter of this Agreement. The representations and warranties made in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Closing. 16 24 ARTICLE III. CONDITIONS TO CLOSING ---------------------------------- 3.1 CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS. The obligations of Parent and Merger Sub to consummate the transactions provided for by this Agreement are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Parent and Merger Sub except for the conditions set forth in subsection (e) of this Section 3.1: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of S&T made in Section 2.1 of this Agreement shall be true and correct in all material respects both on the date hereof and as of the Closing Date as though made at such time. (b) COVENANTS. S&T shall have performed and complied with in all material respects all covenants, agreements and obligations required to be performed or complied with by it at or prior to the Closing Date. (c) MATERIAL ADVERSE CHANGE. Except as disclosed on Schedule 3.1(c), entitled "Material Adverse Changes," since the date hereof, there shall have occurred no material adverse change, or discovery of a condition or occurrence of any event which might result in any such change, in the condition (financial or otherwise), business, assets, properties, operations or prospects of S&T or the Business. (d) CONSENTS. (i) All Consents of Governmental Authorities and third parties described in Sections 2.1(d) and 2.1(t) and necessary to consummate the transactions contemplated hereunder shall have been obtained and satisfied. (ii) Parent shall have obtained the consent of Citibank, N.A. to the consummation of the transactions contemplated by this Agreement. (e) HSR CONSENT. The waiting period under the HSR Act shall have expired or early termination under the HSR Act shall have been granted. (f) NO PROCEEDING OR LITIGATION. No litigation, action, suit, investigation, claim or proceeding challenging the legality of, or seeking to restrain, prohibit or materially modify, the transactions provided for in this Agreement shall have been instituted and not settled or otherwise terminated. (g) CERTIFICATE OF S&T. At the Closing, S&T shall have delivered to Parent a Certificate signed by S&T's President, and attested to by its Secretary or an Assistant Secretary, and dated the Closing Date, to the effect that to the best of the knowledge and belief of such officers the conditions specified in Sections 3.1(a), (b), (c), (d) and (e) have been fulfilled. (h) INVESTIGATIONS. Parent shall have commenced the investigations described in Section 7.4 and the Environmental Consultant shall not have, as of the Closing Date, discovered Non-Complying Conditions or Practices (as defined in Section 7.4(b)) in excess of One Million Dollars ($1,000,000). 17 25 (i) CERTIFICATE; DOCUMENTS. S&T and the other Persons shall have delivered the certificates, opinion of counsel and other documents required by Sections 4.1 and 4.3. (j) APPROVAL OF S&T'S STOCKHOLDERS; DISSENTERS' RIGHTS. (i) To the extent required by applicable law, this Agreement, the Merger and the transactions contemplated thereby shall have been approved by the requisite vote of the stockholders of S&T. (ii) Dissenters' rights under Section 31-1-123 of the WVCA shall not have been asserted by the holders of more than 10% of the issued and outstanding Shares. (k) DELIVERY OF EMPLOYEE PLAN DOCUMENTS. S&T shall have furnished to Parent and its representatives a true, correct and complete copy of every document pursuant to which each Employee Plan is established or operated (including any summary plan descriptions), a written description of any Employee Plan for which there is no such written document and the three most recent annual reports, financial statements and actuarial valuations with respect to each Employee Plan. (l) DELIVERY OF REAL PROPERTY INSTRUMENTS AND AGREEMENTS. S&T shall have furnished to Parent true, correct and complete copies of all instruments and agreements creating any interest in Fee Property. 3.2 CONDITIONS TO S&T'S OBLIGATIONS. The obligations of S&T to consummate the transactions provided for by this Agreement are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by S&T except for the conditions set forth in subsection (a) of this Section 3.2: (a) HSR CONSENT. The waiting period under the HSR Act shall have expired or early termination under the HSR Act shall have been granted. (b) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of Parent and Merger Sub made in Section 2.2 of this Agreement shall be true and correct in all material respects both on the date hereof and as of the Closing Date as though made at such time. (c) COVENANTS. Each of Parent and Merger Sub shall have performed and complied with all covenants and agreements required to be performed or complied with by it at or prior to the Closing Date. (d) NO PROCEEDING OR LITIGATION. No litigation, action, suit, investigation, claim or proceeding challenging the legality of, or seeking to restrain, prohibit or materially modify, the transactions provided for in this Agreement shall have been instituted and not settled or otherwise terminated. (e) CERTIFICATES; DOCUMENTS. Parent and Merger Sub and the other Persons shall have delivered the certificates, opinion of counsel and other documents required by Section 4.2. 18 26 (f) APPROVAL OF MERGER SUB'S STOCKHOLDER. To the extent required by applicable law, this Agreement, the Merger and the transactions contemplated thereby shall have been approved by the requisite vote of the stockholder of Merger Sub. (g) CERTIFICATE OF PARENT. At the Closing, Parent shall have delivered to S&T a Certificate signed by Parent's President, and attested to by its Secretary or an Assistant Secretary, and dated the Closing Date, to the effect that to the best knowledge and belief of such officers the conditions specified in Section 3.2(a), (b) and (c) have been fulfilled. ARTICLE IV. CLOSING ------------------- 4.1 DOCUMENTS TO BE DELIVERED BY S&T. At the Closing, S&T shall deliver to Parent and Merger Sub: (a) Copies of (i) the resolutions of the Boards of Directors of S&T and the stockholders of S&T, authorizing and approving this Agreement and all other transactions and agreements contemplated hereby, (ii) S&T's, and each Subsidiary of S&T's, Articles of Incorporation, and (iii) S&T's, and each Subsidiary of S&T's, Bylaws, all certified by the corporate Secretary or Assistant Secretary of S&T to be true, correct, complete and in full force and effect and unmodified as of the Closing Date; (b) Copies of the Certificate of Merger and the Articles of Merger, each executed by S&T in the form required by the OGCL and the WVCA, respectively; (c) An opinion, dated as of the Closing Date, of Steptoe & Johnson, counsel to S&T, addressed to Parent and Merger Sub, in form and substance reasonably satisfactory to Parent and Merger Sub; (d) Copies of all Consents to the Merger of each (i) license, permit, approval, variance, waiver or consent (collectively, the "Permits"), (ii) Contract, and (iii) Lease Agreement, that requires such Consent pursuant to Section 2.1(t); (e) The Certificate required by Section 3.1(g); (f) Long-form good standing and tax certificates for each of S&T and its Subsidiaries from West Virginia and from the appropriate state and tax authorities in each jurisdiction in which S&T is qualified to do business as a foreign corporation, dated not more than ten days prior to the Closing; (g) An incumbency certificate of the officers of S&T; (h) At S&T's expense, good and valid title insurance policies or, in final form, irrevocable title insurance commitments issuable by Chicago Title Insurance Company (the "Title Insurance Policies"), dated as of the Closing Date, issued in the name of the Surviving Corporation, insuring the title as fee owner in each parcel of real property included in the Fee 19 27 Property, access rights to such property and specific survey facts, in a form reasonably satisfactory to Parent; and (i) Searches of the official UCC and real estate records of the Secretary of State of West Virginia, Virginia, Kentucky and Ohio, the County Recorders of Cabell, Greenbrier, Harrison, Kanawha, Mercer, Monongalia, Nicholas, Ohio, Putnam, Raleigh, Randolph, Upshur, Wetzel and Wood Counties, West Virginia, the County Recorders of Albemarle and Augusta Counties, Virginia, the County Recorder of Boyd County, Kentucky and the County Recorder of Belmont County, Ohio reflecting no mortgages, liens, pledges, charges, security interests, leasehold interests, options to purchase, or other encumbrances of any kind or character, except Permitted Liens and other than (i) those that would not affect or limit either the value or use of the assets to which they relate, including without limitation all liens, equities, claims, prior assignments, mortgages, charges, security interests, pledges, conditional sales contracts, collateral security arrangements and other title retention arrangements, restrictions (including, in the case of real property, rights of way, use restrictions, and other variances, reservations or limitations of any nature) or encumbrances whatsoever, and (ii) liens for Taxes not yet due and payable. (j) The Escrow Agreement in substantially the form attached hereto as EXHIBIT A, duly executed by S&T, the Escrow Agent and the Representatives. 4.2 DOCUMENTS TO BE DELIVERED BY PARENT AND MERGER SUB. At the Closing, Parent shall deliver to S&T: (a) A copy of (i) the resolutions of the Board of Directors of Parent and Merger Sub authorizing and approving this Agreement and all other transactions and agreements contemplated hereby, (ii) Articles of Incorporation of Parent and Merger Sub, and (iii) Code of Regulations of Parent and Merger Sub, all certified by the Secretary or an Assistant Secretary of Parent or Merger Sub, as appropriate, to be true, correct, complete and in full force and effect and unmodified as of the Closing Date; (b) Evidence of the payment of the Merger Consideration; (c) An opinion, dated as of the Closing Date, of the General Counsel of Parent, addressed to S&T, as to the due authorization and enforceability of the Agreement and the Transaction Documents; (d) Long-form good standing and tax certificates for Parent and Merger Sub from the Secretary of State of Ohio, dated not more than ten days prior to the Closing; (e) An Incumbency Certificate of the officers of Parent and Merger Sub; (f) The Exchange Agreement, duly executed by Parent; (g) The Escrow Agreement in substantially the form attached hereto as EXHIBIT A, duly executed by Parent; and 20 28 (h) The Certificate required by Section 3.2(g). 4.3 OTHER DOCUMENTS TO BE DELIVERED AT CLOSING. At the Closing, Parent, Merger Sub, S&T, and such other Persons, as appropriate, shall execute and deliver: (a) a Consulting Agreement between Surviving Corporation and Wilbur S. Jones, Jr., which agreement shall provide for the consultant to provide services to the Surviving Corporation for a period of one year after the Effective Time in exchange for fees in the aggregate amount of $150,000. (b) Written certification from the Environmental Consultant, dated not more than ten calendar days prior to the Closing, to the effect that all Non-Complying Conditions or Practices have been corrected or remediated, or otherwise have been satisfactorily addressed, or shall be completed promptly following the Closing as contemplated by Section 7.4. ARTICLE V. COVENANTS OF S&T --------------------------- 5.1 CONDUCT OF BUSINESS. Subject to the disclosures on Schedules 2.1(q) and 3.1(c), during the period from the date hereof through the Closing Date, S&T shall conduct the Business and operate the Acquired Assets diligently and in the ordinary and normal course and consistent with past practice (including, without limitation, using its best efforts to preserve beneficial relationships between S&T and its distributors, agents, lessors, suppliers and customers) and continue normal maintenance, marketing, advertising, distributional and promotional expenditures in connection with the Business. S&T shall engage in no transactions, including transactions relating to the purchase or sale of goods, inventories or other operating or production items, intracorporate or otherwise, not in the ordinary and normal course of business from the date hereof until the Closing other than transactions approved by Parent in writing. Without limiting the generality of the foregoing and except as otherwise expressly provided in this Agreement, during the period from the date hereof through the Closing Date, S&T shall not: (a) OBLIGATIONS FOR BORROWED MONEY. Except as disclosed on Schedule 5.1(a), entitled "Obligations for Borrowed Money," in connection with the Business or the Acquired Assets (i) create, incur or assume any debt (including obligations in respect of capital leases) or any debt for money borrowed (whether long- or short-term); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligation of any other Person; or (iii) make any loans, advances or capital contributions to any other Person, other than such liabilities and obligations of S&T that constitute trade payables due to suppliers as payment for inventory included in the Acquired Assets and incurred by S&T in the ordinary and normal course of business between the Balance Sheet Date and the Closing Date (in transactions in the ordinary and normal course) and consistent with past practice and the representations, warranties, covenants, obligations and agreements set forth in this Agreement; (b) EMPLOYEE MATTERS. (i) Increase in any manner the rate of compensation of any of its officers or other employees or make or agree to make any bonus to any of its officers or other employees, (ii) make or agree to make any payment pursuant to any Employee Plan, 21 29 including, without limitation, any payment of any pension, retirement allowance, severance or other employee benefit, except as required by any existing Employee Plan disclosed on the Schedules to this Agreement, to any such officers or employees, whether past or present; (iii) enter into or modify any collective bargaining agreement, except as required by Law; or (iv) commit itself to any additional Employee Plan, or employment or consulting agreement with a Person, or to amend any of such Plans or agreements, except as required by Law; (c) SALE OF ASSETS. Sell, transfer, license or otherwise dispose of or agree to sell, transfer, license or otherwise dispose of any Acquired Assets, except inventory in the ordinary and normal course of business consistent with past practice; (d) COMMITMENTS. Enter into any other agreements, commitments, contracts or undertakings, except agreements, commitments, contracts or undertakings made in the ordinary and normal course of business consistent with past practice and the representations and warranties of S&T contained in this Agreement; (e) LEASED FACILITIES. Terminate, modify or amend the Lease Agreements; (f) ENCUMBRANCES. Except as required to obtain the financing disclosed on Schedule 5.1(a), entitled "Obligations for Borrowed Money," encumber or grant or create a Lien on any of the Acquired Assets or S&T Common Shares or S&T Preferred Shares; (g) LITIGATION. Enter into any compromise or settlement of any litigation, action, suit, claim, proceeding or investigation, except settlements made in the ordinary and normal course of business or by insurers, involving amounts not in excess of $5,000; (h) REPRESENTATIONS AND WARRANTIES. Take any action the taking of which, or omit to take any action the omission of which, would cause any of the representations and warranties contained in Section 2.1 to fail to be true and correct as of the Closing as though made at and as of the Closing; (i) AMENDMENTS. Amend its certificate of incorporation, bylaws or other comparable charter or organizational documents; (j) CAPITAL STRUCTURE. (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, securities or other property) in respect of, any of its outstanding capital stock, (ii) split, combine or reclassify any of its outstanding capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its outstanding capital stock, or (iii) purchase, redeem or otherwise acquire any shares of outstanding capital stock or any rights, warrants or options to acquire any such shares; (k) REORGANIZATION. Adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or any agreement relating to an Acquisition Proposal (as herein defined); or 22 30 (l) ACCOUNTING. Make any changes in any method of accounting or accounting practice or policy, except as required by any changes in generally accepted accounting principles. (m) COMMITMENTS. Agree or commit to do any of the foregoing; 5.2 SUPPLEMENTAL DISCLOSURE. (a) From time to time prior to the Closing, S&T shall promptly disclose to Parent any matter that may arise hereafter and which, if existing or occurring at or prior to the date hereof, would have been required to be set forth or described in the Schedules to this Agreement. No such disclosure, unless expressly consented in writing by Parent, shall be deemed to cure any breach of any representation or warranty made in this Agreement, or modify, affect or diminish Parent's right to terminate this Agreement pursuant to Section 8.1(a)(vi). (b) During the period from the date hereof to the Closing, S&T shall promptly (i) furnish or make available to Parent copies of all major operating reports and monthly, quarterly and year-end financial statements as soon as they become available, all certified by S&T's chief financial officer that such financial statements fairly present the financial position and results of operations of the S&T for the periods covered by such statements in accordance with GAAP consistently applied (subject to normally recurring year-end audit adjustments and without footnote disclosures), and (ii) notify Parent of (A) any material change in the condition (financial or otherwise), business, assets, properties, operations or prospects of S&T, and (B) the institution or settlement of any litigation, action, suit, investigation, claim or proceeding and of any developments therein. 5.3 CLOSING. S&T shall use its best efforts to cause the conditions set forth in Section 3.1 to be satisfied by the Closing Date. 5.4 MAINTENANCE OF INSURANCE. S&T will (a) maintain all policies of insurance in effect on the date hereof through and until the Closing; and (b) after the Closing use its best efforts to maintain any policies of insurance which cover liabilities associated with the operation of the Business prior to the Closing; PROVIDED, HOWEVER, that after the Closing S&T shall not be required to pay any additional premiums in respect of such policies or maintain in effect any insurance coverage other than coverage disclosed on the Schedules hereto. 5.5 INVENTORIES. Except to the extent compliance is prevented by the circumstances set forth in Schedule 3.1(c) and the first sentence of Schedule 2.1(q), prior to the Closing, S&T will maintain levels of all inventories, including merchandise and supplies, at levels consistent with current practice in the ordinary and normal course of business. 5.6 NO SHOPPING. From the date hereof through and until the earlier of termination of this Agreement pursuant to Article VIII or Closing, but in no event for any period exceeding 180 days, neither S&T, nor any of its Subsidiaries, Affiliates, employees, officers, directors, agents, representatives or advisors shall, directly or indirectly, (a) solicit, initiate or encourage any inquiries, proposals or offers from any Person relating to any acquisition (or sublease as the case may be) of the Acquired Assets or the Business, or any securities of, or any merger, 23 31 consolidation or business combination with, S&T, or (b) with respect to any effort or attempt by any other Person to do or seek any of the foregoing, (i) participate in any discussions or negotiations, (ii) furnish to any other Person any information with respect to, or afford access to the properties, books or records of or relating to, S&T, the Acquired Assets or the Business, or (iii) otherwise cooperate in any way with, or assist or participate in, or facilitate or encourage any such effort. S&T shall promptly notify Parent if any such proposal or offer or any inquiry or contact with any Person with respect thereto is made. 5.7 FURTHER ASSURANCES. S&T shall use its best efforts to implement the provisions of this Agreement, and for such purpose S&T, at the request of Parent, at or after the Closing, shall, without further consideration, promptly execute and deliver, or cause to be executed and delivered, to Parent such deeds, assignments, bills of sale, Consents and other instruments in addition to those required by this Agreement, in form and substance satisfactory to Parent, and take all such other actions, as Parent may reasonably deem necessary or desirable to implement any provision of this Agreement or to more effectively transfer, convey and assign to Parent good and marketable title to, and to put Parent in actual possession and operating control of, all of the Acquired Assets, free and clear of all Liens. ARTICLE VI. COVENANTS OF PARENT ------------------------------- 6.1 MAINTENANCE OF, AND ACCESS TO, RECORDS. From and after the Closing, Parent shall, whenever reasonably requested by the Representatives, permit the Representatives to have access to such business records turned over to Parent pursuant to this Agreement and professionals previously retained by S&T as may be required by the Representatives in connection with any audit or investigation by any Governmental Authority, or any matter relating to insurance coverage or third party claims, in each such case to the extent relating to the operation of the Business by S&T prior to the Closing. Parent shall preserve and maintain the records relating to the Business that are part of the Acquired Assets for at least three years after the Closing Date. 6.2 CLOSING. Parent shall use its best efforts to cause the conditions set forth in Section 3.2 to be satisfied by the Closing Date. ARTICLE VII. CERTAIN ADDITIONAL COVENANTS ----------------------------------------- 7.1 EXPENSES; TRANSFER TAXES. Each party hereto will bear the legal, accounting, financial advisory and related out-of-pocket expenses incurred by such party in connection with the negotiation, preparation and execution of this Agreement, the Transaction Documents, and the transactions contemplated hereby. All sales, transfer, recordation and documentary Taxes and fees that may be payable in connection with the transactions contemplated by this Agreement shall be borne by the party responsible for such Taxes and fees under applicable law and customary practice. The Merger Consideration shall be reduced by the amount of all expenses, costs and fees incurred by S&T pursuant to this Section 7.1; PROVIDED, HOWEVER, that, notwithstanding the foregoing, the Merger Consideration shall not be reduced by any out-of-pocket accounting expenses incurred by S&T in connection with the preparation of the Registration Statement. 24 32 7.2 PRESS RELEASES AND DISCLOSURE. The parties agree that neither S&T, Parent, Merger Sub nor their respective Subsidiaries or Affiliates shall issue or cause publication of any press release or other announcement or public communication with respect to this Agreement or the transactions contemplated hereby or otherwise disclose this Agreement or the transactions contemplated hereby to any third party (other than attorneys, advisors and accountants to S&T or Parent) without the consent of the other party hereto, which consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that nothing herein shall prohibit any party from issuing or causing publication of any press release, announcement or public communication to the extent that such party deems such action to be required by Law or stock exchange; PROVIDED FURTHER, HOWEVER, that such party shall, whenever practicable consult with the other party concerning the timing and content of such press release, announcement or communication before the same is issued or published. 7.3 REGULATORY APPROVALS. S&T will, and will cause its appropriate Affiliates to, and each of Parent and Merger Sub will use, in each case, its best efforts to obtain any authorizations, consents, orders and approvals of any Governmental Authority necessary for the performance of its respective obligations pursuant to this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, and will cooperate fully with each other in all reasonable respects in promptly seeking to obtain such authorizations, consents, orders and approvals. Neither S&T, Parent, nor Merger Sub will take any action that will have the effect of delaying, impairing or impeding the receipt of any required regulatory approvals. Without limiting the generality of the foregoing, if applicable, S&T and Parent will promptly file or cause to be filed with the Federal Trade Commission ("FTC") and the Antitrust Division of the United States Department of Justice ("DOJ"), Notification and Report Forms and documentary materials which substantially comply with the provisions of the HSR Act and the rules thereunder. S&T shall pay (or shall reimburse Parent for) all fees associated with the filing of any such Notification and Report Forms or related materials and information (other than the fees and expenses of Parent's legal, financial or other professionals engaged to provide services in respect of such filing); PROVIDED, HOWEVER, that Parent shall pay all fees associated with any Notification, Report Forms and documentary materials necessary to substantially comply with the provisions of the HSR Act and the rules thereunder. Parent and S&T will promptly file any additional information requested as soon as practicable after receipt of a request for additional information. Parent and S&T will use reasonable efforts to obtain early termination of the applicable waiting period under the HSR Act. The parties hereto will coordinate and cooperate with one another in exchanging such information and providing such reasonable assistance as may be requested in connection with such filing. S&T will supply Parent with copies of all correspondence, filings or communications (or memoranda setting forth the substance thereof) between S&T or its representatives, on the one hand, and the FTC, the DOJ or any other Governmental Authority or members of their respective staffs, on the other hand, with respect to this Agreement or the transactions contemplated hereby. 7.4 ENVIRONMENTAL INSPECTION AND ASSESSMENT; COMPLIANCE ACTIONS. (a) INSPECTION. No later than five calendar days subsequent to the execution of this Agreement, Parent and S&T shall cause an environmental consulting firm mutually acceptable to Parent and S&T (the "Environmental Consultant") to commence an inspection and environmental assessment of the Property and to render a written report setting forth its findings in connection with such inspection and assessment. Parent shall pay the costs of such inspection and assessment. The 25 33 scope of such inspection and assessment shall be satisfactory to Parent and shall include, without limitation: (i) a so-called "Phase I" preliminary environmental audit of the Property (including, without limitation, a walk-through site inspection and review of S&T's records regarding previous environmental violations, if any, and an inspection of environmental Permits and verification of compliance with the same); (ii) additional procedures, including, without limitation, taking of ground water samples, soil test borings, effluent or other discharge analyses at all locations; and (iii) in the event that any of the foregoing procedures reveal any actual or potential environmental conditions existing on, in, under or about the Property or otherwise associated with the operation of the Business or with the ownership, possession or use of any of the Acquired Assets, such other testing as Parent may determine to be appropriate. Parent will coordinate with S&T on the timing of the physical inspection. The parties (or their representatives) will also agree on the implementation of the sampling program, provided that the parties' consent shall not be unreasonably withheld to the Environmental Consultant's proposals for such implementation. Prior to commencement of any tests that involve penetration of the surface, the Environmental Consultant shall arrange for radar detector tests of any affected areas in order to avoid damage to underground structures, facilities or equipment. (b) ENVIRONMENTAL REPORT. After completing its environmental survey of the properties and operations of S&T, the Environmental Consultant will issue a written report to Parent, containing a list of all Non-Complying Conditions or Practices (as hereinafter defined) that it believes should be cured or corrected, along with suggested methods for so doing, and the estimated costs therefor. The estimated costs shall be discounted at the then market interest rate to give a present value, but only in instances where the cure or correction will extend over a period of more than two years and only for that portion of such costs which are expected to extend more than two years after the date of the report. "Non-Complying Conditions or Practices" shall mean all those environmental conditions or practices that are in violation of Environmental Requirements, as well as (i) soil contamination to the extent that it can reasonably be expected to cause ground water contamination; (ii) friable asbestos on building components and process equipment or in exposed insulation; or (iii) inadequate spill containment and monitoring facilities (including lack of proper secondary containment (A) of above grade tankage; (B) of process equipment; and (C) at points of transfer of Hazardous Material). Parent will deliver a copy of the Environmental Consultant report to S&T who will have five (5) business days thereafter to notify Parent, in writing, of any objections to the findings of the Environmental Consultant, the methods proposed for curing or correcting any conditions or practices, or the estimated costs associated therewith. Failing such notification, S&T will be deemed to be in agreement with the Environmental Consultant report. If S&T objects to the Environmental Consultant report, Parent and S&T will, in the following five (5) business days, seek to resolve the points to which S&T has objected. If Parent and S&T cannot reach agreement in this period, the matters in dispute will be submitted for resolution to a second environmental consulting firm, to be chosen by mutual agreement to be retained jointly by and responsible to Parent and S&T. The conclusions of the second environmental consulting firm shall be final and binding on the parties. The costs of the second environmental consulting firm will be paid by S&T. 26 34 (c) MERGER CONSIDERATION ADJUSTMENT. (i) If the estimated costs to cure or correct any Non-Complying Conditions or Practices, as finally agreed upon in accordance with the procedures described in Section 7.4(b) (the "Final Environmental Report"), are as to any Fee Property or Leased Property over $50,000, the Merger Consideration shall be reduced (through reduction of the Escrowed Funds) by the amount in excess of $50,000 contained in the Final Environmental Report. (ii) If the estimated costs to cure or correct any conditions and practices as contained in the Final Environmental Report are over, in the aggregate, $1,000,000, either Parent or S&T may elect not to effect the Closing and may terminate this Agreement; PROVIDED, HOWEVER, that such termination shall not be effective until 10 days after Parent or S&T, as applicable, shall have given written notice of such termination to the other parties to this Agreement, during which 10 day period the parties shall attempt in good faith to resolve any matters addressed by the Final Environmental Report. If, on the other hand, Parent and S&T decide to effect the Closing, the Merger Consideration shall be reduced (through reduction of the Escrowed Funds) by the amounts contained in the Final Environmental Report. (iii) To the extent the estimated costs to cure or correct any Non-Complying Conditions or Practices as contained in the Final Environmental Report are in the form of a range, the parties hereby agree that, for the purposes of this Section 7.4, the mid-point in such range shall be deemed to be the amount estimated for such costs. (iv) Parent may only recover the reduction in the Merger Consideration contemplated by (i) and (ii) above, by, at the option of the Parent, (A) reducing the amount of the Escrowed Funds to be deposited with the Escrow Agent in accordance with Section 1.11(a), but only if such reduction occurs prior to the Closing, (B) asserting claims against the Escrowed Property in accordance with the Escrow Agreement, or (C) a combination of both of the foregoing. 7.5 CERTAIN INFORMATION TO BE PROVIDED. As soon as practicable following the date hereof S&T shall use its best efforts to (i) cooperate with Parent to prepare for inclusion in the Registration Statement information relating to the Merger in accordance with the Securities Act (the "Merger Information"), (ii) cause its officers, directors, management personnel, independent public accounts, professionals and other advisers to cooperate with Parent in preparing the Merger Information, and (iii) provide such access to its books and records as may be necessary to prepare the Merger Information. 7.6 STOCKHOLDERS MEETING/UNANIMOUS WRITTEN CONSENT. S&T shall take all action necessary, in accordance with the WVCA and other applicable law and its articles of incorporation and bylaws, to convene and hold a special meeting of the stockholders of S&T (the "Stockholders Meeting") as promptly as practicable after the date hereof for the purpose of considering and voting upon this Agreement or, in lieu of the Stockholders Meeting, adopt a unanimous written consent of the stockholders of S&T approving the Merger and this Agreement. The Board of Directors of S&T shall recommend that the holders of the Shares vote in favor of the adoption of this Agreement. Parent and Merger Sub shall vote any Shares beneficially owned by them (which may be voted by 27 35 them pursuant to applicable law) and S&T shall vote any shares for which it holds irrevocable proxies in favor of the adoption of this Agreement. 7.7 ACCESS TO INFORMATION; CONFIDENTIALITY. Each of Parent and S&T shall, and shall cause each of its Subsidiaries to, afford to the other and its officers, employees, counsel, financial advisors and other representatives access during the period prior to the Effective Time to all its properties, books, contracts, commitments, returns, personnel and records and, during such period, each of Parent and S&T shall, and shall cause each of its Subsidiaries to, furnish as promptly as practicable to the other such information concerning its business, properties, financial condition, operations and personnel as the other may from time to time request. Any such investigation by Parent or S&T shall not affect the representations or warranties contained in this Agreement. Except as required by law, Parent and S&T will hold, and will cause its directors, officers, employees, accountants, counsel, financial advisors and other representatives and affiliates to hold, any non-public information obtained from the other in confidence to the extent required by, and in accordance with the provisions of, the Confidentiality Agreement, dated June 11, 1998, between Parent and S&T and the letter agreement, dated April 27, 1998, between Deloitte & Touche LLP and Parent and the individual secrecy agreements related thereto (collectively, the "Confidentiality Agreements"). ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER ----------------------------------------------- 8.1 TERMINATION. (a) This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, notwithstanding adoption thereof by the stockholders of S&T, in any one of the following circumstances: (i) By mutual written consent duly authorized by the Boards of Directors of Parent and S&T. (ii) By Parent or S&T, if the Effective Time shall not have occurred on or before August 31, 1998, otherwise than as a result of any material breach of any provision of this Agreement, by the party seeking to effect such termination. (iii) By Parent or S&T, if any federal or state court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling, or taken any other action permanently restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and non-appealable, provided that neither party may terminate this Agreement pursuant to this Section 8.1(a)(iii) if it has not complied with its obligations under Section 7.3. (iv) By Parent or S&T, if the Stockholders Meeting shall have been held and this Agreement shall not have been adopted by the affirmative vote of the holders of the requisite number of shares of capital stock of S&T, provided that S&T may not terminate this Agreement pursuant to this Section 8.1(a)(iv) unless it shall have paid to Parent the Fee provided for in 28 36 Section 8.1(b); or by Parent, if the Stockholders Meeting shall not have been held by July 31, 1998 as a result of a breach by S&T of its obligations under Section 7.6. (v) By Parent, if the Board of Directors of S&T or any committee thereof shall have (A) withdrawn or modified, in a manner adverse to Parent or Merger Sub, its approval of this Agreement or the transactions contemplated hereby or the recommendation referred to in the penultimate sentence of Section 7.6, (B) approved, endorsed or recommended to its stockholders an Acquisition Proposal, or (C) resolved to do any of the foregoing. For purposes of this Agreement, "Acquisition Proposal" means an inquiry, offer, proposal or other indication of interest regarding any of the following (other than the transactions contemplated hereby with Parent or Merger Sub) involving S&T: (i) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or substantially all the assets of S&T and its Subsidiaries, taken as a whole, in a single transaction or series of related transactions; or (iii) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. (vi) By Parent or S&T, if (A) the other party shall have failed to comply in any material respect with any of the material covenants and agreements contained in this Agreement to be complied with or performed by such party at or prior to such date of termination, and such failure continues for 20 business days after the actual receipt by such party of a written notice from the other party setting forth in detail the nature of such failure, or (B) a representation or warranty of the other party contained in this Agreement shall have been untrue in any respect on the date when made (or in the case of any representations and warranties that are made as of a different date, as of such different date) and the matters in respect of which such representation or warranty shall have been untrue has had or could reasonably be expected to have a Material Adverse Effect on such other party. (b) If this Agreement is terminated pursuant to (i) Section 8.1(a)(iv), or (ii) Section 8.1(a)(v), then, in either of such events, S&T shall pay to Parent prior to such termination, in the case of termination by S&T pursuant to Section 8.1(a)(iv), or promptly (and in any event within three business days) after such termination, in the case of termination by Parent pursuant to Section 8.1(a)(iv) or Section 8.1(a)(v), a fee in the amount of Four Hundred Thousand Dollars ($400,000) (the "Fee"), which amount shall be payable in immediately available funds. 8.2 EFFECT OF TERMINATION. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1(a) hereof, this Agreement (except for the provisions of paragraph (b) of Section 8.1 and this Section 8.2) shall forthwith become void and cease to have any force or effect, without any liability on the part of any party hereto or any of its affiliates; PROVIDED, HOWEVER, that nothing in this Section 8.2 shall relieve any party to this Agreement of liability for any willful or intentional breach of this Agreement. 8.3 AMENDMENT. Subject to any applicable provisions of the OGCL and the WVCA, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement by written agreement executed and delivered by duly authorized officers of the respective parties; PROVIDED, HOWEVER, that after adoption of this Agreement at the Stockholders Meeting, no 29 37 amendment shall be made that would reduce the amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger. This Agreement may not be modified or amended except by written agreement executed and delivered by duly authorized officers of each of the respective parties. 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties of the other parties contained in this Agreement or in any document delivered pursuant to this Agreement, or (c) subject to Section 8.3, waive compliance with any of the agreements or conditions (other than the condition contained in Section 3.2(a)) of the other parties contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. 8.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A termination of this Agreement pursuant to Section 8.1, an amendment of this Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section 8.4 shall, in order to be effective, require in the case of Parent, Merger Sub or S&T, action by its Board of Directors or the duly authorized designee of its Board of Directors. ARTICLE IX. MISCELLANEOUS ------------------------- 9.1 AMENDMENTS. This Agreement may be amended only by a writing executed by all of the parties hereto. 9.2 ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreements and the other agreements expressly provided for herein, set forth the entire understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, between the parties. 9.3 GOVERNING LAW. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflicts of law doctrine. S&T hereby agrees to submit to the personal jurisdiction of the state or federal courts located in the State of Ohio. Notwithstanding the foregoing, any party may initiate and prosecute any legal proceeding or seek enforcement of any judgment in any proper court having jurisdiction in the United States or elsewhere. 9.4 NOTICES. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given (a) when received if personally delivered, (b) within five days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) within 12 hours after being sent by telecopy, with confirmed 30 38 answerback, or (d) within one business day of being sent by priority delivery by established overnight courier, to the parties at their respective addresses set forth below. To S&T: Stone & Thomas 1030 Main Street Wheeling, West Virginia 26003 Attention: Wilbur S. Jones, Jr. With a copy to: Steptoe & Johnson Bank One Center Clarksburg, West Virginia 26302-2190 Attention: Evans L. King, Jr., Esq. To Parent: The Elder-Beerman Stores Corp. 3155 El-Bee Road Dayton, Ohio 45439 Attention: Scott J. Davido, Esq. With a copy to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114-1190 Attention: Lyle G. Ganske, Esq. To Representatives G. Ogden Nutting after the Closing Date: 1500 Main Street Wheeling, West Virginia 26003 Wilbur S. Jones, Jr. 24 Park Road Wheeling, West Virginia 26003 With a copy to: Steptoe & Johnson Bank One Center Clarksburg, West Virginia 26302-2190 Attention: Evans L. King, Jr., Esq. Any party by written notice to the others given in accordance with this Section 9.4 may change the address or the Persons to whom notices or copies thereof shall be directed. 9.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together will constitute one and the same instrument. 31 39 9.6 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of each party hereto. No rights, obligations or liabilities hereunder shall be assignable by any party without the prior written consent of the other parties. 9.7 WAIVERS. Except as otherwise provided herein, Parent, S&T and Merger Sub (acting on behalf of itself and its appropriate Affiliates), may waive in writing compliance by any of the other parties hereto (to the extent such compliance is for the benefit of the party giving such waiver) with any of the terms, covenants or conditions (other than the condition contained in Section 3.2(a)) contained in this Agreement or in any of the other Transaction Documents (except such as may be imposed by law). Any waiver by any party of any violation of, breach of, or default under, any provision of this Agreement or any of the other Transaction Documents, by any other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement or any of the other Transaction Documents. 9.8 THIRD PARTIES. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person or entity other than Parent, S&T and Merger Sub any rights or remedies under or by reason of this Agreement. 9.9 SCHEDULES, ADDENDA AND EXHIBITS. The Schedules and Exhibits attached to this Agreement are incorporated herein and shall be part of this Agreement for all purposes. 9.10 HEADINGS. The headings in this Agreement are solely for convenience of reference and shall not be given any effect in the construction or interpretation of this Agreement. 9.11 CERTAIN DEFINITIONS. For purposes of this Agreement and of any other Transaction Document: (a) the term "Affiliate" shall mean any Person that directly, or indirectly through one or more Persons, controls, is controlled by, or is under common control with, the Person specified or, directly or indirectly, is related to or otherwise associated with any such Person or entity; (b) the term "claim" or "Claim" shall mean a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured; (c) the term "Law" shall mean all federal, state, municipal or local constitutional provisions, laws, ordinances, rules, regulations, orders, actions, rules and regulations. and common laws. (d) the term "Lien" shall mean a claim, encumbrance, or charge on property, whether acquired by contract, operation of law or otherwise, for payment of some debt, obligation or duty; 32 40 (e) the term "Person" shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature; (f) the term "Related Party" shall mean any trust, corporation or any entity in which S&T or any of their Affiliates has a material interest; (g) a "Subsidiary" of any person means any other person of which (i) the first mentioned person or any Subsidiary thereof is a general partner, (ii) voting power to elect a majority of the board of directors or others performing similar functions with respect to such other person is held by the first mentioned person and/or by any one or more of its Subsidiaries, or (iii) at least 50% of the equity interests of such other person is, directly or indirectly, owned or controlled by such first mentioned person and/or by any one or more of its Subsidiaries; (h) the phrase, "to the best of S&T's knowledge" or "S&T's knowledge" shall be deemed to include, without limitation, all information that is actually known or, in the exercise of reasonable diligence in the normal course of their employment and/or assigned duties, should be known, by each of the following individuals: (i) the officers and employees of S&T listed on Schedule 9.11(h) and all other management or supervisory personnel who are (or, at any time since June 1, 1997, were) employed or retained by S&T or any of its Affiliates and whose principal place of performance of their duties was at the Wheeling, West Virginia corporate offices of S&T, whether or not such individuals were or are also officers, directors of employees of S&T or any of its Affiliates, and (ii) all other individuals employed or retained by S&T or any of its Affiliates who have (or should have) exercised by reason of their position, responsibilities or duties, the principal supervisory, monitoring or compliance function with respect to any of the particular subject matters addressed by the representations and warranties set forth in Article III of this Agreement. 9.12 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy and each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or hereafter existing at law or in equity or by statute or otherwise. No remedy shall be deemed to be a limitation on the amount or measure of damages resulting from any breach of this Agreement. The election of any one or more remedies shall not constitute a waiver of the right to pursue other available remedies. 9.13 GENDER AND NUMBER. The masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others whenever the context so indicates. IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written. 33 41 STONE & THOMAS By: /s/ WILBUR S. JONES, JR. ----------------------------------- Name: WILBUR S. JONES, JR. Title: PRESIDENT THE ELDER-BEERMAN STORES CORP. By: /s/ JOHN A. MUSKOVICH ----------------------------------- Name: JOHN A. MUSKOVICH Title: PRESIDENT THE ELDER-BEERMAN ACQUISITION CORP. By: /s/ JOHN A. MUSKOVICH ----------------------------------- Name: JOHN A. MUSKOVICH Title: PRESIDENT /s/ WILBUR S. JONES, JR. ----------------------------------- Wilbur S. Jones, Jr., as Representative /s/G. OGDEN NUTTING ----------------------------------- G. Ogden Nutting, as Representative 34 EX-2.C 4 EXHIBIT 2(C) 1 Exhibit 2(c) FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER ----------------------------------------------- This FIRST AMENDMENT, dated as of July 27, 1998 (this "Amendment"), to the Agreement and Plan of Merger is by and among Stone & Thomas, a West Virginia corporation ("S&T"), The Elder-Beerman Stores Corp., an Ohio corporation ("Parent"), The Elder-Beerman Acquisition Corp., an Ohio corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and G. Ogden Nutting and Wilbur S. Jones, Jr., as Representatives. WHEREAS, S&T, Parent, Merger Sub and the Representatives are each parties to that certain Agreement and Plan of Merger, dated as of June 18, 1998 (the "Agreement"); WHEREAS, the Agreement contained a scrivener's error, by which Merger Sub, an Ohio corporation, was inaccurately identified as a West Virginia corporation, and the parties to the Agreement desire to correct the scrivener's error and certain related scrivener's errors contained in the Agreement; WHEREAS, prior to the Closing Date, S&T paid $165,554.32 to discharge and satisfy certain past due rent liabilities due and owing to Cafaro Company (the "Cafaro Liability") under S&T's leases for its Ohio Valley Mall, Huntington Mall, and Meadowbrook Mall stores, which Cafaro Liability should have been, but was not, disclosed by S&T on Schedule 2.1(j) to the Agreement; WHEREAS, S&T is a party to three equipment leases with Sensormatic (the "Sensormatic Leases") for certain equipment used by S&T at its Charlottesville, Virginia, Beckley, West Virginia, and Huntington, West Virginia stores, which Sensormatic Leases should have been, but were not, disclosed by S&T on Schedule 2.1(h) to the Agreement; WHEREAS, Parent has agreed that the Surviving Corporation will assume S&T's obligations under the Sensormatic Lease, and, in consideration thereof, S&T has agreed to pay all costs and expenses (the "Sensormatic Liability") associated with removing the Sensormatic equipment from S&T's Charlottesville, Virginia and Beckley, West Virginia stores and re-installing it at the locations designated by Parent upon the terms and conditions set forth in this Amendment; WHEREAS, the parties desire to reduce the Merger Consideration by the amount of the Cafaro Liability and the Sensormatic Liability; NOW, THEREFORE, in consideration of the terms and conditions herein contained and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and pursuant to Section 9.1 of the Agreement, all of the parties to the Agreement hereby consent to amend the Agreement as follows: 1. The preamble of the Agreement is hereby amended and restated in its entirety as follows: "This AGREEMENT AND PLAN OF MERGER, dated as of June 18, 1998 (the "Agreement"), is by and among Stone & Thomas, a West Virginia corporation ("S&T"), The Elder-Beerman Stores Corp., an Ohio corporation ("Parent"), The Elder-Beerman Acquisition 2 Corp., an Ohio corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and G. Ogden Nutting and Wilbur S. Jones, Jr., as Representatives (as hereinafter defined)." 2. Section 1.1 of the Agreement is hereby amended and restated in its entirety as follows: "1.1 MERGER. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Ohio General Corporation Law ("OGCL") and the West Virginia Corporation Act ("WVCA"), the Merger shall be effected and Merger Sub shall be merged with and into S&T at the Effective Time (as defined in Section 1.3 below). At the Effective Time, the separate corporate existence of Merger Sub shall cease and S&T shall be the surviving corporation (the "Surviving Corporation") and S&T shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the OGCL and the WVCA." 3. Section 1.3 is hereby amended and restated in its entirety as follows: "1.3 CERTIFICATE OF MERGER/ARTICLES OF MERGER. On the Closing Date, S&T and Merger Sub shall cause a certificate of merger meeting the requirements of Section 1701.81 of the OGCL (the "Certificate of Merger"), to be properly executed and filed in accordance with the OGCL, and S&T and Merger Sub shall cause articles of merger meeting the requirements of Section 31-1-36 of the WVCA (the "Articles of Merger") to be properly executed and filed in accordance with the WVCA. The Merger shall be effective, for corporate law purposes, at the time and on the latter date of (i) the filing of the Certificate of Merger in accordance with the OGCL, or (ii) the issuance of a certificate of merger by the Secretary of State of West Virginia in accordance with Section 31-1-37 of the WVCA (the "Effective Time")." 4. Section 1.4 of the Agreement is hereby amended and restated in its entirety as follows: "1.4 EFFECTS OF MERGER. The Merger shall have effects set forth in the applicable provisions of the OGCL and the WVCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all property of S&T and Merger Sub shall vest in the Surviving Corporation, and all liabilities of S&T and Merger Sub shall become the liabilities of the Surviving Corporation." 5. Section 1.5 of the Agreement is hereby amended and restated in its entirely as follows: "1.5 ARTICLES OF INCORPORATION. The articles of incorporation of S&T in effect immediately prior to the Effective Time shall be the articles of incorporation 2 3 of the Surviving Corporation (the "Articles") unless changed or amended in accordance with the provisions thereof and applicable law; PROVIDED, HOWEVER, that Article First of the Articles of S&T shall be amended to read as follows: The name of the corporation is Elder-Beerman West Virginia, Inc." 6. Section 1.6 of the Agreement is hereby amended and restated in its entirety as follows: "1.6 BYLAWS. The bylaws of S&T in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation (the "Bylaws") unless changed or amended in accordance with the provisions thereof and of the Articles and applicable law." 7. Section 1.11(a) of the Agreement is hereby amended and restated in its entirety as follows: "1.11 ESCROW. (a) Prior to or concurrently with the Effective Time: (i) Parent and S&T shall enter into an escrow agreement, in the form attached hereto as EXHIBIT A (the "Escrow Agreement"), with such escrow agent as may be designated by Parent (the "Escrow Agent") and G. Ogden Nutting and Wilbur S. Jones, Jr., as representatives of the holders of S&T Common Shares (the "Representatives"); and (ii) subject to Section 7.4(c)(iv), Parent shall deposit with the Escrow Agent, pursuant to the Escrow Agreement, Three Million Dollars ($3,000,000) in immediately available funds (the "Escrow Funds"). Upon being deposited with the Escrow Agent pursuant to the Escrow Agreement, the Escrow Funds and any and all earnings thereon and proceeds thereof held by the Escrow Agent (collectively, the "Escrowed Property") shall be subject in all respects to the provisions of the Escrow Agreement and shall be held and disbursed by the Escrow Agent in accordance with the provisions of the Escrow Agreement. In accordance with the provisions of the Escrow Agreement, the Escrowed Property shall be held in escrow by the Escrow Agent for a period of eighteen (18) months after which time any remaining Escrowed Property will be disbursed, on a pro rata basis, to the Certificate holders of S&T Common Shares; PROVIDED, HOWEVER, that such portion of the Escrowed Property sufficient to completely discharge the amount of any claim for indemnification made by written demand before the expiration of such 18-month period (as provided in Section 1.11(b) and the Escrow Agreement) shall be held in escrow by the Escrow Agent beyond the 18-month period until such claim has been fully resolved. On the Closing Date, to provide a fund to reimburse all out-of-pocket expenses incurred by the Representatives in connection with their service as Representatives, Parent shall pay to the Representative the sum of One Hundred Thousand Dollars ($100,000), which amount shall be deducted from the aggregate Merger Consideration otherwise to be deposited into the Exchange Fund and any 3 4 unused portions of such amount shall be distributed by the Representative to the holders of S&T Common Shares in proportion to their Proportionate Share (as defined in the Escrow Agreement) at the termination of the Escrow Agreement. 8. REDUCTION OF THE MERGER CONSIDERATION. a. To reduce the Merger Consideration by the amount of the Cafaro Liability (with an additional adjustment necessary due to rounding), the text "$595.49" appearing in Section 1.9(c) of the Agreement is hereby deleted and the text "$590.01" is inserted in lieu thereof. b. If after the Closing, it is determined that the Cafaro Liability was overstated and the Cafaro Corporation returns to Parent any overpayment made by S&T to discharge the Cafaro Liability (the "Returned Overpayment"), Parent will pay the Returned Overpayment into, and the Returned Overpayment will become part of, the Escrowed Property. The Returned Overpayment will be distributed in accordance with the terms and conditions of the Escrow Agreement. 9. PAYMENT TO PARENT FROM THE ESCROWED PROPERTY. The parties agree that as soon as the amount of the Sensormatic Liability is ascertained, Parent will be entitled to reimbursement for the Sensormatic Liability from the Escrowed Property. The parties agree that the Escrow Agent may make a payment or payments from the Escrowed Property to Parent for all costs and expenses associated with the Sensormatic Liability upon the Parent's submission to the Escrow Agent of a written claim or claims, as the case may be, for such payment. 10. MISCELLANEOUS. The Agreement shall, except as provided above, remain unchanged and continue in full force and effect. All initially capitalized terms used in this Amendment without definition shall have the respective meanings set forth in the Agreement. All and any references in any of the Transaction Documents to the Agreement shall be deemed to be references to the Agreement, as amended by this Amendment. 11. COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same Amendment. [Remainder of Page Intentionally Blank] 4 EX-5 5 EXHIBIT 5 1 Exhibit 5 July 27, 1998 The Elder-Beerman Stores Corp. 3155 El-Bee Road Dayton, Ohio 45439 RE: REGISTRATION OF UP TO 3,220,000 SHARES OF COMMON STOCK, WITHOUT PAR VALUE, OF THE ELDER-BEERMAN STORES CORP. Ladies and Gentlemen: We are acting as counsel to The Elder-Beerman Stores Corp., an Ohio corporation (the "Company"), in connection with the issuance and sale of up to 3,220,000 shares, including 420,000 shares that may be sold pursuant to an over-allotment option granted by the Company to the Underwriters (as defined below), of Common Stock, without par value, of the Company (the "Shares") in accordance with the terms and conditions of an Underwriting Agreement (the "Underwriting Agreement") to be entered into among the Company, McDonald & Company Securities, Inc., Warburg Dillon Read LLC and Johnson Rice & Company Securities, Inc., as representatives of the Underwriters named therein (the "Underwriters") with respect to the Shares. We have examined such documents, records, and matters of law as we have deemed necessary for purposes of this opinion. Based on such examination and on the assumptions set forth below, we are of the opinion that, subject to the approval of the number and price of the Shares by the Pricing Committee of the Board of Directors of the Company, the Shares have been duly authorized and, when issued and delivered to the Underwriters pursuant to the Underwriting Agreement against payment of the consideration therefor as provided therein, will be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we have relied as to certain factual matters upon certificates of officers of the Company and public officials, and we have not independently checked or verified the accuracy of the statements contained therein. In addition, our examination of matters of law has been limited to the General Corporation Law of the State of Ohio and the federal laws of the United States of America, in each case as in effect on the date hereof. We hereby consent to the filing of this opinion as Exhibit 5 and Exhibit 23(a) to the Registration Statement on Form S-1 (the "Registration Statement") filed by the Company to effect registration of the Shares under the Securities Act of 1933, as amended, and to the reference to us under the caption "Validity of Shares" in the Prospectus constituting a part of the Registration Statement. Very truly yours, JONES, DAY, REAVIS & POGUE EX-23.B 6 EXHIBIT 23(B) 1 EXHIBIT 23(b) INDEPENDENT AUDITORS' CONSENT We consent to the use in this Amendment No. 2 to the Registration Statement of The Elder-Beerman Stores Corp. on Form S-1 of our report dated April 10, 1998, (which expresses an unqualified opinion and includes an explanatory paragraph concerning the Company's plan of reorganization), appearing in the Prospectus, which is part of this Registration Statement. We also consent to the references to us under the headings "Selected Consolidated Financial Information" and "Experts" in such Prospectus. DELOITTE & TOUCHE LLP July 22, 1998 Dayton, Ohio EX-23.C 7 EXHIBIT 23(C) 1 Exhibit 23(c) INDEPENDENT AUDITORS' CONSENT We consent to the use in this Amendment No. 2 to the Registration Statement of The Elder-Beerman Stores Corp. on Form S-1 of our report dated May 21, 1998 (June 18, 1998 as to Notes 3, 9, and 10) (which expresses an unqualified opinion and includes an explanatory paragraph that expresses substantial doubt as to Stone & Thomas' ability to continue as a going concern and an explanatory paragraph relating to a letter of intent for the sale of Stone & Thomas' outstanding stock), relating to the consolidated financial statements of Stone & Thomas and subsidiaries, appearing in the Prospectus, which is part of this Registration Statement, and to the reference to us under the heading "Experts" in such Prospectus. DELOITTE & TOUCHE LLP Pittsburgh, Pennsylvania July 22, 1998 -----END PRIVACY-ENHANCED MESSAGE-----