SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 18
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Hills Stores Company
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
431692102
(CUSIP Number)
David P. Levin, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
(212) 715-9100
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
June 14, 1995
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box: /_/
Check the following box if a fee is being paid with this
statement: /_/
Page 1 of 37 pages
PAGE
<PAGE>
SCHEDULE 13D
CUSIP No. 431692102 Page 2 of 37 Pages
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN & CO., L.P. 13-3321472
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC,OO
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 889,315 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 889,315 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
889,315 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.3% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
PAGE
<PAGE>
SCHEDULE 13D
CUSIP No. 431692102 Page 3 of 37 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN FOCUS FUND L.P. 13-3746015
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 110,495 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 110,495 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
110,495 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.2% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
PAGE
<PAGE>
SCHEDULE 13D
CUSIP No. 431692102 Page 4 of 12 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN INTERNATIONAL LIMITED
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC,OO
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 363,649 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 363,649 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
363,649 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.8% (See Item 5)
14) TYPE OF REPORTING PERSON
CO
PAGE
<PAGE>
SCHEDULE 13D
CUSIP No. 431692102 Page 5 of 37 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN PARTNERS, L.P. 13-3544838
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
AF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 999,810 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 999,810 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
999,810 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.5% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
PAGE
<PAGE>
SCHEDULE 13D
CUSIP No. 431692102 Page 6 of 37 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN PARTNERS INC. 13-3537972
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
AF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 1,363,459 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 1,363,459 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,363,459 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.3% (See Item 5)
14) TYPE OF REPORTING PERSON
CO
PAGE
<PAGE>
SCHEDULE 13D
CUSIP No. 431692102 Page 7 of 37 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MARK DICKSTEIN
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
AF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 1,363,459 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 1,363,459 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,363,459 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.3% (See Item 5)
14) TYPE OF REPORTING PERSON
IN
PAGE
<PAGE>
Amendment No. 18 to Schedule 13D
This Statement amends the Schedule 13D, dated May 6,
1994, as amended on July 22, 1994, July 28, 1994, August 11,
1994, August 17, 1994, August 30, 1994, September 21, 1994,
September 26, 1994, February 23, 1995, March 7, 1995, April 27,
1995, May 4, 1995, May 5, 1995, May 12, 1995, May 17, 1995, May
24, 1995, June 6, 1995 and June 13, 1995 (the "Schedule 13D"),
filed by Dickstein & Co., L.P., Dickstein International Limited,
Dickstein Focus Fund L.P., Dickstein Partners, L.P., Dickstein
Partners Inc. and Mark Dickstein with respect to the Common
Stock, $.01 par value (the "Common Stock"), of Hills Stores
Company, a Delaware corporation (the "Company"). Notwithstanding
this Amendment No. 18, the Schedule 13D speaks as of its date.
Capitalized terms used without definition have the meanings
ascribed to them in the Schedule 13D.
I. Item 3 of the Schedule 13D, Source and Amount of Funds and
other Consideration is hereby amended by adding the following
paragraph:
"Since June 13, 1995 (the date the Reporting Persons filed
Amendment No. 17 to the Schedule 13D), the Reporting Persons in
the aggregate have acquired an additional 100,000 shares of
Common Stock in the open market. Dickstein & Co. acquired 65,000
of such shares at a total cost of $1,572,050.00; Dickstein
International acquired 27,500 of such shares at a total cost of
$665,112.50; and Dickstein Focus acquired 7,500 of such shares at
a total cost of $181,412.50. Such amounts were funded out of
each entity's working capital, which may include margin loans
made by brokerage firms in the ordinary course of business."
II. Item 4 of the Schedule 13D, "Purpose of the Transaction,"
is amended by adding the following:
"On June 14, 1995, Dickstein Inc. issued a press release,
among other things, announcing that it had entered into
agreements with Indosuez Capital, Canyon Partners (Canpartners
Investments III, L.P.) and Golub Associates, regarding the
investment of $20 million of equity capital in the proposed
acquisition of Hills Stores Company. A copy of the press release
is attached hereto as Exhibit 18. The agreements with each of
Indosuez Capital, Canyon Partners and Golub Associates are
attached hereto as Exhibits 19, 20 and 21, respectively."
III. Items 5(a) and 5(c) of the Schedule 13D, "Interest in
Securities of the Issuer," are amended and restated in
their entirety by the following:
"(a) The Reporting Persons beneficially own an aggregate
of 1,363,459 shares of Common Stock representing approximately
14.3% of the shares of Common Stock outstanding. Dickstein
-8-
PAGE
<PAGE>
& Co. owns 889,315 of such shares, representing approximately
9.3% of the shares of Common Stock outstanding. Dickstein Focus
owns 110,495 of such shares, representing approximately 1.2% of
the shares of Common Stock outstanding. Dickstein International
owns 363,649 of such shares, representing approximately 3.8% of
the shares of Common Stock outstanding. The foregoing
percentages are based upon 9,538,986 shares of Common Stock
outstanding as of May 27, 1995 as reported in the Company's
Quarterly Report on Form 10-Q for the quarter ended April 29,
1995. Upon the resolution of all pre-petition claims pursuant to
the Company's Plan of Reorganization (see Item 3), the Reporting
Persons will be entitled to receive additional shares of Common
Stock and Preferred Stock pursuant to such Plan of
Reorganization.
Mark Brodsky, a Vice President of Dickstein Inc., owns 679
shares of Common Stock, constituting less than 1% of the
outstanding shares of Common Stock. Mark Kaufman, a Vice
President of Dickstein Inc., owns 2,000 shares of Common
Stock, constituting less than 1% of the outstanding shares of
Common Stock. Each of Mr. Brodsky and Mr. Kaufman possesses sole
voting and dispositive power with respect to the shares of Common
Stock beneficially owned by him.
(c) Except as set forth on Schedule II hereto or as
reported in previous amendments to the Schedule 13D, none of the
persons identified in Item 2 has effected any transactions in the
Common Stock during the past 60 days."
IV. Item 7 of the Schedule 13D, "Material to be Filed as
Exhibits," is amended by adding the following Exhibits:
"Exhibit 18 Press release dated June 14, 1995
Exhibit 19 Agreement between Dickstein Partners
Inc. and Indosuez Capital, dated June
14, 1995
Exhibit 20 Agreement between Dickstein Partners
and Canpartners Investments III, L.P.,
dated June 14, 1995
Exhibit 21 Agreement between Dickstein Partners
Inc. and Golub Associates Incorporated,
dated June 14, 1995."
-9-
<PAGE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this Statement is true, complete and
correct.
Date: June 15, 1995
DICKSTEIN & CO., L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein
Partners, L.P., the general partner
of Dickstein & Co., L.P.
/s/ Alan Cooper
Name: Alan Cooper
DICKSTEIN INTERNATIONAL LIMITED
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
agent of Dickstein International
Limited
/s/ Alan Cooper
Name: Alan Cooper
DICKSTEIN FOCUS FUND L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein
Partners, L.P., the general partner
of Dickstein Focus Fund L.P.
/s/ Alan Cooper
Name: Alan Cooper
DICKSTEIN PARTNERS, L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein
Partners, L.P.
/s/ Alan Cooper
Name: Alan Cooper
-10-
PAGE
<PAGE>
DICKSTEIN PARTNERS INC.
By: Alan Cooper, as Vice President
/s/ Alan Cooper
Name: Alan Cooper
/s/ Mark Dickstein
Name: Mark Dickstein
-11-
PAGE
<PAGE>
Schedule II
TRANSACTIONS IN COMMON
STOCK OF
HILLS STORES COMPANY
Shares Purchased by Dickstein & Co., L.P.
Number of
Shares Price Per Total
Date Purchased share Commission Cost
6/14/95 65,000 24.125 3,925.00 1,572,050.00
Shares Purchased by Dickstein International Limited
Number of
Shares Price Per Total
Date Purchased share Commission Cost
6/14/95 27,500 24.125 1,675.00 665,112.50
Shares Purchased by Dickstein Focus Fund, L.P.
Number of
Shares Price Per Total
Date Purchased share Commission Cost
6/14/95 7,500 24.125 475.00 181,412.50
-12-
<PAGE>
NEWS RELEASE
Exhibit 18
CONTACT: MACKENZIE
Stan Kay PARTNERS, INC.
(212) 929-5940 156 Fifth Avenue
New York, NY 10010
212 929-5500
FAX 212 929-0308
FOR IMMEDIATE RELEASE:
DICKSTEIN PARTNERS PLACES EQUITY FOR HILL STORES OFFER
NEW YORK, NEW YORK, June 14, 1995 -- Dickstein Partners Inc.
today announced that it has entered into agreements with Indosuez
Capital, Canyon Partners and Golub Associates regarding the
investment of $20 million of equity capital in its proposed
acquisition of Hills Stores Co. (NYSE: HDS).
Dickstein Partners also announced that it is now willing to
provide the balance of the $75 million of equity capital required
to finance the proposed acquisition under the terms of the
"highly confident" letters which have been provided to Dickstein
Partners Inc. from NatWest Markets and NatWest Bank N.A.
Mark Dickstein, President of Dickstein Partners Inc., commented,
"At this time we have decided to accept only $20 million from
outside investors. This will provide us with maximum financial
flexibility for what we hope will be the auction of Hills Stores,
at which point Hills will presumably allow us to negotiate with
other Hills shareholders regarding their investment of equity
capital. In this auction, if we can obtain a merger agreement in
which the existing board approves of the prospective change in
control, obviating the need for more than $20 million of golden
parachute payments, then we believe it probable that we can raise
our offer.
Among the reasons that we are now willing to commit more equity
capital to this transaction is the level of interest that has
been expressed to us from both financial and strategic buyers in
acquiring Hills."
Dickstein Partners also responded to the question posed by Hills
management in a letter sent to all shareholders dated June 12:
<PAGE>
<PAGE>
Dickstein Partners/Hills Stores Co.
June 14, 1995
Page Two
1. Where is Dickstein's financing? On May 24 we filed with the
SEC "highly confident" letters provided to Dickstein Partners
Inc. from NatWest Markets and NatWest Bank N.A. which detail
their willingness to provide debt financing for our offer of $22
per share in cash plus $5 per share of new debt described in our
proxy materials.
2. Will Dickstein ever make a firm offer? On May 24, in a
letter sent to Hills, we offered pursuant to a merger, to acquire
all of Hills' outstanding shares for $22 in cash and $5 per share
of new debt. This is a firm offer.
3. Will Dickstein's hand-picked nominee run a fair auction of
Hills? Yes. We also encourage the existing board to instead
serve as auctioneers.
4. What if Dickstein wins but cannot sell Hills? We expect the
existing Board to delay Hills' annual meeting and put Hills up
for sale if it becomes apparent that we will win the proxy fight.
However, if they do not, NatWest Bank N.A. has informed us that
they are "highly confident" that they will provide Hills with
financing when the Dickstein slate is elected. The Dickstein
nominees would then conduct an auction in which Hills would be
sold to the highest bidder - an auction in which we intend to
offer at least as much as our current proposal.
5. Will Mark Dickstein favor his own interests over yours?
Consider the following: The Chairman of the Board of Hills,
Thomas H. Lee, who led Hills into bankruptcy, receives a
consulting fee of $250,000 a year from Hills plus regular
director fees, while another Board member is the beneficiary of a
$2 million golden parachute.
In sharp contrast, Mark Dickstein, who is Chairman of the Board
of Carson Pirie Scott & Co., and who led Carson's out of
bankruptcy, received $38,000 in director fees last year from
Carson's - approximately the same compensation as all other
Carson's directors.
Mark Dickstein further commented, "Now that all our financing is
arranged, we believe the choice for Hills' shareholders is clear
- -- to vote for directors committed to a sale of Hills to the
highest bidder, with our acquisition proposal serving as a
floor."
<PAGE>
Exhibit 19
DICKSTEIN PARTNERS INC.
Tel: 212-754-4000
Fax: 212-754-5825
June 14, 1995
Mr. Andrew H. Marshak
Vice President
Indosuez Capital
1211 Avenue of the Americas--7th Floor
New York, NY 10036
Re: Equity Investment in
Hills Stores Acquisition
Dear Andrew:
As you are aware, Dickstein Partners Inc. and its affiliates
("Dickstein") have made a proposal to acquire, in a merger, all
of the outstanding shares of capital stock of Hills Stores
Company, a Delaware corporation (the "Company"), for $22 per
share in cash and $5 per share in debt securities of a holding
company to be formed in connection with the proposed acquisition
(the "Acquisition"). Dickstein is prepared to provide up to $55
million of the $75 million of the equity capital (the "Required
Equity Capital") Dickstein believes will be required to finance
the Acquisition.
Indosuez Capital ("Equity Participant") has indicated an
interest in providing up to 13.33% (or $10.0 million) of the
Required Equity Capital. The purpose of this letter is to set
forth the agreement between Dickstein and Equity Participant with
respect to the foregoing.
1. Subject to paragraphs 2 and 3 below, in the event
Dickstein or any acquisition entity formed by Dickstein (in
either event, the "Acquisition Entity") enters into a merger
agreement in respect of the Acquisition on substantially the
terms as currently proposed, Equity Participant shall contribute
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<PAGE>
to the capital of the Acquisition Entity 13.33% of the Required
Equity Capital and receive a 13.33% equity interest in the
Acquisition Entity on the same terms and conditions as Dickstein
(except as to fees). If the Required Equity Capital changes, or
the consideration proposed to be paid to the Company's
shareholders in the Acquisition is increased or the transaction
as currently proposed changes in any other material manner,
Dickstein shall promptly so notify Equity Participant and Equity
Participant would have the option of not continuing in the
transaction (hereinafter referred to as the "Termination
Option"). Equity Participant will promptly notify Dickstein if,
as a result of any such change, Equity Participant is no longer
interested in participating in the transaction.
2. Equity Participant's agreement pursuant to paragraph 1
above is expressly conditioned upon the following:
(a) the execution of definitive documentation acceptable to
Equity Participant in respect of the Acquisition with the
cooperation of the Company (including a merger agreement).
(b) the execution of definitive documentation with respect
to the formation of the Acquisition Entity.
(c) Equity Participant's approval of the Acquisition
Entity's capital structure.
(d) the Equity Participant's satisfaction with its due
diligence review.
Equity Participant shall promptly notify Dickstein in
writing at such time as the conditions set forth in paragraphs
(b), (c) and (d) above have been satisfied. Upon such written
notification Equity Participant shall be deemed to have agreed to
firmly provide equity capital as set forth in paragraph 1 above,
subject to paragraph 2(a).
3. In the event the Acquisition Entity enters into and
consummates a merger agreement in respect of the Acquisition, and
notwithstanding that as of such time Equity Participant has made
a firm commitment to provide a portion of the Required Equity
(subject to paragraph 2(a)), Dickstein shall have the right to
terminate all or any portion of such commitment in excess of $2.5
million. If the Acquisition Entity consummates the Acquisition
and Dickstein exercises such right, Dickstein shall pay to Equity
Participant an amount equal to 4% of the amount of such
commitment that Dickstein has elected to terminate.
4. Dickstein hereby agrees that if a "Competing
Transaction" (as hereinafter defined) shall be consummated,
Dickstein shall pay to Equity Participant the greater of (x)
<PAGE>
<PAGE>
$50,000 and (y) the product of (i) $10,000 and (ii) the excess of
the "Per Share Consideration" (as hereinafter defined) over $25.
"Competing Transaction" means any sale of the Company to a person
other than Dickstein or any affiliate of Dickstein, including by
merger, consolidation or other business combination or any sale
of substantially all of the Company's assets or similar
transaction. "Per Share Consideration" means the average per
share consideration received in a merger and/or tender offer in
which Dickstein sells its shares of Common Stock of the Company.
In case Dickstein receives securities for all or a portion of its
shares, in calculating Per Share Consideration, the value of such
securities shall be determined in good faith by the parties based
upon all relevant factors.
5. Equity Participant hereby represents and warrants to
Dickstein that neither Equity Participant nor any of Equity
Participant's "associates" or "affiliates" (as such terms are
defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934) (x) "beneficially owns" (within the meaning of Rule
13d-3 thereunder), or has the current or future right to acquire,
any equity securities of the Company or (y) has any understanding
or arrangement with anyone (other than Dickstein) concerning any
equity securities of or related to the Company. Without the
prior written consent of Dickstein unless Equity Participant has
first exercised its Termination Option or otherwise has informed
Dickstein that it is no longer willing to provide any portion of
the Required Equity because of the failure of one of the
conditions set forth in paragraph 2 above, neither Equity
Participant nor any of its associates or affiliates will acquire
any equity securities of or related to the Company. This letter
shall be of no force or effect if any statement in this paragraph
is untrue when made or thereafter ceases to be correct. Equity
Participant will promptly notify Dickstein if it becomes aware
that any such statement is or becomes incorrect.
6. Equity Participant understands that Dickstein may
publicly disclose the existence and substance of this letter,
including, without limitation, any disclosures concerning Equity
Participant required pursuant to applicable securities laws.
Equity Participant agrees to provide Dickstein with any
information about Equity Participant that Dickstein is required
to disclose in a judicial or other proceeding or as otherwise may
be required by law. During the term of this agreement, Dickstein
agrees to provide Equity Participant with a copy of any amendment
to its Schedule 13D with respect to its investment in the Company
prior to the filing thereof if Equity Participant is named
therein. Equity Participant shall have no approval or consent
rights with respect thereto and shall hold the information
contained therein in the strictest of confidence until any such
amendment is filed with the Securities and Exchange Commission.
<PAGE>
<PAGE>
7. Equity Participant may assign all or any portion of its
rights under this agreement to one or more of its affiliates or
managed accounts.
8. Dickstein agrees to indemnify Equity Participant as
provided in Schedule A to this letter. The provisions of this
paragraph 8 shall survive the termination of this agreement.
9. In the event that Dickstein enters into an agreement
with any other person in respect of such person's equity
participation in the Acquisition Entity on terms more favorable
to such person than the terms of this letter are to Equity
Participant, the terms of this letter shall be amended to provide
for such more favorable terms for the benefit of Equity
Participant.
10. Dickstein hereby agrees to reimburse Equity Participant
for up to $2,500 of reasonable legal fees and expenses incurred
by Equity Participant in connection with the negotiation of this
letter.
<PAGE>
<PAGE>
If the foregoing accurately reflects your understanding of
our agreement, please sign where indicated below. This agreement
will expire on September 30, 1995, unless sooner terminated by
either party hereto as provided herein.
Very truly yours,
DICKSTEIN PARTNERS INC.
By:________________________
AGREED AND ACKNOWLEDGED:
INDOSUEZ CAPITAL
By:___________________________
<PAGE>
<PAGE>
EXHIBIT "A"
INDEMNITY AGREEMENT
In consideration of the execution by Indosuez Capital
("Indosuez Capital") of that certain equity participation
agreement dated June 14, 1995, by and between Dickstein Partners
Inc. and its affiliates ("Dickstein") and Indosuez Capital (the
"Agreement"), Dickstein agrees to indemnify and hold harmless
Indosuez Capital and its affiliates, their respective officers,
directors, employees and agents and each person, if any, who
controls Indosuez Capital (collectively the "Indemnified Parties"
and individually an "Indemnified Party"), to the fullest extent
lawful, from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation and as
incurred, reasonable costs of investigating, preparing or
defending, or if not a party, of responding as a witness or as
custodian of documents or in any manner related thereto, and
reasonable attorneys' fees and expenses incurred in connection
therewith) (collectively "Losses") suffered by an Indemnified
Party to the extent that such Losses arise out of or are based
upon, directly or indirectly, in whole or in part: (i) the
Agreement referred to herein; (ii) any use (whether authorized or
not) by Dickstein of the commitments of the Indemnified Parties
herein; (iii) the performance by the Indemnified Parties, or any
of them, of the commitments contemplated in the Agreement; (iv)
any transaction contemplated in or by the Agreement or any
similar or related transaction; (v) any claim (regardless of the
proponent thereof) that the performance of the obligations of the
parties under or pursuant to the Agreement was or is unfair,
inequitable, fraudulent, a breach of fiduciary or otherwise
contrary to law, or involved any alleged omission to state a
material fact or any alleged misleading or untrue statement in
connection therewith; or (vi) any other claim relating to or
involving the transaction referred to in the Agreement or any
similar or related transaction which subjects the Indemnified
Parties or any of them to any Losses; provided, however, that no
Indemnified Party shall be entitled to indemnification by
Dickstein hereunder with respect to any Losses arising out of the
gross negligence or willful misconduct (as finally determined by
a court of competent jurisdiction) of such Indemnified Party.
All such fees and expenses (including any fees and expenses
incurred in connection with investigating or preparing to defend
such action or proceeding) shall be paid to the Indemnified
Party, as incurred, on demand to Dickstein, although if it is
determined that the Indemnified Party is not entitled to
indemnification, such payments shall be returned by the
Indemnified Party.
If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any
<PAGE>
<PAGE>
Indemnified Party in respect of which indemnity may be sought
from Dickstein, such Indemnified Party shall promptly notify
Dickstein in writing and Dickstein shall assume the defense
thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all
fees and expenses related thereto. Failure to promptly notify
Dickstein will not relieve Dickstein from any duty to indemnify
under this agreement, except if Dickstein's indemnification
obligation is materially adversely affected due to any such
delay. An Indemnified Party, upon written notice to Dickstein,
shall have the right to employ counsel in any action and to
participate in the defense thereof and the reasonable fees and
expenses of such counsel shall be at the expense of Dickstein
only if (a) Dickstein shall have failed promptly to assume the
defense of such action or proceeding or (b) the named parties to
such action or proceeding have been advised by counsel that the
representation by the same counsel would be impermissible due to
conflict of interests under applicable standards of professional
responsibility; provided that in the case of clause (b) above,
the counsel retained by any Indemnified Party must be reasonably
acceptable to Dickstein (if any such Indemnified Party notifies
Dickstein in writing that it elects to employ separate counsel,
Dickstein shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Party,
provided, however, that Dickstein shall not, in connection with
any such action or proceeding or separate but substantially
similar or related actions or proceedings, be liable for the fees
and expenses of more than one firm of attorneys). Dickstein
shall not be liable for any settlement of any such action or
proceeding effected without its prior written consent, but if any
action or proceeding is settled with its written consent, or if
there be a final judgment against the Indemnified Party in any
such action or proceeding, Dickstein agrees to indemnify and hold
harmless any such Indemnified Party from and against any loss (to
the extent and subject to the exceptions stated above) by reason
of such settlement or judgment.
If the indemnification provided for in this Indemnity
Agreement is held to be unenforceable although applicable in
accordance with its terms to an Indemnified Party under the first
paragraph hereof in respect of any Losses, referred to therein,
except due to the gross negligence or willful misconduct of the
party seeking indemnification, then Dickstein, in lieu of
indemnifying such Indemnified Party in full as provided above,
agrees that it shall pay 100% of the loss and shall receive from
the Indemnified Party as a result of such Losses an amount (a) in
such proportion as is appropriate to reflect on the one hand the
relative benefits received by Dickstein from the transactions
contemplated under the Agreement and on the other hand the
relative benefits received by the Indemnified Party for the
<PAGE>
<PAGE>
services rendered hereunder or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (a) above but also the relative
fault of Dickstein on the one hand and of the Indemnified Party
on the other, as well as any other relevant equitable
considerations. Furthermore, the Indemnified Parties, in the
aggregate, shall not be required to contribute any amount in
excess of the amount of fees received by Indosuez Capital
pursuant to the Agreement.
The indemnity and contribution obligations of Dickstein
under this Indemnity Agreement shall be in addition to any
liability or obligation Dickstein may otherwise have to an
Indemnified Party. The indemnity and contribution obligations of
Dickstein shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of any
Indemnified Party, (b) any termination of the Agreement, or (c)
any termination of the Transactions contemplated by the
Agreement, and shall be binding upon and shall inure to the
benefit of any successor, assign, heir or personal representative
of each Indemnified Party. Terms which are not otherwise
defined in this Indemnity Agreement are to have the same meanings
as are given defined terms in the Agreement.
Dickstein Partners Inc.
By:_________________________
Its:
<PAGE>
Exhibit 20
DICKSTEIN PARTNERS INC.
Tel: 212-754-4000
Fax: 212-754-5825
June 14, 1995
Canpartners Investments III, L.P.
9665 Wilshire Boulevard--Suite 200
Beverly Hills, CA 90212
Attn: Josh Friedman
Re: Equity Investment in
Hills Stores Acquisition
Dear Josh:
As you are aware, Dickstein Partners Inc. and its
affiliates ("Dickstein") have made a proposal to acquire, in a
merger, all of the outstanding shares of capital stock of Hills
Stores Company, a Delaware corporation (the "Company"), for $22
per share in cash and $5 per share in debt securities of a
holding company to be formed in connection with the proposed
acquisition (the "Acquisition"). Dickstein is prepared to
provide up to $55 million of the $75 million of the equity
capital (the "Required Equity Capital") Dickstein believes will
be required to finance the Acquisition.
Canpartners Investments III, L.P. ("Equity Participant") has
indicated an interest in providing up to 6 2/3% (or $5.0 million)
of the Required Equity Capital. The purpose of this letter is to
set forth the agreement between Dickstein and Equity Participant
with respect to the foregoing.
1. Subject to paragraphs 2 and 3 below, in the event
Dickstein or any acquisition entity formed by Dickstein (in
either event, the "Acquisition Entity") enters into a merger
agreement in respect of the Acquisition on substantially the
terms as currently proposed, Equity Participant shall contribute
to the capital of the Acquisition Entity 6 2/3% of the Required
Equity Capital and receive a 6 2/3% equity interest in the
Acquisition Entity on the same terms and conditions as Dickstein
<PAGE>
<PAGE>
(except as to fees). If the Required Equity Capital changes, or
the consideration proposed to be paid to the Company's
shareholders in the Acquisition is increased or the transaction
as currently proposed changes in any other material manner,
Dickstein shall promptly so notify Equity Participant and Equity
Participant would have the option of not continuing in the
transaction (hereinafter referred to as the "Termination
Option"). Equity Participant will promptly notify Dickstein if,
as a result of any such change, Equity Participant is no longer
interested in participating in the transaction.
2. Equity Participant's agreement pursuant to paragraph 1
above is expressly conditioned upon the following:
(a) the execution of definitive documentation acceptable to
Equity Participant in respect of the Acquisition with the
cooperation of the Company (including a merger agreement).
(b) the execution of definitive documentation with
respect to the formation of the Acquisition Entity.
(c) Equity Participant's approval of the Acquisition
Entity's capital structure.
(d) the Equity Participant's satisfaction with its due
diligence review.
Equity Participant shall promptly notify Dickstein in
writing at such time as the conditions set forth in paragraphs
(b), (c) and (d) above have been satisfied. Upon such written
notification Equity Participant shall be deemed to have agreed to
firmly provide equity capital as set forth in paragraph 1 above.
3. In the event the Acquisition Entity enters into
and consummates a merger agreement in respect of the Acquisition,
and notwithstanding that as of such time Equity Participant has
made a firm commitment to provide a portion of the Required
Equity, Dickstein shall have the right to terminate all or any
portion of such commitment in excess of $1.25 million. If the
Acquisition Entity consummates the Acquisition and Dickstein
exercises such right, Dickstein shall pay to Equity Participant
an amount equal to 4% of the amount of such commitment that
Dickstein has elected to terminate.
4. Dickstein hereby agrees that if a "Competing
Transaction" (as hereinafter defined) shall be consummated,
Dickstein shall pay to Equity Participant the greater of (x)
$25,000 and (y) the product of (i) $5,000 and (ii) the excess of
the "Per Share Consideration" (as hereinafter defined) over $25.
"Competing Transaction" means any sale of the Company to a person
<PAGE>
<PAGE>
other than Dickstein or any affiliate of Dickstein, including by
merger, consolidation or other business combination or any sale
of substantially all of the Company's assets or similar
transaction. "Per Share Consideration" means the average per
share consideration received in a merger and/or tender offer in
which Dickstein sells its shares of Common Stock of the Company.
In case Dickstein receives securities for all or a portion of its
shares, in calculating Per Share Consideration, the value of such
securities shall be determined in good faith by the parties based
upon all relevant factors.
5. Equity Participant hereby represents and warrants
to Dickstein that neither Equity Participant nor any of Equity
Participant's "associates" or "affiliates" (as such terms are
defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934) (x) "beneficially owns" (within the meaning of Rule
13d-3 thereunder), or has the current or future right to acquire,
any equity securities of the Company or (y) has any understanding
or arrangement with anyone (other than Dickstein) concerning any
equity securities of or related to the Company. Without the
prior written consent of Dickstein unless Equity Participant has
first exercised its Termination Option or otherwise has informed
Dickstein that it is no longer willing to provide any portion of
the required Equity because of the failure of one of the
conditions set forth in paragraph 2 above, neither Equity
Participant nor any of its associates or affiliates will acquire
any equity securities of or related to the Company. This letter
shall be of no force or effect if any statement in this paragraph
is untrue when made or thereafter ceases to be correct. Equity
Participant will promptly notify Dickstein if it becomes aware
that any such statement is or becomes incorrect.
6. Equity Participant understands that Dickstein may
publicly disclose the existence and substance of this letter,
including, without limitation, any disclosures concerning Equity
Participant required pursuant to applicable securities laws.
Equity Participant agrees to provide Dickstein with any
information about Equity Participant that Dickstein is required
to disclose in a judicial or other proceeding or as otherwise may
be required by law. During the term of this agreement, Dickstein
agrees to provide Equity Participant with a copy of any amendment
to its Schedule 13D with respect to its investment in the Company
prior to the filing thereof if Equity Participant is named
therein. Equity Participant shall have no approval or consent
rights with respect thereto and shall hold the information
contained therein in the strictest of confidence until any such
amendment is filed with the Securities and Exchange Commission.
7. Equity Participant may assign all or any portion
of its rights under this agreement to one or more of its
affiliates or managed accounts.
<PAGE>
<PAGE>
8. Dickstein agrees to indemnify Equity Participant
as provided in Schedule A to this letter. The provisions of this
paragraph 8 shall survive the termination of this agreement.
9. In the event that Dickstein enters into an agreement
with any other person in respect of such person's equity
participation in the Acquisition Entity on terms more favorable
to such person than the terms of this letter are to Equity
Participant, the terms of this letter shall be amended to provide
for such more favorable terms for the benefit of Equity
Participant.
10. Dickstein hereby agrees to reimburse Equity
Participant for up to $2,500 of reasonable legal fees and
expenses incurred by Equity Participant in connection with the
negotiation of this letter.
PAGE
<PAGE>
If the foregoing accurately reflects your understanding
of our agreement, please sign where indicated below. This
agreement will expire on September 30, 1995, unless sooner
terminated by either party hereto as provided herein.
Very truly yours,
DICKSTEIN PARTNERS INC.
By:_____________________
AGREED AND ACKNOWLEDGED:
CANPARTNERS INVESTMENTS III, L.P.
By:_____________________________
<PAGE>
<PAGE>
EXHIBIT "A"
INDEMNITY AGREEMENT
In consideration of the agreement of Canpartners
Investments III, L.P. and its affiliates ("Canyon") to undertake
certain assignments pursuant to that certain equity participation
agreement dated June 14, 1995, by and between Dickstein Partners
Inc. and its affiliates ("Dickstein") and Canyon (the
"Agreement"), Dickstein agrees to indemnify and hold harmless
Canyon and its affiliates, their respective officers, directors,
employees and agents and each person, if any, who controls Canyon
(collectively the "Indemnified Parties" and individually an
"Indemnified Party"),to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities and
expenses (including, without limitation and as incurred,
reasonable costs of investigating, preparing or defending, or if
not a party, of responding as a witness or as custodian of
documents or in any manner related thereto, and reasonable
attorneys' fees and expenses incurred in connection therewith)
(collectively "Losses") suffered by an Indemnified Party to the
extent that such Losses arise out of or are based upon, directly
or indirectly, in whole or in part: (i) the Agreement referred to
herein; (ii) any use (whether authorized or not) by Dickstein of
the commitments of the Indemnified Parties herein; (iii) the
performance by the Indemnified Parties, or any of them, of the
commitments contemplated in the Agreement; (iv) any transaction
contemplated in or by the Agreement or any similar or related
transaction; (v) any claim (regardless of the proponent thereof)
that the performance of the obligations of the parties under or
pursuant to the Agreement was or is unfair, inequitable,
fraudulent, a breach of fiduciary or otherwise contrary to law,
or involved any alleged omission to state a material fact or
alleged misleading or untrue statement in connection therewith;
or (vi) any other claim relating to or involving the transaction
referred to in the Agreement or any similar or related
transaction which subjects the Indemnified Parties or any of them
to any Losses; provided, however, that no Indemnified Party shall
be entitled to indemnification by Dickstein hereunder with
respect to any Losses arising out of the gross negligence or
willful misconduct (as finally determined by a court of competent
jurisdiction) of such Indemnified Party. All such fees and
expenses (including any fees and expenses incurred in connection
with investigating or preparing to defend such action or
proceeding) shall be paid to the Indemnified Party, as incurred,
on demand to Dickstein, although if it is determined that the
Indemnified Party is not entitled to indemnification, such
payments shall be returned by the Indemnified Party.
If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any
<PAGE>
<PAGE>
Indemnified Party in respect of which indemnity may be sought
from Dickstein, such Indemnified Party shall promptly notify
Dickstein in writing and Dickstein shall assume the defense
thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all
fees and expenses related thereto. Failure to promptly notify
Dickstein will not relieve Dickstein from any duty to indemnify
under this agreement, except if Dickstein's indemnification
obligation is materially adversely affected due to any such
delay. An Indemnified Party, upon written notice to Dickstein,
shall have the right to employ counsel in any action and to
participate in the defense thereof and the reasonable fees and
expenses of such counsel shall be at the expense of Dickstein
only if (a) Dickstein shall have failed promptly to assume the
defense of such action or proceeding or (b) the named parties to
such action or proceeding have been advised by counsel that the
representation by the same counsel would be impermissible due to
conflict of interests under applicable standards of professional
responsibility; provided that in the case of clause (b) above,
the counsel retained by any Indemnified Party must be reasonably
acceptable to Dickstein (if any such Indemnified Party notifies
Dickstein in writing that it elects to employ separate counsel,
Dickstein shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Party,
provided, however, that Dickstein shall not, in connection with
any such action or proceeding or separate but substantially
similar or related actions or proceedings, be liable for the fees
and expenses of more than one firm of attorneys). Dickstein
shall not be liable for any settlement of any such action or
proceeding effected without its prior written consent, but if any
action or proceeding is settled with its written consent, or if
there be a final judgment against the Indemnified Party in any
such action or proceeding, Dickstein agrees to indemnify and hold
harmless any such Indemnified Party from and against any loss (to
the extent and subject to the exceptions stated above) by reason
of such settlement or judgment.
If the indemnification provided for in this Indemnity
Agreement is held to be unenforceable although applicable in
accordance with its terms to an Indemnified Party under the first
paragraph hereof in respect of any Losses, referred to therein,
except due to the gross negligence or willful misconduct of the
party seeking indemnification, then Dickstein, in lieu of
indemnifying such Indemnified Party in full as provided above,
agrees that it shall pay 100% of the loss and shall receive from
the Indemnified Party as a result of such Losses an amount (a) in
such proportion as is appropriate to reflect on the one hand the
relative benefits received by Dickstein from the transactions
contemplated under the Agreement and on the other hand the
relative benefits received by the Indemnified Party for the
services rendered hereunder or (b) if the allocation provided by
PAGE
<PAGE>
clause (a) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (a) above but also the relative
fault of Dickstein on the one hand and of the Indemnified Party
on the other, as well as any other relevant equitable
considerations. Furthermore, the Indemnified Parties, in the
aggregate, shall not be required to contribute any amount in
excess of the amount of fees received by Canyon pursuant to the
Agreement.
The indemnity and contribution obligations of Dickstein
under this Indemnity Agreement shall be in addition to any
liability or obligation Dickstein may otherwise have to an
Indemnified Party. The indemnity and contribution obligations of
Dickstein shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of any
Indemnified Party, (b) any termination of the Agreement, or (c)
any termination of the Transactions contemplated by the
Agreement, and shall be binding upon and shall inure to the
benefit of any successor, assign, heir or personal representative
of each Indemnified Party. Terms which are not otherwise defined
in this Indemnity Agreement are to have the same meanings as are
given defined terms in the Agreement.
Dickstein Partners Inc.
By:______________________
Its:
<PAGE>
Exhibit 21
DICKSTEIN PARTNERS INC.
Tel: 212-754-4000
Fax: 212-754-5825
June 14, 1995
Golub Associates Incorporated
230 Park Avenue--21st Floor
New York, NY 10169
Attn: Lawrence Golub
Re: Equity Investment in
Hills Stores Acquisition
Dear Lawrence:
As you are aware, Dickstein Partners Inc. and its affiliates
("Dickstein") have made a proposal to acquire, in a merger, all
of the outstanding shares of capital stock of Hills Stores
Company, a Delaware corporation (the "Company"), for $22 per
share in cash and $5 per share in debt securities of a holding
company to be formed in connection with the proposed acquisition
(the "Acquisition"). Dickstein is prepared to provide up to $55
million of the $75 million of the equity capital (the "Required
Equity Capital") Dickstein believes will be required to finance
the Acquisition.
Golub Associates Incorporated ("Equity Participant") has
indicated an interest in providing up to 6 2/3% (or $5.0
million) of the Required Equity Capital. The purpose of this
letter is to set forth the agreement between Dickstein and Equity
Participant with respect to the foregoing.
1. Subject to paragraphs 2 and 3 below, in the event
Dickstein or any acquisition entity formed by Dickstein (in
either event, the "Acquisition Entity") enters into a merger
agreement in respect of the Acquisition on substantially the
terms as currently proposed, Equity Participant shall contribute
to the capital of the Acquisition Entity 6 2/3% of the Required
<PAGE>
<PAGE>
Equity Capital and receive a 6 2/3% equity interest in the
Acquisition Entity on the same terms and conditions as Dickstein
(except as to fees). If the Required Equity Capital changes, or
the consideration proposed to be paid to the Company's
shareholders in the Acquisition is increased or the transaction
as currently proposed changes in any other material manner,
Dickstein shall promptly so notify Equity Participant and Equity
Participant would have the option of not continuing in the
transaction (hereinafter referred to as the "Termination
Option"). Equity Participant will promptly notify Dickstein if,
as a result of any such change, Equity Participant is no longer
interested in participating in the transaction.
2. Equity Participant's agreement pursuant to paragraph 1
above is expressly conditioned upon the following:
(a) the execution of definitive documentation acceptable to
Equity Participant in respect of the Acquisition with the
cooperation of the Company (including a merger agreement).
(b) the execution of definitive documentation with respect
to the formation of the Acquisition Entity.
(c) Equity Participant's approval of the Acquisition
Entity's capital structure.
(d) the Equity Participant's satisfaction with its due
diligence review.
Equity Participant shall promptly notify Dickstein in
writing at such time as the conditions set forth in paragraphs
(b), (c) and (d) above have been satisfied. Upon such written
notification Equity Participant shall be deemed to have agreed to
firmly provide equity capital as set forth in paragraph 1 above.
3. In the event the Acquisition Entity enters into and
consummates a merger agreement in respect of the Acquisition, and
notwithstanding that as of such time Equity Participant has made
a firm commitment to provide a portion of the Required Equity,
Dickstein shall have the right to terminate all or any portion of
such commitment in excess of $1.25 million. If the Acquisition
Entity consummates the Acquisition and Dickstein exercises such
right, Dickstein shall pay to Equity Participant an amount equal
to 4% of the amount of such commitment that Dickstein has elected
to terminate.
4. Dickstein hereby agrees that if a "Competing
Transaction" (as hereinafter defined) shall be consummated,
Dickstein shall pay to Equity Participant the greater of (x)
$25,000 and (y) the product of (i) $5,000 and (ii) the excess of
<PAGE>
<PAGE>
the "Per Share Consideration" (as hereinafter defined) over $25.
"Competing Transaction" means any sale of the Company to a person
other than Dickstein or any affiliate of Dickstein, including by
merger, consolidation or other business combination or any sale
of substantially all of the Company's assets or similar
transaction. "Per Share Consideration" means the average per
share consideration received in a merger and/or tender offer in
which Dickstein sells its shares of Common Stock of the Company.
In case Dickstein receives securities for all or a portion of its
shares, in calculating Per Share Consideration, the value of such
securities shall be determined in good faith by the parties based
upon all relevant factors.
5. Equity Participant hereby represents and warrants to
Dickstein that neither Equity Participant nor any of Equity
Participant's "associates" or "affiliates" (as such terms are
defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934) (x) "beneficially owns" (within the meaning of Rule
13d-3 thereunder), or has the current or future right to acquire,
any equity securities of the Company or (y) has any understanding
or arrangement with anyone (other than Dickstein) concerning any
equity securities of or related to the Company. Without the
prior written consent of Dickstein unless Equity Participant has
first exercised its Termination Option or otherwise has informed
Dickstein that it is no longer willing to provide any portion of
the required Equity because of the failure of one of the
conditions set forth in paragraph 2 above, neither Equity
Participant nor any of its associates or affiliates will acquire
any equity securities of or related to the Company. This letter
shall be of no force or effect if any statement in this paragraph
is untrue when made or thereafter ceases to be correct. Equity
Participant will promptly notify Dickstein if it becomes aware
that any such statement is or becomes incorrect.
6. Equity Participant understands that Dickstein may
publicly disclose the existence and substance of this letter,
including, without limitation, any disclosures concerning Equity
Participant required pursuant to applicable securities laws.
Equity Participant agrees to provide Dickstein with any
information about Equity Participant that Dickstein is required
to disclose in a judicial or other proceeding or as otherwise may
be required by law. During the term of this agreement, Dickstein
agrees to provide Equity Participant with a copy of any amendment
to its Schedule 13D with respect to its investment in the Company
prior to the filing thereof if Equity Participant is named
therein. Equity Participant shall have no approval or consent
rights with respect thereto and shall hold the information
contained therein in the strictest of confidence until any such
amendment is filed with the Securities and Exchange Commission.
<PAGE>
<PAGE>
7. Equity Participant may assign all or any portion of its
rights under this agreement to one or more of its affiliates or
managed accounts.
8. Dickstein agrees to indemnify Equity Participant as
provided in Schedule A to this letter. The provisions of this
paragraph 8 shall survive the termination of this agreement.
9. In the event that Dickstein enters into an agreement
with any other person in respect of such person's equity
participation in the Acquisition Entity on terms more favorable
to such person than the terms of this letter are to Equity
Participant, the terms of this letter shall be amended to provide
for such more favorable terms for the benefit of Equity
Participant.
10. Dickstein hereby agrees to reimburse Equity Participant
for up to $2,500 of reasonable legal fees and expenses incurred
by Equity Participant in connection with the negotiation of this
letter.
PAGE
<PAGE>
If the foregoing accurately reflects your understanding of
our agreement, please sign where indicated below. This agreement
will expire on September 30, 1995, unless sooner terminated by
either party hereto as provided herein.
Very truly yours,
DICKSTEIN PARTNERS INC.
By:________________________
AGREED AND ACKNOWLEDGED:
GOLUB ASSOCIATES INCORPORATED
By:___________________________
<PAGE>
<PAGE>
EXHIBIT "A"
INDEMNITY AGREEMENT
In consideration of the agreement of Golub Associates
Incorporated ("Golub") to undertake certain assignments pursuant
to that certain equity participation agreement dated June 14,
1995, by and between Dickstein Partners Inc. and its affiliates
("Dickstein") and Golub (the "Agreement"), Dickstein agrees to
indemnify and hold harmless Golub and its affiliates, their
respective officers, directors, employees and agents and each
person, if any, who controls Golub (collectively the "Indemnified
Parties" and individually an "Indemnified Party"), to the fullest
extent lawful, from and against any and all losses, claims,
damages, liabilities and expenses (including, without limitation
and as incurred, reasonable costs of investigating, preparing or
defending, or if not a party, of responding as a witness or as
custodian of documents or in any manner related thereto, and
reasonable attorneys' fees and expenses incurred in connection
therewith) (collectively "Losses") suffered by an Indemnified
Party to the extent that such Losses arise out of or are based
upon, directly or indirectly, in whole or in part: (i) the
Agreement referred to herein; (ii) any use (whether authorized or
not) by Dickstein of the commitments of the Indemnified Parties
herein; (iii) the performance by the Indemnified Parties, or any
of them, of the commitments contemplated in the Agreement; (iv)
any transaction contemplated in or by the Agreement or any
similar or related transaction; (v) any claim (regardless of the
proponent thereof) that the performance of the obligations of the
parties under or pursuant to the Agreement was or is unfair,
inequitable, fraudulent, a breach of fiduciary or otherwise
contrary to law, or involved any alleged omission to state a
material fact or any alleged misleading or untrue statement in
connection therewith; or (vi) any other claim relating to or
involving the transaction referred to in the Agreement or any
similar or related transaction which subjects the Indemnified
Parties or any of them to any Losses; provided, however, that no
Indemnified Party shall be entitled to indemnification by
Dickstein hereunder with respect to any Losses arising out of the
gross negligence or willful misconduct (as finally determined by
a court of competent jurisdiction) of such Indemnified Party.
All such fees and expenses (including any fees and expenses
incurred in connection with investigating or preparing to defend
such action or proceeding) shall be paid to the Indemnified
Party, as incurred, on demand to Dickstein, although if it is
determined that the Indemnified Party is not entitled to
indemnification, such payments shall be returned by the
Indemnified Party.
If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any
<PAGE>
<PAGE>
Indemnified Party in respect of which indemnity may be sought
from Dickstein, such Indemnified Party shall promptly notify
Dickstein in writing and Dickstein shall assume the defense
thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees
and expenses related thereto. Failure to promptly notify
Dickstein will not relieve Dickstein from any duty to indemnify
under this agreement, except if Dickstein's indemnification
obligation is materially adversely affected due to any such
delay. An Indemnified Party, upon written notice to Dickstein,
shall have the right to employ counsel in any action and to
participate in the defense thereof and the reasonable fees and
expenses of such counsel shall be at the expense of Dickstein
only if (a) Dickstein shall have failed promptly to assume the
defense of such action or proceeding or (b) the named parties to
such action or proceeding have been advised by counsel that the
representation by the same counsel would be impermissible due to
conflict of interests under applicable standards of professional
responsibility; provided that in the case of clause (b) above,
the counsel retained by any Indemnified Party must be reasonably
acceptable to Dickstein (if any such Indemnified Party notifies
Dickstein in writing that it elects to employ separate counsel,
Dickstein shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Party,
provided, however, that Dickstein shall not, in connection with
any such action or proceeding or separate but substantially
similar or related actions or proceedings, be liable for the fees
and expenses of more than one firm of attorneys). Dickstein
shall not be liable for any settlement of any such action or
proceeding effected without its prior written consent, but if any
action or proceeding is settled with its written consent, or if
there be a final judgment against the Indemnified Party in any
such action or proceeding, Dickstein agrees to indemnify and
hold harmless any such Indemnified Party from and against any
loss (to the extent and subject to the exceptions stated above)
by reason of such settlement or judgment.
If the indemnification provided for in this Indemnity
Agreement is held to be unenforceable although applicable in
accordance with its terms to an Indemnified Party under the first
paragraph hereof in respect of any Losses, referred to therein,
except due to the gross negligence or willful misconduct of the
party seeking indemnification, then Dickstein, in lieu of
indemnifying such Indemnified Party in full as provided above,
agrees that it shall pay 100% of the loss and shall receive from
the Indemnified Party as a result of such Losses an amount (a) in
such proportion as is appropriate to reflect on the one hand the
relative benefits received by Dickstein from the transactions
contemplated under the Agreement and on the other hand the
relative benefits received by the Indemnified Party for the
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services rendered hereunder or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (a) above but also the relative
fault of Dickstein on the one hand and of the Indemnified Party
on the other, as well as any other relevant equitable
considerations. Furthermore, the Indemnified Parties, in the
aggregate, shall not be required to contribute any amount in
excess of the amount of fees received by Golub pursuant to the
Agreement.
The indemnity and contribution obligations of Dickstein
under this Indemnity Agreement shall be in addition to any
liability or obligation Dickstein may otherwise have to an
Indemnified Party. The indemnity and contribution obligations of
Dickstein shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of any
Indemnified Party, (b) any termination of the Agreement, or (c)
any termination of the Transactions contemplated by the
Agreement, and shall be binding upon and shall inure to the
benefit of any successor, assign, heir or personal representative
of each Indemnified Party. Terms which are not otherwise
defined in this Indemnity Agreement are to have the same meanings
as are given defined terms in the Agreement.
Dickstein Partners Inc.
By:______________________
Its:
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