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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13G
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 10)*
ARBOR DRUGS, INC.
- - --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- - --------------------------------------------------------------------------------
(Title of Class of Securities)
038760 10 4
---------------------
(CUSIP Number)
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 5 pages
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CUSIP NO. 038760 10 4 13G PAGE 2 OF 5
----------- ----- -----
- - -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EUGENE APPLEBAUM
SS# ###-##-####
- - -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /X/
- - -------------------------------------------------------------------------------
3 SEC USE ONLY
- - -------------------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
- - -------------------------------------------------------------------------------
5 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------------
SHARES 6 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 14,726,804
EACH ---------------------------------------------------------------
REPORTING 7 SOLE DISPOSITIVE POWER
PERSON
WITH 600,000
---------------------------------------------------------------
8 SHARED DISPOSITIVE POWER
14,126,804
- - -------------------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,726,804
- - -------------------------------------------------------------------------------
10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
See Item 4.
- - -------------------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
24.2%
- - -------------------------------------------------------------------------------
12 TYPE OF REPORTING PERSON*
IN
- - -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
Page 2 of 5 pages
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ITEM 1. NAME OF ISSUER AND ADDRESS
(a) Name of Issuer:
Arbor Drugs, Inc.
(b) Address of Issuer's Principal Executive Offices:
3331 West Big Beaver Road
Troy, Michigan 48007-2510
ITEM 2. IDENTITY OF PERSON FILING
(a) Name of Person Filing:
Eugene Applebaum
(b) Address of Principal Business Office, or if none, Residence:
3331 West Big Beaver Road
Troy, Michigan 48007-2510
(c) Citizenship:
United States of America
(d) Title of Class of Securities:
Common Stock, $0.01 Par Value
(e) CUSIP Number:
038760 10 4
ITEM 3. IF THIS STATEMENT IS FILED PURSUANT TO RULE 13D-1(B), OR 13D-2(B),
CHECK WHETHER THE PERSON FILING IS A:
(a) [ ] Broker or Dealer registered under Section 15 of the Act
(b) [ ] Bank as defined in section 3(a)(6) of the Act
(c) [ ] Insurance Company as defined in section 3(a)(19) of
the Act
(d) [ ] Investment Company registered under section 8 of the
Investment Company Act
(e) [ ] Investment Adviser registered under section 203 of
the Investment Advisers Act of 1940
(f) [ ] Employee Benefit Plan, Pension Fund which is subject
to the provisions of the Employee Retirement Income
Security Act of 1974 or Endowment Fund; see Section
240.13d-1(b)(1)(ii)(F)
(g) [ ] Parent Holding Company, in accordance with Section
240.13d-1(b)(ii)(G) (Note: See Item 7)
(h) [ ] Group, in accordance with Section 240.13d-1(b)(1)(ii)(H)
Page 3 of 5 Pages
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ITEM 4. OWNERSHIP
(A) Amount Beneficially Owned:
14,726,804
(B) Percent of Class:
24.2%
(C) Number of shares as to which such person has:
(I) sole power to vote or to direct the vote
0
(II) shared power to vote or to direct the vote
14,726,804
(III) sole power to dispose or to direct the disposition of
600,000
(IV) shared power to dispose or to direct the disposition of
14,126,804
The shares described above as to which Mr. Applebaum has shared voting
power or shared dispositive power are subject to an Option and Voting Agreement
dated as of February 8, 1998, in favor of CVS Corporation. Such agreement, a
copy of which is attached as Exhibit A, was entered into pursuant to the terms
of the Agreement and Plan of Merger dated as of February 8, 1998, among CVS
Corporation, a newly-formed wholly-owned subsidiary of CVS Corporation, and
Arbor Drugs, Inc.
The shares reported in this item 4 exclude 265,780 shares owned by Mr.
Applebaum's wife and 987,186 shares owned by Mr. Applebaum's wife as trustee
for the adult children of Mr. and Mrs. Applebaum, in which shares Mr. Applebaum
disclaims any beneficial interest. Such shares are also subject to the above
described Option and Voting agreement.
ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS
If this statement is being filed to report the fact that as of the date
hereof the reporting person has ceased to be a beneficial owner of more than
five percent of the class of securities, check the following [ ].
ITEM 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON
N/A
ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED THE
SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY
N/A
ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP
N/A
Page 4 of 5 Pages
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ITEM 9. NOTICE OF DISSOLUTION OF GROUP
N/A
ITEM 10. CERTIFICATION
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
February 12, 1998
-----------------
DATE
/s/ Eugene Applebaum
--------------------
SIGNATURE
EUGENE APPLEBAUM
--------------------
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative other than an
executive officer or general partner of the filing person, evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001)
Page 5 of 5 Pages
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EXHIBIT A
OPTION AND VOTING AGREEMENT
AGREEMENT dated as of February 8, 1998 among CVS Corporation, a
Delaware corporation ("BUYER"), and the holders (the "STOCKHOLDERS") of the
shares of common stock, $0.01 par value (the "SHARES") of Arbor Drugs, Inc., a
Michigan corporation ("COMPANY"), listed on the signature pages hereof.
WHEREAS, in order to induce Buyer to enter into the Agreement and Plan
of Merger (the "MERGER AGREEMENT") with Company dated as of the date hereof,
Buyer has requested the Stockholders, and the Stockholders have agreed, to enter
into this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS; STOCK OPTION
SECTION 1.1. Defined Terms. Capitalized terms used but not defined
in this Agreement are used as defined in the Merger Agreement.
SECTION 1.2. Grant of Stock Option. Each Stockholder hereby grants to
Buyer an irrevocable option (the "OPTION") to purchase all Shares presently
owned by such Stockholder as set forth on the signature page hereto and any
additional Shares acquired by the Stockholder (whether by purchase or otherwise)
after the date of this Agreement (the "STOCKHOLDER SHARES") at a purchase price
of $23 per Stockholder Share (the "PURCHASE PRICE"); provided that the
Stockholders may retain an aggregate of 600,000 Shares for purposes of donation
to charity, which shall not be Stockholder Shares subject to the Option.
SECTION 1.3. Exercise of Option. (a) Subject to the conditions set
forth in Section 1.05 hereof, the Option may be exercised by Buyer, in whole but
not in part, at any time after the occurrence of a Trigger Event (as defined
below) and prior to the first anniversary after the termination of the Merger
Agreement in accordance with the terms thereof. In the event Buyer wishes to
exercise the Option for all of the Stockholder Shares, Buyer shall send a
written notice (the "EXERCISE NOTICE") to the Stockholders specifying the place,
the date (not less than one nor more than 20 business days from the date of the
Exercise Notice), and the time for the closing of such purchase, provided that
such date and time may be earlier than one day after the Exercise Notice if
reasonably practicable. The closing of the purchase of Stockholder Shares (the
"CLOSING") shall take place at the place, on the date and at the time designated
by Buyer in its Exercise
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Notice, provided that if, at the date of the Closing herein provided for, the
conditions set forth in Section 1.05 shall not have been satisfied (or waived by
the Stockholders), Buyer may postpone the Closing until a date within five
business days after such conditions are satisfied.
(b) Buyer shall not be under any obligation to deliver any Exercise
Notice and may allow the Option to terminate without purchasing any Stockholder
Shares hereunder; provided, however, that once Buyer has delivered to the
Stockholders an Exercise Notice, subject to the terms and conditions of this
Agreement, Buyer shall be bound to effect the purchase as described in such
Exercise Notice.
SECTION 1.4. Closing. Each Stockholder shall deliver to Buyer a
certificate or certificates (the "CERTIFICATES") representing (or cause to be
made book entry delivery to an account designated by Buyer) such Stockholder
Shares, in the case of certificates, duly endorsed or accompanied by stock
powers duly executed in blank and at Buyer's election, Buyer shall deliver to
such Stockholder either (x) a certified or bank cashier's check or checks
payable to or upon the order of such Stockholder in an amount equal to (i) the
number of Stockholder Shares being purchased at such Closing multiplied by (ii)
the Purchase Price (the "PURCHASE AMOUNT") or (y) the number of shares of the
Parent Common Stock equal to the Purchase Amount divided by the closing price on
the NYSE of Parent Common Stock on the trading day prior to delivery of the
Exercise Notice. If Buyer elects to deliver the Parent Common Stock pursuant to
the immediately preceding sentence, Buyer shall concurrently enter into a
Registration Rights Agreement with the Stockholders in respect of shares of
Parent Common Stock delivered to the Stockholders hereunder. Such agreement
shall be substantially in the form of Exhibit B to the Merger Agreement.
SECTION 1.5. Conditions to the Stockholder's Obligations. The
obligation of any Stockholder to sell Stockholder Shares at the Closing is
subject to the following conditions:
(a) The representations and warranties of Buyer contained in
Article 4 shall be true and correct in all material respects on the
date thereof and Buyer shall not be in material breach of its
obligations under the Merger Agreement.
(b) All waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR ACT") applicable to such exercise of
the Option shall have expired or been terminated.
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(c) There shall be no preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency
or commission, nor any statute, rule, regulation or order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining such exercise of the Option.
(d) (i) the Merger Agreement has been terminated by Company
pursuant to Section 7.01(e) of the Merger Agreement; (ii) the Merger
Agreement has been terminated by Buyer pursuant to Section 7.01(d) of
the Merger Agreement or (iii) a termination fee is payable under
Section 8.04(b)(z)(1) of the Merger Agreement (each of (i), (ii) and
(iii) being a "TRIGGER EVENT").
SECTION 1.6. Adjustment Upon Change in Capitalization or Merger. (a)
In the event of any change in Company's capital stock by reason of stock
dividends, stock splits, mergers, consolidations, recapitalizations,
combinations, conversions, exchanges of shares, extraordinary or liquidating
dividends, or other changes in the corporate or capital structure of Company
which would have the effect of diluting or changing Buyer's rights hereunder,
the number and kind of shares or securities subject to the Option and the
purchase price per Stockholder Share (but not the total purchase price) shall be
appropriately and equitably adjusted so that Buyer shall receive upon exercise
of the Option the number and class of shares or other securities or property
that Buyer would have received in respect of the Stockholders Shares purchasable
upon exercise of the Option if the Option had been exercised immediately prior
to such event. The Shareholders shall take such steps in connection with such
consolidation, merger, liquidation or other such action as may be necessary to
assure that the provisions hereof shall thereafter apply as nearly as possible
to any securities or property thereafter deliverable upon exercise of the
Option.
(b) In the event the consideration per Share to be paid by Buyer
pursuant to the Merger is increased, the Purchase Price shall be similarly
increased and in the event the Closing hereunder shall have occurred, Buyer
shall promptly pay to the Stockholder the product of the amount of such increase
in the Purchase Price multiplied by the number of Stockholder Shares as to which
the Stockholder Option has been exercised.
ARTICLE 2
VOTING
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SECTION 2.1. Voting of Company Common Stock. Each Stockholder hereby
agrees that at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company Common Stock, however
called, or in connection with any written consent of the holders of Company
Common Stock, such Stockholder will appear at the meeting or otherwise cause the
Stockholder Shares to be counted as present thereat for purposes of establishing
a quorum and such Stockholder shall vote or consent (or cause to be voted or
consented) the Stockholder Shares in favor of the Merger, the execution and
delivery by Company of the Merger Agreement and the approval and adoption of the
terms thereof and each of the other actions contemplated by the Merger Agreement
and this Agreement and any actions required in furtherance thereof and hereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders represents and warrants to Buyer as to itself
that:
SECTION 3.1. Ownership of Shares. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set forth
in Articles 1 and 2 hereof, sole power of disposition, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Stockholder Shares held by
such Stockholder with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
SECTION 3.2. Authorization. This Agreement has been duly and validly
executed and delivered by such Stockholder and constitutes a valid and binding
agreement enforceable against such Stockholder in accordance with its terms
except to the extent such enforcement may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 3.3. No Conflicts. Except for filings, authorizations, consents
and approvals as may be required under the HSR Act, the 1934 Act and the 1933
Act, no filing with, and no permit, authorization, consent or approval of, any
state or federal governmental body or authority is necessary for the execution
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and delivery of this Agreement by the Stockholder and the consummation by the
Stockholder of the transactions contemplated hereby and none of the execution
and delivery of this Agreement by the Stockholder, the consummation by the
Stockholder of the transactions contemplated hereby or compliance by the
Stockholder with any of the provisions hereof shall conflict with or result in
any breach of the organizational documents of the Stockholder, result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which the Stockholder is a party or by
which the Stockholder or any of its properties or assets may be bound, or
violate any order, writ, injunction, decree, judgment, statute, law, rule or
regulation applicable to the Stockholder or any of its properties or assets.
SECTION 3.4. No Encumbrances. Except as expressly provided in this
Agreement, the Stockholder Shares and the Certificates are now, and at all times
during the term hereof, will be, held by the Stockholder, or by a nominee or
custodian for the benefit of the Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder and other than liens arising from
securities margin accounts.
SECTION 3.5. No Finder's Fees. Other than as contemplated by the
Merger Agreement with respect to fees payable by Company, no broker, investment
banker, financial advisor or other Person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Stockholder.
SECTION 3.6. Reliance by Buyer. The Stockholder understands and
acknowledges that Buyer is entering into the Merger Agreement in reliance upon
the Stockholder's execution and delivery of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each of the Stockholders:
SECTION 4.1. Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has
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all requisite corporate power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution and delivery by
Buyer of this Agreement and the performance by Buyer of its obligations
hereunder have been duly and validly authorized by the Board of Directors of
Buyer and no other corporate proceedings on the part of Buyer are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 4.2. Corporate Authorization. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes a valid and binding
agreement of Buyer enforceable against Buyer in accordance with its terms except
to the extent (i) such enforcement may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 4.3. No Conflicts. Except for filings, authorizations,
consents and approvals as may be required under the HSR Act, the 1934 Act and
the 1933 Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal governmental body or authority is necessary
for the execution and delivery of this Agreement by Buyer and the consummation
by Buyer of the transactions contemplated hereby and (ii) none of the execution
and delivery of this Agreement by Buyer, the consummation by Buyer of the
transactions contemplated hereby or compliance by Buyer with any of the
provisions hereof shall (A) conflict with or result in any breach of the
certificate of incorporation or by-laws of Buyer, (B) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which Buyer is a party or its properties or assets
may be bound, or (C) violate any order, writ, injunction, decree, judgment,
statute, law, rule or regulation applicable to Buyer or any of its properties or
assets.
SECTION 4.4. No Finder's Fees. Except for Credit Suisse First Boston
Corporation, whose fees will be paid by Buyer, no broker, investment banker,
financial adviser or other Person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Buyer.
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ARTICLE 5
COVENANTS OF THE STOCKHOLDERS
Each of the Stockholders hereby covenants and agrees that:
SECTION 5.1. Restriction on Transfer; Proxies; Non-Interference. The
Stockholder shall not, directly or indirectly: offer for sale, sell, transfer,
tender, pledge, encumber (other than by operation of law), assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Stockholder Shares or any interest therein; except as contemplated by this
Agreement, grant any proxies or powers of attorney, deposit the Stockholder
Shares into a voting trust or enter into a voting agreement with respect to the
Stockholder Shares; or take any action that would make any representation or
warranty of the Stockholder contained herein untrue or incorrect or would result
in a breach by the Stockholder of its obligations under this Agreement or a
breach by Company of its obligations under the Merger Agreement or the effect of
which would be inconsistent or violative of any provision or agreement contained
in this Agreement.
SECTION 5.2. No Solicitation. The Stockholder shall not, and shall
cause its Affiliates and officers, directors, employees, investment bankers,
consultants and other agents of the Stockholder and such Affiliates (such
Affiliates, officers, directors, employees, investment bankers, consultants and
other agents of any Person are hereinafter collectively referred to as the
"REPRESENTATIVES" of such Person) not to, directly or indirectly, take any
action to initiate, solicit, encourage or facilitate the making of any
Acquisition Proposal or any inquiry with respect thereto, or engage in
discussions or negotiations with any Person (other than Buyer or any of its
Affiliates or Representatives) relating to any Acquisition Proposal or disclose
any non-public information relating to Company or any Subsidiary of Company, or
afford access to the properties, books or records of Company or any Subsidiary
of Company, to any Person that is considering making or has made any Acquisition
Proposal. The Stockholder shall notify Buyer orally and in writing of any
offers, proposals or inquiries received by the Stockholder relating to the
purchase or acquisition by any Person of the Shares and of any Acquisition
Proposal actually known to the Stockholder (including in each case the material
terms and conditions thereof and the identity of the Person making it), within
24 hours of the receipt thereof. The Stockholder shall, and shall cause its
Representatives to, immediately cease and cause to be terminated any and all
existing activities, discussions or negotiations, if any, with any parties
conducted heretofore with respect to any Acquisition Proposal, other than
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discussions or negotiations with Buyer and its Affiliates. Notwithstanding the
restrictions set forth in this Section 5.02, each of Company and any Person who
is an officer or director of Company, including any individual Stockholder
serving in capacity of director or officer, may take any action in such capacity
consistent with the terms of the Merger Agreement.
SECTION 5.3. Stop Transfer; Legend. (a) Each Stockholder agrees with,
and covenants to, Buyer that the Stockholder shall not request that Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Stockholder Shares unless such
transfer is made in compliance with this Agreement.
(b) Each Stockholder will, prior to the Effective Time, duly execute
and deliver to Buyer the Affiliate's letter contemplated in Section 5.11 of the
Merger Agreement substantially in the form of Exhibit C-3 to the Merger
Agreement.
(c) Each Stockholder shall promptly after the date hereof surrender to
Company all certificates representing the Stockholder Shares, and Company shall
place the following legend on such certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN OPTION AND VOTING AGREEMENT DATED AS OF FEBRUARY 8, 1998 BY
AND BETWEEN CVS CORPORATION AND [STOCKHOLDERS] WHICH AMONG
OTHER THINGS RESTRICTS THE TRANSFER AND VOTING THEREOF."
ARTICLE 6
MISCELLANEOUS
SECTION 6.1. Termination of Agreement. The provisions of Section 1.02
shall terminate at the Effective Time of the Merger Agreement or upon the
termination of the Merger Agreement; provided that Section 1.02 shall not
terminate upon termination of the Merger Agreement (i) pursuant to Section
7.01(d) or 7.01(e) of the Merger Agreement, or (ii) pursuant to Section 7.01(b)
of the Merger Agreement where the Board of Directors of Company has failed to
recommend the Merger or modified such recommendation in a manner adverse to
Buyer.
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SECTION 6.2. Indemnity. (a) Buyer agrees that it will indemnify each
Stockholder from and against any costs, liabilities or expenses (including
reasonable attorneys' fees and expenses) arising out of any claim or action
brought by or on behalf of any shareholder of Company (other than any
Stockholder), alleging damage by reason of the grant by such Stockholder of the
Option contemplated hereby, or the exercise of the Option, provided that (i)
such indemnity shall apply if and only to the extent that the Company's
directors and officers liability insurance policies are insufficient to cover
any such cost, liability or expense or said insurer fails to pay under such
policy upon request (it being understood that in the case of any payment by
Buyer or Company hereunder, any such payment shall not waive or otherwise affect
any rights of Buyer or Company) and (ii) Buyer shall not be obligated to
indemnify any Stockholder hereunder for any cost, liability or expense arising
from the wilful misconduct of such Stockholder.
(b) Each Stockholder indemnified under paragraph (a) above shall,
promptly after receipt of notice of a claim or action against such Stockholder
in respect of which indemnity may be sought hereunder, notify Buyer in writing
of such claim or action; provided that the failure to notify Buyer shall not
relieve it from any liability that it may have to such Stockholder on account of
the indemnity contained in paragraph (a) above except to the extent that Buyer
was actually prejudiced by such failure. Buyer shall be entitled to assume the
defense of such claim or action with counsel of its choice at Buyer's expense.
Buyer shall not be liable to indemnify any Stockholder if such Stockholder
settles such claim or action without the consent of Buyer. Buyer may not agree
to any settlement of any such claim or action unless such settlement includes an
unconditional release of Stockholder from all claims thereunder. In any action
hereunder as to which Buyer has assumed the defense thereof, the Stockholder
shall continue to be entitled to participate in the defense thereof, with
counsel of its own choice reasonably acceptable to Buyer and at the expense of
Buyer.
SECTION 6.3. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.4. Further Assurances. In the event Buyer exercises the
Option, Buyer and the Stockholders will each execute and deliver or cause to be
executed and delivered all further documents and instruments and use its best
efforts to secure such consents and take all such further action as may be
reasonably necessary in order to consummate the transactions contemplated hereby
or to enable Buyer to exercise and enjoy all benefits and rights of the
Stockholders with respect to the Stockholder Shares acquired pursuant to
exercise of the Option.
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SECTION 6.5. Additional Agreements. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement, to obtain all necessary waivers, consents and approvals and effect
all necessary registrations and filings, including, but not limited to, filings
under the HSR Act, responses to requests for additional information related to
such filings, and submission of information requested by governmental
authorities, and to rectify any event or circumstances which could impede
consummation of the transactions contemplated hereby.
SECTION 6.6. Specific Performance. The parties hereto agree that Buyer
would be irreparably damaged if for any reason the Stockholders failed to sell
the Stockholder Shares upon exercise of the Option or to perform any of its
other obligations under this Agreement, and that Buyer would not have an
adequate remedy at law for money damages in such event. Accordingly, Buyer shall
be entitled to specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by the Stockholders. This provision is
without prejudice to any other rights that Buyer may have against the
Stockholders for any failure to perform its obligations under this Agreement.
SECTION 6.7. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram or telecopy, or by registered or certified mail
(postage prepaid, return receipt requested) to such party at its address set
forth on the signature page hereto.
SECTION 6.8. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Stockholder Shares.
SECTION 6.9. Amendments. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
SECTION 6.10. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
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<PAGE> 16
SECTION 6.11. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Michigan without giving
effect to the principles of conflicts of laws thereof.
SECTION 6.12. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
SECTION 6.13. Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 6.14. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CVS CORPORATION
By: /s/ Thomas M. Ryan
---------------------------------
Name: Thomas M. Ryan
Title: Vice Chairman and Chief
Operating Officer
One CVS Drive
Woonsocket, RI 02895
Fax: (401) 762-3012
Attention: Thomas M. Ryan, Vice
Chairman and Chief
Operating Officer
CVS Corporation
12
<PAGE> 18
CLASS OF SHARES EUGENE APPLEBAUM LIVING TRUST
STOCK OWNED
--------- ------
common 13,275,555 By:
/s/ Eugene Applebaum
-----------------------------------
Name: Eugene Applebaum
Title: Trustee
CLASS OF SHARES
STOCK OWNED
--------- ------
common 265,780 /s/ Marcia C. Applebaum
-----------------------------------
Marcia C. Applebaum
CLASS OF SHARES TRUST FOR THE BENEFIT OF
STOCK OWNED LISA S. APPLEBAUM
--------- ------
common 493,593 By:
/s/ Marcia C. Applebaum
-----------------------------------
Name: Marcia Applebaum
Title: Trustee
CLASS OF SHARES TRUST FOR THE BENEFIT OF
STOCK OWNED PAMELA A. APPLEBAUM
--------- ------
common 493,593 By:
/s/ Marcia C. Applebaum
-----------------------------------
Name: Marcia Applebaum
Title: Trustee
13
