SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 1, 1994
HOOK-SUPERX, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11122 31-1186877
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
175 Tri-County Parkway, Cincinnati, Ohio 45246-3222
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 782-3000
Exhibit Index Appears on Page 2
Page 1 of 2 Pages
Item 5. Other Events.
The Registrant entered into an Agreement and Plan or Merger, dated as of
March 31, 1994, with Revco D.S., Inc., a Delaware corporation, and HSX
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), pursuant to
which, among other things, Acquisition Corp. will merge with and into
the registrant on the terms and subject to the conditions set forth therein
(the "Merger"). Pursuant to the Merger, each holder of issued and
outstanding shares of common stock, $.01 par value per share, of the
Registrant, will receive $13.75 per share.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
(1) Press release of Hook-SupeRx, Inc. dated April 4, 1994
(2) Agreement and Plan of Merger, dated as of March 31, 1994, by
and among Hook-SupeRx, Inc. Revco D.S., Inc. and HSX Acquisition
Corp.
(3) Voting Agreement, dated as of March 31, 1994, by and among
Hook-SupeRx, Inc., Revco D.S., Inc., HSX Acquisition Corp.
and certain Shareholders named therein.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOOK-SUPERX, INC.
Registrant
By: /s/Timothy M. Mooney
Date: April 8 , 1994 Timothy M. Mooney
Senior Vice President,
Chief Financial Officer
Page 2 of 2 Pages
Exhibit #1
FOR IMMEDIATE RELEASE Revco Contact:
Mark Weinberg
Director, Public Relations
(216) 425-9811, ext. 6145
HSI Contact:
William Z. Welsh, Jr.
Senior V.P., Sales & Marketing
(401) 724-9500, ext. 445
Revco Will Become Second Largest Drug Stores Chain
REVCO D.S., INC. TO ACQUIRE HOOK-SUPERX, INC.
TWINSBURG, Ohio (April 4, 1994) -- Revco D.S., Inc. (NYSE: RXR)
and Hook-SupeRx (NYSE: HSX) jointly announced today that they
have entered into a definitive merger agreement pursuant to which
Revco will acquire all of the outstanding Hook-SupeRx (HSI)
shares for $13.75 per share for a total acquisition value
of approximately $600 million, including assumed debt of HSI.
Stockholders of HSI, owning approximately 49% of the outstanding
HSI shares, have agreed to vote in favor of the transaction.
HSI, a retail drug store chain headquartered in
Cincinnati, Ohio, has nearly 1,200 stores and had sales of $2.3
billion over the past twelve months. The HSI stores operate
variously under the names Hook's, SupeRx and Brooks. Revco and
HSI combined operate 2,371 stores and achieved sales of $4.7
billion over the past twelve months. This will make Revco the
second largest drug store chain in the country.
"HSI is an excellent fit for Revco, and we look forward
to welcoming their employees and customers", said D. Dwayne Hoven,
president and chief executive officer of Revco. "This strategic
acquisition enhances our position in the market, strengthens our
capabilities in third-party marketing, and helps further position
us for health care reform. It will also provide an expanded
mail-order business and enhanced benefits-management capabilities."
Philip Beekman, president and chief executive officer of
HSI, stated that: "We are very proud of our accomplishments at
HSI and the contributions of our associates since our inception in
1986, and this transaction represents an attractive price for our
stockholders. We are confident that our customers will benefit
from the synergisms resulting from the combination of our two
companies."
Hoven noted, "Revco's strategy has been to increase market
penetration by adding stores in the nine contiguous states in
which we operate. The 22-state geographic area in which HSI
operates will strengthen our position in Ohio, Pennsylvania,
Maryland, West Virginia, Virginia and Tennessee. In addition,
this acquisition will expand Revco's geographic scope into several
new areas.
"HSI and Revco make a particularly good match," said Hoven.
"Hook's SupeRx and Brooks stores are similar to our size,
average volume and merchandise. These chains have strong
histories. They have established themselves well in their markets,
and have developed loyal customers."
Revco is presently evaluating a definitive financial package,
but has received both a debt financing commitment from Banque
Paribas and Continental Bank N.A. and a standby purchase commitment
from Zell/Chilmark Fund L.P.., a principal stockholder, in
connection with a contemplated equity rights offering.
Revco's obligation to consummate the transactions, as contemplated
in the merger agreement, is subject to Revco raising up to
$175 million through the issuance of senior subordinated debentures.
The transaction is also subject to customary conditions.
It is expected that closing will occur in the early summer.
Execution Counterpart
Exhibit #2
AGREEMENT AND PLAN OF MERGER
between
REVCO D.S., INC.,
HSX ACQUISITION CORP.
and
HOOK-SUPERX, INC.
Dated as of March 31, 1994<PAGE>
TABLE OF CONTENTS
1. The Merger . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. The Merger . . . . . . . . . . . . . . . . . . . . 1
1.2. The Closing . . . . . . . . . . . . . . . . . . . . 1
1.3. Effective Time . . . . . . . . . . . . . . . . . . 1
2. Certificate of Incorporation and Bylaws of the
Surviving Corporation . . . . . . . . . . . . . . . . . 2
2.1. Certificate of Incorporation . . . . . . . . . . . 2
2.2. Bylaws . . . . . . . . . . . . . . . . . . . . 2
3. Directors and Officers of the Surviving Corporation . . 2
3.1. Directors . . . . . . . . . . . . . . . . . . 2
3.2. Officers . . . . . . . . . . . . . . . . . . . . . 2
4. Conversion of HSI Stock . . . . . . . . . . . . . . . . 2
4.1. Conversion of HSI Stock . . . . . . . . . . . . . . 2
4.2. Exchange of Certificates Representing HSI
Common Stock . . . . . . . . . . . . . . . . . . . 3
4.3 Dissenting Shares . . . . . . . . . . . . . . . . . 5
5. Representations and Warranties of HSI . . . . . . . . . 5
5.1. Existence; Good Standing; Corporate Authority;
Compliance With Law . . . . . . . . . . . . . . . . 5
5.2. Authorization, Validity and Effect of Agreements . 6
5.3. Capitalization . . . . . . . . . . . . . . . . . . 6
5.4. Subsidiaries . . . . . . . . . . . . . . . . . . . 7
5.5. Other Interests . . . . . . . . . . . . . . . . . . 7
5.6. No Violation . . . . . . . . . . . . . . . . . . . 7
5.7. SEC Documents . . . . . . . . . . . . . . . . . . . 8
5.8. Litigation . . . . . . . . . . . . . . . . . . . . 9
5.9. Absence of Certain Changes . . . . . . . . . . . . 9
5.10. Taxes . . . . . . . . . . . . . . . . . . . . 9
5.11 Certain Employee Plans . . . . . . . . . . . . . . 10
5.12. Labor Matters . . . . . . . . . . . . . . . . 10
5.13. Environmental Laws and Regulations . . . . . . 11
5.14. Rights Agreement . . . . . . . . . . . . . . . 11
5.15. Real Property . . . . . . . . . . . . . . . . 12
5.16. Insurance . . . . . . . . . . . . . . . . . . 12
5.17. Intellectual Property . . . . . . . . . . . . 13
5.18. Certain Contracts . . . . . . . . . . . . . . 13
5.19. No Brokers . . . . . . . . . . . . . . . . . . 13
5.20. Fairness Opinion . . . . . . . . . . . . . . . 13
6. Representations and Warranties
of Parent and Merger Sub . . . . . . . . . . . . . . . . 13
6.1. Existence; Good Standing; Corporate Authority;
Compliance With Law . . . . . . . . . . . . . . . . 14
6.2. Authorization, Validity and Effect of Agreements . 14
6.3. No Violation . . . . . . . . . . . . . . . . . . . 14
6.4. Litigation . . . . . . . . . . . . . . . . . . . . 14
6.5. Financing . . . . . . . . . . . . . . . . . . . . . 15
6.6. No Brokers . . . . . . . . . . . . . . . . . . . . 15
6.7. Surviving Corporation After the Merger . . . . . . 15
6.8 No Ownership of Company Capital Stock . . . . . . . 15
7. Covenants . . . . . . . . . . . . . . . . . . . . . . . 15
7.1. Acquisition Proposals . . . . . . . . . . . . . . . 15
7.2. Conduct of Businesses . . . . . . . . . . . . . . . 16
7.3. Meeting of Stockholders . . . . . . . . . . . . . . 19
7.4. Filings; Other Action . . . . . . . . . . . . . . . 19
7.5. Inspection of Records; Access . . . . . . . . . . . 20
7.6. Publicity . . . . . . . . . . . . . . . . . . . . . 20
7.7. Proxy Statement . . . . . . . . . . . . . . . . . . 20
7.8. Further Action . . . . . . . . . . . . . . . . . . 20
7.9. Expenses . . . . . . . . . . . . . . . . . . . . . 20
7.10. Indemnification and Insurance . . . . . . . . 21
7.11. Certain Benefits . . . . . . . . . . . . . . . 22
7.12. Restructuring of Merger . . . . . . . . . . . 23
7.13 New York Real Estate Gains Tax . . . . . . . . . . 23
8. Conditions . . . . . . . . . . . . . . . . . . . . . . . 23
8.1. Conditions to Each Party's Obligation to Effect
the Merger . . . . . . . . . . . . . . . . . . . . 23
8.2. Conditions to Obligation of HSI to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . 24
8.3. Conditions to Obligation of Parent and Merger Sub
to Effect the Merger . . . . . . . . . . . . . . . 24
9. Termination . . . . . . . . . . . . . . . . . . . . . . 25
9.1. Termination by Mutual Consent . . . . . . . . . . . 25
9.2. Termination by Either Parent or HSI . . . . . . . . 25
9.3. Termination by HSI . . . . . . . . . . . . . . . . 25
9.4. Termination by Parent . . . . . . . . . . . . . . . 26
9.5. Effect of Termination and Abandonment . . . . . . . 26
9.6. Extension; Waiver . . . . . . . . . . . . . . . . . 26
10. General Provisions . . . . . . . . . . . . . . . . . . . 27
10.1.
Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . 27
10.2. Notices . . . . . . . . . . . . . . . . . . . 27
10.3. Assignment; Binding Effect; Benefit . . . . . 28
10.4. Entire Agreement . . . . . . . . . . . . . . . 28
10.5. Amendment . . . . . . . . . . . . . . . . . . 28
10.6. Governing Law . . . . . . . . . . . . . . . . 28
10.7. Counterparts . . . . . . . . . . . . . . . . . 28
10.8. Headings . . . . . . . . . . . . . . . . . . . 29
10.9. Interpretation . . . . . . . . . . . . . . . . 29
10.10. Waivers . . . . . . . . . . . . . . . . . . . 29
10.11. Incorporation of Exhibits . . . . . . . . . . 29
10.12. Severability . . . . . . . . . . . . . . . . . 29
10.13. Enforcement of Agreement . . . . . . . . . . . 29
10.14. Subsidiaries . . . . . . . . . . . . . . . . . 29
10.15 Performance by Merger Sub . . . . . . . . . . 30
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of March 31, 1994, between Revco D.S., Inc., a Delaware
corporation ("Parent"), HSX Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), and Hook-SupeRx, Inc., a Delaware corporation ("HSI").
RECITALS
A. The Boards of Directors of Parent and HSI each
have determined that a business combination between Parent and
HSI is in the best interests of their respective companies and
stockholders and presents an opportunity for their respective
companies to achieve long-term strategic and financial benefits
and, accordingly, have agreed to effect the merger provided for
herein upon the terms and subject to the conditions set forth
herein.
B. Parent and HSI have each received a fairness
opinion relating to the transactions contemplated hereby as more
fully described herein.
C. Parent, Merger Sub and HSI desire to make certain
representations, warranties and agreements in connection with the
merger.
NOW, THEREFORE, in consideration of the foregoing, and
of the representations, warranties, covenants and agreements
contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
1. The Merger.
1.1. The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into HSI in
accordance with this Agreement and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger").
HSI shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation"). The
Merger shall have the effects specified in the Delaware General
Corporation Law (the "DGCL").
1.2. The Closing. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the "Closing")
shall take place at the offices of Fried, Frank, Harris, Shriver
& Jacobson, One New York Plaza, New York, New York, at 9:00 a.m.,
local time, on the first business day immediately following the
day on which the last to be fulfilled or waived of the conditions
set forth in Article 8 shall be fulfilled or waived in accordance
herewith, or at such other time, date or place as Parent and HSI
may agree. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
1.3. Effective Time. If all the conditions to the
Merger set forth in Article 8 shall have been fulfilled or waived
in accordance herewith and this Agreement shall not have been
terminated as provided in Article 9, the parties hereto shall
cause a Certificate of Merger meeting the requirements of Section
251 of the DGCL to be properly executed and filed in accordance
with such Section on the Closing Date. The Merger shall become
effective at the time of filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance
with the DGCL or at such later time which the parties hereto
shall have agreed upon and designated in such filing as the
effective time of the Merger (the "Effective Time").
ARTICLE 2
2. Certificate of Incorporation and Bylaws of the
Surviving Corporationn.
2.1. Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until duly amended in accordance with
applicable law.
2.2. Bylaws. The Bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the Bylaws of
the Surviving Corporation, until duly amended in accordance with
applicable law.
ARTICLE 3
3. Directors and Officers of the Surviving
Corporation.
3.1. Directors. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of
the Surviving Corporation as of the Effective Time.
3.2. Officers. The officers of HSI immediately prior
to the Effective Time shall be the officers of the Surviving
Corporation as of the Effective Time.
ARTICLE 4
4. Conversion of HSI Stock.
2
4.1. Conversion of HSI Stock.
(a) At the Effective Time, each share of the
common stock, $.01 par value, of Merger Sub outstanding
immediately prior to the Effective Time shall remain
outstanding and shall represent one share of common
stock, $.01 par value, of the Surviving Corporation.
(b) At the Effective Time, each share of the
common stock, $.01 par value (the "HSI Common Stock"),
together with associated preferred stock rights (the
"Rights") issued pursuant to the HSI Rights Agreement
(as defined herein), of HSI issued and outstanding
immediately prior to the Effective Time, other than the
Dissenting Shares (as defined below), shall, by virtue
of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive
cash in the amount of $13.75, without interest (the
"Purchase Price").
(c) As a result of the Merger and without any
action on the part of the holder thereof, all shares of
HSI Common Stock, together with associated Rights,
shall cease to be outstanding and shall be cancelled
and retired and shall cease to exist, and each holder
of a certificate (a "Certificate") representing any
shares of HSI Common Stock or associated Rights shall
thereafter cease to have any rights with respect to
such shares of HSI Common Stock or associated Rights,
except the right to receive the Purchase Price upon the
surrender of such Certificate.
(d) Each share of HSI Common Stock issued and
held in HSI's treasury at the Effective Time shall, by
virtue of the Merger, cease to be outstanding and shall
be cancelled and retired without payment of any
consideration therefor.
(e) Parent and HSI shall take all actions
necessary to provide that, immediately prior to the
Effective Time, (i) each outstanding option to purchase
shares of HSI Common Stock, each stock appreciation
right, and each limited stock appreciation right or
other similar right (individually, an "HSI Option" and
collectively, the "HSI Options") granted under the HSI
Outside Director Stock Option Plan, the 1987 Stock
Option Plan, and the 1992 Stock Plan (collectively, the
"HSI Stock Option Plans"), whether or not then
exercisable or vested, shall become fully exercisable
and vested, (ii) each HSI Option which is then
outstanding shall be cancelled and (iii) in
consideration of such cancellation, Parent shall pay to
3
each holder of an HSI Option, net of any withholding
taxes, an amount in respect of each such HSI Option
held by such holder equal to the product of (A) the
excess, if any, of the Purchase Price over the exercise
or strike price of such HSI Option and (B) the number
of shares of HSI Common Stock subject to such HSI
Option. HSI and Parent will use their best efforts to
obtain any necessary consents of the holders of HSI
Options and to make any necessary amendments to the HSI
Stock Option Plans.
4.2. Exchange of Certificates Representing HSI
Common Stock.
(a) On the Closing Date, Parent shall deposit, or
shall cause to be deposited, with an exchange agent
selected by Parent, which shall be Parent's Transfer
Agent or such other party reasonably satisfactory to
HSI (the "Exchange Agent"), for the benefit of the
holders of shares of HSI Common Stock, for payment in
accordance with this Article 4, a sum in cash equal to
the total of (i) the product of (A) the Purchase Price
and (B) the number of shares of HSI Common Stock issued
and outstanding as set forth in Section 5.3, and (ii)
an amount sufficient to purchase all of the HSI Options
under the HSI Option Plans, such sum being hereinafter
referred to as the ("Exchange Fund"), to be paid
pursuant to this Section 4.2 in exchange for
outstanding shares of HSI Common Stock and pursuant to
Section 4.1(e) in exchange for the HSI Options.
(b) Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder
of record of a Certificate or Certificates (i) a letter
of transmittal which shall specify that delivery of
such Certificates shall be effected, and risk of loss
and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as
Parent may reasonably specify and (ii) instructions for
use in effecting the surrender of the Certificates in
exchange for payment of the Purchase Price per share
hereunder. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such
letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in
exchange therefor, in cash, the product of (x) the
Purchase Price and (y) the number of shares of HSI
Common Stock represented by such Certificates so
surrendered by such holder, and the Certificate so
surrendered shall forthwith be cancelled. In the event
4
of a transfer of ownership of HSI Common Stock which is
not registered in the transfer records of HSI, the
Exchange Agent may condition payment hereunder upon the
surrender of the Certificate representing such HSI
Common Stock to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer
taxes have been paid.
(c) At or after the Effective Time, there shall
be no transfers on the stock transfer books of HSI of
the shares of HSI Common Stock which were outstanding
immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the
Surviving Corporation, they shall be cancelled and
exchanged for payment in accordance with the procedures
set forth in this Article 4.
(d) Any portion of the Exchange Fund (including
the proceeds of any investments thereof) that remains
unclaimed by the former stockholders of HSI nine (9)
months after the Effective Time shall be delivered to
the Surviving Corporation. Any former stockholders of
HSI who have not theretofore complied with this Article
4 shall thereafter look only to the Surviving
Corporation for payment of the Purchase Price in
respect of each share of HSI Common Stock that such
stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
(e) None of Parent, HSI, the Exchange Agent or
any other person shall be liable to any former holder
of shares of HSI Common Stock for any amount properly
delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by
such person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to
such Certificate, the Exchange Agent will pay in
exchange for such lost, stolen or destroyed Certificate
the Purchase Price as provided in Section 4.2(a),
deliverable in respect thereof pursuant to this
Agreement.
5
4.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to
the contrary, shares of HSI Common Stock which are held
by any recordholder who has not voted in favor of the
Merger or consented thereto in writing and who has
demanded appraisal rights in accordance with Section
262 of the DGCL ("the Dissenting Shares") shall not be
converted into the right to receive the Purchase Price
hereunder but shall become the right to receive such
consideration as may be determined due in respect of
such Dissenting Shares pursuant to the DGCL; provided,
however, that any holder of Dissenting Shares who shall
have failed to perfect, or shall have withdrawn or
lost, his rights to appraisal of such Dissenting
Shares, in each case under the DGCL, shall forfeit the
right to appraisal of such Dissenting Shares, and such
Dissenting Shares shall be deemed to have been
converted into the right to receive, as of the
Effective Time, the Purchase Price in accordance with
Article 4, without interest. Notwithstanding anything
contained in this Section 4.3, if (i) the Merger is
rescinded or abandoned or (ii) if the stockholders of
HSI revoke the authority to effect the Merger, then the
right of any stockholder to be paid the fair value of
such stockholder's Dissenting Shares shall cease. The
Surviving Corporation shall comply with all of its
obligations under the DGCL with respect to holders of
Dissenting Shares.
(b) HSI shall give Parent (i) prompt notice of
any demands for appraisal, and any withdrawals of such
demands, received by HSI and any other related
instruments served pursuant to the DGCL and received by
HSI, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands
for appraisal under the DGCL. HSI shall not, except
with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or
offer to settle any such demands.
ARTICLE 5
5. Representations and Warranties of HSI.
Except as set forth in the disclosure letter delivered
by or on behalf of HSI to Parent at or prior to the execution
hereof (the "HSI Disclosure Letter"), HSI represents and warrants
to Parent as of the date of this Agreement as follows:
5.1. Existence; Good Standing; Corporate Authority;
6
Compliance With Law. HSI is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware.
HSI is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other
state of the United States in which the character of the
properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary,
except where the failure to be so licensed or qualified or be in
good standing would not have, individually or in the aggregate, a
material adverse effect on the business, results of operations or
financial condition of HSI and its Subsidiaries taken as a whole
(an "HSI Material Adverse Effect"). HSI has all requisite
corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. Each of
HSI's Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation or organization,
has the corporate or partnership power and authority to own its
properties and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the ownership
of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to
be so licensed or qualified or to be in good standing would not
reasonably be expected to have, individually or in the aggregate,
an HSI Material Adverse Effect. Neither HSI nor any of its
Subsidiaries is in violation of any order of any court,
governmental authority or arbitration board or tribunal, or any
law, ordinance, governmental rule or regulation to which HSI or
any HSI Subsidiary or any of their respective properties or
assets is subject, except where such violation would not have,
individually or in the aggregate, an HSI Material Adverse Effect.
HSI and its Subsidiaries have obtained all licenses, permits and
other authorizations and have taken all actions required by
applicable law or governmental regulations in connection with
their business as now conducted, where the failure to obtain any
such item or to take any such action would have an HSI Material
Adverse Effect. The copies of HSI's Restated Certificate of
Incorporation and Bylaws and the HSI Rights Agreement previously
delivered to Parent are true and correct.
5.2. Authorization, Validity and Effect of Agreements.
(a) HSI has the requisite corporate power and
authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. Subject
only to the approval of this Agreement and the
transactions contemplated hereby by the holders of a
majority of the outstanding shares of HSI Common Stock,
the consummation by HSI of the transactions
contemplated hereby has been duly authorized by all
7
requisite corporate action. This Agreement
constitutes, and all agreements and documents
contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute,
the valid and legally binding obligations of HSI,
enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors'
rights and general principles of equity.
(b) The provisions of Section 203 of the DGCL do
not apply to the transactions contemplated by this
Agreement.
5.3. Capitalization. The authorized capital stock of
HSI consists of 100,000,000 shares of HSI Common Stock, and
10,000,000 shares of preferred stock, par value $.01 per share
(the "HSI Preferred Stock"). As of March 30, 1994, there were
20,922,270 shares of HSI Common Stock issued and outstanding and
no shares of HSI Preferred Stock issued and outstanding. Since
such date, no additional shares of capital stock of HSI have been
issued, except pursuant to the HSI Stock Option Plans. HSI has
no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible
into or exercisable for securities having the right to vote) with
the stockholders of HSI on any matter. All such issued and
outstanding shares of HSI Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights. Other than as contemplated by this Agreement or the HSI
Stock Option Plans or the HSI Rights Agreement, there are not at
the date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights,
agreements or commitments which obligate HSI or any of its
Subsidiaries to issue, transfer or sell any shares of capital
stock of HSI or any of its Subsidiaries. As of March 30, 1994,
1,671,472.94 shares of Common Stock were reserved for issuance
and are issuable upon or otherwise deliverable in connection with
the exercise of outstanding Options; since that date, no Options
have been granted under the Option Plans and no new option plans
have been authorized or adopted. After the Effective Time, the
Surviving Corporation will have no obligation to issue, transfer
or sell any shares of capital stock of HSI or the Surviving
Corporation pursuant to any HSI Benefit Plan (as defined in
Section 5.11). There are no outstanding obligations of HSI or
any of its Subsidiaries to purchase, redeem or otherwise acquire
any shares of Common Stock, any capital voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of HSI.
5.4. Subsidiaries. HSI owns directly or indirectly
each of the outstanding shares of capital stock of each of HSI's
Subsidiaries. Each of the outstanding shares of capital stock of
8
each of HSI's Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, and is owned, directly or
indirectly, by HSI free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following
information for each Subsidiary of HSI has been previously
provided to Parent, if applicable: (i) its name and jurisdiction
of incorporation or organization; (ii) its authorized capital
stock or share capital; and (iii) the number of issued and
outstanding shares of capital stock or share capital.
5.5. Other Interests. Except for interests in the HSI
Subsidiaries, neither HSI nor any HSI Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, joint venture, business, trust or
entity.
5.6. No Violation. Neither the execution and delivery
by HSI of this Agreement nor the consummation by HSI of the
transactions contemplated hereby in accordance with the terms
hereof will: (i) conflict with or result in a breach of any
provisions of the respective certificates of incorporation or
bylaws (or similar governing documents) of HSI or its
Subsidiaries; (ii) except as disclosed in the HSI Reports (as
defined in Section 5.7), result in a breach or violation of, a
default under, or the triggering of any payment or other material
obligations pursuant to, or accelerate vesting under, any of its
existing HSI Stock Option Plans, or any grant or award made under
any of the foregoing other than accelerated vesting of
outstanding options under stock option agreements in existence on
the date hereof with certain employees of HSI or any of its
Subsidiaries by reason of, in whole or in part, the consummation
of the Merger; (iii) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance
required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the material
properties of HSI or its Subsidiaries under, or result in being
declared void, voidable, or without further binding effect, any
of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust or any material license,
franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which HSI or any of its
Subsidiaries is a party, or by which HSI or any of its
Subsidiaries or any of their properties is bound or affected,
except for any of the foregoing matters which would not have,
individually or in the aggregate, an HSI Material Adverse Effect;
or (iv) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to HSI or any of its
Subsidiaries or any of their respective properties or assets,
except for violations which would not have, individually or in
9
the aggregate, an HSI Material Adverse Effect; (v) other than the
filings provided for in Article 1, certain federal, state and
local regulatory filings, filings required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Securities Act or applicable state securities and "Blue Sky"
laws or filings in connection with the maintenance of
qualification to do business in other jurisdictions
(collectively, the "Regulatory Filings"), require any material
consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory
authority, the failure to obtain or make which would have,
individually or in the aggregate, an HSI Material Adverse Effect.
5.7. SEC Documents. HSI has delivered to Parent each
registration statement, report, proxy statement or information
statement prepared by it since August 31, 1993, including,
without limitation, (i) its Annual Report on Form 10-K for the
fiscal year ended August 31, 1993, (ii) its Quarterly Report on
Form 10-Q for the period ended November 30, 1993, and (iii) its
Proxy Statement for the Annual Meeting of Stockholders held
January 20, 1994, each in the form (including exhibits and any
amendments thereto) filed with the Securities and Exchange
Commission (the "SEC") (collectively, the "HSI Reports"). As of
their respective dates, the HSI Reports (including, without
limitation, any financial statements or schedules included or
incorporated by reference therein) (i) were prepared in all
material respects in accordance with the applicable requirements
of the Securities Act, the Exchange Act, and the respective rules
and regulations thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. Each of the consolidated balance
sheets of HSI included in or incorporated by reference into the
HSI Reports (including the related notes and schedules) fairly
presents the consolidated financial position of HSI and the HSI
Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of HSI
included in or incorporated by reference into the HSI Reports
(including any related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows, as the
case may be, of HSI and the HSI Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments which would not be material in
amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the
periods involved, except as may be noted therein. Except as and
to the extent set forth on the consolidated balance sheet of HSI
and the HSI Subsidiaries at August 31, 1993, including all notes
thereto, or as set forth in the HSI Reports, neither HSI nor any
of the HSI Subsidiaries has any material liabilities or
10
obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of HSI or in the notes
thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except liabilities
arising in the ordinary course of business since such date.
5.8. Litigation. Except as disclosed in the HSI
Reports filed with the SEC prior to the date hereof, there are no
actions, suits or proceedings pending against HSI or the HSI
Subsidiaries or, to the knowledge of HSI, threatened against HSI
or the HSI Subsidiaries any of their respective properties or
assets, at law or in equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality, that would
have, individually or in the aggregate, an HSI Material Adverse
Effect or would prevent or delay, in any internal report, the
consummation of the transactions contemplated by this Agreement.
Except as disclosed in HSI Reports filed with the SEC prior to
the date hereof, neither HSI nor any of its subsidiaries are
subject to any outstanding order, writ, injunction or decree
which, insofar as can be reasonably foreseen, individually or in
the aggregate, in the future would have an HSI Material Adverse
Effect or would prevent or delay the consummation of the
transactions contemplated hereby.
5.9. Absence of Certain Changes. Except as disclosed
in the HSI Reports filed with the SEC prior to the date hereof,
since August 31, 1993, each of HSI and its Subsidiaries has
conducted its business only in the ordinary course of such
business and there has not been (i) any event or changes with
respect to HSI and its Subsidiaries having, individually or in
the aggregate, a HSI Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, or (iii) any
material change in its accounting principles, practices or
methods.
5.10. Taxes. HSI and each of its Subsidiaries (i)
have timely filed all material federal, state, local and foreign
tax returns (including but not limited to all employment tax
returns) required to be filed by any of them for tax years ended
prior to the date of this Agreement or requests for extensions
have been timely filed and any such request shall have been
granted and not expired and all such returns are complete in all
material respects, (ii) have paid or accrued all taxes, including
interest and penalties, if any, shown to be due and payable (and
believed by HSI to be owed) on such returns other than such taxes
as are being contested by HSI or its Subsidiaries in good faith,
(iii) have properly accrued in all material respects all such
taxes for such periods subsequent to the periods covered by such
returns, (iv) have "open" years for federal income tax returns
only as set forth in the HSI Reports and, (v) are not aware of
11
the existence of any tax liens on any of their respective
properties or assets. There are no contracts covering any person
that individually or collectively could give rise to the payment
of any amount that would not be deductible by HSI by reason of
Section 280(G) or 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
5.11 Certain Employee Plans.
(a) Each employee benefit or compensation plan or
arrangement, including each "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")
maintained by HSI or any of its Subsidiaries (the "HSI
Benefit Plans") complies, and has been administered, in
all material respects with all applicable requirements
of law, except for instances of non-compliance that
would not have caused, individually or in the
aggregate, an HSI Material Adverse Effect. The HSI
Benefit Plans are listed in the HSI Disclosure Letter
and copies or descriptions of all material Plans have
previously been provided to Parent.
(b) With respect to each HSI Benefit Plan
intended to qualify under Section 401(a) of the Code,
(i) a favorable determination letter has been issued by
the Internal Revenue Service (the "IRS") with respect
to the qualification of each HSI Benefit Plan and (ii)
no "reportable event" or "prohibited transaction" (as
such terms are defined in ERISA) or termination has
occurred under circumstances which present a risk of
material liability by HSI or any of its Subsidiaries to
any governmental entity or other person, including a
HSI Benefit Plan. Each HSI Benefit Plan which is
subject to Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code has been maintained in
compliance with the minimum funding standards of ERISA
and the Code and no such HSI Benefit Plan has incurred
any "accumulated funding deficiency" (as defined in
Section 412 of the Code and Section 302 of ERISA),
whether or not waived. Neither HSI nor any of its
Subsidiaries has incurred any material withdrawal
liability under any "multiemployer plan" (within the
meaning of Section 3(37) of ERISA) which has not been
satisfied in full.
(c) Except as required by applicable law, neither
HSI nor any of its Subsidiaries provides any health,
welfare or life insurance benefits to any of their
former or retired employees, which benefits would be
material either individually or in the aggregate to
HSI.
12
5.12. Labor Matters.
(a) Neither HSI nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding
with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of HSI, threatened against
HSI or its Subsidiaries relating to their business,
except for any such proceeding which would not have,
individually or in the aggregate, an HSI Material
Adverse Effect. To the knowledge of HSI, there are no
organizational efforts with respect to the formation of
a collective bargaining unit presently being made or
threatened involving employees of HSI or any of its
Subsidiaries.
(b) HSI has delivered to Parent copies of all
employment agreements, consulting agreements, severance
agreements, bonus and incentive plans, profit-sharing
plans and other agreements, plans or arrangements with
respect to compensation of the employees of HSI and its
Subsidiaries (the "Compensation Arrangements"). HSI
has determined that the Merger will accelerate or
otherwise give rise to payments pursuant to the
Compensation Arrangements in an amount not to exceed
$30,000,000 (assuming each such payment was required to
be made as of February 28, 1994).
5.13. Environmental Laws and Regulations.
(a) Except as disclosed in HSI Reports filed with
the SEC prior to the date hereof, (i) HSI and each of
its Subsidiaries is in compliance with all applicable
federal, state and local laws and regulations relating
to pollution or protection of human health or the
environment (collectively, "Environmental Laws") which
compliance includes, but is not limited to, the
possession by HSI and its Subsidiaries of all material
permits and other governmental authorizations required
under applicable Environmental Laws, and compliance
with the terms and conditions thereof, except for non-
compliance that would not have, individually or in the
aggregate, an HSI Material Adverse Effect, ; (ii)
neither HSI nor any of its subsidiaries has received
written notice of, or, to the knowledge of HSI, is the
subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity
alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claims") that
would have, individually or in the aggregate, an HSI
Material Adverse Effect; and (iii) to the knowledge of
13
HSI, there are no circumstances that are reasonably
likely to prevent or interfere with such material
compliance in the future.
(b) Except as disclosed in the HSI Reports filed
with the SEC prior to the date hereof, there are no
Environmental Claims which would have, individually or
in the aggregate, an HSI Material Adverse Effect that
are pending or, to the knowledge of HSI, threatened
against HSI or any of its Subsidiaries or, to the
knowledge of HSI, against any person or entity whose
liability for any Environmental Claim HSI or any of its
Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
5.14. Rights Agreement. HSI has taken all
necessary actions so that none of (i) the execution of this
Agreement by the parties hereto or (ii) the consummation of the
Merger (including execution and performance by the parties to
that certain Voting Agreement, dated as of the date hereof, among
Parent, Merger Sub and the Shareholders (as defined therein))
will (x) cause the Rights issued pursuant to the Rights Agreement
to become exercisable, (y) cause any person to become an
Acquiring Person (as such term is defined in the Rights
Agreement) or (z) give rise to a Distribution Date or a
Triggering Event (as each such term is defined in the Rights
Agreement).
5.15. Real Property.
(a) HSI has delivered to Parent copies of lease
abstracts (the "Lease Abstracts") for each of its
leases, subleases, licenses or other agreements under
which HSI or any of its Subsidiaries uses or occupies
or has the right to use or occupy, now or in the
future, any real property (the "Real Estate Leases").
Each Real Property Lease is valid, binding and in full
force and effect, all rent and other sums and charges
payable by HSI and its Subsidiaries as tenants
thereunder are current, no termination event or
condition or uncured default of a material nature on
the part of HSI or any such Subsidiary or, to the
knowledge of HSI, as to a landlord exists under any
Real Property Lease, except for any of the foregoing
matters which would not have, individually or in the
aggregate, an HSI Material Adverse Effect. The
information contained in the Lease Abstracts is true
and correct in all material respects.
(b) From August 31, 1993 through March 30, 1994,
no portion of the real property subject to the Real
14
Property Leases has suffered any material damage by
fire or other casualty which has not heretofore been
substantially repaired or restored.
(c) Except for any of the following matters which
would not have, individually or in the aggregate, an
HSI Material Adverse Effect, HSI
(i) has not granted, and to the best of
HSI's knowledge, no other person has granted, any
leases, subleases, licenses or other agreements
granting to any person other than HSI any right to
possession, use, occupancy or enjoyment of the
stores covered by the Real Estate Leases, or any
portion thereof; and
(ii) HSI is not obligated under any option,
right of first refusal or any contractual right to
purchase, acquire, sell or dispose of any real
property covered by the Real Property Leases.
(d) None of the Real Property Leases contain
continuous operating covenants, radius restrictions or
provisions requiring the consent of the landlord to
Parent's or Merger Sub's assumption of HSI's
obligations under the Real Property Leases in the
manner contemplated by this Agreement, except for any
of the foregoing matters which would not have,
individually or in the aggregate, an HSI Material
Adverse Effect.
5.16. Insurance. HSI and its Subsidiaries maintain
with respect to their operations and their assets, in full force
and effect, policies of insurance in the ordinary course of
business as is usual and customary for businesses similarly
situated to HSI. HSI has provided Parents copies of loss runs
associated with its operations and the operations of its
subsidiaries for the three most recent years and used by HSI and
its Subsidiaries in the ordinary course of business.
5.17. Intellectual Property. Every material
trademark, service mark, trade name or copyright, or application
thereof in connection with any of the foregoing (the
"Intellectual Property"), is owned by HSI and, to the knowledge
of HSI, HSI's Intellectual Property does not infringe upon the
Intellectual Property rights of any person. HSI has not granted
to any other person the right to use the Intellectual Property,
or any part thereof.
5.18. Certain Contracts. HSI has delivered copies
of its (i) Agreement, dated as of November 30, 1986, with
Peyton's Inc. and The Kroger Co., as amended January 11, 1990
15
(the "Peyton's Agreement"), (ii) Agreement for Systems Operations
Services, dated as of December 1, 1992, with Integrated Systems
Solutions Corporation (the "ISSC Agreement"), (iii)
Photofinishing Agreements, dated as of May 31, 1990, as amended,
with Qualex Inc., (the "Qualex Agreements"), and (iv) Customer
Agreement, dated as of December 22, 1993, with Hughes Network
Systems, Inc. (the "Hughes Agreement"). HSI (x) is in
compliance, in all material respects, with all terms and
conditions of the Peyton's Agreement, ISSC Agreement, Qualex
Agreements and Hughes Agreement, (y) has not exceeded the
implementation schedule set forth in the Hughes Agreement in any
material respect, and (z) has no further material obligations
under the Peyton's Agreement other than the obligation to
purchase certain items of inventory. HSI is in compliance with
all terms of its contracts or other arrangements with the vendor,
dated December 21, 1993, providing for a cash payment on January
14, 1994 of approximately $40,000,000.
5.19. No Brokers. HSI has not entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of HSI or Parent to pay any
finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby, except that HSI has retained Goldman, Sachs & Co.
("Goldman") as its financial advisor and Salomon Brothers Inc
("Salomon") to render a fairness opinion with respect to the
Purchase Price, the arrangements with which have been disclosed
in writing to Parent prior to the date hereof. Other than the
foregoing arrangements, HSI is not aware of any claim for payment
of any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby.
5.20. Fairness Opinion. HSI has received opinions
of Goldman and Salomon, to the effect that, as of the date hereof
the Purchase Price hereunder is fair to the holders of HSI Common
Stock.
ARTICLE 6
6. Representations and Warranties
of Parent and Merger Sub.
Except as set forth in the disclosure letter delivered
by or on behalf of Parent or Merger Sub to HSI at or prior to the
execution hereof (the "Parent Disclosure Letter"), Parent and
Merger Sub represent and warrant to HSI as of the date of this
Agreement as follows:
6.1. Existence; Good Standing; Corporate Authority;
16
Compliance With Law. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
Parent is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other
state of the United States in which the character of the
properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary,
except where the failure to be so qualified would not have a
material adverse effect on the ability of Parent or Merger Sub to
perform its obligations hereunder (a "Parent Material Adverse
Effect"). Parent has all requisite corporate power and authority
to own, operate and lease its properties and carry on its
business as now conducted.
6.2. Authorization, Validity and Effect of Agreements.
Each of Parent and Merger Sub has the requisite corporate power
and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. The consummation
by Parent and Merger Sub of the transactions contemplated hereby
has been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto
for value received) will constitute, the valid and legally
binding obligations of Parent and Merger Sub, enforceable in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
6.3. No Violation. Neither the execution and delivery
by Parent and Merger Sub of this Agreement, nor the consummation
by Parent and Merger Sub of the transactions contemplated hereby
in accordance with the terms hereof, will: (i) conflict with or
result in a breach of any provisions of the Certificate of
Incorporation or Bylaws of Parent or Merger Sub; (ii) violate,
or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation
of any lien, security interest, charge or encumbrance upon any of
the material properties of Parent or its Subsidiaries under, or
result in being declared void, voidable, or without further
binding effect, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust or any material
license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Parent or any of
its Subsidiaries is a party, or by which Parent or any of its
Subsidiaries or any of their properties is bound or affected,
except for any of the foregoing matters which would not have a
Parent Material Adverse Effect; or (iii) other than the
Regulatory Filings, require any material consent, approval or
17
authorization of, or declaration, filing or registration with,
any domestic governmental or regulatory authority, the failure to
obtain or make which would have a Parent Material Adverse Effect.
6.4. Litigation. There are no actions, suits or
proceedings pending against Parent or the Parent Subsidiaries or,
to the actual knowledge of the executive officers of Parent,
threatened against Parent or the Parent Subsidiaries, at law or
in equity, or before or by any federal or state commission,
board, bureau, agency or instrumentality, that are reasonably
likely to have a Parent Material Adverse Effect.
6.5. Financing. Parent and Merger Sub have received a
written commitment from Banque Paribas and Continental Bank N.A.
to enable them to consummate the Merger on the terms contemplated
by this Agreement and, at the Effective Time, Parent and Merger
Sub will have available all funds necessary for the acquisition
of all shares of HSI Common Stock and HSI Options pursuant to the
Merger and to perform their respective obligations under this
Agreement.
6.6. No Brokers. Parent has not entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of HSI or Parent to pay any
finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby, except that Parent has retained Donaldson, Lufkin,
Jenrette Securities Corporation as its financial advisor, the
arrangements with which have been disclosed in writing to HSI
prior to the date hereof. Other than the foregoing arrangements,
Parent is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
6.7. Surviving Corporation After the Merger.
Immediately after the Effective Time and after giving effect to
any change in the Surviving Corporation's assets and liabilities
as a result of the Merger, the Surviving Corporation will not (i)
be insolvent (either because its financial condition is such that
the sum of its debts is greater than the fair value of its assets
or because the fair saleable value of its assets is less than the
amount required to pay its probable liability on existing debts
as they become absolute and mature), (ii) have unreasonably small
capital with which to engage in its business or (iii) have
incurred liabilities beyond its ability to pay as they become
due.
6.8 No Ownership of Company Capital Stock. Neither
Parent nor Merger Sub own, directly or indirectly, any HSI Common
Stock.
18
ARTICLE 7
7. Covenants.
7.1. Acquisition Proposals. Prior to the Effective
Time, HSI agrees (a) that neither HSI nor any of its Subsidiaries
shall, and HSI shall direct and use its best efforts to cause its
officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to
its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase
of all or any significant portion of the assets or any equity
securities of, HSI or any of its Significant Subsidiaries (any
such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning,
or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal,
or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) that it will immediately
cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and will take the necessary
steps to inform the individuals or entities referred to above of
the obligations undertaken in this Section 7.1; and (c) that it
will notify Parent immediately if any such inquiries or proposals
are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or
continued with, it; provided, however, that nothing contained in
this Section 7.1 shall prohibit the Board of Directors of HSI
from (i) furnishing information to or entering into discussions
or negotiations with, any person or entity that makes an
unsolicited bona fide written proposal to acquire HSI pursuant to
a merger, consolidation, share exchange, purchase of a
substantial portion of the assets, business combination or other
similar transaction, if, and only to the extent that, (A) the
Board of Directors of HSI determines in good faith, based as to
legal matters on the written opinion of outside legal counsel,
that such action is required for the Board of Directors to comply
with its fiduciary duties to stockholders imposed by law, (B)
prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, HSI
provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or
negotiations with, such person or entity and provide Parent with
a copy of any such written proposal, and (C) HSI keeps Parent
informed of the status (not the terms) of any such discussions or
negotiations; and (ii) to the extent applicable, complying with
Rule 14e-2 promulgated under the Exchange Act with regard to an
19
Acquisition Proposal. Nothing in this Section 7.1 shall (x)
permit any party to terminate this Agreement (except as
specifically provided in Article 9 hereof), (y) permit HSI to
enter into any agreement with respect to an Acquisition Proposal
during the term of this Agreement (it being agreed that during
the term of this Agreement, HSI shall enter into any agreement
with any person that provides for, or in any way facilitates, an
Acquisition Proposal (other than a confidentiality agreement in
customary form)), or (z) affect any other obligation of any party
under this Agreement.
7.2. Conduct of Businesses. Prior to the Effective
Time, except as set forth in the HSI Disclosure Letter or as
contemplated by any other provision of this Agreement, unless
Parent has consented in writing thereto, HSI:
(a) shall, and shall cause each of its
Subsidiaries to, conduct its operations according to
its usual, regular and ordinary course in substantially
the same manner as heretofore conducted;
(b) shall use its reasonable efforts, and shall
cause each of its respective Subsidiaries to use its
reasonable efforts, to preserve intact its business
organization and goodwill, keep available the services
of its officers and employees and maintain satisfactory
relationships with those persons having business
relationships with it;
(c) shall confer on a regular basis with one or
more representatives of Parent to report operational
matters of materiality and any proposals to engage in
material transactions;
(d) shall not amend its Certificates of
Incorporation or Bylaws;
(e) shall promptly notify Parent of (i) any
material emergency or other material change in the
condition (financial or otherwise), HSI's or any
Subsidiary's business, properties, assets, liabilities,
prospects or the normal course of its businesses or in
the operation of its properties, (ii) any material
litigation or material governmental complaints,
investigations or hearings (or communications
indicating that the same may be contemplated), or (iii)
the breach in any material respect of any
representation or warranty or covenant contained
herein;
(f) shall promptly deliver to Parent true and
correct copies of any report, statement or schedule
20
filed by HSI with the SEC subsequent to the date of
this Agreement;
(g) shall not (i) except pursuant to the exercise
of options, warrants, conversion rights and other
contractual rights existing on the date hereof and
disclosed pursuant to this Agreement, issue any shares
of its capital stock, effect any stock split or
otherwise change its capitalization as it exists on the
date hereof, (ii) grant, confer or award any option,
warrant, conversion right or other right not existing
on the date hereof to acquire any shares of its capital
stock from HSI, (iii) increase any compensation or
enter into or amend any employment severance,
termination or similar agreement with any of its
present or future officers or directors, except for
normal increases in compensation to employees not
earning more than $75,000 in annual base compensation
consistent with past practice and the payment of cash
bonuses to employees pursuant to and consistent with
existing plans or programs, or (iv) adopt any new
employee benefit plan (including any stock option,
stock benefit or stock purchase plan) or amend any
existing employee benefit plan in any material respect,
except for changes which are less favorable to
participants in such plans or as may be required by
applicable law;
(h) shall not (i) declare, set aside or pay any
dividend or make any other distribution or payment with
respect to any shares of its capital stock; (ii) except
in connection with the use of shares of capital stock
to pay the exercise price or tax withholding in
connection with stock-based HSI Benefit Plans, directly
or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of any of
its Subsidiaries, or make any commitment for any such
action, including the Rights or (iii) split, combine or
reclassify any of its capital stock;
(i) shall not, and shall not permit any of its
Subsidiaries to sell, lease or otherwise dispose of any
of its assets (including capital stock of Subsidiaries)
which are material, individually or in the aggregate,
except in the ordinary course of business;
(j) shall not (i) incur or assume any long-term
or short-term debt or issue any debt securities except
for borrowings under existing lines of credit in the
ordinary course of business; (ii) except for
obligations of wholly-owned Subsidiaries of HSI;
assume, guaranty, endorse or otherwise become liable or
21
responsible (whether directly, indirectly, contingently
or otherwise) for the obligations of any other person
except in the ordinary course of business consistent
with past practices in an amount not material to HSI
and its Subsidiaries, taken as a whole; (iii) other
than wholly-owned Subsidiaries of HSI, make any loans,
advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber
shares of capital stock of HSI or its Subsidiaries; or
(v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to create
any material mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect to such
asset;
(k) shall not acquire, sell, lease or dispose of
any assets outside the ordinary course of business or
any assets which in the aggregate are material to HSI
and its Subsidiaries taken as a whole, or enter into
any commitment or transaction outside the ordinary
course of business consistent with past practices which
would be material to HSI and its Subsidiaries taken as
a whole;
(l) except as may be required as a result of a
change in law or in generally accepted accounting
principles shall not change any of the accounting
principles or practices used by HSI;
(m) shall not (i) acquire (by merger,
consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization
or division thereof or any equity interest therein;
(ii) enter into any contract or agreement other than in
the ordinary course of business consistent with past
practice which would be material to HSI and its
Subsidiaries taken as a whole; (iii) authorize any new
capital expenditure or expenditures which,
individually, is in excess of $25,000 or, in the
aggregate, are in excess of $1,500,000; provided, that
none of the foregoing shall limit any capital
expenditure within the aggregate amount previously
authorized by HSI's Board of Directors for capital
expenditures and written evidence thereof has been
previously provided to Parent or Merger Sub; or (iv)
enter into or amend any contract, agreement, commitment
or arrangement providing for the taking of any action
which would be prohibited hereunder;
(n) shall not make any tax election or settle or
compromise any income tax liability material to HSI and
its Subsidiaries taken as a whole;
22
(o) shall not pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of business
of liabilities reflected or reserved against in, and
contemplated by, the consolidated financial statements
(or the notes thereto) of HSI and its Subsidiaries or
incurred in the ordinary course of business consistent
with past practice;
(p) shall not settle or compromise any pending or
threatened suit, action or claim relating to the
transactions contemplated hereby; or
(q) shall not take, or agree in writing or
otherwise to take, any of the actions described in
Section 6.1(a) through 6.1(p) or any action that would
make any of the representations and warranties of HSI
contained in this Agreement untrue or incorrect as of
the date when made.
7.3. Meeting of Stockholders. HSI will take all action
necessary in accordance with applicable law and its Certificate
of Incorporation and Bylaws to convene a meeting of its
stockholders as promptly as practicable to consider and vote upon
the approval of this Agreement and the transactions contemplated
hereby. The Board of Directors of HSI shall recommend such
approval and HSI shall take all lawful action to solicit such
approval, including, without limitation, timely mailing the Proxy
Statement (as defined in Section 7.7); provided, however, that
such recommendation or solicitation is subject to any action
taken by, or upon authority of, the Board of Directors of HSI in
the exercise of its good faith judgment as to its fiduciary
duties to its stockholders imposed by law. HSI shall coordinate
and cooperate with respect to the timing of such meetings and
shall use its best efforts to hold such meetings on the same day.
It shall be a condition to the mailing of the Proxy Statement
that HSI shall have received opinions of Goldman and Salomon,
each dated the date of the Proxy Statement, to the effect that,
as of the date thereof, the Purchase Price pursuant to the Merger
is fair to the holders of HSI Common Stock.
7.4. Filings; Other Action. Subject to the terms and
conditions herein provided, HSI and Parent shall: (a) promptly
make their respective filings and thereafter make any other
required submissions under the HSR Act with respect to the
Merger; (b) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made
prior to the Effective Time with, and which consents, approvals,
permits or authorizations are required to be obtained prior to
the Effective Time from, governmental or regulatory authorities
of the United States, the several states and foreign
23
jurisdictions in connection with the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done,
all other things necessary, proper or appropriate to consummate
and make effective the transactions contemplated by this
Agreement. Each of Parent and HSI will use its best efforts to
resolve such objections, if any, as may be asserted with respect
to the Merger under the HSR Act or other antitrust laws. In the
event a suit is instituted challenging the Merger as violative of
the HSR Act or other antitrust laws, each of Parent and HSI will
use its best efforts to resist or resolve such suit. Each of
Parent and HSI will use its best efforts to take such action as
may be required (a) by the Antitrust Division of the Department
of Justice or the Federal Trade Commission in order to resolve
such objections as either of them may have to the Merger under
the HSR Act or other antitrust laws or (b) by any federal or
state court of the United States, in any suit challenging the
Merger as violative of the HSR Act or other antitrust laws, in
order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order which has
the effect of preventing the consummation of the Merger. In
complying with the foregoing, each of Parent and HSI shall use
all reasonable and appropriate measures available to them,
including, if appropriate, "hold-separate" agreements or
divestitures of Subsidiaries, assets or operations if necessary
to consummate the transactions contemplated hereby, so long as
such actions do not, in the aggregate, have a HSI Material
Adverse Effect (after giving effect to the Merger). If, at any
time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper
officers and directors of Parent and HSI shall take all such
necessary action.
7.5. Inspection of Records; Access. From the date
hereof to the Effective Time, HSI shall allow all designated
officers, attorneys, accountants and other representatives of
Parent ("Parent's Representatives") access at all reasonable
times to all employees, stores, offices, warehouses, and other
facilities and to the records and files, correspondence, audits
and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs, of HSI and its
Subsidiaries; provided, however, Parent's Representatives shall
use their reasonable best efforts to avoid interfering with,
hindering or otherwise disrupting the employees of HSI in the
execution of their employment duties during any visit to, or
inspection of, HSI's facilities or stores. .
7.6. Publicity. The initial press release relating to
24
this Agreement shall be a joint press release and thereafter HSI
and Parent shall, subject to their respective legal obligations
(including requirements of stock exchanges and other similar
regulatory bodies), consult with each other, and use reasonable
efforts to agree upon the text of any press release, before
issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby
and in making any filings with any federal or state governmental
or regulatory agency or with any national securities exchange
with respect thereto.
7.7. Proxy Statement. HSI shall promptly prepare and
then file with the SEC a proxy statement with respect to the
meeting of the stockholders of HSI in connection with the Merger
(the "Proxy Statement"). HSI will cause the Proxy Statement to
comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations
thereunder. HSI agrees that the Proxy Statement and each
amendment or supplement thereto at the time of mailing thereof
and at the time of the meeting of the stockholders of HSI will
not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
7.8. Further Action. Each party hereto shall, subject
to the fulfillment at or before the Effective Time of each of the
conditions of performance set forth herein or the waiver thereof,
perform such further acts and execute such documents as may be
reasonably required to effect the Merger.
7.9. Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
7.10. Indemnification and Insurance.
(a) From and after the Effective Time, Parent
shall indemnify, defend and hold harmless to the
fullest extent permitted under applicable law each
person who is now, or has been at any time prior to the
date hereof, an officer, director, employee, trustee or
agent of HSI (or any Subsidiary or division thereof),
including, without limitation, each person controlling
any of the foregoing persons (individually, an
"Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages,
liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit,
25
proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or
omissions, by them in their capacities as such, whether
commenced, asserted or claimed before or after the
Effective Time and including, without limitation,
liabilities arising under the Securities Act, the
Exchange Act and state corporation laws in connection
with the Merger. In the event of any such claim,
action, suit, proceeding or investigation (an
"Action"), (i) Parent shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to Parent,
in advance of the final disposition of any such action
to the full extent permitted by applicable law, upon
receipt of any undertaking required by applicable law,
and (ii) the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that
Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be
unreasonably withheld or delayed) and provided,
further, that Parent shall not be obligated pursuant to
this Section to pay the fees and disbursements of more
than one counsel for all Indemnified Parties in any
single Action except to the extent that, in the opinion
of counsel for the Indemnified Parties, two or more of
such Indemnified Parties have conflicting interests in
the outcome of such action.
(b) Parent shall cause the Surviving Corporation
to keep in effect provisions in its Certificate of
Incorporation and Bylaws providing for exculpation of
director and officer liability and indemnification of
the Indemnified Parties to the fullest extent permitted
under the DGCL, which provisions shall not be amended
except as required by applicable law or except to make
changes permitted by law that would enlarge the
Indemnified Parties' right of indemnification.
(c) For a period of four years after the
Effective Time, Parent shall cause to be maintained
officers' and directors' liability insurance covering
the Indemnified Parties who are currently covered, in
their capacities as officers and directors, by HSI's
existing officers' and directors' liability insurance
policies on terms substantially no less advantageous to
the Indemnified Parties than such existing insurance;
provided, however, that Parent shall not be required in
order to maintain or procure such coverage to pay an
annual premium in excess of two times the current
annual premium paid by HSI for its existing coverage
(the "Cap"); and provided, further, that if equivalent
coverage cannot be obtained, or can be obtained only by
26
paying an annual premium in excess of the Cap, Parent
shall only be required to obtain as much coverage as
can be obtained by paying an annual premium equal to
the Cap.
(d) Parent shall pay all expenses, including
attorneys' fees, that may be incurred by any
Indemnified Parties in enforcing the indemnity and
other obligations provided for in this Section 7.10.
(e) The rights of each Indemnified Party
hereunder shall be in addition to any other rights such
Indemnified Party may have under the Certificate of
Incorporation or Bylaws of HSI, under the DGCL or
otherwise. The provisions of this Section shall
survive the consummation of the Merger and expressly
are intended to benefit each of the Indemnified
Parties.
7.11. Certain Benefits.
(a) From and after the Effective Time, subject to
applicable law, and except as contemplated hereby with
respect to the HSI Stock Option Plans, Parent and its
Subsidiaries will honor in accordance with their terms,
all HSI Benefit Plans; provided, however, that nothing
herein shall preclude any change effected on a
prospective basis in any HSI Benefit Plan that is
permitted pursuant to the following sentence of this
Section 7.11. For a period of not less than six months
following the Effective Time, subject to applicable
law, Parent and its Subsidiaries will provide benefits
(or cash compensation in lieu thereof) to HSI employees
who become employees of Parent and its Subsidiaries
which will, in the aggregate, be no less favorable than
those provided by HSI and its Subsidiaries to their
employees immediately prior to the Effective Time.
With respect to the each employee benefit or
compensation plan or arrangement, including each
"employee benefit plan" as defined in Section 3(3) of
ERISA maintained by Parent or any of its Subsidiaries
(the "Parent Benefit Plans"), Parent and the Surviving
Corporation shall grant all HSI employees from and
after the Effective Time credit for all service with
HSI and its affiliates and predecessors prior to the
Effective Time for all purposes for which such service
was recognized by HSI. To the extent Parent Benefit
Plans provide medical or dental welfare benefits after
the Effective Time, such plans shall waive any pre-
existing conditions and actively-at-work exclusions and
shall provide that any expenses incurred on or before
the Effective Time shall be taken into account under
27
Parent Benefit Plans for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-
pocket provisions.
(b) Parent agrees to employ at the Effective Time
all employees of HSI and its Subsidiaries who are
employed on the Closing Date on terms consistent with
HSI's current employment practices and at comparable
levels of compensation and positions. Such employment
shall
be at will and Parent shall be under no obligation to
continue to employ any individuals.
(c) For purposes of this Section 7.11, the term
"employees" shall mean all current employees of HSI and
its Subsidiaries (including those on lay-off,
disability or leave of absence, paid or unpaid).
(d) Notwithstanding the provisions of Section
7.11(a), at or prior to the Effective Time, Parent
shall expressly assume and agree to perform (i) the
Protective Compensation and Benefits Agreement between
the HSI and certain employees of HSI (ii) the
Employment Agreement between HSI and Philip E. Beekman
and (iii) the various bonus plans of the Company and
its Subsidiaries in effect for Fiscal Year 1994 (the
"Bonus Plans"). Notwithstanding the terms of the Bonus
Plans, Parent shall make payments to all employees
whose employment is terminated on or prior to August
31, 1994 and on or after the Effective Time of a bonus
equal to the product of
(x) such employee's entitlement under the
Bonus Plans; and
(y) a percentage equal to (1) the number of
days such employee was employed by the
Company (including days employed by the
Surviving Corporation) during the fiscal
year ending August 31, 1994, divided by
(ii) 365.
It is understood that in making any discretionary
payments under the Bonus Plans, Parent shall determine
the amount of any such payment consistent with the
Company's past practice (with any such payments to
employees no longer employed at the time of payment
being made without consideration of the fact that such
employee is no longer employed).
7.12. Restructuring of Merger. Upon the mutual
28
agreement of Parent and HSI, the Merger shall be restructured in
the form of a forward triangular merger of HSI into Merger Sub,
with Merger Sub being the surviving corporation, or as a merger
of HSI into Parent, with Parent being the surviving corporation.
In such event, this Agreement shall be deemed appropriately
modified to reflect such form of merger.
7.13 New York Real Estate Gains Tax. Merger Sub agrees
that either Merger Sub or the Surviving Corporation will pay the
New York State Real Property Transfer Tax, the New York State
Real Property Transfer Gains Tax and the New York City Real
Property Transfer Tax (collectively, the "Gains Taxes"), if any,
and any penalties or interest with respect to the Gains Taxes
payable in connection with the consummation of the Merger. HSI
agrees to cooperate with Merger Sub in the filing of any returns
with respect to the Gains Taxes, including supplying in a timely
manner a complete list of all real property interests held by HSI
that are located in New York State and any information with
respect to such property that is reasonably necessary to complete
such returns.
7.14 Placement of Subordinated Notes. Parent shall not
seek to issue nor file with the SEC any registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to any public debt, except Subordinated Notes
(as defined herein) of aggregate principal amount not in excess
of $175,000,000; except, however, that this Section 7.14 shall
not apply and be of no force and effect if the condition set
forth in Section 8.3(c) has been waived in writing by Parent.
Parent shall use reasonable best efforts to take, or cause to be
taken, all action and do, or cause to be done, all things
necessary, proper or appropriate to satisfy the condition set
forth in Section 8.3(c).
ARTICLE 8
8. Conditions.
8.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect
the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) This Agreement and the transactions
contemplated hereby shall have been approved in the
manner required by applicable law or by applicable
regulations of any stock exchange or other regulatory
body by the holders of the issued and outstanding
shares of capital stock of HSI entitled to vote
thereon.
(b) The waiting period applicable to the
29
consummation of the Merger under the HSR Act shall have
expired or been terminated.
(c) Neither of the parties hereto shall be
subject to any order or injunction of a court of
competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement. In
the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts
to have any such injunction lifted.
(d) All consents, authorizations, orders and
approvals of (or filings or registrations with) any
governmental commission, board or other regulatory body
required in connection with the execution, delivery and
performance of this Agreement shall have been obtained
or made, except for filings in connection with the
Merger and any other documents required to be filed
after the Effective Time and except where the failure
to have obtained or made any such consent,
authorization, order, approval, filing or registration
would not have an HSI Material Adverse Effect following
the Effective Time.
8.2. Conditions to Obligation of HSI to Effect the
Merger. The obligation of HSI to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(a) Parent shall have performed its agreements
contained in this Agreement required to be performed on
or prior to the Closing Date and the representations
and warranties of Parent and Merger Sub contained in
this Agreement and in any document delivered in
connection herewith shall be true and correct as of the
Closing Date, and HSI shall have received a certificate
of the President or a Vice President of Parent, dated
the Closing Date, certifying to such effect; provided,
however, that notwithstanding anything herein to the
contrary, this Section 8.2(a) shall be deemed to have
been satisfied even if such representations or
warranties are not true and correct, unless the failure
of any of the representations or warranties to be so
true and correct would have or would be reasonably
likely to have a Parent Material Adverse Effect.
(b) From the date of this Agreement through the
Effective Time, there shall not have occurred any
change in the financial condition, business, operations
or prospects of Parent and its Subsidiaries, taken as a
whole, that would have or would be reasonably likely to
have a Parent Material Adverse Effect.
8.3. Conditions to Obligation of Parent and Merger Sub
to Effect the Merger. The obligations of Parent and Merger Sub
to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
30
(a) HSI shall have performed its agreements
contained in this Agreement required to be performed on
or prior to the Closing Date and the representations
and warranties of HSI contained in this Agreement and
in any document delivered in connection herewith shall
be true and correct as of the Closing Date, and Parent
shall have received a certificate of the President or a
Vice President of HSI, dated the Closing Date,
certifying to such effect; provided, however, that
notwithstanding anything herein to the contrary, this
Section 8.3(a) shall be deemed to have been satisfied
even if such representations or warranties are not true
and correct, unless the failure of any of the
representations or warranties to be so true and correct
would have or would be reasonably likely to have an HSI
Material Adverse Effect.
(b) From the date of this Agreement through the
Effective Time, there shall not have occurred any
change in the financial condition, business, operations
or prospects of HSI and its Subsidiaries, taken as a
whole, that would have or would be reasonably likely to
have an HSI Material Adverse Effect.
(c) Parent shall have completed and received the
proceeds from the issuance and sale of not less than
$175,000,000 aggregate principal amount of Subordinated
Notes pursuant to an underwritten public offering
registered under the Securities Act, or pursuant to a
placement in compliance with Regulation 144A thereunder
or in a private placement made in accordance with
exemptions thereunder. As used herein, "Subordinated
Notes" shall mean notes of Parent issued under an
indenture qualifiable under the Trust Indenture Act
which shall (i) bear a stated interest rate of not
greater than 12% per annum, (ii) mature not more than
ten years from the date of issue, (iii) be subordinated
to the Parent's bank indebtedness and senior to other
subordinated indebtedness, (iv) not be redeemable at
the Parent's option for a period of not less than five
years following the date of issue, (v) have other terms
and non-financial covenants substantially similar to
the existing $145,000,000 Senior Subordinated
Debentures of HSI, and (vi) have financial covenants
customary for other similar debt issuances then being
issued in the market by corporations of comparable
credit.
ARTICLE 9
9. Termination.
9.1. Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior
to the Effective Time, before or after the approval of this
Agreement by the stockholders of HSI, by the mutual consent of
Parent and HSI.
31
9.2. Termination by Either Parent or HSI. This
Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of either Parent or HSI if
(a) the Merger shall not have been consummated by September 30,
1994, or (b) the approval of HSI's stockholders required by
Section 8.1(a) shall not have been obtained at a meeting duly
convened therefor or at any adjournment thereof, or (c) a United
States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement
pursuant to this clause (c) shall have used all reasonable
efforts to remove such injunction, order or decree; and provided,
in the case of a termination pursuant to clause (a) above, that
the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that
shall have proximately contributed to the occurrence of the
failure referred to in said clause.
9.3. Termination by HSI.
(a) This Agreement may be terminated and the
Merger may be abandoned at any time prior to the
Effective Time, before or after the adoption and
approval by the stockholders of HSI referred to in
Section 8.1(a), by action of the Board of Directors of
HSI, if (i) in the exercise of its good faith judgment
as to its fiduciary duties to its stockholders imposed
by law the Board of Directors of HSI determines that
such termination is required by reason of an
Acquisition Proposal being made, or (ii) there has been
a breach by Parent or Merger Sub of any representation
or warranty contained in this Agreement which would
have or would be reasonably likely to have a Parent
Material Adverse Effect, or (iii) there has been a
material breach of any of the covenants or agreements
set forth in this Agreement on the part of Parent,
which breach is not curable or, if curable, is not
cured within 30 days after written notice of such
breach is given by HSI to Parent.
(b) If, on or prior to April 29, 1994, Parent
fails to either (A) (i) deposit or cause to be
deposited with First Fidelity Bank, National
Association, New Jersey, (the "Trustee"), trustee under
that certain Indenture (the "Indenture") dated as of
January 1, 1993 between Parent and Trustee, sufficient
funds to defease (the "Defeasance") Parent's 9-1/8%
Senior Notes due 2000 (the "Parent Notes") and (ii)
take any other action required to effect the Defeasance
at the earliest time permitted under the Indenture; or
(B) obtain the consents (which may be in the form of
waivers) of the holders of Parent Notes to certain
covenants contained in the Parent Notes necessary to
permit the consummation of the Merger in accordance
32
with the terms of this Agreement, including the
incurrence of indebtedness and granting of liens
resulting therefrom (clauses (A) and (B) of this
Section 9.03(b), hereinafter referred to as "Parent
Notes Condition"), then
(x) Parent shall pay HSI a fee in cash of
$6,000,000, payable on or before the fifth
business day following Parent's failure to satisfy
the Parent Note Condition; and
(y) HSI, by action of its Board of Directors
taken within five business days of Parent's
failure to satisfy the Parent Note Condition, may
terminate the Agreement and the Merger.
9.4. Termination by Parent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of the Board of Directors of Parent,
if (a) there has been a breach by HSI of any representation or
warranty contained in this Agreement which would have or would be
reasonably likely to have an HSI Material Adverse Effect, or (b)
there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of HSI, which
breach is not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by Parent to HSI.
9.5. Effect of Termination and Abandonment. In the
event of termination of this Agreement and the abandonment of the
Merger pursuant to this Article 9, all obligations of the parties
hereto shall terminate, except the obligations of the parties
pursuant to this Section 9.5 and Section 7.9 and except for the
provisions of Sections 10.3, 10.4, 10.6, 10.9, 10.12 and 10.13
and the Confidentiality Agreement referred to in Section 10.4.
Moreover, in the event of termination of this Agreement pursuant
to Section 9.3 or 9.4, nothing herein shall prejudice the ability
of the non-breaching party from seeking damages from any other
party for any breach of this Agreement, including without
limitation, attorneys' fees and the right to pursue any remedy at
law or in equity.
9.6. Extension; Waiver. At any time prior to the
Effective Time, any party hereto, by action taken by its Board of
Directors, may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by or
on behalf of the party granting such extension or waiver. HSI's
determination to forego action under Section 9.3(b)(y) shall not
be deemed a waiver by HSI of any other provisions of this
Agreement.
33
ARTICLE 10
10. General Provisions.
10.1.
Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall be
deemed to the extent expressly provided herein to be conditions
to the Merger and shall not survive the Merger, provided,
however, that the agreements contained in Article 4 and in
Sections 7.10, 7.11, 7.12, and 7.13 and this Article 10 and the
agreements delivered pursuant to this Agreement shall survive the
Merger.
10.2. Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by
facsimile transmission and by courier service (with proof of
service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as
follows:
If to HSI: If to Parent or Merger Sub:
Philip E. Beekman D. Dwayne Hoven
President, Chairman of the Board and . . . . . . . President
and Chief Executive Officer
Chief Executive Officer Revco D.S., Inc.
Hook-SupeRx, Inc. 1925 Enterprise Parkway
175 Tri-County Parkway Twinsburg, OH 44017
Cincinnati, OH 45246-3298 Facsimile: (216) 487-1679
Facsimile: (513) 782-3576
With copies to: With copies to:
James S. Johns, Esq. Jack A. Staph, Esq.
Hook-SupeRx, Inc. Senior Vice President,
Secretary and
175 Tri-County Parkway General Counsel
Cincinnati, OH 45246-3290 Revco D.S., Inc.
Facsimile: (513) 782-3062 1925 Enterprise Parkway
Twinsburg, OH 44017
Jeffrey Bagner, Esq. Facsimile: (216) 487-1679
Fried, Frank, Harris,
Shriver & Jacobson Michael K. L. Wager, Esq.
One New York Plaza Benesch, Friedlander, Coplan &
Aronoff
New York, NY 10004 88 East Broad Street
Facsimile: (212) 747-1526 Columbus, OH 43215-3506
Facsimile: (614) 223-9330
or to such other address as any party shall specify by written
notice so given, and such notice shall be deemed to have been
delivered as of the date so telecommunicated, personally
delivered or mailed.
10.3. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence,
34
this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns. Notwithstanding anything contained in this Agreement to
the contrary, except for the provisions of Article 4 and Sections
7.10, 7.11, and 7.13 (collectively, the "Third Party
Provisions"), nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement. The Third Party Provisions may be
enforced on behalf of the beneficiaries thereof by the directors
of HSI prior to the Effective Time. Parent shall pay all
expenses, including attorneys' fees, that may be incurred by any
of such directors in enforcing the Third Party Provisions.
10.4. Entire Agreement. This Agreement, the
Exhibits, the HSI Disclosure Letter, the Parent Disclosure
Letter, the Confidentiality Agreement between HSI and Parent and
any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect
thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in
writing and signed by all parties hereto. During the term of
this Agreement, neither party hereto shall terminate the
foregoing Confidentiality Agreement.
10.5. Amendment. This Agreement may be amended by
the parties hereto, by action taken by their respective Boards of
Directors, at any time before or after approval of matters
presented in connection with the Merger by the stockholders of
HSI, but after any such stockholder approval, no amendment shall
be made which by law requires the further approval of
stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing
signed by or on behalf of each of the parties hereto.
10.6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware without regard to its rules of conflict of
laws. Each of HSI and Parent hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States
of America located in the State of Delaware (the "Delaware
Courts") for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such
courts), waives any objection to the laying of venue of any such
litigation in the Delaware Courts and agrees not to plead or
claim that such litigation brought in any Delaware Court has been
brought in an inconvenient forum.
10.7. Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
35
of this Agreement, each of which may be signed by less than all
of the parties hereto, but together all such copies are signed by
all of the parties hereto.
10.8. Headings. Headings of the Articles and
Sections of this Agreement are for the convenience of the parties
only, and shall be given no substantive or interpretive effect
whatsoever.
10.9. Interpretation. In this Agreement, unless
the context otherwise requires, words describing the singular
number shall include the plural and vice versa, and words
denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and
vice versa.
10.10. Waivers. Except as provided in this
Agreement, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver
by any party hereto of a breach of any provision hereunder shall
not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
10.11. Incorporation of Exhibits. The HSI
Disclosure Letter, the Parent Disclosure Letter and all Exhibits
attached hereto and referred to herein are hereby incorporated
herein and made a part hereof for all purposes as if fully set
forth herein.
10.12. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability
of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
10.13. Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It
is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in
any Delaware Court, this being in addition to any other remedy to
which they may be entitled at law or in equity.
10.14. Subsidiaries. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or
unincorporated, of which such party directly or indirectly owns
or controls at least a majority of the securities or other
36
interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect to such corporation or other organization,
or any organization of which such party is a general partner.
When a reference is made in this Agreement to Significant
Subsidiaries, the words "Significant Subsidiaries" shall refer to
Subsidiaries (as defined above) which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the
Securities Act.
10.15 Performance by Merger Sub. Parent hereby
agrees to cause Merger Sub to comply with its obligations
hereunder and to cause Merger Sub to consummate the Merger as
contemplated herein.
[Remainder of Page Intentionally Left Blank]
37
IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on their
behalf as of the day and year first written above.
REVCO D.S., INC.
By:
D. Dwayne Hoven
President and Chief Executive
Officer
HSX ACQUISITION CORP.
By:
D. Dwayne Hoven
President
HOOK-SUPERX, INC.
By:
Philip E. Beekman
President and Chief Executive
Officer
Exhibit #3
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of
March 31, 1994, by and among Broad Street Investment Fund I,
L.P., Stone Street Fund 1986, Bridge Street Fund 1986, Goldman,
Sachs & Co., The Goldman Sachs Group, L.P., and The Kroger Co.,
(individually, a "Shareholder" and collectively, the
"Shareholders"), Revco D.S., Inc., a Delaware corporation
("RDS"), and HSX Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of RDS ("Sub").
W I T N E S S E T H:
WHEREAS, the Shareholders own, of record and/or
beneficially, an aggregate of 10,249,998 shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Hook-SupeRx,
Inc., a Delaware corporation (the "Company"), which shares
constitute approximately 49% of the currently issued and
outstanding shares of Common Stock (all such shares together with
any shares of Common Stock acquired by the Shareholders after the
date hereof and prior to the termination hereof, being referred
to herein as the "Shares"); and
WHEREAS, concurrently herewith, RDS, Sub and the
Company are entering into an Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"), pursuant to
which, among other things, Sub will merge with and into the
Company (the "Merger"), and the holders of all of the issued and
outstanding shares of Common Stock will receive for $13.75 per
share (the "Merger Price") in cash; and
WHEREAS, the Shareholders desire to vote in favor of
the Merger; and
WHEREAS, RDS and Sub are entering into the Merger
Agreement in reliance on the Shareholders' covenants hereunder;
NOW, THEREFORE, in consideration of the foregoing
recitals and the mutual covenants and agreements herein contained
and other good and valuable consideration, the parties hereto
hereby agree as follows:
1. Agreement to Vote.
1..1 Voting. The Shareholders hereby agree, during
the time this Agreement is in effect, at any meeting of the
shareholders of the Company, however called, and in any action by
written consent of the shareholders of the Company, to (a) vote
all of their Shares in favor of the Merger; (b) vote such Shares
against any action or agreement that would result in a breach in<PAGE>
any material respect of any covenant, representation or warranty
or any other obligation of the Company under the Merger
Agreement; and (c) vote such Shares against any action or
agreement that would impede, interfere with or attempt to
discourage the Merger, including, but not limited to: (i) any
extraordinary corporate transaction (other than the Merger), such
as a merger, consolidation, business combination, reorganization,
recapitalization or liquidation involving the Company or any of
its subsidiaries; (ii) a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries; (iii) any
change in the management or board of directors of the Company,
except as otherwise agreed to in writing by Sub; (iv) any
material change in the present capitalization or dividend policy
of the Company; or (v) any other material change in the Company's
corporate structure or business; provided, however, that nothing
herein shall be construed to obligate any Shareholder to act in
accordance with the terms hereof in such person's capacity as a
director or officer of the Company.
2. Representations and Warranties of the
Shareholders. Each Shareholder represents and warrants to Sub
and RDS as follows:
2..1 Ownership of Shares. The Shares indicated on
Exhibit I hereto next to the name of such Shareholder are owned
of record and/or beneficially by such Shareholder, constitute all
of the outstanding shares of Common Stock owned of record and/or
beneficially by such Shareholder. Such Shareholder does not have
any rights to acquire any additional shares of Common Stock.
2..2 Power; Binding Agreement. Such Shareholder has
full legal right, power and authority to enter into and perform
all of such Shareholder's obligations under this Agreement. The
execution and delivery of this Agreement by such Shareholder will
not violate any other agreement to which such Shareholder is a
party including, without limitation, any voting agreement,
shareholders' agreement or voting trust. This Agreement has been
duly executed and delivered by such Shareholder. To the
knowledge of such Shareholder, no consent or approval of or
filing with any governmental or other regulatory body is required
for the execution and performance in accordance with the terms of
this Agreement, except for filings required pursuant to the
Exchange Act and the rules and regulations promulgated
thereunder.
2..3 Shares. On the date hereof each Shareholder is,
and on the date of the Closing hereunder each Shareholder will
be, the lawful owner of the Shares indicated next to such
Shareholder's name on Exhibit I hereto, and there are no
restrictions of any kind upon the ability of such Shareholder to
vote such Shares on the date hereof and there will be no such
restrictions to vote such Shares during the term of this
Agreement.
3. Representations and Warranties of RDS and Sub.
Each of RDS and Sub jointly and severally represent and warrant
to the Shareholders as follows: (a) that each of RDS and Sub has
all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby;
(b) the execution, delivery and performance of this Agreement by
each of RDS and Sub have been duly authorized and approved by all
required corporate action on the part of each of Sub and RDS; (c)
this Agreement has been duly executed and delivered by each of
RDS and Sub and is a legal, valid and binding obligation of each
of RDS and Sub, enforceable against each in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
4. Termination of Agent. The Agreement shall expire
upon the earliest to occur of (x) the Effective Time (as defined
in the Merger Agreement), and (y) September 30, 1994.
5. Certain Covenants of the Shareholders. Except in
accordance with the provisions of this Agreement, each
Shareholder, while this Agreement is in effect, shall not:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer,
pledge, encumbrance, assignment or other disposition of, any
Shares;
(b) acquire any additional shares of Common Stock
without the prior consent of Sub;
(c) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any
Shares; or
(d) solicit or enter into any negotiations with, or
furnish or cause to be furnished any information concerning the
business or assets of the Company or its subsidiaries to, any
person or entity (other than RDS and Sub) in connection with the
acquisition of the business or substantially all the assets
(including by merger, sale of stock, consolidation, business
combination or otherwise) of the Company; provided, however, that
the foregoing shall not restrict any Shareholder or any officer,
director or partner of such Shareholder or its affiliates, from
otherwise exercising the fiduciary duties owed by such person to
the Company by virtue of such person's position as a director or
officer of the Company; provided further, however, that each
Shareholder will promptly communicate to RDS any solicitation or
inquiry received by such Shareholder; and, provided further that
the foregoing shall not prohibit Goldman, Sachs & Co. from taking
any action solely in its capacity as financial advisor to the
Company.
6. Expenses. Each party hereto will pay all of its
own expenses in connection with the transactions contemplated by
this Agreement, including, without limitation, the fees and
expenses of its counsel and other advisors.
7. Confidentiality. The Shareholders recognize that
successful consummation of the transactions contemplated by this
Agreement may be dependent upon confidentiality with respect to
the matters referred to herein. In this connection, pending
public disclosure thereof, each Shareholder shall not disclose or
discuss such matters with anyone (other than such Shareholder's
counsel and advisors, if any) not a party to this Agreement,
without the prior written consent of Sub, except for filings
required pursuant to the Exchange Act and the rules and
regulations thereunder or disclosures such Shareholder's counsel
advises are necessary in order to fulfill such Shareholder's
obligations imposed by law, in which event such Shareholder shall
give notice of such disclosure to Sub as promptly as practicable
so as to enable RDS to seek a protective order from a court of
competent jurisdiction with respect thereto.
8. Survival of Representations and Warranties. All
representations, warranties, covenants and agreements made by the
Shareholders, RDS or Sub in this Agreement shall survive each
Closing hereunder and any investigation at any time made by or on
behalf of any party.
9. Amendment; Assigns. This Agreement may not be
modified, amended, altered or supplemented except by an agreement
in writing executed by all of the parties hereto. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, but none of
the parties hereto may assign any of such party's rights, inter-
ests or obligations under this Agreement without the prior writ-
ten consent of the other parties hereto, except that Sub may
assign all of its rights and obligations under this Agreement to
any subsidiary of Sub or RDS without the consent of the Share-
holders, but no such transfer shall relieve Sub of its obliga-
tions hereunder if such subsidiary does not perform such
obligations.
10. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be given (and shall be deemed to have been duly given if so
given) if delivered in person, by cable, telegram, telex, or
telecopy, or sent by registered or certified mail (postage
prepaid, return receipt requested), to the respective parties as
follows:
If to RDS or Sub:
REVCO D.S., INC.
1925 Enterprise Parkway
Twinsburg, Ohio 44087
Attention: Jack A. Staph
With copies to:
BENESCH FRIEDLANDER COPLAN & ARONOFF
88 East Broad Street
Columbus, Ohio 43215-3506
Attention: Michael K.L. Wager, Esq.
WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, New York 10153
Attention: Akiko Mikumo, Esq.
If to Broad Street Investment Fund I, L.P.,
Stone Street Fund 1986,
Bridge Street Fund 1986,
Goldman, Sachs & Co.
The Goldman Sachs Group, L.P.:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
Attention: Richard A. Friedman
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Attention: James C. Morphy
If to The Kroger Co.:
The Kroger Co.
1014 Vine Street
Cincinnati, Ohio 45202
Attention: Paul W. Heldman, Esq.
or to such other address as any party may designate in writing in
accordance herewith, except that notices of changes of address
shall only be effective upon receipt.
11. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same document.
12. GOVERNING LAW. THIS AGREEMENT, AND ALL MATTERS
RELATING HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO ANY PRINCIPLES OF CHOICE OF LAWS OR CONFLICTS OF LAW.
13. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in another
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, such provision shall be interpreted to be
only so broad as is enforceable.
14. Further Assurances. Each party hereto shall
execute and deliver such additional documents as may be necessary
or desirable to consummate the transactions contemplated by this
Agreement.
15. Third Party Beneficiaries. Nothing in this
Agreement, expressed or implied, shall be construed to give any
person other than the parties hereto any legal or equitable
right, remedy or claim under or by reason of this Agreement or
any provision contained herein.
16. Entire Agreement. This Agreement, together with
the documents expressly referred to herein, constitutes the
entire agreement among the parties hereto with respect to the
subject matter contained herein and therein and supersedes all
prior agreements and understandings, express or implied, between
the parties with respect to such subject matter.
17. Injunctive Relief. The parties agree that in the
event of a breach of any provision of this Agreement, the
aggrieved party may be without an adequate remedy at law. The
parties therefore agree that in the event of a breach of any
provision of this Agreement, the aggrieved party may elect to
institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages
for breach of this Agreement. By seeking or obtaining any such
relief, the aggrieved party will not be precluded from seeking or
obtaining any other relief to which it may be entitled.
IN WITNESS WHEREOF, each of the parties hereto have
caused this Agreement to be duly executed and delivered as of the
day and year first above written.
REVCO D.S., INC.
By:_____________________________
Name: D. Dwayne Hoven
Title: President and Chief Executive
Officer
HSX ACQUISITION CORP.
By:_____________________________
Name:
Title: President
BROAD STREET INVESTMENT FUND I, L.P.
By: Goldman, Sachs & Co.
General Partner
By:_____________________________
Name:
Title:
STONE STREET FUND 1986
By: Stone Street Advisors Corp.
General Partner
By:_____________________________
Name:
Title:<PAGE>
BRIDGE STREET FUND 1986
By: Stone Street Advisors Corp.
General Partner
By:_____________________________
Name:
Title:
GOLDMAN, SACHS & CO.
By:_____________________________
Name:
Title:
THE GOLDMAN SACHS GROUP, L.P.
By: Goldman, Sachs & Co.
General Partner
By:_____________________________
Name:
Title:
THE KROGER CO.
By:_____________________________
Name:
Title:<PAGE>
EXHIBIT I
OWNERSHIP OF SHARES
Shares
Bridge Street Fund 1986 66,666
Stone Street Fund 1986 83,333
Goldman, Sachs & Co. 365,724
The Goldman Sachs Group, L.P. 500,000
Broad Street Investment Fund I, L.P. 4,109,275
Kroger Co. 5,125,000
April 1, 1994 - 1:18pm - NMA
CIN - 51355_4.CIN - 00000\578
