<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
Statement on
SCHEDULE 13D
Under the Securities Exchange Act of 1934
------------------------------------
BIG B, INC.
(Name of Subject Company)
------------------------------------
RDS ACQUISITION INC.
REVCO D.S., INC.
(Bidders)
------------------------------------
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
0888917106
(CUSIP Number of Class of Securities)
------------------------------------
JACK A. STAPH, ESQ.
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
REVCO D.S., INC.
1925 ENTERPRISE PARKWAY
TWINSBURG, OH 44087
(216) 487-1667
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
------------------------------------
COPY TO:
RICHARD HALL, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019-7475
(212) 474-1293
CALCULATION OF FILING FEE*
<TABLE>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$330,154,650 $66,031
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</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 22,010,310 shares of Common Stock, par value $0.001 per share,
which represents all the shares of Common Stock outstanding as of May 11,
1996 according to the Subject Company's Quarterly Report on Form 10-Q for the
quarter ended May 11, 1996, plus the number of shares of Common Stock
currently issuable upon the exercise of all options to purchase Common Stock
and upon conversion of Big B, Inc.'s 6.5% Convertible Subordinated Debentures
Due 2003 according to the Subject Company's Annual Report on Form 10-K for
the year ended February, 3 1996.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
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Amount Previously Paid: N/A Filing Party: N/A
Form of Registration No.: N/A Date Filed: N/A
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<PAGE> 2
14D-1 AND 13D
CUSIP No. 0888917106
<TABLE>
<S> <C>
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1. NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
RDS Acquisition Inc. (34-1838790)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
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3. SEC USE ONLY:
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4. SOURCES OF FUNDS:
AF
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(e) or 2(f). /X/
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON:
1,190,000
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8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES: / /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 6.4% of the Shares Outstanding as of
September 9, 1996.
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10. TYPE OF REPORTING PERSON:
CO
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</TABLE>
<PAGE> 3
14D-1 AND 13D
CUSIP No. 0888917106
<TABLE>
<S> <C>
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1. NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Revco D. S., Inc. (34-1527876)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
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3. SEC USE ONLY:
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4. SOURCES OF FUNDS:
BK, WC, OO
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(e) or 2(f). /X/
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON:
1,190,000
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8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES: / /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 6.4% of the Shares Outstanding as of
September 9, 1996.
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10. TYPE OF REPORTING PERSON:
CO, HC
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</TABLE>
<PAGE> 4
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Big B, Inc., an Alabama corporation
(the "Company"), which has its principal executive offices at 2600 Morgan Road,
S.E., Bessemer, AL 35023.
(b) This Tender Offer Statement on Schedule 14D-1 and Statement on Schedule
13D relates to the offer by RDS Acquisition Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Revco D.S., Inc., a Delaware
corporation ("Parent"), to purchase all outstanding shares of Common Stock, par
value $0.001 per share (the "Shares"), of the Company at a price of $15 per
Share (the "Offer Price"), net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated September 10, 1996
(the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments and supplements thereto, collectively constitute
the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. Information concerning the number of outstanding Shares is set
forth in "Introduction" of the Offer to Purchase and is incorporated herein by
reference.
(c) Information concerning the principal markets in which the Shares are
traded, and the high and low sales prices of the Shares for each quarterly
period during the past two years is set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase and is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 14D-1 is being filed by the Purchaser along with a Schedule
13D filed by the Purchaser and Parent. Information concerning the principal
business and principal offices of the Purchaser and Parent is set forth in
Section 9 ("Certain Information Concerning the Purchaser and Parent") of the
Offer to Purchase and is incorporated herein by reference. The names, business
addresses, present principal occupations or employment, material occupation,
positions, offices or employment during the last five years are set forth in
Schedule I to the Offer to Purchase and are incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") and Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 11 ("Contacts and Transactions
with the Company; Background of the Offer") and Section 12 ("Purpose of the
Offer; Plans for the Company") of the Offer to Purchase is incorporated herein
by reference.
(b) The information set forth in Section 11 ("Contacts and Transactions
with the Company; Background of the Offer") and Section 12 ("Purpose of the
Offer; Plans for the Company") of the Offer to Purchase is incorporated herein
by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer;
Plans for the Company") of the Offer to Purchase is incorporated herein by
reference.
1
<PAGE> 5
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Effect of
the Offer on the Convertible Debentures; Margin Regulations") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction", Section 9
("Certain Information Concerning the Purchaser and Parent"), Section 11
("Contacts and Transactions with the Company; Background of the Offer"), Section
12 ("Purpose of the Offer; Plans for the Company") of, and Schedule II to, the
Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser and Parent") of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; Plans
for the Company") of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated hereby by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Effect of the
Offer on the Convertible Debentures; Margin Regulations") of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
2
<PAGE> 6
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
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(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for Use by Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Form of Summary Advertisement
(a)(8) Text of Press Release dated September 9, 1996.
(b) None.
(c) Amended and Restated Credit Agreement dated as of July 27, 1995, among Parent,
Banque Paribas and Bank of Illinois, as managing agents, Bank of America
National Trust and Savings Association, as administrative agent, and the
syndicate of lenders thereto.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
3
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 10, 1996
REVCO D.S., INC.,
by /s/ Jack A. Staph
----------------------------------
Name: Jack A. Staph
Title: Senior Vice President,
Secretary and General
Counsel
RDS ACQUISITION INC.,
by /s/ Jack A. Staph
----------------------------------
Name: Jack A. Staph
Title: Vice President and
Secretary
4
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGINATION
BY
SEQUENTIAL
EXHIBIT EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
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<S> <C> <C>
(a)(1) Offer to Purchase. ................................................
(a)(2) Letter of Transmittal. ............................................
(a)(3) Notice of Guaranteed Delivery. ....................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees. .........................................................
(a)(5) Letter to Clients for Use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees. .....................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9. ..............................................
(a)(7) Form of Summary Advertisement......................................
(a)(8) Text of Press Release dated September 9, 1996. ....................
(b) None. .............................................................
(c) Amended and Restated Credit Agreement dated as of July 27, 1995,
among Parent, Banque Paribas and Bank of Illinois, as managing
agents, Bank of America National Trust and Savings Association, as
administration agent, and the syndicate of lenders thereto. .......
(d) None. .............................................................
(e) Not applicable. ...................................................
(f) None. .............................................................
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BIG B, INC.
AT
$15 NET PER SHARE
BY
RDS ACQUISITION INC.,
a Wholly Owned Subsidiary of
REVCO D.S., INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN
PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES OF COMMON STOCK (THE
"SHARES") OF BIG B, INC. (THE "COMPANY") THAT, TOGETHER WITH THE 1,190,000
SHARES ALREADY OWNED BY THE PURCHASER, WOULD REPRESENT A MAJORITY OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM TENDER CONDITION"). THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS. SEE
THE INTRODUCTION AND SECTIONS 1 AND 14.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a copy
thereof) in accordance with the instructions in the Letter of Transmittal, have
such stockholder's signature thereon guaranteed if required by Instruction 1 to
the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
copy), or, in the case of a book-entry transfer effected pursuant to the
procedures set forth in Section 2, an Agent's Message (as defined herein), and
any other required documents to the Depositary and either deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal (or such copy) or deliver such Shares pursuant to the procedures for
book-entry transfer set forth in Section 2 or (ii) request such stockholder's
broker, dealer, bank, trust company or other nominee to effect the transaction
for such stockholder. A stockholder having Shares registered in the name of a
broker, dealer, bank, trust company or other nominee must contact such broker,
dealer, bank, trust company or other nominee if such stockholder desires to
tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedures for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such stockholder's tender of Shares may be effected by following the
procedures for guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to Salomon Brothers
Inc, the Dealer Manager, or to D.F. King & Co., Inc., the Information Agent, at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter
of Transmittal, the Notice of Guaranteed Delivery and all other tender offer
materials may be obtained from the Information Agent or the Dealer Manager or
from brokers, dealers, commercial banks and trust companies, and will be
furnished promptly at the Purchaser's expense.
------------------------
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
------------------------
September 10, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Introduction......................................................................... 1
The Tender Offer..................................................................... 2
1. Terms of the Offer.......................................................... 2
2. Procedures for Tendering Shares............................................. 4
3. Withdrawal Rights........................................................... 7
4. Acceptance for Payment and Payment.......................................... 8
5. Certain Federal Income Tax Consequences..................................... 9
6. Price Range of the Shares; Dividends on the Shares.......................... 10
7. Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Effect of the Offer on the
Convertible Debentures; Margin Regulations.......................... 10
8. Certain Information Concerning the Company.................................. 12
9. Certain Information Concerning the Purchaser and Parent..................... 14
10. Source and Amount of Funds.................................................. 16
11. Contacts and Transactions with the Company; Background of the Offer......... 17
12. Purpose of the Offer; Plans for the Company................................. 20
13. Dividends and Distributions................................................. 23
14. Certain Conditions of the Offer............................................. 24
15. Certain Legal Matters....................................................... 27
16. Fees and Expenses........................................................... 29
17. Miscellaneous............................................................... 30
</TABLE>
Schedule I: Directors and Executive Officers of Parent and the Purchaser
Schedule II: Recent Share Purchases by the Purchaser
i
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF BIG B, INC.:
INTRODUCTION
RDS Acquisition Inc., a Delaware corporation (the "Purchaser"), which is a
wholly owned subsidiary of Revco D.S., Inc., a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of Common Stock, par value
$.001 per share (the "Shares"), of Big B, Inc., an Alabama corporation (the
"Company"), at a price of $15 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements from time to
time hereto or thereto, collectively constitute the "Offer").
The purpose of the Offer is to enable Parent to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. Parent currently intends, as soon as practicable following consummation
of the Offer, to act to have its nominees elected to the Company's board of
directors to replace the Company's current board and to propose and seek to have
the Company consummate a merger or similar business combination with the
Purchaser or another direct or indirect wholly owned subsidiary of Parent (the
"Proposed Merger"). The purpose of the Proposed Merger is to acquire all Shares
not tendered and purchased pursuant to the Offer or otherwise. Pursuant to the
Proposed Merger, each then outstanding Share (other than Shares owned by the
Purchaser, Parent or any of their subsidiaries, Shares held in the treasury of
the Company and Shares owned by stockholders who perfect any available
dissenters' rights under the Alabama Business Corporation Act (the "ABCA")) will
be converted into the right to receive an amount in cash equal to the price per
Share paid pursuant to the Offer. In order to approve the Proposed Merger
without the affirmative vote of any other stockholders of the Company, the
Purchaser would need to own 66-2/3% of the outstanding Shares on the record
date set for the meeting of stockholders to approve the Proposed Merger, unless
the Company's articles of incorporation are amended to provide for a lesser
amount (which may not be less than a majority of the outstanding Shares). See
Sections 1, 12 and 14. If the Purchaser obtains 80% of the outstanding Shares,
the Purchaser will be able to merge the Company into the Purchaser without the
need to conduct a meeting of stockholders. See Section 12.
Parent intends to seek to negotiate with the Company with respect to the
acquisition of the Company by Parent. If such negotiations result in a
definitive merger agreement between the Company and Parent, the consideration to
be received by holders of Shares could include or consist of securities, cash or
any combination thereof. Accordingly, such negotiations could result in, among
other things (a) termination of the Offer (see Section 14) and submission of a
different acquisition proposal to the Company's stockholders for their approval
or (b) amendment of the Offer (see Section 1).
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THE OFFER IS CONDITIONED UPON THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1) THAT NUMBER OF
SHARES (THE "MINIMUM NUMBER OF SHARES") THAT, TOGETHER WITH THE 1,190,000 SHARES
ALREADY OWNED BY THE PURCHASER, WOULD REPRESENT A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM TENDER
CONDITION"). THE PURCHASER RESERVES THE RIGHT, SUBJECT TO THE APPLICABLE RULES
AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), TO
WAIVE OR REDUCE THE MINIMUM TENDER CONDITION AND TO ELECT TO PURCHASE, PURSUANT
TO THE OFFER, FEWER THAN THE MINIMUM NUMBER OF SHARES. SEE SECTIONS 1 AND 14.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended May 11, 1996 (the "Company 10-Q"), as of May 11, 1996 filed with the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), there were 18,592,130 Shares issued and outstanding. According to the
Company's Annual Report on Form 10-K for the fiscal year ended
1
<PAGE> 4
February 3, 1996 (the "Company 10-K") filed with the Commission under the
Exchange Act, as of February 3, 1996, there were 119,000 Shares subject to
outstanding options. The Company's 6.5% Convertible Subordinated Debentures Due
2003 (the "Convertible Debentures") are currently convertible into Shares at a
price of $12.20 per Share, which represents 81.9672 Shares per $1,000 aggregate
principal amount and an aggregate of 3,299,180 Shares, subject to adjustment.
Based on the foregoing and assuming that no options were granted after February
3, 1996, and no options were exercised or expired from February 4, 1996 through
September 10, 1996, there would be 22,010,310 Shares outstanding on a fully
diluted basis. As of September 10, 1996, the Purchaser owned 1,190,000 Shares,
which means that the number of additional Shares needed to satisfy the Minimum
Tender Condition would be 9,815,155 Shares. However, the actual Minimum Number
of Shares will depend on the facts as they exist on the date of purchase.
Other conditions to the Offer are described in Section 14. The Purchaser
reserves the right (but shall not be obligated), subject to the applicable rules
and regulations of the Commission, to waive any of or all such conditions. See
Sections 1, 8, 14 and 15.
The Purchaser is not offering to purchase the Convertible Debentures.
However, in lieu of converting the Convertible Debentures in order to tender
Shares, holders of Convertible Debentures may deliver certificates for
Convertible Debentures that are convertible into the number of Shares being
tendered. See Section 2.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Salomon Brothers Inc ("Salomon
Brothers"), which is acting as Dealer Manager (the "Dealer Manager"),
ChaseMellon Shareholder Services, L.L.C., which is acting as the Depositary (the
"Depositary"), and D.F. King & Co., Inc., which is acting as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See Section
16.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will promptly after the Expiration Date accept for
payment and will pay for all Shares validly tendered prior to the Expiration
Date and not properly withdrawn in accordance with Section 3. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Monday, October
7, 1996, unless and until the Purchaser, in its sole discretion, extends the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, expires.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM TENDER CONDITION,
THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER (THE "HSR ACT"), AND THE SATISFACTION OF THE OTHER
CONDITIONS SET FORTH IN SECTION 14.
Subject to the applicable rules and regulations of the Commission, the
Purchaser reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events or facts set forth
in Section 14 shall have occurred, to (a) extend the period of time during which
the Offer is open, and thereby delay acceptance for payment of and the payment
for any Shares, by giving oral or written notice of such extension to the
Depositary and (b) amend the Offer in any other respect by giving oral or
written notice of such amendment to the Depositary. During any such extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer, subject to the right of a tendering shareholder to withdraw such
stockholder's
2
<PAGE> 5
Shares as provided in Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE OFFER PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN PAYMENT FOR TENDERED SHARES.
If by the Expiration Date, any of or all the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the applicable rules and regulations of the Commission,
to (a) terminate the Offer and not accept for payment or pay for any Shares and
return all tendered Shares to tendering stockholders, (b) waive all the
unsatisfied conditions and accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn, (c) extend
the Offer and, subject to the right of stockholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer or is delayed in its acceptance for
payment of or payment (whether before or after its acceptance for payment of
Shares) for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to exercise withdrawal rights as set forth in Section 3. However, the
ability of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that the Purchaser pay the consideration offered or return tendered
Shares promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price, a change in the percentage of
securities sought or an amendment to or a waiver of the Minimum Tender
Condition, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. With respect to a
change in price or a change in the percentage of securities sought, a minimum
period of 10 business days, and with respect to any other amendment to the
Minimum Tender Condition, a minimum period of five business days, is generally
required to allow for adequate dissemination to stockholders and investor
response.
Requests are being made to the Company pursuant to Rule 14d-5 of the
Exchange Act and Section 16.02 of the ABCA for the use of the Company's
stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares,
3
<PAGE> 6
and will be furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists, or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares, by the Purchaser following receipt of such lists or listings from the
Company, or by the Company if it so elects.
2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, (a) in the case of physical delivery of certificates for Shares, a
properly completed and signed Letter of Transmittal (or copy thereof), together
with any required signature guarantees and any other required documents, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, and certificates for
tendered Shares must be received by the Depositary at one of such addresses
prior to the Expiration Date, (b) in the case of a book-entry transfer of
Shares, an Agent's Message (as defined below) and a properly completed and
signed Letter of Transmittal (or copy thereof), together with any required
signature guarantees and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date or (c) the tendering stockholder must
comply with the procedures for guaranteed delivery set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or copy thereof), properly completed and duly executed, with any
required signature guarantees, and an Agent's Message, and any other required
documents, must, in each case, be transmitted to, and received by, the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the tendering stockholder must comply
with the procedures for guaranteed delivery set forth below. The confirmation of
a book-entry transfer of Shares into the Depositary's account at a Book-Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. A signature guarantee is not required on the Letter
of Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name
4
<PAGE> 7
appears on a security position listing as the owner of the Shares) of the Shares
tendered therewith and such registered holder has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If certificates for tendered Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Shares not tendered
or not accepted for payment are to be returned to a person other than the
registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly signed Letter of Transmittal
(or a copy thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, are received by the Depositary within three trading days after
the date of execution of such Notice of Guaranteed Delivery. A "trading
day" is any day on which the Nasdaq National Market (the "Nasdaq National
Market") operated by the National Association of Securities Dealers, Inc.
(the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by fax or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter
of Transmittal (or a copy thereof), properly completed and duly signed, with any
required signature guarantees, and, in the case of a book-entry transfer, an
Agent's Message, and (c) any other required documents. Accordingly, tendering
stockholders may be paid at different times depending upon when such documents
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT FOR TENDERED
SHARES.
THE VALID TENDER OF SHARES PURSUANT TO ONE OF THE PROCEDURES DESCRIBED
ABOVE WILL CONSTITUTE A BINDING AGREEMENT BETWEEN THE TENDERING STOCKHOLDER AND
THE PURCHASER UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER.
5
<PAGE> 8
Appointment as Attorneys-in-Fact and Proxies. By executing a Letter of
Transmittal as set forth above, the tendering stockholder will irrevocably
appoint designees of the Purchaser as such stockholder's attorneys-in-fact and
proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
the Purchaser and with respect to any and all other Shares or other securities
or rights issued or issuable in respect of such Shares on or after September 10,
1996. All such proxies will be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts for payment Shares tendered by such stockholder as
provided herein. Upon such appointment, all prior powers of attorney, proxies
and consents given by such stockholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will be deemed not effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights in respect of any annual, special or
adjourned meeting of the Company's stockholders, actions by written consent in
lieu of any such meeting or otherwise, as they in their sole discretion deem
proper, including any of the foregoing held or executed in regard to an action
to have the Purchaser's nominees elected to the Company's board of directors, to
consummate the Proposed Merger and otherwise in connection with the transactions
contemplated by the Proposed Merger. The Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares the Purchaser must be able to
exercise full voting, consent and other rights with respect to such Shares and
other securities or rights, including voting at any meeting of stockholders.
Tender of Shares by Holders of Convertible Debentures. Holders of
Convertible Debentures who wish to tender Shares into which their Convertible
Debentures are convertible may do so either (a) by first converting their
Convertible Debentures and delivering to the Depositary certificates for Shares
being tendered or (b) by delivering to the Depositary certificates for
Convertible Debentures that are convertible into the Shares being tendered. In
the case of (b), only the number of whole Shares into which the Convertible
Debentures represented by the certificates so delivered are convertible may be
tendered, and any cash in lieu of fractional Shares received upon conversion of
such Convertible Debentures will be paid over to the holders of such Convertible
Debentures or as provided in the Letter of Transmittal. Holders of Convertible
Debentures who elect to tender Shares by delivering certificates for Convertible
Debentures without first converting their Convertible Debentures will, by
executing a Letter of Transmittal, in addition to the matters described under
"Appointment as Attorneys-in-Fact and Proxies" above, irrevocably appoint the
Depositary as such holder's agent and attorney-in-fact in the manner set forth
in the Letter of Transmittal, with full power of substitution, to the full
extent of such holder's rights, to convert the Convertible Debentures
represented by the certificates so delivered into the Shares being tendered.
Such appointment will be effective when, and only to the extent that, the
Purchaser accepts for payment Shares tendered by a holder of Convertible
Debentures in this manner. Certificates for Convertible Debentures delivered to
the Depositary to tender Shares must be in proper form for conversion into the
Shares being tendered. In the event certificates for Convertible Debentures are
registered in a name other than the name of the tendering securityholder, or to
the extent deemed necessary or appropriate by the Depositary or the Purchaser to
convert such Convertible Debentures, additional documents may be required to
transfer record ownership of the Convertible Debentures into the name of the
tendering securityholder or the name of the Depositary. In any event, payment
for Shares tendered by the delivery of certificates for Convertible Debentures
that are accepted for payment pursuant to the Offer will only be made after the
receipt by the Depositary of such Shares upon conversion of such Convertible
Debentures. See Section 4.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right
6
<PAGE> 9
to reject any or all tenders determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right
to waive any defect or irregularity in the tender of any Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of the Purchaser, Parent, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal. See Section 5.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer will be irrevocable. Shares tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
November 8, 1996.
For a withdrawal to be effective, a written or fax notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase and must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder of the Shares to be withdrawn (or in the
case of holders tendering Shares by the delivery of certificates for Convertible
Debentures, the name of the registered holder of the Convertible Debentures that
are convertible into the Shares to be withdrawn), if different from the name of
the person who tendered the Shares. If certificates for Shares (or Convertible
Debentures) have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such
certificates have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
set forth in Section 2, any notice of withdrawal must also specify the name and
number of the account at the appropriate Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered
7
<PAGE> 10
for purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will promptly after the Expiration Date accept for
payment and will pay for all Shares validly tendered prior to the Expiration
Date and not properly withdrawn in accordance with Section 3. All questions as
to the satisfaction of such terms and conditions will be determined by the
Purchaser in its sole discretion, which determination will be final and binding.
See Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including the HSR Act. Any
such delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act, which requires that the Purchaser pay the consideration offered or return
tendered Shares promptly after the termination or withdrawal of the Offer.
Parent filed a Notification and Report Form with respect to the Offer under
the HSR Act on September 10, 1996. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on September
25, 1996. However, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend the
waiting period by requesting additional information or documentary material from
Parent. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the 10th day after substantial compliance by Parent
with such request. See Section 15 for additional information concerning the HSR
Act and the applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after (i) timely receipt by the Depositary of (a) certificates
for such Shares (or Convertible Debentures convertible into such Shares) (or a
timely Book-Entry Confirmation with respect to such Shares), (b) a Letter of
Transmittal (or a copy thereof), properly completed and duly signed, with any
required signature guarantees, and, in the case of a book-entry transfer, an
Agent's Message, and (c) any other required documents; and (ii) in the case of
Shares tendered by delivery of certificates for Convertible Debentures, receipt
by the Depositary of certificates for the Shares issuable upon conversion of
such Convertible Debentures. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
PAYMENT FOR TENDERED SHARES.
If the Purchaser extends the Offer or is delayed in its acceptance for
payment of or payment (whether before or after its acceptance for payment of
Shares) for Shares or is unable to accept for payment or pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the
8
<PAGE> 11
Purchaser's rights under the Offer (but subject to compliance with Rule 14e-1(c)
under the Exchange Act), the Depositary may retain tendered Shares on behalf of
the Purchaser, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise withdrawal rights as set forth
in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares (or in the case of holders of
Convertible Debentures tendering Shares by delivery of Certificates for
Convertible Debentures, certificates for such Convertible Debentures) will be
returned, without expense to the tendering securityholder (or, in the case of
Shares delivered by book-entry transfer, such Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility), as promptly
as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Proposed Merger will be a
taxable transaction for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for Federal income tax purposes, a tendering stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer or the Proposed Merger and the aggregate tax
basis in the Shares tendered by the stockholder and purchased pursuant to the
Offer or converted in the Proposed Merger, as the case may be. Gain or loss will
be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer or converted in the Proposed Merger, as the case may be.
If Shares are held by a stockholder as capital assets, except as provided
below, gain or loss recognized by the stockholder will be capital gain or loss,
which will be long-term capital gain or loss if the stockholder's holding period
for the Shares exceeds one year. Under current law, long-term capital gains
recognized by an individual stockholder will generally be taxed at a maximum
Federal marginal tax rate of 28%, and long-term capital gains recognized by a
corporate stockholder will be taxed at a maximum Federal marginal tax rate of
35%.
If a holder of Convertible Debentures converts such Debentures into Shares,
the holder will recognize no gain or loss on the conversion, and the holder's
tax basis and (assuming the Convertible Debentures were held as capital assets)
holding period for the Convertible Debentures will carry over to the Shares. If
the Shares are purchased pursuant to the Offer or converted into cash pursuant
to the Proposed Merger, the tax results in the two preceding paragraphs will
generally apply. However, if the holder's tax basis in the Convertible
Debentures is less than their principal amount (such difference being "market
discount"), then, subject to a de minimis rule, the untaxed market discount on
the Convertible Debentures that had accrued at the time of their conversion into
Shares will be taxable as ordinary income rather than capital gain upon any
subsequent taxable disposition of the Shares, including when the Shares are
purchased pursuant to the Offer or converted into cash pursuant to the Proposed
Merger.
A securityholder (other than certain exempt securityholders, including,
among others, all corporations and certain foreign individuals and entities)
that tenders Shares may be subject to 31% backup withholding unless such
securityholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies. A
securityholder that does not furnish its TIN may be subject to a penalty imposed
by the IRS. See Section 2 ("Procedures For Tendering Shares--Backup
Withholding").
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<PAGE> 12
If backup withholding applies to a securityholder, the Depositary will be
required to withhold 31% from payments to such securityholder. Backup
withholding is not an additional tax. Rather, the amount of the backup
withholding can be credited against the Federal income tax liability of the
person subject to the backup withholding, provided that the required information
is given to the IRS. If backup withholding results in an overpayment of tax, a
refund can be obtained by the securityholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. HOLDERS OF SHARES AND
CONVERTIBLE DEBENTURES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE
PROPOSED MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are included in the Nasdaq National Market and are traded under
the symbol BIGB. The following table sets forth, for each of the periods
indicated, the high and low sales quotations per Share as reported by the Nasdaq
National Market and the Dow Jones News Retrieval Service and the dividends paid
on the Shares as set forth in the Company 10-K and the Company 10-Q.
<TABLE>
<CAPTION>
SALES
QUOTATION
------------
FISCAL YEAR HIGH LOW DIVIDENDS
- ------------------------------------------------------------------ ---- --- ---------
<S> <C> <C> <C>
1995
Quarter ended May 7, 1994....................................... $ 12-1/2 $ 9-7/8 $0.04
Quarter ended July 30, 1994..................................... $ 12-1/8 $10-5/8 $0.04
Quarter ended October 22, 1994.................................. $ 12-1/8 $10-3/8 $0.04
Quarter ended January 28, 1995.................................. $ 14-1/2 $11-1/2 $0.04
1996
Quarter ended May 8, 1995....................................... $ 15-1/4 $13 $0.04
Quarter ended July 29, 1995..................................... $ 15-1/8 $13-3/4 $0.05
Quarter ended October 26, 1995.................................. $ 16-1/8 $14-1/4 $0.05
Quarter ended February 3, 1996.................................. $ 14-3/4 $ 7-1/2 $0.05
1997
Quarter ended May 11, 1996...................................... $ 11-7/8 $ 9-1/4 $0.05
Quarter ended August 3, 1996.................................... $ 11-1/2 $ 7-7/8 $0.05
Quarter ending October 19, 1996 (through September 6, 1996)..... $ 12-7/8 $ 9-7/8
</TABLE>
On September 6, 1996, the last full trading day before the first public
announcement of the Purchaser's intention to make the Offer, the last reported
sale price of the Shares on the Nasdaq National Market was $12 5/8 per Share. On
September 9, 1996, the last full trading day before the commencement of the
Offer, the last reported sale price of the Shares on the Nasdaq National Market
was $15 7/8 per Share. The average closing price for Shares for the 90-calendar
day period ended September 6, 1996 was $9.81. Stockholders are urged to obtain
current market quotations for the Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; EFFECT OF THE OFFER ON THE CONVERTIBLE DEBENTURES; MARGIN
REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
10
<PAGE> 13
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market, which require that an issuer
have at least 200,000 publicly held shares, held by at least 400 stockholders or
300 stockholders of round lots, with a market value of at least $1,000,000, and
have net tangible assets of at least $1,000,000, $2,000,000 or $4,000,000,
depending on profitability levels during the issuer's four most recent fiscal
years. If these standards are not met, the Shares might nevertheless continue to
be included in the NASD's Nasdaq Stock Market (the "Nasdaq Stock Market") with
quotations published in the Nasdaq "additional list" or in one of the "local
lists", but if the number of holders of the Shares were to fall below 300, or if
the number of publicly held Shares were to fall below 100,000 or there were not
at least two registered and active market makers for the Shares, the NASD's
rules provide that the Shares would no longer be "qualified" for Nasdaq Stock
Market reporting and the Nasdaq Stock Market would cease to provide any
quotations. Shares held directly or indirectly by directors, officers or
beneficial owners of more than 10% of the Shares are not considered as being
publicly held for this purpose. According to the Company 10-K, as of April 1,
1996 there were approximately 2,234 holders of record of Shares and, according
to the Company 10-Q, as of May 11, 1996 there were 18,592,130 Shares
outstanding. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market and the Shares are no longer included in the Nasdaq National Market or in
any other tier of the Nasdaq Stock Market, as the case may be, the market for
Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of Shares remaining, at such time, the
interest in maintaining a market in Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Shares is not terminated prior to the Proposed
Merger, then the Shares will be delisted from all stock exchanges and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Proposed Merger.
Effect of the Offer on the Convertible Debentures. Although the Company
10-K discloses that the Convertible Debentures are not registered under Section
12 of the Exchange Act and, as a result, do not meet the qualification
requirements of the NASD for inclusion in the Nasdaq Stock Market, to date the
Convertible Debentures have been so included. Depending on the amount of
Convertible
11
<PAGE> 14
Debentures that are converted into Shares as a result of the Offer, the reduced
principal amount may cause the Convertible Debentures to no longer meet an
additional qualification requirement of NASD for continued inclusion in the
Nasdaq Stock Market that the issue have at least two registered and active
market makers. Accordingly, the Nasdaq Stock Market may cease to provide any
quotations.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. In any event, the Shares will cease to be "margin securities" if
registration of the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is an Alabama corporation with its principal offices at 2600
Morgan Road, S.E., Bessemer, Alabama 35023. According to the Company 10-K, the
Company's principal line of business is operating a chain of drug stores in five
states in the southeastern United States.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company Annual Report and the Company 10-Q. More comprehensive
financial information is included in the Company 10-K, the Company 10-Q and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to the Company Annual Report,
the Company 10-Q and such other documents and all the financial information
(including any related notes) contained therein. The Company Annual Report, the
Company 10-Q and such other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information."
12
<PAGE> 15
BIG B, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL QUARTER
FISCAL YEAR ENDED ENDED
--------------------------------------- -------------------
FEBRUARY 3, JANUARY 28, JANUARY 29, MAY 11, MAY 6,
1996 1995 1994 1996 1995
----------- ----------- ----------- -------- --------
(53 WEEKS) (52 WEEKS) (52 WEEKS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales....................... $ 737,146 $ 668,205 $ 595,712 $208,783 $195,183
Cost of products sold........... 521,186 460,925 412,560 147,092 136,101
Income before taxes............. 4,724 23,775 18,434 2,864 7,697
Net income...................... 2,624 15,097 11,752 1,789 4,807
NET INCOME PER COMMON SHARE:
Primary......................... $ 0.15 $ 0.97 $ 0.76 $ 0.10 $ 0.31
Fully diluted................... $ 0.15 $ 0.89 $ 0.72 $ 0.10 $ 0.28
BALANCE SHEET DATA: (1)
Total current assets............ $ 214,456 $ 199,762 $218,713
Total assets.................... 298,836 273,492 300,700
Total current liabilities....... 68,452 79,092 74,410
Total liabilities............... 153,588 166,759 154,468
Total stockholders' equity...... $ 145,248 $ 106,733 $146,232
</TABLE>
- ---------------
(1) At period end.
On August 20, 1996, the Company issued a press release that included the
following:
"Big B, Inc. (OTC: BIGB) announced today record sales of $381,897,000
for the twenty-six week period ended August 3, 1996, an increase of 7.7%
over sales of $354,742,000 in the prior year. For the twelve week second
quarter, sales rose 8.5% to a record $173,114,000 as compared to
$159,559,000 previously. Comparable store sales improved 6% for the quarter
and 5% for the twenty-six weeks. Net earnings for the quarter were
$1,542,000 or $.08 per share as compared to $3,235,000 or $.16 per share in
the prior year. For the twenty-six week period, earnings were $3,336,000 or
$.18 per share compared to $8,047,000 and $.44 per share previously."
The indenture for the Convertible Debentures (the "Debenture Indenture")
contains a covenant pursuant to which, upon a change of control of the Company,
the holders of the Convertible Debentures would have the right to require the
Company to purchase their Convertible Debentures for 100% of the principal
amount thereof. The consummation of the Offer on the terms described herein
would constitute a "change of control" under the Debenture Indenture. If all
such holders elect to require repurchase of their Convertible Debentures
following consummation of the Offer rather than tendering the Shares into which
the Convertible Debentures are convertible pursuant to the Offer, the Company
will be required to purchase an aggregate of $40,250,000 principal amount of
Convertible Debentures. The Convertible Debentures are currently convertible
into Shares at a price of $12.20 per Share, which is less than the Offer Price.
In addition, the Company's bank credit facility (which is not publicly
available) may contain provisions pursuant to which, upon consummation of the
Offer, the Company would be required to repay all amounts outstanding under the
credit facility. As of February 3, 1996 there was an aggregate of $21,255,000
outstanding under the credit facility. Accordingly, upon consummation of the
Offer, the Company may need to refinance up to an aggregate of $61,505,000 of
its debt.
13
<PAGE> 16
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities' and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago,
Illinois 60661. Such reports, proxy statements and other information may also be
obtained at the Web site that the Commission maintains at http://www.sec.gov.
Copies of such information should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material should also be
available for inspection at the offices of Nasdaq Operations, 1735 K Street,
N.W., Washington, D.C. 20006.
The information concerning the Company contained herein has been taken from
or based upon publicly available documents on file with the Commission and other
publicly available information. Although the Purchaser and Parent do not have
any knowledge that any such information is untrue, neither the Purchaser nor
Parent takes any responsibility for the accuracy or completeness of such
information or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
General. The Purchaser, a Delaware corporation and a wholly owned
subsidiary of Parent, was organized to acquire the Company and has not conducted
any unrelated activities since its organization. The principal office of the
Purchaser is located at the principal office of Parent. All outstanding shares
of capital stock of the Purchaser are owned by Parent.
Parent is a Delaware corporation with its principal office located at 1925
Enterprise Parkway, Twinsburg, OH 44087. Parent operates the second largest
retail drugstore chain in the United States in terms of store count, while
ranking third in sales volume.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted from the information contained
in Parent's 1996 Annual Report on Form 10-K (the "Parent 10-K") filed with the
Commission under the Exchange Act and Parent's 1996 Annual Report to
Stockholders (the "Parent Annual Report"). More comprehensive financial
information is included in the Parent 10-K, the Parent Annual Report and other
documents filed by Parent with the Commission, and the following summary is
qualified in its entirety by reference to the Parent 10-K, the Parent Annual
Report and such other documents and all the financial information (including any
related notes) contained therein. The Parent 10-K, the Parent Annual Report and
such other documents should be available for inspection and copies thereof
should be obtainable in the manner set forth below, under "Available
Information."
14
<PAGE> 17
REVCO D.S., INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------
JUNE 1, 1996 JUNE 3, 1995 MAY 28, 1994
------------ ------------ ------------
<S> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales........................................... $5,087.7 $4,431.9 $2,504.0
Operating profit.................................... 206.2 175.7 100.5
Net income.......................................... 76.2 58.3 38.7
Net income per share of common stock................ 1.14 0.91 0.77
BALANCE SHEET DATA: (1)
Total current assets................................ $1,116.8 $1,089.0
Total assets........................................ 2,133.5 2,149.8
Total current liabilities........................... 703.5 689.5
Total liabilities................................... 1,264.9 1,376.7
Total stockholder's equity.......................... $ 868.6 $ 773.1
</TABLE>
- ---------------
(1) At period end.
Available Information. Parent is subject to the informational requirements
of the Exchange Act and, in accordance therewith, files reports relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Parent's directors and officers, their remuneration, stock
options and other matters, the principal holders of Parent's securities and any
material interest of such persons in transactions with Parent is required to be
disclosed in proxy statements distributed to Parent's stockholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the Commission and copies thereof should be
obtainable from the Commission in the same manner as is set forth with respect
to the Company in Section 8. Such material should also be available for
inspection at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, NY 10005.
Certain Litigation. On September 9, 1993, Talton R. Embry, a director of
Parent, and Magten Asset Management Corporation ("Magten"), an investment
advisory firm established by Mr. Embry, without admitting or denying the
allegations in a complaint by the Commission, consented to the entry of
judgments enjoining them from violating (and, in the case of Mr. Embry, aiding
and abetting violations of) anti-fraud and other provisions of the Exchange Act,
the Investment Advisers Act of 1940, as amended, and the Investment Company Act
of 1940, as amended. The Commission's complaint alleged principally that Mr.
Embry failed to advise clients of certain personal trades relevant to the
clients' holdings, to obtain certain consents required under applicable law in
connection therewith and to comply with certain reporting requirements. The
complaint did not involve the securities of Parent. As part of the settlement,
Mr. Embry made a $1 million payment for the benefit of certain of Magten's
clients. On April 28, 1995, a Parent stockholder, suing derivatively on behalf
of Parent, filed a complaint in U.S. District Court for the Southern District of
New York which named Magten, Mr. Embry, certain of Magten's clients, and Parent
as defendants. The complaint alleges that Magten's clients violated the "short
swing profits" laws, Section 16(b) of the Exchange Act, by selling shares issued
by Parent in a July 1994 offering within six months of that offering. Magten's
attorneys filed a motion for summary judgment asserting that the allegedly
violative conduct is expressly exempted from the "short swing profits" laws. On
February 6, 1996, the District Court dismissed the action in its entirety. On
February 22, 1996, the plaintiff appealed the District Court's decision.
15
<PAGE> 18
During fiscal 1994, Thomas O. Thorsen, a director of Parent, consented,
without a hearing and without admitting or denying the matters set forth
therein, to the issuance of an order of the Commission, and to the entry of the
findings and imposition of the remedial sanctions set forth therein. The order
stated that during the time Mr. Thorsen served as Chief Financial Officer of
Travelers, Travelers failed to disclose certain financial information in
conformity with the requirements of the Exchange Act and the rules promulgated
thereunder in certain periodic filings with the Commission. The Commission
ordered Mr. Thorsen to cease and desist from causing any violation and any
future violation of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1
and 13a-13.
Except as set forth above, to the best knowledge of Parent and the
Purchaser, during the last 5 years, no executive officer or director of, or
person controlling, Parent or the Purchaser or any officer or director of any
corporation or other person ultimately controlling Parent or the Purchaser was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws. To the best knowledge of Parent
and the Purchaser, during the last 5 years, no executive officer or director of,
or person controlling, Parent or the Purchaser or any officer or director of any
corporation or other person ultimately controlling Parent or the Purchaser has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis (and not held by the Purchaser) and to pay fees and expenses
related to the Offer will be approximately $332 million. The Purchaser plans to
obtain all funds needed for the Offer through a capital contribution, which will
be made by Parent to the Purchaser at the time Shares tendered pursuant to the
Offer are accepted for payment. Parent intends to use its available cash on hand
and borrowings to make this capital contribution. Parent has commenced
discussions with the Agents (as defined below) to increase its borrowing
capacity under the Revolving Credit Facility (as defined below) and to otherwise
amend the Revolving Credit Facility to make certain technical amendments
desirable in connection with the making of the Offer and the Proposed Merger.
The Offer is not contingent upon Parent or the Purchaser's receipt of financing.
Parent has a $650 million revolving credit facility (the "Revolving Credit
Facility") pursuant to an Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of July 27, 1995, among Parent, Banque Paribas and Bank of
America Illinois, as managing agents (the "Agents"), Bank of America National
Trust and Savings Association, as administrative agent, and the syndicate of
lenders party thereto (the "Lenders"). As of September 9, 1996, approximately
$396 million was available for borrowing under the Revolving Credit Facility.
The Revolving Credit Facility provides for revolving credit of up to $650
million, reducing to $600 million on the third anniversary of the Credit
Agreement and to $525 million on the fourth anniversary of the Credit Agreement.
The Facility may also be reduced voluntarily by Parent.
The Credit Agreement provides for the payment by Parent of (i) a non-use
fee on the aggregate unused commitment of the Lenders under the Revolving Credit
Facility, regardless of utilization, (ii) a fronting fee with respect to letters
of credit and a letter of credit fee based on the average outstanding amount of
letters of credit and (iii) certain other administrative fees. The interest rate
on loans varies depending on the type of loan, length of interest rate period
chosen and current market rate of certain types of loans.
The Credit Agreement contains customary conditions to borrowing,
representations and warranties, covenants and events of default.
16
<PAGE> 19
The commitment of the Lenders expires no later than July 27, 2000.
Purchaser has made no arrangements to refinance its borrowings under the
Revolving Credit Facility.
The foregoing description of the Revolving Credit Facility is qualified in
its entirety by reference to the text of the Credit Agreement filed as an
exhibit to the Tender Offer Statement on Schedule 14D-1 and Statement on
Schedule 13D of the Purchaser and Parent filed with the Commission in connection
with the Offer (the "Schedule 14D-1") and is incorporated herein by reference.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
D. Dwayne Hoven, President and Chief Executive Officer of Parent, and
Anthony J. Bruno, Chairman and Chief Executive Officer of the Company, met at
the Company's headquarters on August 1, 1996. At this meeting Mr. Hoven
indicated Parent's interest in purchasing all the stock of the Company for cash
or a combination of cash and securities. Mr. Bruno stated at that meeting that
he believed the Company's stock was undervalued by the market and that, as a
result, Parent would have to offer a significant premium over the then current
market price of the Shares.
On August 5, 1996, Mr. Hoven sent the following letter to Mr. Bruno:
Anthony J. Bruno August 5, 1996
Chairman of the Board and
Chief Executive Officer
Big B, Inc.
2600 Morgan Road, S.E.
Bessemer, AL 35023
Dear Anthony:
Thank you for taking the time to meet with me last Thursday.
Hopefully, you had a fun and exciting time at the Olympics. The following
is a brief summary of our discussion on Thursday and includes an offer
price:
- Revco's Board of Directors has a strong interest in pursuing a
merger transaction with your company, whereby Revco would acquire
all of your company's outstanding shares at a price of $14.00 a
share, payable in cash, stock or a combination of cash and stock.
- As a part of the transaction, Revco will assume responsibility
for obtaining all requisite antitrust approvals.
- Revco's financial situation is such that there will be no
financing "out" in the purchase agreement, and Revco could move
very fast to conclude a transaction.
As discussed, we would be flexible in providing a deal structure that
is attractive to you, your family and your employees. We would hope to
employ all field employees and entertain suggestions from you regarding
corporate employees.
I will try to reach you by telephone on Wednesday, August 7, to
further discuss this proposal. As I stated in our meeting, I believe that
Big B is an excellent fit for Revco, and hopefully, our discussions will
conclude with a merger of our two companies. Again, thank you for taking
the time to meet with me and for considering this proposal.
Sincerely,
D. Dwayne Hoven
17
<PAGE> 20
On August 7, 1996, Mr. Hoven telephoned Mr. Bruno. In that call Mr. Bruno
stated that Parent's proposed offer was not sufficient in light of his view that
the Company's stock was undervalued in the market. Mr. Bruno also stated that he
would prefer that the Company remain independent until market conditions
supported a transaction at a higher price.
On September 3, 1996, Mr. Hoven sent the following letter to Mr. Bruno:
Mr. Anthony J. Bruno September 3, 1996
Chairman of the Board and
Chief Executive Officer
Big B, Inc.
2600 Morgan Road, S.E.
Bessemer, AL 35023
Dear Anthony:
I appreciate the time that you have spent talking with me about your
company and the possibility of a business combination between Revco D.S.,
Inc. ("Revco") and Big B, Inc. ("Big B"). As you know, Revco is prepared to
proceed with an acquisition of Big B. As outlined in my August 5, 1996
letter to you and a subsequent telephone conversation, Revco is prepared to
pay $14 per share, payable in cash, stock or a combination of cash and
stock. This offer represents a 35% premium to Big B's closing price on
Friday, August 30. Also, as part of the transaction, Big B will assume
responsibility for obtaining all requisite antitrust approvals. Finally,
Revco's financial situation is such that there will be no financing "out"
in the purchase agreement, and Revco could move very fast to conclude the
transaction.
There continues to be rapid consolidation in the retail drugstore
industry. We believe that an acquisition of Big B is inevitable, and a
combination of Revco and Big B offers numerous advantages over either
company remaining a stand-alone entity and, for Big B, over any other
possible strategic combination.
- Revco and Big B represent an excellent geographic fit, without
significant overlap of existing Big B stores, distribution
centers and other facilities.
- A combination of Revco and Big B will allow the combined company
to spread fixed costs over a significantly larger base of stores,
which will assist the combined company to meet the increasing
customer demand for lower pharmacy prices.
- A merger with Revco offers your shareholders a significant cash
premium to recent trading prices or, if you would prefer, the
transaction could be structured to give your shareholders an
ongoing equity interest in the combined company.
Unfortunately, Big B has elected not to negotiate a transaction with
Revco. We are determined to proceed and, in this regard, Revco has already
purchased approximately 4.9% of the outstanding Big B shares and intends to
purchase additional shares if market conditions permit. It is our very
strong preference to work with you toward a negotiated transaction. I
believe a friendly transaction would be in the best interests of both our
companies, including our customers, employees and communities. For that
reason, I am not making this letter public. However, in the event you do
not wish to proceed jointly at this time, Revco will consider alternative
approaches, including making a proposal directly to your shareholders. As
you know, there has been considerable public speculation regarding possible
acquisition transactions involving Big B, and Revco will move quickly to
protect the value to our shareholders of a combination of Revco with Big B
should a competing transaction be announced.
In order to ensure that all our constituencies are able to benefit
from a prompt combination of Revco and Big B, I urge you to meet with me as
soon as possible to discuss terms for the merger of Revco and Big B. You
owe it to your shareholders to meet with me to explore this
18
<PAGE> 21
opportunity, and I am willing to meet with you at your earliest convenience
to discuss all the terms of any transaction. I believe that we could
complete any necessary due diligence, agree and sign a definitive agreement
very quickly and, subject to the usual conditions, complete this
transaction soon thereafter.
I look forward to hearing from you by the close of business on Friday.
Sincerely,
D. Dwayne Hoven
On September 4, 1996 Mr. Hoven again telephoned Mr. Bruno. Mr. Bruno stated
in that call he believed that the Company would benefit from remaining an
independent company.
On September 9, 1996, Parent issued a press release announcing the Offer,
and Mr. Hoven sent the following letter to Mr. Bruno:
Mr. Anthony J. Bruno September 9, 1996
Chairman of the Board and
Chief Executive Officer
Big B, Inc.
2600 Morgan Road, S.E.
Bessemer, AL 35023
Dear Anthony:
As you know from our prior conversations, Revco D.S., Inc. is
interested in pursuing a business combination with Big B, Inc.
Unfortunately, because Big B has to date been unwilling to proceed
with such a transaction, we are announcing this morning our offer to buy
all of Big B's outstanding shares for a price of $15 per share in cash, or
an aggregate equity value of approximately $330 million on a fully diluted
basis. As we have previously said, we would be happy to work with you to
structure a tax-free transaction to give your shareholders an ongoing
equity interest in the combined company.
We believe that Revco's offer is a highly attractive opportunity for
Big B shareholders representing a premium of 53% over the $9.81 average
closing price of Big B stock for the 90-calendar day period ended Friday,
September 6, 1996. We believe that this is the fastest, most efficient way
to bring our companies together. We hope that the Board of Directors of Big
B will recognize the significant benefits to Big B and its shareholders.
The combination of Revco and Big B offers numerous advantages over
either company remaining as a stand-alone entity, and, for Big B, over any
other possible strategic combination. Revco and Big B represent an
excellent geographic fit, with only limited overlap of stores and
distribution centers. Among other efficiencies, this combination will allow
the combined company to spread costs over a larger base of stores. This
will assist us in meeting the increasing customer demand for lower pharmacy
prices.
Revco is a Fortune 500 company and is among the top performers in the
drugstore industry. Since 1993, we have more than doubled our sales and
operating profit, and net income per share has more than tripled over the
same time period. Revco has one of the most technologically advanced
pharmacy systems and offers some of the most innovative marketing programs
in the drugstore industry, designed to add consumer value and to enhance
the pharmacist-patient relationship.
19
<PAGE> 22
We have the highest respect for you and all Big B employees. We
anticipate retaining the services of Big B's field and distribution center
employees and will entertain suggestions from you and your senior
management team regarding corporate employees.
Like Big B, Revco has always prided itself in its role as a strong
community partner and good corporate citizen. Revco and its employees
donate time and money to a variety of charitable organizations in the areas
we serve. Revco recognizes its corporate responsibility to give back to
every community we call home. As a native of Alabama, I am particularly
sensitive to those issues in this transaction.
Revco's objective is a transaction that is enthusiastically supported
by Big B's shareholders and employees, as well as Big B's many loyal
customers. Revco and its advisors are prepared to meet with Big B's Board,
management and advisors to answer any questions they may have about our
offer. We are convinced that this combination serves the best interests of
both companies.
Sincerely,
D. Dwayne Hoven
President and Chief Executive
Officer, Revco D.S., Inc.
Between August 13 and September 6, 1996, the Purchaser purchased in open
market transactions, including block trades, a total of 1,190,000 Shares at
prices, including brokers' commissions, ranging from $10.75 to $12.625. See
Schedule II hereto.
Except as described in this Offer to Purchase (including Schedules I and II
hereto), none of the Purchaser, Parent or, to the best knowledge of Parent and
the Purchaser, any of the persons listed in Schedule I hereto, or any associate
or majority owned subsidiary of the Purchaser, Parent or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Purchaser, Parent or, to the best knowledge of Parent and the Purchaser, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days. The
Purchaser and Parent disclaim beneficial ownership of any Shares owned by any
pension plan of Parent or any affiliate of Parent.
Except as described in this Offer to Purchase, as of the date hereof (a)
there have not been any contacts, transactions or negotiations between the
Purchaser or Parent, any of their respective subsidiaries or, to the best
knowledge of Parent and the Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or any of its directors, officers or
affiliates, on the other hand, that are required to be disclosed pursuant to the
rules and regulations of the Commission and (b) none of the Purchaser, Parent
or, to the best knowledge of Parent and the Purchaser, any of the persons listed
in Schedule I hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
During the Offer, the Purchaser and Parent intend to have ongoing contacts and
negotiations with the Company and its directors, officers and stockholders.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Proposed Merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all the Shares. Parent currently intends, as soon
as practicable following consummation of the Offer, to act to have its nominees
elected to the Company's board of directors to replace the Company's current
board and to propose and seek to consummate the Proposed Merger. The purpose of
the Proposed Merger is to acquire
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all Shares not tendered and purchased pursuant to the Offer or otherwise.
Pursuant to the Proposed Merger, each then outstanding Share (other than Shares
owned by the Purchaser, Parent or any of their subsidiaries, Shares held in the
treasury of the Company and Shares owned by stockholders who perfect any
available dissenters' rights under the ABCA) would be converted into the right
to receive an amount in cash equal to the price per Share paid by the Purchaser
pursuant to the Offer.
Except in the case of a "short-form" merger as described below, under the
ABCA, unless the Company's articles of incorporation otherwise provide, the
approval of the Company's Board of Directors and the affirmative vote of holders
of 66-2/3% of the outstanding Shares (including any Shares owned by the
Purchaser) would be required to approve the Proposed Merger. If the Purchaser
consummates the Offer and, as a result, owns a majority of the outstanding
Shares but less than 66-2/3% of such Shares, the Purchaser currently intends to
seek to consummate the Proposed Merger by acquiring a sufficient number of
additional Shares so that it owns 66-2/3% of the outstanding Shares, by seeking
the votes of the holders of a sufficient number of Shares in addition to those
owned by the Purchaser in order to consummate the Proposed Merger or by amending
the Company's articles of incorporation to provide for stockholder approval of
the Proposed Merger by the holders of a majority of the outstanding Shares. If
the Purchaser acquires, through the Offer or otherwise, voting power with
respect to at least 66-2/3% of the outstanding Shares and the Purchaser were to
accept for payment Shares tendered pursuant to the Offer, it would have
sufficient voting power to effect the Proposed Merger without the vote of any
other stockholder of the Company.
The ABCA provides that if a parent company owns at least 80% of each class
of stock of a subsidiary, the parent can effect a "short-form" merger of that
subsidiary into it without a stockholder vote. Accordingly, if as a result of
the Offer or otherwise, the Purchaser owns at least 80% of the outstanding
Shares, the Purchaser could, and currently intends to, effect the Proposed
Merger without any stockholder vote.
If the Proposed Merger has not been consummated, the Purchaser or an
affiliate of the Purchaser may, either immediately following the consummation or
termination of the Offer (whether or not the Purchaser purchases Shares pursuant
to the Offer), or from time to time thereafter, seek to acquire additional
Shares through open market purchases, privately negotiated transactions, a
tender offer or exchange offer or otherwise, upon such terms and at such prices
as it may determine, which may be more or less than the price to be paid
pursuant to the Offer. Alternatively, the Purchaser and its affiliates reserve
the right to sell or otherwise dispose of any or all of the Shares acquired by
them pursuant to the Offer or otherwise, upon such terms and at such prices as
they determine.
The precise timing and other details of the Proposed Merger or other
business combination transaction will depend on a variety of factors such as
general economic conditions and prospects, the future prospects, asset value and
earnings of the Company, the number of Shares acquired by the Purchaser pursuant
to the Offer or otherwise and the statutory requirements described above. The
Purchaser can give no assurance that a merger or other business combination will
be proposed or that, if it is proposed, it will not be delayed or abandoned. The
Purchaser expressly reserves the right not to propose any merger or similar
business combination involving the Company, or to propose a merger or other
business combination on terms other than those set forth herein, and its
ultimate decision could be affected by information hereafter obtained by the
Purchaser, changes in general economic or market conditions or in the business
of the Company or other factors.
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Parent intends to seek to negotiate with the Company with respect to the
acquisition of the Company by Parent. If such negotiations result in a
definitive merger agreement with the Company, the consideration to be received
by holders of Shares could include or consist of securities, cash or any
combination thereof. Accordingly, such negotiations could result in, among other
things, termination of the Offer (see Section 14) and submission of a different
acquisition proposal upon terms agreed to by the parties to the Company's
stockholders for their approval, which proposal may include a price per Share of
more or less than the price to be paid pursuant to the Offer.
Plans for the Company. Upon consummation of the Offer, Parent will evaluate
the Company's operations to determine what cost savings and other synergies will
be available to the combined entities. Parent expects, upon completion of that
evaluation, that it will conclude that certain of the Company's stores should be
closed. Parent currently expects that it will retain and possibly expand the
Company's distribution center in Bessemer, Alabama. Parent expects that the
Company's general corporate and administrative functions will be consolidated
into those of Parent.
Except as described in this Offer to Purchase, Parent and the Purchaser
have no present plans or proposals which relate to or would result in: the
acquisition by any person of additional securities of the Company, or the
disposition of securities of the Company; an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries; any change in the present
board of directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board; any material change in the present capitalization or
dividend policy of the Company; any other material change in the Company's
business or corporate structure; changes in the Company's charter, bylaws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person; causing a class of
securities of the Company to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
the Shares becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act; or any action similar to any of those enumerated
above.
Dissenters' Rights. Holders of Shares do not have dissenters' rights in
connection with the Offer. If the Proposed Merger is consummated, holders of
Shares at the effective time of the Proposed Merger will have certain rights
pursuant to the provisions of Article XIII of the ABCA ("Article XIII") to
dissent and demand appraisal of their Shares. Under Article XIII, dissenting
stockholders who comply with the applicable statutory procedures will be
entitled to obtain in payment for the fair value of their Shares immediately
prior to the effectiveness of the Proposed Merger (exclusive of any appreciation
or depreciation arising in anticipation of the Proposed Merger unless exclusion
would be inequitable) in cash, together with interest from the effective date of
the Proposed Merger at the average rate paid by the Company on its principal
bank loans, or, if none, at a rate that is fair and equitable under the
circumstances. Assuming compliance with the statutory procedures, dissenting
stockholders will also be entitled, in the absence of agreement between the
Company and the stockholder regarding the fair value of his Shares, to receive a
judicial determination of such value. Any such judicial determination of the
fair value of Shares could be based upon factors other than, or in addition to,
the price per Share to be paid in the Proposed Merger or the market value of the
Shares. The value so determined could be more or less than the price per Share
to be paid in the Proposed Merger.
The foregoing summary of Article XIII does not purport to be complete and
is qualified in its entirety by reference to Article XIII.
In addition, Parent intends to seek to negotiate with the Company with
respect to the acquisition of the Company by Parent. If such negotiations result
in a definitive merger agreement between the
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Company and Parent (other than with respect to the Proposed Merger), holders of
Shares may or may not have appraisal rights under Article XIII in connection
with the consummation of the merger contemplated thereby, depending upon the
terms of any such merger.
Going Private Transactions. The Commission has adopted Rule 13e-3 under the
Exchange Act, which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Proposed Merger or
any other merger involving the Company. However, Rule 13e-3 will be inapplicable
to the Proposed Merger if (a) the Shares are deregistered under the Exchange Act
prior to the Proposed Merger or (b) the Proposed Merger is consummated within
one year after the purchase of the Shares pursuant to the Offer and the Proposed
Merger provides for stockholders to receive cash for their Shares in an amount
at least equal to the amount paid per Share in the Offer. If applicable, Rule
13e-3 requires, among other things, that certain financial information
concerning the fairness of the proposed transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to the consummation of the
transaction.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after September 9, 1996, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or (c)
issue or sell additional Shares (other than the issuance of Shares under option
prior to September 9, 1996, in accordance with the terms of such options as
publicly disclosed prior to September 9, 1996 and other than the issuance of
Shares upon conversion of Convertible Debentures pursuant to the terms of the
Convertible Debentures as publicly disclosed prior to September 9, 1996), shares
of any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14,
the Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after September 9, 1996, the Company should declare or pay any
cash dividend on the Shares or other distribution on the Shares (except for
regular quarterly dividends on the Shares declared and paid at times consistent
with past practice in an amount not in excess of $0.05 per Share per quarter),
or issue with respect to the Shares any additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, payable or distributable to stockholders of record on a date
prior to the transfer of the Shares purchased pursuant to the Offer to the
Purchaser or its nominee or transferee on the Company's stock transfer records,
then, subject to the provisions of Section 14, (a) the Offer Price may, in the
sole discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
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14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer), to pay for any
Shares not theretofore accepted for payment or paid for unless (1) the Minimum
Tender Condition shall have been satisfied and (2) any waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated. Furthermore, notwithstanding any other term or
provision of the Offer, the Purchaser will not be required to accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate or amend the Offer if, at any time on or
after September 9, 1996 and before the acceptance of such Shares for payment or
the payment therefor, any of the following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
legislative, regulatory or administrative authority or agency, domestic,
foreign or supranational (each, a "Governmental Entity"), or by any other
person, domestic or foreign, before any court or Governmental Entity, (i)
(A) challenging or seeking to, or which is reasonably likely to, make
illegal, delay or otherwise directly or indirectly restrain or prohibit, or
seeking to, or which is reasonably likely to, impose voting, procedural,
price or other requirements, in addition to those required by Federal
securities laws and the ABCA (each as in effect on the date of this Offer
to Purchase), in connection with, the making of the Offer, the acceptance
for payment of, or payment for, some of or all the Shares by the Purchaser,
Parent or any other affiliate of Parent or the consummation by the
Purchaser, Parent or any other affiliate of Parent of a merger or other
similar business combination with the Company, (B) seeking to obtain
material damages or (C) otherwise directly or indirectly relating to the
transactions contemplated by the Offer or any such merger or business
combination, (ii) seeking to prohibit the ownership or operation by the
Purchaser, Parent or any other affiliate of Parent of all or any portion of
the business or assets of the Company and its subsidiaries or of the
Purchaser, Parent or any other affiliate of Parent or to compel the
Purchaser, Parent or any other affiliate of Parent to dispose of or hold
separate all or any portion of the business or assets of the Company or any
of its subsidiaries or of the Purchaser, Parent or any other affiliate of
Parent or seeking to impose any limitation on the ability of the Purchaser,
Parent or any other affiliate of Parent to conduct such business or own
such assets, (iii) seeking to impose or confirm limitations on the ability
of the Purchaser, Parent or any other affiliate of Parent effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by the
Purchaser, Parent or any other affiliate of Parent on all matters properly
presented to the Company's stockholders, (iv) seeking to require
divestiture by the Purchaser, Parent or any other affiliate of Parent of
any Shares, (v) seeking any material diminution in the benefits expected to
be derived by the Purchaser, Parent or any other affiliate of Parent as a
result of the transactions contemplated by the Offer or any merger or other
similar business combination with the Company, (vi) otherwise directly or
indirectly relating to the Offer or which otherwise, in the sole judgment
of the Purchaser, might materially adversely affect the Company or any of
its subsidiaries or the Purchaser, Parent or an other affiliate of Parent
or the value of the Shares or (vii) in the sole judgment of the Purchaser,
materially adversely affecting the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, Parent or any other affiliate of Parent or the
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<PAGE> 27
Company or any of its subsidiaries or (ii) the Offer or any merger or other
similar business combination by the Purchaser, Parent or any other
affiliate of Parent with the Company, by any court or Governmental Entity,
other than the routine application of the waiting period provisions of the
HSR Act to the Offer, that, in the sole judgment of the Purchaser, might,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above;
(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change) in the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries that, in the sole
judgment of the Purchaser, is or may be materially adverse to the Company
or any of its subsidiaries, or the Purchaser shall have become aware of any
facts that, in the sole judgment of the Purchaser, have or may have
material adverse significance with respect to either the value of the
Company or any of its subsidiaries or the value of the Shares to the
Purchaser, Parent or any other affiliate of Parent;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad or in the market price of Shares, (iii) any change in the general
political, market, economic or financial conditions in the United States or
abroad that could, in the sole judgment of the Purchaser, have a material
adverse effect upon the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries or the trading in, or value of, the
Shares, (iv) any material change in United States currency exchange rates
or any other currency exchange rates or a suspension of, or limitation on,
the markets therefor, (v) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) any
limitation (whether or not mandatory) by any Governmental Entity on, or
other event that, in the sole judgment of the Purchaser, might affect, the
extension of credit by banks or other lending institutions, (vii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (viii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have (i) split,
combined or otherwise changed, or authorized or proposed a split,
combination or other change of, the Shares or its capitalization, (ii)
acquired or otherwise caused a reduction in the number of, or authorized or
proposed the acquisition or other reduction in the number of, outstanding
Shares or other securities, (iii) issued or sold, or authorized or proposed
the issuance, distribution or sale of, additional Shares (other than the
issuance of Shares under option prior to September 9, 1996, in accordance
with the terms of such options as publicly disclosed prior to September 9,
1996 and other than the issuance of Shares upon conversion of Convertible
Debentures pursuant to the terms of the Convertible Debentures as publicly
disclosed prior to September 9, 1996), shares of any other class of capital
stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of
the foregoing, (iv) declared or paid, or proposed to declare or pay, any
dividend or other distribution, whether payable in cash, securities or
other property, on or with respect to any shares of capital stock of the
Company (except for regular quarterly dividends on the Shares declared and
paid at times consistent with past practice in an amount not in excess of
$0.05 per Share per quarter), (v) altered or proposed to alter any material
term of any outstanding security, (vi) incurred any debt other than in the
ordinary course of business or any debt containing burdensome covenants,
(vii) authorized, recommended, proposed or entered into an agreement with
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respect to any merger, consolidation, liquidation, dissolution, business
combination, acquisition of assets, disposition of assets, release or
relinquishment of any material contractual or other right of the Company or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that in the sole judgment
of the Purchaser could adversely affect either the value of the Company or
any of its subsidiaries or the value of the Shares to the Purchaser, Parent
or any other affiliate of Parent, (ix) entered into any employment,
severance or similar agreement, arrangement or plan with or for the benefit
of any of its employees other than in the ordinary course of business or
entered into or amended any agreements, arrangements or plans so as to
provide for increased or accelerated benefits to the employees as a result
of or in connection with the transactions contemplated by the Offer, (x)
except as may be required by law, taken any action to terminate or amend
any employee benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended) of the Company or any
of its subsidiaries, or the Purchaser shall have become aware of any such
action that was not disclosed in publicly available filings prior to
September 9, 1996, (xi) amended, or authorized or proposed any amendment
to, its articles of incorporation or its by-laws, or the Purchaser shall
become aware that the Company or any of its subsidiaries shall have
proposed or adopted any such amendment that was not disclosed in publicly
available filings prior to September 9, 1996 or (xii) otherwise acted out
of the ordinary course of business, consistent with past practice;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates, but excluding the Purchaser and
Parent); or it shall have been publicly disclosed or the Purchaser shall
have otherwise learned that (i) any person, entity (including the Company
or any of its subsidiaries, but excluding the Purchaser and Parent) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13D or 13G on file with the
Commission prior to September 9, 1996, (ii) any such person, entity or
group that prior to September 9, 1996, had filed such a Schedule with the
Commission has acquired or proposes to acquire, through the acquisition of
stock, the formation of a group or otherwise, beneficial ownership of 1% or
more of any class or series of capital stock of the Company (including the
Shares), or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of 1% or more of
any class or series of capital stock of the Company (including the Shares),
(iii) any person or group (other than the Purchaser and Parent) shall have
entered into a definitive agreement or an agreement in principle or made a
proposal with respect to a tender offer or exchange offer or a merger,
consolidation or other business combination with or involving the Company
or (iv) any person (other than the Purchaser and Parent) shall have filed a
Notification and Report Form under the HSR Act (or amended a prior filing
to increase the applicable filing threshold set forth therein)or made a
public announcement reflecting an intent to acquire the Company or any
assets or subsidiaries of the Company;
(g) any approval, permit, license, authorization, favorable review or
consent of any Governmental Entity (including those described or referred
to in Section 15) that would be required or desirable for the acquisition
or ownership of the Shares by the Purchaser as described herein shall not
have been obtained on terms satisfactory to Purchaser in its sole
discretion; or
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(h) the Purchaser shall have reached an agreement or understanding
with the Company providing for termination of the Offer, or the Purchaser,
Parent or any other affiliate of Parent shall have entered into a
definitive agreement or announced an agreement in principle with the
Company providing for a merger or other business combination with the
Company or the purchase of stock or assets of the Company;
which, in the sole judgment of the Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by the Purchaser, Parent or
any other affiliate of Parent) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by the Purchaser in whole or
in part at any time and from time to time in its sole discretion. The failure by
the Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with respect to
any other facts and circumstances and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time. Any determination
by the Purchaser concerning the events described in this Section 14 will be
final and binding upon all parties.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, neither the Purchaser nor Parent
is aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein
or of any approval or other action by any Governmental Entity that would be
required or desirable for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required or desirable, the Purchaser and Parent currently contemplate that such
approval or other action will be sought, except as described below under "State
Takeover Laws." The Company's pharmacists are required to be licensed by various
state pharmacy boards and the Federal Drug Enforcement Administration (the
"FDEA"). The Company's pharmacies and the Company's pharmacy distribution center
are also registered with the FDEA and certain state regulatory agencies. Many of
the Company's stores sell alcoholic beverages and are subject to various state
and local liquor licensing requirements as a result. By virtue of these
requirements, the Purchaser or the Company may be obligated to obtain certain
governmental consents and approvals in connection with the Offer and the
Proposed Merger. The Purchaser believes that such approvals can be obtained in
due course, and that the Company will continue to conduct its operations
substantially in the same manner as before the consummation of the Offer and the
Proposed Merger. While, except as otherwise expressly described in this Section
15, the Purchaser does not currently intend to delay the acceptance for payment
of or payment for Shares tendered pursuant to the Offer pending the outcome of
any such matter, there can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that failure to obtain any such approval or other action might not
result in consequences adverse to the Company's business or that certain parts
of the Company's business might not have to be disposed of if such approvals
were not obtained or such other actions were not taken or in order to obtain any
such approval or other action. If certain types of adverse action are taken or
occur with respect to such matters or the matters discussed below, the Purchaser
could decline to accept for payment or pay for any Shares tendered. See Section
14 for the conditions to the Offer.
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State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
The Purchaser has not attempted to comply with any state takeover statutes
in connection with the Offer. The Purchaser reserves the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer and
nothing in this Offer to Purchase nor any action taken in connection herewith is
intended as a waiver of that right. In the event that any state takeover statute
is found applicable to the Offer, the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer. In such case, the Purchaser may not be
obligated to accept for payment or pay for any Shares tendered. See Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC. Parent made such filing on September 10, 1996. If, within
the initial 15-day waiting period, either the Antitrust Division or the FTC
requests additional information or material from Parent concerning the Offer,
the waiting period will be extended and would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Proposed Merger or seeking the divestiture of
Shares acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There are certain locations in Georgia and Tennessee in which the Company
and Parent both operate drugstores. The Purchaser and Parent do not believe that
consummation of the Offer will
28
<PAGE> 31
violate the antitrust laws. However, there can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the result thereof.
16. FEES AND EXPENSES
Salomon Brothers is acting as Dealer Manager in connection with the Offer
and is providing certain financial advisory services to the Purchaser and Parent
in connection with the Offer and the proposed acquisition of the Company. Parent
has agreed to pay Salomon Brothers as compensation for such services financial
advisory and other related fees of (a) $250,000 upon execution of the engagement
letter, (b) $500,000 upon the execution of an agreement or the commencement or
public announcement of a tender offer (such as the Offer) or other transaction
to acquire the Company and (c) $1,250,000 upon consummation of an acquisition
(by merger, tender offer or otherwise) by Parent (or a subsidiary of Parent) of
the Company or the purchase by Parent (or a subsidiary of Parent) of all or a
significant portion of the assets, or more than 10% of the equity securities, of
the Company (an "Acquisition Transaction"). In addition, Parent has agreed that
(i) if an Acquisition Transaction does not occur and Parent decides to sell or
otherwise dispose of Shares owned by Parent within two years from the date of
the engagement letter with Salomon Brothers, Salomon Brothers will be paid an
additional fee in an amount equal to 25% of the Purchaser's gain on the sale of
its Shares, subject to a cap of $1,750,000 less any fees already paid to Salomon
Brothers under clause (b) of the preceding sentence and (ii) if Parent receives
a "break-up" or other similar fee (including any amount characterized as an
expense reimbursement) in connection with the termination or abandonment of an
Acquisition Transaction, Salomon Brothers will be paid an additional fee in an
amount equal to 25% of such fee (after deducting Parent's expenses other than
fees to Salomon Brothers under this sentence or the preceding sentence), subject
to a cap of $2,000,000. Parent has also agreed with Salomon Brothers that, if
prior to an Acquisition Transaction or within two years following an Acquisition
Transaction Parent determines to sell any subsidiary or division or other
significant portion of the Company's assets, then Parent will engage Salomon
Brothers as its exclusive financial advisor in connection with such divestiture
on customary terms and for customary fees to be agreed upon by Parent and
Salomon Brothers. Parent has also agreed to reimburse Salomon Brothers for its
reasonable out-of-pocket expenses, including the reasonable fees and expenses of
its counsel and any other advisor retained by Salomon Brothers, in connection
with its engagement and to indemnify Salomon Brothers and certain related
persons against certain liabilities and expenses, including certain liabilities
and expenses under the Federal securities laws. Salomon Brothers also is
rendering financial advisory services for Parent in addition to those referred
to above, and has rendered in the past, and may from time to time in the future
render, various financial advisory and other investment banking services to
Parent and its affiliates, for which it is receiving, and has received and is
expected to receive, customary fees.
In the ordinary course of its business, Salomon Brothers engages in
securities trading, marketmaking and brokerage activities and may, at any time,
hold long or short positions and may trade or otherwise effect transactions in
securities of the Company.
The Purchaser and Parent have retained D.F. King & Co., Inc. to act as the
Information Agent and ChaseMellon Shareholder Services, L.L.C., to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the
29
<PAGE> 32
solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks
and trust companies will be reimbursed by the Purchaser upon request for
customary mailing and handling expenses incurred by them in forwarding material
to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent the Purchaser or
Parent becomes aware of any state law that would limit the class of offerees in
the Offer, the Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide for adequate
dissemination of such information to holders of Shares prior to the Expiration
Date. In any jurisdiction the securities, blue sky or other laws of which
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser or Parent not contained herein or in
the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 and Rule 13d-1 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, should be available for inspection and copies should be
obtainable in the manner set forth in Section 8 (except that such material will
not be available at the regional offices of the Commission).
RDS Acquisition Inc.
September 10, 1996
30
<PAGE> 33
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
Parent are set forth below. All such directors and executive officers listed
below are citizens of the United States. Unless otherwise indicated, the
principal business address of each director or executive officer is Revco D.S.,
Inc., 1925 Enterprise Parkway, Twinsburg, OH 44087.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
D. Dwayne Hoven (55)............... Mr. Hoven is a Director and was elected Chief Executive
Officer of Parent effective August 1993 and was elected
President of the Company in July 1992. From July 1992 to
August 1993, Mr. Hoven served as Chief Operating Officer
of Parent. From December 1991 to July 1992, Mr. Hoven
served as Executive Vice President, Marketing and Stores
for Parent. From June 1992 to July 1992, Mr. Hoven
served as a member of the interim office of the
President of Parent. From July 1989 to December 1991,
Mr. Hoven served as Executive Vice President of Stores
for Parent. From January 1988 to June 1989, Mr. Hoven
served as Senior Vice President of Distribution for
Parent. Mr. Hoven is also a director of OfficeMax, Inc.
Mr. Hoven was selected, effective August 27, 1992, by
the Board of Directors to become a member of the Board
to fill a vacancy.
Carl A. Bellini (62)............... Mr. Bellini is a Director and was elected Executive Vice
President and Chief Operating Officer of Parent on
October 13, 1993. From August 18, 1992 to October 13,
1993, Mr. Bellini served as Executive Vice President of
Marketing and Stores for Parent. From approximately
December 1991 to April 1992, Mr. Bellini served as
Acting Chief Operating Officer of Standard Brands Paint
Co., which filed a bankruptcy proceeding in March 1992
and emerged from bankruptcy during 1993. From June 1989
until June 1991, Mr. Bellini served as President and
Chief Operating Officer of Erol's, Inc., a video and
electronics chain based in Washington, D.C. From
December 1987 to June 1989, Mr. Bellini served as
Executive Vice President of Store Operations for Parent.
Mr. Bellini was selected, effective August 1, 1994, by
the Board of Directors to become a member of the Board
to fill a vacancy.
</TABLE>
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<PAGE> 34
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Livio M. Borghese (57)............. Mr. Borghese is a Director and is Chairman of Curtis
79 East 79th Street Industries, Inc., a national distributor of hardware
New York, NY 10021 products, chemicals and automotive replacement parts and
a manufacturer and distributor of security products. He
was with Bear Stearns & Co. from 1968 to 1988, ending as
Senior Managing Director and Member of the Executive
Committee. Mr. Borghese was Chairman of International
Corporate Finance at Prudential-Bache Securities in
1989. He presently owns a company engaged in
international trading and investments and is a board
member of OMI Corp., the United Kingdom Corp. and Noel
Group, Inc.
Rod F. Dammeyer (55)............... Mr. Dammeyer is a Director and is, and since 1985 has
Anixter International Inc. been, President and a director of Anixter International
Two North Riverside Plaza Inc. ("Anixter"), a holding and distribution company,
Suite 1900 and is, and since 1993 has been, Chief Executive Officer
Chicago, IL 60606 of Anixter. Since 1996, Mr. Dammeyer has served as
Managing Director of EGI Corporate Investments, Inc., a
diversified management and investment company. Mr.
Dammeyer is also a director of CapsureHoldings Corp.,
ANTEC Corporation, Jacor Communications, Inc., Lukens
Inc., IMC Global Inc., Sealy Corporation, Falcon
Building Products, Inc. (where he has served as Chairman
since July 1996), and a trustee of Van Kampen American
Capital, Inc. closed-end mutual funds and series trusts.
Mr. Dammeyer is a member of the executive committee of
the general partner of Zell/Chilmark Fund, L.P.
("Zell/Chilmark"). Mr. Dammeyer was selected, effective
December 15, 1992, by the Board of Directors to become a
member of the Board to fill a vacancy.
Talton R. Embry (49)............... Mr. Embry is a Director and is, and since 1978 has been,
Magten Asset Management Managing Director and Chief Investment Officer of Magten
Corporation Asset Management Corporation, which he established and
35 East 21st Street which is an investment advisory firm. Mr. Embry is also
New York, NY 10010 a director of Capsure Holdings Corp., Varco
International, Inc. ("Varco"), TSX Corporation, Combined
Broadcasting, Inc., BDK Holdings, Inc., Termodyne
Holdings Corp. and Anacomp, Inc. Mr. Embry and Mr. Zell
were elected on July 27, 1992, as Co-Chairmen of the
Board of Directors of Parent.
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Ben Evans (67)..................... Mr. Evans is a Director and was a partner of Ernst &
Ernst & Young Whinney, now Ernst & Young, until his retirement in
787 7th Avenue 1989. Mr. Evans was an audit partner supervising the
7th Floor audits of companies in many diverse industries with
New York, NY 10019 heavy concentration in apparel, retailing and commercial
finance. From 1978 through 1989, Mr. Evans was a member
of Ernst & Whinney's corporate financial services group
concentrating on bankruptcy assignments generally on
behalf of unsecured creditors committees, with special
emphasis in the apparel, retailing, food, drug and
pharmaceutical industries. Since 1989, Mr. Evans has
been a consultant for the firm of Ernst & Young in their
corporate financial services group continuing work in
the bankruptcy area. Mr. Evans is also a director of
Kash n' Karry Food Stores, Inc. and Megafoods Stores,
Inc.
John V. Guttag (47)................ Dr. Guttag is a Director and is Professor of Computer
Massachusetts Institute of Science and Engineering at the Massachusetts Institute
Technology of Technology ("MIT"). Since his arrival at MIT in 1979,
545 Technology Square Dr. Guttag has headed the laboratory for Computer
Cambridge, MA 02139 Science's Systematic Program Development Group and
currently is Associate Department Head for Computer
Science of the Electrical Engineering and Computer
Science Department. Dr. Guttag is a member of the
governing council of the School of Engineering and a
member of the Executive Committee of the Laboratory for
Computer Science at MIT. Dr. Guttag is also a director
of INSO Corporation and the Computing Research
Association. Dr. Guttag was selected, effective March
23, 1994, by the Board of Directors to become a member
of the Board to fill a vacancy.
Walter B. Reinhold (71)............ Mr. Reinhold is a Director and is Chairman of the Board
Varco International, Inc. of Varco, a company engaged in the business of
743 North Eckhoff Street manufacturing oil and gas well drilling equipment and
Orange, CA 92668 machinery, drilling rig instrumentation and blow out
prevention equipment. He has been with Varco since 1949
and was Chief Executive Officer from 1979 to April 1991,
and prior thereto he served as Executive Vice President
of Varco. Mr. Reinhold is a standing member of the
American Petroleum Institute, Stanford Associates, and
the Society of Petroleum Engineers. He is a director of
the Amdahl Corporation, the National Ocean Industries
Association and the Petroleum Equipment Suppliers
Association and a trustee for the City of Hope.
</TABLE>
S-3
<PAGE> 36
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Sheli Z. Rosenberg (54)............ Ms. Rosenberg is a Director and is, and since 1994 has
Rosenberg & Liebentritt, P.C. been, President and Chief Executive Officer, and since
Two North Riverside Plaza 1980, a director and Executive Vice President of Equity
Suite 1601 Financial and Management Company and Equity Group
Chicago, IL 60606 Investments, Inc. Ms. Rosenberg is, and since 1980 has
been, a member of Rosenberg & Liebentritt, P.C.
Ms. Rosenberg is, and since 1991 has been, a director of
American Classic Voyages Co. and Vice President and
Assistant Secretary of American Classic Voyages Co. since
1990 and 1991, respectively; and is, and since 1985 has
been, a director, Vice President and General Counsel of
Capsure Holdings Corp. Ms. Rosenberg is also a director
of Anixter, Jacor Communications, Inc. (where she serves
as Chair), Falcon Building Products, Inc., Manufactured
Home Communities, Inc., Sealy Corporation, and a trustee
of Equity Residential Properties Trust. Ms. Rosenberg
has been Vice President of First Capital Benefits
Administrators, Inc. ("First Capital") since July 1987.
First Capital filed a petition under the federal
bankruptcy laws on January 3, 1995 which ultimately
resulted in First Capital's liquidation on November 11,
1995. Ms. Rosenberg is a member of the executive
committee of the general partner of Zell/Chilmark. Prior
to October 4, 1991, Ms. Rosenberg was Vice President of
Madison Management Group, Inc. which filed a petition
under Chapter 11 of the Bankruptcy Code on November 8,
1991. Ms. Rosenberg was selected, effective March 23,
1994, by the Board of Directors to become a member of
the Board to fill a vacancy.
David M. Schulte (49).............. Mr. Schulte is a Director and is, and since mid-1990 has
Chilmark Partners, L.P. been, one of two individuals (the other being Mr. Zell)
Two North Riverside Plaza who act as general partners of the general partner of
Suite 1500 Zell/Chilmark, a limited partnership with capital
Chicago, IL 60606 commitments in excess of $1 billion formed to invest in
and provide capital and management support to companies
that are engaged in or are the appropriate subject of
significant recapitalizations or corporation
restructurings, both in and out of the bankruptcy
process. Since 1984, Mr. Schulte has been managing
general partner of Chilmark Partners, L.P., a merchant
banking firm that has specialized in providing corporate
and investment banking advice to companies on the
restructuring of their business in conjunction with
recapitalizations, although he currently devotes all of
his time to the affairs of Zell/Chilmark. Mr. Schulte is
also a director of Sealy Corporation.
</TABLE>
S-4
<PAGE> 37
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Thomas O. Thorsen (64)............. Mr. Thorsen is a Director and has been a director of The
7790 Old Marsh Road Travelers Corporation, now known as The Travelers Group
Palm Beach Gardens, FL 33418 ("Travelers"), a multiline insurance, financial and
health services institution, since 1987. Prior to his
retirement in May 1992, Mr. Thorsen was Vice Chairman of
the Board of Travelers since 1990. He was Vice Chairman
and Chief Financial Officer of Travelers from 1990 to
1991. Prior thereto, he was Executive Vice President and
Chief Financial Officer from 1984 to 1990. Before
joining Travelers, Mr. Thorsen served thirty-one years
with General Electric Company in various financial
positions, including Senior Vice President and Chief
Financial Officer from 1980 to 1984. Mr. Thorsen is a
director of Iowa Select Farms, Inc. and a member of the
advisory committee of Iowa Select Farms, L.P., entities
engaged in large scale hog production. He is also a
director of PGA Golf Properties, Inc., an affiliate of
the PGA of America involved in the development and
ownership of golf facilities.
Samuel Zell (54)................... Mr. Zell is a Director and is, and since 1981 has been,
Equity Group Investments, Inc. Chairman of the Board of Equity Financial and Management
Two North Riverside Plaza Company and, since 1986 has been Chairman of the Board
Suite 600 of Equity Group Investments, Inc., two privately owned
Chicago, IL 60606 affiliated investment and management companies; is, and
since mid-1990 has been, the other individual (along
with Mr. Schulte) who acts a general partner of the
general partner of Zell/Chilmark; is, and since 1985 has
been, Chairman of the Board of Anixter; is, and from
1987 has served as Chairman of the Board and Executive
Officer of Capsure Holdings Corp.; is, and since 1993
has been, Chairman of the Board of Equity Residential
Properties Trust; is Chairman of the Board and, from
March 31, 1995 until August 13, 1996, had served as
Chief Executive Officer, and from 1993 to March 31, 1995
had served as Co-Chairman of the Board, of Manufactured
Home Communities, Inc. Mr. Zell is a member of the board
of directors of American Classic Voyages Co. (where he
has served as Chairman of the Board since August 1993),
Sealy Corporation, Quality Food Centers, Inc., Ramco
Energy plc, based in the United Kingdom, and Tele Tech
Holdings, Inc. Prior to October 4, 1991, Mr. Zell was
President of Madison Management Group, Inc., which filed
a petition under Chapter 11 of the Bankruptcy Code on
November 8, 1991. Mr. Zell and Mr. Embry were elected on
July 27, 1992, as Co-Chair of the Board of Directors of
Parent.
</TABLE>
S-5
<PAGE> 38
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
James P. Mastrian (54)............. Mr. Mastrian was elected Executive Vice President of
Marketing of Parent in July 1994. From June 1992 to July
1994, Mr. Mastrian served as Senior Vice President,
Marketing. From September 1990 to June 1992, Mr.
Mastrian served as Vice President and General Manager,
Marketing of Parent. From March 1990 to September 1990,
Mr. Mastrian served as Executive Vice President of Milo
Corp. From October 1989 to March 1990, Mr. Mastrian was
President and Chief Operating Officer of SuperX Drug
Company of Arizona. From July 1987 to October 1989, Mr.
Mastrian was Senior Vice President, Merchandising and
Marketing for the Sherwin-Williams Company Paint Stores
Group. Before July 1987, Mr. Mastrian was employed by
Gray Drug Fair, a division of Sherwin-Williams Company,
and served as President and General Manager of Gray Drug
Fair from prior to June 1986 to July 1987.
Clarence D. Nichols (49)........... Mr. Nichols was elected Executive Vice President, Store
and Real Estate, in July 1996. From June 1992 to July
1996, Mr. Nichols served as Senior Vice President, Store
Operations. From November 1987 to June 1992, Mr. Nichols
served as Regional Vice President for Parent's southern
region. From August 1986 to November 1987, Mr. Nichols
served as a regional merchandise manager for Parent.
Brian P. Carney (35)............... Mr. Carney was elected Senior Vice President, Finance in
May 1996. From June 1992 to May 1996, Mr. Carney served
as Vice President and Controller of Parent. From October
1989 to June 1992, Mr. Carney served as Parent's
director of general accounting. Prior to October 1989,
Mr. Carney was a manager with the public accounting firm
of Arthur Andersen & Co. (now known as Arthur Andersen
LLP).
Douglas W. Coffey (55)............. Mr. Coffey was elected Senior Vice President, Human
Resources of Parent in July 1993. For five years prior
to July 1993, Mr. Coffey served as Senior Vice President
of Human Resources at Burdine's Department Stores, a
division of Federated Department Stores.
Wilson A. Lester, Jr. (45)......... Mr. Lester was elected Senior Vice President, Logistics
for Parent in May 1996. From August 1995 to May 1996,
Mr. Lester served as Vice President, Distribution and
Transportation. From December 1993 to August 1995, Mr.
Lester served as Senior Vice President of Logistics of
Fabri-Centers of America, Inc. ("Fabri-Centers"). From
June 1990 to December 1993, Mr. Lester served as Senior
Vice President of Distribution for Phar-Mor, Inc.
</TABLE>
S-6
<PAGE> 39
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
William D. Russell (49)............ Mr. Russell was elected Senior Vice President, Real
Estate in July 1996. From March 1996 to July 1996, Mr.
Russell served as Senior Vice President of Development
at The Sembler Co., in St. Petersburg, Florida. From
prior to July 1991 to March 1996, Mr. Russell served as
Vice President of Real Estate for Montgomery Ward.
Bruce E. Schwallie (41)............ Mr. Schwallie was elected Senior Vice President,
Marketing in May 1996. From March 1995 to May 1996, Mr.
Schwallie served as Vice President, Marketing. From
February 1991 until March 1995, Mr. Schwallie served in
various capacities within the Parent's marketing
department, most recently as divisional merchandise
manager. From September 1990 until January 1991, Mr.
Schwallie was employed by RDS Acquisition Corp. in
Phoenix, Arizona, where he served as director of
merchandising.
Jack A. Staph (51)................. Mr. Staph has been Parent's Senior Vice President,
Secretary and General Counsel since December 1986 and
served as a member of the interim office of the
President of Parent from June 1992 to July 1992. Mr.
Staph had been continuously employed as a member of
Parent's in-house legal staff for more than ten years
prior to June 1986.
George T. Watt (52)................ Mr. Watt was elected Senior Vice President, Managed Care
in May 1996. From August 1995 to May 1996, Mr. Watt
served as Vice President, Managed Care. Mr. Watt served
as a Vice President of Parent from August 1994 until
August 1995. From November 1986 until August 1994, Mr.
Watt was employed by Thrift Drug Corporation, where he
served as Vice President of Sales and Client Service for
Thrift Drug's subsidiary, TDI Managed Care Services,
Inc.
Dante R. Barone (52)............... Mr. Barone was elected Vice President, Pharmacy
Marketing of Parent in May 1989. From March 1988 to May
1989, Mr. Barone served as divisional Vice President of
Pharmacy Marketing for Parent. From prior to June 1986
to March 1988, Mr. Barone was senior buyer for Walgreen
Drug Co.
Charles W. Breckenridge (54)....... Mr. Breckenridge was elected Vice President, Control
Support Services of Parent in June 1992. Mr.
Breckenridge served as Parent's director of internal
audit from August 1989 to June 1992. From February 1986
to August 1989, Mr. Breckenridge served as director of
business investigation services at the public accounting
firm of Coopers & Lybrand.
Richard M. Mergo (51).............. Mr. Mergo was elected Vice President, Store Operations
of Parent in March 1995. Mr. Mergo served as a regional
Vice President for Parent from 1986 to March 1995.
</TABLE>
S-7
<PAGE> 40
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PARENT; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Carl E. Palmiter (43).............. Mr. Palmiter was elected Vice President, Advertising of
Parent in July 1996. From July 1994 to June 1996, Mr.
Palmiter served as Director of Advertising of Parent.
From prior to 1991 to July 1994, Mr. Palmiter was
employed by Hook-SupeRx, Inc. ("HSI"), where he served
as Assistant Vice President of advertising at the time
of the Parent's acquisition of HSI.
Robert T. Raaf (50)................ Mr. Raaf assumed duties as Vice President, Taxes of
Parent in July 1994. From July 1993 to July 1994, Mr.
Raaf served as Vice President and Treasurer of Parent.
From September 1989 to July 1993, Mr. Raaf was Vice
President, Tax of Parent. For more than three years
prior to September 1989, Mr. Raaf was a tax partner with
the public accounting firm of Arthur Andersen & Co. (now
known as Arthur Andersen LLP).
Jay E. Ross (44)................... Mr. Ross was elected Vice President, Merchandising of
Parent in March 1995. Mr. Ross has been continuously
employed by Parent since 1969, most recently as director
of merchandising.
Robert A. Tamplin (49)............. Mr. Tamplin was elected Vice President, Store Operations
of Parent in March 1995. Mr. Tamplin has been
continuously employed by Parent for more than 25 years,
most recently as a regional Vice President.
Robert I. Thompson (43)............ Mr. Thompson was elected Vice President, Professional
Operations of Parent in August 1995, and currently is
responsible for the Parent's pharmacy operations under
the title Vice President, Pharmacy Operations. Mr.
Thompson has been continuously employed by Parent since
1978, most recently as regional director of pharmacy
operations.
Hanley H. Wheeler, III (37)........ Mr. Wheeler was elected Vice President, Store Operations
of Parent in August 1995. Mr. Wheeler has been
continuously employed by Parent since 1981, most
recently as regional director of operations.
Joseph E. Williams (42)............ Mr. Williams was elected Vice President, Controller of
Parent in July 1996. From October 1992 to June 1996, Mr.
Williams served as Controller for The Limited Stores,
Inc. From prior to 1991 to July 1992, Mr. Williams
served as Senior Vice President and Controller for
Fabri-Centers.
Paul N. Harris (38)................ Mr. Harris was elected Assistant Secretary of Parent in
July 1993. From prior to May 1989 to July 1993, Mr.
Harris served as senior counsel for Parent.
Gregory G. Wilson (47)............. Mr. Wilson was elected Assistant Controller of Parent in
June 1992. From February 1988 to June 1992, Mr. Wilson
served as director of financial planning and analysis
for Parent, and from prior to June 1986 to February
1988, he served as director of investor relations for
Parent.
</TABLE>
S-8
<PAGE> 41
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
the Purchaser are set forth below. The business address of each such director
and executive officer is RDS Acquisition Inc., in care of Revco D.S., Inc., 1925
Enterprise Parkway, Twinsburg, OH 44087. All such directors and executive
officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE PURCHASER; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
D. Dwayne Hoven (55)............... Mr. Hoven is a Director and President of the Purchaser.
Mr. Hoven is a Director and was elected Chief Executive
Officer of Parent effective August 1993 and was elected
President of the Company in July 1992. From July 1992 to
August 1993, Mr. Hoven served as Chief Operating Officer
of Parent. From December 1991 to July 1992, Mr. Hoven
served as Executive Vice President, Marketing and Stores
for Parent. From June 1992 to July 1992, Mr. Hoven
served as a member of the interim office of the
President of Parent. From July 1989 to December 1991,
Mr. Hoven served as Executive Vice President of Stores
for Parent. From January 1988 to June 1989, Mr. Hoven
served as Senior Vice President of Distribution for
Parent. Mr. Hoven is also a director of OfficeMax, Inc.
Mr. Hoven was selected, effective August 27, 1992, by
the Board of Directors to become a member of the Board
to fill a vacancy.
Carl A. Bellini (62)............... Mr. Bellini is a Director of the Purchaser. Mr. Bellini
is a Director and was elected Executive Vice President
and Chief Operating Officer of Parent on October 13,
1993. From August 18, 1992 to October 13, 1993, Mr.
Bellini served as Executive Vice President of Marketing
and Stores for Parent. From approximately December 1991
to April 1992, Mr. Bellini served as Acting Chief
Operating Officer of Standard Brands Paint Co., which
filed a bankruptcy proceeding in March 1992 and emerged
from bankruptcy during 1993. From June 1989 until June
1991, Mr. Bellini served as President and Chief
Operating Officer of Erol's, Inc., a video and
electronics chain based in Washington, D.C. From
December 1987 to June 1989, Mr. Bellini served as
Executive Vice President of Store Operations for Parent.
Mr. Bellini was selected, effective August 1, 1994, by
the Board of Directors to become a member of the Board
to fill a vacancy.
Jack A. Staph (51)................. Mr. Staph is a Director and Vice President and Secretary
of the Purchaser. Mr. Staph has been Parent's Senior
Vice President, Secretary and General Counsel since
December 1986 and served as a member of the interim
office of the President of Parent from June 1992 to July
1992. Mr. Staph had been continuously employed as a
member of Parent's in-house legal staff for more than
ten years prior to June 1986.
</TABLE>
S-9
<PAGE> 42
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE PURCHASER; PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Brian P. Carney (35)............... Mr. Carney is Treasurer of the Purchaser. Mr. Carney was
elected Senior Vice President, Finance of Parent in May
1996. From June 1992 to May 1996, Mr. Carney served as
Vice President and Controller of Parent. From October
1989 to June 1992, Mr. Carney served as Parent's
director of general accounting. Prior to October 1989,
Mr. Carney was a manager with the public accounting firm
of Arthur Andersen & Co. (now known as Arthur Andersen
LLP).
</TABLE>
S-10
<PAGE> 43
SCHEDULE II
RECENT SHARE PURCHASES BY THE PURCHASER
Between August 13 and September 6, 1996, Purchaser purchased in open market
transactions, including block trades, a total of 1,190,000 Shares (representing
approximately 6.4% of the outstanding Shares) at prices, including brokers'
commissions, ranging from $10 3/4 to $12 5/8 as follows:
RECENT TRANSACTIONS IN SHARES
<TABLE>
<CAPTION>
PURCHASE DATE NUMBER OF SHARES PRICE PER SHARE
- -------------- ---------------- ---------------
<S> <C> <C>
August 13 350,000 $10 15/16
August 13 60,000 $11
August 14 115,000 $11 1/8
August 15 25,000 $11.40
August 15 50,000 $11 19/32
August 15 25,000 $11 7/16
August 16 25,000 $11 1/4
August 19 175,000 $11 5/16
August 20 25,000 $11 3/8
August 21 40,000 $11 3/8
September 3 12,500 $10 3/4
September 3 12,500 $10 3/4
September 4 45,000 $11 1/4
September 4 60,000 $11 1/2
September 5 35,000 $11 3/4
September 5 40,000 $11 3/4
September 5 5,000 $12
September 6 35,000 $12 1/4
September 6 25,000 $12 1/2
September 6 25,000 $12 9/16
September 6 5,000 $12 5/8
</TABLE>
On August 19, Hanley H. Wheeler, III, Vice President, Store Operations of
Parent, sold 1,000 Shares in an open market transaction for $11 1/8 per share.
S-11
<PAGE> 44
Manually signed copies of the Letter of Transmittal (or copies thereof)
will be accepted. The Letter of Transmittal, certificates for Shares and any
other required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail By Hand or Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P.O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
</TABLE>
By Fax Transmission:
(201) 329-8936
For Fax Confirmation Only by Telephone:
(201) 296-4209
------------------------
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses or telephone numbers set
forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at the Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Bankers and Brokers Call Collect: (212) 269-5550
Call Toll Free: (800) 488-8075
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
Call Collect: (212) 783-5141
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
BIG B, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 10, 1996
BY
RDS ACQUISITION INC.,
a Wholly Owned Subsidiary of
REVCO D.S., INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C>
By Mail By Hand or Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P.O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
</TABLE>
By Fax Transmission:
(201) 329-8936
For Fax Confirmation Only by Telephone:
(201) 296-4209
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FAX TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by securityholders of Big B,
Inc. (the "Company") either if certificates ("Certificates") evidencing Shares
(as defined below) or Convertible Debentures (as defined below) are to be
forwarded herewith or if delivery of Shares is to be made by book-entry transfer
to the account of ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at
The Depository Trust Company or Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedures described in the
section entitled "The Tender Offer--Procedures for Tendering Shares" of the
Offer to Purchase (as defined below). Delivery of documents to a Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures does not constitute delivery to the Depositary.
Securityholders whose Certificates are not immediately available or who
cannot deliver their Certificates and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase) or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis and who wish to tender their Shares must do so pursuant to the
guaranteed delivery procedures described in the section entitled "The Tender
Offer--Procedures for Tendering Shares" of the Offer to Purchase. See
Instruction 2.
<PAGE> 2
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check box of Applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number
Transaction Code Number
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry
Transfer Facility:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number
Transaction Code Number
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE EVIDENCED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1)(2) TENDERED(2)
TOTAL SHARES OF COMMON STOCK
</TABLE>
- --------------------------------------------------------------------------------
(1) Need not be completed by stockholders delivering Shares by book-entry
transfer.
(2) Includes whole Shares to be received upon conversion of Convertible
Debentures if Certificates for Convertible Debentures are being
delivered to tender such Shares. Unless otherwise indicated, it will
be assumed that all Shares evidenced by each Certificate for Shares
(and all whole Shares to be received upon conversion of Convertible
Debentures evidenced by each Certificate for Convertible Debentures)
are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to RDS Acquisition Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Revco D.S., Inc.,
a Delaware corporation, the above-described shares of Common Stock, par value
$0.001 per share (the "Shares"), of Big B, Inc., an Alabama corporation (the
"Company"), pursuant to Purchaser's offer to purchase any and all outstanding
Shares at a price of $15 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated September
10, 1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with any supplements or
amendments from time to time hereto or thereto, collectively constitute the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or at any time in part from time to time, to one or
more of its affiliates, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby (and any and all other Shares or other securities
or rights issued or issuable in respect of such Shares on or after September 10,
1996 (collectively, "Distributions")), and irrevocably appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares and all Distributions, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by a Book-Entry Transfer Facility together, in either
case, with all accompanying evidence of transfer and authenticity, to or upon
the order of the Purchaser, (b) present such Shares and all Distributions for
transfer on the Company's books and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Jack A. Staph, Brian P. Carney and Paul N. Harris as attorneys-in-fact
and proxies of the undersigned, each with full power of substitution, to the
full extent of the undersigned's rights with respect to the Shares tendered by
the undersigned and accepted for payment by the Purchaser (and any and all
Distributions). All such attorneys-in-fact and proxies shall be considered
coupled with an interest in the tendered Shares. This appointment will be
effective if, when, and only to the extent that, the Purchaser accepts such
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior powers of attorney and proxies given by the undersigned with respect to
such Shares and other securities will, without further action, be revoked, and
no subsequent proxies may be given. The individuals named above as
attorneys-in-fact and proxies will, with respect to the Shares and other
securities for which the appointment is effective, be empowered to exercise all
voting and other rights of the undersigned as they in their sole discretion may
deem proper at any annual, special, adjourned or postponed meeting of the
Company's shareholders, by written consent or otherwise, and the Purchaser
reserves the right to require that in order for Shares or other securities to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Shares, the Purchaser must be able to exercise full voting rights with
respect to such Shares.
<PAGE> 4
If the undersigned is tendering Shares by the delivery of Certificates for
the Company's 6.5% Convertible Subordinated Debentures Due 2003 ("Convertible
Debentures"), in addition to the matters described above, the undersigned hereby
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to the full extent of the undersigned's rights with respect to such Convertible
Debentures, (a) to convert Convertible Debentures represented by such
Certificates into the Shares being tendered, (b) to cause the transfer of record
ownership of such Convertible Debentures into the name of the undersigned or the
Depositary if deemed by the Depositary or the Purchaser to be necessary or
appropriate to convert such Convertible Debentures into the Shares being
tendered and (c) to receive the Shares issuable upon conversion of such
Convertible Debentures and any cash in lieu of fractional Shares payable upon
such conversion. This appointment will be effective if, when and only to the
extent that, the Purchaser accepts such Shares for payment pursuant to the
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions (including Shares and Distributions to be
received upon conversion of Convertible Debentures on behalf of the undersigned)
and that when the same are accepted for payment by the Purchaser, the Purchaser
will acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will be subject to
any adverse claim. The undersigned, upon request, shall execute and deliver all
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby and all Distributions. In addition, the undersigned shall remit
and transfer promptly to the Depositary for the account of the Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price,
the amount or value of such Distribution as determined by the Purchaser in its
sole discretion.
If the undersigned is tendering Shares by the delivery of Certificates for
Convertible Debentures, the undersigned, upon request, shall execute and deliver
all additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to effectuate the conversion of such Convertible
Debentures into the Shares tendered hereby, including, without limitation, such
documents as shall be necessary to effect the transfer of record ownership of
such Convertible Debentures into the name of the undersigned or the Depositary.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in the section entitled "The Tender Offer--Procedures
for Tendering Shares" of the Offer to Purchase and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Offer. The Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
<PAGE> 5
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased (and if the undersigned is tendering Shares by the delivery of
Certificates for Convertible Debentures, the check for any cash in lieu of
fractional Shares received upon conversion of such Convertible Debentures), and
return all Certificates evidencing Shares not tendered or not purchased (and
Certificates evidencing Convertible Debentures convertible into Shares not
tendered or not purchased), in the name(s) of the registered holder(s) appearing
above under "Description of Shares Tendered". Similarly, unless otherwise
indicated in the box entitled "Special Delivery Instructions", please mail the
check for the purchase price of all Shares purchased (and if the undersigned is
tendering Shares by the delivery of Certificates for Convertible Debentures, the
check for any cash in lieu of fractional Shares received upon conversion of such
Convertible Debentures) and all Certificates evidencing Shares not tendered or
not purchased (and Certificates evidencing Convertible Debentures convertible
into Shares not tendered or not purchased) (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered". In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
(and if the undersigned is tendering Shares by the delivery of Certificates for
Convertible Debentures, the check for any cash in lieu of fractional Shares
received upon conversion of such Convertible Debentures) and return all
Certificates evidencing Shares not tendered or not purchased (and Certificates
evidencing Convertible Debentures convertible into Shares not tendered or not
purchased) in the name(s) of, and mail such check(s) and Certificates to the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that the Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares (or convert or transfer any Convertible
Debentures) from the name of the registered holder(s) thereof if the Purchaser
does not accept for payment any of the Shares tendered hereby.
<PAGE> 6
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES (OR CONVERTIBLE
DEBENTURES) THAT YOU OWN HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 10.
Number of Shares (or number of Shares to be received upon conversion of
Convertible Debentures) represented by the lost or destroyed certificates:
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of the Shares
purchased (and if the undersigned is tendering Shares by the delivery of
Certificates for Convertible Debentures, the check for any cash in lieu of
fractional Shares received upon conversion of such Convertible Debentures) or
Certificates evidencing the Shares not tendered or not purchased (or
Certificates evidencing Convertible Debentures convertible into the Shares not
tendered or not purchased) are to be issued in the name of someone other than
the undersigned, or if the Shares tendered hereby and delivered by book-entry
transfer which are not purchased are to be returned by credit to an account at
one of the Book-Entry Transfer Facilities other than that designated above.
Issue: / / Check / / Certificate(s) to:
Name
(Please Print)
Address
- ------------------------------------------------------
(Include Zip Code)
- ------------------------------------------------------
(Taxpayer Identification or Social Security Number)
/ / Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Check appropriate box:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
(SIGNATURE(S) OF HOLDER(S))
Dated: _________________ , 1996
(MUST BE SIGNED BY REGISTERED HOLDER(S) AS NAME(S) APPEAR(S) ON THE
CERTIFICATE(S) OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO
BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH.
IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS,
ATTORNEYS-IN-FACT, OFFICERS OF CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION. SEE
INSTRUCTION 5.)
Name(s)
(PLEASE PRINT)
Capacity (Full title)
Address
(INCLUDE ZIP CODE)
Area Code and Telephone Number ( )
Taxpayer Identification or Social Security
Number
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
Name
(PLEASE PRINT)
Name of Firm
Address
(INCLUDE ZIP CODE)
Area Code and Telephone Number ( )
Dated: _________________ , 1996
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased (and if the undersigned is tendering Shares by the delivery of
Certificates for Convertible Debentures, the check for any cash in lieu of
fractional Shares received upon conversion of such Convertible Debentures) or
Certificates evidencing the Shares not tendered or not purchased (or
Certificates evidencing Convertible Debentures convertible into the Shares not
tendered or not purchased) are to be mailed to someone other than the
undersigned, or to the undersigned at an address other than that shown under
"Description of Shares Tendered".
Mail / / Check / / Certificate(s) to:
Name
(Please Print)
Address
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal if (a) this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of Shares) of any of the
Shares tendered herewith and such registered holder(s) has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" above or (b) such Shares are tendered for the account of
a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. If
Certificates evidencing Shares or Convertible Debentures are registered in the
name of a person other than the signer of this Letter of Transmittal, or if
payment is to be made or Certificates relating to tendered Shares not accepted
for payment are to be returned to a person other than the registered holder of
the Certificates surrendered, the tendered Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or name(s) of the registered holders or owners appear on the Certificate,
with the signatures on such Certificate or stock powers guaranteed as aforesaid.
See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Certificates evidencing Shares or
Convertible Debentures are to be forwarded herewith or if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in the
section entitled "The Tender Offer--Procedures for Tendering Shares" of the
Offer to Purchase. Certificates evidencing all tendered Shares (or Certificates
evidencing Convertible Debentures convertible into all tendered Shares), or
confirmation of a book-entry transfer of such Shares (a "Book-Entry
Confirmation"), if such procedure is available, into the Depositary's account at
one of the Book-Entry Transfer Facilities pursuant to the procedures set forth
in the section entitled "The Tender Offer--Procedures for Tendering Shares" of
the Offer to Purchase, together with a properly completed and duly executed
Letter of Transmittal (or copy thereof) with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message, as defined below)
and any other required documents, must be received by the Depositary at one of
its addresses set forth on the back cover hereof prior to the Expiration Date.
If Certificates evidencing Shares or Convertible Debentures are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery. Securityholders whose
Certificates are not immediately available, who cannot deliver their
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedures for delivery by book-entry
transfer on a timely basis may tender Shares pursuant to the guaranteed delivery
procedures described in the section entitled "The Tender Offer--Procedures for
Tendering Shares" of the Offer to Purchase. Pursuant to such procedures: (i)
such tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form provided by the Purchaser herewith, must be received by the Depositary
prior to the Expiration Date; and (iii) the Certificates evidencing all tendered
Shares (or Certificates evidencing Convertible Debentures convertible into all
tendered Shares), in proper form for transfer, or a confirmation of a book-entry
transfer of such Shares, if such procedures are available, into the Depositary's
account at one of the Book-Entry Transfer Facilities, together with a properly
completed and duly executed Letter of Transmittal (or copy thereof) with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other required documents, must be received by the
Depositary within three trading days after the date of execution of the Notice
of Guaranteed Delivery, all as described in the section entitled "The Tender
Offer--Procedures for Tendering Shares" of the Offer to Purchase. A "trading
day" is any day on which the Nasdaq National Market is open for business. The
term "Agent's Message" means a message, transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-Entry
Confirmation, which states that such Book-Entry Transfer Facility has received
an express acknowledgment from the participant in such Book-Entry Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of this Letter of Transmittal and that the Purchaser may enforce
such agreement against the participant.
<PAGE> 8
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES
EVIDENCING SHARES OR CONVERTIBLE DEBENTURES AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a copy hereof), all tendering securityholders waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Certificate numbers, the number of Shares
evidenced by such Certificates (or the number of Shares to be received upon
conversion of Convertible Debentures evidenced by such Certificate) and the
number of Shares tendered should be listed on a separate schedule and attached
hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Certificate
(or if fewer than all the whole Shares to be received upon conversion of
Convertible Debentures evidenced by any Certificate) delivered to the Depositary
herewith are to be tendered hereby, fill in the number of Shares that are to be
tendered in the box entitled "Number of Shares Tendered". In such cases, new
Certificate(s) evidencing the remainder of the Shares (or Debentures) that were
evidenced by the Certificates delivered to the Depositary herewith will be sent
to the person(s) signing this Letter of Transmittal, unless otherwise provided
in the box entitled "Special Delivery Instructions", as soon as practicable
after the expiration or termination of the Offer. All Shares evidenced by
Certificates (and all whole Shares to be received upon conversion of Convertible
Debentures evidenced by Certificates) delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby (or the Convertible Debentures that are convertible into the
Shares tendered hereby), the signature(s) must correspond with the name(s) as
written on the face of the Certificate(s) without any alteration, enlargement or
change whatsoever.
If any Share tendered hereby (or any Convertible Debenture that is
convertible into any Share tendered hereby) is owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby (or any Convertible Debenture that is
convertible into any Share tendered hereby) are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby (or any Convertible Debentures that are convertible into
any Shares tendered hereby), no endorsements of Certificates or separate stock
powers are required, unless payment is to be made to, or Certificates evidencing
Shares (or Convertible Debentures that are convertible into Shares) not tendered
or not purchased are to be issued in the name of a person other than the
registered holder(s), in which case the Certificate(s) evidencing the Shares
tendered hereby (or the Convertible Debentures that are convertible into the
Shares tendered hereby) must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appears(s) on such Certificate(s). Signatures on such Certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby (or any Convertible
Debentures that are convertible into Shares tendered hereby), the Certificate(s)
evidencing such Shares (or Convertible Debentures) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Certificate(s). Signatures
on such Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
<PAGE> 9
If this Letter of Transmittal or any Certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Purchaser of such person's authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as provided in this Instruction 6, the
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price of any Shares purchased is to be made to, or if Certificates
evidencing Shares not tendered or not purchased (or Certificates evidencing
Convertible Debentures convertible into Shares not tendered or not purchased)
are to be issued in the name of, a person other than the registered holder(s),
the amount of any transfer taxes (whether imposed on the registered owner(s),
such other person or otherwise) payable on account of the transfer to such other
person will be deducted from the purchase price of such Shares purchased, unless
satisfactory evidence to the Purchaser of the payment of such taxes or exemption
therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES EVIDENCING THE SHARES
TENDERED HEREBY (OR THE CERTIFICATES EVIDENCING CONVERTIBLE DEBENTURES
CONVERTIBLE INTO THE SHARES TENDERED HEREBY).
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby (or if Shares are tendered by the delivery
of Certificates for Convertible Debentures, a check for any cash in lieu of
fractional Shares received upon conversion of such Convertible Debentures) is to
be issued, or Certificate(s) evidencing Shares not tendered or not purchased (or
Convertible Debentures convertible into Shares not tendered or not purchased)
are to be issued, in the name of a person other than the person(s) signing this
Letter of Transmittal or if any such check or any such Certificate is to be sent
to someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but to an address other than that
shown in the box entitled "Description of Shares Tendered", the appropriate
boxes on this Letter of Transmittal must be completed. Stockholders delivering
Shares tendered hereby by book-entry transfer may request that Shares not
purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate in the box entitled "Special Payment
Instructions" on the reverse hereof. If no such instructions are given, all such
Shares not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated on the reverse hereof as the account from which
such Shares were delivered.
8. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a securityholder tendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such holder's correct taxpayer identification number (i.e., social security
number or employer identification number) ("TIN") on the Substitute Form W-9
below in this Letter of Transmittal and certify under penalties of perjury that
such TIN is correct and that such holder is not subject to backup withholding.
If a holder does not provide such holder's correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a $50 penalty on such holder and payment of cash to such holder pursuant
to the Offer may be subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding may be credited against the Federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund may be obtained by the holder upon filing an income tax return.
The securityholder is required to give the Depositary the TIN of the record
holder of the Shares (or in the case of Shares to be received upon conversion of
Convertible Debentures, the record holder of the Convertible Debentures). If the
Shares (or Convertible Debentures) are held in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
<PAGE> 10
The box in Part 3 of Substitute Form W-9 may be checked if the tendering
securityholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
securityholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
securityholder if a TIN is provided to the Depositary within 60 days.
Certain securityholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign securityholders must complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to Salomon Brothers Inc, the Dealer Manager, or to
D.F. King & Co., Inc., the Information Agent, at their respective addresses and
telephone numbers set forth on the back cover of this Offer to Purchase.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials may be obtained from
the Information Agent or the Dealer Manager or from brokers, dealers, commercial
banks and trust companies.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Shares (or Convertible Debentures) has been lost, destroyed or
stolen, the securityholder should promptly notify the Depositary by checking the
box immediately preceding the special payment/special delivery instructions and
indicating the number of Shares (or the number of Shares to be received upon
conversion of any Convertible Debentures) so lost, destroyed or stolen. The
securityholder will then be instructed by the Depositary as to the steps that
must be taken in order to replace the certificate. This Letter of Transmittal
and related documents cannot be processed until the procedures for replacing
lost, destroyed or stolen certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A COPY HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES (TOGETHER
WITH CERTIFICATES FOR SHARES OR CONVERTIBLE DEBENTURES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER), AND ALL OTHER REQUIRED DOCUMENTS OR A PROPERLY COMPLETED
AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
<PAGE> 11
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND DATING BELOW. Social Security
FORM W-9 Number(s)
DEPARTMENT OF THE TREASURY OR
INTERNAL REVENUE SERVICE Employer Identification
Number(s)
----------------------------------------------------------------
PAYER'S REQUEST PART 2--Certification--Under penalty of perjury, I certify that: PART 3--
FOR TAXPAYER (1) the number shown on this form is my correct Taxpayer Awaiting TIN
IDENTIFICATION NUMBER Identification Number (or I am waiting for a number to be / /
(TIN) issued to me) and
(2) I am not subject to backup withholding because (a) I am
exempt from backup withholding or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to
report all interest or dividends or (c) the IRS has notified
me that I am no longer subject to backup withholding.
---------------------------
PART 4--
Exempt
/ /
----------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of under reporting
interest or dividends on your tax returns. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out such item (2). If you
are exempt from backup withholding, check the box in Part 4 above.
</TABLE>
- --------------------------------------------------------------------------------
Signature Date __________ , 1996
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand
that, if I do not provide a taxpayer identification number to the Depositary,
31% of all reportable payments made to me will be withheld, but will be refunded
if I provide a certified taxpayer identification number within 60 days.
<TABLE>
<S> <C>
, 1996
Signature Date
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
<PAGE> 12
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Bankers and Brokers Call Collect: (212) 269-5550
Call Toll Free: (800) 488-8075
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
Call Collect: (212) 783-5141
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
BIG B, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00, MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS
THE OFFER IS EXTENDED (THE "EXPIRATION DATE")
As set forth in the section entitled "The Tender Offer--Procedures for
Tendering Shares" of the Offer to Purchase (as defined below), and in
Instruction 2 of the related Letter of Transmittal, this Notice of Guaranteed
Delivery, or one substantially in the form hereof, must be used to accept the
Offer if (i) certificates evidencing shares of Common Stock, par value $0.001
per share (the "Shares"), of Big B, Inc., an Alabama corporation (the "Company")
(or certificates evidencing the Company's 6.5% Convertible Subordinated
Debentures Due 2003 ("Convertible Debentures") that are convertible into Shares
to be tendered), are not immediately available, (ii) time will not permit all
required documents to reach ChaseMellon Shareholder Services, L.L.C. (the
"Depositary"), prior to the Expiration Date or (iii) the procedures for
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or transmitted by fax or mail to
the Depositary. See the section entitled "The Tender Offer--Procedures for
Tendering Shares" of the Offer to Purchase. All capitalized terms used but not
defined herein shall have the meaning ascribed to them in the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail By Hand or Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P.O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
</TABLE>
By Fax Transmission:
(201) 329-8936
For Fax Confirmation Only by Telephone:
(201) 296-4209
------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA
FAX TRANSMISSION OTHER THAN AS SET FORTH ABOVE,
DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
(as defined below) under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to RDS Acquisition Inc., a Delaware
corporation (the "Purchaser"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated September 10, 1996 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, together with any
supplements or amendments from time to time thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedures set forth in the
section entitled "The Tender Offer--Procedures for Tendering Shares" of the
Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Dated: , 1996
------------------------------ ----------------------------
Certificate Nos. (if available): Name(s) of Record Holder(s):
- ------------------------------------------------ ------------------------------------------------
------------------------------------------------
(Check ONE box if Shares will be tendered by (Please Print)
book-entry transfer)
/ / The Depository Trust Company Address(es):
/ / Philadelphia Depository Trust Company ------------------------------------------------
Zip Code
Account Number:
Area Code and Tel. No.:
Signature(s):
------------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"), hereby guarantees
delivery to the Depositary, at one of its addresses set forth above, of
certificates evidencing the Shares tendered hereby in proper form for transfer
(or certificates evidencing Convertible Debentures that are convertible into the
Shares tendered hereby) in proper form for conversion), or confirmation of
book-entry transfer of such Shares into the Depositary's accounts at The
Depository Trust Company or Philadelphia Depository Trust Company, in each case
with delivery of a properly completed and duly executed Letter of Transmittal
(or copy thereof) with any required signature guarantees, or an Agent's Message
(as defined in the Offer to Purchase), and any other required documents, within
three trading days after the date of execution of this Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market is open
for business.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal (or, in
the case of a book-entry transfer, an Agent's Message) and certificates for
Shares (or Convertible Debentures) to the Depositary within the time period
shown herein. Failure to do so could result in a financial loss to such Eligible
Institution.
<TABLE>
<S> <C>
Name of Firm: ------------------------------------------------
Address Authorized Signature
- ------------------------------------------------ Name
Zip Code Please Type or Print
Area Code and Title:
Telephone Number: Dated:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR CONVERTIBLE DEBENTURES WITH THIS
NOTICE. CERTIFICATES FOR SHARES OR CONVERTIBLE DEBENTURES SHOULD BE SENT
WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
--------------------------
SALOMON BROTHERS
--------------------------
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BIG B, INC.
AT
$15 NET PER SHARE
BY
RDS ACQUISITION INC.,
a Wholly Owned Subsidiary of
REVCO D.S., INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS
THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
September 10, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by RDS Acquisition Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Revco D.S., Inc., a Delaware
corporation, to act as the Dealer Manager in connection with its offer to
purchase all outstanding shares of Common Stock, par value $0.001 per share (the
"Shares"), of Big B, Inc., an Alabama corporation (the "Company"), at a price of
$15 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase, dated September 10,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any supplements or amendments from time to time thereto,
collectively constitute the "Offer") enclosed herewith. All capitalized terms
used herein but not defined herein shall have the meanings ascribed to them in
the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares or 6.5% Convertible Subordinated Debentures
Due 2003 of the Company ("Convertible Debentures") registered in your name or in
the name of your nominees.
Enclosed herewith are copies of the following documents:
1. The Offer to Purchase dated September 10, 1996;
2. The Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares;
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
the certificates evidencing such Shares (or certificates evidencing the
Convertible Debentures that are convertible into Shares to be tendered)
have not yet been issued, are not immediately available or time will not
permit all required documents to reach ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") prior to the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you
hold Shares or Convertible Debentures registered in your name or in the
name of your nominees, with space provided for obtaining such clients'
instructions with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9, providing
information relating to backup federal income tax withholding; and
<PAGE> 2
6. A return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with the provisions
set forth in the section entitled "The Tender Offer--Withdrawal Rights" of the
Offer to Purchase. Payment for Shares accepted for payment pursuant to the Offer
will in all cases be made only after timely receipt by the Depositary of (a) the
Share certificates (or in the case of Shares being tendered by the delivery of
certificates evidencing the Convertible Debentures as described in the Offer to
Purchase, certificates for such Convertible Debentures) or timely confirmation
of a book-entry transfer of such Shares, if such procedure is available, into
the Depositary's accounts at The Depository Trust Company or Philadelphia
Depository Trust Company pursuant to the procedures set forth in the Offer to
Purchase, (b) the Letter of Transmittal (or copy thereof), properly completed
and duly executed, or an Agent's Message (as defined in the Offer to Purchase)
and (c) any other required documents.
PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS
EXTENDED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
The Purchaser will not pay for fees or commissions to any broker or dealer
or other person (other than to the Dealer Manager and the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. You will be reimbursed upon
request for customary mailing and handling expenses incurred by you in
forwarding the enclosed materials to your customers.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or copy thereof), with any required signature
guarantees and any other required documents, should be sent to the Depositary,
and certificates evidencing the tendered Shares (or in the case of holders of
Convertible Debentures, certificates for the Convertible Debentures convertible
into the tendered Shares) should be delivered or such Shares should be tendered
by book-entry transfer, all in accordance with the Offer to Purchase and the
Instructions set forth in the Letter of Transmittal.
If stockholders wish to tender Shares, but such stockholders are unable to
forward their certificates or other required documents prior to the Expiration
Date, a tender may be effected by following the guaranteed delivery procedures
specified in the section entitled "The Tender Offer--Procedures for Tendering
Shares" of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Salomon Brothers Inc, the Dealer Manager, or D.F. King & Co., Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling the
Information Agent, D.F. King & Co., Inc., 77 Water Street, New York, NY 10005 at
(212) 269-5550 (Call Collect).
Very truly yours,
SALOMON BROTHERS INC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEPOSITARY, THE INFORMATION
AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO
THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BIG B, INC.
AT
$15 NET PER SHARE
BY
RDS ACQUISITION INC.,
a Wholly Owned Subsidiary of
REVCO D.S., INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS
THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
September 10, 1996
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated September 10,
1996 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any supplements or amendments from time to time thereto,
collectively constitute the "Offer") relating to the offer by RDS Acquisition
Inc., a Delaware corporation (the "Purchaser"), to purchase any and all
outstanding shares of Common Stock, par value $0.001 per share (the "Shares"),
of Big B, Inc., an Alabama corporation (the "Company"), at a price of $15 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer.
The Shares into which the Company's 6.5% Convertible Subordinated
Debentures Due 2003 ("Convertible Debentures") are convertible may be tendered
without first converting such Convertible Debentures by delivery of the
certificates for such Convertible Debentures.
Stockholders whose certificates evidencing Shares (or certificates
evidencing Convertible Debentures to be delivered to tender Shares into which
they are convertible) are not immediately available or who cannot deliver their
Share certificates and all other documents required by the Letter of Transmittal
to ChaseMellon Shareholder Services, L.L.C. (the "Depositary"), prior to the
Expiration Date or who cannot complete the procedures for delivery by book-entry
transfer to the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase) on a timely basis and who wish to tender their
Shares must do so pursuant to the guaranteed delivery procedures described in
the section entitled "The Tender Offer--Procedures for Tendering Shares" of the
Offer to Purchase. See Instruction 2 of the Letter of Transmittal. Delivery of
documents to a Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures does not constitute delivery to the Depositary.
THIS MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF THE SHARES
HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER
OF RECORD OF THE SHARES (OR CONVERTIBLE DEBENTURES) HELD BY US FOR YOUR ACCOUNT.
A TENDER OF SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT
TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
<PAGE> 2
We request instructions as to whether you wish to have us tender on your
behalf any of or all the Shares (or any of or all the whole Shares issuable upon
conversion of Convertible Debentures) held by us for your account, upon the
terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $15 per Share, net to the seller in cash.
2. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, October 7, 1996, unless the Offer is extended.
3. The Offer is being made for all outstanding Shares.
4. The Purchaser currently owns 1,190,000 Shares, representing
approximately 6.4% of the outstanding Shares.
5. The Offer is conditioned upon (i) there being validly tendered and
not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) that number of Shares that, together with the Shares already
owned by the Purchaser, would represent a majority of all outstanding
Shares on a fully diluted basis on the date of purchase; (ii) the
expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder; and (iii) the satisfaction of the other conditions
set forth in the Offer to Purchase.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. The Purchaser is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, the Purchaser will make a good faith
effort to comply with such state statute. If, after such good faith effort, the
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by Salomon Brothers Inc, the Dealer
Manager, or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
If you wish to have us tender any of or all the Shares (including any whole
Shares into which Convertible Debentures may be converted) held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares
(including any Shares into which Convertible Debentures may be converted), all
such Shares will be tendered unless otherwise specified on the instruction form
contained in this letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE
TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION
DATE.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BIG B, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated September 10, 1996 and the related Letter of Transmittal
(which, together with any supplements or amendments thereto, collectively
constitute the "Offer"), in connection with the offer by RDS Acquisition Inc., a
Delaware corporation (the "Purchaser"), to purchase all the outstanding shares
of Common Stock, par value $0.001 per share (the "Shares"), of Big B, Inc., an
Alabama corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to be Tendered:*
____________ Shares
Account Number:
Dated , 1996
SIGN HERE
(Signatures)
(Please type or print name(s) here)
(Please type or print address(es) here)
(Area Code and Telephone Number)
(Tax Identification or Social Security Number(s))
- ---------------
*May include Shares to be received upon conversion of Convertible Debentures
held for the account of the undersigned. Unless otherwise indicated, it will be
assumed that all of your Shares (including any whole Shares into which
Convertible Debentures are convertible) held by us for your account are to be
tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 000-000000. The table below will help determine the number to
give the payer.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------- -----------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------------------- -----------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account or,
if combined funds,
any one of the
individual's(1)
3. Husband and wife The actual owner
(joint account) of the account or,
if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult, or
(joint account) if the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for or incompetent
a designated ward, minor, person(3)
or incompetent person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(4)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, The legal entity (Do
or pension trust not furnish the
identifying number
of the personal rep-
resentative or trus-
tee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department The public entity
of Agriculture in the name of a
public entity (such as a State or
local government, school district or
prison) that receives agricultural
program payments
- ----------------------------------------------------------- -----------------------------------------------------------
</TABLE>
(1) List all names first and circle the name of the person whose number you
furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Provide the name of the owner.
(5) List all names first and circle the name of the legal trust, estate or
pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
PAYMENTS NOT GENERALLY SUBJECT TO BACKUP WITHHOLDING
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: A Payee may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and such
Payee has not provided its correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FORM W-9 WITH THE
PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE
OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST,
DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividends, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to IRS. IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to that
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
- --------------------------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
September 10, 1996 and the related Letter of Transmittal, and is not being
made to (nor will tenders be accepted from or on behalf of) holders of Shares
in any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. In any
jurisdictions where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchaser by Salomon Brothers Inc (the "Dealer Manager") or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BIG B, INC.
AT
$15 NET PER SHARE
BY
RDS ACQUISITION INC.,
A WHOLLY OWNED SUBSIDIARY OF
REVCO D.S., INC.
RDS Acquisition Inc., a Delaware corporation (the "Purchaser"), which
is a wholly owned subsidiary of Revco D.S., Inc., a Delaware corporation
("Revco"), is offering to purchase all outstanding shares of Common Stock,
par value $.001 per share (the "Shares"), of Big B, Inc., an Alabama
corporation (the "Company"), at a price of $15 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated September 10, 1996
(the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively
constitute the "Offer").
The purpose of the Offer is to enable Revco to acquire control of, and
the entire equity interest in, the Company. The Offer, as the first step
in the acquisition of the Company, is intended to facilitate the
acquisition of all the Shares.
--------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996,
UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------
The Offer is conditioned upon there being validly tendered and not
withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) that number of Shares that, together with the 1,190,000 shares
already owned by the Purchaser, would represent a majority of all
outstanding Shares on a fully diluted basis on the date of purchase. The
Offer is also subject to certain other conditions set forth in the Offer
to Purchase.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered to
the Purchaser and not properly withdrawn as, if and when the Purchaser
gives oral or written notice to ChaseMellon Shareholder Services, L.L.C.
(the "Depositary") of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act
as agent for tendering stockholders for the purpose of receiving payment
from the Purchaser and transmitting payment to tendering stockholders. In
all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i)
certificates with respect to (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (ii) a
Letter of Transmittal (or a copy thereof), properly completed and duly
signed, with any required signature guarantees, and, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and (iii) any other required documents. Accordingly, tendering
stockholders may be paid at different times depending upon when such
documents are actually received by the Depositary. Under no circumstances
will interest be paid on the purchase price of the Shares to be paid by
the Purchaser, regardless of any extension of the Offer or any delay in
making payment for tendered Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date, and, unless theretofore accepted for payment and
paid for by the Purchaser pursuant to the Offer, may be withdrawn at any
time after November 8, 1996. For a withdrawal to be effective, a written
or fax notice of withdrawal must be timely received by the Depositary at
one of its addresses as set forth below and must specify the name of the
person having tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name of the registered holder of the certificate
relating to the Shares to be withdrawn, if different from the name of the
person who tendered the Shares. If certificates with respect to Shares
have been delivered or otherwise identified to the Depositary, then, prior
to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such
Shares have been tendered by an Eligible Institution (as defined in
<PAGE> 2
Section 2 of the Offer to Purchase), the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have
been delivered pursuant to the procedures for book-entry transfer as set
forth in Section 2 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the appropriate
Book-Entry Transfer Facility (as defined in the Offer to Purchase) to be
credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for any purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time
prior to the Expiration Date. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by
the Purchaser in its sole discretion, which determination will be final
and binding. None of the Purchaser, Revco, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to
give information of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such
information.
The Purchaser expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to
the Depositary.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by
reference.
Requests are being made to the Company for use of the Company's
stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares and communicating with
holders of Shares in connection with the Offer. The Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed
to record holders of Shares, and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT
TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective addresses and
telephone numbers as set forth below. The Purchaser will not pay any fees
or commissions to any broker or dealer or to any other person (other than
the Dealer Manager and the Information Agent) for soliciting tenders of
shares pursuant to the Offer. Additional copies of the Offer to Purchase,
the Letter of Transmittal and all other tender offer materials may be
obtained from the Information Agent or the Dealer Manager or from brokers,
dealers, commercial banks and trust companies, and will be furnished
promptly at the Purchaser's expense.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005
Bankers and Brokers Call Collect:
(212) 269-5550
Toll Free (800) 488-8075
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P. O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
</TABLE>
By Fax Transmission:
(201) 329-8936
For Fax Confirmation Only by
Telephone:
(201) 296-4209
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
Call Collect: (212) 783-5141
September 10, 1996
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit (a)(8)
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR CONTACT:
Thomas Dingledy Dianne McCormick
216/425-9811 x6145 216/425-9811 x1900
Joele Frank / Dan Katcher
Abernathy MacGregor Group
212/371-5999
REVCO ANNOUNCES OFFER TO ACQUIRE
BIG B FOR $15 PER BIG B SHARE
TWINSBURG, OHIO (SEPTEMBER 9, 1996) -- Revco D.S., Inc. [NYSE: RXR] today
announced that it is commencing a cash tender offer for all of the outstanding
shares of Big B, Inc. [NASDAQ: BIGB] at a price of $15 per share. This
represents a premium of 53% over the $9.81 average closing price of Big B stock
for the 90-calendar day period ended Friday, September 6, 1996. Following the
completion of the tender offer, Revco intends to consummate a merger in which
all remaining Big B shareholders will also receive the same cash price paid in
the tender offer. Big B has approximately 22.0 million shares on a fully diluted
basis, giving the transaction a total equity value of approximately $330
million.
Revco currently owns 1,190,000 shares of Big B common stock, representing
approximately 5.4% of Big B's shares on a fully diluted basis. The transaction
is anticipated to be accretive to Revco's earnings per share in the first year
of the combination.
D. Dwayne Hoven, President and Chief Executive Officer of Revco, said "This is
truly a win-win opportunity for Revco and Big B shareholders, employees and
customers. With Revco's financial resources, technological expertise and
marketing and sales capability, we can together grow our combined company's
customer base and increase our sales potential. Among other efficiencies, this
combination will allow the combined company to spread costs over a larger base
of stores. This will assist us in meeting the increasing customer demand for
lower pharmacy prices. We hope that the Board of Directors of Big B will
recognize the significant benefits to Big B and its shareholders."
The tender offer is not contingent on Revco obtaining financing. Revco intends
to finance the tender offer through a combination of cash on hand and bank
borrowings. The tender offer is conditioned upon the acquisition of a majority
of Big B's shares
<PAGE> 2
2
on a fully diluted basis and the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The complete terms and conditions of the tender offer will be set forth in the
offering documents to be filed with the Securities and Exchange Commission.
The tender offer is scheduled to expire at midnight (EDT) on Monday, October 7,
1996.
Salomon Brothers Inc is acting as Dealer Manager for the offer and D.F. King &
Co., Inc. is acting as Information Agent.
Following is the complete text of a letter sent today from D. Dwayne Hoven,
President and Chief Executive Officer of Revco D.S., Inc. to Anthony J. Bruno,
Chairman of the Board and Chief Executive Officer of Big B, Inc.:
September 9, 1996
Mr. Anthony J. Bruno
Chairman of the Board and
Chief Executive Officer
Big B, Inc.
2600 Morgan Road, S.E.
Bessemer, AL 35023
Dear Anthony:
As you know from our prior conversations, Revco D.S., Inc. is
interested in pursuing a business combination with Big B, Inc.
Unfortunately, because Big B has to date been unwilling to proceed with
such a transaction, we are announcing this morning our offer to buy all
of Big B's outstanding shares for a price of $15 per share in cash, or
an aggregate equity value of approximately $330 million on a fully
diluted basis. As we have previously said, we would be happy to work
with you to structure a tax-free transaction to give your shareholders
an ongoing equity interest in the combined company.
<PAGE> 3
3
We believe that Revco's offer is a highly attractive opportunity for
Big B shareholders representing a premium of 53% over the $9.81 average
closing price of Big B stock for the 90-calendar day period ended
Friday, September 6, 1996. We believe that this is the fastest, most
efficient way to bring our companies together. We hope that the Board
of Directors of Big B will recognize the significant benefits to Big B
and its shareholders.
The combination of Revco and Big B offers numerous advantages over
either company remaining as a stand-alone entity, and, for Big B, over
any other possible strategic combination. Revco and Big B represent an
excellent geographic fit, with only limited overlap of stores and
distribution centers. Among other efficiencies, this combination will
allow the combined company to spread costs over a larger base of
stores. This will assist us in meeting the increasing customer demand
for lower pharmacy prices.
Revco is a Fortune 500 company and is among the top performers in the
drugstore industry. Since 1993, we have more than doubled our sales and
operating profit, and net income per share has more than tripled over
the same time period. Revco has one of the most technologically
advanced pharmacy systems and offers some of the most innovative
marketing programs in the drugstore industry, designed to add consumer
value and to enhance the pharmacist-patient relationship.
We have the highest respect for you and all Big B employees. We
anticipate retaining the services of Big B's field and distribution
center employees and will entertain suggestions from you and your
senior management team regarding corporate employees.
Like Big B, Revco has always prided itself in its role as a strong
community partner and good corporate citizen. Revco and its employees
donate time and money to a variety of charitable organizations in the
areas we serve. Revco recognizes its corporate responsibility to give
back to every community we call home. As a native of Alabama, I am
particularly sensitive to those issues in this transaction.
<PAGE> 4
4
Revco's objective is a transaction that is enthusiastically supported
by Big B's shareholders and employees, as well as Big B's many loyal
customers. Revco and its advisors are prepared to meet with Big B's
Board, management and advisors to answer any questions they may have
about our offer. We are convinced that this combination serves the best
interests of both companies.
Sincerely,
/s/ D. Dwayne Hoven
D. Dwayne Hoven
President and Chief Executive Officer, Revco D.S., Inc.
Revco, recognized as a Fortune 500 company, is the second largest drugstore
chain in the U.S. operating 2,184 stores in 14 contiguous Midwestern,
Southeastern and Eastern states. The stores sell prescription and
over-the-counter drugs, health and beauty aids and other consumer products.
Revco employs more than 32,000 associates in its stores, network of five
distribution centers, regional offices and corporate offices in Twinsburg, Ohio.
Note to Editors: Today's news release, along with other news about
Revco, is available by calling Company News On-Call at 1-800-758-5804,
extension 751257. Information is also available on the Internet
at: http:\\www.revco.com.
# # #
SATELLITE UPLINK FOR REVCO B-ROLL:
Monday, September 9
10:00 am - 10:15 pm EDT
C-band uplink & space segment for Galaxy 9 Transponder 22
Monday, September 9
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<PAGE> 5
5
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Revco B-roll, please call Erin Lahey at 212/682-8300.
<PAGE> 1
Exhibit (C)
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AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of July 27, 1995,
among
REVCO D.S., INC.,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Revolving Lenders,
BANQUE PARIBAS
and
BANK OF AMERICA ILLINOIS,
as Managing Agents
and
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
as Administrative Agent
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
Definitions and Interpretation
------------------------------
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SECTION 1.01. Defined Terms............................... 2
SECTION 1.02. Use of Defined Terms........................ 2
SECTION 1.03. Interpretation.............................. 3
SECTION 1.04. Accounting Matters.......................... 4
SECTION 1.05. Conflict in Credit Documents................ 4
SECTION 1.06. Legal Representation of
Parties................................. 4
SECTION 1.07. Assignments from the Existing
Credit Agreement........................ 4
SECTION 1.08. Assignment of Agency........................ 7
ARTICLE II
Commitments
-----------
SECTION 2.01. Commitments................................. 7
SECTION 2.02. Revolving Credit
Commitments............................. 7
SECTION 2.03. Revolving Lenders Not Required To
Extend Credit........................... 8
SECTION 2.04. Reduction of Total Revolving
Credit Commitment Amount................ 9
SECTION 2.05. Optional Reductions......................... 9
SECTION 2.06. Mandatory Revolving Credit
Commitment Reductions................... 9
SECTION 2.07. Fees........................................ 9
SECTION 2.08. Revolving Nonuse Fee........................ 9
SECTION 2.09. Letter of Credit Fees....................... 10
SECTION 2.10. Administrative Agent Fee.................... 11
SECTION 2.11. Amendment Fee............................... 11
SECTION 2.12. Increased Costs............................. 11
SECTION 2.13. Swing Line.................................. 12
SECTION 2.14. Bid Borrowings.............................. 15
SECTION 2.15. Procedure for Bid Borrowings................ 15
ARTICLE III
Loans and Notes
---------------
SECTION 3.01. Loan Procedure.............................. 20
SECTION 3.02. Revolving Loan Requests..................... 20
SECTION 3.03. Funding of Borrowings....................... 21
SECTION 3.04. Notes....................................... 22
SECTION 3.05. Principal Payments.......................... 20
SECTION 3.06. Repayments and Prepayments.................. 20
</TABLE>
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SECTION 3.07. Loan Application............................ 25
SECTION 3.08. Interest Payments........................... 25
SECTION 3.09. Rates....................................... 25
SECTION 3.10. Default Rate................................ 26
SECTION 3.11. Payment Dates............................... 26
SECTION 3.12. Rate Determinations......................... 27
SECTION 3.13. Taxes, etc.................................. 28
SECTION 3.14. Payments, Computations, etc................. 29
SECTION 3.15. Allocation.................................. 29
SECTION 3.16. Time, Place and Manner
of Payment.............................. 30
SECTION 3.17. Computation................................. 30
SECTION 3.18. Business Day Adjustment..................... 30
SECTION 3.19. Proration of Payments....................... 31
SECTION 3.20. Setoff...................................... 32
SECTION 3.21. Use of Proceeds............................. 32
SECTION 3.22. Payments by Revco........................... 32
SECTION 3.23. Payments by the Revolving Lenders
to the Administrative
Agent................................... 33
ARTICLE IV
Interest Rate Options
---------------------
SECTION 4.01. Borrowing Elections......................... 34
SECTION 4.02. Continuation and Conversion
Elections............................... 34
SECTION 4.03. Funding..................................... 36
SECTION 4.04. Eurodollar Rate Lending
Unlawful................................ 36
SECTION 4.05. Eurodollar Deposits
Unavailable............................. 37
SECTION 4.06. Increased Eurodollar Rate Loan
Costs, etc.............................. 37
SECTION 4.07. Funding Losses.............................. 38
ARTICLE V
Letters of Credit
-----------------
SECTION 5.01. LC Issuance Request......................... 39
SECTION 5.02. Issuance of Letters of Credit............... 39
SECTION 5.03. Other Revolving Lender's
Participations.......................... 40
SECTION 5.04. Disbursements............................... 41
SECTION 5.05. Reimbursements.............................. 41
SECTION 5.06. Deemed Disbursement......................... 42
</TABLE>
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<TABLE>
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SECTION 5.07. Nature of Reimbursement
Obligations ......................................... 42
ARTICLE VI
Agreement Effectiveness and
---------------------------
Conditions to Credit Extension
------------------------------
SECTION 6.01. Amendment Effective Data................................. 44
SECTION 6.02. Resolutions, etc......................................... 44
SECTION 6.03. Notes, Guaranties........................................ 45
SECTION 6.04. No Contest, etc.......................................... 45
SECTION 6.05. No Materially Adverse Effect............................. 45
SECTION 6.06. Certificate as to Warranties, No
Default, etc......................................... 45
SECTION 6.07. Opinions of Counsel...................................... 45
SECTION 6.08. Closing Fees, Expenses, etc.............................. 46
SECTION 6.09. HSI Credit Agreement
Terminated........................................... 46
SECTION 6.10. All Credit Extensions.................................... 46
SECTION 6.11. Compliance with Warranties, No
Default, etc......................................... 47
SECTION 6.12. Credit Request, etc...................................... 47
SECTION 6.13. Satisfactory Legal Form.................................. 47
ARTICLE VII
Representations and Warranties
------------------------------
SECTION 7.01. Organization, Power,
Authority, etc....................................... 48
SECTION 7.02. Due Authorization,
Noncontravention, etc.................................... 49
SECTION 7.03. Government Approval, Regulation,
etc...................................................... 49
SECTION 7.04. Validity, etc............................................ 50
SECTION 7.05. Financial Information.................................... 50
SECTION 7.06. No Materially Adverse Effect............................. 51
SECTION 7.07. Litigation, etc.......................................... 51
SECTION 7.08. Regulations G, T, U and X................................ 51
SECTION 7.09. Pension and Welfare Plans................................ 51
SECTION 7.11. Subsidiaries............................................. 51
SECTION 7.12. Taxes.................................................... 52
SECTION 7.13. Absence of Default....................................... 52
SECTION 7.14. Labor Controversies...................................... 53
SECTION 7.15. Capitalization........................................... 53
SECTION 7.16. Ownership of Properties.................................. 53
SECTION 7.17. Environmental Warranties................................. 53
</TABLE>
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Contents, p.4
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SECTION 7.18. Accuracy of Information............................... 55
SECTION 7.19. Refinancing of Certain
Indebtedness...................................... 55
SECTION 7.20. Representations and Warranties
True and Correct.................................. 55
ARTICLE VIII
Covenants
---------
SECTION 8.01. Affirmative Covenants................................. 56
SECTION 8.02. Financial Information, etc............................ 56
SECTION 8.03. Maintenance of Existences,
etc............................................... 58
SECTION 8.04. Foreign Qualification................................. 59
SECTION 8.05. Payment of Taxes, etc................................. 59
SECTION 8.06. Insurance............................................. 59
SECTION 8.07. Notice of Default, Litigation,
etc............................................... 60
SECTION 8.08. Performance of Obligations............................ 61
SECTION 8.09. Books and Records..................................... 61
SECTION 8.10. Compliance with Laws, etc............................. 62
SECTION 8.11. Environmental Matters................................. 62
SECTION 8.12. Maintenance of Property............................... 62
SECTION 8.13. Negative Covenants.................................... 62
SECTION 8.14. Business Activities................................... 63
SECTION 8.15. Indebtedness.......................................... 63
SECTION 8.16. Liens................................................. 64
SECTION 8.17. Financial Condition................................... 66
SECTION 8.18. Investments........................................... 67
SECTION 8.19. Restricted Payments, etc.............................. 67
SECTION 8.20. Take or Pay Contracts................................. 68
SECTION 8.21. Consolidation, Merger,
Acquisitions, etc................................. 68
SECTION 8.22. Asset Dispositions, etc............................... 69
SECTION 8.23. Modification of Certain
Instruments, Organic Documents,
etc............................................... 69
SECTION 8.24. Transactions with Affiliates.......................... 70
SECTION 8.25. Inconsistent Agreements............................... 70
SECTION 8.26. Environmental Matters................................. 71
SECTION 8.27. Limitation on Negative Pledges,
etc............................................... 71
</TABLE>
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Contents, p. 5
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ARTICLE IX
Events of Default
-----------------
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SECTION 9.01. Events of Default..................................... 71
SECTION 9.02. Nonpayment of Obligations............................. 71
SECTION 9.03. Nonperformance of Certain
Covenants......................................... 72
SECTION 9.04. Nonperformance of Other
Obligations....................................... 72
SECTION 9.05. Bankruptcy, Insolvency, etc........................... 73
SECTION 9.06. Breach of Warranty.................................... 73
SECTION 9.07. Default on Other
Indebtedness...................................... 73
SECTION 9.08. Invalidity of HSI Guaranty............................ 74
SECTION 9.09. Pension Plans......................................... 74
SECTION 9.10. Judgments............................................. 74
SECTION 9.11. Change in Control..................................... 75
SECTION 9.12. Action if Bankruptcy.................................. 75
SECTION 9.13. Action if Other Event
of Default........................................ 75
ARTICLE X
The Agents
----------
SECTION 10.01. Appointment and Authorization;
"Agent"........................................... 75
SECTION 10.02. Delegation of Duties.................................. 76
SECTION 10.03. Liability of Agents................................... 77
SECTION 10.04. Reliance by Agents.................................... 78
SECTION 10.05. Notice of Default..................................... 78
SECTION 10.06. Credit Decision....................................... 78
SECTION 10.07. Indemnification of Agent.............................. 79
SECTION 10.08. Agent in Individual Capacity.......................... 79
SECTION 10.09. Successor Agent....................................... 80
SECTION 10.10. Managing Agents....................................... 80
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Waivers, Amendments, etc.............................. 81
SECTION 11.02. Notices............................................... 82
SECTION 11.03. Fees and Expenses..................................... 83
SECTION 11.04. Indemnification....................................... 85
SECTION 11.05. Survival.............................................. 87
SECTION 11.06. Severability.......................................... 87
</TABLE>
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Contents, p.6
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SECTION 11.07. Headings............................................. 87
SECTION 11.08. Counterparts......................................... 88
SECTION 11.09. GOVERNING LAW; ENTIRE
AGREEMENT........................................ 88
SECTION 11.10. Successors and Assigns............................... 88
SECTION 11.11. Assignments and
Participations................................... 88
SECTION 11.12. Revco Assistance..................................... 91
SECTION 11.13. Other Transactions................................... 92
SECTION 11.14. WAIVER OF JURY TRIAL, ETC............................ 92
SECTION 11.15. SUBMISSION TO JURISDICTION........................... 92
SECTION 11.16. Marshalling; Recapture............................... 93
SECTION 11.17. Confidentiality...................................... 93
</TABLE>
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<TABLE>
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Contents, p.7
INDEX OF SCHEDULES AND EXHIBITS
<S> <C>
SCHEDULE I Definitions
SCHEDULE II Disclosure Schedule
SCHEDULE III Assignments of Existing Credit Agreement
SCHEDULE IV Existing Letters of Credit
SCHEDULE V Pricing Matrix
SCHEDULE VI Revolving Credit Commitments and Revolving
Percentages
EXHIBIT A-1 Form of Revolving Note
EXHIBIT A-2 Form of Swing Note
EXHIBIT A-3 Form of Bid Note
EXHIBIT B-1 Form of Competitive Bid Request
EXHIBIT B-2 Form of Invitation for Competitive Bids
EXHIBIT B-3 Form of Form of Competitive Bid
EXHIBIT C-1 Form of Revolving Loan Request
EXHIBIT C-2 Form of Swing Loan Request
EXHIBIT C-3 Form of LC Issuance Request
EXHIBIT D Form of Continuation/Conversion Notice
EXHIBIT E Form of Compliance Certificate
EXHIBIT F-1 Form of Opinion of Jack A. Staph, Esq.
EXHIBIT F-2 Form of Opinion of Mayer, Brown & Platt
EXHIBIT G Form of Assignment and Acceptance Agreement
EXHIBIT H Form of HSI Guaranty
</TABLE>
<PAGE> 9
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT
dated as of July 27, 1995, among REVCO D.S., INC., a
Delaware corporation ("Revco"), various financial
institutions which are, or may become, parties hereto
(the "Revolving Lenders"), BANQUE PARIBAS, a French
banking corporation ("Paribas"), BANK OF AMERICA
ILLINOIS, an Illinois banking corporation, formerly
known as Continental Bank, ("BAI", and, with Paribas,
the "Managing Agents") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION ("BofA"), as
administrative agent (in such capacity, the
"Administrative Agent") and as bid loan agent (in
such capacity, the "Bid Loan Agent") for the
Revolving Lenders.
W I T N E S S E T H:
WHEREAS Revco, certain financial institutions (the "Original
Revco Lenders"), BAI as Administrative Agent and the Managing Agents entered
into that certain Credit Agreement dated as of July 15, 1994, as amended or
modified and in effect immediately prior to the Amendment Effective Date (the
"Existing Credit Agreement") whereunder the Original Revco Lenders agreed to
make term loans in a maximum aggregate outstanding principal amount not to
exceed $203,000,000, to make revolving loans and to issue letters of credit in
the maximum amount of $400,000,000 and to make swing loans in the maximum
aggregate outstanding principal amount not to exceed $30,000,000 (such term
loans, revolving loans, letters of credit and swing loans outstanding on the
Amendment Effective Date, collectively the "Existing Revco Credit Extensions");
WHEREAS Hook-SupeRx, Inc., a Delaware corporation and wholly
owned subsidiary of Revco ("HSI"), certain financial institutions (the "HSI
Lenders"), BAI as Administrative Agent and the Managing Agents entered into that
certain Fourth Amended and Restated Credit Agreement dated as of July 15, 1994,
as amended or modified and in effect immediately prior to the Amendment
Effective Date (the "HSI Credit Agreement") whereunder the HSI Lenders agreed to
make term loans in the original maximum
<PAGE> 10
2
outstanding principal amount of $202,000,000 (such term loans outstanding on the
Amendment Effective Date, collectively the "HSI Credit Extensions");
WHEREAS Revco desires to obtain commitments from the Revolving
Lenders for reducing revolving Credit Extensions to Revco in an aggregate
principal amount outstanding at any time not to exceed $650,000,000 pursuant to
which the Revolving Lenders will refinance the Existing Revco Credit Extensions
and the HSI Credit Extensions;
WHEREAS Revco has requested the Revolving Lenders to amend and
restate the Existing Credit Agreement on the terms and conditions set forth in
this Agreement, to among other things, set forth the terms and conditions under
which the Revolving Lenders hereafter will make Credit Extensions to Revco; it
being the intention of Revco, the Revolving Lenders and the Administrative Agent
that this Agreement and the Credit Documents executed in connection herewith
shall not effect the novation of the obligations of Revco under the Existing
Credit Agreement but be merely a restatement and, where applicable, an amendment
of the terms governing such obligations hereafter; and
WHEREAS, immediately prior to the Amendment Effective Date
certain letters of credit issued pursuant to the Existing Credit Agreement will
be outstanding, which letters of credit shall be deemed to be Letters of Credit
issued and outstanding under this Agreement for all purposes hereof and of the
other Credit Documents after giving effect to the Amendment Effective Date.
NOW, THEREFORE, the parties hereto, intending legally to be
bound hereby, agree as follows:
ARTICLE I
Definitions and Interpretation
------------------------------
SECTION 1.01. DEFINED TERMS. Capitalized terms (whether or not
underscored) used in this Agreement, including its preamble and recitals, and
the other Credit Documents shall (unless a clear contrary intention appears)
have the respective meanings assigned thereto in Schedule I.
<PAGE> 11
3
SECTION 1.02. USE OF DEFINED TERMS. Unless otherwise defined
or the context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and each
Credit Request, Continuation/Conversion Notice, Compliance Certificate,
Assignment and the other Credit Documents and each notice and other
communication delivered from time to time in connection with this Agreement or
any other Credit Document.
SECTION 1.03. INTERPRETATION. In this Agreement and each
other Credit Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number
and vice versa;
(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(c) reference to any gender includes each other
gender;
(d) reference to any agreement (including this Agreement and
the Schedules and Exhibits hereto), document or instrument means such
agreement, document or instrument as amended or modified and in effect
from time to time in accordance with the terms thereof and, if
applicable, the terms hereof and reference to any promissory note
includes any promissory note which is an extension or renewal thereof
or a substitute or replacement therefor;
(e) reference to any Applicable Law means such Applicable Law
as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations
promulgated thereunder;
(f) reference to any Article, Section, Schedule or Exhibit
means such Article or Section of this Agreement or such other Credit
Document or such Schedule or Exhibit to this Agreement or such other
Credit
<PAGE> 12
4
Document, as the case may be, and references in any Article, Section or
definition to any clause means such clause of such Article, Section or
definition;
(g) "hereunder", "hereof", "hereto", and words of similar
import shall be deemed references to this Agreement or such other
Credit Document, as the case may be, as a whole and not to any
particular Article, Section or other provision hereof or thereof;
(h) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term; and
(i) relative to the determination of any period of time,
"from" means "from and including", "to", means "to but excluding" and
"through" means "through and including".
SECTION 1.04. ACCOUNTING MATTERS. For purposes of this
Agreement and each other Credit Document, all accounting terms used herein or
therein shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 8.2.4) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared, in accordance with those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements of Revco
referred to in Section 7.5(a).
SECTION 1.05. CONFLICT IN CREDIT DOCUMENTS. If there is any
conflict between this Agreement and any other Credit Document, this Agreement
and such other Credit Document shall be interpreted and construed, if possible,
so as to avoid or minimize such conflict but, to the extent (and only to the
extent) of such conflict, this Agreement shall prevail and control.
SECTION 1.06. LEGAL REPRESENTATION OF PARTIES. This Agreement
and the other Credit Documents were negotiated by the parties with the benefit
of legal representation and any rule of construction or interpretation otherwise
requiring this Agreement or any other Credit Document to be construed or
interpreted against any party shall not apply to any construction or
interpretation hereof or thereof.
<PAGE> 13
5
SECTION 1.07. ASSIGNMENTS FROM THE EXISTING CREDIT AGREEMENT.
By their execution of Schedule III each of the Original Revco Lenders listed on
Schedule III that are not Revolving Lenders hereunder agree, and by their
execution of this Agreement each of the Revolving Lenders agree, that:
(a) effective as of the Amendment Effective Date, (i) each of
the Original Revco Lenders listed on Schedule III (each, an "Assignor
Lender") will sell and assign an interest in and to all of such
Assignor Lender's respective rights and obligations under the Revolving
Credit Commitment, if any, listed with respect to such Assignor Lender
on Schedule III together with all Revolving Loans, Reimbursement
Obligations and obligations to participate and participations in
Letters of Credit and Swing Loans, if any, and all Term Loans (as such
term is defined in the Existing Credit Agreement) of such Assignor
Lender existing as of the Amendment Effective Date (such Revolving
Credit Commitment, Revolving Loans, Reimbursement Obligations,
Obligations to participate and participations in Letters of Credit and
Swing Loans, and Term Loans of any Assignor Lender being the "Assigned
Interests"), and (ii) each Revolving Lender party to this Agreement
after giving effect to and on the Amendment Effective Date (each, an
"Assignee Lender") will purchase and assume the Assigned Interest set
forth opposite its name on Schedule III (each such assignment being
made to each Assignee Lender in an amount equal to each Assignor
Lender's pro rata share of each of the respective Assigned interests
purchased and assumed by such Assignee Lender);
(b) as of the Amendment Effective Date, prior to giving effect
to any assignment under this Section 1.07 as of such date, each
Assignor Lender represents and warrants, as to the assignment effected
by such Assignor Lender, that as of the Amendment Effective Date: (i)
its Revolving Credit Commitment, if any, is in the dollar amount
specified as its Revolving Credit Commitment on Schedule III hereto,
and the outstanding principal amount of its Term Loans is as specified
on Schedule III hereto and no Revolving Loans (other than Revolving
Loans to be paid on the Amendment Effective Date) or Term Loans (other
than Term Loans to be paid on the Amendment Effective Date) or
Reimbursement
<PAGE> 14
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Obligations are owing to such Assignor Lender; (ii) such Assignor
Lender is the legal and beneficial owner of the Assigned Interests
being assigned by it hereunder and such Assigned Interests are free and
clear of any adverse claim or encumbrance created by such Assignor
Lender;
(c) each Assignor Lender and Assignee Lender confirms and
agrees with each other and each other Revolving Lender as to the
assignment effected by such Assignor Lender and Assignee Lender, as the
case may be, as follows: (i) each such Assignor Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with the Existing Credit Agreement or this Agreement or with
respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Existing Credit Agreement, any
"Credit Document" (as defined in the Existing Credit Agreement), this
Agreement or any Credit Document; (ii) each such Assignor Lender makes
no representation or warranty and assumes no responsibility with
respect to the financial condition of Revco or any of its Subsidiaries
or the performance or observance by Revco or any of its Subsidiaries of
any of their respective obligations under the Existing Credit
Agreement, any "Credit Document" (as defined in the Existing Credit
Agreement) this Agreement or any Credit Document; (iii) each Assignee
Lender confirms that it has received such documents and information as
it has deemed appropriate to make its own credit analysis and decision
to execute and deliver this Agreement and agrees that, except as
provided in clause (b) above, it shall have no recourse against any
Agent, the Collateral Agent, any Assignor Lender or any other Revolving
Lender with respect to any matters relating to the Credit Agreement or
this Agreement; and (iv) each such Assignee Lender will, independently
and without reliance upon any Agent, the Collateral Agent, any Assignor
Lender or any other Revolving Lender based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement and the other Credit Documents;
<PAGE> 15
7
(d) as of the Amendment Effective Date, (i) each Assignee
Lender shall be a party to this Agreement and, to the extent provided
in this Agreement, have the rights and obligations of a Revolving
Lender hereunder and (ii) each Assignor Lender shall, to the extent
provided herein, relinquish its rights and be released from its
obligations under this Agreement as to any assignment effective
pursuant to this Section 1.07;
(e) from and after the Amendment Effective Date, the
Administrative Agent shall make all payments under this Agreement in
respect of the Assigned Interest assigned hereby (including, all
payments of principal, interest and fees with respect thereto) to the
Assignee Lenders as Revolving Lenders hereunder.
SECTION 1.08. ASSIGNMENT OF AGENCY. (a) On the Amendment
Effective Date, BAI hereby assigns all of its rights, responsibilities and
obligations as Administrative Agent under the Existing Credit Agreement, and any
documents executed in connection therewith, to BofA, as successor Administrative
Agent. On the Amendment Effective Date, BofA hereby assumes all of the rights,
responsibilities and obligations of the Administrative Agent under and pursuant
to the terms of this Agreement and any similar provision in any Credit Document
executed in connection herewith.
(b) On the Amendment Effective Date, BAI hereby assigns all of
its rights, responsibilities and obligations as Bid Loan Trustee under the
Existing Credit Agreement and any documents executed in connection therewith, to
BofA, as Administrative Agent. On the Amendment Effective Date, BofA hereby
assumes all the rights, responsibilities and obligations of the Bid Loan Trustee
under and pursuant to the terms of this Agreement and any similar provision in
any Credit Document executed in connection herewith.
ARTICLE II
Commitments
-----------
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions
of this Agreement (including Article VI), each Revolving Lender severally and
for itself alone agrees to provide the commitments described in this Section
2.01.
<PAGE> 16
8
SECTION 2.02. REVOLVING CREDIT COMMITMENTS. Each Revolving
Lender will, from time to time on any Business Day on or after the Amendment
Effective Date and before the Revolving Credit Commitment Termination Date:
(a) make Loans (relative to such Revolving Lender, its
"Revolving Loans") to Revco equal to its Revolving Percentage of the
aggregate principal amount of any Borrowing of Revolving Loans
requested from all Revolving Lenders on such Business Day; and
(b) issue for the account of Revco (in the case of the
applicable LC Issuer), or participate in (in the case of all other
Revolving Lenders), Letters of Credit, in accordance with Article V.
The commitment of each Revolving Lender described in this Section 2.02. is set
forth on Schedule VI and is herein referred to as its "Revolving Credit
Commitment".
SECTION 2.03. REVOLVING LENDERS NOT REQUIRED TO
EXTEND CREDIT. No Revolving Lender shall be required to:
(a) make any Revolving Loan or issue or participate in any
Letter of Credit under the Revolving Credit Commitments if, after
giving effect thereto, the then aggregate outstanding principal amount
of all Revolving Loans, Bid Loans and Swing Loans plus the then
aggregate amount of all Letter of Credit Outstandings relative to
(i) all Revolving Lenders would exceed $650,000,000
(as such amount may be reduced from time to time pursuant to
Section 2.04, the "Total Revolving Credit Commitment Amount"),
or
(ii) such Revolving Lender would exceed its Revolving
Percentage (after giving effect to all Revolving Loans, Bid
Loans and Swing Loans and Letter of Credit Outstandings
(whether or not funded by any particular Revolving Lender) as
if each Revolving Lender had funded its respective Revolving
Loans, Bid Loans and Swing Loans and Letter of Credit
Outstandings in accordance with the terms of this Agreement)
of the aggregate principal amount of all Revolving Loans
<PAGE> 17
9
outstanding from and Letter of Credit Outstandings
of all Revolving Lenders; or
(b) issue or participate in any Letter of Credit if, after
giving effect thereto, the aggregate Letter of Credit Outstandings
would exceed $100,000,000.
Subject to the terms hereof, Revco may from time to time borrow, prepay and
reborrow Revolving Loans; and Revco may request the issuance of Letters of
Credit, allow Letters of Credit to expire undrawn or, if drawn upon, repay
Reimbursement Obligations relative thereto and request the issuance of new
Letters of Credit, in all cases pursuant to the Revolving Credit Commitments.
SECTION 2.04. REDUCTION OF TOTAL REVOLVING CREDIT COMMITMENT
AMOUNT. The Total Revolving Credit Commitment Amount is subject to reduction
from time to time pursuant to this Section 2.04.
SECTION 2.05. OPTIONAL REDUCTIONS. Revco may, from time to
time on any Business Day, voluntarily reduce the amount of the Total Revolving
Credit Commitment Amount; PROVIDED that all such reductions shall require at
least two Business Days' prior written notice to the Administrative Agent and be
permanent, and any partial reduction of the Total Revolving Credit Commitment
Amount shall be in a minimum amount of $5,000,000 and in an integral multiple of
$1,000,000.
SECTION 2.06. MANDATORY REVOLVING CREDIT COMMITMENT
REDUCTIONS. The Total Revolving Credit Commitment Amount shall (to the extent
not already reduced pursuant to Section 2.05.), without further action,
automatically and permanently be reduced on the third anniversary of the
Amendment Effective Date to $600,000,000 and on the fourth anniversary of the
Amendment Effective Date to $525,000,000; PROVIDED, HOWEVER, that on the
Revolving Credit Commitment Termination Date, the Total Revolving Credit
Commitment Amount shall be automatically and permanently reduced to $0.
SECTION 2.07. FEES. Revco agrees to pay the fees set forth in
this Section 2.03.
SECTION 2.08. REVOLVING NONUSE FEE. Revco agrees to pay to the
Administrative Agent for the account of the
<PAGE> 18
10
Revolving Lenders (ratably according to their respective Revolving Percentages)
the applicable Nonuse Fee per annum on the daily average Unused Total Revolving
Credit Commitment Amount for the period from the Amendment Effective Date to the
Revolving Credit Commitment Termination Date, payable in arrears on each
Quarterly Payment Date and the Revolving Credit Commitment Termination Date for
the period then ended for which such fee has not theretofore been paid.
SECTION 2.09. LETTER OF CREDIT FEES. Revco agrees to pay the
following letter of credit fees:
(a) with respect to Commercial Letters of Credit
(i) to the Administrative Agent for the account of
the Revolving Lenders (ratably according to their respective
Revolving Percentages) the Commercial LC Fee per annum on the
daily average Letter of Credit Outstandings with respect
thereto, and
(ii) to the Administrative Agent for the
account of the applicable LC Issuer, the Fronting Fee with
respect thereto,
payable in arrears on a calendar quarter basis within five Business Days after
Revco receives from the Administrative Agent an invoice for or notice of the
fees which have accrued during the calendar quarter then ended and on the
Revolving Credit Commitment Termination Date for each period then ended for
which such fees have not theretofore been paid;
(b) with respect to Standby Letters of Credit
(other than Financial Letters of Credit)
(i) to the Administrative Agent for the account of
the Revolving Lenders (ratably according to their respective
Revolving Percentages) the Non financial Standby LC Fee per
annum on the daily average Letter of Credit Outstandings with
respect thereto, and
(ii) to the Administrative Agent for the
account of the applicable LC Issuer, the Fronting Fee with
respect thereto,
<PAGE> 19
11
payable in arrears on a calendar-quarter basis within five Business Days after
Revco receives from the Administrative Agent an invoice for or notice of the
fees which have accrued during the calendar quarter then ended and on the
Revolving Credit Commitment Termination Date for each period then ended for
which such fees have not theretofore been paid;
(c) with respect to Financial Letters of Credit
(i) to the Administrative Agent for the account of
the Revolving Lenders (ratably according to their respective
Revolving Percentages) the Financial Standby LC Fee per annum
on the daily average Letter of Credit Outstandings with
respect thereto, and
(ii) to the Administrative Agent for the
account of the applicable LC Issuer, the Fronting
Fee with respect thereto,
payable in arrears on a calendar quarter basis within five Business Days after
Revco receives from the Administrative Agent an invoice for or notice of the
fees which have accrued during the calendar quarter then ended and on the
Revolving Credit Commitment Termination Date for each period then ended for
which such fees have not theretofore been paid; and
(d) to the Administrative Agent for the account of the
applicable LC Issuer, upon demand from time to time, all customary fees
and administrative expenses of such LC Issuer as set forth in such LC
Issuer's published schedule of such fees and expenses then in effect
which are charged or incurred from time to time in connection with the
issuance, maintenance, modification (if any), negotiation and
administration of each Letter of Credit.
SECTION 2.10. ADMINISTRATIVE AGENT FEE. Revco agrees to pay to
the Administrative Agent, for its sole account, the fees required by the Fee
Letter.
SECTION 2.11. AMENDMENT FEE. On the Amendment Effective Date,
Revco agrees to pay the Administrative Agent for the account of the Revolving
Lenders (ratably according to their respective Revolving Percentages), an
amendment fee
<PAGE> 20
12
equal to .05% of the Total Revolving Credit Commitment Amount.
SECTION 2.12. INCREASED COSTS. If any Regulatory Change
imposes, modifies or deems applicable any capital adequacy, capital maintenance
or similar requirement (including a request or requirement which affects the
manner in which any Revolving Lender (or the Person controlling such Revolving
Lender) allocates capital resources to its commitments, including its Revolving
Credit Commitments hereunder) and as a result thereof, in the reasonable opinion
of such Revolving Lender, the rate of return on such Revolving Lender's (or the
Person controlling such Revolving Lender's) capital as a consequence of its
Revolving Credit Commitments or Loans, or the issuance of or participation in
any Letter of Credit hereunder, is reduced to a level below that which such
Revolving Lender (or the Person controlling such Revolving Lender) could have
achieved but for such circumstances, then and in each such case upon notice from
time to time by such Revolving Lender to Revco (with a copy to the
Administrative Agent and the Managing Agents), Revco shall pay to such Revolving
Lender such additional amount or amounts as shall compensate such Revolving
Lender (or the Person controlling such Revolving Lender) for such reduction in
its rate of return. Such notice shall contain a statement of such Revolving
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) which shall, in the absence of manifest error, be
conclusive evidence of the matters stated therein and be binding upon Revco.
SECTION 2.13. SWING LINE. (a) Upon Revco's request, and
subject to the terms and conditions of this Agreement, the Managing Agents (in
such capacity, each a "Swing Line Lender") may, in their sole discretion, on and
after the Amendment Effective Date and prior to the Revolving Credit Commitment
Termination Date, provide to Revco a swing line credit facility (the "Swing
Line") of up to $30,000,000; PROVIDED that no Managing Agent shall in any event
be permitted to make any Loan (each a "Swing Loan") under the Swing Line if,
after giving effect thereto, (i) the sum of the then aggregate outstanding
principal amount of all Revolving Loans, Bid Loans and Swing Loans plus the then
aggregate amount of all Letter of Credit Outstandings would exceed the Total
Revolving Credit Commitment Amount, (ii) the outstanding principal balance of
the Swing Loans made by such Managing Agent would exceed
<PAGE> 21
13
$15,000,000, or (iii) the then aggregate outstanding principal amount of all
Swing Loans made by the Managing Agents would exceed $30,000,000. No Managing
Agent shall at any time be obligated to make any Swing Loan.
(b) Each request for Swing Loans shall be made from time to
time by Revco delivering a Swing Loan Request therefor to the Administrative
Agent at or before 10:00 a.m., San Francisco time, on any Business Day. Each
Managing Agent making the requested Swing Loan shall deposit with the
Administrative Agent same day funds, at or before 12:00 noon, San Francisco
time, in an amount equal to such Managing Agent's Swing Loan. On the terms and
subject to the conditions of this Agreement, after timely receipt of such funds,
each Swing Loan shall be disbursed on the Business Day on which the request
therefor was timely made, in same day funds by wire transfer to such
transferee(s), or to such account(s) of Revco, as Revco shall have specified in
the request therefor. Swing Loans shall be in an aggregate minimum principal
amount of $1,000,000 and an integral multiple of $100,000.
(c) Each Swing Loan outstanding under the Swing Line shall
accrue interest at a rate per annum quoted to the Administrative Agent by the
Managing Agent making such Swing Loan from time to time which interest shall be
payable quarterly in arrears on each Quarterly Payment Date and upon demand
therefor, if made earlier, and shall be payable to the Administrative Agent for
the sole and ratable account of the applicable Managing Agent; PROVIDED that,
notwithstanding any other provision of this Agreement, each Swing Loan shall
bear interest for a minimum of one day.
(d) The principal and interest outstanding under the Swing
Line shall be due and payable:
(i) on demand made at any time upon one Business Day's prior
notice to Revco furnished at or before 9:00 a.m., San Francisco time;
and
(ii) in any event on the Revolving Credit Commitment
Termination Date;
PROVIDED that, if no Event of Default shall have occurred and be continuing at
the time of such demand, then unless Revco notifies the Administrative Agent
that it will repay such Swing Loans, Revco shall, immediately after Revco
<PAGE> 22
14
learns of such demand, if and to the extent that Revco is permitted to borrow
Revolving Loans under the terms of this Agreement at the time of such demand, be
deemed to have submitted a Revolving Loan Request for Revolving Loans at the
Base Rate in an amount necessary to repay the amount demanded, and the
provisions of Section 3.02 concerning the minimum principal amounts and integral
multiples thereof required for Borrowings of Revolving Loans shall not apply to
Revolving Loans made pursuant to this Section 2.13(d).
(e) Revco may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Swing Loans, without incurring any premium or penalty; PROVIDED that
(i) each such voluntary prepayment shall require prior written
notice given to the Administrative Agent no later than 10:00 a.m., San
Francisco time, on the day on which Revco intends to make a voluntary
prepayment, and
(ii) each such voluntary prepayment shall be in a minimum amount
of $1,000,000 and in an integral multiple of $100,000 (or, if less, the
aggregate outstanding principal amount of all Swing Loans then
outstanding).
(f) Each Revolving Lender shall be deemed to have
unconditionally and irrevocably purchased a pro rata risk participation from
each Managing Agent in such Managing Agent's Swing Loans, without recourse or
warranty (except that its outstanding Swing Loans in fact were made by such
Managing Agent, have not been repaid, and have not been sold or assigned by such
Managing Agent) in an amount equal to such Revolving Lender's Revolving
Percentage of such Swing Loans. In addition, from and after the date that any
Revolving Lender funds such participation, such Revolving Lender shall, to the
extent of its Revolving Percentage, be entitled to receive a ratable portion of
any payment of principal and interest received by the Managing Agents on account
of such Swing Loans, payable promptly to such Revolving Lender upon such
receipt.
(g) The Managing Agents may at any time, without the consent
of Revco, upon one Business Day's notice to Revco terminate the Swing Line and
cause Revolving Loans to be made by the Revolving Lenders in an aggregate amount
<PAGE> 23
15
equal to the amount of principal and interest outstanding under the Swing Line,
and the conditions precedent set forth in Article VI and Section 3.02. shall not
apply to such Revolving Loans. The proceeds of such Revolving Loans shall be
paid to the Managing Agents to retire the outstanding principal and interest
under the Swing Line.
(h) The Managing Agents shall not, without the approval of all
Revolving Lenders, make a Swing Loan if the Managing Agents then have actual
knowledge that a Default has occurred and is continuing.
SECTION 2.14. BID BORROWINGS. In addition to Borrowings
pursuant to Sections 2.01 and 2.13, each Revolving Lender severally agrees that
Revco may, as set forth in Section 2.15, from time to time request the Revolving
Lenders prior to the Revolving Credit Commitment Termination Date to submit
offers to make Bid Loans to Revco; PROVIDED, HOWEVER, that the Revolving Lenders
may, but shall have no obligation to, submit such offers and Revco may, but
shall have no obligation to, accept any such offers, and, if such offers are
accepted by Revco, to make such Bid Loans; and PROVIDED FURTHER, that at no time
shall the outstanding aggregate principal amount of all Bid Loans made by all
Revolving Lenders, plus the outstanding aggregate principal amount of all
Revolving Loans and Swing Loans plus the then aggregate amount of Letter of
Credit Outstandings exceed the Total Revolving Credit Commitment Amount. No Bid
Loan shall reduce or affect the Revolving Credit Commitment or the Revolving
Percentage of the Revolving Lender that made such Bid Loan. The principal and
interest payable under a Bid Loan shall be due and payable on the last day of
the applicable Interest Period.
SECTION 2.15. PROCEDURE FOR BID BORROWINGS. (a) When Revco
wishes to request the Revolving Lenders to submit offers to make Bid Loans
hereunder, it shall transmit to the Bid Loan Agent by telephone call followed
promptly by facsimile transmission a Competitive Bid Request so as to be
received no later than (x) 10:00 a.m., San Francisco time, four Business Days
prior to the date of a proposed Bid Borrowing in the case of a LIBOR Auction, or
(y) 10:00 a.m.,
<PAGE> 24
16
San Francisco time, one Business Day prior to the date of a proposed Bid
Borrowing in the case of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which shall be
a Business Day;
(ii) the aggregate amount of such Bid Borrowing, which shall be
a minimum amount of $5,000,000 or in integral multiples of $1,000,000
in excess thereof;
(iii) whether the Competitive Bids requested are to
be for LIBOR Bid Loans or Absolute Rate Bid Loans or
both; and
(iv) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of "Interest Period"
herein.
Subject to Section 2.15(c), Revco may not request Competitive Bids for more than
three Interest Periods in a single Competitive Bid Request.
(b) Upon receipt of a Competitive Bid Request, the Bid Loan
Agent will promptly send to the Revolving Lenders by facsimile transmission an
Invitation for Competitive Bids, which shall constitute an invitation by Revco
to each Revolving Lender to submit Competitive Bids offering to make the Bid
Loans to which such Competitive Bid Request relates in accordance with this
Section 2.15.
(c) (i) Each Revolving Lender may at its discretion submit a
Competitive Bid containing an offer or offers to make Bid Loans in response to
any Invitation for Competitive Bids. Each Competitive Bid must comply with the
requirements of this Section 2.15(c) and must be submitted to the Bid Loan Agent
by facsimile transmission at the Bid Loan Agent's office for notices set forth
on the signature pages hereto not later than (A) 6:30 a.m., San Francisco time,
three Business Days prior to the proposed date of Borrowing, in the case of a
LIBOR Auction or (B) 6:30 a.m., San Francisco time, on the proposed date of
Borrowing, in the case of an Absolute Rate Auction; PROVIDED that Competitive
Bids submitted by BAI (or any Affiliate of BAI) in the capacity of a Revolving
Lender may be submitted, and may only be submitted, if the BAI or such Affiliate
notifies the Bid Agent of the terms of the offer or offers contained
<PAGE> 25
17
therein not later than (A) 6:15 a.m., San Francisco time, three Business Days
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (B)
6:15 a.m., San Francisco time, on the proposed date of Borrowing, in the case of
an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially the form
of Exhibit B-3, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for which
such Competitive Bid is being made, which principal amount (x)
may be equal to, greater than or less than the Revolving
Credit Commitment of the quoting Revolving Lender, (y) must be
$1,000,000 or in multiples thereof, and (z) may not exceed the
principal amount of Bid Loans for which Competitive Bids were
requested but may exceed such Revolving Lender's Revolving
Percentage of the Total Revolving Credit Commitment Amount;
(C) in case Revco elects a LIBOR Auction, the margin
above or below LIBOR (the "LIBOR Bid Margin") offered for each
such Bid Loan, expressed in multiples of 1/1000th of one basis
point to be added to or subtracted from the applicable LIBOR
and the Interest Period applicable thereto;
(D) in case Revco elects an Absolute Rate Auction,
the rate of interest per annum expressed in multiples of
1/1000th of one basis point (the "Absolute Rate") offered for
each such Bid Loan and the Interest Period applicable thereto;
and
(E) the identity of the quoting Revolving Lender.
A Competitive Bid may contain up to three separate offers by the
quoting Revolving Lender with respect to each Interest Period specified
in the related Invitation for Competitive Bids.
<PAGE> 26
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(iii) Any Competitive Bid shall be disregarded
if it:
(A) is not substantially in conformity with
Exhibit B-3 or does not specify all of the
information required by Section 2.15(c)(ii);
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in addition
to those set forth in the applicable Invitation
for Competitive Bids; or
(D) arrives after the time set forth in Section
2.15(c)(i).
(d) Promptly on receipt and not later than 7:15 a.m., San
Francisco time, three Business Days prior to the proposed date of Borrowing in
the case of a LIBOR Auction, or 7:15 a.m., San Francisco time, on the proposed
date of Bid Borrowing, in the case of an Absolute Rate Auction, the Bid Loan
Agent will notify Revco of the terms (i) of any Competitive Bid submitted by a
Revolving Lender that is in accordance with Section 2.15(c), and (ii) of any
Competitive Bid that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid submitted by such Revolving Lender with respect to the
same Competitive Bid Request. Any such subsequent Competitive Bid shall be
disregarded by the Bid Loan Agent unless such subsequent Competitive Bid is
submitted solely to correct a manifest error in such former Competitive Bid and
only if received within the times set forth in Section 2.15(c). The Bid Loan
Agent's notice to Revco shall specify (A) the aggregate principal amount of Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Request, (B) the respective principal amounts and
LIBOR Bid Margins or Absolute Rates, as the case may be, so offered and (C) the
identity of the Revolving Lenders offering such Bids Loans. Subject only to the
provisions of Sections 4.04, 4.05 and 6.02 hereof and the provisions of this
subsection (d), any Competitive Bid shall be irrevocable except with the written
consent of the Bid Loan Agent given on the written instructions of Revco.
(e) Not later than 7:45 a.m., San Francisco time, three
Business Days prior to the proposed date of Borrowing,
<PAGE> 27
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in the case of a LIBOR Auction, or 7:45 a.m., San Francisco time, on the
proposed date of Borrowing, in the case of an Absolute Rate Auction, Revco shall
notify the Bid Loan Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to Section 2.157(d). Revco shall be under no obligation
to accept any offer and may choose to reject all offers. In the case of
acceptance, such notice shall specify the aggregate principal amount of offers
for each Interest Period that is accepted. Revco may accept any Competitive Bid
in whole or in part; PROVIDED that:
(i) the aggregate principal amount of each Bid Borrowing may
not exceed the applicable amount set forth in the related Competitive
Bid Request;
(ii) the principal amount of each Bid Borrowing
must be $1,000,000 or in any multiple thereof;
(iii) acceptance of offers may only be made on the basis of
ascending LIBOR Bid Margins or Absolute Rates within each Interest
Period, as the case may be; and
(iv) Revco may not accept any offer that is described in Section
2.15(c)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
(f) If offers are made by two or more Revolving Lenders with
the same LIBOR Bid Margins or Absolute Rates, as the case may be, for a greater
aggregate principal amount than the amount in respect of which such offers are
accepted for the related Interest Period, the principal amount of Bid Loans in
respect of which such offers are accepted shall be allocated by the Bid Loan
Agent among such Revolving Lenders as nearly as possible (in such multiples, not
less than $1,000,000, as the Bid Loan Agent may deem appropriate) in proportion
to the aggregate principal amounts of such offers. Determination by the Bid Loan
Agent of the amounts of Bid Loans shall be conclusive in the absence of manifest
error.
(g) (i) The Bid Loan Agent will promptly notify each Revolving
Lender having submitted a Competitive Bid if its offer has been accepted and, if
its offer has been accepted, of the amount of the Bid Loan or Bid Loans to be
made by it on the date of the Bid Borrowing.
<PAGE> 28
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(ii) Each Revolving Lender, which has received notice pursuant
to Section 2.15(g)(i) that its Competitive Bid has been accepted, shall make the
amounts of such Bid Loans available to the Bid Loan Agent for the account of
Revco at the Bid Loan Agent's Payment Office, by 11:00 a.m., San Francisco time,
in the case of Absolute Rate Bid Loans, and by 11:00 a.m., San Francisco time,
in the case of LIBOR Bid Loans, on such date of Bid Borrowing, in funds
immediately available to the Bid Loan Agent for the account of Revco at the Bid
Loan Agent's Payment Office.
(iii) Promptly following each Bid Borrowing, the Bid Loan Agent
shall notify each Revolving Lender of the ranges of bids submitted and the
highest and lowest Bids accepted for each Interest Period requested by Revco and
the aggregate amount borrowed pursuant to such Bid Borrowing.
(iv) From time to time, Revco and the Revolving Lenders shall
furnish such information to the Bid Loan Agent as the Bid Loan Agent may request
relating to the making of Bid Loans, including the amounts, interest rates,
dates of borrowings and maturities thereof, for purposes of the allocation of
amounts received from Revco for payment of all amounts owing hereunder.
(h) If, on or prior to the proposed date of Bid Borrowing, the
Revolving Credit Commitments have not been terminated and if, on such proposed
date of Borrowing all applicable conditions to funding referenced in Sections
4.04, 4.05 and 6.02 are satisfied, the Revolving Lenders whose offers Revco has
accepted will fund each Bid Loan so accepted.
ARTICLE III
LOANS AND NOTES
---------------
SECTION 3.01. LOAN PROCEDURE. Borrowings of Loans (other than
Bid Loans and Swing Loans) shall be made in accordance with this Section 3.01.
SECTION 3.02. REVOLVING LOAN REQUESTS. By delivering to the
Administrative Agent a duly completed and executed Revolving Loan Request
therefor, in the case of a proposed Borrowing of Eurodollar Rate Loans, at or
before 10:00 a.m., San Francisco time, on a Business Day not less
<PAGE> 29
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than three and not more than five Business Days before the proposed Borrowing
Date therefor provided that in the case of a Borrowing of Eurodollar Loans to be
made on the Amendment Effective Date such notice shall be given three Business
Days prior to the Amendment Effective Date, or in the case of a proposed
Borrowing of Base Rate Loans, at or before 10:00 a.m., San Francisco time, on
three Business Day next preceding the proposed Borrowing Date therefor, Revco
may request that the Revolving Lenders make Revolving Loans to Revco on the
Borrowing Date specified therefor in such request, in each case in a minimum
aggregate principal amount of $5,000,000 and integral multiple of $100,000 (or,
if less, the Unused Total Revolving Credit Commitment Amount) for Base Rate
Loans and a minimum aggregate principal amount of $5,000,000 and integral
multiple of $100,000 for Eurodollar Rate Loans. After giving effect to any
Borrowing, there may not be more than 10 Interest Periods in effect in respect
of all Eurodollar Rate Loans. Revco shall be allowed, for Eurodollar Borrowings
on the Amendment Effective Date only, to select Interest Periods of
approximately one week, two weeks, three weeks and one month.
On the terms and subject to the conditions of this Agreement,
each Loan described above shall be disbursed promptly after the Administrative
Agent's receipt from each Revolving Lender of such Revolving Lender's Revolving
Percentage of the Borrowing then requested by Revco on the applicable Borrowing
Date therefor, in same day funds by wire transfer to such transferee(s), or to
such account(s) of Revco, as Revco shall have specified in the applicable
request therefor; PROVIDED that the Administrative Agent shall disburse such
funds as it has received from the Revolving Lenders to Revco no later than 12:00
noon, San Francisco time.
The Administrative Agent shall promptly notify the Revolving
Lenders of the receipt of each request pursuant to this Section. Each request
for Loans made pursuant to this Section or Section 2.13(b) shall constitute
Revco's representation and warranty made to the Administrative Agent, the
Managing Agents and the Revolving Lenders that all of the applicable conditions
contained in Article VI will, after giving effect to such Borrowing or any Swing
Loans requested pursuant to Section 2.13(b), be satisfied, and the making
available of such Loans to Revco shall be subject to the satisfaction of the
applicable conditions of
<PAGE> 30
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Article VI; PROVIDED that, notwithstanding the foregoing, no Managing Agent
shall at any time be obligated to make any Swing Loan.
SECTION 3.03. FUNDING OF BORROWINGS. Subject to the terms and
conditions of this Agreement, each Borrowing shall be made on the Borrowing Date
specified in the request duly made therefor. On each Borrowing Date, each
Revolving Lender shall deposit with the Administrative Agent same day funds, at
or before 11:00 a.m., San Francisco time, in an amount equal to such Revolving
Lender's Revolving Percentage of the amount of such requested Borrowing, such
deposit to be made to such account as the Administrative Agent shall specify
from time to time by notice to the Revolving Lenders. After timely receipt of
such funds, the Administrative Agent shall promptly on such Borrowing Date make
such funds available to Revco by wire transfer to such transferee(s), or to such
account(s) of Revco, as Revco shall have specified in the request therefor. No
Revolving Lender's obligation to make any Loan shall be affected by any other
Revolving Lender's failure to make any such Loan.
SECTION 3.04. NOTES. All Loans made by the Revolving Lenders
shall be evidenced:
(a) in the case of the Revolving Loans, by a promissory note
(the "Revolving Note") of Revco, dated the Amendment Effective Date and
substantially in the form of Exhibit A-1, payable to the order of the
Administrative Agent for the account of the Revolving Lenders ratably
in accordance with their respective Revolving Percentages and in a
maximum principal amount equal to the initial Total Revolving Credit
Commitment Amount;
(b) in the case of the Swing Loans, by a promissory note (the
"Swing Note") of Revco, dated the Amendment Effective Date and
substantially in the form of Exhibit A-2, payable to the order of the
Administrative Agent for the account of the Managing Agents ratably in
accordance with their respective Swing Loans and in a maximum principal
amount equal to $30,000,000; and
(c) in the case of the Bid Loans, by a promissory note (the
"Bid Note") of Revco, dated the Amendment Effective Date and
substantially in the form of
<PAGE> 31
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Exhibit A-3, payable to the order of the Administrative Agent for the
account of the Revolving Lenders that made such Bid Loans ratably in
accordance with their respective Bid Loans.
Revco hereby irrevocably authorizes the Administrative Agent to make (or cause
to be made) appropriate notations on the schedule attached to each Note of Revco
(or on a continuation of such schedule attached to such Note and made a part
thereof), or in the Administrative Agent's other records, which notations shall
evidence, INTER ALIA, the date of, the outstanding principal amount of, and the
interest rate (including any applicable conversions thereof pursuant to Section
4.02) applicable to, the Loans evidenced thereby. Such notations indicating the
outstanding principal amount of the Loans shall, in the absence of manifest
error, be conclusive evidence of the principal amount thereof owing and unpaid,
but the failure to record or any error in recording any such amount on such
schedule (or on such continuation), or in such other records, shall not limit or
otherwise affect the obligations of Revco hereunder or under such Note to make
payment of principal of or interest on such Loans when due. The Administrative
Agent will hold the original Notes.
Nothing in this Section 3.04 shall be construed or deemed to
limit or otherwise prejudicially affect the rights of any Revolving Lender or
any Managing Agent to repayment of its Loans and other Obligations owing to such
Revolving Lender or Managing Agent or to commence or maintain any action, suit
or other proceeding therefor against Revco or other Obligor without the
necessity of joining the Administrative Agent as party thereto, which rights
Revco hereby acknowledges and agrees to.
SECTION 3.05. PRINCIPAL PAYMENTS. Repayments and prepayments
of principal of the Loans (other than Bid Loans and Swing Loans) shall be made
in accordance with this Section 3.03.
SECTION 3.06. REPAYMENTS AND PREPAYMENTS. Revco will make
payment in full of all unpaid principal of each Loan to Revco on the Stated
Maturity Date therefor. Prior thereto, Revco:
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of
<PAGE> 32
24
the outstanding principal amount of any Loans (other than Bid Loans)
made as part of any particular Borrowing, provided that:
(i) no such prepayment of any such Eurodollar Rate
Loans may be made which, after giving effect thereto, would
result in the aggregate outstanding principal amount thereof
being less than $5,000,000 or other than an integral multiple
of $100,000;
(ii) each such voluntary prepayment shall require (x)
in the case of Base Rate Loans, prior written notice thereof
given to the Administrative Agent no later than 10:00 a.m.,
San Francisco time, on the Business Day next preceding the day
on which Revco intends to make such voluntary prepayment and
(y) in the case of Eurodollar Rate Loans, at least three but
no more than five Business Days' prior written notice thereof
to the Administrative Agent; and
(iii) each such voluntary prepayment of Base Rate Loans
shall be in a minimum amount of $1,000,000 and an integral
multiple of $100,000 (or, if less, the outstanding principal
amount of all Revolving Loans or Swing Loans, as the case may
be, then outstanding and designated in Revco's notice as being
prepaid);
(b) shall make a mandatory prepayment of the Revolving Loans
until paid in full in an amount equal to the amount of Net Cash
Proceeds, if any, which either HSI or Revco would otherwise be required
to use to offer to repurchase HSI Notes or 9-1/8% Notes, as the case
may be; PROVIDED that, to the extent the amount of Net Cash Proceeds
which must be applied as a mandatory repayment exceeds the then
outstanding Revolving Loans, Revco shall make a Borrowing of Revolving
Loans equal to such excess immediately prior to making such mandatory
prepayment;
(c) shall, if the then aggregate outstanding principal amount
of all Revolving Loans, Bid Loans and Swing Loans plus the then
aggregate amount of all Letter of Credit Outstandings shall exceed the
Total Revolving Credit Commitment Amount as reduced at any
<PAGE> 33
25
time pursuant to Section 2.02, immediately repay Revolving Loans in a
principal amount equal to such excess; and
(d) shall, immediately upon any acceleration of the maturity
of any Loans pursuant to Section 9.02 or 9.03, repay such Loans.
Each repayment and prepayment of any Loans made pursuant to this Section shall
be without premium or penalty, except in the case of Eurodollar Rate Loans as
required by Section 4.07. All voluntary prepayments of the Loans shall not
constitute a credit toward other prepayments required under clauses (b) through
(d). Any mandatory prepayments made under any of clauses (b) through (d) shall
not constitute a credit toward prepayments required to be made under any other
of such clauses and shall be applied to such Loans pro rata (according to the
respective amounts thereof). No voluntary prepayment or mandatory prepayment
under Section 3.06.(b) of principal of the Revolving Loans shall cause a
reduction in the Total Revolving Credit Commitment Amount.
SECTION 3.07. LOAN APPLICATION. Any prepayment of the Loans
shall be applied first to the portion of such Loans being maintained as Base
Rate Loans and then to the portion of such Loans being maintained as Eurodollar
Rate Loans (unless Revco shall elect a different application between Base Rate
Loans and Eurodollar Rate Loans in its notice of such prepayment).
SECTION 3.08. INTEREST PAYMENTS. Interest on Loans shall
accrue and be payable in accordance with this Section 3.04.
SECTION 3.09. RATES. From the date any Loan is made to the
date the principal amount of such Loan is repaid in full, interest shall accrue
on the outstanding principal amount of such Loan at a rate per annum:
(a) in the case of the Revolving Loans:
(i) on that portion of the outstanding principal
amount thereof maintained from time to time as a Base Rate
Loan, equal to the Base Rate from time to time in effect; and
<PAGE> 34
26
(ii) on that portion of the outstanding principal
amount thereof maintained from time to time as a Eurodollar
Rate Loan, during each Interest Period applicable thereto,
equal to the sum of the Eurodollar Rate (Adjusted) for such
Interest Period plus the Applicable Interest Margin;
(b) in the case of the Bid Loans:
(i) for Absolute Rate Bid Loans, at the Absolute
Rate, and
(ii) for LIBOR Bid Loans, at LIBOR plus the LIBOR Bid
Margin; and
(c) in the case of Swing Loans, as-provided in
Section 2.05(c).
SECTION 3.10. DEFAULT RATE. Notwithstanding the provisions of
Section 3.09, after the occurrence of any Default described in Section 9.1.1 or
Section 9.1.4 and, at the election of the Required Lenders, after the occurrence
of any other Event of Default, until the time when such Default or Event of
Default shall have been cured or waived or the principal of and interest on all
Loans and all other monetary Obligations arising under this Agreement, the Notes
or any other Credit Document shall have been paid in full, Revco shall pay
interest (after as well as before judgment) on the principal amount of all Loans
and Reimbursement Obligations and, to the fullest extent permitted by Applicable
Law, on such other Obligations, respectively, of Revco at a rate per annum (the
"Default Rate") which is determined:
(a) by increasing the fees set forth in Sections 2.09(a)(i),
2.09(b)(i) and 2.09(c)(i) and, in the case of the principal amount of
the Loans, each of the interest rates set forth in Sections 3.09(a) and
3.09(b), by 2.0% per annum; and
(b) in the case of Reimbursement Obligations and such other
Obligations, at a rate per annum equal to the sum of the Base Rate from
time to time in effect, which shall in any event be not less than the
Base Rate in effect on the date on which such Default or Event of
Default occurred, plus 3.5% per annum.
<PAGE> 35
27
SECTION 3.11. PAYMENT DATES. Interest accrued on
each Loan and each Reimbursement Obligation shall be payable, without
duplication:
(a) on the Stated Maturity Date of such Loan or
Reimbursement Obligation;
(b) with respect to any portion of any Eurodollar
Rate Loan prepaid pursuant to Section 3.06, on the date
of such prepayment;
(c) in the case of any Revolving Loan:
(i) on that portion of the outstanding principal
amount thereof maintained as a Base Rate Loan, on each
Quarterly Payment Date, commencing with the first such
Quarterly Payment Date following the Amendment Effective Date;
and
(ii) on that portion of the outstanding principal
amount thereof maintained as a Eurodollar Rate Loan, on the
last day of each applicable Interest Period and, if such
Interest Period shall exceed 3 months, on the day of the third
month of such Interest Period numerically corresponding to the
first day of such Interest Period (or, if there is no such
numerically corresponding day in such third month, on the last
Business Day of such third month);
(d) in the case of any Bid Loan, at the time(s) specified in
the applicable Bid Offer, or, if no such time is so specified, on the
Stated Maturity Date thereof; and
(e) on that portion of any Loans the maturity of which is
accelerated pursuant to Section 9.2 or Section 9.3, immediately upon
such acceleration.
Interest accrued on the principal amount of each Loan or Reimbursement
Obligation or other monetary Obligation arising under this Agreement or any
other Credit Document after the date such amount is due and payable (whether on
the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon
demand.
<PAGE> 36
28
SECTION 3.12. RATE DETERMINATIONS. (a) All determinations by
the Administrative Agent of any rate of interest applicable to any Loan or other
monetary Obligation shall be conclusive and binding in the absence of manifest
error.
(b) Each Reference Bank agrees to furnish to the
Administrative Agent timely information for the purpose of determining the
Eurodollar Rate (Adjusted). If either of the Reference Banks shall fail to
furnish such information to the Administrative Agent for any such interest rate,
the Administrative Agent shall determine such interest rate on the basis of the
information furnished by the remaining Reference Bank.
SECTION 3.13. TAXES, ETC. (a) All payments by Revco to any
Revolving Lender (or to the Administrative Agent for the account of any such
Revolving Lender) in respect of any Obligation shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding franchise
taxes, taxes imposed on or measured by any Revolving Lender's net income or
receipts and any United States withholding tax that may be imposed on interest
paid to any Initial Lender which is a Non-United States Person as a result of
such interest ceasing to be "effectively connected" with the conduct of a trade
or business of such Initial Lender in the United States within the meaning of
section 881 of the Code (such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to be made by Revco to
any Revolving Lender is required in respect of any Taxes pursuant to any
Applicable Law, rule or regulation, then Revco will
(i) pay to the relevant authorities the full
amount required to be so withheld or deducted;
(ii) pay such additional amounts as may be necessary in order
that the net amount received by such Revolving Lender after such
deduction or withholding (including any required deduction or
withholding on such additional amounts) shall equal the amount such
Revolving Lender would have received had no such deduction or
withholding been made; and
<PAGE> 37
29
(iii) promptly forward to the Administrative Agent (for delivery
to such Revolving Lender) an official receipt or other documentation
satisfactory to the Administrative Agent evidencing such payment to
such authorities.
Moreover, if any Taxes are directly asserted against any such Revolving Lender
with respect to any payment made in respect of any Obligation, such Revolving
Lender may pay such Taxes, and Revco shall, promptly upon receipt of notice from
such Revolving Lender, pay such additional amount (including any penalties,
interest or expenses) as may be necessary in order that the net amount received
by such Revolving Lender after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such Revolving Lender would have
received had no such Taxes been asserted; PROVIDED that Revco shall not be
required to pay any such penalty, interest or expense to the extent that such
Revolving Lender's liability for such item is attributable solely to the actions
of such Revolving Lender. For purposes of this Section 3.13, a distribution
hereunder by the Administrative Agent or any Revolving Lender to or for the
account of any Revolving Lender shall be deemed to be a payment by Revco.
(b) Each Revolving Lender which is a Non-United States Person
agrees (to the extent it is permitted to do so under the laws and any applicable
double taxation treaties of the United States, the jurisdiction of its
incorporation and the jurisdictions in which its Domestic Office and its
Eurodollar Office are located) to execute and deliver to the Administrative
Agent for delivery to Revco, before the first scheduled payment date in each
taxable year of such Revolving Lender, two copies of either (1) a United States
Internal Revenue Service Form 1001, (2) a United States Internal Revenue Service
Form 4224 together with a United States Internal Revenue Service Form W-9, or
(3) a United States Internal Revenue Service Form W-8 together with a
certificate substantially in the form of Exhibit J and containing any additional
certifications as the Administrative Agent may reasonably require to establish
such Revolving Lender's exemption from United States Federal Taxes pursuant to
section 881(c) or 871(h) of the Code (or any successor Forms, as appropriate),
and such other and further Forms which Revco may reasonably request, in each
case properly completed and properly claiming complete or
<PAGE> 38
30
partial, as the case may be, exemption from withholding and deduction of United
States Federal Taxes.
SECTION 3.14. PAYMENTS, COMPUTATIONS, ETC.
SECTION 3.15. ALLOCATION. Except as set forth herein, all
payments by Revco pursuant to this Agreement, the Notes or any other Credit
Document, whether in respect of principal of or interest on Loans or
Reimbursement Obligations, shall be made by Revco to the Administrative Agent
for the account of the applicable Revolving Lenders ratably according to the
respective unpaid principal amounts of the applicable Loans made by them or to
their respective participation interests in such Reimbursement Obligations, as
the case may be. All other amounts payable to the Administrative Agent, any LC
Issuer, any Managing Agent, or any Revolving Lender under this Agreement or any
other Credit Document (except under Sections 2.10, 2.12, 4.6 and 4.7) shall be
paid to the Administrative Agent for the account of the Person entitled thereto.
SECTION 3.16. TIME, PLACE AND MANNER OF PAYMENT. All payments
hereunder or under the Notes or any other Credit Document shall be made, without
setoff or counterclaim, not later than 11:00 a.m., San Francisco time, on the
date due, in same day or immediately available funds, to such account as the
Administrative Agent shall specify from time to time by notice to Revco. As an
administrative convenience to Revco, the Administrative Agent shall debit
Revco's account no. 7701543 maintained with the Administrative Agent on the due
date once the Administrative Agent has determined that there are sufficient
funds in such account. Funds received after that time shall be deemed to have
been received by the Administrative Agent on the next following Business Day.
The Administrative Agent shall promptly remit in same day or immediately
available funds to each Revolving Lender its share, if any, of such payments
received by the Administrative Agent for the account of such Revolving Lender.
SECTION 3.17. COMPUTATION. Interest on Base Rate Loans shall
be computed on the basis of a 365 or, where applicable, 366-day year. All other
interest and fees hereunder or under the Notes or any other Credit Document
shall be computed on the basis of the actual number of days (including the first
day but excluding the last day, other than for fees relating to Letters of
Credit for which the
<PAGE> 39
31
last day shall be included) occurring during the period for which such interest
or fee is payable over a year comprised of 360 days.
SECTION 3.18. BUSINESS DAY ADJUSTMENT. Whenever any payment
shall otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (ii) of the definition of the term
"Interest Period" with respect to payments then due of principal of or interest
on any Loans being maintained as Eurodollar Rate Loans) be made on the
immediately succeeding Business Day.
SECTION 3.19. PRORATION OF PAYMENTS. If any Revolving Lender
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of principal of or interest on
any Loans, Reimbursement Obligations or other Obligations then due in excess of
such Revolving Lender's pro rata share of payments then or concurrently
therewith obtained thereon by all Revolving Lenders and such amount is not
required to be turned over to the Collateral Agent pursuant to Section 3.04 of
the Collateral Agency Agreement, then such Revolving Lender shall purchase from
the other Revolving Lenders such participations in such Loans, Reimbursement
Obligations or other Obligations held by them as shall be necessary to cause
such purchasing Revolving Lender to share the excess payment or other recovery
ratably with each of them; provided that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Revolving
Lender, each Revolving Lender which has sold a participation to the purchasing
Revolving Lender shall repay to the purchasing Revolving Lender the purchase
price to the extent of such recovery together with an amount equal to such
selling Revolving Lender's ratable share (according to the proportion of
(a) the amount of such selling Revolving required repayment
to the purchasing Revolving Lender
to
(b) the total amount so recovered from the
purchasing Revolving Lender)
of any interest or other amount paid or payable by the
purchasing Revolving Lender in respect of the total amount
<PAGE> 40
32
so recovered. Revco agrees that any Revolving Lender so purchasing a
participation from another Revolving Lender pursuant to this Section 3.19 may,
to the fullest extent permitted by Applicable Law, exercise all its rights of
payment (including pursuant to Section 3.20) with respect to such participation
as fully as if such Revolving Lender were the direct creditor of Revco in the
amount of such participation. If under any applicable bankruptcy, insolvency or
other similar law, any Revolving Lender receives a secured claim in lieu of a
setoff to which this Section 3.19 applies, such Revolving Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Revolving Lenders entitled under this
Section 3.19 to share in the benefits of any recovery on such secured claim.
SECTION 3.20. SETOFF. In addition to and not in limitation of
any rights of any Revolving Lender under Applicable Law, each Revolving Lender
shall, upon the occurrence of any Default described in Section 9.1.1 or 9.1.4
or, with the consent of the Required Lenders, upon the occurrence of any other
Event of Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether directly or as a participant) and then due and
unpaid, and, as security for such Obligations, Revco hereby grants to each
Revolving Lender a continuing security interest in and lien upon, any and all
balances, credits, deposits, accounts or moneys of Revco then or thereafter
maintained with such Revolving Lender (or an Affiliate of such Revolving Lender)
or participant (excluding, however, any such account expressly designated as an
escrow or similar account all of the amounts on deposit in which are being held
for the benefit of a Person other than Revco or any of its Subsidiaries);
provided that any such appropriation and application shall be subject to the
provisions of Section 3.19. Each Revolving Lender agrees promptly to notify
Revco and the Administrative Agent after any such setoff and application made by
such Revolving Lender; PROVIDED that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Revolving
Lender under this Section 3.20 are in addition to other rights and remedies
(including other rights of setoff) which such Revolving Lender may have.
SECTION 3.21. USE OF PROCEEDS. Revco shall apply the proceeds
of each Borrowing, and shall utilize any Letter of Credit, for ongoing working
capital and general corporate
<PAGE> 41
33
purposes of Revco and its Subsidiaries, including the making of any loans or
capital contributions by Revco to its Subsidiaries.
SECTION 3.22. PAYMENTS BY REVCO. (a) All payments to be made
by Revco shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by Revco shall be made to the
Administrative Agent for the account of the Revolving Lenders, and shall be made
in Dollars and in immediately available funds, no later than 3:00 p.m., San
Francisco time, on the date specified herein. The Administrative Agent will
promptly distribute to each Revolving Lender its Revolving Percentage (or other
applicable share as expressly provided herein) of such payment in like funds as
received. Any payment received by the Administrative Agent later than 3:00 p.m.,
San Francisco time, shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
(b) Unless the Administrative Agent receives notice from Revco
prior to the date on which any payment is due to the Revolving Lenders that
Revco will not make such payment in full as and when required, the
Administrative Agent may assume that Revco has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Revolving Lender on such due date an amount equal
to the amount then due such Revolving Lender. If and to the extent Revco has not
made such payment in full to the Administrative Agent, each Revolving Lender
shall repay to the Administrative Agent on demand such amount distributed to
such Revolving Lender, together with interest thereon at the Federal Funds Rate
for each day from the date such amount is distributed to such Revolving Lender
until the date repaid.
SECTION 3.23. PAYMENTS BY THE REVOLVING LENDERS TO THE
ADMINISTRATIVE AGENT. (a) Unless the Administrative Agent receives notice from a
Revolving Lender on or prior to the Amendment Effective Date or, with respect to
any Borrowing after the Amendment Effective Date, at least one Business Day
prior to the date of such Borrowing, that such Revolving Lender will not make
available as and when required hereunder to the Administrative Agent for the
account of Revco the amount of that Revolving Lender's
<PAGE> 42
34
Revolving Percentage of the Borrowing, the Administrative Agent may assume that
each Revolving Lender has made such amount available to the Administrative Agent
in immediately available funds on the Borrowing Date and the Administrative
Agent may (but shall not be so required), in reliance upon such assumption, make
available to Revco on such date a corresponding amount. If and to the extent any
Revolving Lender shall not have made its full amount available to the
Administrative Agent in immediately available funds and the Administrative Agent
in such circumstances has made available to Revco such amount, then such
Revolving Lender shall on the Business Day following such Borrowing Date make
such amount available to the Administrative Agent, together with interest at the
Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Revolving Lender with respect to amounts
owing under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Administrative Agent shall
constitute such Revolving Lender's Revolving Loan on the date of Borrowing for
all purposes of this Agreement. If such amount is not made available to the
Administrative Agent on the Business Day following the Borrowing Date, the
Administrative Agent will notify Revco of such failure to fund and, upon demand
by the Administrative Agent, Revco shall pay such amount to the Administrative
Agent for the Administrative Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Revolving Loans comprising such
Borrowing.
(b) The failure of any Revolving Lender to make any Revolving
Loan on any Borrowing Date shall not relieve any other Revolving Lender of any
obligation hereunder to make a Revolving Loan on such Borrowing Date, but no
Revolving Lender shall be responsible for the failure of any other Revolving
Lender to make the Revolving Loan to be made by such other Revolving Lender on
any Borrowing Date.
ARTICLE IV
INTEREST RATE OPTIONS
---------------------
SECTION 4.01. BORROWING ELECTIONS. At the election of Revco
pursuant to a Revolving Loan Request delivered pursuant to Section 3.01, any
Borrowing may be
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35
made as Base Rate Loans or Eurodollar Rate Loans. Each Revolving Loan Request
shall be irrevocable and binding upon Revco.
SECTION 4.02. CONTINUATION AND CONVERSION ELECTIONS. At the
election of Revco pursuant to a Continuation/Conversion Notice delivered by
delivering to the Administrative Agent a duly completed and executed
Continuation/Conversion Notice at or before 10:00 a.m., San Francisco time, on
any Business Day, Revco may elect, from time to time on not less than three nor
more than five Business Days' notice:
(a) that all, or any portion in a minimum aggregate amount of
$5,000,000 and an integral multiple of $100,000, of any Borrowing of
Revolving Loans be converted from Base Rate Loans into Eurodollar Rate
Loans on any Business Day or, subject to Section 4.7, from Eurodollar
Rate Loans into Base Rate Loans; and
(b) on the expiration of the Interest Period applicable to any
Eurodollar Rate Loans comprising all or part of any Borrowing, that
all, or any portion in an aggregate minimum principal amount of
$5,000,000 and an integral multiple of $100,000, of such Borrowing be
continued as Eurodollar Rate Loans (in the absence of delivery of such
notice under either this clause or clause (a) above, Revco will be
deemed to have elected that such Eurodollar Rate Loans be converted
into Base Rate Loans);
provided that:
(i) no portion of the outstanding principal amount of any
Revolving Loans may be continued as, or be converted into, Eurodollar
Rate Loans when any Default has occurred and is continuing provided
that Eurodollar Rate Loans may be converted into Base Rate Loans unless
an Event of Default has occurred and is continuing; and
(ii) no portion of the outstanding principal amount of any
Revolving Loans may be made or continued as, or be converted into,
Eurodollar Rate Loans if, after giving effect thereto, the Interest
Period applicable thereto shall extend beyond the date of any scheduled
reduction of the Total Revolving Credit Commitment Amount pursuant to
Section 2.06 unless a
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36
sufficient principal amount of Revolving Loans is then being maintained
as Base Rate Loans or Eurodollar Rate Loans having an Interest Period
ending on or prior to the date of any such scheduled reduction to
permit such payment to be applied in full to Base Rate Loans; and
(iii) no portion of the outstanding principal amount of any
Revolving Loans may be made or continued as, or converted into,
Eurodollar Rate Loans or Base Rate Loans if, after giving effect to
such action, the aggregate principal amount of any Eurodollar Rate
Loans having a particular Interest Period is less than $5,000,000 or is
not an integral multiple of $100,000.
SECTION 4.03. FUNDING. In the event Revco elects to obtain any
Revolving Loans as Eurodollar Rate Loans pursuant to Section 4.01, or elects to
continue any Eurodollar Rate Loans or convert any portion of the principal
amount of any Base Rate Loans to Eurodollar Rate Loans pursuant to Section 4.02,
each Revolving Lender may, if it so elects, fulfill its obligation to make or
continue any portion of the principal amount of any Revolving Loan as, or to
convert any portion of the principal amount of any Revolving Loan into, a
Eurodollar Rate Loan in accordance with any election made by Revco by causing a
foreign branch or Affiliate of such Revolving Lender or an international banking
facility created by such Revolving Lender to make such Eurodollar Rate Loan;
provided that in such event such Eurodollar Rate Loan shall be deemed to have
been made by such Revolving Lender, and the obligation of Revco to repay such
Eurodollar Rate Loan shall nevertheless be to such Revolving Lender and shall be
deemed to be held by such Revolving Lender, to the extent of such Eurodollar
Rate Loan, for the account of such foreign branch, Affiliate or international
banking facility. In addition, Revco hereby consents and agrees that, for
purposes of any determination to be made for purposes of this Agreement
(including Sections 4.04, 4.05, 4.06 and 4.07), it shall be conclusively assumed
that each Revolving Lender elected to fund all Eurodollar Rate Loans by
purchasing Dollar deposits in its Eurodollar Office's interbank eurodollar
market.
SECTION 4.04. EURODOLLAR RATE LENDING UNLAWFUL. If, as the
result of any Regulatory Change, any Revolving Lender shall determine (which
determination shall be conclusive and binding on Revco) that it is unlawful for
such Revolving Lender to make, continue, or maintain any
<PAGE> 45
37
Revolving Loan as, or to convert any Revolving Loan into, a Eurodollar Rate
Loan, the obligations of such Revolving Lender to make, continue, or maintain,
as the case may be, any portion of the principal amount of any Revolving Loans
as, or to convert any Revolving Loans into, Eurodollar Rate Loans shall, upon
such determination (and telephonic notice thereof confirmed in writing to the
Administrative Agent and Revco), forthwith be suspended until such Revolving
Lender shall notify the Administrative Agent that the circumstances causing such
suspension no longer exist, and all Eurodollar Rate Loans of such Revolving
Lender shall automatically convert into Base Rate Loans.
SECTION 4.05. EURODOLLAR DEPOSITS UNAVAILABLE. If prior to the
date on which all or any portion of the principal amount of any Revolving Loan
is to be made or continued as, or be converted into, Eurodollar Rate Loans, the
Administrative Agent shall have determined (and telephone notice thereof,
confirmed in writing, shall have been given to Revco and the Revolving Lenders)
that:
(a) Dollar deposits in the relevant amount and for
the relevant Interest Period are not available to any
Reference Bank in the interbank eurodollar market; or
(b) by reason of circumstances affecting the interbank
eurodollar market, adequate means do not exist for ascertaining the
interest rate applicable hereunder to such Eurodollar Rate Loan,
then, the obligations of all Revolving Lenders under Sections 4.1 and 4.2 to
make or continue any portion of the principal amount of any Revolving Loans as,
or to convert any Revolving Loans into, Eurodollar Rate Loans shall forthwith be
suspended until the Administrative Agent shall notify Revco and the Revolving
Lenders that the circumstances causing such suspension no longer exist.
SECTION 4.06. INCREASED EURODOLLAR RATE LOAN COSTS, ETC. Revco
agrees to reimburse each Revolving Lender for any increase in the cost to such
Revolving Lender of making, continuing or maintaining (or of its obligation to
make, continue or maintain) any portion of the principal amount of any of its
Revolving Loans as, or of converting (or of its obligation to convert) any
portion of the principal amount of any of its Revolving Loans into, Eurodollar
Rate Loans and for any reduction in the amount of
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38
any sum receivable by such Revolving Lender hereunder in respect of making,
continuing or maintaining any portion of the principal amount of any of its
Revolving Loans as, or converting any portion of the principal amount of any
Revolving Loans into, Eurodollar Rate Loans. In any such event, such Revolving
Lender shall promptly notify the Administrative Agent and Revco thereof, stating
the reasons therefor and the additional amount required fully to compensate such
Revolving Lender for such increased cost or reduced amount. Such additional
amounts shall be payable in full by Revco directly to such Revolving Lender
within 5 days of its receipt of such notice. A statement as to any such
increased cost or reduced amount or any change therein (including calculations
thereof in reasonable detail) shall be submitted by such Revolving Lender to the
Administrative Agent and Revco and shall, in the absence of manifest error, be
conclusive and binding on Revco.
SECTION 4.07. FUNDING LOSSES. In the event any Revolving
Lender shall incur any loss or expense (including any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Revolving Lender to make, continue or maintain any portion of the
principal amount of any Revolving Loan as, or to convert any portion of the
principal amount of any Revolving Loan into, a Eurodollar Rate Loan) as a result
of:
(a) repayment or prepayment of the principal amount of any
Eurodollar Rate Loans on a date other than the scheduled last day of
the Interest Period applicable thereto, whether pursuant to Section 3.3
or otherwise;
(b) any conversion of all or any portion of the outstanding
principal amount of any Eurodollar Rate Loans to Base Rate Loans
pursuant to Section 4.2 or 4.4 prior to the expiration of the Interest
Period then applicable thereto;
(c) any Revolving Loans not being made as Eurodollar Rate
Loans in accordance with the request therefor or any Eurodollar Rate
Loans not being prepaid in accordance with the notice therefor; or
(d) any Revolving Loans not being continued as, or converted
into, Eurodollar Rate Loans in accordance with the notice applicable
thereto,
<PAGE> 47
39
then, upon the request of such Revolving Lender to Revco (with a copy to the
Administrative Agent), Revco shall pay directly to such Revolving Lender such
amount as will (in the reasonable determination of such Revolving Lender)
reimburse such Revolving Lender for such loss or expense. A statement as to any
such loss or expense (including calculations thereof in reasonable detail) shall
be submitted by such Revolving Lender to the Administrative Agent and Revco and
shall, in the absence of manifest error, be conclusive and binding on Revco.
ARTICLE V
LETTERS OF CREDIT
-----------------
SECTION 5.01. LC ISSUANCE REQUEST. By concurrently delivering
an LC Issuance Request to the applicable LC Issuer at or before 8:00 a.m., San
Francisco time, on any Business Day (provided that LC Issuance Requests with
respect to Commercial Letters of Credit may be given at any time during such
Business Day). Revco may request, on not less than 2 Business Days' prior
notice, that such LC Issuer issue, on any Business Day on or after the Amendment
Effective Date and before the Revolving Credit Commitment Termination Date, an
irrevocable letter of credit in such form as may be requested by Revco and
approved by such LC Issuer (a "Letter of Credit"), solely for the purposes
described in Section 3.09. Each Letter of Credit shall by its terms:
(a) be issued in a Stated Amount which, when added to the then
aggregate amount of Letter of Credit Outstandings, does not exceed
$100,000,000; and
(b) be stated to expire on a date no later than
the earlier of
(i) the Revolving Credit Commitment Termination Date;
PROVIDED that, not later than 5 Business Days prior to the
Revolving Credit Commitment Termination Date, Revco shall cash
collateralize, under arrangements satisfactory to the Required
Lenders, the Letters of Credit in an amount equal to 105% of
the then aggregate Stated Amount of all Letters of Credit, and
<PAGE> 48
40
(ii) the first anniversary of the date of
issuance of such Letter of Credit.
SECTION 5.02. ISSUANCE OF LETTERS OF CREDIT. Subject to the
terms and conditions of this Agreement (including Article VI), the applicable LC
Issuer shall issue a Letter of Credit in accordance with the request duly made
therefor. Prior to the issuance of any Letter of Credit, Revco shall have
properly completed all of such LC Issuer's required standard letter of credit
documentation. The applicable LC Issuer will make available to the beneficiary
thereunder the original of any Letter of Credit which it issues hereunder. On
each Friday that is a Business Day (or, if any Friday is not a Business Day, on
the next succeeding Business Day), each LC Issuer shall provide the
Administrative Agent with a list of its respective outstanding Letters of
Credit. The Administrative Agent will furnish to Revco and each Revolving
Lender, on a monthly basis, a summary of such list, including such Revolving
Lender's Revolving Percentage of all Letter of Credit Outstandings.
SECTION 5.03. OTHER REVOLVING LENDERS' PARTICIPATIONS. Upon
the issuance of any Letter of Credit, and without further action, each Revolving
Lender shall be deemed to have irrevocably purchased, to the extent of its
Revolving Percentage, an undivided participation interest in such Letter of
Credit (including the Contingent Liability and any Reimbursement Obligation with
respect thereto), and such Revolving Lender shall, to the extent of its
Revolving Percentage, be responsible to reimburse the applicable LC Issuer
promptly for Reimbursement Obligations which have not been reimbursed by Revco
in accordance with Section 5.05. Upon notice from the Administrative Agent of
Revco's failure to reimburse any Reimbursement Obligation, each Revolving Lender
shall deposit with the Administrative Agent same day funds, at or before 11:00
a.m., San Francisco time (if notice is received prior to 8:00 a.m., San
Francisco time) in an amount equal to such Revolving Lender's Revolving
Percentage of such Reimbursement Obligation. In addition, such Revolving Lender
shall, to the extent of its Revolving Percentage, be entitled to receive a
ratable portion, payable promptly to such Revolving Lender upon receipt by the
Administrative Agent (and, if such payment is received by the Administrative
Agent prior to 8:00 a.m., San Francisco time, on any Business Day, payable to
such
<PAGE> 49
41
Revolving Lender in same day funds on such Business Day), of:
(a) the letter of credit fees payable pursuant to
Section 2.09(a)(i), 2.09(b)(i) and 2.09(c)(i); and
(b) interest payable pursuant to Section 5.4.
SECTION 5.04. DISBURSEMENTS. Each LC Issuer will notify Revco
and the Administrative Agent promptly of each demand or presentment for payment
under any Letter of Credit issued by such LC Issuer, together with notice of the
date (the "Disbursement Date") on which such payment shall be made. Subject to
the terms and provisions of such Letter of Credit, the applicable LC Issuer
shall make such payment to the beneficiary (or its designee) of such Letter of
Credit. Prior to 8:00 a.m., San Francisco time, on the Disbursement Date, Revco
will reimburse the Administrative Agent, for the account of the applicable LC
Issuer for all amounts which such LC Issuer has disbursed or will disburse under
such Letter of Credit (the "Disbursement"), together with interest thereon at a
rate per annum equal to the sum of the Base Rate from time to time in effect
plus a margin of 3.5% per annum for the period from the Disbursement Date to the
date of such reimbursement.
SECTION 5.05. REIMBURSEMENT. Revco's obligation (the
"Reimbursement Obligation") under Section 5.4 to reimburse the Administrative
Agent, for the account of the applicable LC Issuer with respect to any
Disbursement (including interest thereon) and, upon Revco's failure to reimburse
the Administrative Agent, for the account of such LC Issuer, each Revolving
Lender's obligation under Section 5.3 to reimburse the Administrative Agent, for
the account of such LC Issuer, shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which Revco or such Revolving Lender, as the case may be, may have or
have had against such LC Issuer, any Revolving Lender or the beneficiary of such
Letter of Credit, including any defense based upon the occurrence of any Default
or Event of Default, any draft, demand, certificate or other document proving to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged, the failure of any demand or presentation for any Disbursement to
conform to the terms of the applicable Letter of Credit or any non-application
or misapplication by
<PAGE> 50
42
the beneficiary under such Letter of Credit of the proceeds of such
Disbursement, or the legality, validity, form, regularity or enforceability of
such Letter of Credit; PROVIDED that nothing herein shall adversely affect the
right of Revco or such Revolving Lender, as the case may be, after paying in
full its Reimbursement Obligation under Section 5.5 or its obligations under
Section 5.3, to commence any proceeding against such LC Issuer for any wrongful
Disbursement made by the LC Issuer under a Letter of Credit as a result of acts
or omissions constituting gross negligence or wilful misconduct on the part of
such LC Issuer.
SECTION 5.06. DEEMED DISBURSEMENTS. Upon the occurrence and
during the continuation of an Event of Default, then:
(a) automatically in the case of an Event of Default described
in Section 9.1.4, and at the election of the Required Lenders in the
case of any other Event of Default, an amount equal to that portion of
the Letter of Credit Outstandings attributable to the then aggregate
amount which is undrawn and available under all outstanding Letters of
Credit shall, without demand upon or notice to Revco, be deemed to have
been paid or disbursed by the applicable LC Issuer (notwithstanding
that such amount may not in fact have been so paid or disbursed); and
(b) upon notification by the Administrative Agent to Revco of
its obligations under this Section 5.06, Revco shall be immediately
obligated to reimburse the Administrative Agent for the account of the
applicable LC Issuer for the amount deemed to have been so paid or
disbursed by such LC Issuer.
Any amounts so payable by Revco pursuant to this Section 5.6 shall be deposited
in cash with the Administrative Agent and held as collateral security for the
Obligations in connection with any Letter of Credit and shall be invested by the
Administrative Agent in Cash Equivalent Investments the interest on which shall
be held as collateral security for such Obligations and applied to pay such
Obligations then due and unpaid. At such time when all Events of Default shall
have been cured or waived, the Administrative Agent shall return to Revco all
amounts then on deposit with the Administrative Agent pursuant to this Section
5.06
<PAGE> 51
43
(including any income from Cash Equivalent Investments), net of any amounts
applied to the payment of any such Obligations.
SECTION 5.07. NATURE OF REIMBURSEMENT OBLIGATIONS. Revco and,
to the extent set forth in Section 5.03, each Revolving Lender shall assume all
risks of the acts, omissions or misuse of each Letter of Credit by the
beneficiary thereof. Neither the Administrative Agent nor the applicable LC
Issuer (except to the extent of its own gross negligence or wilful misconduct as
set forth in Section 5.05) shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit issued by it or any document
submitted by any party in connection with the application for and
issuance of such Letter of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Instrument transferring or assigning or purporting
to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which may prove to
be invalid or ineffective for any reason;
(c) failure of the beneficiary under any Letter of Credit to
comply fully with conditions required in order to demand payment under
such Letter of Credit;
(d) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under any
such Letter of Credit.
None of the foregoing shall affect, impair, limit or prevent the vesting of any
of the rights or powers granted to the Administrative Agent, the applicable LC
Issuer or any Revolving Lender hereunder (including pursuant to Section 11.04).
In furtherance and extension, and not in limitation or derogation of any of the
foregoing, any action taken or
<PAGE> 52
44
omitted to be taken by the Administrative Agent or the applicable LC Issuer in
good faith and without gross negligence shall be binding upon Revco and each
such Revolving Lender, and shall not put the Administrative Agent or the
applicable LC Issuer under any resulting liability to Revco or any such
Revolving Lender, as the case may be.
ARTICLE VI
AGREEMENT EFFECTIVENESS AND CONDITIONS TO CREDIT EXTENSIONS
- -----------------------------------------------------------
SECTION 6.01. AMENDMENT EFFECTIVE DATE. This
Agreement shall be and become effective on the date (the "Amendment Effective
Date") on which Revco, the Revolving Lenders and the Agents shall have executed
and delivered this Agreement and the applicable Assignor Lenders shall have
executed and delivered Schedule III to this Agreement and the prior or
concurrent satisfaction of each of the requirements set forth in this Section
6.01.
SECTION 6.02. RESOLUTIONS, ETC. The Administrative Agent, the
Managing Agents and such Revolving Lenders as shall have requested receipt of
same prior to the Amendment Effective Date shall have received:
(a) a certificate, dated the Amendment Effective Date, of the
Secretary or any Assistant Secretary of each Obligor as to:
(i) no amendments to the Organic Documents of such
Obligor since July 16, 1994 except as noted in such
certificate;
(ii) resolutions of the Board of Directors of such
Obligor then in full force and effect, authorizing the
execution, delivery and performance of each Credit Document to
be executed by it and the related transactions contemplated in
connection therewith; and
(iii) the incumbency and signatures of those of its
officers authorized to act with respect to each Credit
Document to be executed by it;
<PAGE> 53
45
upon which certificate each Revolving Lender, including each Assignee
(whether or not it shall have then become a party hereto), may
conclusively rely until it shall have received a further certificate of
the Secretary of such Obligor replacing or amending such prior
certificate; and
(b) such other documents (certified if requested) as the
Administrative Agent, any Managing Agent or the Required Lenders may
reasonably request with respect to any Organic Document, Contractual
Obligation or Approval.
SECTION 6.03. NOTES; GUARANTIES. The Administrative Agent
shall have received:
(a) the Revolving Note, the Swing Note and the Bid Note, in
each case duly executed and delivered pursuant to Section 3.02; and
(b) the HSI Guaranty duly executed and delivered
by HSI.
SECTION 6.04. NO CONTEST, ETC. No litigation, arbitration,
governmental investigation, proceeding or inquiry shall, on the Amendment
Effective Date, be pending or, to the knowledge of Revco, threatened which:
(a) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated by or in connection with this Agreement; or
(b) might, in the opinion of the Required Lenders, if
adversely determined, be reasonably expected to have a Materially
Adverse Effect, or be materially detrimental to the interests of any of
the parties hereto with respect to any of the transactions contemplated
hereby.
SECTION 6.05. NO MATERIALLY ADVERSE EFFECT. No event or events
which, individually or in the aggregate, in the opinion of the Required Lenders,
could have a Materially Adverse Effect shall have occurred since May 28, 1994.
SECTION 6.06. CERTIFICATE AS TO WARRANTIES, NO DEFAULT, ETC.
The Administrative Agent shall have received
<PAGE> 54
46
a certificate, dated the Amendment Effective Date, of Revco executed on its
behalf by the chief executive or financial Authorized Officer of Revco stating
that on and as of the Amendment Effective Date:
(a) all representations and warranties set forth in Article
VII are true and correct in all material respects; and
(b) no Default has occurred and is continuing.
SECTION 6.07. OPINIONS OF COUNSEL. The Administrative Agent
shall have received opinion letters, dated the Amendment Effective Date and
addressed to the Administrative Agent, the Bid Agent, the Managing Agents and
all Revolving Lenders, from:
(a) Jack A. Staph, Esq., Senior Vice President, Secretary and
General Counsel of Revco, substantially in the form of Exhibit F-1;
and
(b) Mayer, Brown & Platt, counsel to the Administrative Agent,
the Bid Agent and the Managing Agents, substantially in the form of
Exhibit F-2.
SECTION 6.08. CLOSING FEES, EXPENSES, ETC. The Administrative
Agent shall have received for the account of each Managing Agent, or for the
account of each Revolving Lender or Assignor Lender, as the case may be, all
fees then due and payable under Sections 2.10 and 2.11 and all other fees due
through July 24, 1995 (with fees accrued from July 24, 1995 until the Amendment
Effective Date being paid on August 4, 1995) and all costs and expenses which
have been then invoiced and are payable pursuant to Section 11.3 and the Term
Loans (as defined in the Existing Credit Agreement) shall have been repaid or
refinanced as Revolving Loans.
SECTION 6.09. HSI CREDIT AGREEMENT TERMINATED. The
Administrative Agent shall have received evidence, reasonably satisfactory to
the Administrative Agent, that the HSI Credit Extensions have been, or
concurrently with the making of the initial Loans will be, funded in full and
the HSI Credit Agreement has been terminated.
SECTION 6.10. ALL CREDIT EXTENSIONS. Notwithstanding any other
provision of this Agreement,
<PAGE> 55
47
without duplication of any conditions precedent required to be satisfied
pursuant to Section 6.01, the obligations of the Revolving Lenders to make any
Credit Extension on or after the Amendment Effective Date shall be subject to
the prior or concurrent satisfaction of each of the conditions precedent set
forth in this Section 6.02.
SECTION 6.11. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. The
representations and warranties set forth in Article VII shall have been true and
correct as of the date initially made, and both before and after giving effect
to the making of any such Credit Extension (but, if any Default of the nature
referred to in Section 9.1.6 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or indirectly,
of the proceeds of such Credit Extension):
(a) subject to Section 8.02(e), such representations and
warranties shall be true and correct in all material respects with the
same effect as if then made (except to the extent any such
representation or warranty relates solely to an earlier date); and
(b) no Default shall have occurred and be continuing.
SECTION 6.12. CREDIT REQUEST, ETC. The Administrative Agent
shall have received a Revolving Loan Request, a Swing Loan Request or an LC
Issuance Request, as applicable. Each of the delivery or deemed delivery of any
such Revolving Loan Request, Swing Loan Request, or LC Issuance Request, as the
case may be, shall constitute and be deemed a representation and warranty by
Revco that on the date of such request for a Credit Extension, and before and
after giving effect to the application of any Credit Extensions requested
thereby, all statements set forth in Section 6.11. are true and correct.
SECTION 6.13. SATISFACTORY LEGAL FORM. All corporate and other
actions or proceedings taken or required to be taken in connection with the
transactions contemplated hereby and all agreements, instruments and documents
executed or submitted pursuant hereto by or on behalf of Revco shall be
reasonably satisfactory in form and substance to the Administrative Agent, the
Managing Agents and their counsel; all certificates and opinions delivered
pursuant to
<PAGE> 56
48
this Article VI shall be addressed to the Administrative Agent, the Managing
Agents and each Revolving Lender, or the Administrative Agent, the Managing
Agents and each Revolving Lender shall be expressly entitled to rely thereon;
the Administrative Agent, the Managing Agents and their counsel shall have
received all information, and such number of counterpart originals or such
certified or other copies of such Instruments, as the Managing Agents or their
counsel may reasonably request; and all legal matters incident to the
transactions contemplated by this Agreement shall be reasonably satisfactory to
counsel to the Administrative Agent and the Managing Agents.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Revolving Lenders, the Administrative
Agent and the Managing Agents to enter into this Agreement, to engage in the
transactions contemplated herein and in the other Credit Documents and to make
and issue Credit Extensions hereunder, Revco and each Obligor, as the case may
be, represents and warrants unto, the Administrative Agent, the Managing Agents
and each Revolving Lender as set forth in this Article VII.
SECTION 7.01. ORGANIZATION, POWER, AUTHORITY, ETC. Revco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the failure so to
qualify may have a Materially Adverse Effect, and has full power and authority
and holds all material requisite governmental licenses, permits and other
approvals to own and hold under lease its property and to conduct its business
substantially as currently conducted by it. Each Subsidiary of Revco is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where the
failure so to qualify may have a Materially Adverse Effect, and has full power
and authority and holds all material requisite governmental licenses, permits
and other approvals to own and hold under lease its property and to conduct its
business substantially as currently conducted by it. Revco
<PAGE> 57
49
has full power and authority to execute, deliver and perform its Obligations
under this Agreement, the Notes and each other Credit Document to which it is or
is to be a party, to obtain Credit Extensions or incur Obligations hereunder or
thereunder and to grant the Liens provided in the Pledge Agreement. Each Obligor
has full power and authority to execute, deliver and perform its Obligations
under each Credit Document to which it is or is to be a party.
SECTION 7.02. DUE AUTHORIZATION, NONCONTRAVENTION, ETC. The
execution and delivery by Revco of this Agreement, the Notes and each other
Credit Document executed or to be executed by it, the performance by Revco of
its Obligations hereunder and thereunder, all Credit Extensions obtained
hereunder by Revco and all other actions incidental to any thereof have been
duly authorized by all necessary action, do not and will not conflict with,
result in any violation of, or constitute any default under, any provision of
any Organic Document or Contractual Obligation of Revco or any law or
governmental regulation or court decree or order and will not result in or
require the creation or imposition of any Lien on any of Revco's properties
pursuant to the provisions of any Contractual Obligation. The execution and
delivery by each Obligor of each Credit Document executed or to be executed by
it, the performance by such Obligor of its Obligations hereunder and thereunder
and all other actions incidental to any thereof have been duly authorized by all
necessary action, do not and will not conflict with, result in any violation of,
or constitute any default under, any provision of any Organic Document or
Contractual Obligation of such Obligor or any law or governmental regulation or
court decree or order and will not result in or require the creation or
imposition of any Lien on such obligor's properties pursuant to the provisions
of any Contractual Obligation.
SECTION 7.03. GOVERNMENT APPROVAL, REGULATION, ETC. Except as
set forth in Item 7.3 ("Approvals") of the Disclosure Schedule, no authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required for the
due execution, delivery or performance by Revco or any Obligor of this
Agreement, the Notes or any other Credit Document to which it is or is to be a
party or the consummation of the transactions contemplated hereby or thereby,
except for authorizations, approvals, actions, notices or filings which have
been duly obtained or made and
<PAGE> 58
50
are in full force and effect. Neither Revco nor any Subsidiary is an "investment
company" within the meaning of the Investment Company Act of 1940 or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935.
SECTION 7.04. VALIDITY, ETC. This Agreement has been duly
executed and delivered by Revco and constitutes the legal, valid and binding
obligation of Revco enforceable in accordance with its terms; and each of the
Notes and each other Credit Document to which Revco is or is to be a party will,
on the due execution and delivery thereof, constitute the legal, valid and
binding obligation of Revco, enforceable in accordance with its terms. Each
Credit Document to which any Obligor is a party to has been duly executed and
delivered by such Obligor and constitutes the valid and binding obligation of
such Obligor enforceable in accordance with its terms; and each Credit Document
to which any Obligor is to be a party will, on the due execution and delivery
thereof, constitute the legal, valid and binding obligation of such Obligor,
enforceable in accordance with its terms.
SECTION 7.05. FINANCIAL INFORMATION. (a) The audited
consolidated balance sheet as of May 28, 1994 and the related audited
consolidated statements of earnings, stockholders' equity and cash flow for the
Fiscal Year then ended, of Revco and its Subsidiaries, audited by Arthur
Andersen & Co., have been prepared in accordance with GAAP consistently applied
throughout the period involved and present fairly the financial condition of
Revco and its Subsidiaries as of the date thereof and the results of their
operations and cash flows for the period then ended. Neither Revco nor any of
its Subsidiaries had on the date thereof any material Contingent Liability or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in such financial statements or in the notes
thereto.
(b) The unaudited consolidated balance sheet as of February 4,
1995 and the related unaudited statements of earnings, stockholders' equity and
cash flow for the nine Fiscal Months then ended, of Revco and its Subsidiaries,
have been prepared in accordance with GAAP consistently applied (except as
expressly disclosed therein)
<PAGE> 59
51
throughout the period involved and present fairly (subject to normal and
customary year-end audit adjustments) the financial condition of Revco and such
Subsidiaries as at the date thereof and the results of their operations for the
period then ended. Neither Revco nor any of its Subsidiaries had on the date
thereof any material Contingent Liability or liabilities for taxes, long-term
leases or unusual forward or long-term commitments which are not reflected in
such financial statements or in the notes thereto.
SECTION 7.06. NO MATERIALLY ADVERSE EFFECT. Since May 28,
1994, no event or events have occurred which, individually or in the aggregate,
has resulted or could result in a Materially Adverse Effect.
SECTION 7.07. LITIGATION, ETC. There is no pending or, to the
best knowledge of Revco, threatened litigation, action, proceeding, order,
investigation or claim, at law or in equity or before or by any governmental
department, commission, board, bureau, agency or instrumentality affecting Revco
or any of its Subsidiaries, or any of their respective properties, assets or
revenues which, if determined adversely to Revco or such Subsidiaries, might
result in or constitute a Materially Adverse Effect, except as disclosed in Item
7.7 ("Litigation") of the Disclosure Schedule; and none of them is subject to
any arbitration proceedings under collective bargaining agreements or otherwise
or any governmental investigations or inquiries.
SECTION 7.08. REGULATIONS G, T, U AND X. Neither Revco nor any
of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock, and less than 25% of the assets of Revco, individually
and on a consolidated basis with its Subsidiaries, consists of margin stock. The
proceeds of any Loans made hereunder will not be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulations G, T, U or X.
Terms for which meanings are provided in F.R.S. Board Regulations G, T, U and X
have such meanings when such terms are used in this Section.
SECTION 7.09. PENSION AND WELFARE PLANS. Except as disclosed
in Item 7.9 ("Employee Benefit Plans") of the Disclosure Schedule, neither Revco
nor any member of the
<PAGE> 60
52
Controlled Group maintains or contributes to any Pension Plans, Multiemployer
Plans or Welfare Plans. During the 12- consecutive-month period prior to the
date of the execution and delivery of this Agreement and prior to the date of
any Credit Extension hereunder, no steps have been taken to terminate any
Pension Plan and no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
Except as disclosed in Item 7.9 ("Employee Benefit Plans") of the Disclosure
Schedule, no condition exists or event or transaction has occurred with respect
to any Pension Plan which could be reasonably expected to result or which has
resulted in the incurrence by Revco or any member of the Controlled Group of any
material liability, fine or penalty. Except as disclosed in Item 7.9 ("Employee
Benefit Plans") of the Disclosure Schedule, neither Revco nor any member of the
Controlled Group has any Contingent Liability with respect to any
post-retirement welfare benefit under a Welfare Plan or other arrangement, other
than liability arising under applicable state insurance laws, for continuation
coverage described in Part 6 of Title I of ERISA, under employment contracts
listed in such Item or severance benefits payable in cash pursuant to an
arrangement described in such Item.
SECTION 7.10. SUBSIDIARIES. Revco has no Subsidiaries except
those Subsidiaries which are shown in Item 7.10 ("Existing Subsidiaries") of the
Disclosure Schedule or permitted to have been acquired or organized after the
Amendment Effective Date in accordance with this Agreement.
SECTION 7.11. TAXES. Each of Revco and each of its
Subsidiaries has filed all tax returns and reports required by law to have been
filed by it; all such tax returns are true and correct in all material respects;
and Revco and each of its Subsidiaries has paid or withheld (as applicable) all
taxes and governmental charges thereby shown to be owing or required to be
withheld, except any such taxes or charges which are being diligently contested
in good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
<PAGE> 61
53
SECTION 7.12. ABSENCE OF DEFAULT. Neither Revco nor any of its
Subsidiaries is:
(a) in default in the payment of any amount in respect of (or
in the performance of any obligation applicable to) any Indebtedness in
an outstanding principal amount of $10,000,000 or more; or
(b) in default under any governmental regulation or court
decree or order or under any law if such default could have a
Materially Adverse Effect.
SECTION 7.13. LABOR CONTROVERSIES. There are no labor
controversies pending or, to the best knowledge of Revco, threatened against
Revco or any of its Subsidiaries, which, if adversely determined, might have a
Materially Adverse Effect.
SECTION 7.14. CAPITALIZATION. Item 7.14 ("Ownership of Revco")
of the Disclosure Schedule sets forth, as of the date of and based upon the most
recent filings pursuant to Section 13(d) and Section 13(g) of the Securities
Exchange Act of 1934, as amended, each record and, to the knowledge of Revco,
beneficial owner of 5% or more of the outstanding shares of each class of equity
securities of Revco registered under Section 12 of the Securities Exchange Act
of 1934.
SECTION 7.15. OWNERSHIP OF PROPERTIES. Each of Revco and each
of its Subsidiaries has good and marketable title to, or a valid leasehold
interest in, all of its properties and assets, real and personal, of any nature
whatsoever, free and clear of all. Liens, except Permitted Liens.
SECTION 7.16. ENVIRONMENTAL WARRANTIES. Except as set forth in
Item 7.16 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by Revco or any of its Subsidiaries have
been, and continue to be, owned or leased by Revco and its Subsidiaries
in material compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or, to
the knowledge of Revco, threatened
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(i) claims, complaints, notices or requests for
information received by Revco or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to Revco
or any of its Subsidiaries regarding potential
liability under any Environmental Law;
(c) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by Revco or any
of its Subsidiaries during such ownership or lease or, to the knowledge
of Revco, prior thereto that, singly or in the aggregate, have, or may
reasonably be expected to have, a Materially Adverse Effect;
(d) Revco and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters and
necessary for their businesses;
(e) no property now or, to the knowledge of Revco, previously
owned or leased by Revco or any of its Subsidiaries is listed or
proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by Revco or any of its Subsidiaries
that, singly or in the aggregate, have, or may reasonably be expected
to have, a Materially Adverse Effect;
(g) neither Revco nor any of its Subsidiaries has directly
transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations
which may lead to material claims against Revco or such Subsidiary
thereof for any
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remedial work, damage to natural resources or personal injury,
including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by Revco or
any of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a Materially Adverse Effect; and
(i) to the knowledge of Revco, no conditions exist at, on or
under any property now or previously owned or leased by Revco or any of
its Subsidiaries which, with the passage of time or the giving of
notice or both, would give rise to liability under any Environmental
Law.
SECTION 7.17. ACCURACY OF INFORMATION. All factual information
heretofore or contemporaneously furnished by or on behalf of Revco in writing to
any Agent or any Revolving Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of Revco to any Agent or any
Revolving Lender will be, true and accurate in every material respect on the
date as of which such information is dated or certified and such information is
not, or shall not be, as the case may be, incomplete by omitting to state any
material fact necessary to make such information not misleading; provided that
in the case of any projections hereafter so furnished by or on behalf of Revco,
such projections shall represent the reasonable expectations of the management
of Revco of future performance, based upon historical financial information and
reasonable assumptions.
SECTION 7.18. REFINANCING OF CERTAIN INDEBTEDNESS. This
Agreement is, in part, a refinancing of Indebtedness of Revco under the Existing
Credit Agreement. The Existing Credit Agreement was, in part, a refinancing of
Indebtedness of Revco under the Revolving Credit Facility and Term Facility (as
set forth in the definition of "Permitted Indebtedness" contained in the 9-1/8%
Indenture).
SECTION 7.19. REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT.
If the Amendment Effective Date is not the date of this Agreement, the
representations and warranties of Revco and its Subsidiaries contained in this
Article and
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elsewhere in this Agreement, and all information contained in any Exhibit or
Schedule or in any writing delivered by, or on behalf of, Revco or any of its
Subsidiaries, will be true and correct on the Amendment Effective Date as though
then made.
ARTICLE VIII
COVENANTS
SECTION 8.01. AFFIRMATIVE COVENANTS. Revco agrees with the
Administrative Agent, the Managing Agents and each Revolving Lender that, until
all Revolving Credit Commitments have terminated and all Obligations have been
paid and performed in full, Revco will perform the Obligations set forth in this
Section 8.01.
SECTION 8.02. FINANCIAL INFORMATION, ETC. Revco will furnish,
or will cause to be furnished, to the Administrative Agent, each Revolving
Lender and to each Managing Agent copies of the following financial statements,
reports and information:
(a) promptly when available and in any event
within 100 days after the close of each Fiscal Year,
(i) a consolidated balance sheet at the close of such
Fiscal Year, and related consolidated statements of earnings,
stockholders, equity and cash flow for such Fiscal Year, of
Revco and its Subsidiaries, in each case with comparable
information at the close of and for the prior Fiscal Year,
audited without Impermissible Qualification by Arthur Andersen
& Co. or another firm of independent, nationally recognized
certified public accountants reasonably acceptable to the
Required Lenders (with comparable information for such periods
as set forth in the annual business plan most recently
delivered pursuant to clause(e) below and for the
corresponding prior Fiscal Year),
(ii) a certificate from such accountants stating that
they have reviewed the Compliance Certificate then being
furnished pursuant to clause (a)(iii) below and to the effect
that, in
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making the examination necessary in connection with their
audit of such annual financial statements, they have not
become aware of any Default that has occurred and is
continuing, or, if they have become aware of such Default,
describing such Default and the steps, if any, being taken to
cure it, and
(iii) a Compliance Certificate calculated as of
the close of such Fiscal Year;
(b) promptly when available and in any event within 55 days
after the close of each Fiscal Quarter (other than the last Fiscal
Quarter of each Fiscal Year),
(i) a consolidated balance sheet at the close of such
Fiscal Quarter, and related consolidated statements of
earnings, stockholders' equity and cash flow for such Fiscal
Quarter and for the period commencing at the close of the
previous Fiscal Year and ending with the close of such Fiscal
Quarter (with comparable information for such periods as set
forth in the annual business plan most recently delivered
pursuant to clause (e) below and for the corresponding periods
of the prior Fiscal Year) of Revco and its Subsidiaries, and
(ii) a Compliance Certificate calculated as
of the close of such Fiscal Quarter;
(c) promptly following any filing thereof by Revco or any of
its Subsidiaries with the Securities and Exchange Commission or with
any securities exchange on which any of their respective securities are
then listed, any annual, periodic or special report or registration
statement generally available to the public;
(d) not later than 90 days after the beginning of each Fiscal
Year, Revco's budget for such Fiscal Year as approved by Revco's senior
management which shall include:
(i) the projected consolidated balance
sheets, and related consolidated statements of
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earnings, stockholders, equity and cash flow, of Revco and
its Subsidiaries on a Fiscal Quarter basis, and
(ii) a summary of key assumptions underlying all of
the materials delivered pursuant to this clause,
together with appropriate supporting details as requested by Required Lenders;
(e) from time to time, as promptly as practicable after any
officer of Revco has knowledge with respect thereto, a supplement or
amendment to each Schedule, representation or warranty in this
Agreement or any other Credit Document with respect to any matter
hereafter arising which, if existing or occurring as of the Amendment
Effective Date, would have been required to be set forth or described
in such Schedule or as an exception to such representation or warranty
or which is necessary to correct any information in such Schedule,
representation or warranty which has been rendered inaccurate thereby;
PROVIDED that unless such supplement or amendment is accepted in
writing by the Required Lenders, in their sole and absolute discretion,
no Schedule, representation or warranty will be deemed modified thereby
and no Default will be deemed to have been avoided, cured or waived
thereby; and
(f) such other information (including a copy of each notice
received by Revco or HSI, as the case may be, from the respective
trustee under the 9-1/8% Indenture and the HSI Indenture) with respect
to the financial condition of Revco or any Subsidiary as any Managing
Agent or any Revolving Lender through the Administrative Agent may from
time to time reasonably request, including reports, management letters
and other detailed information (if any) prepared by any independent
public accountants with respect to Revco in connection with any annual
or interim audit made by such independent public accountants of the
books of Revco or any of its Subsidiaries.
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SECTION 8.03. MAINTENANCE OF EXISTENCES, ETC. Except as
expressly permitted by Section 8.2.9 or 8.2.10, Revco will:
(a) cause to be done at all times all things necessary to
maintain and preserve the existences, rights (statutory and other) and
franchises (including licenses, authorizations and permits necessary to
the operation of its businesses) of Revco and its Subsidiaries; and
(b) continue to own and hold, directly or indirectly and free
and clear of all Liens, all of the outstanding shares of capital stock
(excluding directors' qualifying shares, if any) or other equity of
each of its Subsidiaries.
SECTION 8.04. FOREIGN QUALIFICATION. Revco will, and will
cause each of its Subsidiaries to, cause to be done at all times all things
necessary to be duly qualified to do business and be in good standing as a
foreign corporation in each jurisdiction where the failure so to qualify could
have a Materially Adverse Effect.
SECTION 8.05. PAYMENT OF TAXES, ETC. Revco will, and will
cause each of its Subsidiaries to, pay and discharge, as the same may become due
and payable, all Federal, state, local and foreign taxes, assessments, fees and
other governmental charges or levies against it or on any of its property or the
income or profits therefrom, as well as claims of any kind which, if unpaid,
would become a Lien upon any of their respective properties and will pay (before
they become delinquent) all such other tax obligations and liabilities; PROVIDED
that the foregoing shall not require Revco or any such Subsidiary to pay or
discharge any such tax, assessment, fee, charge, levy or Lien so long as it
shall be diligently contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves in
accordance with GAAP with respect thereto.
SECTION 8.06. INSURANCE. Revco will, and will cause each of
its Subsidiaries to, at its sole cost and expense maintain with responsible
insurance companies insurance, including self-insurance, in such amounts as is
customary in the case of similar businesses, with respect to its properties and
business against such casualties and
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contingencies and of such types and in such amounts as is customary in the case
of similar businesses from time to time and, in any event, as required by any
Applicable Law and will, within 100 days after the end of each Fiscal Year,
furnish to the Administrative Agent, the Managing Agents and each Revolving
Lender a certificate of an Authorized Officer of Revco setting forth the nature
and extent of all insurance maintained by Revco and its Subsidiaries in
accordance with this Section 8.06.
SECTION 8.07. NOTICE OF DEFAULT, LITIGATION, ETC. Revco will
give prompt notice (with a description in reasonable detail of the nature and
period of existence thereof and of the actions which Revco has taken and
proposes to take with respect thereto) to the Administrative Agent and the
Managing Agents of:
(a) the occurrence of any Default;
(b) any litigation, arbitration or governmental investigation
or proceeding not previously disclosed by Revco to the Revolving
Lenders which has been instituted or, to the knowledge of Revco, is
threatened against, Revco or any of its Subsidiaries or to which any of
its properties, assets or revenues is subject which
(i) if adversely determined, could have a
Materially Adverse Effect, or
(ii) relates to this Agreement or any other
Credit Document;
(c) the occurrence of any other circumstance which
has resulted or could result in a Materially Adverse
Effect;
(d) any material adverse development which shall occur in any
litigation, arbitration or governmental investigation or proceeding
against (or, to the knowledge of Revco, affecting) Revco, any of its
Subsidiaries or any of their respective assets previously disclosed by
Revco to the Revolving Lenders;
(e) the institution of any steps by Revco, any member of its
Controlled Group or any other Person to terminate any Pension Plan, or
the failure to make a
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required contribution to any Pension Plan if such failure is sufficient
to give rise to a Lien under section 302(f) of ERISA, or the taking of
any action with respect to a Pension Plan which could result in the
requirement that Revco or any member of its Controlled Group furnish a
bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan which could
have a Materially Adverse Effect or any increase in the contingent
liability of Revco or any member of its Controlled Group with respect
to any post-retirement Welfare Plan benefit which could result in a
Materially Adverse Effect; and
(f) any assessment of withdrawal liability against Revco or
any member of its Controlled Group by any Multiemployer Plan in an
amount which could result in a Materially Adverse Effect.
SECTION 8.08. PERFORMANCE OF OBLIGATIONS. Revco will, and
will cause each of its Subsidiaries to,
(a) perform promptly and faithfully all of its Obligations
under each Credit Document executed by it; and
(b) comply with the provisions of all contracts or agreements
to which it is a party or by which it is bound, whether oral or
written, express or implied, and pay all obligations which it has
incurred or may incur pursuant to any such contract or agreement as
such obligations become due, where the failure so to comply or make
such payment, individually or in the aggregate with all such other
failures, has or could have a Materially Adverse Effect.
SECTION 8.09. BOOKS AND RECORDS. Revco will, and will cause
each of its Subsidiaries to, keep proper books and records reflecting all of its
business affairs and transactions (including all loans and advances by Revco to
any of its Subsidiaries) in accordance with GAAP and permit the Administrative
Agent, the Managing Agents and the Revolving Lenders, on reasonable notice and
at reasonable times and intervals during ordinary business hours, to visit all
of its offices, discuss its financial matters with officers of Revco or any of
its Subsidiaries and its independent public accountants (provided that each
Revolving
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Lender shall give Revco prior notice of any meeting with such independent public
accountants and permit a representative of Revco to be present at such meeting),
and examine and make abstracts from any of its books or other corporate records.
Revco shall pay any fees of such independent public accountants incurred in
connection with the exercise by the Administrative Agent, the Managing Agents
and the Revolving Lenders of their rights pursuant to this Section 8.09. Revco
will, and will cause each of its Subsidiaries to, continue in full force and
effect all of its respective inventory control procedures in effect on the date
of this Agreement, except for improvements thereto.
SECTION 8.10. COMPLIANCE WITH LAWS, ETC. Revco will, and will
cause each of its Subsidiaries to, comply with the requirements of all
Applicable Laws noncompliance with which could have a Materially Adverse Effect.
SECTION 8.11. ENVIRONMENTAL MATTERS. Revco will, and will
cause each of its Subsidiaries to:
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Administrative Agent and the
Managing Agents and provide copies upon receipt of all written claims,
complaints, notices or inquiries relating to the condition of its
facilities and properties or compliance with Environmental Laws, and
shall promptly cure and have dismissed with prejudice to the
satisfaction of the Required Lenders any actions and proceedings
relating to compliance with Environmental Laws; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section 8.1.10.
SECTION 8.12. MAINTENANCE OF PROPERTY. Revco will, and will
cause each of its Subsidiaries to, at their
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joint and several expense maintain and keep its properties which are used or
useful to its business in good repair, working order and condition, and from
time to time make all necessary or desirable repairs renewals and replacements,
in a manner consistent with its existing practices, so that its businesses may
be properly and advantageously conducted at all times.
SECTION 8.13. NEGATIVE COVENANTS. Revco agrees with the
Administrative Agent, the Managing Agents and each Revolving Lender that, until
all Revolving Credit Commitments have terminated and all Obligations have been
paid and performed in full, Revco will perform the obligations set forth in this
Section 8.13.
SECTION 8.14. BUSINESS ACTIVITIES. Revco will not, nor will it
permIt any of its Subsidiaries to, engage in any business activity other than
the ownership and operation of retail drugstores and such other businesses as
may be incidental or related thereto or as engaged in by Revco and its
Subsidiaries on the Amendment Effective Date.
SECTION 8.15. INDEBTEDNESS. Revco will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness other than:
(a) Indebtedness in respect of the Loans, the Letters of
Credit and other Obligations;
(b) Indebtedness outstanding on the date hereof and identified
in Item 8.2.2(b) ("Existing Indebtedness") of the Disclosure Schedule
and any refinancing, renewal or extension of such Indebtedness, in an
amount not greater than the amount required to repay the Indebtedness
so refinanced and which does not accelerate the date or increase the
amount of any required repayment, repurchase or redemption of (or
impose any significantly greater obligation on Revco or any of its
Subsidiaries than the obligations imposed by) the Indebtedness being
refinanced, renewed or extended;
(c) Permitted Additional Indebtedness of Revco and, with
respect to Acquired Indebtedness, the respective acquired Subsidiary;
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(d) Indebtedness of Revco and, with respect to Acquired
Indebtedness, the respective acquired Subsidiary, in connection with
interest rate agreements entered in the ordinary course of business to
hedge the interest rate obligations of Revco and its Subsidiaries;
(e) unsecured Indebtedness of Revco and its Subsidiaries
incurred in the ordinary course of business (including open accounts
extended by suppliers on normal trade terms) in connection with
purchases of goods and services but excluding Indebtedness for borrowed
money or Contingent Liabilities in respect of such Indebtedness;
PROVIDED that only Revco and Subsidiaries held for disposition may
incur such Indebtedness with respect to purchases of inventory;
(f) Indebtedness of any Subsidiary of Revco to Revco in
connection with loans or advances made by Revco to such Subsidiary;
(g) Indebtedness in respect of taxes, assessments or
governmental charges to the extent that payment thereof shall not at
the time be required to be made in accordance with the provisions of
Section 8.05. or which is being contested in good faith by diligent
proceedings, for which adequate reserves in accordance with GAAP shall
have been set aside and with respect to which no Lien has attached; and
(h) Indebtedness in respect of judgments or awards which have
been in force for less than the applicable appeal period so long as
execution is not levied thereunder (or in respect of which Revco or any
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review).
SECTION 8.16. LIENS. Revco will not, nor will it permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except the following ("Permitted Liens"):
(a) Liens encumbering the assets of Revco or any of its
Subsidiaries which were granted and in effect
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prior to the date hereof to secure Indebtedness which is permitted by
Section 8.15(b) and which Liens are described in the comment made with
respect to such Indebtedness in Item 8.15(b) ("Existing Indebtedness")
of the Disclosure Schedule;
(b) Liens granted to secure Indebtedness (x) incurred to
finance the purchase or other acquisition of assets permitted by
Section 8.21 on (but only on) such assets and where such Indebtedness
does not exceed the consideration paid to purchase or acquire such
assets or (y) assumed by Revco in connection with a purchase or other
acquisition permitted by Section 8.21. and where such Lien was not
granted in anticipation or contemplation of such purchase or other
acquisition or (z) permitted by Section 8.15(c) incurred for the
purpose of financing the acquisition, construction and/or improvement
of fixed assets provided that such Lien attaches solely to such
property and the principal amount of such Indebtedness does not exceed
100% of the cost of such acquisition, construction and/or improvement
and in each case where, when added to all other Indebtedness so
secured, such Indebtedness does not exceed (i) $50,000,000 in the
aggregate for Indebtedness secured by assets other than specific fixed
assets and (ii) $100,000,000 in the aggregate for all Indebtedness
secured pursuant to this CLAUSE (B);
(c) Liens securing any refinancing, renewal or extension of
any Indebtedness permitted by Section 8.2.2(b); provided that any such
Lien is limited to the property and assets securing the Indebtedness
being refinanced, renewed or extended;
(d) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been SET
aside on its books;
(e) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate proceedings and
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for which adequate reserves in accordance with GAAP shall have been
set aside on its books;
(f) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 10 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance, so long as the aggregate amount of all such judgment
Liens at any time does not exceed $20,000,000;
(h) leases or subleases to other Persons by Revco or any of
its Subsidiaries entered into in the ordinary course of business and
not interfering in any material respect with the ordinary conduct of
the business of Revco or such Subsidiary; PROVIDED that in no event
shall more than 30% of the floor space of any store (other than any
store at which Revco or such Subsidiary has ceased doing business) be
leased or subleased;
(i) any interest or title of a lessor under any lease not
prohibited hereunder; and
(j) easements, restrictions, conditions, zoning restrictions,
rights-of-way, licenses and other similar charges and encumbrances and
other minor defects or irregularities of title which are not, in the
aggregate, material.
SECTION 8.17. FINANCIAL CONDITION. Revco will not:
(a) Consolidate Interest and Lease Expense Coverage Ratio. Permit the
Consolidated Interest and Lease Expense Coverage Ratio as of the last day of
each Fiscal Quarter (the "Measurement Date") on a rolling thirteen Fiscal Month
basis to be less than (i) for each Fiscal Quarter ending in Fiscal Year 1996,
1.2 to 1.0 and (ii) for each Fiscal
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Quarter for Fiscal Year 1997 and each Fiscal Year thereafter, 1.3 to 1.0.
(b) Consolidated Total Indebtedness/Adjusted EBITDA Ratio. Permit the
Consolidated Total Indebtedness/Adjusted EBITDA Ratio as of the last day of each
Fiscal Quarter to exceed (i) for each Fiscal Quarter ending in Fiscal Year 1996
and Fiscal Year 1997, 3.75 to 1.00, (ii) for each Fiscal Quarter ending in
Fiscal Year 1998, 3.5 to 1.00 and (iii) for each Fiscal Quarter ending in Fiscal
Year 1999 and each Fiscal Year thereafter, 3.25 to 1.00.
SECTION 8.18. INVESTMENTS. Revco will not, nor will it permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments in any Person existing on the date hereof and
identified in Item 8.2.5(a) ("Ongoing Investments") of the Disclosure
Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to Section 8.15.;
(d) without duplication, Investments in the form of Capital
Expenditures in the ordinary course of business;
(e) acquisitions permitted by Section 8.21.;
(f) Investments by Revco in any of its Subsidiaries, or by any
of its Subsidiaries in any of its other Subsidiaries in the form of
contributions to capital or equity securities of any of such
Subsidiaries; and
(g) other Investments in an aggregate amount at any time not
to exceed $10,000,000;
PROVIDED that no Investment otherwise permitted by clauses (c) through (g) above
shall be permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
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SECTION 8.19. RESTRICTED PAYMENTS, ETC. On and at all times
after the Amendment Effective Date:
(a) Revco will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of Revco or on
any warrants, options or other rights with respect to any shares of any
class of capital stock (now or hereafter outstanding) of Revco (other
than dividends or distributions payable in its common stock or warrants
to purchase its common stock or splitups or reclassifications of its
stock into additional or other shares of its common stock) or apply, or
permit any of its Subsidiaries to apply, any of its funds, property or
assets to the purchase, redemption, sinking fund or other retirement
of, or agree (or permit any of its Subsidiaries to agree) to purchase
or redeem, any shares of any class of capital stock (now or hereafter
outstanding) of Revco, or warrants, options or other rights with
respect to any shares of any class of capital stock (now or hereafter
outstanding) of Revco; and
(b) Revco will not, and will not permit any Subsidiary to,
make any deposit for any of the foregoing purposes;
each of the foregoing being a "restricted payment", unless immediately after
giving effect to such restricted payment:
(c) no Default shall have occurred and be continuing; and
(d) the amount of such restricted payment, when added total
other restricted payments on or after June 3, 1995, shall not exceed
$100,000,000 plus Available Consolidated Net Income.
SECTION 8.20. TAKE OR PAY CONTRACTS. Revco will not, nor will
it permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other property or services
if such arrangement by its express terms requires that payment be made by Revco
or such Subsidiary regardless of whether or not such materials, supplies, other
properties or services are delivered or furnished to it, except severance
payment
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obligations under employment contracts and any other plan, arrangement or
program (whether or not subject to ERISA) in an aggregate amount for Revco and
all of its Subsidiaries not in excess of $40,000,000 at any time.
SECTION 8.21. CONSOLIDATION, MERGER, ACQUISITIONS, ETC. Revco
will not, nor will it permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, effect a recapitalization or reorganization, or merge into or
with, any other Person, or purchase or otherwise acquire all or substantially
all of the assets of any Person (or of any division thereof) except
(a) any such Subsidiary may liquidate or dissolve voluntarily
into Revco or any other such Subsidiary and any such Subsidiary may
merge with and into Revco or any other such Subsidiary; and
(b) any Permitted Material Acquisition;
(c) any purchase or other acquisition by Revco or any of its
Subsidiaries (by merger consolidation or otherwise) of all or
substantially all of the equity securities of a corporation or all or
substantially all of the assets of any Person engaged in a business
permitted to be engaged in by Revco or such Subsidiary pursuant to
Section 8.14 which is not a Material Acquisition;
provided further that, in any such case, if Revco is a party thereto, Revco is
the surviving entity.
SECTION 8.22. ASSET DISPOSITIONS, ETC. Revco will not, nor
will it permit any of its Subsidiaries to, sell, transfer, lease or otherwise
dispose of, or grant options, warrants or other rights with respect to, all or
substantially all of the assets of Revco and its Subsidiaries, taken as a whole
(including accounts receivable and capital stock or other equity of
Subsidiaries) to any Person.
SECTION 8.23. MODIFICATION OF CERTAIN INSTRUMENTS, ORGANIC
DOCUMENTS, ETC. Revco will not, nor will it permit any of its Subsidiaries to:
(a) consent to any amendment, supplement or other
modification of any of the terms or provisions
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contained in, or applicable to, or to any refinancing or renewal of,
the 9-1/8% Notes or HSI Notes or any Indebtedness evidencing any
refinancing or renewal of the 9-1/8% Notes or HSI Notes (including,
with respect to the 9-1/8% Indenture and HSI Indenture or any other
Instruments evidencing or governing the 9-1/8% Notes or HSI Indenture
or any such Indebtedness, any provision in respect of acceleration,
covenant, default, subordination, sinking fund, repayment, required
repurchase, interest rate or redemption), other than any amendment,
supplement or other modification, or any refinancing or renewal, which
extends the date or reduces the amount of any required repayment,
repurchase or redemption or which, in the opinion of the Required
Lenders, otherwise has no adverse effect on the Revolving Lenders;
(b) prepay, repurchase, defease, redeem or otherwise acquire
or retire for value (collectively, "Retire") any 9-1/8% Notes or HSI
Notes or any Indebtedness evidencing any refinancing or renewal of the
9-1/8% Notes or HSI Notes (other than in connection with a refinancing
or renewal of the entire amount of the 9-1/8% Notes or HSI Notes or
such Indebtedness which satisfies the requirement of clause (a) above);
provided that, unless a Default shall exist or would result therefrom,
Revco may Retire 9-1/8% Notes and Revco or HSI may Retire HSI Notes in
an aggregate principal amount of up to $150,000,000; or
(c) consent to any amendment, supplement or other modification
of any of the terms or provisions contained in any of Revco's or any of
its Subsidiaries' Organic Documents which is in any manner adverse to
the interests of the Revolving Lenders.
SECTION 8.24. TRANSACTIONS WITH AFFILIATES. Except as set
forth in Item 8.2.11 ("Affiliate Transactions") of the Disclosure Schedule,
Revco will not, nor will it permit any of its Subsidiaries to, enter into, or
cause, suffer or permit to exist any arrangement or contract with any of its
Affiliates (other than Revco or the Obligors) unless such arrangement is fair
and equitable to Revco or such Subsidiary and is not of a sort which would not
be entered into by a prudent Person in the position of Revco or such Subsidiary
with, or which is on terms which are less favorable to Revco or such Subsidiary
than are
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obtainable from, any Person which is not one of its Affiliates.
SECTION 8.25. INCONSISTENT AGREEMENTS. Revco will not, nor
will it permit any of its Subsidiaries to, enter into any agreement containing
any provision which would be violated or breached by any Credit Extension or by
the performance by Revco or any other Obligor of its Obligations hereunder or
under any Credit Document.
SECTION 8.26. ENVIRONMENTAL MATTERS. Revco will not, nor will
it permit any of its Subsidiaries to, violate any Environmental Law if such
violation could have a Materially Adverse Effect and, without limiting the
foregoing, Revco will not, and will not permit any Person to, except in
accordance with Applicable Law, dispose of any Hazardous Material into, onto or
from any real property owned or operated by Revco or any of its Subsidiaries,
nor allow any Lien imposed pursuant to any law, regulation or order relating to
Hazardous Materials or the disposal thereof to remain on such real property.
SECTION 8.27. LIMITATION ON NEGATIVE PLEDGES, ETC. From and
after the Amendment Effective Date, Revco will not, nor will it permit any of
its Subsidiaries to, enter into any agreement containing any provision which
would be violated or breached by a pledge of the outstanding capital stock of
the Subsidiaries or a guarantee by such Subsidiaries of Revco's Obligations
hereunder, except to the extent that any provision in Acquired Indebtedness of
any Subsidiary acquired by Revco or any of its Subsidiaries after the Amendment
Effective Date prohibits or limits the ability of such acquired Subsidiary or
its stockholders to enter into a pledge of stock or a guaranty of Revco's
Obligations; provided that such Indebtedness, prohibitions or limitations were
not created or entered into in anticipation or contemplation of or in connection
with the acquisition of such Subsidiary.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
SECTION 9.01. EVENTS OF DEFAULT. The term "Event of Default"
shall mean any of the events set forth in this Section 9.01.
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SECTION 9.02. NONPAYMENT OF OBLIGATIONS. Revco shall default:
(a) in the payment or prepayment when due (whether at stated
maturity or by acceleration, mandatory prepayment or otherwise) of any
principal of any Loan or any Reimbursement Obligation; or
(b) in the payment when due of any interest on any Loan or any
Reimbursement Obligation or of any commitment fee, letter of credit fee
or any other monetary Obligation (other than principal of any Loan or
Reimbursement Obligation) and such default shall continue unremedied
for a period of 5 Business Days.
SECTION 9.03. NONPERFORMANCE OF CERTAIN COVENANTS. Revco shall
default in the due performance or observance of any of its obligations under
Section 8.02.
SECTION 9.04. NONPERFORMANCE OF OTHER OBLIGATIONS. Revco shall
default in the due performance and observance of any other agreement contained
herein or in any other Credit Document executed by it, and such default shall
continue unremedied for a period of 30 days after the earlier of notice thereof
shall have been given to Revco by the Administrative Agent or the date on which
an Authorized Officer of Revco knew or should have known of such default.
SECTION 9.05. BANKRUPTCY, INSOLVENCY, ETC. Revco or any of its
Subsidiaries shall:
(a) become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for Revco or any
such Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for Revco or any such
Subsidiary or for a substantial part of the property of any thereof,
and such trustee,
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receiver, sequestrator or other custodian shall not be discharged
within 60 days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of Revco or any such
Subsidiary, and, if such case or proceeding is not commenced by Revco
or such Subsidiary, such case or proceeding shall be consented to or
acquiesced in by Revco or such Subsidiary or shall result in the entry
of an order for relief or shall remain for 60 days undismissed; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 9.06. BREACH OF WARRANTY. Any representation or
warranty of Revco hereunder or in the Credit Documents or any representation or
warranty by any Obligor in any Credit Document or any other writing furnished by
or on behalf of Revco or any Obligor to any Agent or any Revolving Lender for
the purposes of or in connection with this Agreement or any such Credit Document
is or shall be incorrect when made or deemed made in any material respect.
SECTION 9.07. DEFAULT ON OTHER INDEBTEDNESS, ETC. Any other
Indebtedness of Revco or any of its Subsidiaries in an outstanding principal
amount of $10,000,000 or more shall become due and payable and not be paid or
satisfied in full, or its holder shall be entitled to require Revco or such
Subsidiary to purchase, repurchase, redeem, defease, retire or otherwise prepay
such Indebtedness in whole or in part except as permitted by Section 8.2.10(b)
(in each case without giving effect to any grace periods applicable thereto); or
any default shall occur under the terms applicable to any Indebtedness in an
outstanding principal amount of $10,000,000 or more of Revco or any of its
Subsidiaries representing any borrowing or financing or arising under any other
material agreement, and such default shall:
(a) consist of the failure to pay such Indebtedness at the
maturity thereof;
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(b) result in the acceleration of such Indebtedness, or
continue unremedied for a period of time sufficient to permit the
acceleration of such Indebtedness or to permit the holder thereof to
require Revco or such Subsidiary to purchase, redeem or defease such
Indebtedness in whole or in part; or
(c) without limiting clause (b) above, continue unremedied
(and not have been waived by the holder of such Indebtedness) for more
than 10 days.
SECTION 9.08. INVALIDITY OF HSI GUARANTY. The HSI Guaranty
shall cease to be in full force and effect with respect to HSI other than as
expressly permitted hereunder, HSI shall fail (subject to any applicable grace
period) to comply with or to perform any applicable provision of the HSI
Guaranty, or HSI (or any Person by, through or on behalf of-HSI), shall contest
in any manner the validity, binding nature or enforceability of the HSI Guaranty
with respect to HSI.
SECTION 9.09. PENSION PLANS. Any of the following events shall
occur with respect to any Pension Plan:
(a) the institution of any steps by Revco, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as
a result of such termination, Revco or any such member could be
required to make a contribution to such Pension Plan, or could incur a
liability or obligation to such Pension Plan, in excess of $10,000,000;
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA;
(c) the institution of any steps or failure to take any action
by Revco, any member of its Controlled Group or any other Person if
such act or omission results, or could reasonably be expected to
result, in the assessment of withdrawal liability by a Multiemployer
Plan against Revco or any member of its Controlled Group in an amount
in excess of $10,000,000; or
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(d) a "default" (as defined in section 4219(c)(5) of ERISA)
occurs with respect to payments owed by Revco or any member of its
Controlled Group to any Multiemployer Plan.
SECTION 9.10. JUDGMENTS. Any judgment or order for the payment
of money in an aggregate amount in excess of $20,000,000 shall be rendered
against Revco or any of its Subsidiaries and either:
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
SECTION 9.11. CHANGE IN CONTROL. Any Change in Control shall
occur.
SECTION 9.12. ACTION IF BANKRUPTCY. If any Event of Default
described in clauses (a) through (d) of Section 9.05. shall occur, then all
Revolving Credit Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 9.13. ACTION IF OTHER EVENT OF DEFAULT. Subject to
Section 5.06, if any Event of Default (other than any Event of Default described
in clauses (a) through (d) of Section 9.05.) shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Administrative Agent may, and
upon the direction of the Required Lenders, shall, upon notice or demand,
declare a Commitment Termination Event, declare the outstanding principal amount
of the Loans and all other Obligations to be due and payable and terminate all
Revolving Credit Commitments, whereupon the full unpaid amount of such Loans and
any and all other Obligations shall be and become immediately due and payable,
without further notice, demand, or presentment, and/or, as the case may be, the
Revolving Credit Commitments shall terminate.
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ARTICLE X
THE AGENTS
----------
SECTION 10.01. APPOINTMENT AND AUTHORIZATION; "AGENT". Each
Revolving Lender hereby irrevocably (subject to Section 10.09) appoints,
designates and authorizes each Agent to take such action on its behalf under the
provisions of this Agreement and each other Credit Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Credit Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Credit Document, the
Agents shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall any Agent have or be deemed to have any fiduciary
relationship with any Revolving Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Credit Document or otherwise exist against any Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to any Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
SECTION 10.02. DELEGATION OF DUTIES. Each Agent may execute
any of its duties under this Agreement or any other Credit Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. No Agent shall be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
SECTION 10.03. LIABILITY OF AGENTS. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Credit Document
or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the
Revolving Lenders
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for any recital, statement, representation or warranty made by Revco or any
Subsidiary or Affiliate of Revco, or any officer thereof, contained in this
Agreement or in any other Credit Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Credit Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Credit Document, or for any failure of Revco or any
other party to any Credit Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Revolving Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or any
other Credit Document, or to inspect the properties, books or records of Revco
or any of Revco's Subsidiaries or Affiliates.
SECTION 10.04. RELIANCE BY AGENTS. (a) Each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to Revco), independent accountants and other
experts selected by such Agent. Each Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Credit Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Revolving Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agents shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Credit Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Revolving Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 6.01, each Revolving Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied
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with, each document or other matter either sent by an Agent to such Revolving
Lender for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Revolving
Lender.
SECTION 10.05. NOTICE OF DEFAULT. The Agents shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except, in the case of the Administrative Agent, with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Revolving Lenders, or if the
Administrative Agent shall have received written notice from a Revolving Lender
or Revco referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Revolving Lenders of its receipt of any
such notice. The Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Lenders in accordance with
Article IX; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Revolving Lenders.
SECTION 10.06. CREDIT DECISION. Each Revolving Lender
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by the Agents hereinafter taken, including
any review of the affairs of Revco and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any AgentRelated Person to any
Revolving Lender. Each Revolving Lender represents to the Agents that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property financial and other condition and creditworthiness of Revco and its
Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Revco and its Subsidiaries hereunder. Each
Revolving Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based
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on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Credit Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Revco. Except for notices, reports and other documents
expressly herein required to be furnished to the Revolving Lenders by the
Administrative Agent, the Agents shall not have any duty or responsibility to
provide any Revolving Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of Revco which may come into the possession of any of the
Agent-Related Persons.
SECTION 10.07. INDEMNIFICATION OF AGENT. Whether or not the
transactions contemplated hereby are consummated, the Revolving Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Revco and without limiting the obligation of Revco to do so),
pro rata, from and against any and all Indemnified Liabilities; PROVIDED,
HOWEVER, that no Revolving Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Revolving Lender shall reimburse each Agent
upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by such Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Credit Document, or any document contemplated by or referred to
herein, to the extent that such Agent is not reimbursed for such expenses by or
on behalf of Revco. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of any Agent.
SECTION 10.08. AGENT IN INDIVIDUAL CAPACITY. BofA and its
Affiliates and Paribas and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with Revco and its
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Subsidiaries and Affiliates as though BofA or Paribas were not an Agent
hereunder and without notice to or consent of the Revolving Lenders. The
Revolving Lenders acknowledge that, pursuant to such activities, BofA or its
Affiliates or Paribas or its Affiliates may receive information regarding Revco
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of Revco or such Subsidiary) and acknowledge that such
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, each of BAI, Paribas and each of their respective
Affiliates shall have the same rights and powers under this Agreement as any
other Revolving Lender and may exercise the same as though it were not the
Agent, and the terms "Revolving Lender" and "Revolving Lenders" include each of
BAI and Paribas in its individual capacity.
SECTION 10.09. SUCCESSOR AGENT. The Administrative Agent may
resign as Administrative Agent at any time upon at least 10 Business Days' prior
notice to Revco and all Revolving Lenders. If the Administrative Agent resigns
under this Agreement, the Required Lenders (with the written consent of Revco at
all times other than during the existence of an Event of Default, which consent
shall not be unreasonably withheld) shall appoint from among the Revolving
Lenders the successor Administrative Agent for the Revolving Lenders. If no
successor agent is appointed prior to the effective date of the resignation of
the Administrative Agent, the Administrative Agent may appoint, after consulting
with the Revolving Lenders and Revco, a successor agent from among the Revolving
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
such successor agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article X and Sections 11.03 and 11.04 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement. If no successor agent has accepted
appointment as Administrative Agent by the date which is 20 Business Days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Revolving Lenders shall perform all of the duties of the
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Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
SECTION 10.10. MANAGING AGENTS. None of the Revolving Lenders
identified on the facing page or signature pages of this Agreement as a
"Managing Agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Revolving Lenders as such or as a Swing Line Lender. Without limiting the
foregoing, none of the Revolving Lenders so identified as a "Managing Agent"
shall have or be deemed to have any fiduciary relationship with any Revolving
Lender. Each Revolving Lender acknowledges that it has not relied, and will not
rely, on any of the Revolving Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.01. WAIVERS, AMENDMENTS, ETC. The provisions of
this Agreement and of each Credit Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by Revco and the Required Lenders and acknowledged by the
Administrative Agent (it being understood that the Administrative Agent has no
independent vote), provided that no such amendment, modification or waiver:
(a) which would modify any requirement hereunder that any
particular action be taken by all the Revolving Lenders or by the
Required Lenders shall be effective unless consented to by each
Revolving Lender;
(b) which would modify this Section 11.1, change the
definition of "Required Lenders" or "Voting Percentage", increase any
Total Revolving Credit Commitment Amount or change any Revolving
Percentage or Voting Percentage for any Revolving Lender, reduce any
fees described in Article II, extend the Revolving Credit Commitment
Termination Date or subject any Revolving Lender to any additional
obligations shall be made without the consent of each Revolving Lender;
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(c) which would extend any mandatory Revolving Credit
Commitment reduction date or reduce the amount of any mandatory
Revolving Credit Commitment reduction or extend the due date for, or
reduce the amount of any payment of principal, interest or fees on any
Loan shall be made without the consent of each Revolving Lender;
(d) which would affect adversely the interests, rights or
obligations of the Administrative Agent and the Administrative Agent
shall be made without the consent of the Administrative Agent;
(e) which would affect adversely the interests, rights or
obligations of the Bid Loan Agent and the Bid Loan Agent shall be made
without the consent of the Bid Loan Agent; or
(f) which would release HSI under the HSI Guaranty, shall be
made without the consent of each Revolving Lender,
and, PROVIDED FURTHER, that the Fee Letter may be amended or rights or
privileges thereunder waived in a writing executed by the parties thereto.
No failure or delay on the part of any Agent or any Revolving Lender in
exercising any power or right under this Agreement or any other Credit Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on Revco in any
case shall entitle it to any notice or demand in similar or other circumstances.
No waiver or approval by any Agent or any Revolving Lender under this Agreement
or any other Credit Document shall, except as may be otherwise stated in such
waiver or approval, be applicable to subsequent transactions. No waiver or
approval hereunder shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
SECTION 11.02. NOTICES. (a) All notices, requests and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by Revco by facsimile shall be immediately
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confirmed by a telephone call to the recipient at the number set forth below its
signature hereto), and mailed, faxed or delivered, to the address or facsimile
number specified for notices set forth below its signature hereto; or, as
directed to Revco or the Administrative Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to Revco and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or X shall not be effective until actually
received by the Administrative Agent.
(c) Any agreement of the Agents, the Issuing Banks and the
Revolving Lenders herein to receive certain notices by telephone, facsimile or
electronic transmission is solely for the convenience and at the request of
Revco. The Agents, the Issuing Banks and the Revolving Lenders shall be entitled
to rely on the authority of any Person purporting to be a Person authorized by
Revco to give such notice and the Agents and the Revolving Lenders shall not
have any liability to Revco or any other Person on account of any action taken
or not taken by the Agents, the Issuing Banks or the Revolving Lenders in
reliance upon such telephonic, facsimile or electronic transmission notice. The
obligation of Revco to repay the Loans shall not be affected in any way or to
any extent by any failure by the Agents and the Revolving Lenders to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Agents and the Revolving Lenders of a confirmation which is at variance with the
terms understood by the Agents and the Revolving Lenders to be contained in the
telephonic or facsimile notice.
SECTION 11.03. FEES AND EXPENSES. Revco shall pay, upon
receipt of an itemized invoice therefor in reasonable detail, on demand all
expenses of each Managing Agent and the Administrative Agent in connection with
its review and examination of Revco and its Subsidiaries for
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purposes of the transactions contemplated hereby, in connection with the
development, preparation, delivery, execution, closing and ongoing
administration of the Credit Documents (including the reasonable fees and
expenses of Mayer, Brown & Platt or other counsel (and allocated costs and
disbursements of internal counsel) to the Managing Agents and the Administrative
Agent (and of local counsel, if any, who may be retained by counsel to the
Managing Agents) and all travel and lodging expenses, fees and expenses of
consultants, field examiners and other experts, environmental analysis fees, and
printing, document production, delivery and communication costs in connection
with the Credit Documents and the transactions contemplated thereby). If, at any
time or times, regardless of the existence of an Event of Default, any Managing
Agent or the Administrative Agent (or, in the case of clause (b) or (c) below,
any Revolving Lender) shall employ counsel, consultants, field examiners or
other professional advisors for advice or other representation or shall incur
reasonable legal, appraisal, accounting, consulting or other costs and expenses
(including reasonable loan administration expenses) in connection with:
(a) any amendment, supplement, modification or waiver of, or
consent with respect to, any of the Credit Documents (including any
"workout" or other restructuring or resetting of any or all of the
Obligations);
(b) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Agent or any Revolving Lender, Revco
or any other Person) in any way relating to, any of the Credit
Documents, or any other agreements to be executed or delivered in
connection therewith or herewith, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against Revco or any
other Person that may be obligated to any Agent or any Revolving Lender
by virtue of the Credit Documents, under the Bankruptcy Code or any
other applicable Federal, state, or foreign bankruptcy or other similar
law; or
(c) any attempt to enforce any rights of any Agent or any
Revolving Lender against Revco or any other Person that may be
obligated to any Agent or any
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Revolving Lender by virtue of any of the Credit Documents;
then, and in any such event, the reasonable fees of such attorneys, consultants,
field examiners and other professional advisors arising from such services,
including those of any appellate proceedings, and all reasonable expenses,
costs, charges and other fees incurred by such counsel or other professionals in
any way or respect arising in connection with or relating to any of the events
or actions described in this Section, together with all other out-of-pocket
expenses of any Agent or such Revolving Lender in connection with any of the
foregoing events, shall, upon receipt by Revco of an itemized invoice therefor
in reasonable detail, be payable on demand by Revco to such Agent or such
Revolving Lender and shall be additional Obligations secured under the Credit
Documents. Without limiting the generality of the foregoing, such reasonable
expenses, costs, charges and fees may include: paralegal fees, costs and
expenses; accountants' fees, costs and expenses; environmental analysis fees,
costs and expenses; appraisers' fees, costs and expenses; management, employee
benefit, liquidator and other consultants' fees, costs and expenses; court costs
and expenses; photocopying and duplicating expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal or other professional services.
SECTION 11.04. INDEMNIFICATION. In consideration of the
execution and delivery of this Agreement by each Revolving Lender and the
extension of the Revolving Credit Commitment, Revco hereby indemnities,
exonerates and holds each Agent, and each Revolving Lender and each of their
respective officers, directors, employees, attorneys and agents (the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
actually incurred in connection therewith (irrespective of whether such
Indemnified Party is a party to the action for which indemnification hereunder
is sought), including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to:
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(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance by Revco or any other
Obligor of this Agreement and any other Credit Document;
(c) any investigation, litigation, or proceeding related to
any acquisition or proposed acquisition by Revco or any of its
Subsidiaries of all or any portion of the stock or all or substantially
all the assets of any Person, whether or not such Agent or such
Revolving Lender is party thereto; or
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by Revco or any of its Subsidiaries of any
Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under CERCLA,
any so-called "Superfund" or "Superlien" law, or any other federal,
state, local or other statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to or imposing liability or
standards on conduct concerning, any Hazardous Material), regardless of
whether caused by, or within the control of, Revco or any of its
Subsidiaries; PROVIDED that, notwithstanding the foregoing, Revco shall
indemnify each Indemnified Party regardless of whether such Indemnified
Party takes possession of any real property owned or operated by Revco
or any of its Subsidiaries for all matters for which an Indemnified
Party might otherwise be entitled to indemnification by Revco hereunder
which have occurred or arisen prior to the time at which such
Indemnified Party takes such possession and which are unremediated or
continuing, and possession by such Indemnified Party shall not affect
Revco's duty and obligation to indemnify such Indemnified Party
hereunder,
except for such Indemnified Liabilities arising for the account of a particular
Indemnified Party which are determined by a final judgment of a court of
competent jurisdiction to be attributable solely to such Indemnified Party's
gross negligence or willful misconduct; provided
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that, if Revco institutes any action, suit or proceeding against any of the
Indemnified Parties and such action, suit or proceeding is unsuccessful, Revco
shall indemnify and hold harmless the Indemnified Parties from and against all
Indemnified Liabilities arising in connection with or relating to such action,
suit or proceeding. If and to the extent that the undertaking described in this
Section 11.04 may be unenforceable for any reason, Revco hereby agrees to make
the maximum contribution to the payment and satisfication of each of the
Indemnified Liabilities which is permissible under Applicable Law. No
Indemnified Person shall be responsible or liable to Revco, any of its
Subsidiaries, any of their respective successors or assigns, or any other Person
asserting claims derivately through any such party, for indirect, punitive,
exemplary or consequential damages which may be alleged as a result of this
Agreement and the other Credit Documents or the transactions contemplated hereby
and thereby. The provisions of this Section 11.04 shall be in addition to any
rights that any Indemnified Person may have at law or otherwise, including any
rights to contributions.
SECTION 11.05. SURVIRAL. The obligations of Revco under
Sections 2.04, 3.05, 4.06, 4.07, 11.03 and 11.04, and the obligations of the
Revolving Lenders under Section 10.01, shall in each case survive any
termination of this Agreement and the payment in full of any or all of the
Obligations. The representations and warranties made by Revco and any other
Obligor in this Agreement, the Notes and in each other Credit Document shall
survive the execution and delivery of this Agreement, the Notes and each such
other Credit Document.
SECTION 11.06. SEVERABILITY. Whenever possible, each provision
of this Agreement will be interpreted in such a manner as to be effective and
valid under Applicable Law, but if any provision of this Agreement, the Notes or
any other Credit Document is prohibited or unenforceable in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, the Notes or such other Credit Document or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11.07. HEADINGS. The various headings of this
Agreement, the Notes and of each other Credit Document
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are provided solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement, the Notes or such other Credit
Document or any provisions hereof or thereof.
SECTION 11.08. COUNTERPARTS. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
SECTION 11.09. GOVERNING LAW; ENTIRE AGREEMENT. THIS
AGREEMENT, THE NOTES AND EACH OTHER CREDIT DOCUMENT SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. THIS AGREEMENT, THE NOTES
AND THE OTHER CREDIT DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 11.10. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns, provided that:
(a) Revco may not assign or transfer (by operation of law or
otherwise) its rights or obligations hereunder without the prior
written consent of all Revolving Lenders; and
(b) the rights of sale, assignment and transfer by the
Revolving Lenders are subject to Section 11.11.
SECTION 11.11. ASSIGNMENTS AND PARTICIPATIONS. (a) Any
Revolving Lender may, with the written consent of Revco at all times other than
during the existence of an Event of Default, and of the Administrative Agent and
the LC Issuers, which consents shall not be unreasonably withheld, at any time
assign and delegate to one or more Eligible Assignees (provided that no written
consent of Revco or the Administrative Agent shall be required in connection
with any assignment and delegation by a Revolving Lender to an Eligible Assignee
that is an Affiliate of such Revolving Lender or to another Revolving Lender)
(each an "Assignee") all or any ratable part of all of the Loans, the Revolving
Credit Commitments and its participations in Letters of
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Credit and Swing Loans made with respect to its Revolving Credit Commitment and
owing to it and its undivided interest in the Notes (the "Assignable
Obligations") provided that: (i) each such assignment shall cover the same
aggregate percentage of such Revolving Lender's Assignable Obligations with
respect to Loans and such Revolving Lender's Revolving Credit Commitment
hereunder; (ii) the amount of the Assignable Obligations or the Revolving Credit
Commitment being assigned pursuant to each such assignment unless to a Revolving
Lender shall in no event be less than $10,000,000 of such assigning Revolving
Lender's Assignable Obligations (or, if less, the entire amount of such
assigning Revolving Lender's Assignable Obligations); (iii) no such assignment
shall require Revco to file a registration statement with the Securities and
Exchange Commission or apply to qualify any Revolving Credit Commitment,
Assignable Obligation or interest in any Note, or any interest in any thereof,
under the "blue sky" or other securities laws of any-jurisdiction; (iv) such
assignment will not result in the payment of additional fees by Revco with
respect to any then outstanding Loan, and (v) if because of circumstances in
effect on the effective date of any assignment, Revco would, under Sections 2.4,
3.5 or 4.6 of this Agreement, be obligated to make any payment to or for the
account of any Assignee, Revco shall only be obligated to make such payment to
the extent that it would then have been obliged to make such payment to the
assigning Revolving Lender; and PROVIDED FURTHER, that Revco and the
Administrative Agent may continue to deal solely and directly with such
Revolving Lender in connection with the Assignable Obligations so assigned to an
Assignee until (x) written notice of such Assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to Revco and the Administrative Agent by such Revolving
Lender and the Assignee; (y) such Revolving Lender and its Assignee shall have
delivered to Revco and the Administrative Agent an assignment and acceptance in
the form of Exhibit G (an "Assignment and Acceptance") and (z) the assignor
Revolving Lender or Assignee has paid to the Administrative Agent a processing
fee in the amount of $3,000.
(b) From and after the date that the Administrative Agent
notifies the assignor Revolving Lender that it has received (and, if necessary,
provided its consent with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing
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fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder shall have been assigned to it pursuant to such
Assignment and Acceptance shall have the rights and obligations of a Revolving
Lender under the Credit Documents and (ii) the assignor Revolving Lender shall,
to the extent that rights and obligations hereunder and under the other Credit
Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Documents.
(c) Immediately upon receipt of the processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Revolving Credit Commitments
arising therefrom. The Revolving Credit Commitment allocated to each Assignee
shall reduce such Revolving Credit Commitment of the assigning Revolving Lender
pro tanto and the Administrative Agent shall distribute to Revco and the
Revolving Lenders a revised Schedule VI reflecting such adjustment.
(d) Each Managing Agent agrees that, if as a result of its
assignments pursuant to this Section its voting Percentage at any time prior to
the termination of the Revolving Credit Commitments pursuant to Section 9.02 or
9.03 shall be less than 2.4%, it will, upon the request of Revco, resign as a
Managing Agent hereunder.
(e) Any Revolving Lender may at any time sell to one or more
commercial banks or other Persons not Affiliates of Revco (a "Participant")
participating interests in any loans, Revolving Credit Commitment of that
Revolving Lender (the "Originator") hereunder and under the other Credit
documents; PROVIDED, HOWEVER, that (i) the Originator's obligations under this
Agreement (including its Revolving Credit Commitments to Revco hereunder) shall
remain unchanged, (ii) the Originator shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such
participation is of a pro rata share of its Revolving Credit Commitments and/or
Loans, (iv) Revco and the Agents shall continue to deal solely and directly with
the Originator in connection with the originator's rights and obligations under
this Agreement and the other Credit Documents, (v) Participants shall be
entitled to the cost and yield protection provisions
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contained in Sections 2.04, 3.05, 4.03, 4.06, 4.07, 11.03 and 11.04 of this
Agreement to the extent (but solely to the extent) the Originator selling such
participation would be so entitled, and (vi) no Revolving Lender shall transfer
or grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
agreement or any other Credit Document, except to the extent that such
amendment, consent or waiver would require unanimous consent of the Revolving
Lenders as described in Sections ll.l(c) and (f). Revco agrees that if amounts
outstanding under this Agreement and the Notes are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default each Participant shall, be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Revolving Lender under this Agreement or such
Note.
(f) Any Revolving Lender may, subject to Section 11.17, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.11, disclose to any Assignee or
participant or proposed assignee or participant any information relating to
Revco furnished to such Revolving Lender by or on behalf of Revco.
(g) Notwithstanding any other provision in this Agreement, any
Revolving Lender may assign all or part of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with Regulation A
of the F.R.S. Board or U.S. Treasury Regulation 31 C.F.R. sec. 203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under Applicable Law.
SECTION 11.12. REVCO ASSISTANCE. In order to facilitate the
addition of additional Revolving Lenders hereto, Revco agrees to cooperate fully
with any Revolving Lender and the Managing Agents in connection therewith, and
to provide all reasonable assistance requested by any Revolving Lender and the
Managing Agents relating thereto, including the participation by senior
management of Revco and its Subsidiaries in meetings or teleconference calls
with potential additional Revolving Lenders, upon the
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request of such potential additional Revolving Lenders and the Managing Agents.
SECTION 11.13. OTHER TRANSACTIONS. Nothing contained herein
shall preclude any Agent, or any Revolving Lender from engaging in any debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Credit Document, with Revco or any of its Affiliates in which Revco
or such Affiliate is not restricted hereby from engaging with any other Person.
SECTION 11.14. WAIVER OF JURY TRIAL, ETC. REVCO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER CREDIT
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN), OR ACTIONS OF THE AGENTS, THE REVOLVING LENDERS, OR REVCO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, AND SUCH REVOLVING LENDERS
ENTERING INTO THIS AGREEMENT.
SECTION 11.15. SUBMISSION TO JURISDICTION. REVCO HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN NEW YORK CITY OVER ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE CREDIT DOCUMENTS OR THE NOTES, AND REVCO
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT.
REVCO, ON BEHALF OF ITSELF AND EACH SUBSIDIARY, HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AS
WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR
PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON
CONVENIENS OR OTHERWISE. REVCO HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEM
(THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 208 SOUTH LASALLE
STREET, CHICAGO, ILLINOIS 60604, UNITED STATES, AS ITS AGENT TO RECEIVE ON
BEHALF OF REVCO AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT
AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH
SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO REVCO IN
CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND REVCO HEREBY
IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS
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AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. REVCO AGREES TO INDEMNIFY THE
PROCESS AGENT IN CONNECTION WITH ALL MATTERS RELATING TO ITS APPOINTMENT AS
AGENT OF REVCO FOR SUCH PURPOSES, TO ENTER INTO ANY AGREEMENT RELATING TO SUCH
APPOINTMENT WHICH THE PROCESS AGENT MAY CUSTOMARILY REQUIRE, AND TO PAY THE
PROCESS AGENT'S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE,
REVCO ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO REVCO AT
ITS ADDRESS SPECIFIED PURSUANT TO SECTION 11.02. REVCO AGREES THAT A FINAL,
NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
REVCO AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST ANY AGENT OR ANY REVOLVING LENDER OR THE DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR PROPERTY OF ANY THEREOF, ARISING OUT OF OR RELATING TO THIS AGREEMENT,
IN ANY COURT OTHER THAN THE ONE HEREINABOVE SPECIFIED IN THIS SECTION. NOTHING
IN THIS SECTION, HOWEVER, SHALL AFFECT THE RIGHT OF ANY AGENT OR ANY REVOLVING
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF ANY AGENT OR ANY REVOLVING LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST REVCO OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 11.16. MARSHALLING; RECAPTURE. No Agent nor any
Revolving Lender shall be under any obligation to marshall any assets in favor
of Revco, any Subsidiary of Revco or any other party or against or in payment of
any or all of the Obligations. To the extent any Revolving Lender receives any
payment by or on behalf of Revco, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to Revco or its estate, trustee, receiver, custodian or
any other party under any bankruptcy law, state or Federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included within
the liabilities of Revco to such Revolving Lender as of the date such initial
payment, reduction or satisfaction occurred.
SECTION 11.17. CONFIDENTIALITY. Each Revolving Lender agrees
to take and to cause its Affiliates to take
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normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
Revco and provided to it by Revco or any Subsidiary or by any Agent on Revco's
or such Subsidiary's behalf, under this Agreement or any other Credit Document,
and neither it nor any of its Affiliates shall use any such information other
than in connection with or in enforcement of this Agreement and the other Credit
Documents or in connection with other business now or hereafter existing or
contemplated with Revco or any Subsidiary; except to the extent such information
(i) was or becomes generally available to the public other than as a result of
disclosure by the Revolving Lender, or (ii) was or becomes available on a
non-confidential basis from a source other than Revco, provided that such source
is not bound by a confidentiality agreement with Revco known to the Revolving
Lenders; PROVIDED that any Revolving Lender may disclose such information (A) at
the request or pursuant to any requirement of any governmental agency or
representative thereof to which the Revolving Lender is subject or in connection
with an examination of such Revolving Lender by any such authority; (B) pursuant
to subpoena or other court process; (C) when required to do so in accordance
with the provisions of any Applicable Law; (D) to the extent reasonably required
in connection with any litigation or proceeding to which any Agent, any
Revolving Lender or their respective affiliates may be parties; (E) to the
extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Credit Document; (F) to such Revolving Lender's
independent auditors or other professional advisors; (G) to any Participant or
Assignee, actual or potential, PROVIDED that such person agrees in writing to
keep such information confidential to the same extent required of the Revolving
Lenders hereunder; (H) to any Revolving Lender or its Affiliate, as expressly
permitted under the terms of any other document or agreement regrading
confidentiality to which Revco or any Subsidiary is a party or is deemed a party
with such Revolving Lender or such Affiliate; or (I) to its Affiliates provided
further that, unless specifically prohibited by Applicable Law or court order,
each Revolving Lender as promptly as practicable shall notify Revco of any
request (other than a request in connection with an examination of the
financial condition of such Revolving Lender) for disclosure under clauses (A),
(B) or (C).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
[SIGNATURES]
