STOCKHOLDER AGREEMENT
AGREEMENT dated as of February 6, 1997 between CVS Corporation, a
Delaware corporation ("CVS"), and Zell/Chilmark Fund, L.P., a Delaware
limited partnership (the "Stockholder").
W I T N E S S E T H:
WHEREAS, immediately prior to the execution of this Agreement,
CVS, Revco D.S., Inc., a Delaware corporation (the "Company"), and
North Acquisition Corp., a Delaware corporation ("Merger Subsidiary"),
have entered into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Subsidiary will be merged with and into the
Company (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, CVS has requested that the Stockholder agree, and
the Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements
contained herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
SECTION 1. Certain Definitions. Capitalized terms used and not
defined herein have the respective meanings ascribed to them in the
Merger Agreement. For purposes of this Agreement:
(a) "Affiliate" shall mean, when used with respect to any Person,
any other Person directly or indirectly controlling, controlled by or
under common control with such Person. As used in this definition, the
term "control" means possession, directly or indirectly, of the power
to direct or control the direction of management or policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, "Affiliate" when
used with respect to the Stockholder shall exclude any entity that
would otherwise be an Affiliate hereunder but that is not 100%
Beneficially Owned by Samuel Zell.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to
any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), including
pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by
the same holder, securities Beneficially Owned by a Person shall
include securities Beneficially Owned by all other Persons with whom
such Person would constitute a "group" within the meaning of Section
13(d) of the Exchange Act with respect to securities of the same
issuer.
(c) "Company Common Stock" shall mean at any time the common
stock, $.01 par value, of the Company.
(d) "Existing Shares" shall mean the shares of Company Common
Stock Beneficially Owned by the Stockholder on the date hereof.
(e) "Shares" shall mean the Existing Shares and any shares of
Company Common Stock and/or other equity securities of the Company
acquired by the Stockholder in any capacity after the date hereof and
prior to the termination of this Agreement, whether upon the exercise
of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase,
dividend, distribution, split-up, recapitalization, combination,
exchange of shares or the like, gift, bequest, inheritance or as a
successor in interest in any capacity or otherwise Beneficially Owned
by the Stockholder.
SECTION 2. Voting of Company Common Stock. The Stockholder hereby
agrees that at any meeting (whether annual or special and whether or
not an adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, the Stockholder will
appear at the meeting or otherwise cause the Shares to be counted as
present thereat for purposes of establishing a quorum and the
Stockholder shall vote or consent (or cause to be voted or consented)
the Shares held of record or Beneficially Owned by the Stockholder in
favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval and adoption of the terms thereof
and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and
hereof.
SECTION 3. Covenants, Representations and Warranties of the
Stockholder. The Stockholder hereby represents and warrants to, and
agrees with, CVS as follows:
(a) Ownership of Shares. The Stockholder is the record and
Beneficial Owner of Existing Shares consisting of 13,102,288 shares of
Company Common Stock. On the date hereof, the Existing Shares
constitute all of the Shares owned of record or Beneficially Owned by
the Stockholder. The Stockholder has sole voting power (except as
provided in the Stockholder's Agreement dated as of June 1, 1992, by
and between Revco and the Stockholder (the "Revco Stockholder
Agreement")) and sole power to issue instructions with respect to the
matters set forth in Section 2 hereof, sole power of disposition
(except as provided in the Agreement of Limited Partnership of
Zell/Chilmark Fund, L.P. (the "Zell Fund Agreement")), sole power of
conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Existing Shares with no limitations,
qualifications or restrictions on such rights, subject to applicable
securities laws and the terms of this Agreement. Upon consummation of
the Merger, the Stockholder will have sole voting power (except as
provided in the Revco Stockholder Agreement) and sole power to issue
instructions with respect to the matters set forth in Section 4
hereof, sole power of disposition (except as provided in the Zell Fund
Agreement), sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the shares of CVS
Common Stock it holds of record or Beneficially Owns with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Corporate Authorization. This Agreement has been duly and
validly executed and delivered by the Stockholder and constitutes a
valid and binding agreement enforceable against the Stockholder in
accordance with its terms except to the extent (i) such enforcement
may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents
and approvals as may be required under the HSR Act, the 1934 Act and
the 1933 Act, (i) no filing with, and no permit, authorization,
consent or approval of, any state or federal governmental body or
authority is necessary for the execution and delivery of this
Agreement by the Stockholder and the consummation by the Stockholder
of the transactions contemplated hereby and (ii) none of the execution
and delivery of this Agreement by the Stockholder, the consummation by
the Stockholder of the transactions contemplated hereby or compliance
by the Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of the organizational documents
of the Stockholder, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which the
Stockholder is a party or by which the Stockholder or any of its
properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, statute, law, rule or regulation
applicable to the Stockholder or any of its properties or assets.
(d) No Encumbrances. Other than as provided in the Revco
Stockholder Agreement as to voting of the Shares and in the Zell Fund
Agreement as to provisions relating to timing of disposition of the
Shares by the Stockholder, and except as applicable in connection with
the transactions contemplated hereby, the Shares and the certificates
representing such Shares are now, and at all times during the term
hereof, will be, held by the Stockholder, or by a nominee or custodian
for the benefit of the Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever,
except for any such encumbrances or proxies arising hereunder.
(e) No Finder's Fees. Other than as contemplated by the Merger
Agreement with respect to fees payable by the Company, no broker,
investment banker, financial advisor or other Person is entitled to
any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
the Stockholder.
(f) No Solicitation. The Stockholder shall not, and shall cause
its Affiliates and officers, directors, employees, investment bankers,
consultants and other agents of the Stockholder and such Affiliates
(such Affiliates, officers, directors, employees, investment bankers,
consultants and other agents of any Person are hereinafter
collectively referred to as the "Representatives" of such Person) not
to, directly or indirectly, take any action to initiate, solicit,
encourage or facilitate the making of any Acquisition Proposal or any
inquiry with respect thereto, or engage in discussions or negotiations
with any Person (other than CVS or any of its Affiliates or
Representatives) relating to any Acquisition Proposal or disclose any
non-public information relating to Revco or any Subsidiary of Revco or
afford access to the properties, books or records of Revco or any
Subsidiary of, Revco, to any Person that has made any Acquisition
Proposal. The Stockholder shall notify CVS orally and in writing of
any offers, proposals or inquiries received by the Stockholder
relating to the purchase or acquisition by any Person of the Shares
and of any Acquisition Proposal actually known to the Stockholder
(including in each case the material terms and conditions thereof and
the identity of the Person making it), within 24 hours of the receipt
thereof. The Stockholder shall, and shall cause its Representatives
to, immediately cease and cause to be terminated any and all existing
activities, discussions or negotiations, if any, with any parties
conducted heretofore with respect to any Acquisition Proposal, other
than discussions or negotiations with CVS and its Affiliates. For
purposes of the foregoing, Representatives of the Stockholder will not
include investment bankers or consultants that approach or contact the
Stockholder, the Company or any other Person, without having been
solicited by the Stockholder, regarding such an offer, proposal or
inquiry so long as the Stockholder does not thereafter encourage or
retain such investment bankers or consultants to pursue such offer,
proposal or inquiry. Notwithstanding the restrictions set forth in
this Section 3(f), each of the Company and any Person who is an
officer or director of the Company may take any action consistent with
the terms of the Merger Agreement.
(g) Restriction on Transfer, Proxies; Non-Interference. The
Stockholder shall not, directly or indirectly: (i) offer for sale,
sell, transfer, tender,
pledge, encumber (other than by operation of law), assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of the Shares or any interest therein; (ii) except as
contemplated by this Agreement, grant any proxies or powers of
attorney, deposit the Shares into a voting trust or enter into a
voting agreement with respect to the Shares; or (iii) take any action
that would make any representation or warranty of the Stockholder
contained herein untrue or incorrect or would result in a breach by
the Stockholder of its obligations under this Agreement or a breach by
the Company of its obligations under the Merger Agreement or the
effect of which would be inconsistent or violative of any provision or
agreement contained in this Agreement.
(h) Reliance by CVS. The Stockholder understands and acknowledges
that CVS is entering into the Merger Agreement in reliance upon the
Stockholder's execution and delivery of this Agreement.
SECTION 4. Representations and Warranties of CVS. CVS hereby
represents and warrants to the Stockholder as follows:
(a) Organization. CVS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has all requisite corporate power and authority to execute and deliver
this Agreement and perform its obligations hereunder. The execution
and delivery by CVS of this Agreement and the performance by CVS of
its obligations hereunder have been duly and validly authorized by the
Board of Directors of CVS and no other corporate proceedings on the
part of CVS are necessary to authorize the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
(b) Corporate Authorization. This Agreement has been duly and
validly executed and delivered by CVS and constitutes a valid and
binding agreement of CVS enforceable against CVS in accordance with
its terms except to the extent (i) such enforcement may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors
rights and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any
proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents
and approvals as may be required under the HSR Act, the 1934 Act and
the 1933 Act, (i) no filing with, and no permit, authorization,
consent or approval of, any state or federal governmental body or
authority is necessary for the execution and delivery of this
Agreement by CVS and the consummation by CVS of the transactions
contemplated hereby and (ii) none of the execution and delivery of
this Agreement by CVS, the consummation by CVS of the transactions
contemplated hereby or compliance by CVS with any of the provisions
hereof shall (A) conflict with or result in any breach of the
certificate of incorporation or by-laws of CVS, (B) result in a
violation or breach of, or constitute (with or without notice or lapse
of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or
obligation of any kind to which CVS is a party or its properties or
assets may be bound, or (C) violate any order, writ, injunction,
decree, judgment, statute, law, rule or regulation applicable to CVS
or any of its properties or assets.
(d) No Finder's Fee. Except for Donaldson, Lufkin & Jenrette
Securities Corporation and CS First Boston Corporation whose fees will
be paid by CVS, no broker, investment banker, financial adviser or
other Person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on
behalf of CVS.
SECTION 5. Stop Transfer; Legend. (a) The Stockholder agrees
with, and covenants to, CVS that the Stockholder shall not request
that the Company register the transfer (book-entry or otherwise) of
any certificate or uncertificated interest representing any of the
Shares unless such transfer is made in compliance with this Agreement.
(b) In the event of a stock dividend or distribution, or any
change in the Company Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or
the like other than pursuant to the Merger, the term "Shares" shall be
deemed to refer to and include the shares of Company Common Stock as
well as all such stock dividends and distributions and any shares into
which or for which any or all of the Shares may be changed or
exchanged and appropriate adjustments shall be made to the terms and
provisions of this Agreement.
(c) The Stockholder will, prior to the Effective Time, duly
execute and deliver to CVS the Affiliate's letter contemplated in
Section 5.11 of the Merger Agreement substantially in the form of
Exhibit C-3 to the Merger Agreement.
(d) The Stockholder shall promptly after the date hereof
surrender to the Company all certificates representing the Shares, and
the Company shall place the following legend on such certificates:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A STOCKHOLDER
AGREEMENT DATED AS OF FEBRUARY 6, 1997
BY AND BETWEEN CVS CORPORATION AND
ZELL/CHILMARK FUND, L.P. WHICH AMONG
OTHER THINGS RESTRICTS THE TRANSFER AND
VOTING THEREOF."
SECTION 6. Termination. The provisions of this Agreement shall
terminate upon the earlier to occur of (i) the Effective Time and (ii)
the termination of the Merger Agreement in accordance with its terms.
SECTION 7. Confidentiality. The Stockholder recognizes that
successful consummation of the transactions contemplated by this
Agreement may be dependent upon confidentiality with respect to the
matters referred to herein. In this connection, pending public
disclosure thereof, the Stockholder hereby agrees not to disclose or
discuss such matters with anyone not a party to this Agreement (other
than to the Company and to its and the Company's counsel and advisors)
without the prior written consent of CVS, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder
or disclosures its counsel advises are necessary in order to fulfill
its obligations imposed by law, in which event the Stockholder shall
give prior notice of such disclosure to CVS as promptly as practicable
so as to enable CVS to seek a protective order from a court of
competent jurisdiction with respect thereto.
SECTION 8. Disclosure. (a) The Stockholder hereby agrees to
permit CVS to publish and disclose in the Form S-4 and the CVS Proxy
Statement (including all documents, exhibits and schedules filed with
the SEC), and any press release or other disclosure document which
CVS's counsel advises are necessary or desirable in connection with
the Merger and any transactions related thereto, the Stockholder's
identity and ownership of Company Common Stock or shares of CVS Common
Stock, as the case may be, and the nature of its commitments,
arrangements and understandings under this Agreement.
(b) The Stockholder hereby agrees to permit Revco to publish and
disclose in the Revco Proxy Statement (including all documents,
exhibits and schedules filed with the SEC), and any press release or
other disclosure document which Revco, in its sole discretion,
determines to be necessary or desirable in connection with the Merger
and any transactions related thereto, the Stockholder's identity and
ownership of Company Common Stock or shares of CVS Common Stock, as
the case may be, and the nature of its commitments, arrangements and
understandings under this Agreement.
SECTION 9. Miscellaneous. (a) Entire Agreement. This Agreement,
the Merger Agreement and the Registration Rights Agreement referred to
therein constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and supersedes all
other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and
thereof.
(b) Binding Agreement. The Stockholder agrees that this Agreement
and the obligations hereunder shall attach to the Shares and shall be
binding upon any Person to which legal or Beneficial Ownership of such
Shares shall pass, whether by operation of law or otherwise,
including, without limitation, the Stockholder's heirs, distributees,
guardians, administrators, executors, legal representatives, or
successors, partners or other transferees (for value or otherwise) and
any other successors in interest. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor. Nothing in this
clause (b) shall permit any transfer of Shares otherwise prohibited by
the provisions of this Agreement.
(c) Assignment. No party may assign any of its rights or
obligations hereunder, by operation of law or otherwise, without the
prior written consent of the other party; provided that CVS may
assign, in its sole discretion, its rights and obligations hereunder
to any direct or indirect wholly owned subsidiary of CVS, but no such
assignment shall relieve CVS of its obligations hereunder if such
assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed
by the parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if given) by hand delivery
or telecopy (with a confirmation copy sent for next day delivery via
courier service, such as Federal Express), or by any courier service,
such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties
at the following addresses:
If to Zell/Chilmark Fund, L.P.
Stockholder: Two CVS Riverside Plaza
Suite 1500
Chicago, Illinois 60606
Attention: Sheli Z. Rosenberg
Telephone No.: (312) 984-9711
Telecopy No.: (312) 984-0317
with a copy to: Rosenberg & Liebentritt
2 North Riverside Plaza
Suite 1601
Chicago, Illinois 60606
Attention: Alisa Singer
Telephone No.: (312) 454-0335
Telecopy No.: (312) 466-3196
If to CVS: CVS Corporation
One CVS Drive
Woonsocket, RI 02895
Attention: Thomas M. Ryan
Telephone: 401-765-1500
Telecopy No.: 401-765-4128
with a copy to: Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis S. Hersch
Telephone No.: (212) 450-4545
Telecopy No.: (212) 450-5744
or to such other address as the Person to whom notice is given may
have previously furnished to the others in writing in the manner set
forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had
near been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain
damages for which it would not have an adequate remedy at law for
money damages, and therefore each of the parties hereto agrees that in
the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements
and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise
of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder,
and
any custom or practice of the parties at variance with the terms
hereof, shall not constitute a waiver by such party of its right to
exercise any such or other right, power or remedy or to demand such
compliance.
(j) No Third Party Beneficiaries. Except for Section 8(b) hereof,
this Agreement is not intended to be for the benefit of, and shall not
be enforceable by, any Person who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of
Delaware in any action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding
shall be brought only in such court (and waives any objection based on
forum non conveniens or any other objection to venue therein);
provided, however, that such consent to jurisdiction is solely for the
purpose referred to in this Section 9(l) and shall not be deemed to be
a general submission to the jurisdiction of said Court or in the State
of Delaware other than for such purposes. Each party hereto hereby
waives any right to a trial by jury in connection with any such
action, suit or proceeding.
(m) Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such
further lawful action as may be necessary or desirable to consummate
and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
(n) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this
Agreement.
(o) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, CVS and the Stockholder have caused this
Agreement to be duly executed as of the day and year first above
written.
CVS CORPORATION
By: /s/ Stanley P. Goldstein
---------------------------
Name: Stanley P. Goldstein
Title: Chairman and Chief
Executive Chief
ZELL/CHILMARK FUND, L.P.
By: ZC Limited Partnership,
general partner
By: ZC Partnerships, general partner
By: ZC Inc., a partner
By: /s/ Sheli Z. Rosenberg
----------------------------
Name: Sheli Z. Rosenberg
Title: Vice President