EXHIBIT 99(D)
CONSULTING AGREEMENT
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AGREEMENT, made and entered into as of February 8, 1998 by and
between CVS Corporation, a Delaware corporation (together with its
subsidiaries and its successors and assigns permitted under this Agreement, the
"Company"), and Xxxxxx Xxxxxxxxx (the "Consultant").
W I T N E S S E T H :
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WHEREAS, the Consultant is the Chairman, Chief Executive Officer
and President of Arbor Drugs, Inc., a Michigan corporation ("Arbor Drugs");
WHEREAS, the Company has entered into an Agreement and Plan of
Merger with Red Acquisition, Inc. and Arbor Drugs dated as of February 8, 1998
(the "Merger Agreement"), pursuant to which, among other things, at the
Effective Time of the Merger provided for therein (as each such term is
defined in the Merger Agreement), Arbor Drugs will become a wholly-owned
subsidiary of the Company;
WHEREAS, the Consultant has the ability to offer services to the
Company based on his extensive expertise and knowledge with respect to matters
relating to Arbor Drugs and its business; and
WHEREAS, the Company desires to retain Consultant to provide such
services to the Company, and the Consultant desires to provide such services
to the Company, subject to the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the Company and the Consultant (individually a
"Party" and together the "Parties") agree as follows:
1. Consulting Term.
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The term of the consulting arrangement provided for herein
(the "Consulting Term") shall commence on the Closing Date of the Merger
provided for in the Merger Agreement (the "Effective Date") and shall end at
the close of business on the fifth anniversary of the Effective Date, unless
it is terminated earlier pursuant to Section 8.
2. Consulting Services.
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(a) The Consultant shall provide consulting services to the
Company at the request of either the Chief Executive Officer or Chief
Operating Officer of the Company ("Consulting Services"). Such Consulting
Services shall include advice on transitional issues, Michigan and Toledo
metropolitan area real estate matters, including with respect to opening,
relocating or acquiring stores and other mutually agreeable projects.
(b) In performing his Consulting Services, Consultant shall
not be required to travel outside of Michigan or the metropolitan Toledo area.
(c) The Parties acknowledge and agree that the Consultant
is an independent contractor and is not a partner, employee, or agent with the
Company or any of its subsidiaries or affiliates. Nothing in the Agreement
shall be construed to grant either Party the authority to enter into a
contract in the name of the other Party, or to bind the other Party in any
manner.
3. Consulting Fee.
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The Consultant shall be paid an annual Consulting Fee of
$450,000.00, payable on a quarterly basis in advance. In consideration of his
role with respect to real estate matters in Michigan and the Toledo
metropolitan area, the Consultant shall be paid a bonus of $25,000 upon the
opening, relocation or the acquisition of each store opened by, relocated or
acquired by the Company in Michigan and metropolitan Toledo during the term of
this Agreement.
4. Grant of Stock Option
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(a) The Company shall grant the Consultant an option (the
"Option") to purchase 25,000 shares of the common stock, par value $0.01 per
share, of the Company (the "Company Common Stock") on the Closing Date of the
Merger. In the event that the Common Stock is subject to a stock split or
stock dividend following the date of this Agreement, or if there is any other
change in the Common Stock of the Company following the date of this
Agreement, the number of shares underlying the Option shall be adjusted
appropriately to reflect such stock split, stock dividend, or other change.
The Option shall have an exercise price equal to the closing sale price of the
Company Common Stock as reported on the New York Stock Exchange, Inc.
Composite Transactions List for the Closing Date of the Merger. The Option
shall (i) expire on the fifth anniversary of the date of grant and (ii) shall
be fully exercisable on the date of grant.
(b) The Company shall effect the registration of the sale
of shares of Company Common Stock underlying the Option to Consultant upon
exercise of the Option under the Securities Act of 1933, as amended.
5. Benefit Programs.
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(a) Nothing set forth in this Agreement shall be deemed to
limit the benefits that would be available to the Consultant as a non-employee
director of the Company for so long as he serves in such capacity.
(b) The parties acknowledge that Consultant's existing
Change of Control Agreement requires the Company to provide the Consultant and
his spouse, from the period commencing on the Effective Date and ending on
their respective deaths, with coverage under Company's health insurance
benefit programs in which the Company's senior executive officers participate.
Such coverage shall be at the Company's cost and expense for the first two
years after the Effective Date and thereafter at the cost and expense of the
Consultant and his spouse. Nothing herein shall be deemed to limit such
rights or benefits of the Consultant and the Company shall not adversely
change such rights or benefits.
In the event that the Company cannot provide comparable
benefits to the Consultant under any group benefit plan or arrangement in
which he has a right to participate pursuant to this Section 5, the Company
shall provide the Consultant with the after-tax economic equivalent of the
benefits provided under such group plan or arrangement in which he is unable
to participate. The economic equivalent of any benefit foregone shall be
deemed to be a reasonable competitive cost that the Consultant would
reasonably incur in obtaining such benefit for himself on an individual basis.
6. Reimbursement of Business and Other Expenses.
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The Consultant is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all reasonable business expenses
incurred in connection with carrying out the business of the Company, subject
to documentation in accordance with the Company's policy.
7. Perquisites.
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Notwithstanding anything herein to the contrary, during the
Consulting Term, the Consultant shall be entitled to, and the Company shall
provide the Consultant with:
(a) office space, secretary (as selected by the Consultant)
and support services comparable to the office space,
secretary and support services currently provided to
the Consultant by Arbor Drugs at Arbor Drugs' current
principal executive offices or at another location
acceptable to the Consultant; and
(b) a U.S. automobile comparable to the automobile which
the Consultant currently uses, together with required
maintenance and repairs.
8. Termination of Consulting Term.
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The Consulting Term shall terminate at the earlier of the
(i) the close of business on the fifth anniversary of the Effective Date or
(ii) the date of the permanent incapacity or death of the Consultant. For
these purposes, the Consultant shall be deemed to be permanently incapacitated
if he is incapable of performing his obligations hereunder for 180 consecutive
days in any 360-day period.
9. Indemnification.
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The Company agrees that it shall indemnify and hold the
Consultant harmless against all cost, expense, liability and loss resulting
from the consulting arrangement provided for herein, the provision of the
Consulting Services and in respect of all other capacities or services served
in or provided by the Consultant to the Company, to the same extent as provided
in the indemnification arrangements in existence from time to time between the
Company and its directors and senior executive officers.
10. Effect of Agreement.
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Any agreement between the Consultant and Arbor Drugs
providing for payments to Consultant in consideration of services rendered
shall terminate and be of no further force and effect from and after the
effectiveness of this Agreement on the Effective Date. The parties
acknowledge that the Consultant's Change of Control Agreement with Arbor Drugs
will continue in full force and effect from and after the Effective Date. The
Company shall honor the provisions of such Change of Control Agreement,
including, without limitation, the existing tax provisions thereof, which
provisions shall cover payments to be made and benefits to be made available
by Arbor Drugs and the Company.
11. Assignability; Binding Nature.
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This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective successors, heirs (in the case of the
Consultant) and assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company; provided,
however, that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained
in this Agreement, either contractually or as a matter of law. The Company
further agrees that, in the event of a sale of assets or liquidation as
described in the preceding sentence, it shall take whatever action it legally
can in order to cause such assignee or transferee to expressly assume the
liabilities, obligations and duties of the Company hereunder. No rights or
obligations of the Consultant under this Agreement may be assigned or
transferred by the Consultant other than his accrued rights to compensation
and benefits, which may be transferred only by will or operation of law,
except as provided in Section 17 below.
12. Representation.
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The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement and that the performance
of its obligations under this Agreement will not violate any agreement between
it and any other person, firm or organization. The Consultant represents that
there is no agreement between him and any other person, firm or organization
that would be violated by entrance into or the performance of his obligations
under this Agreement.
13. Entire Agreement.
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This Agreement contains the entire understanding and
agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties with respect
thereto.
14. Amendment or Waiver.
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No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Consultant and an
authorized officer of the Company. No waiver by either party of any breach
by the other party of any condition or provision contained in this Agreement to
be performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by the Consultant or an authorized
officer of the Company, as the case may be.
15. Severability.
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In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole or
in part, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
16. Survivorship.
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The respective rights and obligations of the Parties
hereunder set forth in Sections 5(b), 6, 9 and 10 shall survive the
termination of the Consulting Term in accordance with their terms.
17. Beneficiaries/References.
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The Consultant shall be entitled, to the extent permitted
under any applicable law, to select and change a beneficiary or beneficiaries
to receive any compensation or benefit payable hereunder following the
Consultant's death by giving the Company written notice thereof. In the event
of the Consultant's death or a judicial determination of his incompetence,
reference in this Agreement to the Consultant shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
18. Governing Law.
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This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Delaware without reference to
principles of conflict of laws.
19. Resolution of Disputes.
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Any disputes arising under or in connection with this
Agreement shall be resolved by binding arbitration, to be held in Troy,
Michigan in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Costs
of the arbitration, including, without limitation, reasonable attorneys' fees
of both Parties, shall be borne by the Company. Pending the resolution of any
arbitration or court proceeding, the Company shall continue payment of all
amounts due the Consultant under this Agreement and all benefits to which the
Consultant is entitled at the time the dispute arises.
20. Notices.
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Any notice given to Party shall be in writing and shall be
deemed to have been given when delivered personally or by facsimile
transmission or sent by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the Party concerned at the address or
facsimile number indicated below or to such changed address or facsimile
number as such Party may subsequently give such notice of:
If to the Company, to:
CVS Corporation
Xxx XXX Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Vice Chairman and
Chief Operating Officer
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and:
If to the Consultant, to:
Honigman, Miller, Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Block, Esq.
21. Headings.
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The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning
or construction of any provision of this Agreement.
22. Counterparts.
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This Agreement may be executed in two or more counterparts.
23. Effectiveness of Agreement.
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Notwithstanding anything herein to the contrary, this
Agreement shall not become effective until the Closing of the Merger provided
for in the Merger Agreement and neither the Company nor the Consultant shall
have any obligations or liabilities hereunder until this Agreement shall then
become effective. In the event that the Company or Arbor Drugs terminate the
Merger Agreement, this Agreement shall be terminated and become void and have
no effect, without further action by the Company or the Consultant.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
CVS CORPORATION
By: /s/ X. X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Vice Chairman and
Chief Operating Officer
/s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx
