COMPANY STOCKHOLDER AGREEMENT
dated as of November 23, 1998 (this
"Agreement"), among X. X. Xxxxxx
Company, Inc., a Delaware corporation
("Parent"), and the individuals and
other parties listed on Schedule A
hereto (each, a "Stockholder" and,
collectively, the "Stockholders").
WHEREAS, Parent, Legacy Acquisition Corp., a
Delaware corporation ("Sub"), and Xxxxxxxx Drug Stores,
Inc., a Delaware corporation (the "Company"), propose to
enter into an Agreement and Plan of Merger dated as of the
date hereof (as the same may be amended or supplemented, the
"Merger Agreement"; capitalized terms used but not defined
herein shall have the meanings set forth in the Merger
Agreement) providing for the merger of Sub with and into the
Company; and
WHEREAS, each Stockholder owns the number of
shares of Company Common Stock set forth opposite his, her
or its name on Schedule A hereto (such shares of Company
Common Stock, together with any other shares of capital
stock of the Company acquired by such Stockholder after the
date hereof and during the term of this Agreement, being
collectively referred to herein as the "Subject Shares" of
such Stockholder);
WHEREAS, the Board of Directors of the Company
have approved the terms of this Agreement; and
WHEREAS, as a condition to its willingness to
enter into the Merger Agreement, Parent has requested that
each Stockholder 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, agree as follows:
SECTION 1. Representations and Warranties of Each
Stockholder. Each Stockholder hereby, severally and not
jointly, represents and warrants to Parent as of the date
hereof in respect of himself, herself or itself as follows:
(a) Authority; Execution and Delivery;
Enforceability. The Stockholder has all requisite power and
authority to execute this Agreement and to consummate the
transactions contemplated hereby. The Stockholder has duly
executed and delivered this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other
laws of general applicability relating to or affecting
creditors' rights and remedies and to general principles of
equity. The execution and delivery by the Stockholder of
this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation
or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of
the Stockholder under, any provision of any Contract to
which the Stockholder is a party or by which any properties
or assets of the Stockholder are bound, including the
Existing Stockholders Agreement (as defined below), or,
subject to the filings and other matters referred to in the
next sentence, any provision of any Judgment or Applicable
Law applicable to the Stockholder or the properties or
assets of the Stockholder. No Consent of, or registration,
declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to the
Stockholder in connection with the execution, delivery and
performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (i) compliance
with and filings under the HSR Act, if applicable to the
Stockholder's receipt in the Merger of Parent Common Stock,
and (ii) such reports under Sections 13(d) and 16 of the
Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby. If the
Stockholder is married and the Subject Shares of the
Stockholder constitute community property or otherwise need
spousal or other approval to be legal, valid and binding,
this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement
of, the Stockholder's spouse, enforceable against such
spouse in accordance with its terms.
(b) The Subject Shares. Except as set forth on
Schedule A hereto, the Stockholder is the record and
beneficial owner of, or is the trustee of a trust that is
the record holder of, and whose beneficiaries are the
beneficial owners of, and has good and marketable title to,
the Subject Shares set forth opposite his, her or its name
on Schedule A attached hereto, free and clear of any Liens.
The Stockholder does not own, of record or beneficially, any
shares of capital stock of the Company other than the
Subject Shares set forth opposite his, her or its name on
Schedule A attached hereto. Except as set forth on Schedule
A hereto, the Stockholder has the sole right to vote such
Subject Shares, and except for the Stockholders Agreement
dated as of June 30, 1997, by and among the Stockholders
(the "Existing Stockholders Agreement") and except as
contemplated by this Agreement, none of such Subject Shares
is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of
such Subject Shares.
SECTION 2. Representations and Warranties of
Parent. Parent hereby represents and warrants to each
Stockholder as follows: Parent has all requisite corporate
power and authority to execute this Agreement and to
consummate the transactions contemplated hereby. The
execution and delivery by Parent of this Agreement and
consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of
Parent. Parent has duly executed and delivered this
Agreement, and, assuming this Agreement constitutes the
legal, valid and binding obligation of each of the other
parties hereto, this Agreement constitutes the legal, valid
and binding obligation of Parent, enforceable against Parent
in accordance with its terms, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting
creditors' rights and remedies and to general principles of
equity. The execution and delivery by Parent of this
Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof
will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation
or acceleration of any obligation or to loss of a material
benefit under, or result in the creation of any Lien upon
any of the properties or assets of Parent under, any
provision of any Contract to which Parent is a party or by
which any properties or assets of Parent are bound or,
subject to the filings and other matters referred to in the
next sentence, any provision of any Judgment or Applicable
Law applicable to Parent or the properties or assets of
Parent. No Consent of, or registration, declaration or
filing with, any Governmental Entity is required to be
obtained or made by or with respect to Parent in connection
with the execution, delivery and performance of this
Agreement or the consummation of the transactions
contemplated hereby, other than such reports under Sections
13(d) and 16 of the Exchange Act as may be required in
connection with this Agreement and the transactions
contemplated hereby.
SECTION 3. Covenants of Each Stockholder. Each
Stockholder, severally and not jointly, covenants and agrees
as follows:
(a) (1) At any meeting (whether annual or special
and whether or not an adjourned or postponed meeting) of the
stockholders of the Company called to seek the Company
Stockholder Approval or in any other circumstances upon
which a vote, consent or other approval (including by
written consent) with respect to the Merger Agreement, any
other Transaction Agreement, the Merger or any other
Transaction is sought, the Stockholder shall, including by
executing a written consent solicitation if requested by
Parent, vote (or cause to be voted) the Subject Shares of
the Stockholder in favor of granting the Company Stockholder
Approval.
(2) The Stockholder hereby irrevocably grants to,
and appoints, Parent, Xxxxxx X. XxXxx, and Xxxxxxx X.
Xxxxxx, or any of them, and any individual designated in
writing by any of them, and each of them individually, as
the Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead
of the Stockholder, to vote the Subject Shares of the
Stockholder, or grant a consent or approval in respect of
the Subject Shares of the Stockholder in a manner consistent
with this Section 3. The Stockholder understands and
acknowledges that Parent is entering into the Merger
Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement. The Stockholder hereby affirms
that the irrevocable proxy set forth in this Section 3(a) is
given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of the Stockholder
under this Agreement. The Stockholder hereby further affirms
that the irrevocable proxy is coupled with an interest and
may under no circumstances be revoked. The Stockholder
hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 212(e) of the
DGCL. The irrevocable proxy granted hereunder shall
automatically terminate upon the termination of Sections
3(a) and 3(b) in accordance with Section 5.
(b) At any meeting (whether annual or special and
whether or not an adjourned or postponed meeting) of
stockholders of the Company or at any adjournment thereof or
in any other circumstances upon which the Stockholder's
vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares of the
Stockholder against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation
or winding up of or by the Company, (ii) any Acquisition
Proposal and (iii) any amendment of the Company Charter or
the Company By-laws or other proposal or transaction
involving the Company or any Company Subsidiary, which
amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify any provision
of the Merger Agreement or any other Transaction Agreement,
the Merger or any other Transaction or change in any manner
the voting rights of any class of capital stock of the
Company. The Stockholder shall not commit or agree to take
any action inconsistent with the foregoing.
(c) Other than this Agreement and except as
provided in the next sentence, the Stockholder shall not (i)
sell, transfer, pledge, assign or otherwise dispose of
(including by gift) (collectively, "Transfer"), or enter
into any Contract, option or other arrangement (including
any profit sharing arrangement) with respect to the Transfer
of, any Subject Shares to any person other than pursuant to
the Merger or (ii) enter into any voting arrangement,
whether by proxy, voting agreement or otherwise, with
respect to any Subject Shares and shall not commit or agree
to take any of the foregoing actions. Notwithstanding the
foregoing, the following Transfers are expressly permitted:
(w) Transfers of Subject Shares to any other
Stockholder;
(x) Transfers of up to an aggregate of 40,000
Subject Shares (for all Stockholders) to one or more
members of one or more Stockholders' family and/or to
one or more charities;
(y) in addition to any Transfers permitted
pursuant to clause (x) above, Transfers of Subject
Shares to (1) a transferee for estate planning
purposes, (2) members of such Stockholder's family or
trusts established for the benefit of such family
members, or (3) a charitable foundation or trust, in
each case only following the due execution and delivery
to Parent by each such transferee of a counterpart to
this Agreement; and
(z) upon the death of the Stockholder, the
Transfer of Subject Shares to the executor of the
estate of such Stockholder or to such Stockholder's
heirs, devisees, or legatees.
(d) The Stockholder shall not, nor shall it
authorize or permit any employee or affiliate of, or any
investment banker, attorney or other adviser or
representative of, the Stockholder to, (i) directly or
indirectly, solicit, initiate or encourage the submission
of, any Acquisition Proposal, (ii) enter into any agreement
with respect to any Acquisition Proposal or (iii)
participate in any discussions or negotiations regarding, or
furnish to any person (other than Parent and any of its
affiliates or representatives) any information with respect
to, or take any other action knowingly to facilitate any
inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition
Proposal. The Stockholder promptly shall advise Parent
orally and in writing of any Acquisition Proposal or inquiry
made to the Stockholder with respect to or that could
reasonably be expected to lead to any Acquisition Proposal.
(e) The Stockholder shall use all reasonable
efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other
Transactions. The Stockholder shall not issue any press
release or make any other public statement with respect to
any Transaction Agreement, the Merger or any other
Transaction without the prior written consent of Parent,
except as may be required by Applicable Law.
(f) The Stockholder hereby consents to and
approves the actions taken by the Company Board in approving
the Transaction Agreements, the Merger and the other
Transactions and adopting the Merger Agreement. The
Stockholder hereby waives, and agrees not to exercise or
assent, any appraisal rights under Section 262 in connection
with the Merger.
SECTION 4. Indemnification. To the fullest extent
permitted by law, Parent shall indemnify, defend and hold
harmless each Stockholder, and the transferees, heirs,
devisees, legatees, executors and administrators of such
Stockholder (each an "Indemnified Party") against all
losses, claims, damages, liabilities, fees and expenses
(including attorneys' fees and disbursements), judgments,
fines and amounts paid in settlement (collectively,
"Losses"), as incurred (payable monthly upon written request
which request shall include reasonable evidence of the
Losses set forth therein) to the extent arising from,
relating to, or otherwise in respect of, any actual or
threatened action, suit, proceeding or investigation, by or
on behalf of any stockholder of the Company or the Company,
challenging a Stockholder's actions or omissions in respect
of this Agreement or any other Transaction Agreement, the
Merger or any other Transactions; provided, however, that an
Indemnified Party shall not be entitled to indemnification
under this Section 4 for Losses arising out of actions or
omissions by the Indemnified Party constituting (i) a breach
of this Agreement or any other Transaction Agreement, (ii)
criminal conduct or (iii) any violation of federal, state or
foreign securities laws. In order to be entitled to
indemnification under this Section 4, an Indemnified Party
must give Parent prompt written notice of any third party
claim which may give rise to any indemnity obligation under
this Section 4, and Parent shall have the right to assume
the defense of any such claim through counsel of its own
choosing, subject to such counsel's reasonable judgment that
separate defenses that would create a conflict of interest
on the part of such counsel are not available. If Parent
does not assume any such defense, Parent shall be liable for
all costs and expenses of defending such claim incurred by
the Indemnified Party, including attorneys' fees and
disbursements, and shall advance such costs and expenses
(subject to receipt of an undertaking by the Indemnified
Party to repay amounts so advanced if it is ultimately
determined that such Indemnified Party is not entitled to
indemnification under this Section 4) to the Indemnified
Party as set forth above. Parent shall not be liable under
this Section 4 for any Losses resulting from any settlement,
compromise or offer to settle or compromise any such action,
suit, proceeding or investigation, without the prior written
consent of Parent.
SECTION 5. Termination. This Agreement, other than
Sections 4 and 7, shall terminate upon the earliest of (i)
the Effective Time and (ii) the termination of the Merger
Agreement in accordance with its terms. Sections 4 and 7
shall not terminate.
SECTION 6. Additional Matters. (a) Each
Stockholder shall, from time to time, execute and deliver,
or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Parent
may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this
Agreement.
(b) No person executing this Agreement who is or
becomes during the term hereof a director or officer of the
Company makes any agreement or understanding herein in his
or her capacity as such a director or officer of the
Company. Each Stockholder signs solely in his, her or its
capacity as the record holder and beneficial owner of, or
the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Subject Shares and
nothing herein shall limit or affect any actions taken by
any Stockholder in his capacity as an officer or director of
the Company to the extent specifically permitted by the
Merger Agreement.
SECTION 7. General Provisions.
(a) Amendments. This Agreement may not be amended
except by an instrument in writing signed by each of the
parties hereto.
(b) Notice. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
proof of delivery) to Parent in accordance with Section 9.02
of the Merger Agreement and to the Stockholders at their
respective addresses set forth on Schedule A hereto (or at
such other address for a party as shall be specified by like
notice).
(c) Interpretation. When a reference is made in
this Agreement to Sections, such reference shall be to a
Section to this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation".
(d) Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to
any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent
of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
(e) Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be
considered one and the same agreement. This Agreement shall
become effective against Parent when one or more
counterparts have been signed by Parent and delivered to
each Stockholder. This Agreement shall become effective
against any Stockholder when one or more counterparts have
been executed by such Stockholder and delivered to Parent.
Each party need not sign the same counterpart.
(f) Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire
agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties
with respect to the subject matter hereof and (ii) except
for Section 4, is not intended to confer upon any person
other than the parties hereto any rights or remedies
hereunder.
(g) Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of Delaware regardless of the laws that might
otherwise govern under applicable principles of conflicts of
law thereof.
(h) Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law
or otherwise, by Parent without the prior written consent of
each Stockholder (except that Parent may assign, in its sole
discretion, any or all of its rights, interests and
obligations hereunder, other than its obligations under
Section 4 hereof which may not be assigned without such
written consent, to any direct or indirect wholly owned
subsidiary of Parent) or by any Stockholder without the
prior written consent of Parent, and any purported
assignment without such consent shall be void. Subject to
the preceding sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
(i) Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any Federal court
located in the State of Delaware or in any Delaware state
court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of
the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware state court in the event
any dispute arises out of this Agreement or any Transaction,
(ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave
from any such court, (iii) agrees that it will not bring any
action relating to this Agreement or any Transaction in any
court other than a Federal court sitting in the State of
Delaware or any Delaware state court and (iv) waives any
right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or
any transaction contemplated hereby.
IN WITNESS WHEREOF, each party has duly executed
this Agreement, all as of the date first written above.
X. X. Xxxxxx Company, Inc.,
by /s/ X. X. Xxxxxxxxxxxxx
----------------------------
Name: X. X. Xxxxxxxxxxxxx
Title: Chairman of the Board
Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx, in
his capacity as Trustee
of the Trust established
for the benefit of Xxxxx
Xxxxxxxx pursuant to
paragraph FIFTH of the
Last Will and Testament
of Xxxxxx Xxxxxxxx, Xx.;
in his capacity as
Co-Trustee of the Trust
established for the
benefit of Xxxxxxx
Xxxxxxxx Xxxxxxxx
pursuant to paragraph
FOURTH of the Last Will
and Testament of Xxxxxx
Xxxxxxxx, Xx.; in his
capacity as Trustee or
Co-Trustee of any other
trust referred to in
Schedule A hereto; and
individually
/s/ Xxxxxxx Xxxxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxx Xxxxxxxx,
in her capacity as Co-Trustee
of the Trust established for the
benefit of Xxxxxxx
Xxxxxxxx Xxxxxxxx
pursuant to paragraph
FIFTH of the Last Will
and Testament of Xxxxxx
Xxxxxxxx, Xx.; in her
capacity as Trustee or
Co-Trustee of any other
trust referred to in
Schedule A hereto; and
individually
SCHEDULE A
Number of Shares of
Name and Address Company
of Stockholder Common Stock Owned
All of the following shares
are held in Xxxxxxx Xxxxx CMA
Accounts:
I. Xxxxxxx Xxxxxxxx
1. Xxxxxxx Xxxxxxxx Trustee 37,441 Class A
U/A Dated 3/22/91 290,373 Class B
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000
2. Xxxxxxx Xxxxxxxx XXX 787 Class A
959 Class B
3. Xxxxxxx Xxxxxxxx 5-Year GRAT 255,591 Class B
4. Xxxxxxx Xxxxxxxx 7-Year GRAT 273,473 Class B
5. Xxxxxxx Xxxxxxxx 10-Year GRAT 281,334 Class B
6. Xxxxxxx Xxxxxxxx Pledged 60,669 Class A
Collateral Account* 223,569 Class B
* These shares are pledged to Xxxxxxx Xxxxx to secure a
loan.
7. Xxxxxxx Xxxxxxxx Trustee FBO
Xxxxx Xxxxxxxx U/W Xxxxxx X.
Xxxxxxxx Xx.** 688,932 Class B
** Xx. Xxxxxxxx has sole voting power of these shares, but
disclaims any beneficial ownership of these shares. Xx.
Xxxxxxxx is the sole trustee of the Trust established for
the benefit of Xxxxx Xxxxxxxx pursuant to the Last Will and
Testament of Xxxxxx Xxxxxxxx, Xx.
Total Class A: 98,897
Total Class B: 2,014,231
Total Shares: 2,113,128
II. Xxxxxxx Xxxxxxxx Xxxxxxxx
1. Xxxxxxx Xxxxxxxx Xxxxxxxx
TTEE
U/A DTD 4/16/96
000 Xxxxxxxxx Xxx, #X000 2,067 Class A
Xxxxxx, XX 00000-0000 31,440 Class B
2. Xxxxxxx Xxxxxxxx TTEE*
Xxxxxxx Xxxxxxxx TTEE
FBO Xxxxxxx Xxxxxxxx
000 Xxxxxxxxx Xxx, #X000
Xxxxxx, XX 00000-0000 1,905,572 Class B
*Shared voting power by Xx. Xxxxxxxx and Xxx. Xxxxxxxx as
co-trustees of the Trust established for the benefit of Xxx.
Xxxxxxxx pursuant to the Last Will and Testament of Xxxxxx
Xxxxxxxx, Xx.
3. Xxxxxxx Xxxxxxxx Xxxxxxxx
Pledged Collateral Account** 170,263 Class B
** These shares are pledged to Xxxxxxx Xxxxx to secure a
loan.
4. Xxxxxxx Xxxxxxxx Xxxxxxxx 9,409 Class B
Total Class A: 2,067
Total Class B: 2,116,684
Total Shares: 2,118,751
