A G R E E M E N T
THIS AGREEMENT is made and executed this 31 day of March, 1989, by and
between XXXXXX X. XXXX and LONGS DRUG STORES CALIFORNIA, INC., a California
corporation.
IN CONSIDERATION OF the manual covenants herein set forth and other
valuable considerations by each party received from each other party, the
adequacy of which is hereby acknowledged, IT IS AGREED:
SECTION 1. DEFINITIONS. As used in this agreement:
1.1. The term "corporation" shall refer to Longs Drug Stores
California, Inc., a California corporation.
1.2. The term "stock" shall refer to shares of common stock issued
by Longs Drug Stores Corporation, a Maryland corporation.
1.3. The term "Foundation stock" shall refer to all stock (a) which
on the death of Xxxxxx X. Xxxx is held by the Xxxxxx X. Xxxx Foundation, a
California public benefit corporation; or (b) which is acquired by the Xxxxxx
X. Xxxx Foundation as a result of the death of Xxxxxx X. Xxxx.
1.4. The term "Trust stock" shall refer to all stock which as a
result of the death of Xxxxxx X. Xxxx (a) is acquired by one or more trustees,
or (b) in which the rights of the trustees become irrevocable and in which the
Xxxxxx X. Xxxx Foundation has a remainder interest.
1.5. The term "the Xxxxxx X. Xxxx Foundation" shall refer not only
to the California public benefit corporation of that name, but also to every
other exempt organization to which a substitutionary gift of Foundation stock
or Trust stock may be made because of the failure of the Xxxxxx X. Xxxx
Foundation to satisfy the conditions of a gift to it.
1.6. The term "personal representative" shall refer to the duly
qualified personal representative of the estate of Xxxxxx X. Xxxx, acting in
that capacity following the death of Xxxxxx X. Xxxx, while the assets of the
estate include any Foundation stock or any Trust stock. Should a special
administrator be appointed to administer the estate of Xxxxxx X. Xxxx until
such time as a personal representative of that estate is appointed, the term
"personal representative" shall also refer to that special administrator.
1.8.[sic] The term "trustee" shall refer to (a) the duly qualified and
acting trustee or trustees holding any Trust stock; and (b) the directors and
officers of the Xxxxxx X. Xxxx Foundation, while it holds any Foundation
stock.
SECTION 2. RECOGNITION. The parties hereto recognize that:
2.1. Xxxxxx X. Xxxx beneficially owns approximately 2,125,000 shares
of stock.
2.2. The provisions and covenants of this agreement are to the best
interests of the parties, the heirs and devisees of Xxxxxx X. Xxxx, and the
Employee Profit Sharing Plan of the corporation, which the parties intend
will acquire the stock, in providing for an orderly sale and purchase of stock
under the circumstances and in the manner provided in this agreement.
2.3. The provisions of this agreement shall apply not only to
shares of stock now owned by Xxxxxx X. Xxxx, but shall also apply to shares of
stock hereafter acquired by him, to the extent such stock is Foundation stock
or Trust stock.
SECTION 3. SALE OF FOUNDATION STOCK AND TRUST STOCK.
3.1. After the death of Xxxxxx X. Xxxx, no shares of Foundation
stock or Trust stock shall be disposed of in any manner other than in
accordance with this Section 3.
3.2. In the 270 day period commencing on the date of the death of
Xxxxxx X. Xxxx, the personal representative and the trustee may demand the
corporation purchase up to five percent (5%) of the aggregate Foundation stock
and Trust stock. The purchase price shall be paid in cash to the sellers
within 90 days after the date of the demand, and the sellers shall then deliver
to the corporation certificates evidencing ownership of the stock purchased,
with proper assignments in blank, duly executed with signatures guaranteed.
If the corporation fails, refuses or declines to purchase timely all of the
stock included within the demand, all of the Foundation stock and all of the
Trust stock shall thereafter be free of any rights or options of the
corporation, and the holders thereof may deal with all of the Foundation stock
and all of the Trust stock, and exercise all rights of ownership therein, free
from the provisions of this agreement.
3.3. In the 270 day period which commences one year after the death
of Xxxxxx X. Xxxx, in the 270 day period which commences two years after the
death of Xxxxxx X. Xxxx, and in each of the seven succeeding annual renewals
of said period, the personal representative and the trustee may demand the
corporation purchase up to a fractional share of the aggregate Foundation
stock and Trust stock. The fractional share, in each 270 day period, is
determined by multiplying the total number of shares of Foundation stock and
Trust stock on the date of the demand by a fraction, the numerator of which is
one and the denominator of which is ten minus "x", when "x" equals the number
of annual renewals of the 270 day period since the death of Xxxxxx X. Xxxx.
The purchase price shall be paid in cash to the sellers within 90 days after
the date of the demand, and the sellers shall then deliver to the corporation
certificates evidencing ownership of the stock purchased, with proper
assignments in blank, duly executed with signatures guaranteed. If the
corporation fails, refuses or declines to timely purchase all of the stock
included within the demand, then in such event the stock included within the
demand shall thereafter be free of any rights or options of the corporation,
and the holders thereof may deal with, and exercise all rights of ownership,
free from the provisions of this agreement.
3.4. Foundation stock, or Trust stock which is purchased by the
corporation in any annual renewal of the 270 day period in excess of the
number determined under the formula stated in Section 3.3 shall reduce the
number of shares the purchase of which may be demanded in the next succeeding
annual renewals of the 270 day period by the number of such excess shares so
purchased.
3.5. The purchase price of all Foundation stock and Trust stock
under this Section 3 shall be the "adjusted market value" of the stock.
"Market value" means the average closing sale price (during the 30 day period
ending on the last trading day preceding the closing date) of a share of
corporation's stock on the composite tape for the New York Stock Exchange-
listed stocks; or, if the stock is not quoted on the composite tape for the
New York Stock Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which the stock is
listed; or, if the stock is not listed on any such exchange, the average
closing bid quotation with respect to a share of the stock during the 30 day
period ending on the last trading day preceding the date in question on the
National Association of Securities Dealers, Inc. automated quotations system
or any system in use. "Adjusted market value" means "market value" reduced by
the amount of commissions, fees or price reductions, if any, to which a sale
by the personal representative, or trustee, would be subject if the stock were
sold on the applicable exchange, or through the applicable quotation system.
Any adjustment in "market value" shall be supported by the opinion of an
investment banker selected by the personal representative and the trustee.
"Closing date" means the date on which the purchase price is paid to the
sellers, and the share certificates are delivered to the corporation.
3.6. If demanded by the Personal Representative and Trustee, the
corporation shall purchase all Foundation stock and all Trust stock at market
value if the stock should be delisted on the exchanges, and excluded from the
quotation systems, described in Section 3.5. The closing date of such
purchase shall be the first date on which the stock is so delisted or
excluded.
3.7. If a tender offer, or an exchange offer, is made for the
stock, the personal representative and the trustee may demand that the
corporation purchase all of the Foundation stock and Trust stock, on a closing
date which will permit the Foundation stock and the Trust stock to be sold in
response to the tender offer or exchange offer, if the corporation does not
purchase all of the Foundation stock and the Trust stock. If the corporation
fails, refuses or declines to purchase timely all of the Foundation stock,
such stock shall thereafter be free of any rights or options of the
corporation, and the holders thereof may deal with all of the Foundation stock
and all of the Trust stock, and exercise all rights of ownership therein, free
from the provisions of this agreement. The purchase price of the Foundation
stock and the Trust stock, in the event of a tender offer or exchange offer,
shall not be determined under Section 3.5. Purchase price in the event of
either such offer shall be the closing sale price of corporation's stock on
the last trading day preceding the closing date on the composite tape for the
New York Stock Exchange-listed stocks; or, if the stock is not quoted on the
composite tape for the New York Stock Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which the stock is listed; or, if the stock is not listed on any such
exchange, the closing bid quotation for a share of the stock on the last
trading day preceding the closing date on the National Association of
Securities Dealers, Inc. automated quotations system or any system in use.
SECTION 4. GENERAL.
4.1. Xxxxxx X. Xxxx hereby directs his personal representative, and
his trustee to perform all of the provisions of this agreement which each,
respectively, is directed to perform without any order of court for that
purpose, and without notice to any person and without the intervention of any
court.
4.2. This agreement shall not in any respect deprive Xxxxxx X. Xxxx
of any rights of ownership of the shares of stock beneficially owned by him,
including (without limitation) unrestricted rights of disposition by sale,
exchange, gift or other transfer, voting rights and the right to receive and
retain all stock splits, and dividends (either in cash or in the form of shares
of stock) declared thereon.
SECTION 5. ENDORSEMENT OF STOCK CERTIFICATES.
5.1 Upon receipt of any Foundation stock or Trustee stock, the
distributee agrees to deliver to the corporation all certificates evidencing
ownership of shares of Foundation stock or Trustee stock in order that there
may be endorsed upon the face of each such certificate a legend reading
substantially as follows:
"The shares of stock evidenced by this certificate are subject
to an Agreement entered into on the 31 day of March, 1989,
between Xxxxxx X. Xxxx and Longs Drug Stores, California,
Inc., which restricts and controls any sale, assignment,
transfer, pledge or other disposition of shares of stock
evidenced by this certificate. A copy of this agreement is
on file with the Secretary of Longs Drug Stores California,
Inc."
After endorsement of that legend, each certificate shall be returned
to the person delivering the certificate to the corporation. So long as this
agreement is in force, a legend substantially as above stated shall be
endorsed on each certificate of Foundation stock or Trust stock.
5.2. A copy of this agreement shall remain on file with the\
Secretary of the corporation.
In the event that the corporation fails, refuses or declines to
purchase shares of stock as provided in sections 3.2, 3.3, 3.6 or 3.7, upon
request by the holder of the stock, the corporation agrees to replace the
certificates evidencing the shares of stock involved (and upon which the
legend appears) by a certificate or certificates duly executed and issued
evidencing ownership by the holder thereof of an equivalent number of shares
of stock upon which no legend shall appear.
SECTION 6. NOTICES.
All notices, offers, acceptances, demands, requests and other
communications contemplated in this agreement shall be in writing and shall be
deemed delivered either (a) by personal delivery to the party to whom it is
addressed or (b) upon the expiration three (3) days following the date of
mailing (as shown by the postmark on the envelope) through United States
Certified Mail, postage prepaid, return receipt requested, addressed to the
respective parties hereto at the following addresses:
In the case of Xxxxxx X. Xxxx, a separate notice addressed to:
Xxxxxx X. Xxxx The Xxxxxx X. Xxxx Foundation
1493 Paseo Nogales 000 X. Xxxxx Xxxxx
Xxxxx, XX 00000 Xxxxxx Xxxxx, XX 00000
In the case of the corporation, a separate notice addressed to each:
Chief Executive Officer Corporate Secretary
Longs Drug Stores Longs Drug Stores
000 X. Xxxxx Xxxxx 000 X. Xxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000 Xxxxxx Xxxxx, XX 00000
Xxxxxx X. Xxxx or The Xxxxxx X. Xxxx Foundation may change the address
above stated by notice in writing to the corporation. The corporation may
change individual officers or the address above stated by notice in writing
to Xxxxxx X. Xxxx and The Xxxxxx X. Xxxx Foundation.
SECTION 7. SUCCESSION.
7.1. It is agreed that neither party to this agreement shall assign
the agreement or its rights hereunder without the express approval in writing
of the other party; provided, however, that the obligations of corporation
hereunder, including the obligation to purchase Foundation stock and Trust
stock, may be performed at the time the corporation is required to act by
either the duly qualified and acting trustee of the Employee Profit Sharing
Plan of the corporation; or by any affiliate of the corporation.
7.2. The provisions of this agreement to be performed following the
death of Xxxxxx X. Xxxx shall be binding upon the personal representative, and
the trustee of Xxxxxx X. Xxxx and on his heirs and devisees.
SECTION 8. ENFORCEMENT - ATTORNEYS FEES.
8.1. Each party hereto recognizes that his or its obligations
hereunder are unique and that the breach of any obligation could not be
adequately compensated by monetary damages; therefore, each party directs
that specific performance of each such obligation shall be the remedy
available to the other party for any such breach.
8.2. In the event suit or action be instituted by either party to
enforce performance by the other party of the terms and provisions of this
agreement incumbent upon the other party to be kept or performed, the
prevailing party in such suit or action shall be entitled to recover a
reasonable sum as attorneys fees and all court costs incurred on behalf of
that party and that amount shall be included in the judgment made and entered
in that action.
SECTION 9. OTHER AGREEMENTS.
This agreement shall supersede any prior agreements between the
parties and any other written or oral understanding between the parties with
respect to the sale and purchase of shares of stock.
SECTION 10. VALIDITY - LEGALITY.
In the event that any provision of this agreement shall be held
invalid or illegal or unenforceable in whole or in part, the validity of any
other provision of this agreement shall not in any manner be affected thereby.
SECTION 11. GOVERNING LAW.
The provisions of this agreement and the interpretation thereof shall
be governed and construed in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, this agreement has been duly executed by an[sic]
on behalf of each party hereto the day and year herein first above written.
/s/ Xxxxxx X. Xxxx 3/31/89
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XXXXXX X. XXXX, (date)
individually and as trustee
under the Declaration of
Trust executed September 4, 1976,
as restated and amended.
LONGS DRUG STORES, CALIFORNIA, INC.
By /s/ X. X. Xxxx 3/31/89
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Its President and CEO (date)
By /s/ Xxxx X. Xxxxx 3/31/89
-----------------------------
Its Secretary (date)
The undersigned Xxxxxx X. Xxxx, spouse of Xxxxxx X. Xxxx joins herein,
individually and as a trustee, to subject any interest in the stock which she
may have to the provisions of this agreement.
/s/ Xxxxxx X. Xxxx 3/31/89
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XXXXXX X. XXXX (date)
