COMPANY STOCKHOLDER AGREEMENT dated as of
November 23, 1998 (this "Agreement"), among X. X.
Penney 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
