STOCKHOLDERS AGREEMENT, dated as of June 30,
1997 (this "Agreement"), by and among the
stockholders of Xxxxxxxx Drug Stores, Inc. (the
"Company") who are signatories hereto and are
listed in Schedule I annexed hereto (individually,
a "Stockholder" and collectively, the
"Stockholders").
WHEREAS each Stockholder owns beneficially or of record the
number of fully paid and non-assessable shares of Class A Common Stock, par
value $1.00 per share, of the Company ("Class A Stock") and Class B Common
Stock, par value $1.00 per share, of the Company ("Class B Stock" and,
together with the Class A Stock, "Common Stock") set forth opposite such
Stockholder's name on Schedule I attached hereto;
WHEREAS the Stockholders desire to enter into this Agreement to
impose certain restrictions on and conditions precedent to the transfer of
the Common Stock and voting of the Common Stock held by the Stockholders;
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties
hereto hereby agree as follows:
ARTICLE I
Effective Date and Scope
SECTION 1.01. Date of Effectiveness. This Agreement shall become
effective as of its date (the "Effective Date").
SECTION 1.02. Shares and Parties Governed. All shares of Common
Stock and all securities convertible into or exchangeable for Common Stock
now or hereafter beneficially owned by a Stockholder or any Permitted
Transferee (as defined in Section 3.01), other than shares of Common Stock
held under the Company's 401(k) employee benefit plan or held in trust
under any other employee benefit plan of the Company, in any such case so
long as they are held under such plan, shall be deemed "Stockholder Shares"
and shall be subject to this Agreement.
SECTION 1.03. Certain Definitions. As used in this Agreement, the
following terms have the indicated meanings, unless the context otherwise
requires:
An "affiliate" of a person means, with respect to such person,
any other person directly or indirectly controlling (or sharing
control of) or controlled by or under direct or indirect common
control with such person. For the purposes of the foregoing, "control"
(including, with correlative meaning, "controlled by" and "under
common control with") as used with respect to any person means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person, whether
through the ownership of voting securities, by contract or otherwise.
An "associate" of a person means, with respect to such person,
(i) any corporation, partnership, limited liability company,
unincorporated association or other entity of which such person is a
director, officer, partner or member or is, directly or indirectly,
the owner of 20% or more of any class of voting stock, (ii) any trust
or other estate in which such person has at least a 20% beneficial
interest or as to which such person serves as trustee, executor,
administrator or in a similar fiduciary capacity and (iii) any
relative or spouse of such person, or any relative of such spouse, who
has the same residence as such person.
The terms "beneficially owned" or "beneficial owner" have the
meanings set forth in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
The term "person" means any individual, group (as such term is
used in Rule 13d-5 under the Exchange Act), corporation, partnership,
limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, government, agency or
political subdivision thereof or other legal entity.
ARTICLE II
Transfer and Conversion Restrictions
SECTION 2.01. General Restriction. Except as set forth in Article
III, without the prior written consent of both Xxxxxxx X. Xxxxxxxx and
Xxxxxxx Xxxxxxxx Xxxxxxxx (the "Principal Stockholders"), no Stockholder or
Permitted Transferee shall, directly or indirectly, whether voluntary or
involuntary, sell, distribute, transfer, assign, pledge, hypothecate or
otherwise dispose of (including, without limitation, by tendering such
shares into a tender offer) or encumber (including, without limitation, by
subjecting such shares to any proxy or voting agreement, trust or other
arrangement except as set forth herein) any Stockholder Shares or any
interest therein (all of which acts shall be deemed included in the term
"transfer" as used in this Agreement).
SECTION 2.02. Conversion or Exchange Restriction. Each
Stockholder or Permitted Transferee agrees that so long as this Agreement
is in effect, without the prior written consent of both of the Principal
Stockholders, it will not convert or exchange any shares of Class B Stock
into or for shares of Class A Stock except as required by Section 3.03.
ARTICLE III
Certain Permitted Transfers
SECTION 3.01. Permitted Transfers. The Stockholders acknowledge
and agree that any of the following transfers of Stockholder Shares shall
be permitted without the prior written consent of the Principal
Stockholders (and each of the persons to whom a transfer is made pursuant
to any of clause (a), (b), (c) or (d) (other than, in the case of clause
(d), a transfer pursuant to clause (i) or (ii) of the proviso thereto) of
this Section 3.01 is herein called a "Permitted Transferee"):
(a) a transfer upon or consequent to the death of a Stockholder
or Permitted Transferee to the executors, administrators, testamentary
trustees, legatees or beneficiaries of a deceased Stockholder or
Permitted Transferee; provided, however, that (i) the recipient of any
such transfer shall be a descendant of Xxxxxx Xxxxxxxx, Xx., or a
spouse of such a descendant and (ii) the transferee agrees to be bound
by this Agreement as if named a Stockholder herein and executes
a counterpart hereof (including a counterpart Schedule I) and such
further documents as may be necessary, in the opinion of both of the
Principal Stockholders, to make it a party hereto;
(b) a transfer made to a descendant of Xxxxxx Xxxxxxxx, Xx., or a
spouse of such a descendant, or to a trust, all of the beneficiaries
and trustees of which, or to a corporation, partnership or limited
liability company, all of the stockholders or partners or members of
which, include only the Stockholder, a descendant of Xxxxxx Xxxxxxxx,
Xx., or a spouse of such a descendant, or a trust for the sole benefit
of one or more of the foregoing; provided, however, that the
transferee agrees to be bound by this Agreement as if named a
Stockholders herein and executes a counterpart hereof (including a
counterpart Schedule I) and such further documents as may be
necessary, in the opinion of both of the Principal Stockholders, to
make it a party hereto;
(c) a transfer by a Permitted Transferee of any Stockholder to
such Stockholder or to any other Permitted Transferee of such
Stockholder; provided, however, that the transferee agrees to be bound
by this Agreement as if named a Stockholder herein and executes a
counterpart hereof (including a counterpart Schedule I) and such
further documents as may be necessary, in the opinion of both of the
Principal Stockholders, to make it a party hereto;
(d) a transfer made as a gift to a charitable organization;
provided, however, that the transferee agrees to be bound by this
Agreement as if named a Stockholder herein and executes a counterpart
hereof (including a counterpart Schedule I) and such further documents
as may be necessary, in the opinion of both of the Principal
Stockholders, to make it a party hereto, unless (i) such transfer to
any one organization or group of related organizations in any calendar
year does not exceed 5,000 shares (adjusted for any stock splits,
dividends or combinations subsequent to the Effective Date made to all
holders of Common Stock) of Class A Stock (after giving effect to
Section 3.03) or (ii) the entering into of this Agreement by the
transferee would eliminate or materially reduce the tax benefits to
the transferor associated with such gift;
(e) a transfer of Class B Stock by the Trust established for the
benefit of Xxxxx Xxxxxxxx pursuant
to paragraph FIFTH of the Last Will and Testament of Xxxxxx Xxxxxxxx,
Xx. upon the death of Xxxxx Xxxxxxxx, pursuant to clause (A) of
subparagraph III of such paragraph FIFTH;
(f) a transfer made to (i) a financial institution in connection
with a pledge or foreclosure of a pledge made to secure a bona fide
personal loan or (ii) the Company in connection with a pledge or
foreclosure of a pledge made to secure indebtedness or any other
obligation to the Company; provided, that any pledge entered into
after the Effective Date shall provide that as a condition to any
foreclosure on any shares of Class B Stock, such shares shall be
converted into or exchanged for shares of Class A Stock in accordance
with Section 3.03; and
(g) a transfer made as a gift to any person of not in excess of
2,000 shares (adjusted for any stock splits, dividends or combinations
subsequent to the Effective Date made to all holders of Common Stock)
of Class A Stock (after giving effect to Section 3.03) in any calendar
year.
SECTION 3.02. Public Distribution. Notwithstanding anything to
the contrary set forth in this Agreement, any Stockholder may sell some or
all of such Stockholder's Stockholder Shares as part of a public offering
registered under the Securities Act of 1933 (the "Securities Act") or a
sale in the public market in a transaction exempt from registration under
the Securities Act that would not result in any person, together with its
affiliates and associates, owning more than 5% of the total outstanding
Class A Stock taking into account all shares subject to outstanding options
or securities convertible into or exchangeable for the Class A Stock
(including the Class B Stock) beneficially owned by such person but without
giving effect to any such shares or securities not beneficially owned by
such person.
SECTION 3.03. Conversion to Class A Shares. Any shares of Class B
Stock to be transferred pursuant to Section 3.01(d), foreclosures under
Section 3.01(f)(i) (it being understood that this Section 3.03 shall not
apply to foreclosures on pledges entered into prior to the Effective Date
unless the pledge agreement or similar documentation would not prohibit
such conversion or exchange), Section 3.01(g) or Section 3.02 shall be
converted into or exchanged for shares of Class A Stock prior to such
transfer.
SECTION 3.04. Notice of Transfer. Each Stockholder agrees that it
will provide written notice to each Principal Stockholder at least 10 days
in advance of any transfer proposed to be made by such Stockholder to a
Permitted Transferee pursuant to this Article III.
ARTICLE IV
Voting Agreement
SECTION 4.01. Until the termination of this Agreement in
accordance with its terms, each Stockholder and each of such Stockholder's
Permitted Transferees agrees that on all matters that are put to a vote (or
action by written consent) of the stockholders of the Company, including,
without limitation, the election of directors, a merger, consolidation,
sale, acquisition or other business combination involving the Company and
amendments to the Company's certificate of incorporation or by-laws, it
will vote (or act by written consent with respect to) its Stockholder
Shares as directed in writing by both of the Principal Stockholders;
provided, however, that if the Principal Stockholders cannot agree as to
how the Stockholder Shares shall be voted, the Stockholder Shares shall be
voted in accordance with the recommendation of the Company's Board of
Directors.
SECTION 4.02. Irrevocable Proxy. In order to effectuate Section
4.01 and in addition to and not in lieu of Section 4.01, each Stockholder
hereby irrevocably for the term of this Agreement appoints each of Xxxxxxx
X. Xxxxxxxx and Xxxxxxx Xxxxxxxx Xxxxxxxx as such Stockholder's proxy, each
with full power to act alone and with full power of substitution, to
represent and to vote (or to act by written consent with respect to) in
accordance with Section 4.01 all of the Stockholder Shares beneficially
owned by such Stockholder and entitled to be voted by such Stockholder.
ARTICLE V
Stock Certificate Legend
A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the records of the Company. Each certificate
representing Stockholder Shares owned by the Stockholders and their
Permitted Transferees shall bear upon its face the following legend:
THE TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED UNDER THE TERMS OF A
STOCKHOLDERS AGREEMENT DATED AS OF JUNE 30, 1997, COPIES OF WHICH ARE
ON FILE AT THE OFFICE OF THE COMPANY. IN ADDITION, THE SHARES OF STOCK
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A VOTING AGREEMENT CONTAINED IN ARTICLE IV OF THE
STOCKHOLDERS AGREEMENT REFERRED TO ABOVE.
Such legend may be placed on the certificate by the Stockholder or by the
Company (or its agent) upon the Stockholder's request. Upon any transfer of
Stockholder Shares by a Stockholder or a Permitted Transferee to a
Permitted Transferee in which one or more new certificates in respect of
such shares are to be issued, the Stockholder or the Permitted Transferee
shall request that the Company cause such new certificate or certificates
to bear the above legend. Upon any transfer of Stockholder Shares pursuant
to clause (i) or (ii) of the proviso to Section 3.01(d) or pursuant to
Section 3.01(e), Section 3.01(f), Section 3.01(g) or Section 3.02, any
Stockholder may exchange the legended certificates representing the shares
to be so transferred for certificates not bearing the above legend.
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Binding Effect; No Assignment. The provisions of
this Agreement shall be binding upon the parties hereto and their
respective heirs, legal representatives, successors and, to the extent
permitted hereby, assigns. This Agreement and the rights and obligations of
the parties hereunder may not be assigned in whole or in part.
SECTION 6.02. Recapitalization, Exchanges, etc., Affecting the
Company's Capital Stock. The provisions of this Agreement shall apply to
the full extent set forth herein with respect to the Stockholder Shares and
to any and all shares of capital stock of the Company or any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued to the Stockholders and their Permitted
Transferees in respect of, in exchange for or in substitution of, the
Stockholder Shares, by reason of any stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitaliza tion,
reclassification, merger, consolidation or otherwise.
SECTION 6.03. Amendments; Waivers. This Agreement may be amended,
and compliance with its provisions
may be waived, only by a written instrument signed by both of the Principal
Stockholders.
SECTION 6.04. Notices. All notices and other communications
provided for herein shall be dated and in writing and shall be deemed to
have been duly given when delivered, if delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid and
when received if delivered otherwise, to the party to whom it is delivered,
at the following address: in care of Xxxx X. Xxxxxx, Esq., Xxxxxxxx Drug
Stores, Inc., 00 Xxxxxx Xxxxx, Xxxxxxxx, XX 00000, or at such other address
as the parties hereto shall have specified by notice in writing to the
other parties.
SECTION 6.05. Applicable Law. The laws of the State of Delaware
shall govern the interpretation, validity and performance of the terms of
this Agreement, regardless of the law that might be applied under
principles of conflicts of law.
SECTION 6.06. Integration. This Agreement and the documents
referred to herein or delivered pursuant hereto which form a part hereof
contain the entire understanding of the parties with respect to the voting
and transfer of Stockholder Shares.
SECTION 6.07. Descriptive Headings. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of terms contained herein.
SECTION 6.08. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
SECTION 6.09. Additional Stockholders. From time to time other
persons that are the record or beneficial owners of Common Stock may become
a party to this Agreement, subject to the written consent of, and upon such
terms and conditions as shall be agreed by, the Principal Stockholders.
Upon execution and delivery, after the date hereof, of a counterpart
signature page to this Agreement setting forth such person's name and a
counterpart Schedule I setting forth the number and class of shares of
Common Stock beneficially owned by such person and the address at which
such person shall receive notices if other than as set forth in Section
6.04, such person shall become
a party hereto and shall be bound hereby with the same force and effect as
if originally named as a Stockholder hereunder. The rights and obligations
of each Stockholder hereunder shall remain in full force and effect
notwithstanding the addition of any new Stockholder as a party to this
Agreement.
SECTION 6.10. Termination. This Agreement shall terminate on the
earlier of (a) the date that is ten years from the Effective Date and (b)
the death or mental incapacity of either of the Principal Stockholders,
unless earlier terminated by written agreement of the Principal
Stockholders or extended by amendment of this Agreement in accordance with
Section 6.03.
SECTION 6.11. Specific Performance. (a) The parties hereto
acknowledge that the benefits to them under this Agreement are unique, that
they are willing to enter into this Agreement only upon performance by each
other of all of their obligations hereunder and that monetary damage would
not afford adequate remedy for failure to perform any such obligations
hereunder. Accordingly, the parties hereby consent to specific performance
of their obligations hereunder and waive any requirement for securing or
posting of any bond in connection with the obtaining of any injunctive or
other equitable relief to enforce their rights hereunder.
(b) The parties agree that, in the event any controversy or claim
between any of the parties arising out of or relating to this Agreement
shall result in litigation, the appropriate court in the State of Delaware
shall have jurisdiction to hear and decide such matter, and each party
hereby submits to the jurisdiction of any such court in which any such suit
or proceeding is so instituted. The parties further acknowledge and agree
that such court is a convenient forum for litigation of any controversy or
claim arising out or of relating to this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the date first above written.
/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.; 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.; and
individually
SCHEDULE I
Number of
Class A
Number of Shares Number of
Class A Subject to Class B
Name Shares Options Shares
Xxxxxxx X. Xxxxxxxx 92,520 226,310 1,255,651
Xxxxxxx Xxxxxxxx Xxxxxxxx 5,392 19,336 187,289
Trust under the Will of the late 1,732,339
Xxxxxx X. Xxxxxxxx, Xx.
Trustees: Xxxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxxx
Trust under the Will of the late 626,302
Xxxxxx Xxxxxxxx, Xx.
Trustee: Xxxxxxx X. Xxxxxxxx