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EXHIBIT BB
Member Agreement
MEMBER AGREEMENT, dated as of January 26, 2001, (this
"Agreement"), among The Xxxxxxx Xxxxx Group, Inc., a Delaware corporation
("Acquiror"), the signatory hereto, who is the owner of that membership interest
("Membership Interest") of Xxxxxxxx Xxxxxxxx & Sons, LLC, a New York limited
liability company (the "Company") set forth next to such signatory's name in
Exhibit A ("Member"), and, for purposes of Section 1(b) hereof only, Xxxxxxxx
Xxxxxxxx & Sons, LLC.
RECITALS
A. Acquiror and the Company entered into an Agreement and Plan
of Merger, dated as of the date hereof (the Agreement and Plan of Merger as it
may be amended from time to time, the "Merger Agreement"), and, subject to the
terms and conditions contained in the Merger Agreement, intend to effect the
merger (the "Merger") of NewCo with and into the Company. Capitalized terms used
but not defined herein shall have the meaning set forth in the Merger Agreement.
B. Upon the consummation of the Merger, the Merger Agreement
provides for the conversion of Member's Membership Interests into such amount of
cash and/or shares of Acquiror Common Stock (the "Shares"), as provided in the
Merger Agreement. Member will derive substantial value from Acquiror's
execution, delivery and performance of the Merger Agreement.
C. As an inducement to, and a condition of, Acquiror's
willingness to enter into the Merger Agreement, and having reviewed the Merger
Agreement and the terms of the proposed Merger, Member is executing this
Agreement for the benefit of Acquiror, the Firm (as hereinafter defined), and
each Acquiror Party.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained in the Merger Agreement, and intending to be
legally bound hereby, Member agrees as follows:
1. Adoption of Merger Agreement; Irrevocable Proxy; Termination.
(a) Member hereby (i) adopts and approves the resolutions attached hereto as
Exhibit C and adopts and consents to the Merger Agreement and the transactions
contemplated thereby, including, without limitation, the Merger and the
amendments to the Operating Agreement contemplated by the Merger Agreement, in
accordance with the provisions of Section 407 of the New York Limited Liability
Company Law and Section 10.1 of the Operating Agreement, (ii) agrees to grant to
Acquiror, upon request by Acquiror, an irrevocable proxy in the form of Exhibit
H, which shall be deemed to be coupled with an interest, with respect to
Member's Membership Interest to adopt or approve such matters described in
clause (i) of
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this Section 1(a), (iii) agrees to vote against, and to withhold consent from,
any action or proposal that could compete with or could serve to materially
interfere with, delay, discourage, adversely affect or inhibit the timely
consummation of the transactions contemplated by the Merger Agreement (including
all exhibits and annexes thereto), including, without limitation, the Merger,
(iv) consents to the replacement of the Managing Members by SLK, or another
Affiliate of Acquiror designated by Acquiror, as the sole Managing Member of the
Company, such replacement to be effective as of the Effective Time, and (v)
consents to the making by the Company of any or all of the determinations
provided for in Sections 3.01 and 3.03 of the Merger Agreement which may affect
the Cash Consideration, Stock Consideration and/or Merger Consideration that
Member is to receive in the Merger. For the avoidance of doubt, and without
limiting in any respect the effect of clause (a)(i) of this Section 1, Member
hereby approves and consents to the form, terms and provisions of, and the
transactions contemplated by, the Merger Agreement, including all exhibits and
annexes thereto, substantially in the form of Exhibit B with such changes as the
Authorized Agents (as such term is defined in the resolutions attached hereto as
Exhibit C) may approve and to any and all amendments, waivers and supplements to
the Merger Agreement or any of such exhibits and annexes as may be entered into
or delivered from time and time after the date of this Agreement. To the extent
necessary and as permitted by applicable law, Member hereby also irrevocably (i)
waives any notice, or requirement thereof, with respect to any meeting of the
Members or other proceeding for the purpose of adopting and approving the Merger
Agreement, the Merger or any related matters and (ii) acknowledges that Member
will not have, and expressly waives, any dissenters' or similar rights in
connection with the Merger and the consummation of the other transactions
contemplated by the Merger Agreement. If the Merger Agreement is properly
terminated for any reason in accordance with its terms and the Merger is not
consummated, this Agreement shall terminate concurrently with such termination
of the Merger Agreement. (See Annex 4 of the Merger Agreement for the provision
on allocation of Merger Consideration.)
(b) The Company hereby acknowledges receipt and delivery at its
principal place of business of an executed copy of this Agreement sufficient to
comply with Section 407(b) of the New York Limited Liability Company Law.
2. Cooperation and Support; HSR; No Transfer of Membership
Interest. (a) Member agrees to use Member's reasonable best efforts in good
faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the transactions contemplated by the
Merger Agreement as promptly as practicable and otherwise to enable consummation
of the transactions contemplated thereby. Without limitation of the foregoing,
Member will timely execute and deliver all Supplemental Agreements, if any, to
which it is to be a party as provided in the Merger Agreement.
(b) Each Member, if any, who will be considered an "acquiring
person" under the rules and regulations promulgated under the HSR Act, in
connection with the consummation of the transactions contemplated by the Merger
Agreement, agrees to use its
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best efforts to file a Notification and Report Form under the HSR Act with
respect to the transactions contemplated by the Merger Agreement as soon as
practicable after the date hereof, but in no event later than ten (10) business
days after the date hereof.
(c) From and after the date hereof, and until the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms, Member shall not Transfer (as hereinafter defined), directly or
indirectly, all or any portion of its Membership Interest without Acquiror's
prior written consent; provided that in the event of a Member's death during the
term of this Agreement, Member's Membership Interest may be transferred pursuant
to the Operating Agreement.
(d) Member hereby agrees that from and after the date hereof,
until the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Member will not, in any manner, directly or
indirectly (including through advisors, agents or other intermediaries), take
any action to seek, encourage, support, respond to or discuss any offer from any
corporation, partnership, person or other entity or group (other than Acquiror)
to acquire any direct or indirect Company Membership Interests, to merge the
Company or any Affiliate of the Company with any such person, or to otherwise
acquire any significant portion of the assets of the Company.
(e) Member hereby agrees to execute and deliver to Acquiror at
the Closing, a counterpart of the Acquiror Shareholders Agreement if requested
to do so by Acquiror, which agreement when so executed and delivered shall be in
full force and effect.
(f) At any time after the date hereof, Member shall promptly
execute, acknowledge and deliver any other assurances or documents reasonably
requested by Acquiror and necessary for Member to satisfy its obligations
hereunder.
3. Representations, Warranties and Agreements. Member represents
and warrants to, and agrees with, Acquiror as follows:
(a) Member has all requisite power and authority to execute and
deliver this Agreement and to perform all of the obligations imposed upon Member
hereunder. Member is the lawful record and beneficial owner of Member's
Membership Interest set forth next to Member's name in Exhibit A hereto, free
and clear of all Liens; no other person has an interest, legal, beneficial or
otherwise, in Member's Membership Interest and no consent of any other person is
required for the execution and delivery by Member of, and performance by Member
of its obligations under, this Agreement and the Merger Agreement. Without
limiting the foregoing, no person has any rights with respect to Member's
Membership Interest or the cash or Shares to be issued to Member pursuant to the
Merger Agreement under any community property or similar legal provision or
concept. There are no actions, suits or proceedings pending or, to Member's
knowledge, threatened against or affecting Member or the assets of Member in any
court or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality which
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is reasonably likely to impair, restrict or delay the ability of Member to
perform Member's obligations under this Agreement and the Merger Agreement or
would make this paragraph untrue in any material respect. This Agreement
constitutes the valid and legally binding agreement of Member, enforceable in
accordance with its terms except as the enforceability hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
(b) The execution, delivery and performance of this Agreement do
not and will not (1) constitute a breach or violation of, or a default under, or
cause or allow the acceleration or creation of a Lien (with or without the
giving of notice, passage of time or both) pursuant to any law, rule or
regulation or any judgment, decree, order, governmental or non-governmental
permit or license, or any Contract to which Member is a party or to which Member
or any of Member's assets are subject or bound or (2) require any consent or
approval of any other person under any such law, rule, regulation, judgment,
decree, order, governmental or non-governmental permit, license or Contract.
(c) Member will acquire any Shares which it is acquiring in the
Merger for Member's own account and not with a view to, or for resale in
connection with, the distribution thereof and Member has no present intention of
selling, Transferring, granting any participation in, or otherwise distributing
the Shares except in conformity with the Securities Act and other applicable
federal and state securities laws (the "Securities Laws").
(d) Member has read and fully understands this Agreement, the
Merger Agreement and the terms of the proposed Merger. The SEC Documents related
to Acquiror have been made available to Member, and Member understands and has
evaluated the risks of an investment in the Shares. Member has been given the
opportunity to ask questions of, and receive answers from, Acquiror and its
representatives concerning the matters pertaining to any investment by Member in
the Shares and has been given the opportunity to review such additional
information as was necessary to evaluate the merits and risks of an investment
in the Shares. Member can bear the economic risk of an investment in any Shares
which it is acquiring in the Merger.
(e) If Member is acquiring any Shares in the Merger, it is an
"accredited investor" as defined in Regulation D, which has been adopted by the
SEC under the Securities Act. The information relating to Member set forth in
the questionnaire attached hereto as Exhibit D and forming a part of this
Agreement is complete and accurate as of the date hereof.
(f) Member understands that any Shares which it is acquiring in
the Merger will be characterized as "restricted securities" under the Securities
Laws in that they are being acquired from Acquiror in a transaction not
involving a public offering and that, consequently, the Shares may not be resold
without first being registered under the Securities Laws, except in certain
limited circumstances. Specifically, Member is familiar with Rules
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144 and 145 under the Securities Act and understands, and agrees to comply with,
the resale limitations imposed thereby, by the legends described in paragraph
(g) below and by the Securities Laws generally to cause any other person who has
an interest in such Shares to so comply.
(g) Member understands and agrees that any certificates issued
to Member representing Shares acquired in the Merger will bear the following
legends and such other legends as Acquiror may reasonably deem necessary or
desirable:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
MEMBER'S AGREEMENT WITH THE XXXXXXX XXXXX GROUP, INC. (THE
"MEMBER'S AGREEMENT")[, AND A SHAREHOLDERS' AGREEMENT AMONG THE
XXXXXXX SACHS GROUP, INC. AND THE PERSONS NAMED THEREIN (THE
"SHAREHOLDERS' AGREEMENT")], COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE XXXXXXX XXXXX GROUP, INC., AND
WHICH, AMONG OTHER MATTERS, PLACE RESTRICTIONS ON THE [VOTING
AND] DISPOSITION OF SUCH SECURITIES. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE MAY BE INDIRECTLY OR DIRECTLY SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF, INCLUDING ANY
DISPOSITION OF THE ECONOMIC OR OTHER RISKS OF OWNERSHIP THROUGH
HEDGING TRANSACTIONS OR DERIVATIVES INVOLVING SUCH SECURITIES,
ONLY IN ACCORDANCE WITH THE PROVISIONS OF MEMBER'S AGREEMENT
[AND THE SHAREHOLDERS' AGREEMENT]."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR OTHER SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD, EXCHANGED, TRANSFERRED, ASSIGNED, PLEDGED,
PARTICIPATED, HYPOTHECATED OR OTHERWISE DISPOSED OF (EACH A
"TRANSFER") EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND, IF APPLICABLE, SUCH OTHER
SECURITIES LAWS AND FOLLOWING RECEIPT BY THE XXXXXXX SACHS
GROUP, INC. OF A LEGAL OPINION IN FORM AND SUBSTANCE
SATISFACTORY TO IT THAT SUCH TRANSFER IS PERMITTED."
The foregoing legends will be removed from a Share certificate at the request of
Member or another holder thereof in connection with the proposed transfer
thereof only upon satisfaction of Acquiror that such legend is no longer
required or appropriate, including, in the case of the Securities Laws legend,
receipt by Acquiror of an opinion of counsel, in form and substance
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satisfactory to Acquiror, to the effect that registration under the Securities
Act is unnecessary in respect of such proposed transfer, in reliance upon SEC
Rule 144 or 145 under the Securities Act, and that such legend is not required
by law to appear on such certificate.
Member agrees and consents to the entry of stop transfer orders
against the transfer of Shares subject to transfer restrictions.
(h) Member meets any suitability standards imposed by the state
of Member's residence or imposed by any other applicable laws.
(i) From and after the date hereof, and until the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms, Member agrees to comply with the restrictions on hedging contained in
Exhibit E hereto; it being understood that Member shall in no event on or after
the date hereof, commence any activities that involve the disposition of the
economic or other risks of ownership through hedging transactions or derivatives
involving Acquiror securities or Member's Membership Interest.
(j) Member has not, and through the Closing Date will not have,
made any election, taken any action or filed any Tax Return or any other
document filed or provided to any taxing authority that is inconsistent with the
Tax Returns filed and furnished by the Company or the treatment of the Company
as a partnership for U.S. federal, state and local Tax purposes and Member
agrees that the foregoing representations shall be subject to the same
indemnification provisions as contemplated by Section 13 herein.
(k) Member will not make any election, take any action or take
any position on any Tax Return or any other document filed or provided to any
Taxing Authority that is inconsistent with any Tax Return filed with any taxing
authority, or furnished to such Member, by or on behalf of the Company or the
Surviving LLC.
(l) Member agrees to provide, and to use its reasonable best
efforts to cause its respective relatives and affiliates to provide, any
document or take any other action reasonably requested by Acquiror (or
Acquiror's designees) in connection with any Tax matters relating to the Company
and the Surviving LLC.
4. Restrictions on Transfer. (a) Member agrees that any Shares
that it is acquiring in the Merger may be Transferred only as follows:
(i) 33 1/3% of such Shares may be Transferred at any time after
May 8, 2002;
(ii) An additional 33 1/3% of such Shares may be Transferred at
any time after May 8, 2003; and
(iii) All of such Shares may be Transferred at any time after
May 8, 2004.
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Notwithstanding the foregoing, if after the Closing the Acquiror generally
waives the restrictions on transfer imposed upon the former Schedule II limited
partners (the "LPs") of The Xxxxxxx Xxxxx Group, L.P. ("Group") in connection
with Group's 1999 Plan of Incorporation, as amended (the "Plan of
Incorporation"), in order to permit the LPs generally to engage in a registered
secondary offering or estate planning transactions, Acquiror will waive the
transfer restrictions in this Section 4 with respect to any Shares that Member
is acquiring in the Merger on (i) the same percentage basis as the waiver
granted to LPs in connection with such registered secondary offering represents
of the shares issued to such LPs under the Plan of Incorporation and to permit
Member to sell such Shares in the registered secondary offering and (ii) the
same basis as the waiver granted to LPs in connection with such estate planning
transactions. (For example, if each LP is permitted to sell 5% of his Acquiror
Common Stock received under the Plan of Incoporation in a registered secondary
offering, Member shall be permitted to sell 5% of any Shares that Member is
acquiring in the Merger; and if each LP is permitted to engage in estate
planning transactions, Member shall be permitted to do so to a similar extent.)
For purposes of this Agreement, the term "Transfer" means any
direct or indirect sale, transfer, pledge or other disposition of securities of
Acquiror or Member's Membership Interests, as the case may be, including any
disposition of the economic or other risks of ownership through hedging
transactions or derivatives involving Acquiror securities or Member's Membership
Interests.
(c) Member agrees that, if it acquires any Shares in the Merger,
at any time Member is employed by the Firm, Member will:
(i) comply with respect to all such Shares with Transfer
restrictions related to future primary or secondary
offerings of such Shares if requested to do so by
Acquiror to the extent that such restrictions are
generally applicable to similarly titled employees of
Acquiror;
(ii) comply with restrictions that may be imposed by Acquiror
from time to time to enable Acquiror or another party to
account for a business combination using the
pooling-of-interests method of accounting to the extent
that such restrictions are generally applicable to
similarly titled employees of Acquiror;
(iii) be subject to the same internal compliance and trading
policies as are in effect from time to time for
similarly titled employees of Acquiror; and
(iv) comply with the hedging restrictions of Acquiror
relating to securities of Acquiror and financial
services companies as are in effect from time to time
for managing directors of Acquiror.
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References in this Section 4 to "Shares" shall be deemed to also
refer to securities received in exchange for Shares on the same basis as
provided in Section 6.4 of the Acquiror Shareholders Agreement.
5. Confidential Information. (a) In the course of involvement in
the Firm's activities or otherwise, Member has obtained or may obtain
confidential information concerning the Firm's businesses, strategies,
operations, financial affairs, organizational and personnel matters (including
information regarding any aspect of Member's tenure as a member in, or officer
or employee of, the Firm or of the termination of such membership, officership
or employment), policies, procedures and other non-public matters, or concerning
those of third parties. Such information ("Confidential Information") may have
been or be provided in written or electronic form or orally. In consideration
of, and as a condition to, continued access to Confidential Information, and
without prejudice to or limitation on any other confidentiality obligations
imposed by agreement or by law, Member hereby undertakes to use and protect
Confidential Information in accordance with any reasonable restrictions placed
on its use or disclosure. Without limiting the foregoing, except as authorized
by the Firm or as required by law, Member may not disclose, directly or
indirectly, any Confidential Information, or any information derived therefrom,
in whatever form, to any person unless such person is a director, officer,
partner, employee, attorney or agent of the Firm and, in Member's reasonable
good faith judgment, has a need to know the Confidential Information or
information derived therefrom in furtherance of the business of the Firm. The
foregoing obligations will survive, and remain binding and enforceable
notwithstanding any termination of Member's employment with the Firm and any
settlement of the financial rights and obligations arising from Member's
employment with the Firm. Without limiting the foregoing, the existence of, and
any information concerning, any dispute between Member and the Firm shall
constitute Confidential Information except that Member may disclose information
concerning such dispute to the arbitrator or court that is considering such
dispute, or to Member's legal counsel (provided that such counsel agrees not to
disclose any such information other than as necessary to the prosecution or
defense of the dispute).
(b) For purposes of this Agreement, "Firm" means (i) prior to
the consummation of the Merger, the Company and its Affiliates, and (ii) from
and after the consummation of the Merger, Acquiror and its Subsidiaries and
Affiliates (including the Company).
6. Noncompetition. (a) In view of Member's importance to the
Firm, Member hereby agrees that the Firm would likely suffer significant harm
from Member's competing with the Firm for some period of time following the
consummation of the Merger, and at any time prior to the date of termination
specified in the notice of termination pursuant to Section 10 hereof (the
"Employment Period") and for some time thereafter, and Member understands that
Acquiror would not have agreed to acquire the Company and its business unless
Member entered into this Agreement. Moreover, Member recognizes and agrees that
the business activities of the Firm are worldwide and that the restrictions on
competition
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included herein are commensurate in geographic scope with those activities.
Accordingly, Member hereby agrees that commencing at the time of consummation of
the Merger, Member will not, without the written consent of Acquiror, until the
later of (x) three years following the Effective Time and (y) two years
following the date of termination of the Employment Period (such later date is
referred to as the "Expiration Date"):
(1) form, or acquire a 5% or greater equity ownership, voting or
profit participation interest in, any Competitive Enterprise (as defined
below); or
(2) associate (including, but not limited to, association as an
officer, employee, partner, director, consultant, agent or advisor) with
any Competitive Enterprise and in connection with such association
engage in, or directly or indirectly manage or supervise personnel
engaged in, any activity
(i) which is similar or substantially related to any
activity in which Member was engaged, in whole or in part, at
the Firm,
(ii) for which Member had direct or indirect managerial
or supervisory responsibility at the Firm, or
(iii) which calls for the application of the same or
similar specialized knowledge or skills as those utilized by
Member in Member's activities with the Firm,
at any time during the one-year period immediately prior to the date of
termination of Member's employment with the Firm (or, in the case of an
action taken during the Employment Period, during the one-year period
immediately prior to such action), and, in any such case, irrespective
of the purpose of the activity or whether the activity is or was in
furtherance of advisory, agency, proprietary or fiduciary business of
either the Firm or the Competitive Enterprise.
(By way of example only, this provision precludes an information systems
professional for the Firm from joining a management or other consulting
firm and providing information technology consulting services or advice
to any Competitive Enterprise.)
(b) For purposes of this Agreement, a "Competitive Enterprise"
is a business enterprise that (1) engages in any activity, or (2) owns or
controls a significant interest in any entity that engages in any activity,
that, in either case, competes anywhere with any activity in which the Firm is
engaged. The activities covered by the previous sentence include, without
limitation, financial services such as investment banking, public or private
finance, lending, financial advisory services, private investing (for anyone
other than Member and members of Member's family), merchant banking, asset or
hedge fund management, insurance or reinsurance underwriting or brokerage,
property management, or securities,
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futures, commodities, energy, derivatives or currency brokerage, sales, market
making, lending, custody, clearance, settlement or trading.
If Member is employed by the Firm immediately following the
Effective Time and the Firm terminates Member's employment with the Firm without
Cause, the Firm may only enforce the provisions of this Section 6 for so long as
the Firm continues to pay Member the same base salary (i.e., excluding any
incentive, bonus or similar compensation) Member was receiving immediately prior
to such termination. In determining whether the Firm has paid Member's base
salary for any period, the Firm shall receive credit for any payments under any
severance, salary continuation or similar plan or arrangement.
For the purposes of this Section 6 and Section 10 only, "Cause"
means (i) Member's conviction, whether following trial or by plea of guilty or
nolo contendere (or similar plea), in a criminal proceeding (A) on a misdemeanor
charge involving fraud, false statements or misleading omissions, wrongful
taking, embezzlement, bribery, forgery, counterfeiting or extortion, or (B) on a
felony charge or (C) on an equivalent charge to those in clauses (A) and (B) in
jurisdictions which do not use those designations; (ii) Member's engaging in any
conduct which constitutes an employment disqualification under applicable law
(including statutory disqualification as defined under the Exchange Act); (iii)
Member's willful or grossly negligent failure to perform Member's duties to the
Firm; (iv) Member's violation of any securities or commodities laws, any rules
or regulations issued pursuant to such laws, or the rules and regulations of any
securities or commodities exchange or association of which Acquiror or any of
its subsidiaries or affiliates is a member; (v) Member's violation of any Firm
policy concerning hedging or confidential or proprietary information, or
Member's material violation of any other Firm policy as in effect from time to
time; (vi) Member's engaging in any act or making any statement which impairs,
impugns, denigrates, disparages or negatively reflects upon the name, reputation
or business interests of the Firm; or (vii) Member's engaging in any conduct
detrimental to the Firm. The determination as to whether "Cause" has occurred
shall be made by the Board of Directors of Acquiror (the "Board") in its sole
discretion.
7. Nonsolicitation of Clients. (a) Member hereby agrees that
during the Employment Period and thereafter until the Expiration Date, Member
will not, in any manner, directly or indirectly, (1) Solicit a Client to
transact business with a Competitive Enterprise or to reduce or refrain from
doing any business with the Firm, or (2) interfere with or damage (or attempt to
interfere with or damage) any relationship between the Firm and a Client.
(b) For purposes of this Agreement, the term "Solicit" means any
direct or indirect communication of any kind whatsoever, regardless of by whom
initiated, inviting, advising, encouraging or requesting any person or entity,
in any manner, to take or refrain from taking any action.
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(c) For purposes of this Agreement, the term "Client" means any
client or prospective client of the Firm to whom Member provided services, or
for whom Member transacted business, or whose identity became known to Member in
connection with Member's relationship with or employment by the Firm.
8. Nonsolicitation of Employees; Expiration. Member hereby
agrees that during the Employment Period and thereafter until the Expiration
Date, Member will not, in any manner, directly or indirectly, Solicit any person
who is a Member or former Member of the Company or a key employee of the Firm to
resign from the Firm or to apply for or accept employment with any Competitive
Enterprise.
9. Damages. (a) Member acknowledges that Acquiror would not have
entered into this Agreement or the Merger Agreement in the absence of Member's
agreement to the provisions of this Section 9 and the Covenants (as defined in
Section 15 hereof) and Member further acknowledges that such compliance with
such Covenants is an important factor to the continued success of the Firm's
operations and its future prospects. Member and Acquiror agree that upon the
occurrence of any of the following events, the damages to the Firm would be
material, but that the amount of such damages would be uncertain and not readily
ascertainable. Accordingly, Member and Acquiror agree that, if, prior to the
fifth anniversary of the date of this Agreement, Member breaches any of the
Covenants set forth in Section 6, 7 or 8, as determined by the Board in its good
faith judgment, Acquiror will be entitled to receive immediately following such
determination and written demand therefor, and Member will make, within ten
business days after written demand has been received, a payment in cash or
Acquiror Common Stock (valued at the average closing per share price of Acquiror
Common Stock for the five trading days immediately preceding the date of payment
under this Section 9(a)) in such combination of cash and/or Acquiror Common
Stock as Member shall determine as and for liquidated damages (the "Liquidated
Damages") in the amount set forth in Exhibit F attached hereto, which amount
shall be the aggregate amount of liquidated damages due for all such breaches
prior to the fifth anniversary of this Agreement.
The payment of any amount as liquidated damages will not be
construed as a release or waiver by Acquiror of the right to prevent the
continuation of any such violation of such Covenants in equity or otherwise. In
addition, Member and Acquiror agree that it would be too speculative to attempt
to determine any amount of liquidated damages that would be applicable following
the fifth anniversary of the date of this Agreement, and that any damages
payable as a result of any breach following such date shall be determined
without regard to this Section 9.
(b) Member and Acquiror agree that the Liquidated Damages are
reasonable in proportion to the probable damages likely to be sustained by the
Firm if Member breaches at any time prior to the fifth anniversary of this
Agreement any of the Covenants set forth in Sections 6, 7 and 8 hereof, that the
amount of actual damages to be sustained by the Firm in the event of such breach
is incapable of precise estimation and that such cash and/or
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Acquiror Common Stock payments are not intended to constitute a penalty or
punitive damages for any purposes.
(c) Member acknowledges and agrees that Member's payment
obligations under this Section 9 will be full recourse obligations and will be
secured pursuant to a Pledge Agreement, in substantially the form set forth as
Exhibit G hereto (the "Pledge Agreement"). Member agrees to execute and deliver
to Acquiror a Pledge Agreement prior to the Closing.
(d) Member acknowledges and agrees that any cash and/or Acquiror
Common Stock payment of Liquidated Damages pursuant to this Section 9 shall be
in addition to, and not in lieu of, any forfeitures of awards (required pursuant
to the terms of any such awards) that may be granted to Member in the future
under one or more of the Firm's compensation and benefit plans.
(e) This Section shall not apply to a Member who does not
receive any Merger Consideration.
10. Employment with the Firm. (a) Member acknowledges that
Acquiror would not have entered into this Agreement or the Merger Agreement in
the absence of Member's agreement to the provisions of this Section 10, and
Member further acknowledges that such Member's continued employment with the
Firm through the second anniversary of the Effective Time is essential to assure
the proper integration of the business operations of the Company into the Firm
and is an important factor to the continued success of the Firm's operations and
its future prospects. Accordingly, Member hereby agrees to remain employed with
the Firm for the period commencing on the Effective Time through the second
anniversary of the Effective Time (the "Initial Employment Period"). After the
Initial Employment Period (unless otherwise agreed by Member and the Firm in
writing), there will be no set term of employment. The Firm may terminate
Member's employment at any time during or after the Initial Employment Period
for any reason, or for no reason, and Member may terminate employment for any
reason, or no reason, after the Initial Employment Period. Such termination
shall be effected only by giving not less than ninety (90) days' prior written
notice of termination; provided, however, that (i) the Firm may elect to place
Member on paid leave for all or any part of such 90-day period; (ii) no advance
notice need be given by the Firm to Member in connection with a termination of
Member's employment for Cause or on account of Disability; and (iii) as long as
the 90 days' prior written notice is given, Member may terminate his or her
employment during the Initial Employment Period on account of Good Reason,
Disability or with Acquiror's written consent. For purposes of this Section 10,
"Good Reason" means, without the consent of Member, (i) a materially adverse
alteration in Member's position or in the nature or status of Member's
responsibilities from those in effect immediately after the Effective Time, or
(ii) the Firm's requiring Member's principal place of employment to be located
more than seventy-five (75) miles from the location at which Member is
principally employed immediately after the Effective Time (except for required
travel on the Firm's business to an extent substantially consistent with
Member's customary business travel obligations in the ordinary course of
business prior to
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the Effective Time). For purposes of this Section 10, "Disability" means
Member's absence from employment for at least 180 days in any 12-month period as
a result of Member's incapacity due to mental or physical illness or incapacity,
as reasonably determined by the Firm.
(b) During the Employment Period: (i) Member will have such
duties and responsibilities as the Firm may from time to time determine; (ii)
Member will devote his or her entire working time, labor, skill and energies to
the business and affairs of the Firm, provided, however, that Member shall not
be prohibited from making passive personal investments or conducting private
affairs if those activities do not interfere with the services required under
this Agreement; and (iii) Member will be paid such base salary and other
compensation as shall be separately communicated to him.
11. Transfer of Client Relationships. (a) During the Coverage
Period, Member hereby agrees to take all actions and do all such things as may
be reasonably requested by the Firm from time to time to maintain for the Firm
the business, goodwill, and business relationships with any of the Firm's
Clients with whom Member worked during the term of Member's employment with the
Firm.
(b) For purposes of this Agreement, the term "Coverage Period"
means, the 90-day period beginning on the date on which notice of Member's
termination of employment is delivered to or by the Firm pursuant to Section 10,
or in the case of termination of Member's employment by the Firm for Cause or on
account of Disability, the 90-day period beginning on the date of termination of
employment.
12. Prior Notice Required. Member hereby agrees that prior to
accepting employment with any other person or entity prior to the date of
termination, Member will provide such prospective employer with written notice
of the provisions of this Agreement, with a copy of such notice delivered
simultaneously to the General Counsel of Acquiror.
13. Indemnification. Member hereby agrees that it shall
indemnify each Acquiror Party as an Indemnifying Party as set forth in Articles
7 and 9 of the Merger Agreement. If an indemnification claim (an
"Indemnification Claim") is made pursuant to the Merger Agreement, Member agrees
that, unless Acquiror delivers consent in writing, the Company Representative
(as defined in the Merger Agreement) shall have the sole and exclusive power and
authority to contest, defend and settle each Indemnification Claim on behalf of
Member. In addition, for purposes of Article 7 of the Merger Agreement, Member
agrees that, unless Acquiror delivers consent in writing, the Company
Representative shall have sole and exclusive power and authority over tax
matters reserved to the Company Representative under the Merger Agreement. In
furtherance thereof, Member agrees that (i) any action by the Company
Representative shall be conclusively binding on Member and (ii) Xxxxx X.
Xxxxxxxx shall be the initial Company Representative and agrees to take all
action necessary to cause the Company to designate Xxxxx X. Xxxxxxxx as the
Company Representative under the terms of the Merger Agreement.
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14. Taxes.
(a) Tax Returns. Member hereby agrees to prepare and file (or
cause to be prepared and filed) when due (taking into account any applicable
extensions) all of his, her or its Tax Returns related to periods during which
the Merger occurs, and Member will timely pay all Taxes reflected on such Tax
Returns (or which are due with respect to such Tax Returns after adjustment by
any taxing authority). Member further agrees to cooperate with Acquiror and to
provide Acquiror with any documentation as reasonably requested in establishing
the timely filing of such Tax Returns and timely payment of such Taxes.
(b) Tax Treatment of the Common Stock. Member agrees that any
Acquiror Common Stock subject to the restrictions on Transfer (as described in
Section 4 herein) and received by the Members in the Merger will be valued for
all U.S. federal income tax purposes at 100% of the mean of the high and low of
the trading price of the Acquiror Common Stock on the Closing Date.
(c) Cooperation. Member agrees to cooperate with the Tax Matters
Partner (as defined in Section 6231(a)(7) of the Code) (or its designee) to the
extent reasonably requested in any Tax audit, examination or other proceeding
involving the Company for any taxable period that relates to periods prior to
the Closing. Member further agrees that the existing Tax Matters Partner (or if
the existing Tax Matters Partners does not so act, the Acquiror (or its
designee)) shall have the right to designate or appoint any individual or entity
in the name and on behalf of such Member, as the Tax Matters Partner, with
respect to any taxable year of the Company.
(d) Overpayments and Underpayments. The parties hereby agree
that in the event the Company makes distributions to Member pursuant to the
terms of the proviso to Section 4.01(c) of the Merger Agreement, the parties
shall as promptly as practicable after the Closing determine whether the actual
amount of Taxes owed by Member in respect of the net earnings of the Company
during the period from January 1, 2001 to the Closing Date (after taking into
account Tax credits and other available Tax assets and provided that no
distributions shall be permitted for any Taxes attributable to, or payable as
the result of, (i) sales or other dispositions requiring the recognition of
unrealized gains reflected on the balance sheet as of December 31, 2000 included
in the Financial Statements (including any "short against the box" positions) or
(ii) Taxes payable in respect of any acceleration of Section 481 adjustments
resulting from the transactions contemplated in the Merger Agreement) is greater
than (an "Underpayment") or less than (an "Overpayment") the amounts distributed
to Member with respect to the period from January 1, 2001 to the Closing Date in
respect to such Taxes, and, in the event of an Overpayment, the Member shall
promptly pay to Acquiror and, in the event of an Underpayment, Acquiror shall
promptly pay to Member, the amount of such difference.
15. Covenants Generally. (a) Member's covenants as set forth in
Sections 5 through 14 of this Agreement are from time to time referred to herein
as the "Covenants." If
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any of the Covenants is finally held to be invalid, illegal or unenforceable
(whether in whole or in part), such Covenant shall be deemed modified to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability and the remaining such Covenants (or part of such Covenants, as
the case may be) shall not be affected thereby; provided, however, that if any
of such Covenants is finally held to be invalid, illegal or unenforceable
because it exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such Covenant will be deemed to be modified to the
minimum extent necessary to modify such scope in order to make such provision
enforceable hereunder.
(b) Member understands that the provisions of the Covenants may
limit Member's ability to earn a livelihood in a business similar to the
business of the Firm.
(c) Member acknowledges that a violation on Member's part of any
of the Covenants would cause irreparable damage to the Firm. Accordingly, Member
agrees that the Firm will be entitled to injunctive relief for any actual or
threatened violation of any of the Covenants in addition to any other remedies
it may have.
16. Waiver and Release. (a) Member hereby irrevocably waives any
right to contest the terms of each of this Agreement and the Merger Agreement
and the transactions contemplated hereby and thereby, whether on the grounds of
unequal or disparate treatment, inconsistency or conflict with the terms and
provisions of the Operating Agreement, unfairness or for any other reason.
(b) Member hereby irrevocably releases Acquiror, each and every
affiliate, shareholder, subsidiary, partner, officer, member, director and
employee of Acquiror and its affiliates in their capacities as such
("Releasees") from any claims, liabilities, costs, expenses, actions, suits or
demands however arising, whether at law or in equity, contingent, known or
unknown, which Member or his or her heirs, successors or assigns may have or
assert, in respect of any interest in the Company and its affiliates or arising
out of any Membership Interest, or Member, partnership or employment
relationship with the Company or its affiliates (including claims for breach of
any contract relating to employment, partnership status or compensation, or for
discrimination based upon race, color, ethnicity, sex, age, national origin,
religion, disability, sexual orientation, or any other unlawful criterion or
circumstance) which Member or Member's heirs, successors or assigns may have or
have had; provided that this release shall not extend to (i) agreements entered
into hereunder and (ii) any conduct that resulted from a Releasee's bad faith,
fraud or criminal act or omission. Member confirms that Member has been given a
reasonable period within which to consider this release and its consequences and
that Member has been advised prior to executing this Agreement to consult with
any attorney or any personal or financial advisor Member chooses.
17. Arbitration. Subject to the provisions of Sections 18 and 19
hereof, any dispute, controversy or claim between Member and the Firm arising
out of or relating to or concerning the provisions of this Agreement, relating
to or arising out of Member's
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employment with the Firm or otherwise concerning any rights, obligations or
other aspects of Member's employment relationship in respect of the Firm
("Employment Related Matters"), shall be finally settled by arbitration in New
York City before, and in accordance with the rules then obtaining of, the NYSE
or, if the NYSE declines to arbitrate the matter, the American Arbitration
Association (the "AAA") in accordance with the commercial arbitration rules of
the AAA.
18. Injunctive Relief; Submission to Jurisdiction; Specific
Performance. (a) Notwithstanding the provisions of Section 17, and in addition
to its right to submit any dispute or controversy to arbitration, the Firm may
bring an action or special proceeding in a state or federal court of competent
jurisdiction sitting in the City of New York, whether or not an arbitration
proceeding has theretofore been or is ever initiated, for the purpose of
temporarily, preliminarily, or permanently enforcing the provisions of the
Covenants, or to enforce an arbitration award, and, for the purposes of this
Section 18, Member (i) expressly consents to the application of Section 19 to
any such action or proceeding, (ii) agrees that proof will not be required that
monetary damages for breach of the provisions of the Covenants would be
difficult to calculate and that remedies at law would be inadequate and (iii)
irrevocably appoints each General Counsel of Acquiror as Member's agent for
service of process in connection with any such action or proceeding, who shall
promptly advise Member of any such service of process.
(b) Each party hereto severally acknowledges that it will be
impossible to measure in money the damage to the other party if the party hereto
fails to comply with any of the obligations imposed by this Agreement and that
every such obligation is material. Accordingly, each party hereto severally
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that the other party has an
adequate remedy at law.
19. Choice of Forum. (a) MEMBER AND THE FIRM HEREBY IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN
THE CITY OF NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO OR CONCERNING THIS AGREEMENT OR ANY EMPLOYMENT RELATED MATTER THAT
IS NOT OTHERWISE ARBITRATED ACCORDING TO THE PROVISIONS OF SECTION 17 HEREOF.
This includes any suit, action or proceeding to compel arbitration or to enforce
an arbitration award. This also includes any suit, action, or proceeding arising
out of or relating to any post-employment Employment Related Matters. Member and
the Firm acknowledge that the forum designated by this Section 19 has a
reasonable relation to this Agreement, and to Member's relationship to the Firm.
Notwithstanding the foregoing, nothing herein shall preclude the Firm from
bringing any action or proceeding in any other court for the purpose of
enforcing the provisions of Sections 17, 18 or 19.
(b) The agreement of Member and the Firm as to forum is
independent of the law that may be applied in the action, and Member and the
Firm agree to such forum even if
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the forum may under applicable law choose to apply non-forum law. Member and the
Firm hereby waive, to the fullest extent permitted by applicable law, any
objection which Member or the Firm now or hereafter may have to personal
jurisdiction or to the laying of venue of any such suit, action or proceeding in
any court referred to in Section 19(a). Member and the Firm undertake not to
commence any action arising out of or relating to or concerning this Agreement
in any forum other than a forum described in this Section 19. Member and the
Firm agree that, to the fullest extent permitted by applicable law, a final and
non-appealable judgment in any such suit, action or proceeding in any such court
shall be conclusive and binding upon Member and the Firm.
20. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS.
21. No Right to Employment. Nothing in this Agreement or the
Merger Agreement shall confer upon Member the right to employment or continued
employment by the Firm or affect the Firm's right to terminate such employment
at will.
22. Miscellaneous. (a) This Agreement and the Merger Agreement
shall supersede any other agreement, written or oral, pertaining to the matters
covered herein.
(b) Notices hereunder shall be delivered to Acquiror at its
principal executive office directed to the attention of its General Counsel, and
to Member at Member's last address appearing in the Firm's employment records.
(c) This Agreement may not be amended or modified, other than by
a written agreement executed by Member and Acquiror or its successors, nor may
any provision hereof be waived other than by a writing executed by Member or
Acquiror or its successors; provided, that any waiver, consent, amendment or
modification of any of the provisions of this Agreement will not be effective
against the Firm without the written consent of Acquiror or its successors.
Member may not, directly or indirectly (including by operation of law), assign
Member's rights or obligations hereunder without the prior written consent of
Acquiror or its successors, and any such assignment by Member in violation of
this Agreement shall be void. This Agreement shall be binding upon Member's
permitted successors and assigns. Without impairing Member's obligations
hereunder, Acquiror may at any time and from time to time assign its rights and
obligations hereunder to any of its subsidiaries or affiliates (and have such
rights and obligations reassigned to it or to any other subsidiary or
affiliate). This Agreement shall be binding upon and inure to the benefit of the
Firm and its assigns.
(d) Without limiting the provisions of Section 15(a) hereof, if
any provision of this Agreement is finally held to be invalid, illegal or
unenforceable (whether in whole or in part), such provision shall be deemed
modified to the extent, but only to the extent, of such
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invalidity, illegality or unenforceability and the remaining provisions shall
not be affected thereby.
(e) Except as expressly provided herein, this Agreement shall
not confer on any person other than Acquiror, the Firm and each Member any
rights or remedies hereunder.
(f) The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
(g) This Agreement may be executed (including by facsimile
transmission) in one or more counterparts, each of which shall be deemed an
original and all such counterparts together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, each signatory hereto has caused this
Agreement, including the written consent evidenced hereby, to be executed and
delivered this 26th day of January, 2001.
THE XXXXXXX XXXXX GROUP, INC.
By:
-------------------------------------
Name:
XXXXXXXX XXXXXXXX & SONS, LLC
(with respect to Section 1(b) only)
By its Managing Member
By:
-------------------------------------
Name:
(As received by XXXXXXXX XXXXXXXX & SONS,
LLC at its principal office)
MEMBER
-------------------------------------
Name:
