Exhibit CC
Member Agreement
MEMBER AGREEMENT, dated as of May 16, 2002 (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 Xxxxxx X. Xxxxx & Co., LLC, a New York limited liability company
(the "Company"), set forth next to such signatory's name on Exhibit A
("Member"), and, for purposes of Section 1(b) hereof only, the Company.
RECITALS
Acquiror and the Company entered into an Agreement and Plan of Merger, dated as
of the date hereof, a copy of which is attached hereto as Exhibit B (the
Agreement and Plan of Merger, including all annexes and schedules thereto, 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.
Upon the consummation of the Merger, the Merger Agreement provides for the
conversion of Member's Membership Interest into such amount of cash and/or
shares of Acquiror Common Stock (the "Shares"), as is provided in the Merger
Agreement. Member will derive substantial value from Acquiror's execution,
delivery and performance of the Merger Agreement.
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 5.7 of the Operating Agreement, (ii) agrees to
grant to Acquiror, upon request by Acquiror, an irrevocable proxy in the form of
Exhibit D, 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 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 Managers by SLK, or another
Affiliate of Acquiror designated by Acquiror, as the sole Manager 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 Section 3.01 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. Member acknowledges and
agrees that the Company Representatives may elect to establish an escrow
arrangement in order to pay the costs and expenses of the Company and the
Members in connection with the transactions contemplated by the Merger
Agreement, and that a portion of Member's Merger Consideration may be paid
directly to the escrow account established pursuant to such escrow arrangement
and disbursed in accordance with the terms of such escrow arrangement. 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.
(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 reasonable 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, however, that in the event of such Member's
death
prior to the Effective Time, Member's Membership Interest may be transferred in
accordance with 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 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, other than Liens created by the Constitutive Documents
of the Company; 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 is reasonably likely to
materially 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, in each case,
which would materially impair, restrict or delay the ability of Member to
perform Member's obligations under this Agreement.
(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 Member's investment 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 the Shares.
(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 E 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 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 and 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 THE 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 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 and pledging
contained in Exhibit F 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, filed any Tax Return or filed or
provided any other document 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 15 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, provided that Acquiror and its Affiliates, as applicable, have
complied with the procedures set forth in Sections 7.02(c) and 7.02(f) of the
Merger Agreement; and provided, further that Member shall file its Tax Returns
and any other documents consistent with Section 7.02(b) of the Merger Agreement.
(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) 331/3% of such Shares may be Transferred at any time
after the first anniversary of the Closing Date;
(ii) an additional 331/3% of such Shares may be Transferred
at any time after the second anniversary of the Closing
Date; and
(iii) all of such Shares may be Transferred at any time after
the third anniversary of the Closing Date.
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; provided, however, that in the event of such Member's death during
the term of this Agreement, a portion of such Member's Shares may be transferred
to the extent necessary to generate cash to pay federal and state estate taxes
applicable to the value of the Shares in such Member's estate that are still
subject to transfer restrictions under Section 4(a) of this Agreement.
(b) 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 Shares if requested to do so by 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 or any other then available method
of accounting;
(iii) be subject to the same internal compliance and trading
policies as are in effect from time to time for
similarly situated employees of Acquiror; and
(iv) comply with the hedging and pledging 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.
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; Return of Materials. (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. 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) Upon the termination of Member's employment with the Firm,
Member shall promptly deliver to Acquiror all correspondence, drawings, manuals,
letters, notes, notebooks, reports, flow-charts, programs, proposals and any
documents concerning Clients (as defined herein), Client lists and all other
paper and/or electronic documents, records or files, and all copies thereof,
relating to the operation, products, processes, business or Clients of the Firm
and, without limiting the foregoing, will promptly deliver to Acquiror any and
all other documents, electronic records or materials containing or constituting
Confidential Information.
(c) 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 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 (including,
for this purpose, stock options, warrants and other rights, whether or
not exercisable), voting or profit participation interest in, any
Competitive Enterprise (as defined below) (it being understood that the
maintenance by Member of his existing ownership interest in Xxxxxxxx
Xxxxxxx & Co., Inc. ("Xxxxxxxx") shall not be deemed to violate the
provisions of this Section 6; provided, that Member shall maintain his
ownership interest in Xxxxxxxx solely as a passive investment and shall
not devote any of Member's time, labor, skill or energies to the
business and affairs of Xxxxxxxx); 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, 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 management of Acquiror 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, counseling, inducing or requesting
any person or entity, in any manner, to take or refrain from taking any action.
(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. 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 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 17 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 management of
Acquiror 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
G 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 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 H 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.
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 first 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 first
anniversary of the Effective Time (the "Initial Employment Period").
Notwithstanding the foregoing, Member acknowledges and agrees that such
employment shall be subject to this Agreement and to terms and conditions that
are consistent with other offers to new employees of the Firm, including,
without limitation, a background check and compliance with the Firm's policies
and procedures. 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 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 are consistent with the Firm's policies and 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 of Member's obligations hereunder, 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. Non-Disparagement. Member hereby acknowledges and agrees that
Member will not make, either by himself or herself, as applicable, or through an
agent, employee, representative or any other third party, any oral or written
statements which are or could reasonably be interpreted to be of a negative or
critical nature concerning the Firm, including, but not limited to, statements
or omissions regarding its business practices, events in the workplace, and/or
his or her treatment by the Firm, to anyone other than in private and privileged
conversations with his or her spouse or legal advisor, or as required by law.
14. Non-Compliance Period. The time periods for the restrictions
referred to in Sections 6, 7 and 8 shall be extended, respectively, by a number
of days equal to the number of days of non-compliance.
15. 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 Representatives (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 Representatives shall
have sole and exclusive power and authority over tax matters reserved to the
Company Representatives under the Merger Agreement. In furtherance thereof,
Member agrees that (i) any action by either of the Company Representatives shall
be conclusively binding on Member and (ii) Xxxxxxx X. Xxxxx and Xxxx X. Xxxxxxxx
III shall be the initial Company Representatives, and Member agrees to take all
action necessary to cause the Company to designate Xxxxxxx X. Xxxxx and Xxxx X.
Xxxxxxxx III as the Company Representatives under the terms of the Merger
Agreement.
16. 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. In
addition, Member agrees to prepare and file in a timely fashion any IRS forms
relating to the allocation of Merger Consideration, to the extent applicable, in
accordance with Section 7.02(f) of the Merger Agreement and the Code. In the
event that the Merger Consideration is adjusted after the Closing Date, Member
agrees to revise and amend any such IRS forms, to the extent applicable, in the
same manner and according to the same procedure.
(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 Company
Representatives, Acquiror, the Surviving LLC and the Tax Matters Partner (as
defined in Section 6231(a)(7) of the Code) (or its designee), as applicable, 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 (such
designation or appointment to be made in good faith) 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
Section 4.01(c)(v) 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 (calculated in
accordance with such Section) during the period from March 1, 2002 to the
Closing Date (after taking into account Tax credits and other available Tax
assets relating to the Company 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 February 28, 2002 included in the Financial Statements
(including any "short against the box" positions), (ii) Taxes payable in respect
of any acceleration of Section 481 adjustments under the Code resulting from the
transactions contemplated by the Merger Agreement or (iii) any other taxes
payable as a result of the transactions contemplated by the Merger Agreement) is
greater than (an "Underpayment") or less than (an "Overpayment") the amounts
distributed to Member pursuant to Section 4.01(c)(v) of the Merger Agreement
with respect to the period from March 1, 2002 to the Closing Date in respect to
such Taxes, and, in the event of an Overpayment, Member shall promptly pay to
Acquiror and, in the event of an Underpayment, Acquiror shall promptly pay to
Member, the amount of such difference.
17. Covenants Generally. (a) Member's covenants as set forth in
Sections 5 through 16 of this Agreement are from time to time referred to herein
as the "Covenants." If 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.
18. 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 (including, without limitation, any claim
pursuant to Section 4.12 of the Operating Agreement relating to the employment
of any member of the Company by the Firm following the Effective Time and any
claim pursuant to Article XIII 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 (or the Company's predecessor)
and its affiliates or arising out of any Membership Interest, or Member,
partnership or employment relationship with the Company (or the Company's
predecessor) 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 or in connection with the transactions contemplated by the Merger
Agreement 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.
19. Arbitration. Subject to the provisions of Sections 20 and 21
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 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.
20. Injunctive Relief; Submission to Jurisdiction; Specific
Performance. (a) Notwithstanding the provisions of Section 19, 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 20, Member (i) expressly consents to the
application of Section 21 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 in writing 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.
21. 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 19 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 21 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 19, 20 or 21.
(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 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 21(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 21. 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.
22. 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.
23. 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.
24. 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 17(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 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.
IN WITNESS WHEREOF, each signatory hereto has caused this
Agreement, including the written consent evidenced hereby, to be executed and
delivered this ___th day of May, 2002.
THE XXXXXXX XXXXX GROUP, INC.
By:__________________________________________
Name:
Title:
XXXXXX X. XXXXX & CO., LLC
(with respect to Section 1(b) only)
By:__________________________________________
Name:
Title:
MEMBER
_____________________________________________
Name:
