Exhibit 10.12
Xxxxxx X. Xxxxxxx, Xx.
The World Trade Center--Baltimore
28th Floor
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
December 29, 1997
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
The World Trade Center--Baltimore
28th Floor
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: Xxxxxxx Holdings, Inc.
Corporate Separation Lock-up Agreement
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Ladies and Gentlemen:
In connection with efforts to raise capital for the business
operations of The Xxxxxxx Co., a Maryland corporation ("CCO") and Xxxxxxx
Capital Management, Inc., a Washington, DC corporation ("CCM"): (i) CCO and its
parent, Xxxxxxx Holdings, Inc., a Maryland corporation ("CHI") entered into a
merger transaction (the "Merger") effective December 29, 1997, pursuant to a
plan of merger (the "Plan") and articles of merger approved by the Board of
Directors and stockholders of CHI whereby the former stockholders of CCO became
stockholders of CHI and CCO became a wholly-owned subsidiary of CHI; (ii)
effective January 8, 1998, CCO transferred the outstanding shares of its
wholly-owned subsidiaries CCM and The Xxxxxxx Insurance Agency Incorporated, a
Maryland corporation ("CIA") to two newly-formed, wholly-owned Maryland
corporation subsidiaries of CCO, Xxxxxxx Capital Holdings, Inc. ("CCH") and
Xxxxxxx Insurance Holdings, Inc. ("CIH"); (iii) CHI currently intends to
undertake an initial public offering of its equity securities (the "IPO"); (iv)
immediately prior to the closing of the IPO, CCO currently intends to distribute
all of the outstanding shares of common stock, par value $0.001 per share, of
CCH ("Common Stock of CCH") and common stock, par value $0.001 per share, of CIH
("Common Stock of CIH") to CHI; and (v) immediately upon the receipt of the
shares of Common Stock of CCH and CIH by CHI, CHI currently intends to
distribute one share of Common Stock of CIH and one
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
December 29, 1997
Page 2
share of Common Stock of CCH to each CHI stockholder for each share of common
stock, par value $0.001 per share, of CHI ("Common Stock of CHI") held by such
CHI stockholder as of the record date for such distribution as set by the Board
of Directors of CHI (the transactions set forth in subparagraphs (iv) and (v)
are hereinafter referred to as the "Separation"). The Separation is intended to
be a tax-free spin-off transaction pursuant to Section 355 of the Internal
Revenue Code. Each of the transactions set forth above is more fully described
in The Xxxxxxx Co. Information Statement dated December 23, 1997 (the
"Information Statement").
The undersigned understands, as set forth in the Plan and the
Information Statement, that the tax-free nature of the Separation may be
threatened by any transfer of shares of Common Stock of CHI received by the
former stockholders of CCO in the Merger (the "Shares") prior to June 28, 1999.
Accordingly, in order to facilitate the consummation of the Separation and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the undersigned agrees that, without the prior written
consent of CHI, the undersigned will not (i) directly or indirectly, offer,
sell, pledge, contract to sell, grant any option to purchase or otherwise
dispose of any of the Shares beneficially owned or otherwise held by the
undersigned (including, without limitation, Shares which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
of CHI which may be issued upon exercise of a stock option or warrant) or any
securities convertible into, derivative of or exercisable or exchangeable for
such Common Stock of CHI for a period commencing on December 29, 1997 and ending
on June 28, 1999; and (ii) notwithstanding clause (i) above, until June 28,
1999, directly or indirectly, sell short any equity securities of CHI.
The undersigned agrees that CHI may, and that the undersigned will,
with respect to any of the Shares for which the undersigned is the record
holder, cause the transfer agent for CHI to note stop transfer instructions with
respect to the Shares on the transfer books and records of CHI.
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
December 29, 1997
Page 3
The undersigned understands that CHI and CCO will proceed with the
Separation in reliance on this agreement. This agreement shall be governed by
and construed in accordance with the internal laws (and not the laws pertaining
to conflicts of laws) of the State of Maryland.
The undersigned understands that CHI and CCO will proceed with the
Separation in reliance on this agreement and that nothing in this agreement
obligates CHI or CCO to proceed with the Separation. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
estate, heirs, personal representatives, successors and assigns of the
undersigned.
Very truly yours,
/S/ XXXXXX X. XXXXXXX, XX.
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Signature of Stockholder
Xxxxxx X. Xxxxxxx, Xx.
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Printed Name of Stockholder