EXHIBIT 4.1
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
Dated as of October 31, 2003
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TABLE OF CONTENTS
Page
ARTICLE I LIMITATIONS ON TRANSFER OF SHARES..................................2
Section 1.1. Transfers Generally...............................2
Section 1.2. Transfers Following Death Or Disability...........2
Section 1.3. Transfers with the Consent of Board of
Directors.........................................2
Section 1.4. Compliance with Law and Regulations...............3
Section 1.5. Legend on Certificates; Entry of Stop Transfer
Orders............................................3
Section 1.6. Certificates to Be Held by Company................3
Section 1.7. Transfers in Violation of Agreement Void..........4
ARTICLE II [Intentionally omitted]...........................................4
ARTICLE III No Harmful Activity..............................................4
Section 3.1. Covenant not to Engage in Harmful Activity;
Liquidated Damages................................4
Section 3.2. Notice of Harmful Activity........................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES....................................6
Section 4.1. Representations and Warranties of the Founder
Stockholders......................................6
Section 4.2. Representations and Warranties of the Company.....7
ARTICLE V DEFINITIONS........................................................7
ARTICLE VI MISCELLANEOUS....................................................12
Section 6.1. Notices..........................................12
Section 6.2. Term of the Agreement............................12
Section 6.3. Amendments; Waivers..............................13
Section 6.4. Adjustment Upon Changes in Capitalization and
Extraordinary Transactions.......................13
Section 6.5. Disinterested Board Members to Make
Determinations...................................13
Section 6.6. Severability.....................................13
Section 6.7. Representatives, Successors and Assigns..........14
Section 6.8. GOVERNING LAW....................................14
Section 6.9. Specific Performance.............................14
Section 6.10. Arbitration......................................14
Section 6.11. Submission to Jurisdiction; Waiver of Immunity...15
Section 6.12. Further Assurances...............................15
Section 6.13. Execution in Counterparts........................15
Section 6.14. Entire Agreement.................................15
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Section 6.15. Effectiveness....................................15
Schedule I
Schedule II
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement")
is dated as of October 31, 2003, by and among (i) Xxxxxx Brothers Holdings
Inc. (the "Company"), (ii) Xxxxxxxxx Xxxxxx Inc., a Delaware corporation
("Xxxxxxxxx"), (iii) the Principals (as defined below) listed on Schedule I
hereto and (iv) the Family Affiliates (as defined below) listed on Schedule II
hereto (the Principals and their Family Affiliates, collectively, the "Founder
Stockholders"). Initially capitalized terms used herein have their respective
meanings set forth in Article V of this Agreement.
W I T N E S S E T H :
WHEREAS, Xxxxxxxxx and each Founder Stockholder is a party to that
certain Stockholders Agreement, dated as of August 2, 1999 (the "Original
Stockholders Agreement");
WHEREAS, the Company, Ruby Acquisition Company, a Delaware
corporation and a wholly-owned subsidiary of the Company ("Merger Sub"), and
Xxxxxxxxx entered into an Agreement and Plan of Merger, dated as of July 21,
2003, as amended by the First Amendment to Agreement and Plan of Merger, dated
as of September 22, 2003 (as amended, the "Merger Agreement"), pursuant to
which Xxxxxxxxx will be merged with and into Merger Sub (the "Merger") with
Merger Sub continuing as the surviving corporation (the "Surviving
Corporation") and a wholly-owned subsidiary of the Company;
WHEREAS, pursuant to the Merger Agreement, among other things, each
share of common stock, par value $0.01 per share, of Xxxxxxxxx ("Xxxxxxxxx
Stock") owned by each Founder Stockholder will be converted into an amount in
cash and a number of shares of common stock, par value $0.10 per share, of the
Company ("Common Stock");
WHEREAS, as a condition precedent under the Merger Agreement to the
Company's obligation to consummate the Merger, the Company, Xxxxxxxxx (with
the approval of its Board of Directors) and the Founder Stockholders that Own
a majority of the "Founder Shares" (as defined in the Original Stockholders
Agreement) subject to the Original Stockholders Agreement as of immediately
prior to the consummation of the Merger have entered into those several
Amendments and Agreements in the form attached to the Merger Agreement
(collectively, the "Amendment") pursuant to which, among other things, the
Original Stockholders Agreement has been amended in the manner set forth in
the Amendment; and
WHEREAS, pursuant to the Amendment, the Original Stockholders
Agreement is being restated in its entirety as set forth herein to reflect the
amendments thereto effected by the Amendment.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements, covenants and provisions herein contained and for good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
LIMITATIONS ON TRANSFER OF SHARES
Section 1.1. Transfers Generally. Each Founder Stockholder agrees that,
in addition to any restrictions imposed by law, no Founder Stockholder shall
Transfer any Founder Shares Owned by such Founder Stockholder, except that:
(a) Subject to Section 1.1(c), each Principal, together with his or her
Family Affiliates, may in the aggregate Transfer, (x) at any time, any Initial
Unrestricted Founder Shares held by such Persons, and (y) in each calendar
year commencing January 1, 2004, an additional number of Founder Shares not to
exceed 10% of the aggregate Number of Initial Restricted Founder Shares Owned
by such Principal and Family Affiliates, provided that, in the case of each of
the preceding clauses (x) and (y):
(i) [intentionally omitted]; and
(ii) [intentionally omitted]; and
(iii) Any Founder Shares in respect of which the Company has
exercised its right of purchase pursuant to Article III hereof may only
be Transferred in accordance with Article III.
From and after a Principal's Employment Termination Date, such Principal and
his or her Family Affiliates shall remain subject to the Transfer restrictions
set forth in this Section 1.1(a). Any number of Founder Shares eligible to be
Transferred in any calendar year under this Section 1.1(a) but not so
Transferred may be Transferred in any future calendar year without any
restriction imposed by this Section 1.1(a).
(b) [intentionally omitted]
(c) Notwithstanding Section 1.1(a), no Principal nor any of his or her
Family Affiliates may Transfer Founder Shares during the pendency of any
dispute between the Company and such Principal or any of his or her Family
Affiliates regarding the obligations under this Agreement, the Amendment or
the Non-Competition Agreement of such Principal or any of his or her Family
Affiliates.
Section 1.2. Transfers Following Death Or Disability. Notwithstanding any
other provisions of this Agreement, upon the death or Disability of any
Principal, such Principal (or his or her estate) and his or her Family
Affiliates may Transfer Founder Shares free of any provisions of this
Agreement.
Section 1.3. Transfers with the Consent of Board of Directors.
Notwithstanding any other provisions of this Agreement, a Founder Stockholder
may Transfer any number of Founder Shares at any time with the prior written
consent of the Board of Directors, which consent may be withheld or delayed,
or granted on such terms and conditions as it may determine, in its sole
discretion.
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Section 1.4. Compliance with Law and Regulations. Each Founder
Stockholder agrees that any Transfer of Founder Shares by such Founder
Stockholder shall be in compliance with any applicable constitution, rule or
regulation of, or any applicable policy of, the NASD, any of the exchanges or
associations or other institutions with which the Company Group has membership
or other privileges (including, without limitation, the NYSE), federal and
state securities laws, and any applicable law, rule or regulation of the
Commission or any other governmental agency having jurisdiction.
Section 1.5. Legend on Certificates; Entry of Stop Transfer Orders. (a)
Each Founder Stockholder agrees that each outstanding certificate representing
any Founder Shares that are subject to this Agreement shall bear an
endorsement noted conspicuously on each such certificate reading substantially
as follows:
"The securities represented by this certificate were
issued without registration under the Securities Act
of 1933. No transfer of such securities may be made
without an opinion of counsel, satisfactory to the
Company, that such transfer may properly be made without
registration under the Securities Act of 1933 or that such
securities have been so registered under a registration
statement which is in effect at the date of such transfer.
The securities represented by this certificate are subject
to the provisions of an agreement dated as of October 31,
2003 among the Company and certain persons listed on
Schedules I and II to such agreement, a copy of which is on
file at the principal executive office of the Company, and
such securities may be sold, assigned, pledged or otherwise
transferred only in accordance with such agreement."
(b) Each Founder Stockholder agrees to the entry of stop transfer orders
against the transfer of legended certificates representing shares of Common
Stock except in compliance with this Agreement.
Section 1.6. Certificates to Be Held by Company. (a) Each Founder
Stockholder agrees that the certificates representing such Founder
Stockholder's Founder Shares shall be issued in the name of a nominee holder
to be designated by the Company and shall be held in custody by the Company.
Subject to Section 1.6(c), the Company shall, upon the request of any such
Founder Stockholder or the estate of any Founder Stockholder, as the case may
be, in writing addressed to the Secretary of the Company or any officer
designated by the Secretary (which request shall include a representation by
such Founder Stockholder or estate thereof that such Founder Stockholder is
then permitted to Transfer a specified number of Founder Shares under the
provisions of this Agreement), promptly release from custody the certificates
representing such specified number of Founder Stockholder's Founder Shares
which are then permitted to be Transferred under the provisions of this
Agreement.
(b) Subject to Section 1.6(c), so long as the Founder Stockholders have
provided appropriate written direction to the Company, whenever the nominee
holder shall receive any
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cash dividend or other cash distribution upon any Founder Shares deposited
pursuant to Section 1.6(a), the Company shall cause the nominee holder to
distribute promptly such cash dividend or other distribution (by sale or any
other manner that it may determine, net of its charges and expenses in
effecting such conversion), by checks drawn on a bank in the United States, to
the Founder Stockholders in proportion to the number of Founder Shares Owned
by each of them respectively; provided that the Company shall cause the
nominee holder to make appropriate adjustments in the amounts so distributed
in respect of any amounts required to be withheld by the nominee holder from
any distribution on account of taxes. The nominee holder shall distribute only
such amount as can be distributed without distributing to any Founder
Stockholder a fraction of one cent, and any balance not so distributable shall
be held by the nominee holder (without liability for interest thereon) and
shall be added to and become part of the next sum received by the nominee
holder for distribution to the Founder Stockholders.
(c) Notwithstanding Section 1.6(b), during the pendency of any dispute
between the Company and any Principal or any of his or her Family Affiliates
regarding the obligations under this Agreement, the Amendment or the
Non-Competition Agreement of such Principal or any of his or her Family
Affiliates, all cash dividends and other cash distributions received by the
nominee holder in respect of the Founder Shares of such Principal and his or
her Family Affiliates shall be retained by the nominee holder and shall not be
distributed until the final resolution of such dispute. Each Principal and his
or her Family Affiliates hereby irrevocably (i) authorizes the Company, upon
any amount becoming payable by such Principal or his or her Family Affiliates
in connection with any such dispute, to set off and apply against such amount
an equal amount of any cash dividends or other cash distributions in respect
of such the Founder Shares of such Principal and his or her Family Affiliates
then retained by the nominee holder and (ii) instructs the nominee holder to
distribute such amounts to the Company.
Section 1.7. Transfers in Violation of Agreement Void. Any attempted
Transfer of Founder Shares not made in accordance with the provisions of this
Agreement shall be void, and the Company shall not register, or cause or
permit the registry, of Common Stock Transferred in violation of this
Agreement.
ARTICLE II
[Intentionally omitted]
ARTICLE III
No Harmful Activity
Section 3.1. Covenant not to Engage in Harmful Activity; Liquidated
Damages. (a) Each Principal covenants and agrees with the Company that it will
not, prior to the third anniversary of the Employment Termination Date of such
Principal, engage in any Harmful Activity (other than to the extent expressly
permitted under any waivers granted by Xxxxxxxxx prior to the date of the
Merger Agreement and disclosed in Xxxxxxxxx'x disclosure schedules to the
Merger Agreement).
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(b) It is expressly understood and agreed that although each Principal
and the Company consider the restrictions contained in this Section 3.1 to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Agreement is an unenforceable restriction against such Principal, the
provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect
the enforceability of any of the other restrictions contained herein. Each
Principal understands that the provisions of this Section 3.1 may limit such
Principal's ability to earn a livelihood in a business similar to the business
of the Company Group.
(c) In addition to any other remedies that the Company may have at law or
in equity for any breach by any Principal of this Section 3.1, if, on or prior
to the third anniversary of the Employment Termination Date of any Principal
(including during such Principal's employment with the Company Group), the
Board of Directors determines in its good faith judgment that such Principal
has engaged in Harmful Activity prohibited by this Section 3.1, the Company
shall have the right to purchase, at any time or from time to time, from such
Principal (or, to the extent a Principal does not Own sufficient Founder
Shares Subject to Repurchase (as defined below) to satisfy his or her
obligations under this Section 3.1 (including, without limitation, because
such Founder Shares Subject to Repurchase have been Transferred in violation
of the transfer restrictions contained in Section 1.1), to purchase from his
or her Family Affiliates pro rata in accordance with the number of Founder
Shares Subject to Repurchase Owned by such Family Affiliates on the Notice
Date) that number of Founder Shares equal to the number of Founder Shares
Owned by such Principal and his or her Family Affiliates that could not have
been Transferred by such Founder Stockholders in accordance with Section 1.1
prior to the Notice Date (such shares, "Founder Shares Subject to
Repurchase"); provided, however, that the Company's right to recover monetary
damages from a Principal and his or her Family Affiliates in respect of a
breach by such Principal of this Section 3.1 shall be limited to the Company's
right to repurchase Founder Shares Subject to Repurchase pursuant to this
Section 3.1(c) (and to obtain the liquidated damages provided for in Section
3.1(e) below, to the extent such Principal and his or her Family Affiliates
are unable for any reason to deliver Founder Shares Subject to Repurchase to
the Company in accordance with this Section 3.1(c)), provided that nothing
contained in this proviso or in Section 3.1(e) shall in any way be deemed to
limit the Company's right to obtain equitable relief for such breach
(including without limitation in the manner described in Section 6.9 below).
The purchase price of each Founder Share Subject to Repurchase (the "Purchase
Price") purchased by the Company pursuant to this Section 3.1 shall equal the
quotient of $1.33 divided by the Applicable Exchange Ratio.
(d) The Company may exercise its right to purchase Founder Shares under
this Section 3.1 in accordance with the following procedures:
(i) The Company shall give notice to the Founder Stockholder that
Owns the Founder Shares subject to such right of purchase not later than
the close of business on the third anniversary of the Employment
Termination Date of such Principal (the "Notice Date"), advising such
Founder Stockholder of the Company's election to exercise such
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right, stating the number of Founder Shares to be so purchased, the
Purchase Price, closing arrangements and a closing date at which payment
of the consideration for such Founder Shares will be made, which date
shall be not less than five days nor more than 90 days after the Notice
Date.
(ii) On the closing date, the Company and such Founder Stockholder
shall cause the nominee holding the Founder Shares being so purchased to
deliver the certificates representing such Founder Shares, properly
endorsed for transfer by such Founder Stockholder or his, her or its
attorney-in-fact, to the Company at its principal place of business and
the Company shall deliver to such Founder Stockholder the consideration
therefor (it being understood and confirmed that NB LLC has been
appointed attorney-in-fact for such Founder Stockholder pursuant to the
Exchange Agreement to take all such actions, to make such endorsements
and to execute such documents as may be required to consummate the sale
under this Section 3.1 of Founder Shares to the Company).
(e) If a Principal and his or her Family Affiliates are unable to
satisfy their obligations under this Section 3.1 to deliver to the
Company such Founder Shares Subject to Repurchase for any reason
(including, without limitation, because such Founder Shares Subject to
Repurchase have been Transferred in violation of the transfer
restrictions contained in Section 1.1), such Principal shall be liable to
the Company, as liquidated damages and not as a penalty, for an amount
equal to the product of (i) the number of Founder Shares Subject to
Repurchase that should have been sold to the Company under this Section
3.1 but were not so sold and (ii) the excess, if any, of the Market Value
of such shares as of the Notice Date over the Purchase Price.
Section 3.2. Notice of Harmful Activity. Prior to the third anniversary
of such Principal's Employment Termination Date (including during such
Principal's employment with the Company Group), each Principal who engages (or
intends to engage) in Harmful Activity agrees (a) to notify the Company in
writing in reasonable detail at least 30 days prior to engaging in such
Harmful Activity, (b) to respond to such questions and furnish such additional
information as the Company may request with respect to such Harmful Activity
and (c) to update such written notice or inquiries promptly in the event of
any circumstances that would cause any notices or responses to be inaccurate
or incomplete.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Founder Stockholders.
Each Founder Stockholder severally represents and warrants as of the date of
this Agreement to the Company and to each other Founder Stockholder that (a)
in the case of a Founder Stockholder who is not a natural person, such Founder
Stockholder is duly authorized to execute, deliver and perform this Agreement;
(b) this Agreement has been duly executed by such Founder Stockholder or his,
her or its attorney-in-fact on behalf of such Founder Stockholder and is a
valid and binding agreement of such Founder Stockholder, enforceable against
such Founder Stockholder in accordance with its terms; (c) the execution,
delivery and performance by such
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Founder Stockholder of this Agreement does not violate or conflict with or
result in a breach of or constitute (or with notice or lapse of time or both
constitute) a default under any agreement to which such Founder Stockholder is
a party; and (d) such Founder Stockholder has good and marketable title to its
Founder Shares, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement.
Section 4.2. Representations and Warranties of the Company. The Company
represents and warrants as of the date of this Agreement to the Founder
Stockholders that (a) the Company is duly authorized to execute, deliver and
perform this Agreement; (b) this Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms; and (c)
the execution, delivery and performance by the Company of this Agreement does
not violate or conflict with or result in a breach by the Company of or
constitute (or with notice or lapse of time or both constitute) a default by
the Company under its Certificate of Incorporation or By-Laws, any existing
applicable law, rule, regulation, judgment, order, or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or its property including the requirements of
the NYSE, or any agreement or instrument to which the Company is a party or by
which the Company or its property may be bound.
ARTICLE V
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Amendment" has the meaning set forth in the recitals to this
Agreement.
"Applicable Exchange Ratio" means 0.6104.
"AMEX" has the meaning set forth in Section 6.10(b).
"Board of Directors" means the Board of Directors of the Company or,
to the extent expressly authorized by the Board of Directors to exercise the
powers of the Board of Directors under this Agreement, (i) any committee of
such Board of Directors or (ii) any board of directors or committee of any
Subsidiary of the Company.
"Business Day" means a day on which the principal national securities
exchange on which shares of Common Stock are listed or admitted to trading is
open for the transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in the
Borough of Manhattan, City and State of New York are not authorized or
obligated by law or executive order to close.
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"Cause" means, with respect to any Principal:
(a) gross negligence or willful misconduct in the performance of his
or her duties as an employee of the Company Group or willful and repeated
failure to perform his or her duties after written notice specifying such
failure and a reasonable time having been afforded to correct such failure;
(b) conviction of, or entering a plea of NOLO CONTENDERE to, a felony
(other than for a traffic violation) or a misdemeanor involving fraud,
embezzlement, forgery or perjury;
(c) dishonesty that has resulted in damage to the property, business
or reputation of the Company and its Subsidiaries, misappropriation of, or
intentional damage to, the property, business or reputation of the Company and
its Subsidiaries, perpetration of fraud on the Company Group that has resulted
in damage to the property or business of the Company Group; or
(d) a finding by the Commission or a court of competent jurisdiction
that he or she has committed an act that would cause such Founder Stockholder,
the Company or any of its affiliates to be disqualified in any manner under
section 9 of the Investment Company Act, if the Commission were not to grant
an exemptive order under section 9(c) thereof, or that would constitute
grounds for the Commission to deny, revoke or suspend registration of the
Company or any of its affiliates as an investment advisor, broker-dealer or
transfer agent, as applicable, with the Commission.
"Closing Price" means, on any day, the last sales price, regular way,
per share of Common Stock on such day, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, as
reported in the principal consolidated transaction reporting system covering
securities listed or admitted to trading on the NYSE or, if shares of Common
Stock are not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system covering securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Quotation Bureau, Inc., or a similar reporting
service designated by the Board of Directors.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the preamble to this Agreement
and any successors thereof, whether by operation of law or otherwise.
"Company Group" means the Company and its Subsidiaries, including
without limitation the Surviving Corporation and its Subsidiaries.
"Confidential Information" means information developed by or for the
Company Group that has a significant business purpose related to the business
of the Company Group and that is
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not generally available in the investment Founder industry or the public
generally, but only for so long as such information continues to have a
significant business purpose for the Company Group.
"Disability" means disability as that term is defined under the
Company's long-term disability plan in effect at the date of such
determination, or any other plan or definition designated by the Board of
Directors for the purpose of this provision.
"Employment Termination Date" means, with respect to any Principal,
the date of termination of such Principal's employment with the Company Group
for any reason, (whether or not terminated by action of the Company Group), as
determined by the Board of Directors in its sole and absolute discretion.
"Exchange" means the contribution of interests in NB LLC to Xxxxxxxxx
in exchange for shares of Xxxxxxxxx Stock, as consummated pursuant to the
Exchange Agreement.
"Exchange Agreement" means the Plan of Merger and Exchange Agreement,
dated as of August 2, 1999, pursuant to which, among other things, the
Exchange was consummated.
"Family Affiliates" means, as the context requires, (a) the Persons
listed on Schedule II hereto or (b) with respect to any Principal, (i) the
Persons listed on Schedule II hereto to whom such Principal transferred a
limited liability company interest prior to the Exchange and (ii) any Person
to whom such Principal Transfers Founder Shares with the written consent of
the Board of Directors in accordance with Section 1.3 and who agrees in
writing to be subject to the terms and provisions of this Agreement as a
Family Affiliate.
"Founder Shares" means (i) with respect to any Founder Stockholder
that was a party to the Original Stockholders Agreement, the shares of Common
Stock received by such Founder Stockholder in the Merger in respect of such
Founder Stockholder's Founder Shares (as such term was defined in the Original
Stockholders Agreement without giving effect to the Amendment) Owned as of
immediately prior to the Merger Effective Time, and (ii) with respect to any
Founder Stockholder that becomes a party to this Agreement after the
consummation of the Merger by an amendment to Schedule I or II hereof, the
shares of Common Stock designated on such Schedule as such Founder
Stockholder's Founder Shares.
"Founder Shares Subject to Repurchase" has the meaning set forth in
Section 3.1(c).
"Founder Stockholders" has the meaning set forth in the recitals to
this Agreement.
"Harmful Activity" by a Principal means such Principal, directly or
indirectly, either individually or as owner, partner, agent, employee,
consultant or otherwise:
(a) solicits or accepts business from (i) any Person who was a client
of the Company Group during the one year period prior to such Principal's
Employment Termination Date (or, in the case of an action taken during such
Principal's employment with the Company Group, during the one-year period
immediately prior to such action) or (ii) any prospective client of the
Company Group who, within the one year period prior to such Employment
Termination Date (or, in the case of an action taken during such Principal's
employment with the Company Group,
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within the one-year period immediately prior to such action), had been
directly solicited by such Principal or where, directly or indirectly, in
whole or in part, such Principal supervised or participated in the Company
Group's solicitation activities related to such prospective client;
(b) solicits or accepts business from or through, or engages in any
sales or marketing activities with, any financial intermediary (including,
without limitation, any broker-dealer, bank, insurance company, financial
planner or other financial institution), or any person employed by or
associated with a financial intermediary, with whom such Principal had
business contact during the one year period prior to such Principal's
Employment Termination Date;
(c) (i) employs any current or former employee or consultant of the
Company Group (other than clerical, secretarial and other similar support
personnel) or (ii) recruits, solicits or induces (or in any way assists
another in recruiting, soliciting or inducing) any such Person to terminate
his or her employment or consultantship with the Company Group, unless, in the
case of (i) or (ii), such person shall have ceased to be employed by or a
consultant to the Company Group for a period of at least one year prior to the
time of such employment, recruitment, solicitation or inducement;
(d) markets, promotes or otherwise trades on or (other than solely in
connection with seeking new employment) claims (or in any way, other than in
connection with the business of the Company Group, assists any Person in
marketing, promoting or otherwise trading on or claiming) as such Principal's
(or such other Person's), the investment performance record (including without
limitation performance ratings or rankings provided by any rating or ranking
service) of any mutual fund, client account or group of mutual funds or client
accounts with which such Principal was associated while employed with the
Company Group;
(e) discloses to any person, firm or corporation any Confidential
Information that is known to the Principal as a result of his or her
employment or professional association with the Company Group or uses the same
in any way other than in connection with the business of the Company Group; or
(f) publicly makes disparaging or derogatory comments regarding (i)
the Company Group or any member of the Company Group or (ii) any current or
former Principal, employee or consultant of the Company Group in their
capacity as a Principal, employee or consultant or with the effect of damaging
the business or reputation of the Company Group.
"Initial Unrestricted Founder Shares" means, respect to a Principal
and his or her Family Affiliates, all shares of Common Stock received by such
Persons in the Merger in respect of shares of Xxxxxxxxx Stock, Owned by such
Principal and his or her Family Affiliates other than Restricted NB Founder
Shares.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder.
"Market Value" means the average of the daily Closing Prices for the
ten consecutive Business Days ending on the Business Day immediately prior to
the date of determination.
"Merger" has the meaning set forth in the recitals to this Agreement.
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"Merger Agreement" has the meaning set forth in the recitals to this
Agreement.
"Merger Effective Time" means the effective time of the Merger.
"Merger Sub" has the meaning set forth in the recitals to this
Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"NB LLC" means Xxxxxxxxx Xxxxxx, LLC, a Delaware limited liability
company and wholly owned subsidiary of Xxxxxxxxx.
"Xxxxxxxxx" has the meaning set forth in the preamble to this
Agreement.
"Xxxxxxxxx Stock" has the meaning set forth in the recitals to this
Agreement.
"Non-Competition Agreement" means the Non-Competition Agreement,
dated as of August 2, 1999, between Xxxxxxxxx and the Principals.
"Notice Date" has the meaning set forth in Section 3.1(d)(i).
"Number of Initial Restricted Founder Shares" means, with respect to
a Principal and his or her Family Affiliates, that number of shares of Common
Stock equal to the product of (a) the number of Restricted NB Founders Shares
Owned by such Persons immediately prior to the Merger Effective Time,
multiplied by (b) the Applicable Exchange Ratio.
"NYSE" means the New York Stock Exchange, Inc.
"Original Stockholders Agreement" has the meaning set forth in the
recitals to this Agreement.
"Own" means to own of record or beneficially, whether directly,
through a nominee designated by the Company pursuant to Section 1.6 or through
any other Person.
"Person" means any natural person or any firm, partnership, limited
liability partnership, association, corporation, limited liability company,
trust, business trust, governmental authority or other entity.
"Principals" means the natural persons listed on Schedule I hereto.
"Purchase Price" has the meaning set forth in Section 3.1(c).
"Restricted NB Founder Shares" means, with respect to a Principal and
his or her Family Affiliates, those shares of Xxxxxxxxx Stock Owned by such
Principal and his or her Family Affiliates that were subject to the transfer
restrictions set forth in Section 1.1 of the Original Stockholders Agreement
as of immediately prior to the Merger Effective Time (for the avoidance of
doubt, after giving effect to any waivers of such transfer restrictions that
were granted by Xxxxxxxxx prior to the date of the Merger Agreement and were
disclosed in Xxxxxxxxx'x disclosure schedules to the Merger Agreement).
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"Subsidiary" means a corporation, limited liability company or other
entity of which the Company, directly or indirectly, has the power, whether
through the ownership of voting securities, equity interests, contract or
otherwise, (i) to elect at least a majority of the members of such entity's
board of directors or other governing body or (ii) in the absence of a
governing body, to control the business affairs of such entity.
"Surviving Corporation" has the meaning set forth in the recitals to
this Agreement.
"Transfer" means, with respect to any Founder Shares, directly or
indirectly, (i) to sell, assign, transfer, pledge (including in margin
transactions), convey, distribute, mortgage, encumber, hypothecate or
otherwise dispose, whether by gift, for consideration or for no consideration
and (ii) to grant any right to vote, whether by proxy, voting agreement,
voting trust or otherwise.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Notices. (a) All notices, requests, demands, waivers and
other communications to be given by any party hereunder shall be in writing
and shall be (i) mailed by first-class, registered or certified mail, postage
prepaid, (ii) sent by hand delivery or reputable overnight delivery service or
(iii) transmitted by telecopy (provided that a copy is also sent by reputable
overnight delivery service) addressed, in the case of any Principal, to him or
her at the address set forth on Schedule I, in the case of any Family
Affiliate, to it at the address set forth on Schedule II or, in the case of
the Company, to Xxxxxx Brothers Holdings Inc., 000 Xxxx Xxxxxx-00xx Xxxxx, Xxx
Xxxx, XX 00000, Attention: Secretary, or, in each case, to such other address
as may be specified in writing to the other parties hereto.
(b) All such notices, requests, demands, waivers and other communications
shall be deemed to have been given and received (i) if by personal delivery or
telecopy, on the day of such delivery, (ii) if by first-class, registered or
certified mail, on the fifth Business Day after the mailing thereof or (iii)
if by reputable overnight delivery service, on the day delivered.
Section 6.2. Term of the Agreement. (a) This Agreement shall terminate on
the earlier to occur of (i) the first date on which there are no Founder
Stockholders who remain bound by its terms and (ii) the date on which the
Company and all Founder Stockholders who are then bound by its terms agree to
terminate this Agreement.
(b) Unless this Agreement is theretofore terminated pursuant to Section
6.2(a) hereof, a Founder Stockholder shall be bound by its terms until all
Founder Shares Owned by such Founder Stockholder are free of the provisions of
Articles I and III hereof.
Section 6.3. Amendments; Waivers. (a) This Agreement may be amended or
modified, and any provision in this Agreement may be waived, if such
amendment, modification or waiver is approved by the Board of Directors,
provided that any amendment that would materially adversely affect any Founder
Stockholder (other than an amendment that, in the good faith judgment of the
Board of Directors, is intended to cure any ambiguity or correct or supplement
any provisions of this Agreement that may be incomplete or inconsistent with
any
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other provision contained herein) must be approved by the Founder Stockholders
that Own a majority of the Founder Shares subject to this Agreement as of the
date of such amendment or modification, provided, further, that, without the
consent of any Person, the Board of Directors may permit any Person who
executes and delivers a counterpart of this Agreement to become a party to
this Agreement by amending Schedule I or II hereto, as the case may be.
(b) The failure of any party at any time or times to require performance
of any provision of this Agreement shall in no manner affect the rights at a
later time to enforce the same. No waiver by any party of the breach of any
term contained in this Agreement, whether by conduct or otherwise, in any one
or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach or the breach of any other term of this
Agreement.
Section 6.4. Adjustment Upon Changes in Capitalization and Extraordinary
Transactions. In the event of (x) any change in the outstanding shares of the
Company by reason of stock dividends, split-ups, recapitalizations,
combinations, exchanges of shares and the like, or (y) any conversion or
exchange of Common Stock pursuant to an acquisition of or other business
combination involving, the Company (whether by merger, recapitalization,
combination or otherwise), in each case the term "shares of Common Stock"
shall refer to and include the securities received or resulting therefrom and
the terms and provisions of this Agreement, including without limitation the
terms "Founder Shares" and "Purchase Price," shall be appropriately adjusted
so that each Founder Stockholder will thereafter continue to have and be
subject to, to the greatest extent practicable, the same rights and
obligations he, she or it had been subject to prior to such change, and in
respect of that new security.
Section 6.5. Disinterested Board Members to Make Determinations. In the
event that any Founder Stockholder breaches its obligations under this
Agreement, then the Board of Directors shall have the exclusive right to make
(on behalf of the Company) any and all determinations that may be necessary or
appropriate under this Agreement, including without limitation, determinations
relating to the exercise and enforcement of remedies hereunder. If a Founder
Stockholder who is also a member of the Board of Directors breaches his or her
obligations under this Agreement, such Founder Stockholder must refrain from
exercising his or her vote at meetings of the Board and general meetings of
the Company to give effect to this Section 6.5.
Section 6.6. Severability. If the final determination of a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that
any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) the invalid or
unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
Section 6.7. Representatives, Successors and Assigns. Each Principal
shall cause his or her Family Affiliate to comply with the terms and
provisions of this Agreement. This Agreement shall be binding upon and inure
to the benefit of the respective parties hereto and their respective legatees,
legal representatives, successors and assigns; provided that Founder
-13-
Stockholders may not assign, delegate or otherwise transfer any of their
rights or obligations under this Agreement except with the written consent of
the Board of Directors.
Section 6.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES OR RULES THEREOF).
Section 6.9. Specific Performance. Each of the parties hereto
acknowledges that it will be impossible to measure in money the damage to the
Company or the Founder Stockholders if any party hereto fails, or threatens to
fail, to comply with the provisions of Article I or III and each party hereto
agrees that in the event of any such failure or threatened failure, neither
the Company nor any Founder Stockholder will have an adequate remedy at law.
Therefore, in the event of such failure or threatened failure, the Company
(without posting any bond) and each Founder Stockholder, in addition to all of
the other remedies which may be available, shall be entitled to obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which
may be then available. All claims for specific performance of one or more
provisions of this Agreement shall be resolved exclusively by litigation
before a court of competent jurisdiction located in the State of New York.
Section 6.10. Arbitration. Except for claims for specific performance
brought in accordance with Section 6.9, all disputes, differences, and
controversies arising out of or in any way related to this Agreement shall be
submitted:
(a) to the NYSE to be heard and decided under the terms of this Agreement
and the then applicable rules of the NYSE or, if those rules as interpreted by
the NYSE do not permit the disputes, differences and controversies to be
submitted to the NYSE for arbitration; then
(b) to the American Stock Exchange (the "AMEX") in New York, New York, to
be heard and decided under the terms of this Agreement and the then applicable
rules of the AMEX or, if those rules as interpreted by the AMEX do not permit
the disputes, differences and controversies to be submitted to the AMEX for
arbitration; then
(c) to the NASD in New York, New York, to be heard and decided under the
terms of this Agreement and the then applicable rules of the NASD or, if the
disputes, differences and controversies are not eligible for submission to the
NASD for arbitration under those rules as interpreted by the NASD; then
(d) to the American Arbitration Association in New York, New York;
to be heard and decided under the terms of this Agreement and in accordance
with the then applicable rules of the hearing body by a panel of three
arbitrators (unless the rules of the hearing body shall require a different
number of arbitrators) chosen in accordance with the then applicable rules of
the hearing body. The decision of the arbitrators shall be final and binding
upon the parties, and an order may be entered upon the award of the
arbitrators in any court of competent jurisdiction.
-14-
Section 6.11. Submission to Jurisdiction; Waiver of Immunity. Each
Founder Stockholder, for itself and its successors and assigns, hereby
irrevocably waives (a) any objection, and agrees not to assert, as a defense
in any arbitration or legal or equitable action, suit or proceeding against
such Founder Stockholder arising out of or relating to this Agreement or any
transaction contemplated hereby or the subject matter of any of the foregoing,
that (i) it is not subject thereto or that such action, suit or proceeding may
not be brought or is not maintainable before such arbitral body or in said
courts, (ii) the venue thereof may not be appropriate and (iii) the internal
laws of the State of New York do not govern the validity, interpretation or
effect of this Agreement, (b) any immunity from jurisdiction to which it might
otherwise be entitled in any such arbitration, action, suit or proceeding
which may be instituted before any state or federal court in the State of New
York in accordance with Section 6.9 or before any arbitral body in accordance
with Section 6.10 and (c) any immunity from the maintaining of an action
against it to enforce any judgment for money obtained in any such arbitration,
action, suit or proceeding and, to the extent permitted by applicable law, any
immunity from execution.
Section 6.12. Further Assurances. Each Founder Stockholder agrees to
execute such additional documents and take such further action as may be
requested by the Company to effect the provisions of this Agreement.
Section 6.13. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute but one and the same
instrument.
Section 6.14. Entire Agreement. This Agreement, including the Schedules
hereto, contains the entire understanding of the parties with respect to the
subject matter hereof, and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
Section 6.15. Effectiveness. This Agreement shall become effective and be
binding upon the Company, Xxxxxxxxx and all Founder Stockholders upon approval
of the Board of Directors of Xxxxxxxxx, execution of a counterpart hereof by a
duly authorized officer of each of the Company and Xxxxxxxxx and of
counterparts of the Amendment by Founder Stockholders that Own a majority of
the "Founder Shares" (as defined in the Original Stockholders Agreement)
subject to the Original Stockholders Agreement as of immediately prior to the
Merger Effective Time.
[Rest of page intentionally blank.]
-15-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
XXXXXXXXX XXXXXX INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive Officer
XXXXXX BROTHERS HOLDINGS INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
SCHEDULE I
TO
STOCKHOLDERS AGREEMENT
Name and Address* of Principal
Xxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx Xxxxx X. Risen
Xxxxxxxx X. Xxxx Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. D'Alelio J. Xxxx Xxxxxxxxxxxxx, Xx.
Xxxxxxxxx X'Xxxx Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxxx X. Silver
Xxxxxxx X. Xxxxxxxx Xxxx X. Xxxxxx
Xxxxxx X. English R. Xxxxxx Xxxxxx
Xxxx X. Xxxxxxx Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx Xxxx Xxxxx
Xxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxxxx Xxxxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxx
Xxx X. Xxxxxxx Xxxxx Xxxxxxx
Xxxx X. Xxxxxx Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxx Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxxxxx Xx.
Xxxxxxx X. Xxxxxx Xxxxxx X. Xxxx
Xxxx X. Xxxxxxx Xxxx Xxxx Xxxx
Xxx X. Xxxxxxxxxxxx Xxxxx X. Xxxxxx
Xxxxx Xxxxxxx Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx Xxxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxx, III
Xxxxxxxxxxx X. Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxxx X. XxXxxxxx
Xxxxxx XxXxxxxx
Xxxxxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx
* Unless otherwise indicated, the address of each Principal is c/x
Xxxxxxxxx Xxxxxx, LLC, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
SCHEDULE II
TO
STOCKHOLDERS AGREEMENT
Name and Address** of Family Affiliate
Xxxxxxx X. Xxxxxxxx Associates, L.P.
Berlin Associates, X.X.
Xxxxxx Associates, X.X.
Xxxxxx Associates, X.X.
Xxxxxxx Associates, X.X.
Xxxxxx Associates, X.X.
Xxxxxx 2003 Grat Trust
Ganek Associates, X.X.
Xxxxxxxx Associates, X.X.
Xxxxxxxxx Associates, L.P.
Kamen Associates, L.P.
Xxxxxxx X. Xxxxxx Associates, L.P.
Xxxxxxx X. Xxxxxx 2002 Grantor Retained Annuity Trust
Xxxxxxx X. Xxxxxx 2003 Grantor Retained Annuity Trust
Xxxxxxxxxxxx Associates, X.X.
Xxxxxx Associates, X.X.
XxXxxxxx Associates, X.X.
Xxxxxxxxx Associates, X.X.
Xxxxxxxxx 2003 Annuity Trust
Xxxxxxxxx Associates, X.X.
Xxxxxx Associates, X.X.
Xxxxxxx Associates, X.X.
Xxxxxxx Associates Inc.
Xxxxxx X. Xxxxxxx 2003 Irrevocable Trust
Xxxxxx X. Xxxxxxx Descendants Exempt Irrevocable Trust
Xxxx X. Xxxxxxx 2003 Irrevocable Trust
Xxxx X. Xxxxxxx Descendants Exempt Irrevocable Trust
Xxxxxxx 1998 Trust A
Potter Associates, X.X.
Xxxxxxxx CS Associates, X.X.
Xxxxxxxx ES Associates, L.P.
Xxxxxx Xxxxxxxx Family 2003 GRAT
Xxxx Xxxxxx 2002 Grat
Xxxx Xxxxxx Grat #2
Xxxx Xxxxxx Grat #3
The Xxxxxx 1998 Trust
Xxxxxxx Associates, X.X.
Xxxxxxx Associates, X.X.
Xxxxxxx 1998 Trust
Xxxxxxx Associates, L.P.
Xxxxx X. Xxxxxx 1998 Grantor Retained Annuity Trust
Xxxxxx 1998 GST Trust F/B/O Xxxxx Xxxxxx-Xxxxxx
Xxxxxx 1998 GST Trust F/B/O Xxxxx Xxxx Xxxxxx
Xxxxxxxx Associates, L.P.
The Xxxxxxxx Xxxxxxxx Revocable Trust
Xxxxxxxx Xxxxxxx 2003 Grantor Retained Annuity Trust
Zicklin Associates, L.P.
** Unless otherwise indicated, the address of each Family Affiliate is
c/x Xxxxxxxxx & Xxxxxx Trust Company of Delaware, 000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000.
