SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is entered into as
of December 23, 2003, by and among (i) Xxxxxx Bros. Co., a California
corporation ("Xxxxxx Bros."), (ii) Xxx X. Xxxxxx ("Xxx XX"), Xxx X. Xxxxxx
("Xxx III"), Xxxxx Xxxx Xxxxxx-Xxxxx ("Xxxxx"), Xxxxxx Xxx Xxxxxx-Xxxxxxxx
("Xxxxxx"), Xxxxxxx X. Xxxxxx ("Xxxxxxx") (Xxx XX, Xxx III, Carol, Jeanne,
and Xxxxxxx are sometimes referred to collectively as the "Farmers"), and
(iii) Xxxxxxxxx Xxxxx ("Xxxxxxxxx"), Xxxxx Xxxxx ("Xxxxx") and Xxxxxx X.
Xxxxx ("Xxxxx") (Xxxxxxxxx, Xxxxx and Xxxxx are sometimes referred to
collectively as the "Crowes") (Xxxxxx Bros., the Farmers and the Crowes are
sometimes referred to collectively as the "Parties" or individually as a
"Party").
On or about April 22, 2003, Xxxxx filed a Petition to Remove
and Surcharge Xxx X. Xxxxxx, as trustee of Trust B of the Children's Trust,
under Probate Code Sections 17200 and 15642, in the matter of the Xxx X.
Xxxxxx I Children's Trust, created pursuant to court decree under the terms
of the Children's Trust Agreement, dated October 24, 1957 (the "Children's
Trust"), L.A.S.C. Case No. BP 079060 ("Children's Trust Removal Petition");
On or about April 22, 2003, Xxxxx filed a Petition to Remove
and Surcharge Xxx X. Xxxxxx, under Probate Code Sections 17200 and 15642, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxxx X. Xxxxx, under
declaration of trust dated December 21, 1964 (the "Xxxxx 1964 Trust"),
L.A.S.C. Case No. BP 079061 (the "1964 Removal Petition");
On or about April 22, 2003, Xxxxx filed a Petition to Remove
and Surcharge Xxx X. Xxxxxx, under Probate Code Sections 17200 and 15642, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxxx X. Xxxxx, under
declaration of trust dated August 4, 1969 (the "Xxxxx 1969 Trust"), L.A.S.C.
Case No. BP 079058 (the "1969 Removal Petition");
On or about April 22, 2003, Xxxxx filed a Petition to Remove
and Surcharge Xxx X. Xxxxxx, under Probate Code Sections 17200 and 15642, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxxx X. Xxxxx, under
declaration of trust dated May 3, 1972 (the "Xxxxx 1972 Trust"), L.A.S.C.
Case No. BP 079059 (the "1972 Removal Petition") (the Children's Trust
Removal Petition, the 1964 Removal Petition, the 1969 Removal Petition, and
the 1972 Removal Petition are sometimes referred to collectively as the
"Removal Petitions");
On or about June 26, 2003, Xxx XX filed Response and
Objections to Petition to Remove and Surcharge Xxx X. Xxxxxx as to each of
the Removal Petitions (sometimes referred to collectively as the "Removal
Objections");
On or about October 6, 2003, Xxxxxxxxx filed a Joinder as to
each of the Removal Petitions;
On or about November 14, 2003, Xxxxx filed a Joinder as to
each of the Removal Petitions;
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Children's Trust, in L.A.S.C. Case No. BP 079060
("Xxxxx/Children's TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxx 1964 Trust, in L.A.S.C. Case No. BP 079061 (the
"Xxxxx/1964 TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxx 1969 Trust, in L.A.S.C. Case No. BP 079058 (the
"Xxxxx/1969 TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxx 1972 Trust, in L.A.S.C. Case No. BP 079059 (the
"Xxxxx/1972 TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxxx X. Xxxxx, under
declaration of trust dated March 22, 1995, in L.A.S.C. Case No. BP 082583
(the "Xxxxx/1995 TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Children's Trust, in L.A.S.C. Case No. BP 082590 (the
"Xxxxx/Children's TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxx Xxxxx, under
declaration of trust dated December 21, 1964 (the "Xxxxx 1964 Trust"),
L.A.S.C. Case No. BP 082589 (the "Xxxxx/1964 TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxx Xxxxx, under
declaration of trust dated August 14, 1969 (the "Xxxxx 1969 Trust"), L.A.S.C.
Case No. BP 082591 (the "Xxxxx/1969 TAL Petition");
On or about November 14, 2003, Xxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxx Xxxxx, under
declaration of trust dated May 3, 1972 (the "Xxxxx 1972 Trust"), L.A.S.C.
Case No. BP 082587 (the "Xxxxx/1972 TAL Petition");
On or about November 14, 2003, Xxxxxxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxxxxxx Xxxxx, under
declaration of trust dated August 4, 1969 (the "Xxxxxxxxx 1969 Trust"),
L.A.S.C. Case No. BP 082586 (the "Xxxxxxxxx/1969 TAL Petition"); and
On or about November 14, 2003, Xxxxxxxxx filed a Petition for
Appointment of Trustee Ad Litem under Probate Code Sections 17200, 17206, in
the matter of the Xxxxxxxxx X. Xxxxxx Trust f/b/o Xxxxxxxxx Xxxxx, under
declaration of trust dated May 3, 1972 (the "Xxxxxxxxx 1972 Trust"), L.A.S.C.
Case No. BP 082588 (the "Xxxxxxxxx/1972 TAL Petition") (Trust B of the
Children's Trust, the Xxxxx 1964 Trust, Xxxxx 1969 Trust, Xxxxx 1972 Trust,
Xxxxx 1995 Trust, Xxxxx 1964 Trust, Xxxxx 1969 Trust, Xxxxx 1972 Trust,
Xxxxxxxxx 1969 Trust and Xxxxxxxxx 1972 Trust are sometimes referred to
collectively as the "Xxxxx Trusts") (the Xxxxx/Children's TAL Petition,
Xxxxx/1964 TAL Petition, Xxxxx/1969 TAL Petition, Xxxxx/1972 TAL Petition,
Xxxxx/1995 TAL Petition, Xxxxx/Children's TAL Petition, Xxxxx/1964 TAL
Petition, Xxxxx/1969 TAL Petition, Xxxxx/1972 TAL Petition, Xxxxxxxxx/1969
TAL Petition and Xxxxxxxxx/1972 TAL Petition are sometimes referred to
collectively as the "TAL Petitions").
Now, in consideration of the foregoing, the respective
covenants and agreements herein contained, and in consideration of other good
and valuable consideration, each to the other, the sufficiency and receipt of
which is hereby acknowledged, the Parties to this Agreement hereby agree as
follows:
ARTICLE I -- TERMS
1.1 Entry of Stipulated Orders. Contemporaneous with the execution of
this Agreement, the Parties shall cause their attorneys to execute
stipulations mutually agreeable to the Parties approving the settlement and
dismissal with prejudice of the Removal Petitions and the TAL Petitions in
each of the above referenced trust proceedings (the "Stipulated Orders").
The Stipulated Orders may be entered immediately by the court on December 24,
2003, or as soon thereafter as the court is prepared to enter the Stipulated
Orders. In the event the court requires changes to the Stipulated Orders,
the Parties shall cooperate in good faith to modify the Stipulated Orders in
accordance therewith. The entry of each of the Stipulated Orders by the
court shall be a condition precedent to any further obligation under this
Agreement. In the event each of the Stipulated Orders is not entered by the
Court by January 15, 2004, this Agreement shall be null and void and the
Parties shall have no further obligations to each other hereunder.
1.2 Closing Documents. Immediately following entry of the Stipulated
Orders, the Parties shall deliver and exchange (a) the Stock Purchase
Agreement, in the form attached hereto as Exhibit A ("Stock Purchase
Agreement"), fully executed by Xxxxxx Bros., Xxx XX and Xxxxxxxxx; and (c)
mutual general releases, in the form attached hereto as Exhibit B (the
"Mutual General Releases"), fully executed by Xxxxxx Bros., the Farmers and
the Crowes. The Stipulated Orders, Stock Purchase Agreement and Mutual
General Releases are sometimes referred to collectively as the "Closing
Documents"). The Closing Documents are hereby incorporated by this reference
as though fully set forth herein. Notwithstanding anything to the contrary
contained herein, the delivery of the fully executed Closing Documents is a
condition precedent to all other terms and conditions of this Agreement, and
the Closing Documents shall become effective upon confirmation that the
Purchase Price (as that term is defined in the Stock Purchase Agreement) has
been transferred in accordance with section 1.11 and confirmation of delivery
of wire instructions to Bank of America in accordance with section 1.10
below.
1.3 Resignation as Trustee. Xxx XX hereby resigns as trustee of the
Xxxxx Trusts, and of Trust A of the Children's Trust (such that Xxx XX has
resigned as trustee of Trust A and Trust B of the Children's Trust).
1.4 Revocation of Designations of Successor Trustee. Xxx XX hereby
revokes, rescinds, and cancels any and all instruments designating or
purporting to designate a successor trustee or successor trustees of the
Xxxxx Trusts.
1.5 Revocation of Exercise of Power of Appointment. Xxx XX hereby
revokes, rescinds, and cancels any and all instruments exercising or
purporting to exercise any powers of appointment over the Xxxxx Trusts.
1.6 Agreement to Not Exercise Powers of Appointment. Xxx XX hereby
agrees to not exercise any powers of appointment over the Xxxxx Trusts at his
death or during his lifetime.
1.7 Waiver of Rights and Powers re: Successor and Corporate Trustees.
Xxxxxx Bros. hereby waives any and all rights and powers to appoint or
designate a successor trustee and/or corporate trustee of Trust B of the
Children's Trust. Xxxxxx Bros. further waives any and all rights to
discharge a successor trustee and/or corporate trustee of Trust B of the
Children's Trust.
1.8 Designation and Appointment of Successor Trustees to Xxxxx
Trusts. It is hereby agreed that the successor trustees of the Xxxxx Trusts
shall be as follows: (a) City National Bank, Xxxxx and Xxxxx for Trust B of
the Children's Trust; (b) City National Bank and Xxxxx for the Xxxxx 1964
Trust; (c) City National Bank and Xxxxx for the Xxxxx 1969 Trust; (d) City
National Bank and Xxxxx for the Xxxxx 1972 Trust; (e) City National Bank and
Xxxxx for the Xxxxx 1995 Trust; (f) City National Bank and Xxxxx for the
Xxxxx 1964 Trust; (g) City National Bank and Xxxxx for the Xxxxx 1969 Trust;
(h) City National Bank and Xxxxx for the Xxxxx 1972 Trust; (i) City National
Bank and Xxxxxxxxx for the Xxxxxxxxx 1969 Trust; and (j) City National Bank
and Xxxxxxxxx for the Xxxxxxxxx 1972 Trust. The successor trustees shall
serve without bond. All principal assets of the Xxxxx Trusts shall remain
under the control of City National Bank, or any successor institutional
trustee, and no such assets shall be managed or controlled by any individual
trustee without filing a bond equal in amount to the value of such assets.
1.9 Designation and Appointment of Successor Trustee to Trust A of
Children's Trust. It is hereby agreed that the successor trustee of Trust A
of the Children's Trust shall be Xxx III. Xxx III shall serve without bond
so long as Trust A consists principally of shares of common stock of Xxxxxx
Bros., which are not to be sold, and shall not be sold, without further order
of the Court.
1.10 Accumulated Income. Xxx XX hereby represents and warrants that
the following amounts of accumulated and undistributed income remained in the
Xxxxx Trusts as of December 23, 2003: (a) Trust B of the Children's Trust:
$0; (b) the Xxxxx 1964 Trust: $0; (c) the Xxxxx 1969 Trust: $40,075.02; (d)
the Xxxxx 1972 Trust: $2,054.88; (e) the Xxxxx 1995 Trust: $0; (f) the Xxxxx
1964 Trust: $0; (g) the Xxxxx 1969 Trust: $338,689.78; (h) the Xxxxx 1972
Trust: $49,694.63; (i) the Xxxxxxxxx 1969 Trust: $379,878.05; and (j) the
Xxxxxxxxx 1972 Trust: $111,286.09. Immediately upon entry of the Stipulated
Orders, Xxx XX shall instruct Bank of America to transfer to City National
Bank, as a successor cotrustee of the Xxxxx Trusts, all assets including
accumulated income in the Xxxxx Trusts by wire transfer or bank transfer.
1.11 Allocation of Sale Proceeds. Pursuant to the Stock Purchase
Agreement, Xxxxxx Bros. shall purchase 100 percent of the common stock of the
company owned by Xxxxxxxxx Xxxxx and Xxx XX as trustee of the Xxxxx Trusts.
The beneficiaries of the Xxxxx Trusts have insisted that Xxx XX, as trustee,
demand a greater allocation of the proceeds to the Xxxxx Trusts, than to
Xxxxxxxxx, as a condition of entering into this Agreement. Based thereon,
Xxx XX and Xxxxxxxxx have agreed to allocate $259.73 in consideration for
each share held in the Xxxxx Trusts, and $238.50 in consideration for each
share owned by Xxxxxxxxx Xxxxx. Immediately upon entry of the Stipulated
Orders, Xxxxxx Bros. shall instruct City National Bank to transfer the
Purchase Price (as that term is defined in the Stock Purchase Agreement) by
wire transfer or bank transfer as follows: $48,518,055 shall be distributed
to Xxxxxxxxx Xxxxx, and $62,442,987.95 shall be distributed to the Xxxxx
Trusts as follows:
(a) $38,015,381.45 to Trust B of the Children's Trust;
(b) $8,356,812.75 to the Xxxxx 1964 Trust;
(c) $1,947,975 to the Xxxxx 1969 Trust;
(d) $623,352 to the Xxxxx 1995 Trust;
(e) $8,356,812.75 to the Xxxxx 1964 Trust;
(f) $1,947,975 to the Xxxxx 1969 Trust;
(g) $623,352 to the Xxxxx 1972 Trust;
(h) $1,947,975 to the Xxxxxxxxx 1969 Trust; and
(i) $623,352 to the Xxxxxxxxx 1972 Trust.
1.12 Disclaimer of Contingent Remaindermen of Children's Trust. Xxx
III, Xxxxx, Xxxxxx and Xxxxxxx do hereby renounce and disclaim, on behalf of
themselves and their respective successors, assignees, heirs, legatees,
devisees, executors, trustees, administrators and legal representatives, any
right or interest they may have as contingent remainder beneficiaries of
Trust B of the Children's Trust. Likewise, Xxxxx and Xxxxx, on behalf of
themselves and their respective successors, assignees, heirs, legatees,
devisees, executors, trustees, administrators and legal representatives, do
hereby renounce and disclaim any right or interest they may have as
contingent remainder beneficiaries of Trust A of the Children's Trust.
1.13 Modification of Children's Trust. The Farmers, the Crowes and
Xxxxxx Bros., on behalf of themselves and their respective successors,
assignees, heirs, legatees, devisees, executors, trustees, administrators and
legal representatives, hereby consent to a modification of the Children's
Trust Agreement, dated October 24, 1957, to reflect the designation of City
National Bank, Xxxxx and Xxxxx as successor trustees of Trust B of the
Children's Trust and the elimination of the right and power of the board of
directors of Xxxxxx Bros. to discharge and/or designate successor and/or
corporate trustees of Trust B of the Children's Trust. The Farmers, the
Crowes and Xxxxxx Bros., on behalf of themselves and their respective
successors, assignees, heirs, legatees, devisees, executors, trustees,
administrators and legal representatives, further agree that they shall use
reasonable and diligent efforts to cooperate with any subsequent proceedings
commenced in Superior Court of the State of California, County of Los
Angeles, for the purpose of achieving such a modification.
1.14 Modification of Other Xxxxx Trusts. The Parties, on behalf of
themselves and their respective successors, assignees, heirs, legatees,
devisees, executors, trustees, administrators and legal representatives, hereby
consent to a modification of the following trusts: (a) the Xxxxx 1964 Trust;
(b) the Xxxxx 1969 Trust; (c) the Xxxxx 1972 Trust; (d) the Xxxxx 1995 Trust;
(e) the Xxxxx 1964 Trust; (f) the Xxxxx 1969 Trust; (g) the Xxxxx 1972 Trust;
(h) the Xxxxxxxxx 1969 Trust; and (i) the Xxxxxxxxx 1972 Trust to reflect the
designation of successor trustees consistent with the terms of this Agreement
and the exercise of powers of appointment solely in favor of the Crowes. The
Parties further agree that they shall use reasonable and diligent efforts to
cooperate with any subsequent proceedings commenced in Superior Court of the
State of California, County of Los Angeles, for the purpose of achieving such a
modification.
1.15 Authorization. Xxx III hereby represents and warrants that he
has been duly authorized by the board of directors of Xxxxxx Bros. to execute
and deliver this Agreement on behalf of Xxxxxx Bros. and the board of
directors of Xxxxxx Bros. Xxx III further represents and warrants that no
other corporate action on the part of Xxxxxx Bros. is necessary to authorize
the execution and delivery by Xxxxxx Bros. of this Agreement.
ARTICLE II - MISCELLANEOUS
2.1 Further Assurances. Each Party hereto shall use reasonable and
diligent efforts to proceed promptly with the transactions contemplated
herein, to fulfill the conditions precedent, and to execute such other and
further documents and perform such other and further acts as may reasonably
be required or appropriate to effectuate the provisions of this Agreement.
2.2 Entire Agreement. This Agreement constitutes and is intended to
constitute the entire agreement of the Parties concerning the subject matter
hereof. No covenants, agreements, representations or warranties of any kind
whatsoever have been made by any Party hereto, except as specifically set
forth herein. All prior or contemporaneous discussions or negotiations with
respect to the subject matter hereof are superseded by this Agreement.
2.3 Successor and Assigns. This Agreement in its entirety shall be
binding and inure to the benefit of the parties, their respective heirs,
successors, and assigns.
2.4 Construction. The Parties hereby acknowledge that each of them
has been represented by independent counsel of their own selection throughout
all negotiations preceding the execution of this Agreement, and that they
have executed the same upon the advice of such counsel. The Parties and
their respective counsel cooperated in the drafting and preparation of this
Agreement such that it shall be deemed to be their joint work product and may
not be construed against any of the Parties by reason of its preparation.
2.5 Severability. If any provision of this Agreement is determined
by a court of competent jurisdiction to be invalid or unenforceable, in whole
or in part, the remaining provisions, and any partially invalid or
unenforceable provisions, to the extent valid and enforceable, shall
nevertheless be binding and valid and enforceable.
2.6 Modification and Amendment. This Agreement may not be modified
or amended orally and no modification, termination or waiver shall be valid
unless in writing and signed by all of the Parties.
2.7 Choice of Law/Venue. The terms and provisions of this Agreement
shall be construed according to and governed by the laws of the State of
California. Any action arising from, or relating to, the terms or provisions
of this Agreement shall be instituted in the Superior Court of the State of
California for the County of Los Angeles.
2.8 No Admission. The Parties understand, acknowledge and agree that
any claims any Party may have against any other Party are disputed and that
all Parties are entering into this Agreement for the purpose of settling such
disputes by compromise in order to avoid litigation and to buy peace.
Neither the execution nor delivery of this Agreement by any Party, nor the
execution and delivery of the stipulation for an order dismissing the
Petition, nor the order dismissing the Petition, nor the payment of any
consideration or performance of any obligation hereunder is an admission as
to the merits of any of the claims the Parties may have against one another,
or that the Parties have against any other persons or entities.
2.9
Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
2.10 Facsimile Transmissions. Facsimile transmissions of signatures
shall be deemed to constitute original signatures.
XXXXXX BROS. CO.
/s/ Xxx X. Xxxxxx
_____________________________
By: Xxx X. Xxxxxx
Chief Executive Officer
/s/ Xxx X. Xxxxxx
_____________________________
Xxx X. Xxxxxx
(SIGNATURES CONTINUED ON NEXT PAGE)
/s/ Xxx X. Xxxxxx
_____________________________
Xxx X. Xxxxxx
/s/ Xxxxx Xxxx Xxxxxx-Xxxxx
_____________________________
Xxxxx Xxxx Xxxxxx-Xxxxx
/s/ Xxxxxx Xxx Xxxxxx-Xxxxxxxx
_____________________________
Xxxxxx Xxx Xxxxxx-Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
_____________________________
Xxxxxxx X. Xxxxxx
(SIGNATURES CONTINUED ON NEXT PAGE)
/s/ Xxxxxxxxx Xxxxx
___________________________
Xxxxxxxxx Xxxxx
/s/ Xxxxx Xxxxx
___________________________
/s/ Xxxxxx X. Xxxxx
___________________________
Xxxxxx X. Xxxxx
CC472423.9
20333210002
12/23/2003 :afs
