AGREEMENT
 
This AGREEMENT, dated as of December 18, 2009 (this “Agreement”), is by and
among HIGHBURY FINANCIAL INC., a Delaware corporation (the “Company”), PEERLESS
SYSTEMS CORPORATION, a Delaware corporation (“Peerless”), and TIMOTHY E. BROG
(Mr. Brog and Peerless are collectively referred to herein as the “Peerless
Parties”).
 
WHEREAS, the Company has filed with the Securities and Exchange Commission (the
“SEC”) and mailed to the stockholders of the Company definitive proxy materials
for use in connection with the Company’s 2009 annual meeting of stockholders
(the “Annual Meeting”), in which the Board of Directors of the Company (the
“Board of Directors”) has proposed to elect two candidates nominated by the
Board of Directors, Messrs. Hoyt Ammidon Jr. and John D. Weil (collectively, the
“Company Nominees”), to the Board of Directors, each to serve as a director for
a term of three years expiring in 2012 (the “Company Proposal”);
 
WHEREAS, the Peerless Parties have filed with the SEC and mailed to the
stockholders of the Company definitive proxy materials for use in connection
with the Annual Meeting, in which the Peerless Parties have proposed, among
other things, to (i) elect Mr. Brog to the Board of Directors to serve as a
director for a term of three years expiring in 2012, (ii) adopt a non-binding
resolution that the Board of Directors amend the certificate of incorporation
and the bylaws of the Company to eliminate the classified Board of Directors and
(iii) adopt a non-binding resolution that the Board of Directors immediately
redeem all rights under the Rights Agreement, dated as of August 10, 2009,
between the Company and Continental Stock Transfer & Trust Company, and that the
Board of Directors obtain prior stockholder approval of any future
implementation of a shareholder rights plan (the proposals described in items
(i) through (iii) above, collectively, the “Peerless Proposals”);
 
WHEREAS, the Company has solicited proxies from the stockholders of the Company
to vote for the Company Proposal, and the Peerless Parties have solicited
proxies from the stockholders of the Company to vote for the Peerless Proposals
(such solicitation of proxies by the Company and the Peerless Parties to vote
for their respective proposals submitted to the Annual Meeting is referred to
herein as the “Proxy Contest”); and
 
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as
of December 12, 2009 (as the same may be amended or supplemented, the “Merger
Agreement”), with Affiliated Managers Group, Inc., a Delaware corporation
(“Parent”), and Manor LLC, a Delaware limited liability company and a wholly
owned subsidiary of Parent (“Merger Sub”), pursuant to which the Company will
merge with and into Merger Sub (the “Merger”), with Merger Sub continuing as the
surviving company and a wholly owned subsidiary of Parent following the Merger,
all in accordance with the terms and subject to the conditions set forth in the
Merger Agreement.
 
 
 

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NOW, THEREFORE, in consideration of and reliance upon the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
 
Section 1. Board Composition.  Subject to the terms and conditions set forth in
this Agreement, the Company hereby agrees that if (a) the Merger and the other
transactions contemplated by the Merger Agreement are not consummated on or
prior to July 16, 2010, or (b) the Merger Agreement has been terminated by any
of the parties thereto, then as promptly thereafter as reasonably practicable,
the Board of Directors, at a duly convened meeting, shall adopt such
resolutions, and shall take all other necessary action in accordance with the
certificate of incorporation and the bylaws of the Company, as necessary to
increase the size of the Board of Directors and to appoint Mr. Brog to serve as
a director of the Company for a term expiring at the 2012 annual meeting of
stockholders of the Company, or until his successor is duly elected and has
qualified, provided, however, that if the Merger is consummated Mr. Brog will
resign as a director of the Company as of the effective time of the Merger.
 
Section 2. Termination of Proxy Contest; Withdrawal of Request for Stockholders
List.
 
(a) Immediately following the execution and delivery of this Agreement by the
parties hereto:
 
(i) the Peerless Parties shall cease all efforts, direct or indirect, in
furtherance of the Proxy Contest and any related solicitation of proxies in
connection with the Annual Meeting, and shall not vote, deliver or otherwise use
any proxies heretofore obtained by the Peerless Parties from any stockholders of
the Company in connection with the Proxy Contest; and
 
(ii) the Company shall cease all direct or indirect negative solicitation
efforts relating to the Annual Meeting concerning the Peerless Parties and their
respective Affiliated Persons.
 
(b) Each of the Peerless Parties hereby agrees that (i) such Peerless Party
shall, or shall cause the holder or holders of record of the Company Voting
Securities held by such Peerless Party (collectively, the “Peerless Securities”)
on the record date for the Annual Meeting to, vote (or cause to be voted) all of
the Peerless Securities at the Annual Meeting, or at any adjournment thereof, in
favor of the election of each of the Company Nominees to the Board of Directors,
and (ii) the Peerless Parties shall refrain from taking (and refrain from
causing others to take) any action necessary to properly present any of the
Peerless Proposals at the Annual Meeting.
 
 
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(c) The Peerless Parties hereby irrevocably withdraw their demand for a
stockholder list and other materials previously made pursuant to Section 220 of
the Delaware General Corporation Law or otherwise, and shall promptly return to
the Company all materials and summaries or duplicates thereof that have been
delivered to the Peerless Parties or their respective representatives prior to
the date hereof.
 
Section 3. Standstill.  Except as required under this Agreement, during the
period commencing on the date hereof and ending upon the termination of this
Agreement (the “Standstill Period”), each of the Peerless Parties hereby agrees
that, without the prior approval of the Board of Directors (as evidenced by a
formal resolution adopted by the Board of Directors and recorded in its
minutes), it or he shall not, and it or he shall cause their respective
Affiliated Persons not to, directly or indirectly:
 
(a) acquire, offer to acquire, agree to acquire, become the beneficial owner of
or obtain any rights in respect of any Company Voting Securities;
 
(b) solicit proxies, assist any other Person in any way, directly or indirectly,
in the solicitation of proxies, or otherwise become a “participant” in a
“solicitation” or assist any “participant” in a “solicitation” (as such terms
are defined in Rule 14a-1 of Regulation 14A under the Exchange Act, as in effect
on the date of this Agreement) in opposition to any recommendation or proposal
of the Board of Directors, or submit any proposal for the vote of stockholders
of the Company (or any successor thereof) or recommend or request or induce or
attempt to induce any other Person to take any such action, or seek to advise,
encourage or influence any other Person with respect to the voting of Company
Voting Securities (including, without limitation, by seeking written
authorization or consent of holders of Company Voting Securities);
 
(c) join in or in any other way participate in a pooling agreement, syndicate,
voting trust or other Group with respect to Company Voting Securities or
otherwise act in concert with any other Person, for the purpose of acquiring,
holding, voting or disposing of Company Voting Securities;
 
(d) take any action, alone or in concert with any other Person, to (i) seek to
effect a change in control of the Company, its successors of any of their
Affiliated Persons, (ii) seek to effect a Reorganization Transaction (other than
the Merger) with respect to the Company, (iii) seek to effect any control or
influence over the management of the Company, its successors or any of its
Affiliated Persons, the Board of Directors or the policies of the Company, its
successor or any of its Affiliated Persons, (iv) advise, assist or encourage or
finance (or assist or arrange financing to or for) any other Person in
connection with any of the matters restricted by, or to otherwise seek to
circumvent the limitations of the provisions of, this Section 3 (any such action
described in clauses (i) through (iv) of this Section 3(d), a “Company
Transaction Proposal”), (v) publicly suggest or announce its willingness or
desire to engage in a transaction or group of transactions or have another
Person engage in a transaction or group of transactions that would result in a
Company Transaction Proposal, (vi) initiate, request, induce, encourage or
attempt to induce or give encouragement to any other Person to initiate, or
otherwise provide assistance to any Person who has made or is contemplating
making, any proposal that can reasonably be expected to result in a Company
Transaction Proposal, or (vii) request a waiver, modification or amendment of
any provisions of this Section 3;
 
 
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provided, however, that nothing in this Section 3 shall prohibit the Peerless
Parties from making a confidential proposal to the Special Committee of the
Board of Directors that the Peerless Parties reasonably believe constitutes a
Superior Proposal (as defined in the Merger Agreement).
 
Section 4. Voting Agreement.  Each of the Peerless Parties hereby agrees that
until this Agreement is terminated in accordance with its terms, such Peerless
Party shall, or shall cause the holder or holders of record of the Peerless
Securities on any applicable record date to, be present for quorum purposes and
vote (or cause to be voted) all of the Peerless Securities at any annual or
special meeting, or at any adjournment thereof or pursuant to any consent of the
stockholders of the Company, in lieu of a meeting or otherwise, in accordance
with the recommendation of the Board of Directors with respect to the Merger
Agreement and the transactions contemplated thereby, including the Merger,
provided that there is no change in the material terms from those in effect on
December 12, 2009.
 
Section 5. Waiver of Appraisal Rights.  Each of the Peerless Parties hereby
agrees not to exercise any appraisal rights or dissenter’s rights in respect of
any shares of capital stock or other securities of the Company that such
Peerless Party may be entitled to with respect to the Merger.
 
Section 6. Release and Covenant Not to Sue.
 
(a) Each of the Peerless Parties, in any and all capacities (including as a
stockholder, employee, officer, director, consultant or service provider of the
Company or any of its subsidiaries), for itself and for each of its affiliates,
stockholders, directors, officers, employees, agents, representatives,
successors and assigns, past, present and future (collectively, and including
the Peerless Parties, the “Releasing Persons”), hereby agrees and confirms as
follows:
 
 
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(i) effective from and after the date of this Agreement, it hereby forever and
fully releases and discharges the Company and each of its affiliates,
controlling persons, directors, officers, stockholders, employees, agents,
representatives, heirs, assigns, executors, administrators, predecessors and
successors, past, present and future, in each case, both individually and in
their official capacities (collectively, and including the Company, the
“Released Persons”), and agrees to hold each Released Person harmless from, any
and all rights, claims, warranties, demands, debts, obligations, liabilities,
costs, attorneys’ fees, expenses, suits, losses, damages, judgments, suits,
issues and causes of action of any kind or nature whatsoever (collectively,
“Claims”), whether known or unknown, suspected or unsuspected, matured or
unmatured, contingent or absolute, hidden or concealed, regarding any matter
whatsoever, that such Releasing Person has, could have, or in the future can or
might assert in any court, tribunal or proceeding against any Released Person,
and that have arisen, could have arisen, arise now, or hereafter arise out of
any event, occurrence, or circumstance taking place on or prior to the date of
signing of this Agreement; provided, however, that if a class-action lawsuit
arising from events on or before the date of signing of this Agreement were to
be filed on behalf of present or former Company stockholders without any direct
or indirect involvement, instigation, or participation by any Peerless Party,
then nothing in this release shall be deemed to prevent any Peerless Party from
receiving its proportionate share of any benefit that may accrue to current or
former Company stockholders by virtue of such class action lawsuit; and
 
(ii) from and after the date of this Agreement, (A) none of the Peerless Parties
or any of their respective affiliates shall, without the prior consent of the
Company, instigate, solicit, assist, intervene in, or otherwise voluntarily
participate in any litigation or arbitration in which the Company, or any of its
directors or officers, are named as parties with respect to any Claim arising
out of any event, occurrence, or circumstance taking place on or prior to the
date of signing of this Agreement; provided that the foregoing shall not prevent
any Peerless Party or any of their respective Affiliated Persons and other
affiliates from responding to a validly issued legal process, and (B) the
Peerless Parties agree to give the Company at least five (5) business days
notice of the receipt of any legal process requesting information regarding the
Company or any of its directors or officers.
 
 
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(b) The Company in any and all capacities, for itself and for each of its
affiliates, stockholders, directors, officers, employees, agents,
representatives, successors and assigns, past, present and future (collectively,
and including the Company, the “Company Releasing Persons”), hereby agrees and
confirms as follows:
 
(i)           effective from and after the date of this Agreement, it hereby
forever and fully releases and discharges each of the Peerless Parties, and each
of their respective affiliates, controlling persons, directors, officers,
stockholders, employees, agents, representatives, heirs, assigns, executors,
administrators, predecessors and successors, past, present and future, in each
case, both individually and in their official capacities (collectively, and
including Peerless and Mr. Brog, the “Company Released Persons”), and agrees to
hold each Company Released Person harmless from, any and all  Claims, whether
known or unknown, suspected or unsuspected, matured or unmatured, contingent or
absolute, hidden or concealed, regarding any matter whatsoever, that such
Company Releasing Person has, could have, or in the future can or might assert
in any court, tribunal or proceeding against any Company Released Person, and
that have arisen, could have arisen, arise now, or hereafter arise out of any
event, occurrence, or circumstance taking place on or prior to the date of
signing of this Agreement; and
 
(ii) from and after the date of this Agreement, (A) neither the Company nor any
of its affiliates shall, without the prior consent of Peerless, instigate,
solicit, assist, intervene in, or otherwise voluntarily participate in any
litigation or arbitration in which the Peerless Parties , or any of their
respective directors or officers, are named as parties with respect to any Claim
arising out of any event, occurrence, or circumstance taking place on or prior
to the date of signing of this Agreement; provided that the foregoing shall not
prevent the Company or any of its Affiliated Persons and other affiliates from
responding to a validly issued legal process, and (B) the Company agrees to give
Peerless at least five (5) business days notice of the receipt of any legal
process requesting information regarding the Peerless Parties or any of their
respective directors or officers.
 
(c) Each of the parties hereby represents that (i) it has had sufficient time to
consider this release of claims and to consult with an attorney or any other
person of its choosing prior to signing this Agreement, (ii) it is signing this
Agreement voluntarily and with a full understanding of its terms and (iii) in
signing this Agreement (and the release of claims included herein), it has not
relied on any promises or representations, express or implied, that are not set
forth expressly in the Agreement.
 
Section 7. Non-Disparagement.  From and after the date hereof, none of the
parties hereto or any of their respective Affiliated Persons, affiliates,
directors, officers, stockholders, employees, agents or representatives shall
make, or cause to be made, any statement or announcement that relates to and
constitutes an ad hominem attack on, or relates to and otherwise disparages, the
other parties hereto or any of their respective affiliates, directors, officers,
stockholders, employees, agents or representatives, past, present or future, in
any document or report filed with or furnished to the SEC or any other
governmental agency, in any press release or other publicly available format, or
to any journalist or member of the media (including, without limitation, in any
television, radio, newspaper or magazine interview).
 
 
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Section 8. Expenses.  The Company hereby agrees to pay to Peerless $200,000 to
reimburse it for its expenses incurred in connection with the Proxy
Contest.  The Company agrees to pay such amount to Peerless within three (3)
business days after the date hereof, by wire transfer of immediately available
funds to an account designated by Peerless in writing.
 
Section 9. Public Announcement.  Each of the parties hereto may announce the
execution and delivery by the parties of this Agreement and the material terms
hereof by means of a press release, each of which shall be in form and substance
reasonably acceptable to the other party hereto (it being understood that each
party may include such press release in any document or report filed with or
furnished to the SEC).  The parties shall use reasonable efforts to make such
announcement on the same date and at the same time, unless otherwise required by
applicable law.  Neither the Company nor the Peerless Parties shall make any
public announcement or statement that is inconsistent with or contrary to the
statements made in the press release described in the preceding sentence of this
Section 9, except (i) with the prior written consent of the other party or (ii)
as required by applicable law or the rules of any stock exchange on which such
party’s securities are traded; provided that in the case of clause (ii), the
disclosing party shall use reasonable efforts to provide the other parties with
an opportunity to review such announcement prior to its release to the extent
feasible in complying with applicable law.
 
Section 10. Miscellaneous.
 
(a) Certain Definitions.
 
(i) “Affiliated Person” shall mean with respect to any Person, (A) such Person’s
“immediate family” as defined in Rule 16a-1 under the Exchange Act, (B) any
other Person of which such Person or his “immediate family”, individually or
collectively, owns a majority of the voting securities (or in the case of a
limited liability company or partnership, a majority of the economic interest or
limited partnership interests, respectively, or, in the case of a trust, act as
trustee or is a majority economic beneficiary of such trust), and (C) any fund
or collectively investment vehicle in which such Person or any of the Persons
described in clauses (A) or (B) hereof is a advisor, general partner, managing
member or manager.
 
(ii) “Company Voting Securities” shall mean, collectively, (A) any shares of
capital stock of the Company entitled to vote generally for the election of the
directors of the Company during the term of this Agreement and (B) any other
securities, warrants or options or rights of any nature (whether or not issued
by the Company) that are convertible into, exchangeable for, or exercisable for,
or otherwise give the holder thereof any rights in respect of (whether or not
subject to the passage of time, contingencies or  contractual restrictions of
any combination thereof), any security described in clause (A) of this
definition.
 
 
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(iii)  “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
 
(iv) “Group” shall mean two or more Persons acquiring, holding, voting or
disposing of securities which would constitute a “person” within the meaning of
Section 13(d)(3) of the Exchange Act.
 
(v) “Person” shall mean an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture or other
entity of whatever nature.
 
(vi) “Reorganization Transaction” shall mean (A) any merger, consolidation,
recapitalization, liquidation or other business combination transaction
involving the Company or any of its subsidiaries (or any successors to any of
such entities), (B) any tender offer or exchange offer for any securities of the
Company or any of its subsidiaries (or any successors to any of such entities)
or (C) any sale or other disposition of assets of the Company or any of its
subsidiaries (or any successors to any of such entities) in a single transaction
or in a series of related transactions in each of the foregoing cases
constituting individually or in the aggregate 5% or more of the assets of the
Company (or any successor) or 5% or more of the then outstanding Company Voting
Securities.
 
(b) Specific Performance.  Each of the parties hereto acknowledges that the
other parties hereto will be irreparably harmed by any violations of any of the
covenants or agreements of such party that are contained in this Agreement, and
that there will be no adequate remedy at law for such violations.  It is
accordingly agreed that, in addition to any other remedies which may be
available to any of the parties hereto upon the breach by any other party hereto
of such covenants and agreements, such party shall have the right to obtain
injunctive relief to restrain any breach or threatened breach of such covenants
or agreements or otherwise to obtain specific performance of any of such
covenants or agreements.
 
(c) Termination.  This Agreement and all obligations hereunder shall terminate
upon the earliest to occur of (i) mutual agreement of the Company and the
Peerless Parties, (ii) the consummation of the Merger, (iii) August 13, 2010 or
(iv) the termination of the Merger Agreement; provided, however, that the
obligations set forth in Section 6 shall survive and continue in full force and
effect following any such termination.  If following the date hereof, (i) the
Company has breached in any material respect any of its covenants or agreements
set forth herein, (ii) the Peerless Parties have provided written notice of such
breach to the Company and (iii) such breach has not been cured within 30 days of
delivery of such notice, all obligations of Peerless Parties hereunder (except
under Section 6) shall terminate.  If following the date hereof, (i) the
Peerless Parties have breached in any material respect any of their covenants or
agreements set forth herein, (ii) the Company has provided written notice of
such breach to the Peerless Parties and (iii) such breach has not been cured
within 30 days of delivery of such notice, all obligations of the Company
hereunder (except under Section 6) shall terminate.
 
 
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(d) Binding Effect.  This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
 
(e) Entire Agreement.  This Agreement contains the entire understanding of the
parties and supersedes all prior agreements and understandings between the
parties with respect to its subject matter.  This Agreement may be amended only
by a written instrument duly executed by the parties hereto.
 
(f) Headings.  The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
 
(g) Assignment.  No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties.
 
(h) Counterparts.  This Agreement may be executed in one or more counterparts
(including by facsimile or by an electronic scan delivered by electronic mail),
each of which shall be an original, but each of which together shall constitute
one and the same Agreement.
 
 
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(i) Notices.  All notices and other communications hereunder shall be in writing
and shall be deemed duly given (i) on the date of delivery if delivered
personally, or by facsimile, upon confirmation of receipt, (ii) on the first
business day following the date of dispatch if delivered by a recognized
next-day courier service, or (iii) on the fifth business day following the date
of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid.  All noticed hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
 
(A)
if to the Company, to:

 
Highbury Financial Inc.
999 18th Street
Suite 3000
Denver, Colorado 80202
Attention: Chief Financial Officer
Facsimile No.: 646-224-8222

with a copy to:

Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022
Attention: Floyd I. Wittlin
Facsimile No.: 212-752-5378

with a copy to:

Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Attention: Michael W. Blair
Facsimile No.: 212-521-7531

(B)
If to the Peerless Parties, to:

 
Peerless Systems Corporation
2361 Rosecrans Ave.
Suite 440
El Segundo, CA 90245
Attention:  William Neil
Facsimile No.:  310-536-0058

with a copy to:
 
Timothy Brog
2 Coventry Lane
Riverside, CT 06878
Facsimile No.:  310-536-0058

Any party may by notice given in accordance with this Section 10(i) to the other
parties to designate updated information for notices hereunder.
 
 
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(j) Governing Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
its principles of conflicts of laws.
 
(k) Waiver of Jury Trial.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
(l) Enforceability.  The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.  Upon a determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible
and, absent agreement among the parties, a court is authorized to so modify this
Agreement.
 
(m) Notice of Proposals.  Nothing in this Agreement shall prohibit the Peerless
Parties from giving notice to the Company during the term of this Agreement
relating to the nomination of directors or any other matter as to which a
stockholder of the Company may properly make a proposal at the 2010 annual
meeting of stockholders, provided, however, that such notice may not be given
prior to the tenth day preceding the latest date it is required to be given in
order to be considered timely under the Company’s advance notice by-law
provisions.
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 

  HIGHBURY FINANCIAL INC.          
 
By:
/s/ R. Bradley Forth       Name:  R. Bradley Forth       Title:  EVP & CFO      
   

 

  PEERLESS SYSTEMS COPORATION          
 
By:
/s/ Timothy Brog       Name:  Timothy Brog       Title:  Chairman of the Board  
                  TIMOTHY E. BROG               /s/ Timothy Brog  

 
 

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