SETTLEMENT AGREEMENT
Exhibit 99.1
This Settlement Agreement (the “Agreement”) dated April 30, 2004 (the “Effective Date”) is made by and among Water Pik Technologies, Inc., a Delaware corporation (the “Company”), on the one hand, and Xxxxxxxxxx Capital Partners, LLC, a Delaware limited liability company (“TCP”), Special Value Bond Fund, LLC, a Delaware limited liability company (“SVBF”), Special Value Bond Fund II, LLC, a Delaware limited liability company (“SVBFII”), SVIM/MSM, LLC, a Delaware limited liability company (“SVIM/MSM”), SVIM/MSM II, LLC, a Delaware limited liability company (“SVIM/MSMII”), Xxxxxxxxxx & Co., LLC, a Delaware limited liability company (“TCO”), Xxxxxxx X. Xxxxxxxxxx (“Xxxxxxxxxx”) and Xxxx X. Xxxxxxxxxx (“Holdsworth”) on the other hand. TCP, SVBF, SVBFII, SVIM/MSM, SVIM/MSMII, TCO and Messrs. Xxxxxxxxxx and Xxxxxxxxxx are collectively referred to herein as the “TC Persons.”
RECITALS
A. SVBF has the sole power of voting and disposition with respect to 650,000 shares of common stock of the Company (“Company Common Stock”) and SVBFII has the sole power of voting and disposition with respect to 1,710,485 shares of Company Common Stock. The certificates for the shares of Company Common Stock held by SVBF and SVBFII have restrictive legends that were placed on the certificates pursuant to Section 9.3 of the Stock Purchase Agreement dated December 29, 2000 by and among the Company, SVBF and SVBFII (the “Restrictive Legends”).
B. TCP and the Company are engaged in a proxy contest (the “Proxy Contest”). TCP has made a solicitation in opposition (the “TC Solicitation”) in connection with the Company’s Annual Meeting of Stockholders to be held on May 13, 2004. In particular, TCP has solicited proxies for the election of Messrs. Xxxxxxxxxx and Holdsworth as directors. The proxy statement sent by TCP is dated April 7, 2004. The Company has made its own solicitation by proxy statement and otherwise (the “Company Solicitation”).
C. The parties desire to settle the Proxy Contest on the basis set forth below.
NOW THEREFORE, in consideration for the mutual promises set forth below, the parties, intending to be legally bound, agree as follows:
1. Representations and Warranties of the Parties.
(a) Representations and Warranties of the Company. The Company hereby represents and warrants to each TC Person as follows:
(i) The Company is duly organized and validly existing and in good standing under the laws of the State of Delaware, has the requisite corporate power and authority to execute, deliver and carry out the terms of this Agreement, and has taken
all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby.
(ii) This Agreement has been duly and validly authorized, executed and delivered by the Company, and constitutes a valid and binding obligation, enforceable against the Company in accordance with its terms.
(b) Representations and Warranties of the TC Persons. Each of the TC Persons, severally and not jointly, represents to the Company as follows:
(i) Such TC Person has the requisite power and authority to execute, deliver and carry out the terms of this Agreement, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby.
(ii) This Agreement has been duly and validly authorized, executed and delivered by such TC Person, and constitutes a valid and binding obligation, enforceable against such TC Person in accordance with its terms.
2. Cessation of Insurgent Campaign. Messrs. Xxxxxxxxxx and Xxxxxxxxxx agree that they:
(a) hereby withdraw their nominations as directors; and
(b) will not vote any proxies that they have or may receive in response to the TC Solicitation.
3. Voting of Shares. Xx. Xxxxxxxxxx, TCO, TCP, and SVIM/MSM shall cause SVBF to vote the shares of Company Common Stock held by SVBF, and Xx. Xxxxxxxxxx, TCO, TCP and SVIM/MSMII shall cause SVBFII to vote the shares of Company Common Stock held by SVBFII in accordance with the recommendations of the Board of Directors of the Company set forth in the Company’s proxy statement dated March 26, 2004 (the “Company Proxy Statement”) using the proxy card provided by the Company with the Company Proxy Statement.
4. Press Release. On the Effective Date, the Company and TCP will promptly issue the joint press release (the “Press Release”) attached hereto as Exhibit A (without further modification or amendment thereto). The Company will promptly file with the Securities and Exchange Commission (the “SEC”) the Press Release as additional soliciting material. The parties hereto shall not, and shall cause their affiliates not to, make any public statement or issue any press release that is inconsistent with, or otherwise contrary to, the Press Release.
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5. Treatment of Shares.
(a) The Company hereby represents and warrants that the TC Persons, considered individually or in the aggregate, are not affiliates (as that term is defined in Rule 144(a)(i) promulgated by the SEC under the Securities Act of 1933, as amended (the “Securities Act”)) of the Company and have not been affiliates of the Company during the preceding three months.
(b) Not later than two (2) business days following the Effective Date, the Company will issue an instruction letter to its transfer agent and shall cause its transfer agent to immediately remove the Restrictive Legends from the certificates held by SVBF and SVBFII. If required by the transfer agent, the Company shall cause to be delivered by its General Counsel, or, if required, appropriate outside counsel, an opinion to the effect that (i) the shares held by SVBF and SVBFII are not restricted securities, (ii) the TC Persons, considered individually or in the aggregate, are not affiliates (as that term is defined in Rule 144(a)(i) promulgated by the SEC under the Securities Act) of the Company and have not been affiliates of the Company during the preceding three months and (iii) the shares held by SVBF and SVBFII may be sold pursuant to Rule 144(k) under the Securities Act. The Company will provide TCP with a copy of the instruction letter and any other documentation furnished by or on behalf of the Company to the transfer agent in connection with this Section. The Company will provide TCP with any other documents reasonably requested by TCP to facilitate sales by TCP under Rule 144(k).
(c) From and after the Effective Date, assuming TCP takes no actions after the Effective Date to acquire additional shares of Company Common Stock, seek board representation or otherwise assert “control” (as that term is defined under Rule 405 under the Securities Act) with respect to the Company, the Company shall not, and shall cause its affiliates not to, take any action, directly or indirectly, to prevent, restrict or otherwise delay any sale of shares held by SVBF or SVBFII pursuant to Rule 144(k) or otherwise under the Securities Act.
6. Payment of Expenses. The Company shall pay to TCP by wire transfer in immediately available funds an amount up to $180,000 for the documented expenses incurred by TCP in connection with the TC Solicitation and this Agreement. Such payment shall be made by the Company no later than two (2) Business Days following receipt by the Company of the documented expenses. Such payment shall be made to an account specified by TCP.
7. No Admission of Liability or Wrongdoing. This Agreement shall not in any way be construed as or deemed to be evidence of any admission or concession on the part of any party hereto of (i) the merits or lack of merits of any matter asserted in the Proxy Contest or (ii) any liability or wrongdoing whatsoever, which liability and wrongdoing are hereby expressly denied and disclaimed by each of the parties hereto.
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8. Mutual Releases.
(a) Company Release. For valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company, on behalf of itself and all of its affiliates, successors and assigns (the “Company Releasors”), hereby releases, acquits and forever discharges each TC Person, their counsel, public relations firm and proxy solicitors together with their respective present and former affiliates, officers, directors, employees, successors and assigns, and individually (collectively, the “TC Releasees”), of and from any and all claims, contracts, debts, demands, causes of action (whether at law or equity), demands, expenses, losses, costs and damages (“Claims”) which any Company Releasor may have had, or may now have, or may hereafter have (whether through operation of law, assignment or subrogation), from the beginning of time to the Effective Date, real or suspected, known or unknown, actual or contingent, direct or derivative, including but not limited to any Claims relating to or arising out of the Proxy Contest or related to or arising out of the subject matter covered by this Agreement, excepting only any action, cause of action or suit arising by virtue of a breach of this Agreement.
(b) TC Persons Release. For valuable consideration, the receipt and adequacy of which are hereby acknowledged, each TC Person, on behalf of itself and all of its affiliates, successors and assigns (the “TC Releasors”), hereby releases, acquits and forever discharges the Company, its counsel, public relations firm and proxy solicitors together with their respective present and former affiliates, officers, directors, employees, successors and assigns, and individually (collectively, the “Company Releasees”), of and from any and all Claims which any TC Releasor may have had, or may now have, or may hereafter have (whether through operation of law, assignment or subrogation), from the beginning of time to the Effective Date, real or suspected, known or unknown, actual or contingent, direct or derivative, including but not limited to any Claims relating to or arising out of the Proxy Contest or related to or arising out of the subject matter covered by this Agreement, excepting only any action, cause of action or suit arising by virtue of a breach of this Agreement.
(c) Additional Terms. Each TC Releasee and each Company Releasee not party to this Agreement is intended and shall be a third-party beneficiary of the foregoing releases. With respect to each of the releases set forth above, each person or entity granting or receiving such a release (i) agrees that such releases do not preclude any party hereto from seeking to enforce any undertaking or promise contained in this Agreement or from seeking redress for the breach of any representation, warranty or covenant contained in this Agreement, (ii) agrees not to challenge, and shall use its best efforts to cause each of its affiliates and representatives not to challenge, the validity of any provisions of this Agreement and (iii) expressly waives all rights and benefits each may have under and by virtue of the terms of Section 1542 of the California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
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KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
Each party understands the statutory language of Section 1542 of the California Civil Code.
9. Miscellaneous.
(a) Governing Law. This Agreement and all disputes arising out of or relating to it shall be governed by and construed and enforced in accordance with the laws of the State of California, without reference to the conflict of laws principles thereof.
(b) Amendments. Any provision in this Agreement may be amended or waived by an instrument in writing signed by the Company and TCP, and any such amendment or waiver shall be binding on all parties.
(c) Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns.
(d) Specific Performance. Each of the parties acknowledges and agrees that irreparable harm would occur if any provision of this Agreement were not performed in accordance with the terms hereof, or were otherwise breached, and that such harm could not be remedied by an award of money damages. Accordingly, the parties hereto agree that any non-breaching party shall be entitled to an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof.
(e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
(f) Notices. Any notice or communication required or permitted to be given to any party pursuant to this Agreement shall be delivered by hand, transmitted by telecopier or sent by registered or certified mail to the address(es) set forth below, or to such other address as any party shall designate by notice in compliance with this Section. Any notice sent in accordance with this Section shall be deemed received one day after transmission if telecopied (and a confirmation obtained) or delivered by hand, and five business days after deposit if mailed.
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Notice to the Company: |
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Water Pik
Technologies, Inc. |
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With a copy to: |
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Xxxxxxx
Xxxxx & Xxxxx |
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Notice to any TC Person: |
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Tennebaum
Capital Partners, LLC |
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With a copy to: |
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Xxxxxx
& Xxxxxxx LLP |
(g) Entire Agreement; No Assignment. This Agreement (i) constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and, except as provided in Section 9(c) above, is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder and (ii) shall not be assigned by operation of law or otherwise without the prior written consent of the other parties. Any attempted assignment or transfer in violation of this Section shall be void and of no effect.
(h) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
(i) Severability. In the event that any one or more of the provisions contained in this Agreement, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the parties shall negotiate in good faith with a view to the substitution therefor of a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid provision; provided, however, that the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained in this Agreement shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.
(j) Waiver of Jury Trial. Each party hereto hereby waives to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement.
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Each party hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 9(j).
(k) Rules of Construction. The parties agree that the following rules shall govern the interpretation and construction of this Agreement: (i) all Section headings are for convenience only and shall not limit, alter, or otherwise affect the construction or interpretation of this Agreement; (ii) whenever the context so requires, the neuter gender shall include the feminine or masculine, and vice versa; and (iii) any rule of construction disfavoring the drafting party shall not apply in the construction of any provision of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Settlement Agreement as of the date first written above.
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Water Pik Technologies, Inc. |
XXXXXXXXXX CAPITAL PARTNERS, LLC, a |
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/s/ XXXXXXX X. XXXXXX |
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By: Xxxxxxxxxx & Co., LLC |
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By: Xxxxxxx X. Xxxxxx |
Its: Managing Member |
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Its: President and CEO |
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SPECIAL VALUE BOND FUND, LLC, a |
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By: SVIM/MSM, LLC |
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Its: Managing Member |
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By: Xxxxxxxxxx & Co., LLC |
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Its: Managing Member |
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SPECIAL VALUE BOND FUND II, LLC, a |
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By: SVIM/MSM II, LLC |
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Its: Managing Member |
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By: Xxxxxxxxxx & Co., LLC |
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Its: Managing Member |
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SVIM/MSM, LLC, a Delaware limited liability company |
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By: Xxxxxxxxxx & Co., LLC |
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Its: Managing Member |
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SVIM/MSM II, LLC, a |
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By: Xxxxxxxxxx & Co., LLC |
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Its: Managing Member |
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XXXXXXXXXX & CO., LLC, a |
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Each of the above by: |
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/s/ XXXXXXX X. XXXXXXXXXX |
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Name: Xxxxxxx X. Xxxxxxxxxx |
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Its: Managing Member |
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/s/ XXXXXXX X. XXXXXXXXXX |
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Xxxxxxx X. Xxxxxxxxxx, an individual |
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/s/ XXXX X. XXXXXXXXXX |
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Xxxx X. Xxxxxxxxxx, an individual |
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