Exhibit 2
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SECURITIES PURCHASE AGREEMENT
DATED AS OF MAY 13, 2002
BY AND
BETWEEN
XXXXX & XXXXX COMPANY
AND
KOJAIAN VENTURES, L.L.C.
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement") made as of May 13, 2002 by
and between Xxxxx & Xxxxx Company, a Delaware corporation (the "Company") and
Kojaian Ventures, L.L.C., a Michigan limited liability company ("Kojaian").
RECITALS:
The facts (as represented by the parties as set forth below) upon which
this Agreement is based are:
A. In January of 2002, Warburg Pincus Investors, L.P. ("Warburg Pincus"),
upon the exercise of common stock purchase warrants, acquired an
aggregate of 1,337,358 shares (the "Warrant Shares") of the Company's
common stock, par value $.01 per share, for an aggregate purchase
price of $4,158,431;
B. On March 7, 2002, the Company entered into a third amendment (the
"Credit Amendment") to restructure the terms and conditions of its
amended and restated credit agreement (the "Credit Facility") dated as
of December 31, 2000, among the Company, various financial
institutions and Bank of America, N.A. as agent and lender
(collectively the "Banks");
C. Pursuant to the Credit Amendment, Warburg Pincus loaned the Company
$5,000,000, at the rate of 15% per annum, compounded quarterly, in
exchange for a convertible secured promissory note (the "$5,000,000
Warburg Note") and, thereby, became an additional, junior lender under
the Credit Facility;
D. Simultaneously with the entering into of the Credit Amendment, the
Company, Warburg Pincus and Bank of America, N.A. ("Bank of America"),
as agent for the Banks, entered into an option agreement (the "Option
Agreement") pursuant to which the Company has the absolute,
unconditional and irrevocable right, assignable to the Banks, to cause
Warburg Pincus, on June 3, 2002, to purchase from the Company a
promissory note in the amount of $6,000,000 upon substantially similar
terms and conditions as the $5,000,000 Warburg Note (the "$6,000,000
Warburg Note") (the Warrant Shares, the $5,000,000 Warburg Note and
the $6,000,000 Warburg Note are sometimes hereinafter collectively
referred to as the "Warburg Financing");
E. Pursuant to the Option Agreement, the Company has the right (the
"Refinancing Right") to replace the Warburg Financing on or before
April 30, 2002, subject to extension to May 14, 2002 under certain
circumstances, in accordance with the terms and conditions set forth
in the Option Agreement, which extension Company has or will secure;
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X. Xxxxxxx desires to invest in the Company through the purchase of
convertible debt and equity securities of the Company, and in doing
so, provide the Company with the requisite funding so as to enable the
Company to exercise the Refinancing Right under the Option Agreement;
and
G. On and effective April 14, 2002 the parties were bound, pursuant to a
Letter Agreement, as amended by that certain Letter Amendment dated
May 13, 2002 (such Letter Agreement, as amended by the Letter
Amendment, hereinafter "Letter Agreement" and attached hereto as
EXHIBIT A), to Kojaian being the party to enable the Company to
exercise the Refinancing Right and succeeding to the positions of
Warburg Pincus pursuant to the Warburg Financing, as modified by the
Letter Agreement, by funding the monies necessary for the Company to
perform its obligations under the Refinancing Right.
NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth and the respective
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
1. SALE OF SECURITIES
1.1 ISSUANCE AND SALE OF STOCK. Subject to the terms and conditions
herein stated, the Company agrees, for the benefit of Kojaian:
(a) to issue and sell to Kojaian on the "Closing Date" (as that
term is defined in SECTION 1.3 below), and Kojaian agrees to purchase from the
Company on the Closing Date: (i) an aggregate of 1,337,358 shares of the
Company's common stock, par value $.01 per share (the "Shares"); and (ii) an
$11,237,500 subordinated convertible promissory note, bearing interest at the
rate of twelve (12%) percent per annum, substantially identical to the
$5,000,000 Warburg Note (other than in principal amount, interest and payee),
and which shall be substantially in the form annexed hereto as EXHIBIT B (the
"$11,000,000 Subordinated Note"); and
(b) that the $11,000,000 Subordinated Note shall be convertible
at any time and from time to time, in whole or in part, generally at the option
of the holder, into shares of the Company's newly authorized and revised Series
A preferred stock, having a par value of $.01 per share, and a stated value of
$1,000 per share (the "Series A Preferred Stock"), and having such rights,
preferences and designation as substantially set forth in that certain
Certificate of Amendment of Certificate of Designations, Number, Voting Powers,
Preferences and Rights of Series A Preferred Stock annexed hereto as EXHIBIT C,
including but not limited to a preferred dividend at the rate of twelve
(12%)percent per annum, and an initial preference on liquidation and
corresponding voting rights of approximately forty (40%) percent (the "Series A
Certificate of Designations"). The indebtedness evidenced by the $11,000,000
Subordinated
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Note is sometimes hereinafter referred to as the "$11,000,000 Subordinated Debt"
and the $11,000,000 Subordinated Note, the Shares, and the Series A Preferred
Stock issuable upon conversion of the $11,000,000 Subordinated Note are
sometimes hereinafter collectively referred to as the "Securities."
1.2 CONSIDERATION. As full and total consideration for the issuance
and sale by the Company to Kojaian of the Securities to be acquired by Kojaian
at the "Closing" (as that term is defined in SECTION 1.3 below), Kojaian shall
pay to the Company on the Closing Date in immediately available funds (a) the
aggregate sum of (i) $15,386,580, plus (ii) all interest due with respect to the
$5,000,000 Warburg Note as of the date of the Closing, plus (iii) the
reasonable, documented expenses incurred by Warburg Pincus in connection with
the Option Agreement, not to exceed $100,000, less (b) the $1,000,000 xxxxxxx
money deposit previously delivered by Kojaian to the Company on April 9, 2002
(the "Xxxxxxx Money Deposit").
1.3 CLOSING. (a) The sale and issuance of the Securities (the
"Closing") shall take place at 5:00 P.M. at the office of Xxxxxxxx Xxxx &
Brandeis, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx on or before May 13, 2002,
or at such other time and date as the parties hereto may mutually agree. Such
time and date, as same may be adjourned, is sometimes hereinafter referred to as
the "Closing Date." Provided that the Closing shall take place no later than
upon one day notice to Company from Kojaian after the satisfaction of the
conditions set forth in Article V and Article VI.
ARTICLE II
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company warrants
and represents, as of the date hereof and as of the Closing Date as if such
representations and warranties were made on the Closing Date, as follows:
2.1 CORPORATE POWER AND AUTHORITY. The Company has the full legal
right, power and authority to enter into this Agreement and to issue and sell
the Securities to be issued pursuant to this Agreement, including but not
limited to the issuance of Series A Preferred Stock issuable upon conversion of
the $11,000,000 Subordinated Note in accordance with the terms set forth in the
$11,000,000 Subordinated Note, and the delivery to Kojaian of the Securities
pursuant to the provisions of this Agreement will transfer to Kojaian valid
title thereto, free and clear of all liens, encumbrances, restrictions and
claims of every kind except as set forth on SCHEDULE 2.1.
2.2 AUTHORIZATION AND NONCONTRAVENTION. This Agreement has been duly
and validly authorized, executed and delivered by the Company and constitutes a
valid and legally binding agreement of the Company, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The execution and
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delivery by the Company of this Agreement and the other agreements and
instruments, to be executed and delivered by the Company in connection herewith
do not and the consummation of the transactions contemplated hereby and thereby
will not, except as set forth on SCHEDULE 2.2: (i) violate any provision of the
Certificate of Incorporation or By-Laws of the Company; (ii) violate any
provision of, or result in the termination or acceleration of, or default under,
or entitle any party to accelerate (whether after the filing of notice or lapse
of time or both) any obligation under, or result in the creation or imposition
of any lien, charge, pledge, security interest or other encumbrance upon any of
the assets of the Company pursuant to any provision of any mortgage, lien,
lease, agreement, license, or instrument, or violate any law, regulation, order,
arbitration award, judgment or decree to which the Company is a party or by
which its property is bound; (iii) violate or conflict with, or create a default
under, any other material restriction of any kind or character to which the
Company is subject; (iv) require any governmental consent, authorization,
filing, approval, or exemption, except as may be required by Regulation D
promulgated under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"); or (v) violate any
consent decree or requirement to which the Company is subject.
2.3 EXISTENCE AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the power to own its property and to carry on its
business as it is now being conducted. The Company is duly qualified to do
business and is in good standing in the jurisdictions in which the character or
location of the properties owned or leased by the Company or the nature of the
business conducted by the Company makes such qualification necessary, except
where the failure to qualify individually or in the aggregate will not have a
material adverse effect on the business of the Company.
2.4 CAPITAL STOCK.
(a) A description of the authorized capital stock of the Company,
together with the number of shares of each class outstanding, as of the Closing
Date, is set forth on SCHEDULE 2.4 hereto. All of such shares of capital stock
of the Company have been duly authorized, validly issued, are fully paid and
non-assessable and were issued in compliance with all applicable federal and
state securities laws. Other than as set forth on SCHEDULE 2.4, there are no
securities directly or indirectly convertible into or exchangeable for any of
the capital stock of the Company, and no options, warrants, rights, calls or
commitments relating to such shares or other such securities are outstanding,
and SCHEDULE 2.4 shall accurately set forth all of the material terms and
conditions (exercise price, term, vesting, etc.) of all of the options,
warrants, rights, calls or commitments set forth thereon.
(b) As of the Closing Date, the Company shall not be subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock and the Company shall not have any
outstanding warrants, options, or other rights to acquire its capital stock,
except as set forth on SCHEDULE 2.4 or in this Agreement.
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(c) As of the Closing Date, sufficient shares of authorized but
unissued Series A Preferred Stock will have been reserved by appropriate
corporate action in connection with the prospective conversion of the
$11,000,000 Subordinated Note. The issuance of the Series A Preferred Stock upon
conversion of the $11,000,000 Subordinated Note will not require any further
corporate action by the Company, nor will it conflict with any provision of any
agreement to which the Company is a party or by which it or its assets are
bound, except as set forth on SCHEDULE 2.2 hereof.
2.5 VALID ISSUANCE OF SECURITIES. When issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, each of
the Shares and the Series A Preferred Stock issuable upon the conversion of the
$11,000,000 Subordinated Debt, in whole or in part, will be duly and validly
issued, fully paid, non-assessable and free of preemptive rights, and, when
executed and delivered by the Company, each of this Agreement, and the
Securities constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
law affecting creditor's rights generally and of general principles of equity
(regardless of whether considered in a proceeding at law or in equity). Based in
part upon the representations of Kojaian in this Agreement, the Securities will
be issued in compliance with all applicable federal and state securities laws
and the offer, sale and issuance of the Securities, including but not limited to
the shares of the Series A Preferred Stock issuable upon conversion of the
$11,000,000 Subordinated Debt, will constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act.
2.6 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of the Company is, or will be, entitled to any commission or broker's
or finder's fees from any of the parties hereto, or from any person controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the transactions contemplated by this Agreement. Company
agrees to indemnify and hold Kojaian harmless with respect to the foregoing.
2.7 RECITALS. The facts and circumstances as set forth in Recitals
A. through E. and, as to the Company, G. are true, complete as to the matters
set forth therein and correct.
ARTICLE III
3. REPRESENTATIONS AND WARRANTIES OF KOJAIAN
3. REPRESENTATIONS AND WARRANTIES OF KOJAIAN. Kojaian hereby represents,
warrants and agrees, as of the date hereof and as of the Closing Date, as if
made on the Closing Date, as follows:
3.1 POWER AND AUTHORITY; AUTHORIZATION AND NONCONTRAVENTION. Kojaian
has the full legal right, power and authority to enter into this Agreement and
this Agreement has
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been duly and validly authorized, executed and delivered by Kojaian and
constitutes a valid and legally binding agreement of Kojaian, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles. The execution
and delivery by Kojaian of this Agreement and the other agreements and
instruments to be executed and delivered by Kojaian in connection herewith do
not and the consummation of the transactions contemplated hereby and thereby
will not, except as set forth on SCHEDULE 3.1: (i) violate any provision of the
Articles of Organization, Operating Agreement or any other like organizational
or governing documents of Kojaian; (ii) violate any provision of, or result in
the termination or acceleration of, or default under, or entitle any party to
accelerate (whether after the filing of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the assets of Kojaian
pursuant to any provision of any mortgage, lien, lease, agreement, license, or
instrument, or violate any law, regulation, order, arbitration award, judgment
or decree to which Kojaian is a party or by which its property is bound; (iii)
violate or conflict with, or create a default under, any other material
restriction of any kind or character to which Kojaian is subject; (iv) require
any governmental consent, authorization, filing, approval, or exemption, except
as may be required by Regulation D promulgated under the Securities Act (the
"Securities Act"); or (v) violate any consent decree or requirement to which
Kojaian is subject.
3.2 EXISTENCE AND GOOD STANDING. Kojaian is a limited liability
company, validly existing and in good standing under the laws of the State of
Michigan. Kojaian has the power to own its property and to carry on its business
as it is now being conducted. All of the issued and outstanding equity
securities of Kojaian are owned by C. Xxxxxxx Xxxxxxx, and no other person or
entity has any direct or indirect right, agreement or understanding, contingent
or otherwise, whether written or oral, to acquire any equity securities of
Kojaian upon the exercise or conversion of any options, warrants, debt or other
derivative securities of any nature whatsoever.
3.3 EXPERIENCE; CERTAIN RISKS. Kojaian has substantial experience in
evaluating and investing in non-registered securities of publicly traded
entities, is capable of evaluating the merits and risks of investment in the
Company and has the capacity to protect its own interests. Kojaian hereby
acknowledges that: (i) the Shares and the shares of Series A Preferred Stock
issuable upon conversion of the $11,000,000 Subordinated Debt represent
non-registered equity securities in a corporate entity that has an accumulated
deficit; (ii) other than with respect to interest payments with respect to the
$11,000,000 Subordinated Debt, no return on investment, whether through
distributions, appreciation, transferability or otherwise, and no performance
by, through or of the Company, has been promised, assured, represented or
warranted by the Company, or by any director, officer, employee, agent or
representative thereof; (iii) the Securities subscribed for under this
Agreement, including but not limited to, the shares of Series A Preferred Stock
issuable upon conversion of the $11,000,000 Subordinated Debt (x) are not
registered under applicable federal or state securities laws, and thus may not
be sold, conveyed, assigned or transferred unless registered under such laws or
unless an exemption from registration is available under such laws, as more
fully described below, and (y) although there
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presently is a public market with respect to the Shares, the $11,000,000
Convertible Debt and the Series A Preferred Stock issuable upon conversion of
the $11,000,000 Convertible Debt are not quoted, traded or listed for trading or
quotation on any organized market or quotation system, and there have not been
any representations made by the Company to Kojaian that the $11,000,000
Convertible Debt or the Series A Preferred Stock issuable upon conversion of the
$11,000,000 Subordinated Debt will ever be quoted, traded or listed for trading
or quotation on any organized market or quotation system or that there ever will
be a public market for the $11,000,000 Convertible Debt or the Series A
Preferred Stock or that there will continue to be a public market with respect
to the Shares, and (iv) the purchase of the Securities is a speculative
investment, involving a degree of risk, and is suitable only for a person or
entity of adequate financial means who has no need for liquidity in this
investment in that, among other things, (a) such person or entity may not be
able to liquidate its investment in the event of an emergency or otherwise, (b)
transferability is limited, and (c) in the event of a dissolution or otherwise,
such person or entity could sustain a complete loss of its entire investment.
Kojaian has adequate means of providing for its current financial needs and
possible contingencies and has no need for liquidity of its investment in the
Securities. Kojaian is able to bear the economic risks inherent in an investment
in the Securities, and an important consideration bearing on its ability to bear
the economic risk of the purchase of the Securities is whether Kojaian can
afford a complete loss of its investment in the Securities, and Kojaian
represents and warrants that it can afford such a complete loss. Kojaian has
such knowledge and experience in business, financial, investment and banking
matters (including, but not limited to investments in restricted, non-listed and
non-registered securities) that Kojaian is capable of evaluating the merits,
risks and advisability of an investment in the Securities.
3.4 ACCREDITED INVESTOR OR BUSINESS AND FINANCIAL EXPERIENCE. Kojaian
is an accredited investor as defined in Rule 501 under the Securities Act of
1933.
3.5 INVESTMENT. Kojaian is acquiring the Securities for investment
purposes only and solely for its own account, not as a nominee or agent, and not
with the view towards the resale or distribution thereof. Kojaian understands
that the Securities have not been, and will not be, registered under the
Securities Act or qualified under any state securities laws, by reason of a
specific exemption from the registration provisions of the Securities Act and
various states' securities laws, which exemption depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of
Kojaian's representations as expressed herein. Kojaian understands that, in the
view of the United States Securities and Exchange Commission (the "SEC"), among
other things, a purchase with a present intent to distribute or resell would
represent a purchase and acquisition with an intent inconsistent with its
representation to the Company, and the SEC might regard such a transfer as a
deferred sale for which the registration exemption is not available.
Consequently, Kojaian agrees and consents to the placement of a legend on the
certificate(s) and the promissory note(s) evidencing the Securities, as the case
may be, that they have not been registered under federal securities laws and
applicable state securities laws.
3.6 RULE 144. Kojaian acknowledges that each of the Shares and the
Series
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A Preferred Stock issuable upon the conversion of the $11,000,000 Subordinated
Debt must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available.
Kojaian is aware of the provisions of Rule 144 promulgated under the Securities
Act which permit limited resale of equity securities purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, in most circumstances (i) the existence of a public market for the
securities, (ii) the availability of certain current public information about
the Company, (iii) the resale occurring not less than one year after an investor
has purchased and fully paid for the shares to be sold from the Company or
affiliate of the Company, (iv) the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" (as provided by
Rule 144(f)) and (v) the number of shares being sold during any three-month
period not exceeding specified limitations.
3.7 ACCESS TO INFORMATION; CURRENT STATUS WITH THE COMPANY. Kojaian
expressly acknowledges that its equityholder, C. Xxxxxxx Xxxxxxx currently is,
and has been a member of the Company's Board of Directors, continuously since
December, 1996. Accordingly, Kojaian expressly acknowledges that in its capacity
as a limited liability company and through its sole owner, C. Xxxxxxx Xxxxxxx,
that it has had the full opportunity to discuss the Company's business,
management, and financial affairs with the Company's management and executive
officers and has had the opportunity to review the Company's facilities.
Kojaian, in its capacity as a limited liability company and through its owner,
C. Xxxxxxx Xxxxxxx, has also had an opportunity to ask questions of the
executive officers of the Company, all of which questions have been answered to
Kojaian's satisfaction. Notwithstanding the foregoing, Kojaian expressly
acknowledges and agrees that he has not relied on any representation, warranty
or statements, written or oral, other than the express representations and
warranties contained herein and the information contained within the Company's
regulatory filings with the Securities Exchange Commission, and that Kojaian's
decision to purchase the Securities is not based on any promotional, marketing
or sales materials, and Kojaian and his representatives have been afforded,
prior to the purchase of the Securities, access to all documents and information
that Kojaian deems material to an investment decision with respect to the
purchase of the Securities hereunder.
3.8 BROKERS OR FINDERS. No agent, broker, person or firm acting on
behalf of Kojaian is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any person controlling or
controlled by or under common control with any of the parties hereto, in
connection with any of the transactions contemplated by this Agreement. Kojaian
agrees to indemnify and hold the Company harmless with respect to the foregoing.
3.9 RECITALS. The facts and circumstances set forth in Recitals F.
and, as to Kojaian, G. are true, complete as to the matters set forth therein
and correct.
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ARTICLE IV
4. COVENANTS OF THE PARTIES
4.1 NON-SOLICITATION. During the period from the date of this
Agreement to the Closing Date, or the termination of this Agreement in
accordance with the provisions of SECTION 8.12 below, whichever is earlier, the
Company shall not directly or indirectly (i) initiate, solicit or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for an alternative refinancing transaction of the type
contemplated by this Agreement (an "Alternative Proposal"), (ii) engage in
negotiations or discussions concerning (and shall cease any current negotiations
or discussion concerning), or provide to any person or entity any confidential
information or data relating to the Company for the purposes of, or otherwise
cooperate with or assist or participate in, facilitate or encourage, any
inquiries or the making of any Alternative Proposal, or (iii) agree to, approve
or recommend any Alternative Proposal. Nothing in this SECTION 4.1 shall prevent
the Company from providing confidential Company information to any director in
connection with the exercise by such director of his fiduciary duties to the
Company.
4.2 USE OF PROCEEDS. The Company shall use the consideration to be
received from Kojaian pursuant to SECTION 1.2 above, plus the Xxxxxxx Money
Deposit (collectively, the "Closing Proceeds") to exercise its Refinancing Right
under the Option Agreement, and accordingly, the Company will use the Closing
Proceeds solely to: (i) repurchase from Warburg Pincus the $5,000,000 Warburg
Note for the principal amount thereof, and all accrued interest thereon,
whereupon the $5,000,000 Warburg Note shall be cancelled and become null and
void; (ii) repurchase from Warburg Pincus all of the Warrant Shares for an
aggregate purchase price of $4,158,431; (iii) reimburse Warburg Pincus for all
reasonable, documented out-of-pocket expenses incurred by Warburg Pincus in
connection with the $5,000,000 Warburg Note, not to exceed $100,000; and (iv)
deliver to the Banks $6,000,000 as a payment towards the amount currently
outstanding under the revolving portion of the Credit Facility.
4.3 CERTAIN CORPORATE ACTIONS. Each of the parties shall use their
reasonable best efforts to take any and all action to meet each of the
conditions to closing set forth in Article V and VI hereunder, as applicable,
and to keep each of their respective representations and warranties hereunder
true, complete and correct from the date hereof through the Closing Date.
4.4 ISSUANCE OF SECURITIES. The Company shall not, prior to the
expiration of the "Non-Voting Date," as that term is defined in, and is subject
to extension pursuant to, Section 4(d) of the Series A Certificate of
Designations, issue any additional common equity securities of the Company, or
any options, warrants or debt or equity derivative securities that are
exercisable or convertible, as the case may be, into equity securities of the
Company; PROVIDED, HOWEVER, that the Company shall not be prohibited in any
fashion whatsoever, from issuing any additional common equity securities of the
Company, or any options, warrants, or debt or equity
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derivative securities that are exercisable or convertible, as the case may be,
into equity securities of the Company (i) in connection with a "Section 3(c)(ii)
Liquidation" as that term is defined in the Series A Certificate of
Designations, (ii) pursuant to any obligation set forth in any employment
agreement in effect as of April 14, 2002 other than pursuant to each of that
certain employment agreement of a regional managing director and that employment
agreement of an executive vice president of operations, both of which agreements
were entered into by the Company subsequent to April 14, 2002, (iii) upon the
exercise or conversion, as the case may be, of any options, warrants or
derivative securities outstanding as of April 14, 2002, or (iv) pursuant to the
Company's employee stock purchase plan.
4.5 ALTERNATE LIQUIDATION RIGHTS.
In the event the Corporation enters into a definitive binding
agreement with respect to a Section 3(c)(ii) Liquidation on or before the
"Non-Voting Date," as such term is defined in, and as such date may extended
pursuant to, Section 4.6 below, which closes on or before the Non-Voting Date,
then Kojaian shall not be entitled to receive the consideration set forth in
Section 3(a) of the Series A Certificate of Designation, but rather, whether or
not Kojaian has converted the $11,000,000 Subordinated Note into shares of
Series A Preferred Stock at that time, Kojaian shall be entitled to receive,
before payment of any consideration shall be made to the holders of Junior
Stock, 100% of the "Series A Investment" plus the "Alternate Liquidation Amount"
(as each of those terms are defined in SECTION 3(D)(I) of the Series A
Certificate of Designations), provided, however, that in the event that Kojaian
accepts the Alternate Liquidation Amount, then Kojaian expressly agrees that
Kojaian shall not, shall cause Kojaian's "affiliates" (as defined in Section 4.6
below) not to, and shall not assist or encourage any stockholder of the Company
to, under any circumstances whatsoever, seek, or be permitted to seek, to
exercise any appraisal rights under Section 262 of the Delaware General
Corporate Law, or otherwise seek, or be permitted to seek, to challenge the
Section 3(c)(ii) Liquidation. Unless Kojaian expressly notifies the Company in
writing within seven (7) days after KV receives the Alternate Liquidation
Amount, which notice, to be effective, must be in accordance with the notice
provisions set forth in SECTION 8.5 below and must also include the return of
the entire Alternate Liquidation Amount, that Kojaian does not accept the
Alternative Liquidation Amount, then Kojaian's shall automatically and
irrevocably be deemed to have accepted the Alternate Liquidation Amount. In the
event that, in accordance with the provisions of the preceding sentence, the
Kojaian duly notifies the Corporation that it does not accept the Alternate
Liquidation Preference, Kojaian shall be deemed to have irrevocably waived its
right to receive such Alternate Liquidation Amount.
4.6 EXERCISE OF RIGHTS. Prior to May 31, 2002 (as same may be extended
as provided below, the "Non-Voting Date"), Kojaian shall not exercise any voting
rights, of any equity securities of the Company beneficially owned by Kojaian,
in any manner whatsoever, that could directly or indirectly hinder, prohibit,
delay or prevent the consummation of, or materially alter the terms of, a
proposed Section 3(c)(ii) Liquidation, provided, that in the event the Company
enters into a definitive binding agreement with respect to a Section 3(c)(ii)
Liquidation on or before the Non-Voting Date, then the Non-Voting Date shall
automatically be extended to
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September 30, 2002. In addition, prior to the expiration of the Non-Voting Date,
Kojaian shall not have the right, and shall cause its controlling member not to,
and not to agree, to voluntarily transfer, donate, sell, assign or otherwise
dispose of any preferred, common or other equity securities of the Corporation
or any other interest therein. As used herein, the term "affiliate" or any
correlative term shall mean, with respect to any party, any other party directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such party, or other than the father of the controlling member of
Kojaian.
ARTICLE V
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company
to consummate the transactions contemplated by this Agreement on the Closing
Date is conditioned upon satisfaction, on or prior to the Closing Date, of the
following conditions:
5.1 TRUTH, COMPLETENESS AND CORRECTNESS OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties of Kojaian contained in this
Agreement shall be true, complete and correct in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date.
5.2 APPROVALS. Receipt of all consents, approvals or waivers from all
parties or entities necessary to consummate the transactions herein
contemplated, including but not limited to the receipt of all consents,
approvals or waivers from the Banks under the Credit Facility that are necessary
or desired to permit the consummation of the transactions contemplated by this
Agreement.
5.3 RECEIPT OF CONSIDERATION. The Company shall have received by wire
transfer to the Company or as directed by the Company the Closing Proceeds in
accordance with the wire transfer instructions annexed hereto as SCHEDULE 5.3.
5.4 RECEIPT OF FAIRNESS OPINION. The special committee of the
Company's Board of Directors shall have received a written opinion from Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc., to the effect that the
transactions contemplated by this Agreement are fair to the Company from a
financial point of view.
5.5. AMENDMENT TO CREDIT FACILITY. The Credit Facility shall be
appropriately amended so as to include the $11,000,000 Subordinated Debt as a
junior subordinated debt thereunder, and eliminate any requirements regarding
minimum equity ownership in the Company by Warburg Pincus, and Kojaian shall
execute and deliver such amendment to the Credit Facility, a subordination
agreement, and any and all other documentation as may be required by the Banks
in order to evidence and effect same.
5.6 PROCEEDINGS. All proceedings and actions to be taken in connection
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with the transactions contemplated by this Agreement, including but not limited
to those under applicable securities laws, shall have been duly taken on a
timely basis and all documents incident thereto shall be reasonably satisfactory
in form and substance to the Company and its counsel, and the Company shall have
received copies of all such documents and other evidences as it or its counsel
may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
5.7 TERMINATION OF OPTION AGREEMENT. The Option Agreement, and all
rights and obligations of the parties thereunder, including but not limited to
the $5,000,000 Warburg Note, shall be terminated and become null and void.
ARTICLE VI
6. CONDITIONS TO KOJAIAN'S OBLIGATIONS
6. CONDITIONS TO KOJAIAN'S OBLIGATIONS. The obligation of Kojaian to
consummate the transactions contemplated by this Agreement on the Closing Date
is conditioned upon satisfaction, on or prior to such date, of the following
conditions:
6.1 TRUTH, COMPLETENESS AND CORRECTNESS OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company contained in this
Agreement shall be true, complete and correct in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date.
6.2 APPROVALS. Receipt of all consents, approvals or waivers from all
parties or entities necessary to consummate the transactions herein
contemplated, including but not limited to the receipt of all consents,
approvals or waivers from the Banks under the Credit Facility that are necessary
or desired to permit the consummation of the transactions contemplated by this
Agreement.
6.3 FILING OF SERIES A CERTIFICATE OF DESIGNATIONS. The Company shall
have properly and validly filed with the Secretary of State of the State of
Delaware an amendment to the Series A Certificate of Designations and shall have
delivered evidence of same to Kojaian.
6.4 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Securities hereunder in accordance with the provisions set forth in
SECTION 4.2 above.
6.5 VALID ISSUANCE. Each of the $11,000,000 Subordinated Note and the
Shares to be issued and sold by the Company and to be acquired by Kojaian shall
be (and the shares of Series A Preferred Stock issuable upon conversion of the
$11,000,000 Subordinated Debt shall, upon issuance by the Company and
acquisition by Kojaian, be) duly authorized and validly issued to Kojaian, free
and clear of all liens, encumbrances, restrictions and claims of every kind.
Kojaian shall have received one or more properly completed stock certificate(s)
representing the Shares, and one or more duly executed promissory note(s)
representing the
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$11,000,000 Subordinated Debt, in each instance, in such denominations and in
such names as Kojaian shall reasonably request.
6.6 PROCEEDINGS. All proceedings and actions to be taken in connection
with the transactions contemplated by this Agreement, including but not limited
to those under applicable securities laws, shall have been duly taken on a
timely basis and all documents incident thereto shall be reasonably satisfactory
in form and substance to Kojaian and its counsel, and Kojaian shall have
received copies of all such documents and other evidences as it or its counsel
may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
6.7 TERMINATION OF OPTION AGREEMENT. The Option Agreement, and all
rights and obligations of the parties thereunder, including but not limited to
the $5,000,000 Warburg Note, shall be terminated and become null and void.
ARTICLE VII
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties, covenants, agreements and obligations of each of
the Company and Kojaian contained in this Agreement or in any Schedule or
Exhibit attached hereto, and the indemnification provisions set forth in this
SECTION 7 hereof, shall survive the Closing.
7.2 INDEMNIFICATION BY THE PARTIES
(a) Each of the parties hereto agrees to indemnify (the
"Indemnifying Party") and hold the other and each of its respective partners,
officers, directors, members, employees, counsel, accountants, agents,
successors and assigns (collectively, an "Indemnified Party") harmless from any
and all damages, liabilities, losses, costs or expenses (including, without
limitation, reasonable counsel fees and expenses) suffered or paid, directly or
indirectly, as a result of or arising out of the failure of any respective
representation or warranty made by the Indemnifying Party in this Agreement or
in any Schedule or Exhibit attached hereto to be true, complete and correct in
all material respects as of the date of this Agreement and as of the Closing
Date.
(b) If any action, suit, proceeding or investigation is
commenced, as to which an Indemnified Party proposes to demand indemnification,
it shall notify the Indemnifying Party with reasonable promptness; PROVIDED,
HOWEVER, that any failure by an Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from its obligations hereunder,
except to the extent that the Indemnifying Party shall have been materially
prejudiced in its ability to defend the action, suit, proceedings or
investigation for which such indemnification is sought by reason of such
failure. Except as set forth below, an Indemnifying Party shall have the right
to retain counsel of its own choice, and the Indemnifying
13
Party shall pay the reasonable fees, reasonable expenses and reasonable
disbursements of counsel selected by the Indemnifying Party; and such counsel
shall to the extent consistent with its professional responsibilities, cooperate
with the Indemnified Party and any counsel designated by the Indemnified Party,
which counsel shall be the expense of the Indemnified Party.
In the event the Indemnifying Party does not assume or fails to conduct in
a diligent manner the defense of any claim or litigation resulting therefrom,
(a) the Indemnified Party may defend, using its own counsel, against such claim
or litigation, in such manner as it deems appropriate, including, but not
limited to, settling such claim or litigation, on such terms as the Indemnified
Party may deem appropriate, subject to first obtaining the prior written consent
of the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed, and (b) the Indemnifying Party shall be entitled to participate in (but
not control) the defense of such action, with its counsel and at its own
expense. The Indemnifying Party shall pay the reasonable fees, reasonable
expenses and reasonable disbursements of counsel selected by an Indemnified
Party in the circumstances described in the previous sentence. If the
Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such third party claim or the amount or nature of any
such settlement, the Indemnifying Party shall have the burden to prove that the
Indemnified Party did not defend or settle such third party claim in a
reasonably prudent manner.
The Indemnifying Party shall be liable for any settlement of any claim
against an Indemnified Party made with the Indemnifying Party's written consent
or made in connection with the circumstances described in the first sentence of
the previous paragraph. The Indemnifying Party shall not, without prior written
consent of an Indemnified Party, which consent shall not be unreasonably
withheld or delayed, settle or compromise any claim, or permit a default or
consent to the entry of any judgment in respect thereof; PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Indemnifying Party shall have the right to
settle or compromise any claim provided that (i) the Indemnifying Party pays all
sums, costs and expenses incident thereto, and (ii) Indemnifying Party obtains
for the Indemnified Party a full, non-conditional absolute release.
Each party agrees to cooperate fully with the other, such cooperation to
include, without limitation, attendance at depositions and the production of
relevant documents as may be reasonably requested by the other parties, provided
that the Indemnifying Party will reimburse the Indemnified Party for all of its
out-of-pocket expenses incurred in connection with such cooperation by the
Indemnified Party.
(c) In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that such indemnification may not be enforced in such
case, even though the express provisions hereof provide for indemnification in
such case, then the Indemnifying Party (as applicable), on the one hand, and an
Indemnified Party, on the other, shall contribute to the losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs and
expenses to which the
14
indemnified persons may be subject in accordance with the relative benefits
received by the Indemnifying Party (as the case may be), on the one hand, and an
Indemnified Party, on the other hand, in connection with the statements, acts or
omissions which resulted in expenses and the relevant equitable considerations
shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation.
ARTICLE VIII
8. MISCELLANEOUS
8.1 PRESERVATION OF CONFIDENTIAL INFORMATION. Unless readily
ascertainable from public or published information or trade sources, Kojaian
until the Closing shall keep strictly confidential any and all non-public
information obtained from the Company concerning the Company's properties,
operations and business, and shall use any such information solely for the
purpose of evaluating whether Kojaian wishes to make an investment in the
Company pursuant to this Agreement. The provisions of this Section are in
addition to, and not in lieu of, any other fiduciary obligations that the
controlling member of Kojaian may have to the Company.
8.2 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of Delaware applicable to agreements executed and to be performed solely
within such State, and each of the parties hereto irrevocably consents to the
venue and jurisdiction of the federal and state courts located in the State of
Delaware, County of Kent.
8.3 HEADINGS. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
8.4 PUBLICITY. Except as otherwise required by applicable federal
securities laws, or as otherwise agreed to by the parties, none of the parties
hereto shall issue any press release or make any other public disclosure or
statement, in each case relating to, connected with or arising out of this
Agreement or the transactions contemplated herein. Any statement or disclosure
so issued or made by either party shall require the prior approval, not to be
unreasonably withheld or delayed, of the other party hereto as to the contents
and the manner of presentation and publication thereof.
8.5 NOTICES. All notices, requests, demands, other communications and
deliveries required or desired to be given hereunder shall only be effective if
given in writing by hand, by certified or registered mail, return receipt
requested, postage prepaid, or by U.S. express mail service, or by private
overnight mail service (e.g. Federal Express), or by facsimile transmission. Any
such notice, request, demand, other communication or delivery shall be deemed to
have been received (a) on the business day actually received if given by hand or
15
facsimile transmission, (b) on the business day immediately subsequent to
mailing, if sent by U.S. express mail service or private overnight mail service,
or (c) three (3) business days following the mailing thereof, if mailed by
certified or registered mail, postage prepaid, return receipt requested, and all
such notices shall be sent to the following addresses (or to such other address
or addresses as a party may have advised the other in the manner provided
herein):
if to Kojaian, to:
Kojaian Ventures, L.L.C.
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
with a copy simultaneously by like means to:
Xxxxxx Xxxxxxx, P.L.C.
Third Floor
000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
if to the Company to:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attn: Chief Executive Officer
-and-
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attn: Chief Administrator Officer
with a copy simultaneously by like means:
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Xxxxxxxx Xxxx & Brandeis, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
-and-
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
8.6 SUCCESSORS AND ASSIGNS. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
8.7 COUNTERPARTS. This Agreement may be executed in two or more
original or facsimile counterparts, all of which taken together shall constitute
one instrument.
8.8 ENTIRE AGREEMENT. This Agreement, including the other documents
referred to herein or annexed as Exhibits or Schedules hereto which form a part
hereof, contains the entire understanding of the parties hereto with respect to
the subject matter contained herein and therein and supersedes all prior
agreements and understandings between the parties with respect to such subject
matter, including but not limited to the Letter Agreement.
8.9 AMENDMENTS. This Agreement may not be changed orally, but only by
an agreement in writing signed by the parties hereto.
8.10 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
8.11 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
8.12 TERMINATION OF AGREEMENT; RETURN OF XXXXXXX MONEY DEPOSIT. This
Agreement shall terminate upon the earlier of: (i) 12:01 a.m. Eastern Daylight
Savings Time, on
17
May 14, 2002 (unless the Closing shall have occurred prior to that time, in
which case the provisions of SECTION 7.1 shall govern); (ii) the date on which
any condition to Closing set forth in Article V or Article VI above becomes
incapable of being satisfied by 12:01 a.m. Eastern Daylight Savings Time on May
14, 2002, and any such condition is not waived, provided, however, that the
party asserting that a condition is not capable of being satisfied shall provide
reasonable evidence supporting such determination to the other party); or (iii)
upon the mutual agreement of the parties. In the event that a closing of the
transactions contemplated by this Agreement does not occur for any reason other
than solely as a result of a breach by Kojaian of this Agreement, then upon
written request therefor, the Company shall immediately return the Xxxxxxx Money
Deposit to Kojaian without interest or deduction. In all other instances, the
Company shall be entitled to retain the Xxxxxxx Money Deposit, it being
expressly understood and agreed that any such retention by the Company of the
Xxxxxxx Money Deposit shall be in addition to, and not in lieu of, any further
monetary or equitable remedies that the Company may be entitled to under law or
equity, and under no circumstances whatsoever shall the Company's retention of
the Xxxxxxx Money Deposit hereunder constitute liquidated damages.
8.13 WAIVER OF JURY TRIAL. The parties hereto waive all right to trial
by jury of any action, suit or proceeding brought to enforce or defend any
rights or remedies arising under or in connection with this Agreement or the
transaction contemplated hereby whether grounded in tort, contract or otherwise.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
COMPANY:
XXXXX & XXXXX COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
KOJAIAN VENTURES, L.L.C.
a Michigan limited liability company
By: KOJAIAN VENTURES-MM, INC.
a Michigan Corporation, Managing Member
By: /s/ C. Xxxxxxx Xxxxxxx
------------------------------------
Name: C. Xxxxxxx Xxxxxxx
Title: President
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