CUSIP NO. 000000000 PAGE 32 OF 55 PAGES
Exhibit 1
The Procter & Xxxxxx Company
One Procter & Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Chief Executive Officer
Recovery Engineering, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Dear Xx. Xxxxx and Xx. Xxxxxxxx:
Reference is hereby made to (i) that certain Securities Purchase
Agreement, dated as of July 19, 1996, as amended by Amendment No. 1, dated as of
March 31, 1997, and as further amended by the letter agreement, dated April 24,
1997 (as amended, the "Securities Purchase Agreement"), between Recovery
Engineering, Inc. (the "Company") and GS Capital Partners II, L.P., GS Capital
Partners II Offshore, L.P., Xxxxxxx, Xxxxx & Co. Verwaltungs GmbH, Stone Street
Fund 1996, L.P. and Bridge Street Fund 1996, L.P. (collectively, the "GS
Entities"), and (ii) the Agreement and Plan of Merger, dated as of August 26,
1999, by and among the Company, The Procter and Xxxxxx Company ("Procter &
Xxxxxx") and Xxxxxxx, Inc. (the "Merger Agreement"). Capitalized terms used but
not defined herein shall have the respective meanings given to them in the
Merger Agreement.
The GS Entities hereby agree as follows:
1. For purposes of Section 6.1(a) of the Securities Purchase Agreement, they
consent to the Transactions contemplated by the Merger Agreement;
2. Pursuant to the Merger Agreement, at the Effective Time all of the Notes
(as defined in the Securities Purchase Agreement) then outstanding and
unconverted shall be canceled and each GS Entity which then holds any Notes
will be entitled to receive therefor the consideration provided in the
Merger Agreement;
3. Upon receipt of such consideration, the GS Entities will have no further
rights under the Securities Purchase Agreement, the Registration Rights
Agreement, dated as of July 19, 1996, between the Company and the GS
Entities and any agreement related to the Securities Purchase Agreement or
the Registration Rights Agreement; and
4. The GS Entities in their sole discretion may convert all or a portion of
the Notes and tender the shares of
CUSIP NO. 000000000 PAGE 33 OF 55 PAGES
Company common stock issued upon conversion pursuant to the Offer. In the
event that the GS Entities do not convert all of the Notes, the Notes that
are not converted shall be cancelled at the Effective Time and the GS
Entities that hold such Notes shall be entitled to receive therefor the
consideration provided in the Merger Agreement, as contemplated by
paragraph (2) above. In the event that the GS Entities convert all or a
portion of the Notes after the date hereof and prior to termination of the
Merger Agreement, the GS Entities acknowledge that upon conversion they
will not be entitled to be issued any shares of Company common stock or
receive any other consideration or value in respect of the reset rights
("Reset Rights") granted to the GS Entities pursuant to Section 9.6(j) of
the Securities Purchase Agreement and that such Reset Rights shall be
deemed to have been cancelled and expired. In the event that the GS
Entities do not convert all of the Notes, the GS Entities acknowledge that
upon cancellation of the Notes at the Effective Time the GS Entities will
not be entitled to receive any consideration or value in respect of the
Reset Rights and that such Reset Rights shall be deemed to have been
cancelled and expired.
This letter agreement does not constitute an agreement by any of the GS
Entities (i) to tender pursuant to the Offer any shares of Company common stock
issued upon conversion of all or any portion of the Notes, (ii) to vote any
shares of Company common stock held by such GS Entities in favor of the Merger
or against any other proposal that may be submitted to the stockholders of the
Company, (iii) to refrain from selling, transferring, pledging, assigning,
hypothecating or otherwise disposing of all or any portion of the Notes or any
shares of Company common stock issued upon conversion of all or any portion of
the Notes or (iv) to refrain from granting their consent with respect to any
other consolidation, merger, business combination transaction or other
transaction involving the Company for purposes of Section 6.1(a) of the
Securities Purchase Agreement.
This letter agreement shall terminate automatically and be deemed null
and void and of no further force and effect and the consent granted pursuant to
paragraph (1) above shall be deemed revoked upon (i) the termination of the
Merger Agreement in accordance with the terms thereof and (ii) any amendment of
the Merger Agreement or any waiver by the Company of any of its rights in the
Merger Agreement unless the GS Entities shall have consented in writing to such
amendment or waiver.
* * * * *
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IN WITNESS WHEREOF, the Company, the GS Entities have caused this
Amendment to be executed and delivered by their respective officers thereunto
duly authorized.
RECOVERY ENGINEERING, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
GS CAPITAL PARTNERS II, L.P.
By: GS Advisors, L.P., its general
partner
By: GS Advisors, Inc., its general
partner
By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
GS CAPITAL PARTNERS II OFFSHORE, L.P.
By: GS Advisors II (Cayman), L.P.,
its general partner
By: GS Advisors II, Inc., its
general partner
By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
XXXXXXX, XXXXX & CO. VERWALTUNGS GmbH
By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
and
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Attorney-in-fact
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STONE STREET FUND 1996, L.P.
By: Stone Street Empire Corp., its
general partner
By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
BRIDGE STREET FUND 1996, L.P.
By: Stone Street Empire Corp., its
managing general partner
By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
