Exhibit 1
May 13, 2002
Xxxxx & Xxxxx Company
0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx,
Chief Executive Officer
Re: Letter Agreement
Xx. Xxxxxxxx:
Reference is herein made to that certain Letter Agreement, by and
between Xxxxx & Xxxxx Company (the "Company") and Kojaian Ventures, L.L.C.
("KV"), dated April 14, 2002 (the "Letter Agreement") pursuant to which KV
agreed to provide to the Company the money necessary for the Company to replace
the financing provided by Warburg, Xxxxxx Investors, L.P. ("Warburg") pursuant
to the terms of that certain Option Agreement, dated as of March 7, 2002, by and
among Warburg, the Company and Bank of America, N.A. (as Administrative Agent
under that certain Amended and Restated Credit Agreement, dated as of December
31, 2000, among the Company, various financial institutions and Bank of America,
N.A.) and Company agreed to issue securities to KV and undertake other acts in
order to effectuate the transaction with KV. The transactions contemplated by
the Letter Agreement are herein referred to as the "Kojaian Refinancing." This
amendment and supplement to the Letter Agreement (this "Amendment") sets forth
certain modifications to the agreement of the parties hereto with respect to the
Kojaian Refinancing and modifies and amends the Letter Agreement.
All defined terms contained herein, but not defined herein, shall have
the meanings ascribed thereto in the Letter Agreement.
In order to provide additional assurances of fairness to the
shareholders of the Company and in light of KV's intention of not attempting to
liquidate the Company, KV is willing, as provided herein, to limit its
liquidation premium in the event the Company is acquired shortly after the
Kojaian Refinancing.
Xxxxx & Xxxxx Company
May 10, 2002
Page 2
Until after the "Non-Voting Date" (as hereinafter defined), as same may
be extended as provided below, KV hereby agrees that it will (i) not exercise
any of the rights, powers and preferences of the Series A Preferred Stock
("Preferred Stock") that would be issued to KV should KV convert the promissory
note to be issued to KV by the Company in connection with the Kojaian
Refinancing (the "Note") in a manner that could, directly or indirectly, hinder,
prohibit, delay or prevent the consummation of, or materially alter the terms
of, any potential acquisition of the Company either (a) through a sale of all or
substantially all of the assets of the Company, (b) through an acquisition of an
interest in the common stock of the Company by way of purchase (whether by
public tender offer or otherwise), merger or consolidation or (c) otherwise
(each of clauses (a), (b) and (c), a "Transaction"), and (ii) not transfer the
Note or the Preferred Stock or any part thereof or interest therein to any third
party unless such third party shall become a party to this Amendment or the
definitive documents related hereto as if such transferee were KV. For the
avoidance of doubt, "Transaction" shall include any acquisition of the Company
in a transaction contemplated or permitted by the definitive binding agreement
relating to another Transaction.
Until after the "Non-Voting Date," KV shall cause its controlling
member not to, and not to agree to, voluntarily transfer, donate, sell, assign
or otherwise dispose of any of the shares of common stock of the Company owned,
directly or indirectly, by such stockholder.
Until after the "Non-Voting Date," Company hereby agrees that it will
not issue or agree to issue any equity securities or securities or rights
convertible into equity securities, other than (i) in connection with, and
conditioned on the closing of, a Transaction, (ii) pursuant to any obligation of
the Company contained in (a) any employment agreement in effect as of Xxxxx 00,
0000, (x) certain employment agreements of a regional managing director and an
executive vice president for operations that were entered into between the
Company and such parties after April 14, 2002 but prior to the date hereof and
(c) the Company's employee stock purchase plan, or (iii) upon the exercise or
conversion, as the case may be, of any other options, warrants or derivative
securities outstanding as of April 14, 2002.
The "Non-Voting Date" shall be May 31, 2002; provided, that, should
Company enter into a definitive binding agreement relating to a Transaction
between Company and a third party by such date, the Non-Voting Date shall be
extended automatically until the earlier of (i) a closing of a Transaction, or
(ii) September 30, 2002. For purposes of this Amendment, "affiliate" 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. For
the avoidance of doubt, "affiliate" shall not mean the father of the controlling
member of KV.
In the event of a closing of a Transaction contemplated by this
Amendment, Company at the time of such closing shall redeem the Note for a cash
amount equal to the principal amount of the Note, PLUS all interest accrued
pursuant to the terms of the Note from the date of the closing of the Kojaian
Refinancing through the date of repayment at the 12% interest rate contemplated
in the Letter Agreement (such principal and interest shall be referred to herein
as the "Repayment Amount"), PLUS $2,000,000 (the "Alternate Liquidation
Amount"), which Alternate Liquidation Amount shall be payable as consideration
for the termination of the Kojaian Refinancing in the event that the Note was
not theretofore converted and in lieu of the liquidation premium as set forth in
Xxxxx & Xxxxx Company
May 10, 2002
Page 3
Section 3(a) of the Certificate of Amendment of Company's Certificate of
Designations, Number, Voting Powers, Preferences and Rights of Series A
Preferred Stock ("Amended Certificate") had the Note in fact been converted.
However, should KV convert the Note into Preferred Stock prior to such closing,
KV shall receive a cash amount equal to the stated value of its Preferred Stock,
PLUS dividends that have accrued as outlined in Section 2 of the Amended
Certificate, PLUS the Alternate Liquidation Amount, which Alternate Liquidation
Amount shall be payable in lieu of the liquidation premium set forth in Section
3(a) of the Amended Certificate.
In connection with a Transaction, if KV accepts the Alternate
Liquidation Amount, KV shall not, shall cause its affiliates not to, and shall
not assist or encourage any stockholder of the Company to, seek to exercise
appraisal rights with respect to, or otherwise challenge, the Transaction. If KV
does not accept the Alternate Liquidation Amount, KV shall waive its right to
receive the Alternate Liquidation Amount, but KV and its affiliates shall
otherwise retain all remedies at law with respect to such Transaction.
Except as expressly set forth in this Amendment, the terms of the
Letter Agreement are hereby ratified and confirmed in all respects and remain in
full force and effect. Specifically, the parties confirm that they shall use
their reasonable best efforts to close the transactions contemplated by the
Letter Agreement on or before May 13, 2002. In the event of any inconsistency
between the Letter Agreement and this Amendment, the terms of this Amendment
shall control.
Xxxxx & Xxxxx Company
May 10, 2002
Page 4
This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Delivery by facsimile of an executed counterpart of any signature
page to this Amendment to be executed hereunder shall have the same
effectiveness as the delivery of a manually executed counterpart thereof.
Sincerely,
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
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C. Xxxxxxx Xxxxxxx, President
ACCEPTED AND AGREED:
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XXXXX & XXXXX COMPANY
By /s/ Xxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President, Chief Executive Officer
