United NewVentures
0000 X. Xxxxxxxxx Xxxx
P.O. Box 66100
Elk Grove Township, Illinois 60007
June 1, 2001
Crystal Asset Management, LLC
VIA FACSIMILE: 000-000-0000
Dear Crystal Asset Management:
This letter is to confirm our agreement regarding all of the 696,012
shares, $.001 par value ("Common Stock"), of XxXxxxxx.xxx, Inc., a Delaware
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corporation (the "Company"), beneficially owned (within the meaning of Rule 13d-
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3 under the Securities Exchange Act of 1934, as amended) by you and any other
shares of Common Stock as to which you may hereafter acquire beneficial
ownership prior to the Expiration Date (as defined below)(individually a "Share"
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and collectively the "Shares"). In order to induce United NewVentures, a
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Delaware corporation ("Buyer"), to enter into an Agreement and Plan of Merger,
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dated as of the date hereof, between the Company, UNV Acquisition Corp., and
Buyer (the "Merger Agreement"), you hereby agree as follows (capitalized terms
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used herein but not otherwise defined shall have the meanings ascribed to them
in the Merger Agreement):
Subject to the terms and conditions hereof, as soon as practicable after
the commencement of the tender offer to be commenced by Buyer pursuant to the
Merger Agreement (the "Tender Offer"), but in no event later than the scheduled
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expiration date of the Tender Offer as of the date hereof, you will tender to
Buyer, or cause to be tendered, all of the Shares, regardless of whether another
offer for such Shares has been made. If you withdraw your tender of Shares in
the Tender Offer, you shall immediately, but in no event later than the
scheduled expiration date of the Tender Offer as of the date hereof, re-tender
such Shares to Buyer.
You hereby grant to Buyer the option (the "Option") to purchase any or all
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the Shares, at the higher of U.S. $2.60 per Share in cash or such higher price
per Share in cash as Buyer or any of its subsidiaries may offer to pay for
shares of Common Stock in the Tender Offer (the "Per Share Option Price"),
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beginning on the date of an Applicable Termination (as defined below) and ending
on the date (the "Expiration Date") that is ten business days following such
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Applicable Termination; provided that the closing of such purchase shall in any
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event follow the receipt by Buyer of any applicable governmental consents or
approvals or the termination or expiration of any applicable waiting periods
referred to in Section 8.01(b) of the Merger Agreement. An "Applicable
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Termination" shall mean any termination of the Merger Agreement pursuant to
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which Buyer is or may
become entitled to the Termination Fee (as defined in the Merger Agreement),
including, without limitation, pursuant to Section 9.02(b)(ii) of the Merger
Agreement.
If (i) Buyer acquires the Shares upon exercise of the Option, (ii) Buyer
does not acquire a number of shares of Common Stock representing at least the
Minimum Tender Condition within twelve months after such exercise of the Option
and (iii) within such twelve-month period, Buyer or any affiliate of Buyer,
directly or indirectly, sells, transfers or otherwise disposes of (including,
without limitation, pursuant to a merger, liquidation, reorganization or
business combination involving the Company) the Shares acquired by Buyer upon
exercise of the Option, other than to any affiliate of Buyer (any of the
foregoing, a "Covered Disposition"), then upon consummation of any such Covered
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Disposition, Buyer shall pay to you in cash the amount, if any, by which the
aggregate of the cash consideration per Share and the fair market value (as of
the time of such Covered Disposition) of any securities or other property or
assets obtained by Buyer in the Covered Disposition exceeds the Per Share Option
Price, multiplied by the number of Shares sold, transferred or disposed of in
the Covered Disposition (the amount so payable to you, the "Covered Amount").
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In the case of any securities so obtained by Buyer in a Covered Disposition that
are traded on any national securities exchange or through any inter-dealer
quotation system, the "fair market value" of such securities as of the time of
such Covered Disposition shall be the closing market price as reported on the
securities exchange or quotation system that is the principal trading market for
such securities on the last trading day before the Covered Disposition. In the
case of any other non-cash consideration so obtained by Buyer in a Covered
Disposition, the "fair market value" of such consideration shall be the value
actually attributed to such consideration under the terms of the Covered
Disposition or, if no such attribution was made under the terms of the Covered
Disposition, the fair market value of such consideration as determined by Buyer
and you in good faith. If Buyer and you cannot agree on the fair market value of
such consideration within ten (10) days after the consummation of the Covered
Disposition, then the fair market value shall be determined by arbitration in
accordance with the rules of the American Arbitration Association. The Covered
Amount shall be treated as additional purchase price paid for the Shares for tax
and other purposes.
You hereby agree not to sell, transfer or encumber the Shares (except in
the Tender Offer or to Buyer) prior to the Expiration Date.
You hereby represent and warrant as to the Shares issued, outstanding and
beneficially owned by you as of the date of this letter agreement that except as
disclosed on Schedule I hereto: (i) you are the sole owner of and have full
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right, power and authority to sell and vote the Shares, or if you are not the
sole owner, you have the full right, power and authority to sell the Shares, and
in either event, this letter agreement is a valid and binding agreement,
enforceable against you in accordance with its terms; (ii) neither the execution
of this letter agreement nor the consummation by you of the transactions
contemplated hereby will constitute a violation of, or conflict with, or default
under, any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which you are a party or by which you or the Shares
are bound; and (iii) Buyer or its subsidiary shall, upon purchase of the Shares,
receive good and marketable
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title to the Shares, free and clear of all liens, claims, encumbrances and
security interests of any kind.
Buyer hereby represents and warrants that it is has corporate power and
authority to execute, deliver and perform this letter agreement.
You hereby agree to vote or cause to be voted all of the Shares (i) in the
manner directed by Xxxxx with respect to any matters related to the acquisition
of the Company by Buyer and (ii) against any other mergers, recapitalizations,
business combinations, sales of assets, liquidations or similar transactions
involving the Company, or any other matters which would be inconsistent with
Buyer's intended acquisition of the Company. In furtherance of your voting
agreement in this paragraph, you hereby revoke any and all previous proxies with
respect to any of the Shares and grant to Buyer, and such individuals or
corporations as Buyer may designate, an irrevocable proxy to vote all of the
Shares owned by you in accordance with this paragraph on any matters which may
be presented to shareholders of the Company with respect to the matters referred
to in clause (i) or (ii) above in this paragraph. You hereby acknowledge that
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the proxy granted by the foregoing is coupled with an interest and is
irrevocable. In addition, you hereby agree to execute such additional documents
as Xxxxx may reasonably request to effectuate its proxy and voting rights under
this paragraph.
We each hereby agree that this letter agreement creates legally binding
commitments, enforceable in accordance with their terms. This letter agreement
(i) constitutes the entire agreement among the parties hereto with respect to
the subject matter hereof and (ii) supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof. This letter agreement is not intended to confer upon any
other person any rights or remedies hereunder.
This letter agreement may be terminated at any time (i) by mutual written
consent of the parties hereto, (ii) by either party on or after the termination
of the Merger Agreement other than pursuant to an Applicable Termination or
(iii) by either party on or after the Expiration Date; provided, however, that
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the provisions of the fourth paragraph of this letter agreement (related to
Covered Dispositions) shall survive any such termination in accordance with its
terms. Notwithstanding the foregoing, such right of termination shall not be
available to any party whose breach of any representation, warranty, agreement
or obligation hereunder has been the cause of or resulted in the failure of the
transactions contemplated hereunder to be consummated. No such termination shall
relieve any party from liability for any breach of this letter agreement.
Each party shall be entitled, without prejudice to the rights and remedies
otherwise available to such party, to specific performance of all of the other
party's obligations hereunder. This letter agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Delaware. Each of the parties shall pay its own expenses in
connection with the execution and performance of this letter agreement.
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If any term, provision, covenant or restriction of this letter agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
letter agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Please indicate your agreement to the foregoing by signing this letter
agreement in the space provided below, whereupon a binding agreement will have
been formed between us in respect of the foregoing.
Sincerely,
UNITED NEWVENTURES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
Acknowledged and agreed as of the date first written above:
/s/ Xxxxxxx X. Xxxxxxx
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Crystal Asset Management (by Xxxxxxx X. Xxxxxxx)
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SCHEDULE I
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[LIST ANY EXCEPTIONS]
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