INVESTMENT AGREEMENT
BETWEEN
GREENGRASS HOLDINGS
AND
SWING-N-SLIDE CORP.
March 13, 1997
TABLE OF CONTENTS
ARTICLE I. PURCHASE OF SECURITIES BY HOLDINGS . . . . . . . . . . . 1
1.1 Issuance of Shares . . . . . . . . . . . . . . . . . . . . 1
1.2 Issuance of Bridge Note . . . . . . . . . . . . . . . . . . 1
1.3 Issuance of Stock Purchase Warrants . . . . . . . . . . . . 2
1.4 Consideration for Shares . . . . . . . . . . . . . . . . . 2
1.5 Consideration for Bridge Note . . . . . . . . . . . . . . . 2
1.6 Additional Shares; Dilution Adjustment . . . . . . . . . . 2
1.7 Rights Offering . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Loan Account . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . 3
3.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Satisfaction of Conditions . . . . . . . . . . . . . . . . 4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . 4
4.1 Existence and Rights . . . . . . . . . . . . . . . . . . . 4
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Subsidiaries, Other Investments . . . . . . . . . . . . . . 6
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 No Violation . . . . . . . . . . . . . . . . . . . . . . . 6
4.7 Compliance with Laws, Instruments, Etc . . . . . . . . . . 6
4.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.9 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF HOLDINGS . . . . . . . 7
5.1 Registration . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Investment Purposes . . . . . . . . . . . . . . . . . . . . 7
5.3 Accredited Investor . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI. ADDITIONAL PROVISIONS . . . . . . . . . . . . . . . . . 7
6.1 Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . 7
6.2 Successors and Assigns . . . . . . . . . . . . . . . . . . 8
6.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4 No Waiver, Remedies Cumulative . . . . . . . . . . . . . . 8
6.5 Amendments and Waivers . . . . . . . . . . . . . . . . . . 9
6.6 Mutilated or Missing Certificates . . . . . . . . . . . . . 9
6.7 Integration . . . . . . . . . . . . . . . . . . . . . . . . 9
6.8 Separability . . . . . . . . . . . . . . . . . . . . . . . 9
6.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 9
6.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 9
Schedules
Schedule 4.3(a) Capitalization
Schedule 4.3(b) Securities Agreements
Schedule 4.5 Description of Litigation
Schedule 4.8 Brokers or Finders
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT is made and entered into as of this
13th day of March, 1997, by and among GreenGrass Holdings, a Delaware
general partnership ("Holdings"), and Swing-N-Slide Corp., a Delaware
corporation ("Company").
RECITALS
WHEREAS, the Company, or its subsidiary Newco, Inc., a Wisconsin
corporation ("Newco") will as of the date hereof enter into a Stock
Purchase Agreement (the "Purchase Agreement") for the purchase of all
shares of the common stock of GameTime, Inc., a Alabama corporation
("GameTime") (such common stock is referred to herein as the "GameTime
Securities");
WHEREAS, in order to finance the purchase by the Company or
Newco of the GameTime Securities and/or to refinance Newco's indebtedness
pursuant to the terms and conditions of the Commitment Letter (as defined
herein), the Company has offered to Holdings to make an investment in the
Company on the terms and conditions contained herein; and
WHEREAS, subject to the covenants and conditions contained
herein, Holdings desires to make such investment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged,
IT IS HEREBY AGREED AND STIPULATED AS FOLLOWS:
AGREEMENT
ARTICLE I. PURCHASE OF SECURITIES BY HOLDINGS
1.1 Issuance of Shares. Subject to the terms, covenants and
conditions hereof, at the Closing, the Company will issue and sell to
Holdings and Holdings will purchase from the Company the Purchased Shares.
The "Purchased Shares" means 1,087,405 shares of the Company's common
stock, par value $.01, ("Common Stock") purchased by Holdings on the
Closing Date, determined by dividing $5,000,000 by the Estimated Share
Price. The "Estimated Share Price" means $4.5981, being the average of
the daily closing bid price per share of Common Stock for each of the 20
consecutive Trading Days (weighted for volume on each such Trading Day)
commencing 24 Trading Days prior to the Closing Date. "Trading Day" means
a day on which the principal national securities exchange on which the
Common Stock is listed or admitted to trading is open for the transaction
of business.
1.2 Issuance of Bridge Note. Subject to the terms, covenants
and conditions hereof, at the Closing, the Company will sell to Holdings
and Holdings will purchase from the Company a Bridge Note in the principal
amount of $2,500,000 due on the earlier of December 31, 1997 or as such
time as the Company shall have received the proceeds of the Rights Shares
(as defined herein) and Holdings shall have purchased the Remaining Rights
Shares (as defined herein) (the "Bridge Note"). The Bridge Note will be
dated as of the Closing Date and will contain such terms and provisions as
are set forth in the form attached hereto as Appendix A, which such terms
and conditions are incorporated by reference herein.
1.3 Issuance of Stock Purchase Warrants. Subject to the terms,
covenants and conditions hereof, at the Closing, the Company will grant to
Holdings a Stock Purchase Warrant allowing Holdings to purchase 50,000
shares of Common Stock (the "Warrant") pursuant to the terms and
conditions set forth therein. The Warrant will be dated as of the Closing
Date and will contain such terms and conditions as set forth in the form
attached hereto as Appendix B, which such terms and conditions are
incorporated by reference herein. The Warrant will be issued to Holdings
as a fee for the loan provided to the Company and Holdings under the
Bridge Note.
1.4 Consideration for Shares. The aggregate purchase price to
be paid by Holdings at the Closing for the Purchased Shares and the
Additional Shares, if any, issued pursuant to Section 1.6 herein will be
$5,000,000. The purchase price will be paid by wire transfer of same day
funds to the Company's account upon receipt by Holdings of the Purchased
Shares.
1.5 Consideration for Bridge Note. The purchase price to be
paid by Holdings at the Closing for the Bridge Note will be $2,500,000.
The purchase price will be paid by wire transfer of same day funds to the
Company's account upon receipt by Holdings of the Bridge Note, duly
executed and in proper form.
1.6 Additional Shares; Dilution Adjustment. If the Final
Calculated Price is less than the Estimated Share Price, the Company will
issue to Holdings, immediately upon determination of the Final Calculated
Price, a number of additional shares of Common Stock ("Additional
Shares"). The number of Additional Shares issued to Holdings pursuant to
this Section 1.6 will be equal to the difference between (i) the quotient
of 5,000,000 divided by the Final Calculated Price and (ii) the number of
Purchased Shares purchased by Holdings pursuant to Section 1.1 herein.
The "Final Calculated Price" shall have the meaning set forth in the
Warrant. The "Announcement Date" means the day the Company publicly
announces the closing of Company's or Newco's acquisition of the GameTime
Securities by the filing of a Form 8-K with the Securities and Exchange
Commission.
1.7 Rights Offering. The Company shall use its best efforts to
file, not later than 90 days after the Closing Date, a registration
statement with the Securities and Exchange Commission covering an offering
of Rights Shares to stockholders of the Company other than Holdings (the
"Rights Offering"). Under the Rights Offering each stockholder other than
Holdings will be given the right, on the basis of the number of shares of
Common Stock held by such stockholder as of a record date set by the Board
of Directors of Company, to purchase his pro rata share of the Rights
Shares for cash at a price equal to the Final Calculated Price. "Rights
Shares" means the number of shares of Common Stock offered under the
Rights Offering determined by dividing 2,500,000 by the Final Calculated
Price. Upon effectiveness of such registration statement, the Company
will use its best efforts to cause the Company to consummate the Rights
Offering in accordance with its terms and the requirements of applicable
law. Upon the conclusion of the Rights Offering, Holdings agrees to
purchase any Rights Shares not purchased by the other shareholders of the
Company under the Rights Offering (the "Remaining Rights Shares") at a
price per share equal to the Final Calculated Price. The purchase price
for the Remaining Rights Shares will be paid through a reduction of any
principal outstanding under the Bridge Note on a dollar-for-dollar basis.
1.8 Listing. The Company covenants and agrees that it will, as
soon as practicable, list the Purchased Shares, Additional Shares, the
shares of Common Stock issuable under the Bridge Note and the shares of
Common Stock issuable upon exercise of the rights represented by the
Warrant on the American Stock Exchange, in accordance with and to the
extent permitted by the Securities Act of 1933, as amended, any applicable
state securities laws and the rules or regulations of the American Stock
Exchange.
1.9 Loan Account. The Company shall place all proceeds of the
Rights Offering into a segregated account and shall not comingle such
proceeds with any other assets of the Company (the "Loan Account").
Company shall use the proceeds of the Rights Offering solely to prepay any
principal outstanding under the Bridge Note.
ARTICLE II. THE CLOSING
Subject to the conditions hereof, the transactions described
herein will be closed (the "Closing") simultaneously with the purchase by
Company or Newco of the GameTime Securities (the "Closing Date") and the
refinancing of Newco's indebtedness pursuant to the terms and conditions
of the Commitment Letter.
ARTICLE III. CONDITIONS TO CLOSING
3.1 Conditions. All of the obligations of Holdings to purchase
the Purchased Shares and the Bridge Note described in this Investment
Agreement are subject to the performance by the Company of all the terms,
covenants and conditions on its part to be performed hereunder on or prior
to the Closing Date and to the satisfaction of the following additional
conditions precedent:
(a) Proceedings and Documents. All proceedings taken or
to be taken in connection with the transactions contemplated by
this Investment Agreement to be consummated at, or prior to, the
Closing and all other documents, schedules, exhibits, opinions
and certificates in connection therewith shall each be
satisfactory in form and substance to Holdings, and Holdings
shall have received copies of all such documents, including a
certified copy of resolutions approving the transaction, and all
other documents which Holdings has requested in connection with
said transactions and of all proceedings in connection
therewith, in form and substance satisfactory to Holdings.
(b) Issuance of Shares. The Company shall have issued the
Purchased Shares.
(c) Issuance of Bridge Note. The Company shall have
executed and delivered the Bridge Note.
(d) No Material Adverse Change. No event or circumstance
shall have occurred after September 30, 1996 which individually
or in the aggregate has had or would reasonably be expected to
have a material adverse effect on Company's or GameTime's
business, financial condition or prospects.
(e) Purchase of GameTime Securities. Company or Newco
shall have purchased the GameTime Securities from GameTime
pursuant to the Purchase Agreement and GameTime shall have
merged into Newco pursuant to the Plan of Merger dated March 13,
1997.
(f) Newco Refinancing. Newco shall have refinanced its
indebtedness as contemplated by the Commitment Letter between
Target and Fleet Bank dated January 31, 1997.
(g) Securities Purchase Agreements. Newco shall have
consummated the transactions contemplated by the Securities
Purchase Agreements by and among Company, Massachusetts Mutual
Life Insurance Company, MassMutual Corporate Investors,
MassMutual Participation Investors and MassMutual Corporate
Value Partners Limited (collectively, the "MassMutual Entities")
dated March 13, 1997.
(h) Holdings Investment Agreement. GreenGrass Capital
LLC, a Delaware limited liability company ("Capital"),
GreenGrass Capital II LLC, a Delaware limited liability company
("Capital II") and GreenGrass Management LLC, a Delaware limited
liability company ("Management") and Holdings shall have entered
into an Investment Agreement dated March 13, 1997 (the "Holdings
Investment Agreement").
(i) Admission of Capital II as a Partner of Holdings.
Capital II, Capital, and Management shall have entered into an
Amended and Restated Partnership Agreement of Holdings pursuant
to the Holdings Investment Agreement.
(j) Opinion. Holdings shall have received an opinion of
Xxxxx & Xxxxxxx dated the Closing Date, upon which the members
of Capital II may rely, as to the formation and good standing of
the Company, its authorization, execution and enforceability of
all agreements, and such other customary matters as requested by
Holdings or the members of Capital II in form and substance
satisfactory to Holdings and each member of Capital II.
3.2 Satisfaction of Conditions. Closing of the transaction
contemplated hereby shall constitute satisfaction of all conditions
contained in this Article and such conditions shall terminate effective
with completion of Closing.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF COMPANY
In order to induce Holdings to enter into this Investment
Agreement and notwithstanding any investigation made by or on behalf of
Holdings, Company makes the following representations and warranties as of
the date hereof and as of the Closing Date, each of which is independently
material and relied upon by Holdings:
4.1 Existence and Rights. Company is a Delaware corporation
duly organized and validly existing under the laws of the State of
Delaware. Company has all power and adequate authority, rights, licenses
and franchises to own and operate its properties and assets and carry on
the business to be conducted by it. Company is duly qualified and in good
standing in each state or other jurisdiction where failure to so qualify
would have a material impact on the conduct of its business. Company has
the power and adequate authority to enter into and perform this Investment
Agreement. Company has the power and adequate authority to consummate the
transactions contemplated by the Purchase Agreement.
4.2 Authorization.
(a) The execution and delivery of this Investment
Agreement, the consummation of the transactions contemplated
herein and the performance of each of the terms, covenants and
agreements contained or referred to herein by Company (including
the issuance of the Purchased Shares, any Additional Shares, the
Bridge Note, the Warrant and any Remaining Rights Shares) is not
in contravention of, or in conflict with, any law, ordinance or
regulation known to the Company or any term or provision of its
Certificate of Incorporation or By-laws and the execution and
performance of this Investment Agreement is duly authorized and
does not require the consent or approval of any governmental
body or other regulatory authority except for any approvals and
consents necessary to the completion of the Rights Offering and
the listing of the Company's Common Stock. All action on the
part of Company, and all necessary or appropriate approvals and
consents for the due execution, delivery and performance of this
Investment Agreement, have been duly and validly obtained or
taken. No right of Company is impaired or infringed upon by the
execution and/or performance of this Investment Agreement. This
Investment Agreement and all other documents, instruments and
agreements of Company in connection therewith constitute, and on
the Closing, will constitute, the valid and binding obligations
of Company, as the case may be, enforceable against it in
accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, moratorium and similar
laws of general application affecting creditors' rights, and
except as enforcement may be limited by general equitable
principles.
(b) The Purchased Shares, all shares issuable pursuant to
the Bridge Note and all shares issuable upon the exercise of the
Warrant, when issued, and the Additional Shares and the
Remaining Rights Shares, if issued, to Holdings as contemplated
hereby, will be duly and validly authorized and issued and will
be fully paid and nonassessable.
(c) The Purchase Agreement has been duly authorized,
executed and delivered by Company, and to the best knowledge of
Company, by GameTime, and constitutes the valid and binding
obligations of Company and GameTime enforceable against them in
accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or similar laws of general
application effecting creditors' rights, and except as
enforcement may be limited by general equitable principles.
(d) The Bridge Note and Warrant have been duly authorized,
executed and delivered by Company and constitute the valid and
binding obligations of Company enforceable against it in
accordance with their terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or similar laws of
general application effecting creditors' rights, and except as
enforcement may be limited by general equitable principles.
4.3 Capitalization.
(a) Following the purchase of the Purchased Shares by
Company and immediately after the Closing, the capitalization of
the Company will be as set forth in Schedule 4.3(a). All of the
issued and outstanding shares of capital stock of the Company
set forth on Schedule 4.3(a) have been duly authorized and are
validly issued, fully paid and nonassessable.
(b) The Company does not have, and on the Closing Date
will not have, any outstanding agreements of any kind relating
to the sale, transfer or assignment of any securities of Company
except as provided herein or as set forth in Schedule 4.3(b).
4.4 Subsidiaries, Other Investments. Company has no
subsidiaries other then Newco or other investment in any other entity,
except for the GameTime Securities purchased pursuant to the Purchase
Agreement.
4.5 Litigation. Except for those matters set forth in Schedule
4.5, there is no litigation or other proceeding (including any
administrative or government proceedings or investigations) pending or, to
the knowledge of Company, threatened against or affecting Company or the
assets of Company and Company is not in default with respect to any order,
writ, injunction, decree or demand of any court or other governmental or
regulatory authority. There is no currently pending temporary restraining
order or injunction against the consummation of the transactions
contemplated hereby or by the Purchase Agreement.
4.6 No Violation. Neither the execution nor the delivery of
this Agreement or the Purchase Agreement, nor the consummation of the
transactions contemplated hereby, nor the fulfillment of the terms hereof,
will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, the Certificate of
Incorporation or By-laws of Company, any law or governmental regulation
applicable to Company or of any agreement, instrument, lien, charge or
encumbrance under which Company or any of its properties is bound or
obligated.
4.7 Compliance with Laws, Instruments, Etc. Company is not in
violation of any applicable law, statute or regulation of any federal,
state, municipal or other governmental or quasi-governmental agency,
board, bureau or body or in violation or default in any material respect
with respect to any order, license, regulation or demand of any
governmental agency, or in default in any material respect under any
instrument under which it is bound. Company has complied with and
performed each and every material obligation required to be complied with
and performed pursuant to each instrument and other agreement to which it
is a party or by which it or its assets are bound or obligated, and there
is no material default under any such instrument or other agreement now
existing, or which would come into existence with the passage of time, the
giving of notice, or both.
4.8 Brokers. Company has not incurred any liability for any
finders' fees, brokerage fees, advisory fees or similar fees or expenses
in connection with entering into the transactions contemplated by this
Investment Agreement except as set forth in Schedule 4.8.
4.9 Disclosure. Neither this Investment Agreement nor any of
the schedules, attachments, written statements, documents, certificates or
other items required hereby contain any untrue statement of a material
fact or omit a material fact necessary to make each such statement
contained herein or therein not misleading.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF HOLDINGS
As an inducement to Company to enter into this Investment
Agreement, Holdings hereby represents, warrants and covenants to and with
Company that:
5.1 Registration. Holdings understands that neither the
Purchased Shares, the Additional Shares, the Bridge Note, the Warrant, the
Common Stock to be issued upon exercise of the Warrant nor the Common
Stock to be issued under the Bridge Note (the "Non-Registered Securities")
will be registered under the Securities Act of 1933, as amended
("Securities Act"), that the offer and sale of such securities will be
exempt from such registration under Sections 3(b) and/or 4(2) of the
Securities Act and/or Regulation D thereunder and that such shares will
not be registered under any state securities laws ("Blue Sky Laws") in
reliance upon certain exemptions therefrom, based in part upon Holdings'
representations made herein.
5.2 Investment Purposes. Any purchase by Holdings of the Non-
Registered Shares will be for investment purposes only and for its own
account, and not with a view to resell or otherwise to distribute the Non-
Registered Shares and it will not sell or otherwise distribute the Non-
Registered Shares without registration under the Securities Act and
applicable Blue Sky Laws or pursuant to an applicable exemption therefrom.
5.3 Accredited Investor. The investments represented by this
Investment Agreement are financially suitable to Holdings in that, among
other things, the Investor is an "accredited investor" as defined under
the Securities Act and Holdings's financial condition is more than
adequate, and will continue for the foreseeable future to be more than
adequate, to bear the substantial economic risks of such investments.
Holdings has sufficient knowledge and experience in investment, tax and
business matters and is aware of the intended use of the proceeds of such
investments.
ARTICLE VI. ADDITIONAL PROVISIONS
6.1 Expenses; Indemnity.
(a) Company shall pay or reimburse Holdings for all
reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) paid or
incurred by Holdings in connection with the investment
contemplated hereby and, before and after judgment, in
enforcing, protecting or preserving its rights under this
Investment Agreement and all other documents required hereunder
or thereunder.
(b) Company agrees to indemnify Holdings against any and
all losses, claims, damages, liabilities and expenses,
(including, without limitation, reasonable attorneys' fees and
expenses) incurred by Holdings arising out of, in any way
connected with, or as a result of (i) any acquisition or
attempted acquisition of securities or other assets of another
person or entity by Company other than the GameTime Securities
pursuant to the Purchase Agreement, (ii) any claim, litigation,
investigation or proceedings related to the operations of
Company or to the purchase of securities of GameTime, whether or
not Holdings is a party thereto; provided, however, that such
indemnity shall not apply to any such losses, claims, damages,
liabilities or related expenses arising from (A) any unexcused
breach by Holdings of its obligations under this Investment
Agreement or (B) any commitment made by Holdings to a person
other than Company which would be breached by the performance of
Holdings's obligations under this Investment Agreement.
Notwithstanding the foregoing, a Holdings shall in all instances
be liable for its acts or omissions in breach of this Investment
Agreement or any acts or omissions which constitute fraud,
willful misconduct, or breach of fiduciary duty.
(c) The foregoing agreements and indemnities shall remain
operative and in full force and effect regardless of termination
of this Investment Agreement, the consummation of or failure to
consummate the transactions contemplated by this Investment
Agreement or any amendment, supplement, modification or waiver
hereof, the return of any funds invested hereunder, the
invalidity or unenforceability of any term or provision of this
Investment Agreement, or any other document required hereunder,
any investigation made by or on behalf of Holdings or the
content or accuracy of any representation or warranty made under
this Investment Agreement or any other document required
hereunder.
6.2 Successors and Assigns. This Investment Agreement shall be
binding upon and inure to the benefit of Holdings and the Company and
their respective successors and assigns, and any subsequent holder of any
Common Stock issued hereunder.
6.3 Notices. All notices, demands, and communications provided
for herein or made hereunder shall be delivered, or mailed first class
with postage prepaid, or telecopied, addressed in each case as follows,
until some other address shall have been designated in a written notice
given in like manner, and shall be deemed to have been given or made when
so delivered or one business day after being mailed or telecopied:
(a) if to the Company:
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
(b) if to Holdings:
c/o Glencoe Investment Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
A copy of any such notice, demand or communication shall be given to Xxxxx
& Xxxxxxx, Suite 3800, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxxxxx X. Xxxx.
6.4 No Waiver, Remedies Cumulative. No delay on the part of
Holdings in exercising any right, power or privilege under this Investment
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder or thereunder
preclude other or further exercise thereof, or the exercise of any other
right, power or privilege. The rights and remedies provided in this
Investment Agreement are cumulative and are in addition to all rights or
remedies which Holdings and such other holders otherwise may have in law
or in equity or by statute or otherwise. Without limiting the generality
of the foregoing, nothing in this Investment Agreement shall be deemed to
preclude or be in lieu of any right or remedy which Holdings may have in
law or in equity or by statute or otherwise against the Company or any
other person based upon any fraud.
6.5 Amendments and Waivers. This Investment Agreement may not
be changed or amended orally, and no waiver hereunder may be oral, but any
change or amendment hereto or any waiver hereunder must be in writing and
signed by the party or parties against whom such change, amendment or
waiver is sought to be enforced.
6.6 Mutilated or Missing Certificates. In case any certificate
or other document issued to Holdings hereunder evidencing the Purchased
Shares, the Warrant, the Remaining Rights Shares, the Additional Shares,
the shares issued under the Bridge Note or the shares issued upon the
exercise of the Warrant shall be mutilated, lost, stolen, or destroyed,
the Company shall issue and deliver a new certificate or other document of
like tenor representing an equivalent right or interest in exchange and
substitution for such certificate, and the Company shall cancel such
mutilated, lost, stolen or destroyed certificate or other document, but
only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction; the affidavit of the holder of record, without bond
but with promise of indemnity, shall be satisfactory evidence of such
loss, theft or destruction. The applicant for such replacement instrument
or certificate shall also comply with such other reasonable regulations as
the Company may prescribe.
6.7 Integration. This Investment Agreement, the appendices and
exhibits annexed hereto and documents, schedules and certificates referred
to herein and all other documents delivered at the Closing contain the
entire agreement between the Company and Holdings with respect to the
transactions contemplated herein; and none of the parties shall be bound
by nor shall be deemed to have made any representations and/or warranties
except those made by such party herein and therein.
6.8 Separability. If any provision of this Investment
Agreement is held for any reason to be unenforceable by a court of
competent jurisdiction, the remainder of this Investment Agreement shall,
nevertheless, remain in full force and effect in such jurisdiction.
6.9 Headings. The headings in this Investment Agreement are
intended solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement.
6.10 Governing Law. This Investment Agreement is made in the
State of Delaware and shall be governed by and construed in accordance
with the internal laws of the State of Delaware (without regard to any
rules or principles of conflict of laws that might result in the
application of the laws of any other jurisdiction).
6.11 Counterparts. This Investment Agreement may be executed in
one or more counterparts. Each such counterpart shall be considered an
original and all of such counterparts shall constitute a single agreement
binding all the parties as if all had signed a single document.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
executed as of the day and year first above written.
GREENGRASS HOLDINGS
By: GreenGrass Capital LLC
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Attorney-in-Fact
SWING-N-SLIDE CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, President
Schedule 4.3(a)
Capitalization
Description of authorized and outstanding shares of capital
stock (after giving effect to this Agreement and the transactions
described in Article III hereof) of each Company:
1. Swing-N-Slide Corp.
(a) Description of shares (authorized, issued, outstanding, etc.) *
(i) Common Stock ($.01 par value); 25,000,000 shares
authorized; 10,691,406 shares issued of which
3,600,000 are treasury shares and 7,091,406 are
outstanding.
(ii) Class B Common Stock ($.01 par value); 1,750,000
shares authorized; no shares issued or outstanding.
(iii) Preferred Stock ($.01 par value); 5,000,000 shares
authorized, no shares issued or outstanding.
* The description of the shares of the Company provided in
1(a) above is based on the following assumptions:
1. Assuming a purchase price of $4.5981 per share,
1,087,406 shares of common stock of the Company will be issued
to GreenGrass Holdings and other public stockholders (if any
Rights Shares are purchased by such public stockholders) by the
Company pursuant to the Investment Agreement dated as of March
13, 1997 between GreenGrass Holdings and the Company (the
"Investment Agreement"). In the event that the purchase price
is less than $4.5981 per share, the number of shares of the
Company's common stock to be issued to GreenGrass Holdings and
the public stockholders, shall be increased proportionately (but
shall in no event be greater than 1,250,000 shares).
2. None of the Warrants to purchase 50,000 shares of
common stock of the Company to be issued to GreenGrass Holdings
in connection with the Investment Agreement will have been
exercised.
3. No shares of common stock of the Company have been
issued under the Rights Offering.
4. No shares of common stock of the Company have been
issued to Holdings by the Company pursuant to the Bridge Note.
5. None of the Warrants issued in connection with the
MassMutual Entities Securities Purchase Agreements will have
been exercised.
Number and Class
and Percentage of
(b) Name of Each 5% Shares Owned by Each
Holder of Shares Holder **
GreenGrass Holdings 4,674,870 shares of common
stock;
65.92%
** The number and percentage of shares owned by Holdings
provided in 1(b) above is based on the assumptions that
Holdings will purchase 1,087,406 shares of common stock of
the Company at a rate of $4.5981 per share under the
Investment Agreement. Please note that the number and
percentages of shares may change depending on the
conversion rates and the number of shares purchased by
public stockholders under the Rights Offering, or for other
similar reasons.
2. Newco, Inc.
a. Description of shares (authorized, issued, outstanding,
etc.)
Common Stock (no par value); 1,000 shares authorized, 100
shares issued and outstanding.
Number and Class
Name of Each and Percentage of
x. Xxxxxx of Shares Shares Owned by Each
Holder
The Company 100%
Schedule 4.3(b)
Securities Agreements
1. All outstanding securities convertible into or exercisable or
exchangeable for any shares of the Company or Newco or outstanding
agreements for the purchase from, or sale or issuance by, the Company or
Newco of any of its shares or any securities convertible into or
exercisable or exchangeable for such shares.
a. Transaction Agreement dated January 4, 1996 between the
Company and GreenGrass Holdings, as amended by that certain
Amendment No. 1 to Transaction Agreement dated February 12,
1996 (the "Transaction Agreement").
b. $5,322,804 of 10% Convertible Subordinated Debentures
issued by the Company to Holdings pursuant to the
Transaction Agreement.
Assuming that all of the $5,322,804 of Convertible
Subordinated Debentures described in this paragraph (b) are
converted at the rate of $4.80 per share, the Company will
need to issue 1,108,918 shares of common stock in
connection with the conversion of such debentures.
c. Options of directors, officers and key employees of the
Company and/or Newco to purchase 322,434 shares of common
stock of the Company pursuant to the Company's 1992 and
1996 stock option plans. The number of shares provided in
this paragraph does not include any adjustments that may be
made to the number of such shares under the stock option
plans.
d. Agreement to permit certain officers and key employees of
the Company and/or Newco to take a portion of their annual
bonus in shares of common stock of the Company.
e. Agreement in connection with the settlement of the Sirota
lawsuit to have Holdings purchase $5,000,000 of Company
equity as provided for in this Investment Agreement.
f. Agreement to permit certain public stockholders of the
Company to purchase up to $3,333,333 of 10% Convertible
Subordinated Debentures issued by the Company pursuant to
partial settlement of the Xxxxxxxx lawsuit. Assuming that
all of the $3,333,333 of Convertible Subordinated
Debentures described in this paragraph (i) are converted at
the rate of $4.70 per share, the Company will need to issue
709,220 shares of common stock with respect to such
debentures.
2. All persons entitled to any rights with respect to the
registration of any shares or other securities of the Company or Newco
under the Securities Act (or the securities laws of any other
jurisdiction).
a. Amended and Restated Registration Rights Agreement dated
March 13, 1997 between Swing-N-Slide Corp. and GreenGrass
Holdings.
b. Registration Statement of Swing-N-Slide Corp. filed May 16,
1996 (but not yet effective) relating to the public
offering of 10% Convertible Subordinated Debentures in the
principal amount of $3,333,333 due October 15, 2004.
Schedule 4.5
Description of Litigation
The Company has been named as a defendant in a class action
pending in the Court of Chancery of the State of Delaware, New Castle
County entitled Xxxxxx Xxxxxxxx v. Swing-N-Slide Corp., Xxxxxx X. Xxxx,
Xxxxxxx X. Xxxxxxx Xxxxxx X. Code, Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxx, Green Grass
Holdings and GreenGrass Management, LLC, Case No. 14239. The complaint
alleges that the Company's purchase of 3.6 million of outstanding shares
of common stock, which was completed in January 1995, was the result of a
deceptive and manipulative plan on the part of the individual defendants
to enrich themselves. The plaintiff also challenges on similar grounds
the purchase by Holdings of approximately 3.6 million shares of the
Company's common stock and other securities pursuant to a tender offer.
The relief sought includes the imposition of a constructive trust on all
proceeds of the repurchase received by the defendants as well as various
non-monetary forms of relief. The parties are currently conducting
discovery.
As a settlement proposal for the above referenced class
action, the Company has offered to pay the plaintiffs $300,000 for their
legal fees and the right to purchase $1,000,000 in convertible debentures
which are arguably valued at $1,000,000 in excess of their purchase price.
The Company anticipates that the $300,000 for legal fees will be covered
by its insurance. The plaintiffs have tentatively counter-offered with a
request for $400,000 in legal fees and a grant of transferable warrants
rather than debentures. Such a counter-offer is currently unacceptable to
the Company and the parties are continuing to negotiate.
There is a related case pending in Rock County, Wisconsin
Circuit Court entitled Sirota v. Swing-N-Slide Corp., Case No. 95-CV-726.
This is a derivative action filed on November 17, 1995, by Sirota on
behalf of himself and the Company against Xxxxxx Xxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxx X. Code, Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxx
X. Xxxxxxxx, Xxxxx X. Xxxxxxx, Newco, Inc. and CHS. The complaint raises
allegations similar to those in the Xxxxxxxx action, to wit, that the
defendants breached their fiduciary duties to the shareholders and the
Company as a result of the self-tender offer in November 1994, but alleges
that the breaches damaged the Company, as a whole, as opposed to
individual shareholders. It is believed at this time that the parties
have reached a mutually satisfactory resolution of this case and have
agreement on the principal terms of such resolution. A draft Stipulation
of Settlement containing the proposed settlement terms is available upon
request.
The Company and Newco were parties to a lawsuit brought in
the Federal District Court for the District of Kansas entitled Sperry
Marketing, Inc. v. Newco, Inc. and Swing-N-Slide Corp., Case No. 96-2155-
GTV. Sperry Marketing, Inc., a former Newco distributor, alleged that the
Company improperly reduced Sperry's commission rate and territory from
1992-1995 in violation of the distributorship contract between the
parties. On February 14, 1997, the Court granted the Company's and
Newco's Motion for Summary Judgment dismissing the action on the merits.
The plaintiff has moved for reconsideration of the Court's decision. In
the event the plaintiff is unsuccessful with the motion for
reconsideration, the plaintiff may appeal, but the Company believes that
the judgment of dismissal will be upheld on appeal.
In addition, the Company or Newco are subject to the
attached workers compensation claims and product liability claims attached
as Exhibit A.
In the ordinary course of its business, the Company or
Newco may also receive garnishment and similar notices with respect to its
or their employees.
Other than as described in this Exhibit 4.5, the Company
has no notice or knowledge of any pending or threatened claim, action,
proceeding, or investigation.
Schedule 4.8
Brokers, Finders or Advisors
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Glencoe Investment Corporation
Xxxxx Capital Management Incorporated
Xxxx Xxxxx & Co.
