Exhibit 10.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT, dated as of November 1, 2002, is by and among
U.S. Home & Garden Inc. ("USHG"), a Delaware corporation, Easy Gardener, Inc.
("EGI"), a Delaware corporation, LEG Partners Debenture SBIC, L.P., a Delaware
limited partnership, LEG Partners III SBIC, L.P., a Delaware limited
partnership, LEG Co-Investors, LLC, a Delaware limited liability company, 555
Madison Investors II LLC, f/k/a LEG Co-Investors II, LLC, a Delaware limited
liability company, 555 Madison Investors, LLC, a Delaware limited liability
company (the preceding five entities to be referred to herein as the
"Purchasers"), Xxxxx Associates LLC, a New York limited liability company
("Xxxxx LLC") and Xxxxx Associates Incorporated, a New York corporation ("Xxxxx
Inc.").
WHEREAS, as of November 15, 2001, USHG, EGI and the Purchasers (as well as
LEG Partners III, L.P., a Delaware limited partnership that has since such date
transferred all of its right, title and interest as a Purchaser to LEG Partners
Debenture SBIC, L.P.) entered into the Note and Warrant Purchase, Guaranty and
Security Agreement (the "Note Purchase Agreement"), joined in with respect to
certain parts thereof by certain subsidiaries of USHG and EGI (collectively,
with USHG and EGI, the "USHG Entities"), pursuant to which EGI has issued to the
Purchasers $5,993,151 principal amount of 16% Series A Senior Subordinated Notes
and $856,164 principal amount of 14% Series B Senior Subordinated Notes
(collectively, the "Notes"); and
WHEREAS, as of November 15, 2001, USHG and the Purchasers entered into a
Warrant Agreement (the "Warrant Agreement"), pursuant to which USHG issued to
the
Purchasers certain warrants (the "Warrants") to purchase shares of common stock,
par value $.001 per share ("Common Stock") of USHG; and
WHEREAS, as of November 15, 2001 USHG and the Purchasers entered into an
Option Agreement (the "Option Agreement"), pursuant to which USHG issued to the
Purchasers options (the "Options") to purchase certain 9.4% Cumulative Trust
Preferred Securities (the "Trust Preferred Securities") of U.S. Home & Garden
Trust I (the "Trust") owned by USHG, which Trust Preferred Securities (including
the Trust Preferred Securities owned by USHG and transferable by USHG to the
Purchasers under the Options) are subject to the terms of that certain Amended
and Restated Trust Agreement dated as of April 17, 1998 among USHG, Wilmington
Trust Company and the Administrative Trustees named therein (the "Trust
Agreement"); and
WHEREAS, USHG, EGI and certain companies affiliated with them propose to
enter into an Asset Purchase Agreement (as defined below) with Easy Gardener
Products Ltd., a Texas limited partnership ("EGP"), pursuant to which certain
assets of USHG and EGI and their subsidiaries are to be sold to EGP; and
WHEREAS, the Transaction (as defined in Section 1 hereof) requires the
consent of the Purchasers pursuant to the Note Purchase Agreement, the Warrant
Agreement, the Option Agreement and the other documents entered into among such
parties in connection therewith (the Note Purchase Agreement, the Notes, the
Warrant Agreement, the Warrants, the Option Agreement, the Options, the
Consulting Agreement dated as of November 15, 2001, entered into among USHG, EGI
and Xxxxx LLC (as such Consulting Agreement shall be amended and restated as of
the date hereof and in the form attached hereto as Exhibit 17, the "Consulting
Agreement"), and all documents entered into in connection therewith shall be
referred to
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collectively herein as the "Xxxxx Documents"); and
WHEREAS, USHG approached the Purchasers, Xxxxx Inc. and Xxxxx LLC
(collectively, the "Xxxxx Parties") to consent to the foregoing Transaction; and
WHEREAS, Purchasers have alleged that certain Events of Default have
occurred under the Xxxxx Documents (the "Alleged Defaults"); and
WHEREAS, the Xxxxx Parties are willing to consent to the Transaction and
revise the Xxxxx Documents, effective upon the Settlement Closing (as defined
below), pursuant to the terms and conditions set forth in this Settlement
Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Consent to Transaction.
1.1 Anything contained in the Xxxxx Documents to the contrary
notwithstanding but subject to the satisfaction of all conditions set forth in
Section 1.2 hereof, the Purchasers, Xxxxx Inc. and Xxxxx LLC, on their own
behalf and on behalf of their predecessors, successors and assigns, hereby
irrevocably agree and consent to:
(a) the entering into by USHG, EGI and certain companies affiliated
with them of an asset purchase agreement with EGP substantially as
described in the draft of the asset purchase agreement (the "Draft APA"),
that was attached to the Proxy Statement (the "Proxy Statement") filed by
USHG with the Securities and Exchange Commission on August 2, 2002 (the
"Asset Purchase Agreement"). The Asset Purchase Agreement, when executed,
shall provide that the following shall be express conditions precedent to
the obligations of USHG and its affiliates, and EGP and its affiliates,
thereunder:
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(i) EGP shall assume all the obligations of USHG under the Trust
Agreement, the Indenture (as such term is defined in the Trust
Agreement) and the Debentures (as such term is defined in the Trust
Agreement),
(ii) EGP shall acquire the Trust Preferred Securities owned by
USHG, and assume all of USHG's obligations associated with the Trust
Preferred Securities owned by USHG,
(iii) the Settlement Closing shall occur, and
(iv) in connection with the Settlement Closing, EGP shall deliver
to the Purchasers the Amended and Restated Option Agreement-A (as
defined below), the Option Agreement-B (as defined below) and the
respective Settlement Options (as defined below) issued thereunder,
all as more fully set forth in this Settlement Agreement, including,
without limitation, Section 4 hereof.
The Asset Purchase Agreement may only contain such changes and
modifications to the Draft APA as are approved by USHG and EGP and that do
not materially adversely affect the Purchasers' rights and benefits
(including their economic rights and benefits) under this Settlement
Agreement, the Xxxxx Documents, the Settlement Option Agreements (as
defined below), and the Amended and Restated Warrant Agreement (as defined
below). The parties hereto agree that a change in purchase price that
results in the receipt by USHG of immediately available cash proceeds under
the Asset Purchase Agreement (net of applicable transaction expenses) of no
less than $16.5 million (less any adverse effect of the Weed Wizard
litigation and United States Consumer Product Safety Commission
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complaint currently pending, less any default interest payments paid to the
Purchasers or their affiliates under the Xxxxx Documents and less any
expenses incurred by the Purchasers or their affiliates paid by the USHG
Entities under the Xxxxx Documents or this Settlement Agreement, whether or
not contested) will be deemed not to have materially adversely affected the
Purchasers, and
(b) consummation of the transaction contemplated by the Asset Purchase
Agreement (and all related agreements and documents) and such other actions
taken by USHG and/or EGI pursuant thereto as shall be necessary to
consummate such transaction, it being expressly agreed to by the parties
hereto that a transaction that satisfies the provisions outlined in Section
1.1(a) above shall be referred to herein as the "Transaction".
1.2 The USHG Entities hereby expressly acknowledge and agree that (i) the
consent set forth in Section 1.1 is required as a condition precedent to
consummation of the Transaction and (ii) such consent is expressly conditioned
upon the satisfaction of each of the following conditions (which, if they are
satisfied on the same day, shall be deemed to have occurred contemporaneously):
(a) other than the effectiveness of the consent set forth in Section 1.1,
the Transaction shall have been consummated (the "Transaction
Closing"); and
(b) on or prior to the Transaction Closing the following shall have
occurred:
(i) the amounts payable to the Purchasers under Section 3 hereof
shall have been paid in accordance with the terms of such Section
3;
(ii) the Xxxxx Parties shall have received the Deferred Prepayment
Amount (as defined below) as provided under Section 2 hereof;
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(iii) USHG shall have delivered to the Purchasers the fully executed
Amended and Restated Warrant Agreement (together with the Amended
and Restated Warrants thereunder) and caused EGP to deliver the
fully executed Settlement Option Agreements (together with the
Settlement Options thereunder) in accordance with Sections 4 and
5 hereof;
(iv) the Purchasers shall have received payment of the balance of
Expenses (as defined below) as set forth in Section 23 hereof;
(v) the Purchasers shall have received payment of all Default
Interest not previously paid hereunder; and
(vi) the Parties shall have exchanged the Settlement Closing Releases.
The satisfaction of all of the foregoing conditions shall be referred to herein
as the "Settlement Closing" and the USHG Entities hereby agree that (i) each of
the foregoing conditions shall be incorporated into the Asset Purchase Agreement
as conditions precedent to consummation of the transactions contemplated
thereunder, either directly or by amendment thereto, and (ii) the Transaction
shall not be consummated unless and until (A) all Obligations (as defined in the
Note Purchase Agreement) due to any of the Xxxxx Parties as of the date of the
Settlement Closing shall have been satisfied in all respects, and (B) all of the
obligations set forth in this Settlement Agreement required to be satisfied as
of the date of the Settlement Closing shall have been satisfied in all respects.
1.3 Upon execution of this Settlement Agreement, each of the USHG Entities
expressly acknowledges and agrees that the Option Agreement is hereby amended as
follows: (i) the Exercise Price (as such term is defined in the Option
Agreement) under the Option Agreement shall be reduced by the fair value of the
amount, on a per security basis, of any
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dividend or other distribution paid or accrued on or subsequent to November 1,
2002 on, or in respect of, the Trust Preferred Securities, including, without
limitation, the 9.4% cumulative Distribution (as defined in the Trust Agreement)
payable thereon and (ii) the term "Expiration Date" set forth in the Option
Agreement shall be amended in its entirety to read: "Expiration Date" shall mean
May 19, 2011 or if such day is not a Business Day, the next succeeding Business
Day; provided, that with respect to any dividend or other distribution accrued
but not paid on or subsequent to November 1, 2002 (and which accrual resulted in
a reduction of the exercise price), and which dividend or other distribution is
then subsequently paid in whole or part (the "Payment"), such Payment shall not
result in a further reduction of the exercise price and to the extent such
Payment is made following the exercise by the Purchasers of any Options under
such Option Agreement, such Payment shall be returned to USHG by Purchasers.
2. Deferred Prepayment Amount.
USHG hereby agrees to pay by wire transfer of immediately available funds
$1.45 million in cash (the "Deferred Prepayment Amount") to Xxxxx LLC and the
Purchasers, provided that $1.4 million of the Deferred Prepayment Amount shall
become payable if and only if the Transaction Closing occurs, as follows:
2.1 $200,000 shall be paid to Xxxxx LLC as a management services fee for
services rendered in connection with this Agreement, $50,000 of which is being
paid contemporaneously with the execution of this Settlement Agreement and
$150,000 of which shall be paid contemporaneously with the Settlement Closing.
2.2 $1.25 million (as may be reduced in accordance with Section 3.2 hereof)
shall be paid to the Xxxxx Parties contemporaneously with the Settlement
Closing, to be allocated among the Xxxxx Parties as shall be directed by Xxxxx
Inc.
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3. Payment of Certain Amounts; Conditional Waiver of Certain Default
Interest; Escrow of Disputed Amounts; Conditional Waiver of Right of First
Refusal
3.1 The Obligations, as defined in the Note Purchase Agreement, including
with respect to the Obligations under the Notes, all principal and interest
thereon and the prepayment fee (which shall equal $312,500), to the extent not
paid earlier, shall be paid upon Settlement Closing (it being understood that
payment of such amounts, if any, shall be in addition to the payment of the
Deferred Prepayment Amount); it being expressly agreed to and understood by the
parties that the obligations of the USHG Entities under the Consulting Agreement
shall survive the Settlement Closing.
3.2 On the earlier to occur of (i) 3:00 p.m. New York time on November 1,
2002 or (ii) the repayment of the Obligations, including with respect to the
Obligations under the Notes, all principal and interest thereon and the
prepayment fee (which shall equal $312,500) (the "Refinancing"), the following
sums shall be paid to Purchasers by wire transfer of immediately available funds
to an account designated by the Purchasers:
(a) The sum of all interest, including default interest determined in
accordance with the Note Purchase Agreement ("Default Interest"), accrued
and owing through such date; and
(b) The sum of all Expenses incurred by the Xxxxx Parties through such
date.
The parties acknowledge and agree that the foregoing amounts shall be enumerated
in a "pay-off" letter to be delivered by the Xxxxx Parties to USHG prior to such
Refinancing. The parties agree that (i) as of September 30, 2002, $242,645 of
Default Interest has accrued under the Notes and is immediately due and payable,
and (ii) additional Default Interest continues to accrue
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under the Notes in accordance with the terms of the Note Purchase Agreement.
Purchasers agree, provided that the USHG Entities shall not have defaulted on
any obligation under, or continuing obligations referenced in, this Settlement
Agreement, that all amounts of Default Interest accrued under the Notes as of
October 15, 2002 and paid on or before 3:00 p.m., New York time on October 30,
2002, whether in connection with the Refinancing, or otherwise, shall be
credited against the $1.25 million payment referenced in Section 2.2 hereof. If
the Refinancing or the Settlement Closing has not occurred on or prior to
October 30, 2002, any and all Default Interest which accrues thereafter shall be
paid on the earlier to occur of the Refinancing, the Settlement Closing or each
successive Interest Payment Date (as such term is defined in the Note Purchase
Agreement), by wire transfer of immediately available funds to an account
designated by the Purchasers.
3.3 In the event that the Refinancing occurs subsequent to 3:00 p.m., New
York Time on October 30, 2002, the USHG Entities shall pay to the Purchasers,
contemporaneous with and as a part of the Refinancing, the amount of any
Expenses not previously paid to Purchasers hereunder.
3.4 Upon the Refinancing, the USHG Entities will deliver to the Xxxxx
Parties, in accordance with Section 9 hereof, a release in the form of Exhibit
9D attached hereto, and the Purchasers will (i) authorize the USHG Entities in
writing to file UCC termination statements as to all of the UCC filings made in
favor of the Purchasers, all such liens being terminated as a result of the
foregoing payments, (ii) execute any other lien termination documents needed to
terminate all of the Purchasers' liens, (iii) return the Notes to EGI for
cancellation, and (iv) deliver to the USHG Entities, in accordance with Section
9 hereof, a release in the form of Exhibit 9E attached hereto.
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3.5 Upon the Settlement Closing, the USHG Entities will deliver to the
Xxxxx Parties, in accordance with Section 9 hereof, a release in the form of
Exhibit 9C attached hereto, and the Purchasers will, assuming that the
Refinancing has not previously occurred, (i) authorize the USHG Entities in
writing to file UCC termination statements as to all of the UCC filings made in
favor of the Purchasers, all such liens being terminated as a result of the
foregoing payments, (ii) execute any other lien termination documents needed to
terminate all of the Purchasers' liens, (iii) return the Notes to EGI for
cancellation, and (iv) deliver to the USHG Entities, in accordance with Section
9 hereof, a release in the form of Exhibit 9B attached hereto.
3.6 The Xxxxx Parties hereby waive their respective rights under Section
6.12 of the Note Purchase Agreement, only with respect to the Transaction and
with respect to the Refinancing, if, and only if, (i) the Refinancing is with
Ableco Finance LLC and Foothill Capital Corporation substantially on the terms
set forth in the "Summary" attached to that certain letter dated September 19,
2002 sent from Xxxxxx Xxxxxx, on behalf of USHG to each of the Purchasers, and
(ii) the Transaction is financed by Ableco Finance LLC and Foothill Capital
Corporation substantially in accordance with the terms described in the Proxy
Statement. The foregoing waiver shall not apply to any other financing that
shall be considered to be a Mezzanine Financing (as such term is defined in the
Note Purchase Agreement).
4. Revisions to Option Agreement and Options.
4.1 At and as an essential part of the Settlement Closing, (i) the Option
Agreement shall be amended and restated as of November 15, 2001 and replaced by
a separate agreement, referred to herein as the "Amended and Restated Option
Agreement - A", in the form of Exhibit 4.1A hereto, and (ii) the USHG Entities
shall cause EGP to deliver to the Purchasers a new option agreement, referred to
herein as "Option Agreement-B" in the form of Exhibit 4.1B
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hereto. The options issued under such agreements (such options being referred to
as the "Amended and Restated A Options" and the "B Options", respectively) shall
each be options to purchase 94,875 Trust Preferred Securities, each of which
constitutes 3.75% of the fully-diluted Trust Preferred Securities. The Amended
and Restated Option Agreement-A and the Option Agreement-B shall be collectively
referred to herein as the "Settlement Option Agreements." The Amended and
Restated A Options and the B Options shall be collectively referred to herein as
the "Settlement Options." With respect to the number of Trust Preferred
Securities purchasable upon exercise of the Settlement Options as described in
this Section 4.1, the parties acknowledge and agree that such number of Trust
Preferred Securities shall be adjusted consistent with the provisions of Section
9(f) of the Settlement Option Agreements to reflect events occurring during the
period commencing on the date hereof through and including the date of execution
of such Settlement Option Agreements.
4.2 Neither the Purchasers nor Xxxxx Inc. nor Xxxxx LLC shall enter into
any trading transactions to artificially depress the price of the Trust
Preferred Securities between the date hereof and the Settlement Closing.
Purchasers, Xxxxx Inc. and Xxxxx LLC shall promptly report to USHG any
transactions engaged in by them in the Trust Preferred Securities on or prior to
the Settlement Closing.
4.3 The Purchasers acknowledge and agree that as part of the Transaction,
the Trust Preferred Securities currently owned by USHG will be sold to EGP, and
will be subject to the Settlement Option Agreements and the Settlement Options.
On or prior to the Settlement Closing, USHG shall cause EGP to (i) deliver
evidence reasonably satisfactory to the Purchasers that EGP has received the
Trust Preferred Securities and that such Trust Preferred Securities are subject
to the Settlement Option Agreements and the Settlement Options, and (ii) enter
into an
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escrow agreement, in the form attached as Exhibit E to the Settlement Option
Agreements (the "Option Escrow Agreement") with Purchasers and a Qualifying
Institution. For purposes of this Agreement, "Qualifying Institution" shall mean
HSBC Bank or any other comparable institution acceptable to the Xxxxx Parties.
4.4 To effectuate the foregoing, at the Settlement Closing, EGP shall
deliver to the Purchasers the Amended and Restated A Options. as of November 15,
2001, and the B Options, as of the date of the Settlement Closing, in
substantially the forms which are attached as Exhibit A to each of Exhibits 4.1A
and 4.1B hereto in exchange for their existing Options.
5. Revisions to Warrant Agreement and Warrants.
5.1 At and as an essential part of the Settlement Closing, the Warrant
Agreement shall be amended and restated as of November 15, 2001 and replaced by
a separate agreement, referred to herein as the "Amended and Restated Warrant
Agreement" in the form of Exhibit 5.1 hereto, such that warrants issued under
the Amended and Restated Warrant Agreement (such warrants being referred to as
the "Amended and Restated Warrants") shall be warrants to purchase that certain
number of shares equal to the sum of (A) 50,000 shares, plus (B) the greater of
(x) 3.75% of the Fully-Diluted Common Stock, as defined in the Amended and
Restated Warrant Agreement, on the day of the Settlement Closing (provided that
the foregoing computation of Fully-Diluted Common Stock shall exclude up to
300,000 shares of Common Stock if, and to the extent that, such shares of Common
Stock are actually issued in connection with the consummation of the Transaction
(and at the closing thereof) to certain legal representatives and investment
banking representatives and financing sources as payment for services rendered
in connection with the Transaction, in lieu of a payment of cash; provided that
the shares of Common Stock actually issued as aforesaid shall not be valued at
less than $.50 per
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share based on the fair value of the services paid for by such issuance) and (y)
940,466 Shares (in each case in this clause (B) less such number of Warrants
exercised from the date hereof through the Settlement Closing). With respect to
the foregoing calculation of shares to be purchased pursuant to the Amended and
Restated Warrants, the parties acknowledge and agree that the share amounts set
forth above shall be adjusted consistent with the provisions of Section 9(a) of
the Amended and Restated Warrant Agreement (and with respect to the minimum
valuation of $.50 per share, Section 9(d) of the Amended and Restated Warrant
Agreement) to reflect events occurring during the period commencing on the date
hereof through and including the date of execution of the Amended and Restated
Warrant Agreement.
5.2 Neither the Purchasers nor Xxxxx Inc. nor Xxxxx LLC shall enter into
any trading transactions to artificially depress the price of the Common Stock
between the date hereof and the Settlement Closing. Purchasers, Xxxxx Inc. and
Xxxxx LLC shall promptly report to USHG any transactions in Common Stock engaged
in by them on or prior to the Settlement Closing.
5.3 To effectuate the foregoing, at the Settlement Closing, USHG shall
deliver to the Purchasers the Amended and Restated Warrants in the form of
Exhibit A to Exhibit 5.1 hereto in exchange for their existing Warrants.
6. Escrow.
If the Settlement Closing or Refinancing occurs prior to November 20, 2002,
upon request by Xxxxx Inc. on behalf of the Purchasers, in lieu of making all or
a portion of the payments provided for in Section 3.1 above directly to the
Purchasers, but without impairing or affecting any other provisions of this
Settlement Agreement, USHG and/or EGI shall make all or
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a portion (per the request of Purchasers) of such payments to an escrow agent as
the Purchasers may direct, to be unconditionally released, together with
interest earned thereon (which shall not be the responsibility of USHG or EGI),
if any, while in escrow, upon instruction from Xxxxx Inc. Upon such delivery to
the escrow agent, all Obligations under the Notes and under Section 3.1 above
shall be deemed satisfied, including the obligation to make interest payments.
7. Expiration of Certain Provisions.
7.1 From and after the Settlement Closing, Section 13 of the Note Purchase
Agreement shall be amended to add the following to the list of covenants set
forth therein which do not survive payment and satisfaction in full of the Notes
and therefore expire upon the Settlement Closing: Sections 3.5, 6.1, 6.2, 6.3,
6.7, 6.9, 6.12, 7.8, the provisions regarding Distributions on the Trust
Preferred Securities set forth in Section 7.9(c), but only as they relate to
Distributions and Liquidation Distributions (as such terms are defined in the
Trust Agreement)(provided that USHG shall no longer have any obligations under
the remaining provisions of Section 7.9(c), such remaining obligations to be the
obligation of the holder of the Trust Preferred Securities subject to the
Settlement Option Agreements), 7.10, 7.13, and the restrictions set forth in the
Stockholders Agreement (as such term is defined in the Note Purchase Agreement).
7.2 Anything contained in Section 7.1 to the contrary notwithstanding, so
long as the Purchasers own Amended and Restated Warrants or Warrant Shares, USHG
shall provide Purchasers, upon request, with copies of all Forms 10-K, 10-Q and
8-K, if any, filed by USHG with the SEC, provided that if USHG ceases to be a
reporting company, it shall provide Purchasers with copies of quarterly and
annual financial statements and management commentary thereon identical to that
provided to its senior lenders, subject to any confidentiality
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obligations of the Purchasers set forth in the Note Purchase Agreement. The
Asset Purchase Agreement shall provide that EGP will make an identical
commitment with respect to the Trust Preferred Securities for so long as the
Purchasers own the Settlement Options or Option Securities.
7.3 From and after the Settlement Closing, the Non-competition Agreements
dated as of November 15, 2001 between USHG and Messrs. Xxxxxxx Xxxxxx and
Xxxxxxx Xxxx and all rights of the Purchasers therein shall terminate.
8. Conditional Standstill on Inspection Rights.
Notwithstanding any provisions to the contrary in the Xxxxx Documents, from
and after the date hereof, until the earlier to occur of the Settlement Closing
or the Termination Date, the Purchasers will not exercise their rights to demand
an inspection (other than (i) an inspection effected at the Purchasers' expense
or (ii) an inspection effected in connection with an Event of Default set forth
in Sections 9.1(a), 9.1(b) (as it relates to the covenants set forth in Sections
6.1, 6.10, 6.12, 6.15, and 7.1 through 7.18), 9.1(f) through 9.1(l), 9.1(n),
9.1(o), 9.1(r) and 9.1(s) of the Note Purchase Agreement), pursuant to Section
6.2 of the Note Purchase Agreement, provided that, with respect to those
occurrences or alleged occurrences with respect to which the Purchasers may
exercise their inspection rights, they shall only exercise such rights after
giving written notice of the occurrence (or alleged occurrence) of such an Event
of Default to USHG and provided, further, that such matter, if capable of cure,
is not cured within 10 days of receipt of such notice.
9. Releases.
Upon execution of this Settlement Agreement the USHG Entities shall provide
the Xxxxx Parties with a release in the form of Exhibit 9A attached hereto (the
"Settlement
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Agreement Release"). At the Settlement Closing, the parties will exchange mutual
releases in the forms attached hereto as Exhibits 9B and 9C (the "Settlement
Closing Releases"). Upon consummation of the Refinancing (i) the USHG Entities
shall provide the Xxxxx Parties with a release in the form of Exhibit 9D
attached hereto and (ii) upon receipt of an officers certificate from each of
EGI and USHG stating that, to the best of their knowledge, after due inquiry,
there are no material defaults existing under the Xxxxx Documents, the Xxxxx
Parties shall provide the USHG Entities with a release in the form attached
hereto as Exhibit 9E (Exhibits 9D and 9E collectively the "Refinancing Closing
Releases").
10. Termination.
This Agreement shall terminate upon the earlier to occur of (i) abandonment
of the Transaction as evidenced by USHG's delivery to the Purchasers of either
(x) resolutions of the Board of Directors of USHG (the "Board") providing that
the Board has elected not to proceed with the Transaction, or (y) written
evidence from Xxxxxxx Xxxxxx or EGP that either of them has elected not to
pursue the Transaction, or (ii) at the sole option of Xxxxx Inc., upon delivery
of written notice to USHG, if the Settlement Closing does not occur on or before
the close of business on June 30, 2003 (the "Termination Date"). Upon such
termination, all of the provisions hereof shall be of no further force or effect
except (i) for the obligations and agreements under Sections 1.2(i), 1.3, 3.2,
3.3, 3.4, 3.6 (if the Refinancing has occurred), 10, 11, 13, 22 and 25 hereof;
the obligation to make the payment of $50,000 provided for in Section 2.1
hereof; the obligation to deliver the Settlement Agreement Release under Section
9 hereof; and the obligation to pay Expenses under Section 23 hereof, and (ii)
that neither the USHG Entities nor their affiliates nor the parties to the
Non-competition Agreements described in Section 7.3 shall be liable to the Xxxxx
Parties for (a) any actions taken by such persons through the
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Termination Date in connection with the negotiation of the Transaction, and (b)
the entering into of the Asset Purchase Agreement prior to the Termination Date.
11. Confidentiality.
Each of the parties hereto hereby agrees that it shall keep confidential
and not disclose to any third party whatsoever (other than their investors,
counsel, affiliates and regulators and in connection with any legal proceeding
relating to this Agreement) the existence of this Agreement or the terms
thereof, except (i) as required by applicable law, (ii) as USHG may be required
to disclose the provisions hereof in any press release, and in public filings
with the SEC, including, without limitation, the Proxy Statement, (iii) any
disclosure to Ableco Finance LLC or Foothill Capital Corporation (including any
of their respective officers, agents, affiliates or other advisors) in
connection with the Refinancing or the Transaction, as the case may be, and (iv)
if such information is otherwise publicly available.
12. Cooperation Regarding Transaction.
The Purchasers, Xxxxx Inc. and Xxxxx LLC agree to (i) vote and recommend
that their affiliates vote any shares of Common Stock they may own in favor of
the Transaction if USHG seeks shareholder approval therefor and (ii) vote and
recommend that their affiliates vote any Trust Securities they may own in favor
of the amendments to the Trust's governing documents proposed by USHG in order
to facilitate the Transaction. USHG will promptly notify the Purchasers if the
Transaction is abandoned by USHG and EGP as set forth in Section 10 hereof.
13. Further Assurances.
Each of the Purchasers, Xxxxx Inc. and Xxxxx LLC, on the one hand, and USHG
and EGI, on the other hand, hereby agrees, from time to time, to take such
reasonable ministerial
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action as the other party may reasonably request in writing in order to
effectuate and reflect the transactions contemplated hereby. It is hereby
acknowledged that Xxxxx Inc. has in the past acted on behalf of Xxxxx LLC and
the Purchasers, and USHG and EGI shall be entitled to rely on instructions from
and other communications with Xxxxx Inc. as if such instructions came from or
communications were with the Purchasers or Xxxxx LLC, as the case may be.
14. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and conditions of this Agreement or affecting
the validity or unenforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
15. Settlement and Compromise.
The provisions contained in this Agreement constitute a compromise of
disputed claims, including, without limitation, the Alleged Defaults. This
Agreement shall not in any way be construed as an admission by any party hereto
of any unlawful, wrongful or invalid act or admission or waiver of defense
thereto, except as specifically set forth herein.
16. Modification.
This agreement may only be modified by a written instrument which is
executed by each party to be charged with such modification.
17. Entire Agreement.
This Agreement and the Exhibits hereto set forth our entire agreement with
respect to the consent by the Purchasers, Xxxxx Inc. and Xxxxx LLC to the
Transaction and the settlement
18
of the Alleged Defaults and supersedes all prior agreements between the parties
with respect to such subject matter. The Consulting Agreement, as amended and
restated in the form attached hereto as Exhibit 17, shall be executed and
delivered contemporaneously with the execution and delivery of this Settlement
Agreement and shall remain in full force and effect, as amended and restated, as
of the date hereof.
18. Rights in the Xxxxx Documents.
Each of the Purchasers, Xxxxx Inc. and Xxxxx LLC hereby represents and
warrants to the USHG Entities that no party other than the Purchasers (which as
used in this Section shall include their investors) has any interest obtained
from the Xxxxx Parties in the Note Purchase Agreement, Warrant Agreement or
Option Agreement and that no party other than the Purchasers, Xxxxx Inc. or
Xxxxx LLC has any interest obtained from the Xxxxx Parties in any of the other
Xxxxx Documents. Each of the Purchasers, Xxxxx Inc. and Xxxxx LLC hereby
represents and warrants that it has not assigned or otherwise transferred
(voluntarily, involuntarily or by operation of law) any right, title or interest
in any claim which it has, may have or may have had with respect to any of the
Xxxxx Documents.
19. Prepayment Permitted
Nothing contained in this Settlement Agreement shall prevent USHG and EGI
from making payment to the Purchasers of the Obligations, as defined in the Note
Purchase Agreement, including, without limitation, the Obligations under the
Notes, prior to the Termination Date; provided, however, that the making of any
such payment by USHG or EGI shall in no way alter or amend, in any manner
whatsoever, the rights and benefits of the Xxxxx Parties under this Settlement
Agreement.
19
20. Headings
The headings of the sections of this Agreement and Exhibits (as defined
below) hereto are included for convenience of reference only and shall not form
a part of this Agreement or such Exhibits. As used herein, the term "Exhibits"
shall mean collectively Exhibits 4.1A and 4.1B, the Settlement Option
Agreements, Exhibit 5.1, the Amended and Restated Warrant Agreement, Exhibit 9A,
the Settlement Agreement Release, Exhibits 9B and 9C, the Settlement Closing
Releases, and Exhibits 9D and 9E, the Refinancing Closing Releases.
21. Governing Law
This Agreement shall be governed by the laws of the State of New York
applicable to contracts made and to be wholly performed therein.
22. Notices
Unless otherwise indicated, whenever under the terms of this Agreement
written notice is required to be given, or a report or other document is
required to be furnished, by one party to the other, such notice or other
document shall be mailed first class, postage prepaid, delivered by personal
delivery or sent by overnight courier or by confirmed facsimile to the following
persons at the addresses specified below (or to such other addresses as may be
designated in the future by like notice):
If to USHG or EGI, to them at:
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx, Chief Executive Officer
Facsimile No.: (000) 000-0000
20
with a copy to:
Blank Rome Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Purchasers, Golub Inc. or Golub LLC, to them at:
c/o Golub Associates Incorporated
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx, Principal
Facsimile No.: (000) 000-0000
with a copy to:
KMZ Rosenman
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
All notices and other documents shall be deemed given when actually
received or refused by the party to whom the same is addressed.
23. Expenses
As provided in Section 3.2 hereof, upon the earlier to occur of (i) 3:00
p.m., New York time, on November 1, 2002 or (ii) the Refinancing, USHG shall pay
to Xxxxx Inc., by wire transfer of immediately available funds to an account
designated by Xxxxx Inc., the sum of all expenses incurred by the Xxxxx Parties
in connection with the Alleged Defaults and matters contemplated by this
Settlement Agreement and/or the enforcement of their rights and remedies
hereunder (the "Expenses") incurred by the Xxxxx Parties through such date. The
USHG Entities hereby acknowledge and agree that as of September 30, 2002 the
Xxxxx Parties have incurred Expenses in the amount of $170,780, and that such
Expenses are due and owing to the
21
Xxxxx Parties in accordance with the terms hereof. Without limiting the
foregoing, USHG shall reimburse Xxxxx Inc. for any Expenses subsequent to the
date of the Settlement Agreement, as provided below. Expenses incurred by the
Xxxxx Parties subsequent to the date of the Settlement Agreement, unless
otherwise paid in accordance with the terms hereof, shall be paid by USHG on the
earlier of the Settlement Closing or 10 days following the receipt from time to
time by USHG of invoices from Xxxxx Inc. relating thereto. After the Termination
Date, USHG's obligation to reimburse the Purchasers for Expenses shall be
governed by the Xxxxx Documents. To the extent not expressly addressed herein,
other expenses incurred by the Purchasers shall be governed by the Xxxxx
Documents.
24. Signatures
This Agreement may be executed in one or more counterparts. Facsimile
signatures shall be sufficient to bind the parties signing thereby.
25. Specific Performance
The Purchasers on the one hand, and USHG and EGI on the other, shall have
the right to specific performance of the provisions of this Agreement. Each
party hereto waives, to the extent that it may do so under applicable law, any
defense based on the adequacy of a remedy at law which may be asserted as a bar
to the remedy of specific performance in any action brought for specific
performance of the provisions of this Agreement.
22
For Settlement Purposes Only
IN WITNESS WHEREOF, the undersigned have caused this Settlement Agreement
to be executed by their officers thereunto duly authorized as of the 1st day of
November 2002.
U.S. HOME & GARDEN, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: CFO
EASY GARDENER, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: CFO
LEG PARTNERS DEBENTURE SBIC, L.P.
By: Xxxxx Debenture GP, LLC, its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG PARTNERS III SBIC, L.P.
By: Xxxxx XX-XX, LLC, its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG CO-INVESTORS, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS II LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Manager
XXXXX ASSOCIATES LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
XXXXX ASSOCIATES INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Principal
For Settlement Purposes Only
Exhibit 4.1A
TO SETTLEMENT AGREEMENT
--------------------------------------------------------------------------------
EASY GARDENER PRODUCTS, LTD.
and
THE HOLDERS NAMED HEREIN
AMENDED AND RESTATED
OPTION AGREEMENT-A
--------------------------------------------------------------------------------
_____________, 200___
THIS OPTION AND THE UNDERLYING SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.
AMENDED AND RESTATED
OPTION AGREEMENT-A
(Option to purchase 9.4% Cumulative Trust Preferred Securities
of U.S. Home & Garden Trust I owned by Easy Gardener Products Ltd.)
THIS AMENDED AND RESTATED OPTION AGREEMENT-A, dated ____________, 200___,
is between Easy Gardener Products Ltd., a Texas limited partnership ("EGP"), and
the holders from time to time of the Options or Option Securities referred to
herein (the "Holders").
WHEREAS, the Holders, U.S. Home & Garden Inc. ("USHG") and USHG's
wholly-owned subsidiary Easy Gardener, Inc. (the "Company") are parties to a
Settlement Agreement, dated as of November 1, 2002 (the "Settlement Agreement"),
which provides, among other things, that upon consummation of the Transaction
(as defined therein) EGP shall assume USHG's obligations under that certain
Option Agreement (the "Option Agreement") executed and delivered by USHG in
connection with the Note and Warrant Purchase, Guaranty and Security Agreement,
dated as of November 15, 2001, among the Holders, USHG and the Company (the
"Purchase Agreement"), such that EGP shall be the obligor thereunder, subject to
the Holders' agreement with each of USHG and EGP, as the case may be, to certain
modifications to USHG's obligations under the Option Agreement (and in
accordance with the assumption thereof by EGP, the corresponding modifications
to EGP's obligations under the Option Agreement) as set forth in this Amended
and Restated Option Agreement-A;
WHEREAS, pursuant to the Settlement Agreement the Holders were granted the
right to purchase up to 94,875 of the 9.4% Cumulative Trust Preferred
Securities, liquidation amount $25 per Trust Preferred Security ("Preferred
Securities"), originally issued by USHG's subsidiary U.S. Home & Garden Trust I
(the "Trust") and repurchased by USHG, such right to be governed by the terms of
this Amended and Restated Option Agreement-A; and
WHEREAS, the Preferred Securities and the obligations to issue the
Preferred Securities upon exercise of this Amended and Restated Option
Agreement-A have been transferred by USHG to EGP, and
WHEREAS, the Holders understand that the Preferred Securities were issued
by the Trust, but that the Options herein granted by EGP, represent the right to
purchase from EGP (and not from the Trust) Preferred Securities originally
issued by the Trust that are now owned by EGP;
NOW, THEREFORE, in consideration of the premises EGP and the Holders agree
as follows:
SECTION 1. Definitions. The following terms used herein shall have the
meanings indicated below, unless the context otherwise requires:
"Affiliate" of any Person shall mean any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such first Person, it being
understood that this shall include any officer or director of a Person
which is a corporation, any manager or director of a limited liability
company, and any general partner of a partnership, and any officer,
director or owner of ten percent (10%) or more of any entity which so
serves as such manager or general partner, (b) that directly or
beneficially owns ten percent (10%) or more of any class of the voting
stock of such first Person, or (c) ten percent (10%) or more of whose
voting stock (or in the case of a Person which is not a corporation, ten
percent (10%) or more of whose equity interest) is owned directly or
beneficially by such first Person.
"Agreement" or "Option Agreement" shall mean this Amended and Restated
Option Agreement-A, together with all Exhibits hereto, as may be amended,
modified or supplemented from time to time with the consent of the Holders
in accordance with Section 15.
"Automatic Exercise" shall have the meaning given thereto in Section
4(a).
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York, are required by law to
close.
"Commission" shall have the meaning given thereto in Section 11(b).
"Convertible Securities" shall mean (a) any stock, notes or other
securities of the Trust convertible into or exchangeable, directly or
indirectly, for Preferred Securities (whether or not such right to convert
or exchange is immediately exercisable or is "in the money"), (b) any other
security, note or agreement of the Trust which provides the holder thereof
with a payment, repayment amount, appreciation right or liquidation
preference (i) calculated by reference to, or arising from, the value of
the Trust upon a sale, merger, recapitalization or similar event, or (ii)
based upon the value, whether market or appraisal, of the Preferred
Securities, and (c) any agreement of the Trust to issue or sell Preferred
Securities or to issue, sell or enter into such other stock, notes,
securities or agreements described in the foregoing clauses (a) or (b).
"Distribution" shall have the meaning given thereto in Section 9.
"Escrow Agreement" shall have the meaning given thereto in Section 14.
"Exchange Act" shall have the meaning given thereto in Section 11.
"Exercise Price" shall have the meaning given thereto in Section 3.
2
"Expiration Date" shall mean May 19, 2009 or, if such day is not a
Business Day, the next succeeding Business Day.
"Liquidation Distribution" shall have the meaning given thereto in
Section 9.
"Market Price" of a Preferred Security shall mean the average of the
daily market prices of a Preferred Security over a period of 20 consecutive
business days prior to the day as of which "Market Price" is being
determined. The market price for each such business day shall be the
average of the closing sales prices on such day of a Preferred Security on
the principal domestic stock exchange on which Preferred Securities are
then listed, or if there shall have been no sales on any such exchange on
such day, the average of the highest bid and lowest asked prices on such
exchange at the end of such day, or, if the Preferred Securities shall not
be so listed, the closing sales price in the NASDAQ System on such day, or
if there shall have been no sales in the NASDAQ System on such day, the
average of the highest bid and lowest asked prices on the NASDAQ System on
such day, or if the Preferred Securities shall not be quoted in the NASDAQ
System, the average of the high and low bid and asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization. If the
Preferred Securities are listed on any domestic exchange the term "business
days" as used in this paragraph shall mean business days on which such
exchange is open for trading.
If at any time the Preferred Securities are not listed on any domestic
exchange or quoted in the NASDAQ System or the domestic over-the-counter
market, the "Market Price" shall be the fair market value of a Preferred
Security as determined in good faith by the Board of Directors of the
general partner of EGP (giving due regard to any recent sales or valuations
of Preferred Securities) or, if the holders of a majority of the Options
shall, in the exercise of their sole discretion, object to such
determination, as determined by appraisal pursuant to the following
paragraph of this definition; provided, that if any valuation or appraisal
has been made of the Trust or its Preferred Securities for any reason
within six months prior to any date as of which the Market Price is to be
determined hereunder, then the Holders shall be entitled, at their option,
to rely on such appraisal and such valuation or appraisal shall be binding
on EGP unless any event shall have occurred since the date of such
valuation or appraisal which, in the reasonable opinion of the Holders of a
majority of the Options, manifestly affects the continued validity of such
appraisal.
If the Holders of a majority of the Options shall object to the
determination of Market Price made by the Board of Directors of the
general partner of EGP pursuant to the preceding paragraph, then
Market Price shall be determined as of the end of the most recent
complete fiscal quarter of the Trust ended prior to the date of
determination (taking into account actual performance subsequent
thereto and projections for future periods), and shall be determined
by appraisal as follows: Within fifteen (15) days after receipt by EGP
of notice that an appraisal is desired, EGP and the Holders of a
majority of the Options shall jointly appoint an appraiser for the
purpose of determining Market Price. Such appraiser shall be an
investment banking or advisory
3
firm with experience in valuing trusts or other special purpose
entities such as the Trust, which investment banking or advisory firm
shall be either a firm of recognized national standing or a regional
firm of good national reputation. If there shall be a dispute as to
the selection of such appraiser, then the appraiser shall be appointed
by the American Arbitration Association upon application by EGP or the
Holders of a majority of the Options. EGP and the Holders of a
majority of the Options shall be afforded reasonable opportunities to
discuss the appraisal with such appraiser. The determination of Market
Price by such appraiser shall be final and binding upon EGP and the
Holders of the Options. The fees and expenses of the appraiser and, if
any, of the American Arbitration Association, shall be borne by EGP
unless the determination of Market Price by such appraiser is the same
as the determination of Market Price made by the Board of Directors
(or less favorable to the Holders), in which case the fees and
expenses of such appraiser shall be borne equally by EGP and the
Holders of Options.
"Option" shall mean an Option certificate, in the form of Exhibit A
hereto, and shall also mean the right upon exercise thereof to acquire one
Option Security.
"Option Office" shall mean the office or agency of EGP at which the
Option Register shall be maintained and where the Options may be presented
for exercise, exchange, substitution and transfer, which office or agency
will be the office of EGP at 0000 Xxxxxxxx Xxxxxx, Xxxx, XX 00000-0000. The
Option Office may be changed by EGP pursuant to notice in writing to the
registered Holders of the Options.
"Option Register" shall mean the register, in the form of Exhibit B
hereto, maintained by EGP at the Option Office.
"Option Securities" shall mean the Preferred Securities purchasable or
purchased upon exercise of the Options, and any other Preferred Securities,
capital stock, equity interest, or other securities issuable or issued in
respect of the Option Securities by way of securities dividend,
distribution or securities split or other transaction of the character
referred to in Section 9.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability
company, association, corporation, institution, entity, or government
(whether national, federal, state, county, city, municipal or otherwise,
including without limitation any instrumentality, division, agency, body or
department thereof).
"Preferred Security" shall mean an undivided beneficial interest in
the assets of the Trust designated as "9.4% Cumulative Trust Preferred
Securities", having a Liquidation Amount of $25 per security and having the
rights provided therefor in the Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided in the
Trust Agreement.
"Rights" shall mean any warrants, options (including the Options),
agreements or other rights to subscribe for or to purchase, directly or
indirectly, from the Trust, Preferred
4
Securities (whether or not such warrants, options or other rights are
immediately exercisable or are "in the money"). Rights shall include any
warrants, options or other agreements or rights to subscribe for or to
purchase, directly or indirectly, from the Trust, Convertible Securities or
other Rights (whether or not such warrants, options or other rights are
immediately exercisable or are "in the money") and agreements or plans
under which the Trust may issue or sell securities in exchange for services
of any kind, whether to be rendered by an employee, consultant, individual,
entity or third party of any kind.
"Securities Act" shall have the meaning given thereto in Section 11.
"Settlement Closing" shall have the meaning given thereto in the
Settlement Agreement.
"Trust Agreement" shall mean the Trust's Amended and Restated Trust
Agreement dated as of April 17, 1998 among USHG, as Depositor, Wilmington
Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware
Trustee, and the Administrative Trustees named therein, pursuant to which,
among other things, the Preferred Securities were issued[, as such Amended
and Restated Trust Agreement may be amended, supplemented or assigned in
connection with the transactions contemplated by the Settlement Agreement].
SECTION 2. Grant of Options.
EGP hereby grants to the Holders Options to purchase up to that number of
Preferred Securities listed opposite their respective names on Exhibit B
attached hereto, which shall initially represent the right to purchase, in the
aggregate, up to 94,875 Preferred Securities.(1) The Options shall be
exercisable at any time until 5:00 P.M. (local time at the Option Office) on the
Expiration Date.
SECTION 3. Exercise Price. At any time of determination, the price (the
"Exercise Price") at which a Holder may purchase each Option Security issuable
upon exercise of such Holder's Options shall be equal to the lower of (i)
[insert lowest of (a) [$9.25 per share and (b) closing bid price of the
Preferred Securities as reported on the American Stock Exchange as of the date
of Settlement Agreement], and (ii) the closing bid price of the Trust Preferred
Securities as reported on the American Stock Exchange as of the trading day
immediately prior to the date of the Settlement Closing. The Exercise Price
shall be adjusted in accordance with Section 9 hereof. Without limiting the
foregoing, as of the date of the restatement of this Agreement, the Exercise
Price, as adjusted pursuant to Section 9 hereof, shall be [$____].(2)
----------
(1) With respect to the number of Preferred Securities purchasable upon exercise
of the Options as described in this Section 2, the parties acknowledge and agree
that such number of Preferred Securities shall be adjusted consistent with the
provisions of Section 9(f) hereof to reflect events occurring during the period
commencing on the date of execution of the Settlement Agreement through and
including the date hereof.
(2) With respect to the Exercise Price of the Option for the Preferred
Securities, the parties acknowledge and agree that appropriate adjustments shall
be made consistent with the provisions of Section 9(f) and consistent with the
adjustments set forth in Note 1.
5
SECTION 4. Exercise of Options.
(a) The rights represented by any Option granted pursuant hereto shall
be deemed to be automatically exercised, without the Holder thereof having
to take any action whatsoever, upon the Exercise Price being reduced to
zero (0) in accordance with Section 9(a) hereof (an "Automatic Exercise").
In the event of an Automatic Exercise, EGP shall immediately take all such
actions as are required to facilitate delivery of Option Securities to the
Holder under the Escrow Agreement. Prior to the occurrence of any Automatic
Exercise, the rights represented by any Option granted pursuant hereto may
be exercised by the Holder thereof, in whole or in part, by delivering to
the Option Office:
(i) the Option, together with a properly completed Election to
Purchase in the form attached thereto;
(ii) at the Holders' option, either (A) a check or bank draft in
the amount of the aggregate Exercise Price for the Preferred
Securities to be purchased, or (B) Preferred Securities or Options
owned by the Holders having a Market Price equal to the aggregate
Exercise Price for the Preferred Securities to be purchased. For
purposes of this Section 4: (I) the Market Price per Preferred
Security at any time shall be determined in accordance with the
definition of Market Price and (II) the Market Price per Option at any
time shall be the Market Price per Preferred Security minus the
Exercise Price then in effect; and
(iii) any representations or documents or information from the
Holder of the Options that EGP may reasonably require in order to
comply with the requirements of the Securities Act with respect of
such issuance and in order to comply with the provisions of Section 8
of this Agreement.
Upon such exercise EGP shall transfer, assign and deliver (or shall cause the
Trust to issue and deliver, or shall cause the escrow agent under the Escrow
Agreement to issue and deliver) to or to the order of the registered Holder(s)
of such Option, and in such name or names as such registered Holder(s) may
designate, one or more certificate(s) for the Option Securities to be sold upon
such exercise of such Option. Any person(s) so designated to be named therein
shall be deemed to have become the Holder(s) of record of such Option Securities
as of the date of delivery to EGP at the Option Office of the Option and the
Exercise Price therefor as provided in clauses (i) and (ii) above.
(b) If an Option is exercised in part at any time, a new Option or
Options shall be issued for the unexercised portion of such Option. Each
new Option so issued shall bear the following legend, if the Option
presented in connection with a partial exercise thereof bore such legend.
All Options surrendered upon exercise shall be canceled.
THIS OPTION AND THE UNDERLYING SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD OR TRANSFERRED
6
EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.
IN ADDITION, THIS OPTION AND THE UNDERLYING SECURITIES MAY BE TRANSFERRED
ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE AMENDED AND
RESTATED OPTION AGREEMENT-A AS OF ________ __, 200___, BETWEEN EASY
GARDENER PRODUCTS, LTD. AND THE INITIAL HOLDERS OF THE OPTIONS NAMED
THEREIN, COMPLETE AND CORRECT COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF EASY GARDENER PRODUCTS LTD. AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(c) EGP will pay all taxes (other than any applicable income or
similar taxes payable by the Holders) attributable to the sale of Option
Securities upon the exercise of the Options; provided, that EGP shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issue of any Option or any certificate for Option
Securities in a name other than that of the registered Holder of the Option
surrendered for exercise.
SECTION 5. Registration, Transfer and Exchange of Certificates.
(a) EGP shall maintain at the Option Office an Option Register for
registration of the Options and transfers thereof. EGP may deem and treat
the registered Holder(s) of the Options as the absolute owner(s) thereof
for the purpose of any exercise thereof or any distribution to the
Holder(s) thereof, and for all other purposes.
(b) EGP shall register the transfer of any outstanding Option in the
Option Register upon surrender to EGP at the Option Office of such Option,
accompanied (if so required by it) by one or more duly executed instruments
of transfer in form satisfactory to EGP. Upon any such registration of
transfer, one or more new Option(s) evidencing such transferred Option
shall be issued to the transferee(s) and the surrendered Option shall be
canceled. If less than all of a surrendered Option is to be transferred,
new Option(s) shall be issued to the surrendering Holder evidencing the
remaining balance of the surrendered Option.
(c) Each Option may, at the option of the Holder(s) thereof, be
surrendered to EGP at the Option Office to be exchanged for one or more new
Options of like tenor and exercisable in the aggregate for a like number of
Option Securities. Options surrendered for exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except
for any tax or other governmental charge imposed in connection therewith.
Except as provided for in the provisions set forth on Exhibit C hereto,
each Option issued upon transfer or exchange shall bear the legend set
forth in Section 4 if the Option presented for transfer or exchange bore
such legend.
7
SECTION 6. Mutilated or Missing Option. If any Option is mutilated, lost,
stolen or destroyed, EGP shall issue, in exchange and substitution for and upon
cancellation of the mutilated Option, or in lieu of and substitution for the
Option lost, stolen or destroyed, a new Option of like tenor and representing
rights to acquire an equivalent number of Preferred Securities, but only upon
receipt of evidence satisfactory to EGP of such loss, theft or destruction of
such Option and, if requested, indemnity satisfactory to it. No service charge
shall be made for any such substitution, but all reasonable charges associated
with any stamp, tax or other governmental duty that may be imposed in relation
thereto shall be borne by the Holder of such Option. Each Option issued in any
such substitution shall bear the legend set forth in Section 4 if the Option for
which such substitution was made bore such legend.
SECTION 7. Reservation and Sale of Option Securities.
(a) EGP will at all times keep available, free of all Liens,
restrictions, rights and claims of others, for the purpose of enabling it
to satisfy its obligation to sell Preferred Securities upon any exercise of
the Options, the number of Preferred Securities purchasable upon exercise
of all outstanding Options. Upon any sale of Preferred Securities to a
holder of Options upon exercise thereof, such Preferred Securities shall be
free of all Liens, restrictions, rights and claims of others.
(b) EGP covenants that all Option Securities will, upon sale to a
Holder upon exercise of an Option, be fully paid and nonassessable and free
from all taxes with respect to the sale thereof (other than any applicable
income or similar taxes payable by the Holders) and from all Liens,
restrictions, rights and claims of others (except for Liens, if any,
created by the Holder thereof).
SECTION 8. Obtaining of Governmental Approvals and Stock Exchange Listings.
EGP will, or will cause the Trust to, at its or the Trust's expense, (a) obtain
and keep effective any and all permits, consents and approvals of governmental
agencies and authorities which may from time to time be required in order to
sell Option Securities upon exercise of the Options, and otherwise to perform
its obligations hereunder, and (b) take all action which may be necessary so
that the Option Securities, immediately upon their sale upon the exercise of
Options, will be listed on each securities exchange, if any, on which Preferred
Securities are then listed.
SECTION 9. Additional Adjustment and Anti-Dilution Provisions.
(a) Adjustment of Exercise Price in Connection with Dividends and
Distributions. The Exercise Price shall be reduced, but not to an amount
less than zero (0), by the fair value of the amount, on a per security
(e.g. per share) basis, of any dividend or distribution (including, without
limitation any "Distribution" or "Liquidation Distribution" as such terms
are defined in the Trust Agreement) paid or accrued since November 15,
2001, on or in respect of the Preferred Securities, including, without
limitation, the 9.4% cumulative Distribution payable upon the Preferred
Securities pursuant to the Trust Agreement, whether such dividend or
distribution is made in cash, securities or other property (including,
without limitation, any dividend or distribution payable in Preferred
Securities or Convertible Securities); provided, that with respect to any
dividend or other distribution accrued but not paid since
8
November 15, 2001 (and which accrual resulted in a reduction of the
Exercise Price), and which dividend or other distribution is then
subsequently paid in whole or in part (the "Payment"), such Payment shall
not result in a further reduction of the Exercise Price and to the extent
such Payment is made following the exercise by the Purchasers of any
Options hereunder, such Payment shall be returned to EGP by Purchasers.
Without limiting the foregoing, the portion of any dividend or distribution
that, but for the aforementioned limitation that the Exercise Price shall
not be less than zero (0), would reduce the Exercise Price to a number less
than zero (0), shall be paid to the Holder within five business days of the
date of such Automatic Exercise, as provided in Section 4(a) hereof.
(b) Reorganizations and Asset Sales. If any capital reorganization or
reclassification of the securities of the Trust, or any consolidation or
merger of the Trust with another entity, or the sale of all or
substantially all of its assets to another person or entity shall be
effected in such a way that holders of Preferred Securities shall be
entitled to receive securities or assets with respect to or in exchange for
Preferred Securities, then the following provisions shall also apply
(unless and only to such extent that such event did not result in an
adjustment or payment pursuant to Section 9(a) hereof):
(i) as a condition of such reorganization, reclassification,
consolidation, merger or sale (except as otherwise provided below in
this Section 9(b)), lawful and adequate provisions shall be made
whereby each Holder shall thereafter have the right to purchase and
receive upon the terms and conditions specified in this Agreement and
in lieu of the Option Securities immediately theretofore receivable
upon the exercise of his or its Option, such securities or assets as
may be issued or payable with respect to or in exchange for a number
of outstanding Preferred Securities equal to the number of Option
Securities immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provision shall be made
with respect to the rights and interests of such Holder to the end
that the provisions hereof (including without limitation provisions
for adjustments of the number of securities receivable upon exercise
of an Option) shall thereafter be applicable, as nearly as may be, in
relation to any securities or assets thereafter deliverable upon the
exercise of an Option;
(ii) EGP shall not permit any such consolidation, merger or sale
unless prior to or simultaneously with the consummation thereof the
successor entity (if other than EGP) resulting from such consolidation
or merger or the person or entity purchasing such assets shall assume
by written instrument executed and mailed or delivered to each Holder
at the last address of such Holder appearing on the books of EGP, the
obligation to deliver to such Holder such securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled
to receive, and all other liabilities and obligations of EGP
hereunder. Upon written request by the Holder of any Option, EGP or
such successor person or entity will issue or grant a new Option
revised to reflect the modifications in this Agreement effected
pursuant to this Section 9(b); and
(iii) if a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding Preferred
Securities of the Trust, EGP shall not permit any consolidation,
merger or sale with the person or entity that made such
9
offer or with any affiliate of such person or entity, unless prior to
the consummation of such consolidation, merger or sale each Holder of
an Option shall have been given a reasonable opportunity to then elect
to receive upon the exercise of his or its Option either the
securities or assets then issuable with respect to the Preferred
Securities or the securities or assets, or the equivalent, issued to
previous holders of Preferred Securities in accordance with such
offer.
(c) Notice of Adjustment. Whenever the number of Option Securities
issuable upon the exercise of the Options shall be adjusted as herein
provided, or the rights of Holders shall change by reason of other events
specified herein, EGP shall compute the adjusted number of Option
Securities in accordance with the provisions hereof and shall prepare a
certificate signed by its President, Vice President, Treasurer or Secretary
setting forth the adjusted number of Option Securities purchasable upon
exercise of the Options and the adjusted Exercise Price thereof or
specifying the other securities or assets receivable as a result of such
change in rights, and showing in reasonable detail the facts and
calculations upon which such adjustments or other changes are based,
including a statement of the consideration received or to be received by
EGP or the Trust for, and the amount of, any Preferred Securities, issued
since the last such adjustment or change (or since the date hereof in the
case of the first adjustment or change). EGP shall cause to be mailed to
each Holder of an Option copies of such officer's certificate together with
a notice stating that the number of Option Securities purchasable upon
exercise of the Options has been adjusted and setting forth the adjusted
number of Option Securities purchasable upon exercise of such Holder's
Option.
(d) Disputes. In the event that there is any dispute as to the
computation of the number of Option Securities required to be sold upon
exercise of Options (in which the Holders of a majority of the Option
Securities issuable upon exercise of all outstanding Options shall join),
the Holders will retain an independent and nationally recognized accounting
firm to conduct, at EGP's expense, an audit of the computations pursuant to
the terms hereof involved in such dispute, including the financial
statements or other information upon which such computations were based.
The determination of such nationally recognized accounting firm shall, in
the absence of manifest error, be binding upon the Holders and EGP. If
there shall be a dispute as to the selection of such nationally recognized
accounting firm, such firm shall be appointed by the American Institute of
Certified Public Accountants if willing, otherwise the American Arbitration
Association, upon application by EGP or the Holders of a majority of the
Option Securities issuable upon exercise of all outstanding Options, with
notice to the others. The expenses of such accounting firm and, if any, the
American Institute of Certified Public Accountants or the American
Arbitration Association (as applicable), shall be borne by EGP unless the
computation by such accounting firm of such number of Option Securities is
the same as the computations thereof made by EGP (or less favorable to the
Holders), in which case the fees and expenses of such accounting firm shall
be borne equally by EGP and the Holders of Options.
(e) Securities other than Preferred Securities. If, at any time, as a
result of an adjustment made pursuant to this Section 9, the Holder of any
Option thereafter exercised shall become entitled to receive any securities
other than Preferred Securities, thereafter the number of such other
securities so receivable upon exercise of any Option shall be subject to
adjustment
10
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Option Securities
contained in this Section 9, and the provisions of this Agreement with
respect to the Option Securities shall apply on like terms to such other
securities.
(f) Certain Adjustments.
(i) In the event that the Trust shall at any time after the date
of this Agreement (x) split or subdivide the outstanding Preferred
Securities, or (y) combine the outstanding Preferred Securities into a
smaller number of shares through a reverse split or otherwise, then,
in each such event, the number of Preferred Securities purchasable
upon exercise of the Options immediately prior thereto shall be
adjusted so that the holder shall be entitled to receive the kind and
number of such shares or other securities which the holder would have
owned or have been entitled to receive after the happening of any of
the events described above, had such option been exercised immediately
prior to the happening of such event (or any record date with respect
thereto). Such adjustment shall be made whenever any of the events
listed above shall occur. An adjustment made pursuant to this Section
9(f) shall become effective immediately after the effective date of
the event retroactive to the record date, if any, in respect of the
event which entitles the Holder to receive such adjustment.
(ii) Whenever the number of Preferred Securities purchasable upon
the exercise of the Option is adjusted, the Exercise Price per
Preferred Security payable upon exercise of each Option shall be
adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number
of Preferred Securities purchasable upon the exercise of each Option
immediately prior to such adjustment, and the denominator of which
shall be the number of Preferred Securities purchasable immediately
after such adjustment.
(g) Limitation on Redemptions and Certain Distributions. While any
Options or Option Securities are held by the Holder, EGP will not, and will
not permit the Trust or any subsidiary of EGP to, apply any of its funds or
assets to, or set apart any funds or assets for, the purchase, redemption
or retirement of, or make any distribution (other than a dividend or other
distribution, including a Distribution or Liquidation Distribution, that
results in a reduction to the Exercise Price in accordance with Section
9(a) hereof) by reduction of capital or otherwise, in respect of any of the
Preferred Securities, whether now or hereafter outstanding; unless, in each
case, each Holder holding Options and/or Option Securities is offered the
option to receive the Applicable Portion of such purchase, redemption,
retirement or distribution. For this purpose, the "Applicable Portion"
shall mean the higher of the following: (A) in the same proportion that the
number of Options (or Option Securities therefor) owned by a Purchaser
bears to the number of Preferred Securities that EGP proposes to purchase,
redeem, retire or make a distribution in respect of, and (B) in the same
proportion that the number of Options (or Option Securities therefor) owned
by a Holder bears to the number of Preferred Securities owned by all
Affiliates of EGP that EGP proposes to purchase, redeem, retire or make a
distribution in respect of.
SECTION 10. Notices to Option Holders. In case at any time the Trust
proposes:
11
(a) to declare a cash dividend upon Preferred Securities;
(b) to declare or pay, or set apart any funds for the payment of, any
dividends on any Preferred Securities or make any other distribution,
including a Distribution or a Liquidation Distribution, to the holders of
its Preferred Securities;
(c) to apply any of its funds, property or assets to, or set apart any
funds, property or assets for, the purchase, redemption or retirement of,
or make any distribution, including a Distribution or Liquidation
Distribution, by reduction of capital or otherwise, in respect of any of
its Preferred Securities or in respect of any Rights or Convertible
Securities exercisable or exchangeable for or convertible into Preferred
Securities, whether now or hereafter outstanding;
(d) to issue or sell any Preferred Securities, Rights or Convertible
Securities (except pursuant to the exercise of Options or Rights or the
conversion or exchange of Convertible Securities in accordance with their
terms);
(e) to offer for subscription pro rata to the holders of Preferred
Securities or Convertible Securities any additional securities of any class
or other rights;
(f) to effect any capital reorganization, or reclassification of the
securities of the Trust, or consolidation or merger of the Trust with
another Person, or sale or other disposition of greater than 25% of the net
value of its assets; or
(g) to effect a voluntary or involuntary dissolution, liquidation or
winding up of the Trust;
then, in any one or more of said cases, EGP shall give (or cause the Trust
to give) the Holder of any Option (i) at least 10 Business Days' (but nor
more than 90 days') prior written notice of the date on which the books of
the Trust shall close or a record shall be taken for such dividend,
redemption, distribution, including a Distribution or Liquidation
Distribution, or subscription rights or for determining rights to vote in
respect of any such issuance, reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, and
(ii) in the case of any such issuance, reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at
least 10 Business Days' (but not more than 90 days') prior written notice
of the date when the same shall take place (provided that no more than 5
Business Days' prior written notice need be given of an issuance referred
to in clause (d) above). Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend,
redemption, distribution, including a Distribution or Liquidation
Distribution, or subscription rights, the date on which the holders of
Preferred Securities shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the date on
which the holders of Preferred Securities shall be entitled to exchange
their Preferred Securities for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. The failure to
give the notice required by this Section 10
12
or any defect therein shall not affect the legality or validity of any
distribution, including a Distribution or Liquidation Distribution, right,
Option, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
SECTION 11. Securities Law Matters; Transfers; Rule 144 and Rule 144A
Covenants.
(a) The parties hereto agree to be bound by the provisions of Exhibit
C hereto as if such provisions were set forth in full herein.
(b) With a view to making available certain rules and regulations of
the Securities and Exchange Commission (the "Commission") which may permit
the sale of Options and Option Securities without registration, EGP agrees
that at any time when securities of the Trust are registered under the
Securities and Exchange Act of 1934 (the "Exchange Act") that EGP will
cause the Trust to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), or any successor provision thereto;
(ii) so long as Rule 144A is available to the Holders, make and
keep available the information specified in Rule 144A(d)(4) under the
Securities Act or any successor provision thereto;
(iii) file with the Commission in a timely manner all reports and
other documents required of the Trust under the Exchange Act; and
(iv) furnish to each Holder upon request a written statement by
the Trust as to its compliance with the information or reporting
requirements of Rule 144 and Rule 144A or any successor provision
thereto, and of the Securities Act and the Exchange Act, and a copy of
the most recent annual or quarterly report of the Trust filed with the
Commission.
SECTION 12. Registration Rights. The provisions of Exhibit D of this
Agreement are hereby incorporated by reference herein as if set forth in full
herein.
SECTION 13. Security Interest. In order to secure its obligations to the
Holders under this Agreement, EGP hereby grants to the Holders a first priority
security interest in the Option Securities and the proceeds thereof, which
Option Securities shall be placed on the date of this Agreement into escrow
pursuant to Section 14 below. EGP hereby authorizes the Holders to file
financing statements relating to such Option Securities and proceeds.
SECTION 14. Escrow. On the date hereof EGP agrees to place into escrow the
Option Securities (and from time to time such other Option Securities as may be
required) with an escrow agent specified by the Holders (it being agreed that
such escrow agent must be a commercial bank, financial institution or trust
company not affiliated with any of the parties hereto). The escrow agreement
governing such escrow shall be in the form of Exhibit E hereto (the "Escrow
Agreement").
13
SECTION 15. Amendments and Waivers. Any provision of this Agreement may be
amended, supplemented, waived, discharged or terminated by a written instrument
signed by EGP and the Holders of a majority of the Option Securities purchased
or purchasable upon exercise of all outstanding Options; provided, that the
Exercise Price may not be increased, the Expiration Date may not be changed to
an earlier date and this Section may not be amended except with the consent of
each Holder which would be affected thereby.
SECTION 16. Specific Performance. The Holders of the Options and/or Option
Securities shall have the right to specific performance by EGP of the provisions
of this Agreement, and EGP hereby irrevocably waives, to the extent that it may
do so under applicable law, any defense based on the adequacy of a remedy at law
which may be asserted as a bar to the remedy of specific performance in any
action brought against EGP for specific performance of this Agreement by the
Holders.
SECTION 17. Notices. All notices, requests, demands or other communications
to or upon the respective parties hereto shall be in writing and shall be deemed
to have been given or made, and all financial statements, information and the
like required to be delivered hereunder shall be deemed to have been delivered,
either (a) three (3) Business Days after deposited in the United States
certified mail, return receipt requested, with postage prepaid, or (b) one (1)
Business Day after delivery to a nationally recognized courier, designated for
overnight delivery with all fees prepaid, in either case addressed to EGP at the
Option Office, Attn: Chief Executive Officer, and to the Holders at their
respective addresses set forth on the Option Register, or to such other address
as any of them shall specify in writing to the others. EGP shall cause the
Option Register to contain current addresses for each of the Holders.
SECTION 18. Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the benefit of EGP, its successors and assigns, the Holders
and the registered Holders from time to time of the Options and the Option
Securities.
SECTION 19. Termination. This Agreement shall terminate and be of no
further force and effect at the close of business on the earlier of (i) the
Expiration Date, (ii) the date on which none of the Options or Option Securities
shall be outstanding, and (iii) thirty (30) days following an Automatic
Exercise, except that the provisions of Section 9(g) (Additional Adjustment and
Anti-Dilution Provisions), Exhibit C, Exhibit D, and solely with regard to their
application to the foregoing provisions, Sections 15 (Amendments and Waivers),
16 (Specific Performance), 17 (Notices), 18 (Binding Effect; Assignability), 19
(Termination), 21 (Governing Law) and 24 (Costs and Expenses) shall continue in
full force and effect after such termination.
SECTION 20. Counterparts. This Agreement may be executed in one or more
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
SECTION 21. Governing Law. This Agreement and each Option shall be governed
by and construed in accordance with the laws of the State of New York.
14
SECTION 22. Effective Date. For purposes of this Agreement and each Option,
all of the provisions set forth herein shall be deemed to be effective as of
November 15, 2001.
SECTION 23. Headings. The headings of the sections of this Agreement and
Exhibits (as defined below) hereto are included for convenience of reference
only and shall not form a part of this Agreement or such Exhibits. As used
herein, the term "Exhibits" shall mean collectively Exhibit A, the form of
Option, Exhibit B, the Option Register, Exhibit C, Securities Law Matters;
Transfers, Exhibit D, Registration Rights and Exhibit E, the form of Escrow
Agreement attached hereto.
SECTION 24. Costs and Expenses. The Issuer shall pay, within five (5) days
after receipt of written request therefor, all reasonable fees, costs and
expenses of the Holders incurred in connection with the Holders' exercise,
preservation or enforcement, as the case may be and as may be applicable under
the circumstances, of any of their rights, remedies or benefits hereunder.
[Remainder of page intentionally left blank; signature page follows]
15
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Option Agreement-A of EGP to be duly executed and delivered by their
proper and duly authorized officers, as of the date and year first above
written.
EGP:
By:
------------------------------------------
Name/Title:
Holders:
LEG PARTNERS III SBIC, L.P.
by Xxxxx XX-XX, LLC, its general partner
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG CO-INVESTORS, LLC
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS, LLC
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx, Manager
16
EXHIBIT A
TO AMENDED AND RESTATED OPTION AGREEMENT-A
FORM OF OPTION
THIS OPTION AND THE UNDERLYING SECURITIES REPRESENTED BY THIS OPTION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THIS
OPTION AND THE UNDERLYING SECURITIES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN THE AMENDED AND RESTATED OPTION AGREEMENT-A DATED
___________ , 2002 BETWEEN EASY GARDENER PRODUCTS, LTD. ("EGP") AND THE INITIAL
HOLDERS OF THE OPTIONS THEREIN NAMED, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF USHG AND WILL BE FURNISHED TO THE HOLDER
HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
OPTION
to purchase 9.4% Cumulative Trust Preferred Securities
of U.S. Home & Garden Trust I
owned by Easy Gardener Products, Ltd.
No. O- _________, 20__
This Option certifies that _________________________, or registered
assigns, is the registered holder, as of November 15, 2001, of an Option (the
"Option") to purchase from EASY GARDENER PRODUCTS, LTD., a Texas limited
partnership ("EGP"), up to ________ Preferred Securities, liquidation amount $25
per Preferred Security ("Preferred Securities"), subject to adjustment as
provided in the Option Agreement. This Option may be exercised at any time prior
to 5:00 P.M., local time of the Option Office, on May 19, 2009 or, if such day
is not a Business Day, the next succeeding Business Day (the "Expiration Date"),
by surrender of this Option, execution and delivery of an Election to Purchase
in the form attached hereto and payment of the Exercise Price at the office of
EGP, 0000 Xxxxxxxx Xxxxxx, Xxxx, Xxxxx 00000-0000, or such other address as EGP
may specify in writing to the registered holder of this Option (the "Option
Office").
The aggregate Exercise Price for the Preferred Securities being purchased
may be paid by delivery of either (i) a certified check or bank draft or (ii)
Options or Option Securities, all as provided in Section 4(a) of the Amended and
Restated Option Agreement-A.
EGP may deem and treat the registered holder(s) of this Option as the
absolute owner(s) hereof (notwithstanding any notation of ownership or other
writing hereon made by
A-1
anyone), for the purpose of any exercise hereof and of any distribution to the
holder(s) hereof, and for all other purposes, and EGP shall not be affected by
any notice to the contrary.
This Option is one of the Options referred to in the Amended and Restated
Option Agreement-A, dated as of _________ __, 2002, between EGP and the initial
Holders named therein (the "Amended and Restated Option Agreement-A"). The
Amended and Restated Option Agreement-A is hereby incorporated by reference in
and made a part of this Option and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities of EGP and
the Holder. Unless otherwise defined herein, all capitalized terms used in this
Option have the meanings assigned to them in or pursuant to the Amended and
Restated Option Agreement-A.
IN WITNESS WHEREOF, EGP has caused this Option to be signed by its duly
authorized officers and has caused its corporate seal to be affixed hereunto.
EASY GARDENER PRODUCTS, LTD.
By:
--------------------------
Name:
Title:
(CORPORATE SEAL)
ATTEST:
--------------------------
, Secretary
A-2
ANNEX I
TO OPTION
[Form of]
ELECTION TO PURCHASE
[To be executed upon exercise of Option to purchase 9.4% Cumulative Trust
Preferred Securities of U.S. Home & Garden Trust I owned by Easy Gardener
Products, Ltd.]
The undersigned hereby elects to exercise the right, represented by the
attached Option of Easy Gardener Products, Ltd., a Texas limited partnership
("EGP"), to purchase from EGP _______ 9.4% Cumulative Trust Preferred
Securities, liquidation amount $25 per Preferred Security ("Preferred
Securities"), originally issued by U.S. Home & Garden Trust I ("Option
Securities"), and further elects to pay the aggregate Exercise Price therefor by
delivery of [a check or bank draft] [Options and Option Securities], as provided
in Section 4(a) of the Amended and Restated Option Agreement-A referred to in
the attached Option.
The undersigned requests that a certificate for such Option Securities be
registered in the name of _______________ whose address is ______________ and
that such certificate be delivered to _______________ whose address is
_______________.
If said number of Option Securities is less than all of the Option
Securities purchasable under the attached Option, the undersigned requests that
a new Option representing the remaining balance of the Option Securities be
registered in the name of _________________ whose address is _________________
and that such Option be delivered to __________________ whose address is
_________________.
Signature:
-------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Option)
Date:_______________, 20___
EXHIBIT B
TO AMENDED AND RESTATED OPTION AGREEMENT-A
EASY GARDENER PRODUCTS, LTD.
Option Register
Option Number of Trust
Certificate No. Name and Address of Holder Preferred Securities
--------------- -------------------------- --------------------
O-1 LEG Partners III SBIC, L.P. 91,353.00
O-2 LEG Co-Investors, LLC 865.50
O-3 555 Madison Investors, LLC 2,656.50
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
25.1 Attn: Xxxxxxx X. Xxxxxxx
Telecopier No.: 000-000-0000
TOTAL: 94,875.00
=========
B-1
EXHIBIT C
SECURITIES LAW MATTERS; TRANSFERS
SECTION 1. Securities Law Matters.
1.1. Securities Act. Each Holder acknowledges (a) the Option being acquired
by such Holder is not being registered under the Securities Act on the ground
that the issuance thereof is exempt from registration under Section 4(2) of the
Securities Act as not involving any public offering, and (b) that the Company's
and EGP's reliance on such exemption is predicated in part on the representation
hereby made to the Company and EGP by such Holder that it is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act, and (except as provided herein) is acquiring its Option for investment for
its own account, with no present intention of dividing its participation with
others or reselling or otherwise distributing the same, subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. Except as provided herein, none of the Holders is
aware of any particular occasion, event or circumstance upon the occurrence or
happening of which it intends to dispose of its Option.
1.2 Resales.
(a) None of the Holders will sell or transfer all or any part of its Option
or Option Securities except:
(i) pursuant to Rule 144 under the Securities Act;
(ii) pursuant to any other exemption from, or otherwise in a
transaction not subject to, the registration requirements of the Securities
Act (as confirmed in an opinion delivered by the transferor's counsel, to
the effect that the proposed transfer may be effected without registration
under the Securities Act);
(iii) in a transfer by a Holder to any Affiliate or wholly-owned
Subsidiary of the Holder; or by a Holder to Investors (as defined below) as
contemplated by Section 2.2 below; or
(iv) pursuant to an effective registration statement under the
Securities Act.
(b) The restrictions set forth in Section 1.2(a) above shall terminate and
cease to be effective with respect to any Option or Option Securities registered
under the Securities Act or transferred pursuant to Rule 144, or if EGP receives
an opinion of counsel reasonably satisfactory to it to the effect that the
securities represented thereby need no longer be subject to such restrictions in
order to ensure compliance with the Securities Act. Whenever such restrictions
shall so terminate the holder or transferee of such Option or Option Securities
shall be entitled to receive from the EGP without expense (other than transfer
taxes, if any), certificates for such Option or Option Securities not bearing
the first legend set forth in Section 4(b) of the Option Agreement, at which
time the EGP, will terminate or remove any transfer restrictions relating
thereto. In addition, EGP will issue (or cause to be issued) certificates for
C-1
the Option and Option Securities without all or part of the second legend set
forth in Section 4(b) of the Option Agreement whenever this Agreement and the
Amended and Restated Option Agreement cease to restrict the transfer of the
securities evidenced by such certificate.
SECTION 2. TRANSFERS.
2.1 Transfers. Subject to compliance with applicable securities laws, each
Holder shall be entitled to assign and transfer all or any part of its Option or
Option Securities, or any interest or participation therein, and its related
rights under this Agreement and, if applicable, the Amended and Restated Option
Agreement. Upon the assignment or transfer by such Holder of all or any part of
its Option or Option Securities or its interest therein (except in public
offering registered under the Securities Act, or a sale pursuant to Rule 144
thereunder), the term "Holder" as used herein shall thereafter include, to the
extent of the interest so assigned or transferred, the assignee or transferee of
such interest. Notwithstanding the foregoing, there shall be no more than ten
(10) Holders at any one time hereunder.
2.2 Participations. A Holder may wish to grant participations in its Option
or Option Securities to other accredited investors ("Investors") pursuant to a
participation agreement; provided, however, that at the time any such
participation is granted, the Holder granting such participation will so inform
EGP and furnish it the representation of each participating Investor (in form
and substance reasonably acceptable to EGP) that such Investor is acquiring his,
her or its participation with no present intention of reselling or distributing
the same. If at any time a Holder wishes to assign and transfer of record into
the name of an Investor his, her or its participation and related rights and
obligations, EGP and the other Holders will execute and deliver such agreements
and instruments as the transferring Holder may reasonably request (including
without limitation new certificates for Options and Option Securities in such
amounts as the transferring Holder may request) to effect the assignment and
transfer to such Investor (in his, her or its own name) of such participation,
or such part thereof as may be so assigned and transferred.
2.3 Issuance of New Option Certificates. The Company will at any time, at
its expense, at the request of a holder of an Option or Option Security, and
upon surrender of such Option or Option Security for such purpose, issue a new
certificate for such Option or Option Security in exchange therefor.
C-2
EXHIBIT D
TO AMENDED AND RESTATED
OPTION AGREEMENT-A
Registration Rights
(Preferred Securities)
SECTION 1. Definitions. The following terms used in this Exhibit D shall
have the meanings indicated below:
"Registrable Securities" shall mean (i) the Preferred Options and Preferred
Option Securities and (ii) Preferred Securities and any other securities
issuable or issued by way of securities dividend or securities split or in
connection with a combination of securities, recapitalization, merger,
consolidation or other reorganization or other transaction of the character
referred to in Section 9 of the Amended and Restated Option Agreement-A;
provided, however, that EGP shall have no obligation to cause the Trust to
register any Preferred Options, and each holder of Preferred Options who desires
to include in a registration any Preferred Securities issuable upon exercise of
such Preferred Options will (if requested to do so by EGP or the Trust) exercise
all or part of its Preferred Options prior to the effectiveness of such
registration as required to permit the inclusion therein of such underlying
securities.
SECTION 2. Registration.
(a) Incidental Registration Rights. In the case of any proposed
registration of Preferred Securities or other securities of the Trust under
the Securities Act, whether or not for sale for its own account, on any
form which can include Registrable Securities (other than Form S-8 or S-4
or successor forms), EGP will (or will cause the Trust to) give at least 30
days' prior written notice of the filing thereof to all Holders.
(1) such notice shall afford the Holders an opportunity to elect
within 15 days after receipt thereof to include in such filing all or
any part of their Registrable Securities; provided, that, in the case
of an underwritten public offering, the managing underwriter
administering such offering may reduce the number of Registrable
Securities to be included in such offering if, in the reasonable
opinion of such managing underwriter, the inclusion in such offering
of all Registrable Securities requested to be registered would
materially and adversely affect the marketing of the entire offering
(the number of Registrable Securities to be included in such offering
being herein referred to as the "Permissible Securities"). If the
aggregate number of Registrable Securities which the Holders thereof
desire to include in such filing exceeds the number of Permissible
Securities, then each such Holder shall be entitled to include that
number of Registrable Securities which bears the same ratio to the
number of Permissible Securities as the number of Registrable
Securities such Holder desires to include bears to the number of
Registrable Securities all such Holders desire to include.
(2) EGP agrees that any Holder entitled to include Registrable
Securities in any such registration may assign or transfer such right
to include such Registrable Securities to any other Holder or Holders.
(3) EGP shall be obligated under this Section 2(a) to cause the
Trust to afford the Holders the right to participate in each and every
such registration taking place until all Registrable Securities have
been included in registrations and sold or sold pursuant to Rule 144.
(b) Short Form Registrations. In addition to the registration rights
provided in Section 2(a) above, the holders of a majority of the
Registrable Securities shall be entitled to request by written notice to
EGP from time to time that EGP cause the registration by the Trust of the
offering and sale of all or a portion of the Registrable Securities on Form
S-3 (or any successor or similar short form registration), provided that
the Trust is eligible for such registration. Upon receipt of such written
notice, if the Trust is then eligible to use Form S-3 (or any successor or
similar short form registration), EGP will thereupon notify all other
Purchasers of such request. Upon the written request of any such other
Purchasers after receipt from EGP of such notification, EGP will use its
best efforts to cause such of the Registrable Securities as may be
requested by any Purchasers (including the Purchaser giving the initial
notice of intent to register hereunder) to be registered under the
Securities Act in accordance with the terms of this Section 2. EGP will use
its best efforts to cause the Trust to qualify for use of a registration
statement on Form S-3 (or any successor or similar short form registration)
as early as practicable. The Trust shall not be required to file more than
one registration statement pursuant to this Section 2(b) in any 12 month
period or more than two registration statements pursuant to this Section
2(b) in all.
(c) Expenses of Registration. The costs and expenses of all
registrations and qualifications under the Securities Act and applicable
state securities laws and of all other actions, which EGP is required to
take or effect (or cause the Trust to take or effect) pursuant to this
Section 2 (including without limitation all registration and filing fees,
printing expenses and reasonable fees and disbursements of counsel) shall
be paid by EGP, except that the Holders shall bear their pro rata share of
any underwriting discount or commission, or other similar selling expenses;
provided, that EGP shall not be required to pay the fees and expenses of
more than one counsel for the selling Holders.
(d) Opinion of Counsel as Alternative. The registration rights granted
to the Holders under this Section 2 shall be subject to the condition that
any registration of Registrable Securities proposed to be effected need not
be effected if EGP shall deliver (or cause the Trust to deliver) to the
Holders requesting such registration an opinion, satisfactory to such
Holders and their counsel, of Blank Rome Xxxxxxx & XxXxxxxx LLP or other
counsel satisfactory to such Holders to the effect that the proposed sale
or disposition for which registration was requested does not require
registration under the Securities Act, but such opinion shall not rely on
the availability of sales utilizing the provisions of Rule 144 if doing so
would impose on the Holder any volume restrictions, or any pre-sale
notification or similar restriction on the free sale of the Registrable
Securities. EGP hereby indemnifies the Holders, and each of them, against
and holds them harmless from all damages, losses, liabilities
2
(including liability for rescission), costs and expenses which they may
incur under the Securities Act or otherwise by reason of their proceeding
in accordance with such opinion of counsel.
(e) Registration Obligations. If and whenever EGP is obligated by the
provisions of this Section 2 to cause the registration of any Registrable
Securities under the Securities Act, as expeditiously as reasonably
possible EGP will, or will use its best efforts to, as the case may be,
cause the Trust to:
(1) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities.
(2) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective until the earlier of the sale of all Registrable Securities
covered thereby and the expiration of a period of nine months after
the date such registration statement became effective (except that any
registration statement on Form S-3 or similar short-form shall be
maintained for not less than two years), and comply with the
provisions of the Securities Act with respect to the disposition of
all Registrable Securities covered by such registration statement.
(3) Furnish to each selling Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Holder may reasonably request.
(4) Register or qualify the Registrable Securities covered by
such registration statement under such other securities or blue sky
laws of such jurisdictions (subject to the approval of any managing
underwriter involved) as the selling Holders shall request, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holders to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that
the Trust shall not be obligated, by reason thereof, to qualify as a
foreign corporation or subject itself to taxation as doing business in
any such jurisdiction.
(5) Notify the selling Holders and their counsel promptly after
EGP or the Trust shall receive notice that any registration statement,
supplement or amendment has become effective, or that any registration
statement is required to be amended or supplemented, or that any stop
order has been issued.
(f) Indemnification. EGP agrees to indemnify and hold harmless each
Holder, its officers or directors, Affiliates and each Person, if any, who
controls such Holder within the meaning of the Securities Act, from and
against any losses, claims, damages, liabilities and expenses (under such
Act, at common law or otherwise) caused by any untrue statement or alleged
untrue statement of a material fact or omission to state a material fact
required to be stated or necessary to make the statements therein not
misleading in any registration statement or preliminary or final prospectus
or filing for state registration or qualification, or any
3
amendment or supplement thereto, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any such untrue statement
contained in or omission from information furnished in writing to EGP or
the Trust by such Holder expressly for use therein.
(g) Agreement as to Underwriters. If the offering pursuant to any
registration statement provided for under this Section 2 is made, at the
election of EGP, through underwriters, EGP agrees to cause the Trust to
enter into an underwriting agreement in customary form with such
underwriters and to indemnify such underwriters, their officers and
directors, if any, and each Person who controls such underwriters within
the meaning of the Securities Act, to the same extent as provided in
Section 2(f) with respect to the indemnification of a Holder.
(h) No Special Audit. EGP shall not be required to conduct any special
audit (or any audit not in the ordinary course of its business) in
connection with any registration hereunder.
4
EXHIBIT E
FORM OF ESCROW AGREEMENT
OPTION ESCROW AGREEMENT
THIS OPTION ESCROW AGREEMENT (this "Agreement"), dated _______, 200__, is
by and among Easy Gardener Products, Ltd., a Texas limited partnership ("EGP"),
_____________, (the "Option Holder"), and ____________________ (the "Escrow
Agent").
RECITALS
A. U.S. Home & Garden Inc., a Delaware corporation ("USHG"), Easy Gardener
Inc., a Delaware corporation ("EGI"), and Option Holder are parties to that
certain Settlement Agreement, dated as of November 1, 2002 (the "Settlement
Agreement"), pursuant to which (i) upon consummation of the Transaction (as
defined in the Settlement Agreement), EGP will acquire certain assets and assume
certain obligations of USHG and EGI (collectively, the "Assets"), including the
obligations of USHG under the Amended and Restated Option Agreement - A; and
(ii) EGP has agreed to issue to Option Holder those additional options described
in Option Agreement - B (together, the "Option Agreements" or individually an
"Option Agreement"), in each case with respect to the delivery of the 9.4%
Cumulative Trust Preferred Securities (the "Trust Preferred Securities") of U.S.
Home & Garden Trust I (the "Trust") to the Option Holder, as set forth in each
such Option Agreement upon exercise thereof. As used herein the term "Option" or
"Options" shall refer to any option or options, as the case may be, granted
under the Option Agreements.
B. In accordance with the terms of the Settlement Agreement, EGP shall
deposit, at the time of the acquisition of Assets (the "Settlement Closing")
189,750 Trust Preferred Securities and from time to time such other Option
Securities (as defined in the Option Agreements) as may be required under the
Option Agreements (the "Escrow Deposit") with the Escrow Agent.
C. The receipt by the Option Holder of all or any portion of the Escrow
Deposit is conditioned upon the delivery by the Option Holder to the Escrow
Agent, pursuant to the terms of this Agreement, of a certificate of an officer
of the Option Holder stating that certain conditions to exercise of the Option
as set forth in the Option Agreements have been met.
AGREEMENTS
In consideration of the recitals and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, all capitalized terms used, but
not otherwise defined herein, shall have the meanings attributed to such terms
in the Settlement Agreement.
2. Escrow Deposit; Trust Preferred Securities.
(a) For the purposes herein set forth, EGP hereby deposits the Escrow
Deposit into escrow with the Escrow Agent, in accordance with this
Agreement and as otherwise set forth in the Option Agreements. The Escrow
Deposit shall be held and disbursed by the Escrow Agent in accordance with
the terms of this Agreement.
2
26. For the purposes herein set forth, EGP hereby (i) delivers to the
Escrow Agent the trust preferred stock certificates and any other Option
Securities, duly executed in blank or accompanied by stock powers duly executed
in blank, (ii) agrees to deposit with the Escrow Agent such other securities or
cash as may be required from time to time to be deposited pursuant to the terms
of the Settlement Agreement or Option Agreements, and (iii) agrees to deliver to
Option Holder's legal counsel copies of all certificates constituting the Option
Securities as well as an inventory of all items constituting the Escrow Deposit.
(c) The parties hereby acknowledge that in order to secure EGP's
obligations under the Option Agreement, EGP has granted to the Option
Holder a security interest in all of EGP's right, title and interest in and
to the Option Securities constituting the Escrow Deposit and all investment
property and proceeds relating thereto (collectively, the "Collateral").
Upon receipt by Escrow Agent of notice from the Option Holder that EGP has
failed to comply with any of the terms of the Option Agreement or becomes
insolvent, Escrow Agent shall follow all instructions from the Option
Holder with respect to the Collateral. The Escrow Agent agrees that it will
not follow the instructions of any other person with respect to the
Collateral once it has received such a notice from the Option Holder. EGP
represents and warrants to purchasers that it has good and marketable title
to the Collateral and that it has assumed all of USHG's obligations under
the Option Agreements. EGP authorizes the Option Holder, at their option,
to file Uniform Commercial Code financing statements in order to perfect
its security interest in the Collateral, and agrees to execute and deliver
such other documents or instruments deemed necessary or desirable to
effectuate the foregoing including a Securities Account Control Agreement
with the Escrow Agent and Option Holder in a form acceptable to the Option
Holder in Option Holder's sole discretion.
3. Application of Escrow Deposit; Disposition of Trust Preferred
Securities.
(a) The Escrow Deposit shall be held in escrow under the terms of this
Agreement and forthwith released by the Escrow Agent to the Option Holder
(as the Option Holder shall direct) upon receipt of the Certificate (as
defined below). As used herein the term "Certificate" shall mean a
certificate executed by an officer of Option Holder that states that (i)
the exercise price for the portion of the Option being exercised has been
paid, or that an Automatic Exercise (as defined in the Amended and Restated
Option Agreement-A) has occurred, in either case, in accordance with the
terms of the applicable Option Agreement, and (ii) the Option so exercised
has been sent to EGP in accordance with the terms of the applicable Option
Agreement.
(b) At least one Business Day (but not less than 24 hours) prior to
delivering any Certificate to the Escrow Agent, Option Holder shall provide
EGP with notice of its intentions to deliver such Certificate. For purposes
of this Agreement, "Business Day"
3
shall mean a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are required by law to close.
(c) In the event the terms of the Option Agreements expire with any
portions thereof remaining unexercised, upon receipt of EGP's written
notice to the Option Holder of such expiration, the Option Holder shall
direct the Escrow Agent to release and disburse any remaining Option
Securities to EGP.
4. Termination. This Agreement shall continue in effect until the Escrow
Deposit has been disbursed in accordance with Section 3 of this Agreement.
5. Liability of Escrow Agent; Expenses. The duties of the Escrow Agent
hereunder shall be limited to the observance of the express provisions of this
Agreement. The Escrow Agent shall not make any disposition of the Escrow Deposit
(or any portion thereof) which is not expressly authorized by this Agreement.
The Escrow Agent may rely upon and act upon any instrument delivered to it by
the Option Holder or otherwise pursuant to the provisions of this Agreement
which it in good faith believes to be genuine and in conformity with the
requirements of this Agreement. Except as expressly provided in this Agreement,
the Escrow Agent shall have no duty to determine or inquire into the happening
or the occurrence of any event or the performance or failure of performance of
either EGP or the Option Holder with respect to arrangements or contracts
between them or with others. Notwithstanding anything in this Agreement to the
contrary, the Escrow Agent shall not be liable to any person for anything which
it may do or refrain from doing in connection with this Agreement, unless the
Escrow Agent's conduct constitutes fraud, gross negligence or willful
misconduct. The fees and expenses of the Escrow Agent hereunder shall be the
responsibility of EGP.
6. Miscellaneous.
(a) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall
be delivered personally, sent by facsimile delivery (with confirmation of
delivery by sender's equipment), sent by overnight courier or sent by
certified or registered mail, postage prepaid. Any notice given by either
party to the Escrow Agent shall be delivered simultaneously to the other
party. Any such notice shall be deemed given when so delivered personally,
if sent by facsimile (with confirmation), on the day sent, and if sent by
overnight courier or U.S. mail, on the date received or the date such
receipt is refused by or on behalf of the addressee, as follows:
If to the Option Holder, to:
c/o Golub Associates Incorporated
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxxxx, Principal
4
with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy No.: 312-902-1061
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
If to EGP, to:
__________________________
__________________________
__________________________
Telecopy No.: __________________________
Attention: __________________________
with a copy to:
__________________________
__________________________
__________________________
Telecopy No.: __________________________
Attention: __________________________
If to the Escrow Agent, to:
__________________________
__________________________
__________________________
Telecopy No.: __________________________
Attention: __________________________
Any party may change its address for notice by written notice given to the
other parties in accordance with this section.
(b) Amendments. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by EGP, the Escrow
Agent and the Option Holder.
(c) Entire Agreement. This Agreement constitutes the entire agreement
of the parties regarding the subject matter hereof, and supersedes all
prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
5
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York concerning
contracts made and to be wholly-performed in such State, without regard to
its conflicts of law principles. In any action or suit to enforce any right
or remedy under this Agreement or to interpret any provision of this
Agreement, the prevailing party shall be entitled to recover its costs,
including reasonable attorneys' fees.
(e) Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
The parties hereto have caused this Agreement to be executed as of the
day and year first written above.
OPTION HOLDER:
[____________]
By:
-----------------------------
Its:
----------------------------
EGP:
By:
-----------------------------
Its:
----------------------------
EASY GARDENER PRODUCTS, LTD.
By:
-----------------------------
Its:
----------------------------
ESCROW AGENT:
[____________]
By:
-----------------------------
Its:
----------------------------
6
For Settlement Purposes Only
EXHIBIT 4.1B
TO SETTLEMENT AGREEMENT
--------------------------------------------------------------------------------
EASY GARDENER PRODUCTS, LTD.
and
THE HOLDERS NAMED HEREIN
OPTION AGREEMENT-B
--------------------------------------------------------------------------------
_____________, 200___
7
THIS OPTION AND THE UNDERLYING SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.
OPTION AGREEMENT-B
(Option to purchase 9.4% Cumulative Trust Preferred Securities
of U.S. Home & Garden Trust I owned by Easy Gardener Products Ltd.)
THIS OPTION AGREEMENT-B, dated ____________, 200__, is between Easy
Gardener Products Ltd., a Texas limited partnership ("EGP"), and the holders
from time to time of the Options or Option Securities referred to herein (the
"Holders").
WHEREAS, the Holders, U.S. Home & Garden Inc. ("USHG") and USHG's
wholly-owned subsidiary Easy Gardener, Inc. (the "Company") are parties to a
Settlement Agreement, dated as of November 1, 2002 (the "Settlement Agreement");
WHEREAS, pursuant to the Settlement Agreement the Holders were granted the
right to purchase up to 94,875 of the 9.4% Cumulative Trust Preferred
Securities, liquidation amount $25 per Trust Preferred Security ("Preferred
Securities"), originally issued by USHG's subsidiary U.S. Home & Garden Trust I
(the "Trust") and repurchased by USHG, such right to be governed by the terms of
this Option Agreement-B; and
WHEREAS, the Preferred Securities have been transferred by USHG to EGP, and
WHEREAS, the Holders understand that the Preferred Securities were issued
by the Trust, but that the Options herein granted by EGP, represent the right to
purchase from EGP (and not from the Trust) Preferred Securities originally
issued by the Trust that are now owned by EGP;
NOW, THEREFORE, in consideration of the premises EGP and the Holders agree
as follows:
SECTION 1. Definitions. The following terms used herein shall have the
meanings indicated below, unless the context otherwise requires:
"Affiliate" of any Person shall mean any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such first Person, it being
understood that this shall include any officer or director of a Person
which is a corporation, any manager or director of a limited liability
company, and any general partner of a partnership, and any officer,
director or owner of ten percent (10%) or more of any entity which so
serves as such manager or general partner, (b) that directly or
beneficially owns ten percent (10%) or more of any class of the voting
stock of such first Person, or (c) ten percent (10%) or more of whose
voting stock (or in the case of a Person which is not a
corporation, ten percent (10%) or more of whose equity interest) is owned
directly or beneficially by such first Person.
"Agreement" or "Option Agreement" shall mean this Option Agreement-B,
together with all Exhibits hereto, as may be amended, modified or
supplemented from time to time with the consent of the Holders in
accordance with Section 15.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York, are required by law to
close.
"Commission" shall have the meaning given thereto in Section 11(b).
"Convertible Securities" shall mean (a) any stock, notes or other
securities of the Trust convertible into or exchangeable, directly or
indirectly, for Preferred Securities (whether or not such right to convert
or exchange is immediately exercisable or is "in the money"), (b) any other
security, note or agreement of the Trust which provides the holder thereof
with a payment, repayment amount, appreciation right or liquidation
preference (i) calculated by reference to, or arising from, the value of
the Trust upon a sale, merger, recapitalization or similar event, or (ii)
based upon the value, whether market or appraisal, of the Preferred
Securities, and (c) any agreement of the Trust to issue or sell Preferred
Securities or to issue, sell or enter into such other stock, notes,
securities or agreements described in the foregoing clauses (a) or (b).
"Distribution" shall have the meaning given thereto in the Trust
Agreement.
"Escrow Agreement" shall have the meaning given thereto in Section 14.
"Exchange Act" shall have the meaning given thereto in Section 11.
"Exercise Price" shall have the meaning given thereto in Section 3.
"Expiration Date" shall mean May 19, 2009 or, if such day is not a
Business Day, the next succeeding Business Day.
"Liquidation Distribution" shall have the meaning given thereto in the
Trust Agreement.
"Market Price" of a Preferred Security shall mean the average of the
daily market prices of a Preferred Security over a period of 20 consecutive
business days prior to the day as of which "Market Price" is being
determined. The market price for each such business day shall be the
average of the closing sales prices on such day of a Preferred Security on
the principal domestic stock exchange on which Preferred Securities are
then listed, or if there shall have been no sales on any such exchange on
such day, the average of the highest bid and lowest asked prices on such
exchange at the end of such day, or, if the Preferred Securities shall not
be so listed, the closing sales price in the NASDAQ System on such day, or
if there shall have been no sales in the NASDAQ System on such day, the
average of the highest bid and lowest asked prices on the NASDAQ System on
such day, or if the Preferred Securities shall not be quoted in
2
the NASDAQ System, the average of the high and low bid and asked prices on
such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization. If the Preferred Securities are listed on any domestic
exchange the term "business days" as used in this paragraph shall mean
business days on which such exchange is open for trading.
If at any time the Preferred Securities are not listed on any domestic
exchange or quoted in the NASDAQ System or the domestic over-the-counter
market, the "Market Price" shall be the fair market value of a Preferred
Security as determined in good faith by the Board of Directors of the
general partner of EGP (giving due regard to any recent sales or valuations
of Preferred Securities) or, if the holders of a majority of the Options
shall, in the exercise of their sole discretion, object to such
determination, as determined by appraisal pursuant to the following
paragraph of this definition; provided, that if any valuation or appraisal
has been made of the Trust or its Preferred Securities for any reason
within six months prior to any date as of which the Market Price is to be
determined hereunder, then the Holders shall be entitled, at their option,
to rely on such appraisal and such valuation or appraisal shall be binding
on EGP unless any event shall have occurred since the date of such
valuation or appraisal which, in the reasonable opinion of the Holders of a
majority of the Options, manifestly affects the continued validity of such
appraisal.
If the Holders of a majority of the Options shall object to the
determination of Market Price made by the Board of Directors of the
general partner of EGP pursuant to the preceding paragraph, then
Market Price shall be determined as of the end of the most recent
complete fiscal quarter of the Trust ended prior to the date of
determination (taking into account actual performance subsequent
thereto and projections for future periods), and shall be determined
by appraisal as follows: Within fifteen (15) days after receipt by EGP
of notice that an appraisal is desired, EGP and the Holders of a
majority of the Options shall jointly appoint an appraiser for the
purpose of determining Market Price. Such appraiser shall be an
investment banking or advisory firm with experience in valuing trusts
or other special purpose entities such as the Trust, which investment
banking or advisory firm shall be either a firm of recognized national
standing or a regional firm of good national reputation. If there
shall be a dispute as to the selection of such appraiser, then the
appraiser shall be appointed by the American Arbitration Association
upon application by EGP or the Holders of a majority of the Options.
EGP and the Holders of a majority of the Options shall be afforded
reasonable opportunities to discuss the appraisal with such appraiser.
The determination of Market Price by such appraiser shall be final and
binding upon EGP and the Holders of the Options. The fees and expenses
of the appraiser and, if any, of the American Arbitration Association,
shall be borne by EGP unless the determination of Market Price by such
appraiser is the same as the determination of Market Price made by the
Board of Directors (or less favorable to the Holders), in which case
the fees and expenses of such appraiser shall be borne equally by EGP
and the Holders of Options.
3
"Option" shall mean an Option certificate, in the form of Exhibit A
hereto, and shall also mean the right upon exercise thereof to acquire one
Option Security.
"Option Office" shall mean the office or agency of EGP at which the
Option Register shall be maintained and where the Options may be presented
for exercise, exchange, substitution and transfer, which office or agency
will be the office of EGP at 0000 Xxxxxxxx Xxxxxx, Xxxx, XX 00000-0000. The
Option Office may be changed by EGP pursuant to notice in writing to the
registered Holders of the Options.
"Option Register" shall mean the register, in the form of Exhibit B
hereto, maintained by EGP at the Option Office.
"Option Securities" shall mean the Preferred Securities purchasable or
purchased upon exercise of the Options, and any other Preferred Securities,
capital stock, equity interest, or other securities issuable or issued in
respect of the Option Securities by way of securities dividend,
distribution or securities split or other transaction of the character
referred to in Section 9.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability
company, association, corporation, institution, entity, or government
(whether national, federal, state, county, city, municipal or otherwise,
including without limitation any instrumentality, division, agency, body or
department thereof).
"Preferred Security" shall mean an undivided beneficial interest in
the assets of the Trust designated as "9.4% Cumulative Trust Preferred
Securities", having a Liquidation Amount of $25 per security and having the
rights provided therefor in the Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided in the
Trust Agreement.
"Securities Act" shall have the meaning given thereto in Section 11.
"Settlement Closing" shall have the meaning given thereto in the
Settlement Agreement.
"Trust Agreement" shall mean the Trust's Amended and Restated Trust
Agreement dated as of April 17, 1998 among USHG, as Depositor, Wilmington
Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware
Trustee, and the Administrative Trustees named therein, pursuant to which,
among other things, the Preferred Securities were issued[, as such Amended
and Restated Trust Agreement may be amended, supplemented or assigned in
connection with the transactions contemplated by the Settlement Agreement].
4
SECTION 2. Grant of Options.
EGP hereby grants to the Holders Options to purchase up to that number of
Preferred Securities listed opposite their respective names on Exhibit B
attached hereto, which shall initially represent the right to purchase, in the
aggregate, up to 94,875 Preferred Securities.(3) The Options shall be
exercisable at any time until 5:00 P.M. (local time at the Option Office) on the
Expiration Date.
SECTION 3. Exercise Price. At any time of determination, the price (the
"Exercise Price") at which a Holder may purchase each Option Security issuable
upon exercise of such Holder's Options shall be equal to the lower of (i)
[insert lowest of (a) $9.25 per share and (b) closing bid price of the Preferred
Securities as reported on the American Stock Exchange as of the date of
Settlement Agreement], and (ii) the closing bid price of the Trust Preferred
Securities as reported on the American Stock Exchange as of the trading day
immediately prior to the date of the Settlement Closing.(4)
SECTION 4. Exercise of Options.
(a) The rights represented by any Option granted pursuant hereto may
be exercised by the Holder thereof, in whole or in part, by delivering to
the Option Office:
(i) the Option, together with a properly completed Election to
Purchase in the form attached thereto;
(ii) at the Holders' option, either (A) a check or bank draft in
the amount of the aggregate Exercise Price for the Preferred
Securities to be purchased, or (B) Preferred Securities or Options
owned by the Holders having a Market Price equal to the aggregate
Exercise Price for the Preferred Securities to be purchased. For
purposes of this Section 4: (I) the Market Price per Preferred
Security at any time shall be determined in accordance with the
definition of Market Price and (II) the Market Price per Option at any
time shall be the Market Price per Preferred Security minus the
Exercise Price then in effect; and
(iii) any representations or documents or information from the
Holder of the Options that EGP may reasonably require in order to
comply with the requirements of the Securities Act with respect of
such issuance and in order to comply with the provisions of Section 8
of this Agreement.
Upon such exercise EGP shall transfer, assign and deliver (or shall cause the
Trust to issue and deliver, or shall cause the escrow agent under the Escrow
Agreement to issue and deliver) to or to the order of the registered Holder(s)
of such Option, and in such name or names as such registered Holder(s) may
designate, one or more certificate(s) for the Option Securities to be sold
----------
(3) With respect to the number of Preferred Securities purchasable upon exercise
of the Options as described in this Section 2, the parties acknowledge and agree
that such number of Preferred Securities shall be adjusted consistent with the
provisions of Section 9(f) hereof to reflect events occurring during the period
commencing on the date of execution of the Settlement Agreement through and
including the date hereof.
(4) With respect to the Exercise Price of the Option for the Preferred
Securities, the parties acknowledge and agree that appropriate adjustments shall
be made consistent with the provisions of Section 9(f) and consistent with the
adjustments set forth in Note 1.
5
upon such exercise of such Option. Any person(s) so designated to be named
therein shall be deemed to have become the Holder(s) of record of such Option
Securities as of the date of delivery to EGP at the Option Office of the Option
and the Exercise Price therefor as provided in clauses (i) and (ii) above.
(b) If an Option is exercised in part at any time, a new Option or
Options shall be issued for the unexercised portion of such Option. Each
new Option so issued shall bear the following legend, if the Option
presented in connection with a partial exercise thereof bore such legend.
All Options surrendered upon exercise shall be canceled.
THIS OPTION AND THE UNDERLYING SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.
IN ADDITION, THIS OPTION AND THE UNDERLYING SECURITIES MAY BE TRANSFERRED
ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE OPTION AGREEMENT-B
AS OF ________ __, 200__, BETWEEN EASY GARDENER PRODUCTS, LTD. AND THE
INITIAL HOLDERS OF THE OPTIONS NAMED THEREIN, COMPLETE AND CORRECT COPIES
OF WHICH ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF EASY
GARDENER PRODUCTS LTD. AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE.
(c) EGP will pay all taxes (other than any applicable income or
similar taxes payable by the Holders) attributable to the sale of Option
Securities upon the exercise of the Options; provided, that EGP shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issue of any Option or any certificate for Option
Securities in a name other than that of the registered Holder of the Option
surrendered for exercise.
SECTION 5. Registration, Transfer and Exchange of Certificates.
(a) EGP shall maintain at the Option Office an Option Register for
registration of the Options and transfers thereof. EGP may deem and treat
the registered Holder(s) of the Options as the absolute owner(s) thereof
for the purpose of any exercise thereof or any distribution to the
Holder(s) thereof, and for all other purposes.
(b) EGP shall register the transfer of any outstanding Option in the
Option Register upon surrender to EGP at the Option Office of such Option,
accompanied (if so required by it) by one or more duly executed instruments
of transfer in form satisfactory to EGP. Upon any such registration of
transfer, one or more new Option(s) evidencing such transferred Option
shall be issued to the transferee(s) and the surrendered Option shall be
canceled. If less than all
6
of a surrendered Option is to be transferred, new Option(s) shall be issued
to the surrendering Holder evidencing the remaining balance of the
surrendered Option.
(c) Each Option may, at the option of the Holder(s) thereof, be
surrendered to EGP at the Option Office to be exchanged for one or more new
Options of like tenor and exercisable in the aggregate for a like number of
Option Securities. Options surrendered for exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except
for any tax or other governmental charge imposed in connection therewith.
Except as provided for in the provisions set forth on Exhibit C hereto,
each Option issued upon transfer or exchange shall bear the legend set
forth in Section 4 if the Option presented for transfer or exchange bore
such legend.
SECTION 6. Mutilated or Missing Option. If any Option is mutilated, lost,
stolen or destroyed, EGP shall issue, in exchange and substitution for and upon
cancellation of the mutilated Option, or in lieu of and substitution for the
Option lost, stolen or destroyed, a new Option of like tenor and representing
rights to acquire an equivalent number of Preferred Securities, but only upon
receipt of evidence satisfactory to EGP of such loss, theft or destruction of
such Option and, if requested, indemnity satisfactory to it. No service charge
shall be made for any such substitution, but all reasonable charges associated
with any stamp, tax or other governmental duty that may be imposed in relation
thereto shall be borne by the Holder of such Option. Each Option issued in any
such substitution shall bear the legend set forth in Section 4 if the Option for
which such substitution was made bore such legend.
SECTION 7. Reservation and Sale of Option Securities.
(a) EGP will at all times keep available, free of all Liens,
restrictions, rights and claims of others, for the purpose of enabling it
to satisfy its obligation to sell Preferred Securities upon any exercise of
the Options, the number of Preferred Securities purchasable upon exercise
of all outstanding Options. Upon any sale of Preferred Securities to a
holder of Options upon exercise thereof, such Preferred Securities shall be
free of all Liens, restrictions, rights and claims of others.
(b) EGP covenants that all Option Securities will, upon sale to a
Holder upon exercise of an Option, be fully paid and nonassessable and free
from all taxes with respect to the sale thereof (other than any applicable
income or similar taxes payable by the Holders) and from all Liens,
restrictions, rights and claims of others (except for Liens, if any,
created by the Holder thereof).
SECTION 8. Obtaining of Governmental Approvals and Stock Exchange Listings.
EGP will, or will cause the Trust to, at its or the Trust's expense, (a) obtain
and keep effective any and all permits, consents and approvals of governmental
agencies and authorities which may from time to time be required in order to
sell Option Securities upon exercise of the Options, and otherwise to perform
its obligations hereunder, and (b) take all action which may be necessary so
7
that the Option Securities, immediately upon their sale upon the exercise of
Options, will be listed on each securities exchange, if any, on which Preferred
Securities are then listed.
SECTION 9. Additional Adjustment and Anti-Dilution Provisions.
(a) [INTENTIONALLY OMITTED]
(b) Reorganizations and Asset Sales. If any capital reorganization or
reclassification of the securities of the Trust, or any consolidation or
merger of the Trust with another entity, or the sale of all or
substantially all of its assets to another person or entity shall be
effected in such a way that holders of Preferred Securities shall be
entitled to receive securities or assets with respect to or in exchange for
Preferred Securities, then the following provisions shall apply (unless and
only to such extent that such event did not result in an adjustment or
payment pursuant to Section 9(a) hereof):
(i) as a condition of such reorganization, reclassification,
consolidation, merger or sale (except as otherwise provided below in
this Section 9(b)), lawful and adequate provisions shall be made
whereby each Holder shall thereafter have the right to purchase and
receive upon the terms and conditions specified in this Agreement and
in lieu of the Option Securities immediately theretofore receivable
upon the exercise of his or its Option, such securities or assets as
may be issued or payable with respect to or in exchange for a number
of outstanding Preferred Securities equal to the number of Option
Securities immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provision shall be made
with respect to the rights and interests of such Holder to the end
that the provisions hereof (including without limitation provisions
for adjustments of the number of securities receivable upon exercise
of an Option) shall thereafter be applicable, as nearly as may be, in
relation to any securities or assets thereafter deliverable upon the
exercise of an Option;
(ii) EGP shall not permit any such consolidation, merger or sale
unless prior to or simultaneously with the consummation thereof the
successor entity (if other than EGP) resulting from such consolidation
or merger or the person or entity purchasing such assets shall assume
by written instrument executed and mailed or delivered to each Holder
at the last address of such Holder appearing on the books of EGP, the
obligation to deliver to such Holder such securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled
to receive, and all other liabilities and obligations of EGP
hereunder. Upon written request by the Holder of any Option, EGP or
such successor person or entity will issue or grant a new Option
revised to reflect the modifications in this Agreement effected
pursuant to this Section 9(b); and
(iii) if a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding Preferred
Securities of the Trust, EGP shall not permit any consolidation,
merger or sale with the person or entity that made such offer or with
any affiliate of such person or entity, unless prior to the
consummation of such consolidation, merger or sale each Holder of an
Option shall have been given a reasonable opportunity to then elect to
receive upon the exercise of his or its Option
8
either the securities or assets then issuable with respect to the
Preferred Securities or the securities or assets, or the equivalent,
issued to previous holders of Preferred Securities in accordance with
such offer.
(c) Notice of Adjustment. Whenever the number of Option Securities
issuable upon the exercise of the Options shall be adjusted as herein
provided, or the rights of Holders shall change by reason of other events
specified herein, EGP shall compute the adjusted number of Option
Securities in accordance with the provisions hereof and shall prepare a
certificate signed by its President, Vice President, Treasurer or Secretary
setting forth the adjusted number of Option Securities purchasable upon
exercise of the Options and the adjusted Exercise Price thereof or
specifying the other securities or assets receivable as a result of such
change in rights, and showing in reasonable detail the facts and
calculations upon which such adjustments or other changes are based,
including a statement of the consideration received or to be received by
EGP or the Trust for, and the amount of, any Preferred Securities, issued
since the last such adjustment or change (or since the date hereof in the
case of the first adjustment or change). EGP shall cause to be mailed to
each Holder of an Option copies of such officer's certificate together with
a notice stating that the number of Option Securities purchasable upon
exercise of the Options has been adjusted and setting forth the adjusted
number of Option Securities purchasable upon exercise of such Holder's
Option.
(d) Disputes. In the event that there is any dispute as to the
computation of the number of Option Securities required to be sold upon
exercise of Options (in which the Holders of a majority of the Option
Securities issuable upon exercise of all outstanding Options shall join),
the Holders will retain an independent and nationally recognized accounting
firm to conduct, at EGP's expense, an audit of the computations pursuant to
the terms hereof involved in such dispute, including the financial
statements or other information upon which such computations were based.
The determination of such nationally recognized accounting firm shall, in
the absence of manifest error, be binding upon the Holders and EGP. If
there shall be a dispute as to the selection of such nationally recognized
accounting firm, such firm shall be appointed by the American Institute of
Certified Public Accountants if willing, otherwise the American Arbitration
Association, upon application by EGP or the Holders of a majority of the
Option Securities issuable upon exercise of all outstanding Options, with
notice to the others. The expenses of such accounting firm and, if any, the
American Institute of Certified Public Accountants or the American
Arbitration Association (as applicable), shall be borne by EGP unless the
computation by such accounting firm of such number of Option Securities is
the same as the computations thereof made by EGP (or less favorable to the
Holders), in which case the fees and expenses of such accounting firm shall
be borne equally by EGP and the Holders of Options.
(e) Securities other than Preferred Securities. If, at any time, as a
result of an adjustment made pursuant to this Section 9, the Holder of any
Option thereafter exercised shall become entitled to receive any securities
other than Preferred Securities, thereafter the number of such other
securities so receivable upon exercise of any Option shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Option Securities
contained in this Section 9, and the provisions of this
9
Agreement with respect to the Option Securities shall apply on like terms to
such other securities.
(f) Certain Adjustments.
(i) In the event that the Trust shall at any time after the date
of this Agreement (x) split or subdivide the outstanding Preferred
Securities, or (y) combine the outstanding Preferred Securities into a
smaller number of shares through a reverse split or otherwise, then,
in each such event, the number of Preferred Securities purchasable
upon exercise of the Options immediately prior thereto shall be
adjusted so that the holder shall be entitled to receive the kind and
number of such shares or other securities which the holder would have
owned or have been entitled to receive after the happening of any of
the events described above, had such option been exercised immediately
prior to the happening of such event (or any record date with respect
thereto). Such adjustment shall be made whenever any of the events
listed above shall occur. An adjustment made pursuant to this Section
9(f) shall become effective immediately after the effective date of
the event retroactive to the record date, if any, in respect of the
event which entitles the Holder to reduce such adjustment.
(ii) Whenever the number of Preferred Securities purchasable upon
the exercise of the Option is adjusted, the Exercise Price per
Preferred Security payable upon exercise of each Option shall be
adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number
of Preferred Securities purchasable upon the exercise of each Option
immediately prior to such adjustment, and the denominator of which
shall be the number of Preferred Securities purchasable immediately
after such adjustment.
(g) Limitation on Redemptions and Certain Distributions. While any
Options or Option Securities are held by the Holder, EGP will not, and will
not permit the Trust or any subsidiary of EGP to, apply any of its funds or
assets to, or set apart any funds or assets for, the purchase, redemption
or retirement of, or make any distribution (other than a dividend or other
distribution, including a Distribution or Liquidation Distribution) by
reduction of capital or otherwise, in respect of any of the Preferred
Securities, whether now or hereafter outstanding; unless, in each case,
each Holder holding Options and/or Option Securities is offered the option
to receive the Applicable Portion of such purchase, redemption, retirement
or distribution. For this purpose, the "Applicable Portion" shall mean the
higher of the following: (A) in the same proportion that the number of
Options (or Option Securities therefor) owned by a Purchaser bears to the
total number of Preferred Securities outstanding and (B) in the same
proportion that the number of Options (or Option Securities therefor) owned
by a Holder bears to the number of Preferred Securities owned by all
Affiliates of EGP that EGP proposes to purchase, redeem, retire or make a
distribution in respect of.
SECTION 10. Notices to Option Holders. In case at any time the Trust
proposes:
(a) to declare a cash dividend upon Preferred Securities;
10
(b) to declare or pay, or set apart any funds for the payment of, any
dividends on any Preferred Securities or make any other distribution,
including a Distribution or a Liquidation Distribution, to the holders of
its Preferred Securities;
(c) to apply any of its funds, property or assets to, or set apart any
funds, property or assets for, the purchase, redemption or retirement of,
or make any distribution, including a Distribution or Liquidation
Distribution, by reduction of capital or otherwise, in respect of any of
its Preferred Securities or in respect of any Convertible Securities
exercisable or exchangeable for or convertible into Preferred Securities,
whether now or hereafter outstanding;
(d) to issue or sell any Preferred Securities or Convertible
Securities (except pursuant to the exercise of Options or the conversion or
exchange of Convertible Securities in accordance with their terms);
(e) to offer for subscription pro rata to the holders of Preferred
Securities or Convertible Securities any additional securities of any class
or other rights;
(f) to effect any capital reorganization, or reclassification of the
securities of the Trust, or consolidation or merger of the Trust with
another Person, or sale or other disposition of greater than 25% of the net
value of its assets; or
(g) to effect a voluntary or involuntary dissolution, liquidation or
winding up of the Trust;
then, in any one or more of said cases, EGP shall give (or cause the Trust
to give) the Holder of any Option (i) at least 10 Business Days' (but nor
more than 90 days') prior written notice of the date on which the books of
the Trust shall close or a record shall be taken for such dividend,
redemption, distribution, including a Distribution or Liquidation
Distribution, or subscription rights or for determining rights to vote in
respect of any such issuance, reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, and
(ii) in the case of any such issuance, reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at
least 10 Business Days' (but not more than 90 days') prior written notice
of the date when the same shall take place (provided that no more than 5
Business Days' prior written notice need be given of an issuance referred
to in clause (d) above). Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend,
redemption, distribution, including a Distribution or Liquidation
Distribution, or subscription rights, the date on which the holders of
Preferred Securities shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the date on
which the holders of Preferred Securities shall be entitled to exchange
their Preferred Securities for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. The failure to
give the notice required by this Section 10 or any defect therein shall not
affect the legality or validity of any distribution, including
11
a Distribution or Liquidation Distribution, right, Option, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or
the vote upon any action.
SECTION 11. Securities Law Matters; Transfers; Rule 144 and Rule 144A
Covenants.
(a) The parties hereto agree to be bound by the provisions of Exhibit
C hereto as if such provisions were set forth in full herein.
(b) With a view to making available certain rules and regulations of
the Securities and Exchange Commission (the "Commission") which may permit
the sale of Options and Option Securities without registration, EGP agrees
that at any time when securities of the Trust are registered under the
Securities and Exchange Act of 1934 (the "Exchange Act") that EGP will
cause the Trust to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), or any successor provision thereto;
(ii) so long as Rule 144A is available to the Holders, make and
keep available the information specified in Rule 144A(d)(4) under the
Securities Act or any successor provision thereto;
(iii) file with the Commission in a timely manner all reports and
other documents required of the Trust under the Exchange Act; and
(iv) furnish to each Holder upon request a written statement by
the Trust as to its compliance with the information or reporting
requirements of Rule 144 and Rule 144A or any successor provision
thereto, and of the Securities Act and the Exchange Act, and a copy of
the most recent annual or quarterly report of the Trust filed with the
Commission.
SECTION 12. Registration Rights. The provisions of Exhibit D of this
Agreement are hereby incorporated by reference herein as if set forth in full
herein.
SECTION 13. Security Interest. In order to secure its obligations to the
Holders under this Agreement, EGP hereby grants to the Holders a first priority
security interest in the Option Securities and the proceeds thereof, which
Option Securities shall be placed on the date of this Agreement into escrow
pursuant to Section 14 below. EGP hereby authorizes the Holders to file
financing statements relating to such Option Securities and proceeds.
SECTION 14. Escrow. On the date hereof EGP agrees to place into escrow the
Option Securities (and from time to time such other Option Securities as may be
required) with an escrow agent specified by the Holders (it being agreed that
such escrow agent must be a commercial bank, financial institution or trust
company not affiliated with any of the parties hereto). The escrow agreement
governing such escrow shall be in the form of Exhibit E hereto (the "Escrow
Agreement").
12
SECTION 15. Amendments and Waivers. Any provision of this Agreement may be
amended, supplemented, waived, discharged or terminated by a written instrument
signed by EGP and the Holders of a majority of the Option Securities purchased
or purchasable upon exercise of all outstanding Options; provided, that the
Exercise Price may not be increased, the Expiration Date may not be changed to
an earlier date and this Section may not be amended except with the consent of
each Holder which would be affected thereby.
SECTION 16. Specific Performance. The Holders of the Options and/or Option
Securities shall have the right to specific performance by EGP of the provisions
of this Agreement, and EGP hereby irrevocably waives, to the extent that it may
do so under applicable law, any defense based on the adequacy of a remedy at law
which may be asserted as a bar to the remedy of specific performance in any
action brought against EGP for specific performance of this Agreement by the
Holders.
SECTION 17. Notices. All notices, requests, demands or other communications
to or upon the respective parties hereto shall be in writing and shall be deemed
to have been given or made, and all financial statements, information and the
like required to be delivered hereunder shall be deemed to have been delivered,
either (a) three (3) Business Days after deposited in the United States
certified mail, return receipt requested, with postage prepaid, or (b) one (1)
Business Day after delivery to a nationally recognized courier, designated for
overnight delivery with all fees prepaid, in either case addressed to EGP at the
Option Office, Attn: Chief Executive Officer, and to the Holders at their
respective addresses set forth on the Option Register, or to such other address
as any of them shall specify in writing to the others. EGP shall cause the
Option Register to contain current addresses for each of the Holders.
SECTION 18. Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the benefit of EGP, its successors and assigns, the Holders
and the registered Holders from time to time of the Options and the Option
Securities.
SECTION 19. Termination. This Agreement shall terminate and be of no
further force and effect at the close of business on the Expiration Date or the
date on which none of the Options or Option Securities shall be outstanding,
except that the provisions of Section 9(g) (Additional Adjustment and
Anti-Dilution Provisions), Exhibit C, Exhibit D, and solely with regard to their
application to the foregoing provisions, Sections 15 (Amendments and Waivers),
16 (Specific Performance), 17 (Notices), 18 (Binding Effect; Assignability), 19
(Termination), 21 (Governing Law) and 24 (Costs and Expenses) shall continue in
full force and effect after such termination.
SECTION 20. Counterparts. This Agreement may be executed in one or more
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
SECTION 21. Governing Law. This Agreement and each Option shall be governed
by and construed in accordance with the laws of the State of New York.
13
SECTION 22. Effective Date. For purposes of this Agreement and each Option,
all of the provisions set forth herein shall be deemed to be effective as of
November 15, 2001.
SECTION 23. Headings. The headings of the sections of this Agreement and
Exhibits (as defined below) hereto are included for convenience of reference
only and shall not form a part of this Agreement or such Exhibits. As used
herein, the term "Exhibits" shall mean collectively Exhibit A, the form of
Option, Exhibit B, the Option Register, Exhibit C, Securities Law Matters;
Transfers, Exhibit D, Registration Rights and Exhibit E, the form of Escrow
Agreement attached hereto.
SECTION 24. Costs and Expenses. The Issuer shall pay, within five (5) days
after receipt of written request therefor, all reasonable fees, costs and
expenses of the Holders incurred in connection with the Holders' exercise,
preservation or enforcement, as the case may be and as may be applicable under
the circumstances, of any of their rights, remedies or benefits hereunder.
[Remainder of page intentionally left blank; signature page follows]
14
IN WITNESS WHEREOF, the parties hereto have caused this Option Agreement-B
of EGP to be duly executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.
EGP:
By:
------------------------------------------
Name/Title:
Holders:
LEG PARTNERS III SBIC, L.P.
by Xxxxx XX-XX, LLC, its general partner
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG CO-INVESTORS, LLC
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS, LLC
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx, Manager
15
EXHIBIT A
TO OPTION AGREEMENT-B
FORM OF OPTION
THIS OPTION AND THE UNDERLYING SECURITIES REPRESENTED BY THIS OPTION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THIS
OPTION AND THE UNDERLYING SECURITIES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN OPTION AGREEMENT-B DATED ___________ , 2002 BETWEEN
EASY GARDENER PRODUCTS, LTD. ("EGP") AND THE INITIAL HOLDERS OF THE OPTIONS
THEREIN NAMED, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
OFFICE OF USHG AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
OPTION
to purchase 9.4% Cumulative Trust Preferred Securities
of U.S. Home & Garden Trust I
owned by Easy Gardener Products, Ltd.
No. O- _______, 20__
This Option certifies that _______________________, or registered assigns,
is the registered holder, as of the date hereof, of an Option (the "Option") to
purchase from EASY GARDENER PRODUCTS, LTD., a Texas limited partnership ("EGP"),
up to ________ Preferred Securities, liquidation amount $25 per Preferred
Security ("Preferred Securities"), subject to adjustment as provided in the
Option Agreement. This Option may be exercised at any time prior to 5:00 P.M.,
local time of the Option Office, on May 19, 2009 or, if such day is not a
Business Day, the next succeeding Business Day (the "Expiration Date"), by
surrender of this Option, execution and delivery of an Election to Purchase in
the form attached hereto and payment of the Exercise Price at the office of EGP,
0000 Xxxxxxxx Xxxxxx, Xxxx, Xxxxx 00000-0000, or such other address as EGP may
specify in writing to the registered holder of this Option (the "Option
Office").
The aggregate Exercise Price for the Preferred Securities being purchased
may be paid by delivery of either (i) a certified check or bank draft or (ii)
Options or Option Securities, all as provided in Section 4(a) of Option
Agreement-B.
EGP may deem and treat the registered holder(s) of this Option as the
absolute owner(s) hereof (notwithstanding any notation of ownership or other
writing hereon made by
A-1
anyone), for the purpose of any exercise hereof and of any distribution to the
holder(s) hereof, and for all other purposes, and EGP shall not be affected by
any notice to the contrary.
This Option is one of the Options referred to in Option Agreement-B, dated
as of _________ __, 2002, between EGP and the initial Holders named therein (the
"Option Agreement-B"). Option Agreement-B is hereby incorporated by reference in
and made a part of this Option and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities of EGP and
the Holder. Unless otherwise defined herein, all capitalized terms used in this
Option have the meanings assigned to them in or pursuant to Option Agreement-B.
IN WITNESS WHEREOF, EGP has caused this Option to be signed by its duly
authorized officers and has caused its corporate seal to be affixed hereunto.
EASY GARDENER PRODUCTS, LTD.
By: ____________________________
Name:
Title:
(CORPORATE SEAL)
ATTEST:
_________________________________
, Secretary
A-2
ANNEX I
TO OPTION
[Form of]
ELECTION TO PURCHASE
[To be executed upon exercise of Option to purchase 9.4% Cumulative Trust
Preferred Securities of U.S. Home & Garden Trust I owned by Easy Gardener
Products, Ltd.]
The undersigned hereby elects to exercise the right, represented by the
attached Option of Easy Gardener Products, Ltd., a Texas limited partnership
("EGP"), to purchase from EGP _______ 9.4% Cumulative Trust Preferred
Securities, liquidation amount $25 per Preferred Security ("Preferred
Securities"), originally issued by U.S. Home & Garden Trust I ("Option
Securities"), and further elects to pay the aggregate Exercise Price therefor by
delivery of [a check or bank draft] [Options and Option Securities], as provided
in Section 4(a) of Option Agreement-B referred to in the attached Option.
The undersigned requests that a certificate for such Option Securities be
registered in the name of _______________ whose address is ______________ and
that such certificate be delivered to _______________ whose address is
_______________.
If said number of Option Securities is less than all of the Option
Securities purchasable under the attached Option, the undersigned requests that
a new Option representing the remaining balance of the Option Securities be
registered in the name of _________________ whose address is _________________
and that such Option be delivered to __________________ whose address is
_________________.
Signature:_________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Option)
Date:_______________, 20___
EXHIBIT B
TO OPTION AGREEMENT-B
EASY GARDENER PRODUCTS, LTD.
Option Register
Option Number of Trust
Certificate No. Name and Address of Holder Preferred Securities
--------------- -------------------------- --------------------
O-1 LEG Partners III SBIC, L.P. 91,353.00
O-2 LEG Co-Investors, LLC 865.50
O-3 555 Madison Investors, LLC 2,656.50
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
26.1 Attn: Xxxxxxx X. Xxxxxxx
Telecopier No.: 000-000-0000
TOTAL: 94,875.00
=========
B-1
EXHIBIT C
SECURITIES LAW MATTERS; TRANSFERS
SECTION 1. Securities Law Matters.
1.1. Securities Act. Each Holder acknowledges (a) the Option being acquired
by such Holder is not being registered under the Securities Act on the ground
that the issuance thereof is exempt from registration under Section 4(2) of the
Securities Act as not involving any public offering, and (b) that the Company's
and EGP's reliance on such exemption is predicated in part on the representation
hereby made to the Company and EGP by such Holder that it is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act, and (except as provided herein) is acquiring its Option for investment for
its own account, with no present intention of dividing its participation with
others or reselling or otherwise distributing the same, subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. Except as provided herein, none of the Holders is
aware of any particular occasion, event or circumstance upon the occurrence or
happening of which it intends to dispose of its Option.
1.2 Resales.
(a) None of the Holders will sell or transfer all or any part of its Option
or Option Securities except:
(i) pursuant to Rule 144 under the Securities Act;
(ii) pursuant to any other exemption from, or otherwise in a
transaction not subject to, the registration requirements of the Securities
Act (as confirmed in an opinion delivered by the transferor's counsel, to
the effect that the proposed transfer may be effected without registration
under the Securities Act);
(iii) in a transfer by a Holder to any Affiliate or wholly-owned
Subsidiary of the Holder; or by a Holder to Investors (as defined below) as
contemplated by Section 2.2 below; or
(iv) pursuant to an effective registration statement under the
Securities Act.
(b) The restrictions set forth in Section 1.2(a) above shall terminate and
cease to be effective with respect to any Option or Option Securities registered
under the Securities Act or transferred pursuant to Rule 144, or if EGP receives
an opinion of counsel reasonably satisfactory to it to the effect that the
securities represented thereby need no longer be subject to such restrictions in
order to ensure compliance with the Securities Act. Whenever such restrictions
shall so terminate the holder or transferee of such Option or Option Securities
shall be entitled to receive from the EGP without expense (other than transfer
taxes, if any), certificates for such Option or Option Securities not bearing
the first legend set forth in Section 4(b) of the Option Agreement, at which
time the EGP, will terminate or remove any transfer restrictions relating
thereto. In addition, EGP will issue (or cause to be issued) certificates for
C-1
the Option and Option Securities without all or part of the second legend set
forth in Section 4(b) of the Option Agreement whenever this Agreement and Option
Agreement-B cease to restrict the transfer of the securities evidenced by such
certificate.
SECTION 2. TRANSFERS.
2.1 Transfers. Subject to compliance with applicable securities laws, each
Holder shall be entitled to assign and transfer all or any part of its Option or
Option Securities, or any interest or participation therein, and its related
rights under this Agreement and, if applicable, Option Agreement-B. Upon the
assignment or transfer by such Holder of all or any part of its Option or Option
Securities or its interest therein (except in public offering registered under
the Securities Act, or a sale pursuant to Rule 144 thereunder), the term
"Holder" as used herein shall thereafter include, to the extent of the interest
so assigned or transferred, the assignee or transferee of such interest.
Notwithstanding the foregoing, there shall be no more than ten (10) Holders at
any one time hereunder.
2.2 Participations. A Holder may wish to grant participations in its Option
or Option Securities to other accredited investors ("Investors") pursuant to a
participation agreement; provided, however, that at the time any such
participation is granted, the Holder granting such participation will so inform
EGP and furnish it the representation of each participating Investor (in form
and substance reasonably acceptable to EGP) that such Investor is acquiring his,
her or its participation with no present intention of reselling or distributing
the same. If at any time a Holder wishes to assign and transfer of record into
the name of an Investor his, her or its participation and related rights and
obligations, EGP and the other Holders will execute and deliver such agreements
and instruments as the transferring Holder may reasonably request (including
without limitation new certificates for Options and Option Securities in such
amounts as the transferring Holder may request) to effect the assignment and
transfer to such Investor (in his, her or its own name) of such participation,
or such part thereof as may be so assigned and transferred.
2.3 Issuance of New Option Certificates. The Company will at any time, at
its expense, at the request of a holder of an Option or Option Security, and
upon surrender of such Option or Option Security for such purpose, issue a new
certificate for such Option or Option Security in exchange therefor.
C-2
EXHIBIT D
TO OPTION AGREEMENT-B
Registration Rights
(Preferred Securities)
SECTION 1. Definitions. The following terms used in this Exhibit D shall
have the meanings indicated below:
"Registrable Securities" shall mean (i) the Preferred Options and Preferred
Option Securities and (ii) Preferred Securities and any other securities
issuable or issued by way of securities dividend or securities split or in
connection with a combination of securities, recapitalization, merger,
consolidation or other reorganization or other transaction of the character
referred to in Section 9 of Option Agreement-B; provided, however, that EGP
shall have no obligation to cause the Trust to register any Preferred Options,
and each holder of Preferred Options who desires to include in a registration
any Preferred Securities issuable upon exercise of such Preferred Options will
(if requested to do so by EGP or the Trust) exercise all or part of its
Preferred Options prior to the effectiveness of such registration as required to
permit the inclusion therein of such underlying securities.
SECTION 2. Registration.
(a) Incidental Registration Rights. In the case of any proposed
registration of Preferred Securities or other securities of the Trust under the
Securities Act, whether or not for sale for its own account, on any form which
can include Registrable Securities (other than Form S-8 or S-4 or successor
forms), EGP will (or will cause the Trust to) give at least 30 days' prior
written notice of the filing thereof to all Holders.
(1) such notice shall afford the Holders an opportunity to elect
within 15 days after receipt thereof to include in such filing all or any
part of their Registrable Securities; provided, that, in the case of an
underwritten public offering, the managing underwriter administering such
offering may reduce the number of Registrable Securities to be included in
such offering if, in the reasonable opinion of such managing underwriter,
the inclusion in such offering of all Registrable Securities requested to
be registered would materially and adversely affect the marketing of the
entire offering (the number of Registrable Securities to be included in
such offering being herein referred to as the "Permissible Securities"). If
the aggregate number of Registrable Securities which the Holders thereof
desire to include in such filing exceeds the number of Permissible
Securities, then each such Holder shall be entitled to include that number
of Registrable Securities which bears the same ratio to the number of
Permissible Securities as the number of Registrable Securities such Holder
desires to include bears to the number of Registrable Securities all such
Holders desire to include.
(2) EGP agrees that any Holder entitled to include Registrable
Securities in any such registration may assign or transfer such right to
include such Registrable Securities to any other Holder or Holders.
(3) EGP shall be obligated under this Section 2(a) to cause the Trust
to afford the Holders the right to participate in each and every such
registration taking place until all Registrable Securities have been
included in registrations and sold or sold pursuant to Rule 144.
(b) Short Form Registrations. In addition to the registration rights
provided in Section 2(a) above, the holders of a majority of the Registrable
Securities shall be entitled to request by written notice to EGP from time to
time that EGP cause the registration by the Trust of the offering and sale of
all or a portion of the Registrable Securities on Form S-3 (or any successor or
similar short form registration), provided that the Trust is eligible for such
registration. Upon receipt of such written notice, if the Trust is then eligible
to use Form S-3 (or any successor or similar short form registration), EGP will
thereupon notify all other Purchasers of such request. Upon the written request
of any such other Purchasers after receipt from EGP of such notification, EGP
will use its best efforts to cause such of the Registrable Securities as may be
requested by any Purchasers (including the Purchaser giving the initial notice
of intent to register hereunder) to be registered under the Securities Act in
accordance with the terms of this Section 2. EGP will use its best efforts to
cause the Trust to qualify for use of a registration statement on Form S-3 (or
any successor or similar short form registration) as early as practicable. The
Trust shall not be required to file more than one registration statement
pursuant to this Section 2(b) in any 12 month period or more than two
registration statements pursuant to this Section 2(b) in all.
(c) Expenses of Registration. The costs and expenses of all registrations
and qualifications under the Securities Act and applicable state securities laws
and of all other actions, which EGP is required to take or effect (or cause the
Trust to take or effect) pursuant to this Section 2 (including without
limitation all registration and filing fees, printing expenses and reasonable
fees and disbursements of counsel) shall be paid by EGP, except that the Holders
shall bear their pro rata share of any underwriting discount or commission, or
other similar selling expenses; provided, that EGP shall not be required to pay
the fees and expenses of more than one counsel for the selling Holders.
(d) Opinion of Counsel as Alternative. The registration rights granted to
the Holders under this Section 2 shall be subject to the condition that any
registration of Registrable Securities proposed to be effected need not be
effected if EGP shall deliver (or cause the Trust to deliver) to the Holders
requesting such registration an opinion, satisfactory to such Holders and their
counsel, of Blank Rome Xxxxxxx & XxXxxxxx LLP or other counsel satisfactory to
such Holders to the effect that the proposed sale or disposition for which
registration was requested does not require registration under the Securities
Act, but such opinion shall not rely on the availability of sales utilizing the
provisions of Rule 144 if doing so would impose on the Holder any volume
restrictions, or any pre-sale notification or similar restriction on the free
sale of the Registrable Securities. EGP hereby indemnifies the Holders, and each
of them, against and holds them harmless from all damages, losses, liabilities
(including liability for rescission), costs and expenses which they may incur
under the Securities Act or otherwise by reason of their proceeding in
accordance with such opinion of counsel.
2
(e) Registration Obligations. If and whenever EGP is obligated by the
provisions of this Section 2 to cause the registration of any Registrable
Securities under the Securities Act, as expeditiously as reasonably possible EGP
will, or will use its best efforts to, as the case may be, cause the Trust to:
(1) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities.
(2) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective until the
earlier of the sale of all Registrable Securities covered thereby and the
expiration of a period of nine months after the date such registration
statement became effective (except that any registration statement on Form
S-3 or similar short-form shall be maintained for not less than two years),
and comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement.
(3) Furnish to each selling Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Holder may reasonably request.
(4) Register or qualify the Registrable Securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions (subject to the approval of any managing underwriter
involved) as the selling Holders shall request, and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such Holders to consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that the Trust shall not be
obligated, by reason thereof, to qualify as a foreign corporation or
subject itself to taxation as doing business in any such jurisdiction.
(5) Notify the selling Holders and their counsel promptly after EGP or
the Trust shall receive notice that any registration statement, supplement
or amendment has become effective, or that any registration statement is
required to be amended or supplemented, or that any stop order has been
issued.
(f) Indemnification. EGP agrees to indemnify and hold harmless each Holder,
its officers or directors, Affiliates and each Person, if any, who controls such
Holder within the meaning of the Securities Act, from and against any losses,
claims, damages, liabilities and expenses (under such Act, at common law or
otherwise) caused by any untrue statement or alleged untrue statement of a
material fact or omission to state a material fact required to be stated or
necessary to make the statements therein not misleading in any registration
statement or preliminary or final prospectus or filing for state registration or
qualification, or any amendment or supplement thereto, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement contained in or omission from information furnished in writing to EGP
or the Trust by such Holder expressly for use therein.
3
(g) Agreement as to Underwriters. If the offering pursuant to any
registration statement provided for under this Section 2 is made, at the
election of EGP, through underwriters, EGP agrees to cause the Trust to enter
into an underwriting agreement in customary form with such underwriters and to
indemnify such underwriters, their officers and directors, if any, and each
Person who controls such underwriters within the meaning of the Securities Act,
to the same extent as provided in Section 2(f) with respect to the
indemnification of a Holder.
(h) No Special Audit. EGP shall not be required to conduct any special
audit (or any audit not in the ordinary course of its business) in connection
with any registration hereunder.
EXHIBIT E
FORM OF ESCROW AGREEMENT
OPTION ESCROW AGREEMENT
THIS OPTION ESCROW AGREEMENT (this "Agreement"), dated _______, 200__, is
by and among Easy Gardener Products, Ltd., a Texas limited partnership ("EGP"),
_____________, (the "Option Holder"), and ____________________ (the "Escrow
Agent").
RECITALS
A. U.S. Home & Garden Inc., a Delaware corporation ("USHG"), Easy Gardener
Inc., a Delaware corporation ("EGI"), and Option Holder are parties to that
certain Settlement Agreement, dated as of November 1, 2002 (the "Settlement
Agreement"), pursuant to which (i) upon consummation of the Transaction (as
defined in the Settlement Agreement), EGP will acquire certain assets and assume
certain obligations of USHG and EGI (collectively, the "Assets"), including the
obligations of USHG under the Amended and Restated Option Agreement - A; and
(ii) EGP has agreed to issue to Option Holder those additional options described
in Option Agreement - B (together, the "Option Agreements" or individually an
"Option Agreement"), in each case with respect to the delivery of the 9.4%
Cumulative Trust Preferred Securities (the "Trust Preferred Securities") of U.S.
Home & Garden Trust I (the "Trust") to the Option Holder, as set forth in each
such Option Agreement upon exercise thereof. As used herein the term "Option" or
"Options" shall refer to any option or options, as the case may be, granted
under the Option Agreements.
B. In accordance with the terms of the Settlement Agreement, EGP shall
deposit, at the time of the acquisition of Assets (the "Settlement Closing")
189,750 Trust Preferred Securities and from time to time such other Option
Securities (as defined in the Option Agreements) as may be required under the
Option Agreements (the "Escrow Deposit") with the Escrow Agent.
C. The receipt by the Option Holder of all or any portion of the Escrow
Deposit is conditioned upon the delivery by the Option Holder to the Escrow
Agent, pursuant to the terms
4
of this Agreement, of a certificate of an officer of the Option Holder stating
that certain conditions to exercise of the Option as set forth in the Option
Agreements have been met.
AGREEMENTS
In consideration of the recitals and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, all capitalized terms used, but
not otherwise defined herein, shall have the meanings attributed to such terms
in the Settlement Agreement.
2. Escrow Deposit; Trust Preferred Securities.
(a) For the purposes herein set forth, EGP hereby deposits the Escrow
Deposit into escrow with the Escrow Agent, in accordance with this
Agreement and as otherwise set forth in the Option Agreements. The Escrow
Deposit shall be held and disbursed by the Escrow Agent in accordance with
the terms of this Agreement.
2
27. For the purposes herein set forth, EGP hereby (i) delivers to the
Escrow Agent the trust preferred stock certificates and any other Option
Securities, duly executed in blank or accompanied by stock powers duly executed
in blank, (ii) agrees to deposit with the Escrow Agent such other securities or
cash as may be required from time to time to be deposited pursuant to the terms
of the Settlement Agreement or Option Agreements, and (iii) agrees to deliver to
Option Holder's legal counsel copies of all certificates constituting the Option
Securities as well as an inventory of all items constituting the Escrow Deposit.
(c) The parties hereby acknowledge that in order to secure EGP's
obligations under the Option Agreement, EGP has granted to the Option
Holder a security interest in all of EGP's right, title and interest in and
to the Option Securities constituting the Escrow Deposit and all investment
property and proceeds relating thereto (collectively, the "Collateral").
Upon receipt by Escrow Agent of notice from the Option Holder that EGP has
failed to comply with any of the terms of the Option Agreement or becomes
insolvent, Escrow Agent shall follow all instructions from the Option
Holder with respect to the Collateral. The Escrow Agent agrees that it will
not follow the instructions of any other person with respect to the
Collateral once it has received such a notice from the Option Holder. EGP
represents and warrants to purchasers that it has good and marketable title
to the Collateral and that it has assumed all of USHG's obligations under
the Option Agreements. EGP authorizes the Option Holder, at their option,
to file Uniform Commercial Code financing statements in order to perfect
its security interest in the Collateral, and agrees to execute and deliver
such other documents or instruments deemed necessary or desirable to
effectuate the foregoing including a Securities Account Control Agreement
with the Escrow Agent and Option Holder in a form acceptable to the Option
Holder in Option Holder's sole discretion.
3. Application of Escrow Deposit; Disposition of Trust Preferred
Securities.
(a) The Escrow Deposit shall be held in escrow under the terms of this
Agreement and forthwith released by the Escrow Agent to the Option Holder
(as the Option Holder shall direct) upon receipt of the Certificate (as
defined below). As used herein the term "Certificate" shall mean a
certificate executed by an officer of Option Holder that states that (i)
the exercise price for the portion of the Option being exercised has been
paid, or that an Automatic Exercise (as defined in the Amended and Restated
Option Agreement-A) has occurred, in either case, in accordance with the
terms of the applicable Option Agreement, and (ii) the Option so exercised
has been sent to EGP in accordance with the terms of the applicable Option
Agreement.
(b) At least one Business Day (but not less than 24 hours) prior to
delivering any Certificate to the Escrow Agent, Option Holder shall provide
EGP with notice of its intentions to deliver such Certificate. For purposes
of this Agreement, "Business Day"
3
shall mean a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are required by law to close.
(c) In the event the terms of the Option Agreements expire with any
portions thereof remaining unexercised, upon receipt of EGP's written
notice to the Option Holder of such expiration, the Option Holder shall
direct the Escrow Agent to release and disburse any remaining Option
Securities to EGP.
4. Termination. This Agreement shall continue in effect until the Escrow
Deposit has been disbursed in accordance with Section 3 of this Agreement.
5. Liability of Escrow Agent; Expenses. The duties of the Escrow Agent
hereunder shall be limited to the observance of the express provisions of this
Agreement. The Escrow Agent shall not make any disposition of the Escrow Deposit
(or any portion thereof) which is not expressly authorized by this Agreement.
The Escrow Agent may rely upon and act upon any instrument delivered to it by
the Option Holder or otherwise pursuant to the provisions of this Agreement
which it in good faith believes to be genuine and in conformity with the
requirements of this Agreement. Except as expressly provided in this Agreement,
the Escrow Agent shall have no duty to determine or inquire into the happening
or the occurrence of any event or the performance or failure of performance of
either EGP or the Option Holder with respect to arrangements or contracts
between them or with others. Notwithstanding anything in this Agreement to the
contrary, the Escrow Agent shall not be liable to any person for anything which
it may do or refrain from doing in connection with this Agreement, unless the
Escrow Agent's conduct constitutes fraud, gross negligence or willful
misconduct. The fees and expenses of the Escrow Agent hereunder shall be the
responsibility of EGP.
6. Miscellaneous.
(a) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall
be delivered personally, sent by facsimile delivery (with confirmation of
delivery by sender's equipment), sent by overnight courier or sent by
certified or registered mail, postage prepaid. Any notice given by either
party to the Escrow Agent shall be delivered simultaneously to the other
party. Any such notice shall be deemed given when so delivered personally,
if sent by facsimile (with confirmation), on the day sent, and if sent by
overnight courier or U.S. mail, on the date received or the date such
receipt is refused by or on behalf of the addressee, as follows:
If to the Option Holder, to:
c/o Golub Associates Incorporated
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxxxx, Principal
4
with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy No.: 312-902-1061
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
If to EGP, to:
__________________________
__________________________
__________________________
Telecopy No.: __________________________
Attention: __________________________
with a copy to:
__________________________
__________________________
__________________________
Telecopy No.: __________________________
Attention: __________________________
If to the Escrow Agent, to:
__________________________
__________________________
__________________________
Telecopy No.: __________________________
Attention: __________________________
Any party may change its address for notice by written notice given to the
other parties in accordance with this section.
(b) Amendments. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by EGP, the Escrow
Agent and the Option Holder.
(c) Entire Agreement. This Agreement constitutes the entire agreement
of the parties regarding the subject matter hereof, and supersedes all
prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
5
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York concerning
contracts made and to be wholly-performed in such State, without regard to
its conflicts of law principles. In any action or suit to enforce any right
or remedy under this Agreement or to interpret any provision of this
Agreement, the prevailing party shall be entitled to recover its costs,
including reasonable attorneys' fees.
(e) Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
The parties hereto have caused this Agreement to be executed as of the day
and year first written above.
OPTION HOLDER:
[____________]
By:
-----------------------------
Its:
----------------------------
EGP:
EASY GARDENER PRODUCTS, LTD.
By:
-----------------------------
Its:
----------------------------
ESCROW AGENT:
[____________]
By:
-----------------------------
Its:
----------------------------
6
For Settlement Purposes Only
--------------------------------------------------------------------------------
U.S. HOME & GARDEN INC.
and
THE HOLDERS NAMED HEREIN
AMENDED AND RESTATED
WARRANT AGREEMENT
--------------------------------------------------------------------------------
___________, 200__
EXHIBIT 5.1
TO SETTLEMENT AGREEMENT
U.S. HOME & GARDEN INC.
AMENDED AND RESTATED WARRANT AGREEMENT
THIS AMENDED AND RESTATED WARRANT AGREEMENT, dated as of ___________,
200__, is between U.S. Home & Garden Inc., a Delaware corporation (the
"Issuer"), and the holders from time to time of the Warrants referred to herein
(the "Holders").
WHEREAS, the Issuer and the Holders are parties to a Settlement Agreement
dated as __________, 2002 (the "Settlement Agreement") which provides, among
other things, that upon consummation of the Transaction (as defined therein),
that certain Warrant Agreement executed and delivered by the Issuer in
connection with the Note and Warrant Purchase, Guaranty and Security Agreement,
dated as of November 15, 2001 (the "Purchase Agreement"), among the Holders, the
Issuer, the Issuer's wholly-owned subsidiary Easy Gardener, Inc. (the "Company")
and certain of the Issuer's other subsidiaries (the "Warrant Agreement") shall
be amended and restated in its entirety from and as of November 15, 2001 by this
Amended and Restated Warrant Agreement.
NOW, THEREFORE, in consideration of the consent by the Xxxxx Parties (as
defined the Settlement Agreement) to the Transaction and in consideration of the
premises, the Issuer and the Holders agree as follows:
SECTION 1. Definitions. Capitalized terms used herein which are defined in
the Purchase Agreement and are not otherwise defined herein shall have the
respective meanings given thereto in the Purchase Agreement. The following terms
used herein shall have the meanings indicated below, unless the context
otherwise requires:
"Affiliate" of any Person shall mean any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such first Person, it being
understood that this shall include any officer or director of a Person
which is a corporation, any manager or director of a limited liability
company, and any general partner of a partnership, and any officer,
director or owner of ten percent (10%) or more of any entity which so
serves as such manager or general partner, (b) that directly or
beneficially owns ten percent (10%) or more of any class of the voting
stock of such first Person, or (c) ten percent (10%) or more of whose
voting stock (or in the case of a Person which is not a corporation, ten
percent (10%) or more of whose equity interest) is owned directly or
beneficially by such first Person.
"Agreement" or "Amended and Restated Warrant Agreement" shall mean
this Amended and Restated Warrant Agreement, together with all Exhibits
hereto, as may be amended, modified or supplemented from time to time with
the consent of the Holders in accordance with Section 15, and shall include
all provisions incorporated herein by reference from the Purchase
Agreement, which incorporated provisions shall continue in full force and
effect for the benefit of the Holders as originally in effect unless
modified with the consent of the Holders in accordance with Section 15.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York, are required by law to
close.
"Commission" shall have the meaning given thereto in Section 11.
"Common Stock" shall mean the Issuer's Common Stock, $.001 par value.
"Convertible Securities" shall mean (a) any stock, notes or other
securities convertible into or exchangeable, directly or indirectly, for
shares of Common Stock (whether or not such right to convert or exchange is
immediately exercisable or is "in the money"), (b) any other security, note
or agreement which provides the holder thereof with a payment, repayment
amount, appreciation right or liquidation preference (i) calculated by
reference to, or arising from, the value of the Issuer upon a sale, merger,
recapitalization or similar event, or (ii) based upon the value, whether
market or appraisal, of the Common Stock, and (c) any agreement to issue
shares of Common Stock or issue or enter into such other stock, notes,
securities or agreements described in the foregoing clauses (a) or (b).
"Exchange Act" shall have the meaning given thereto in Section 11.
"Exercise Price" shall have the meaning given thereto in Section 3.
"Expiration Date" shall mean May 19, 2009 or, if such day is not a
Business Day, the next succeeding Business Day.
"Fully-Diluted Common Stock" at any time of determination shall mean
the sum of (A) the number of shares of Common Stock issued by the Issuer
and outstanding at such time, plus (B) the number of shares of Common Stock
subject to issuance or sale upon exercise of all outstanding Options and
conversion or exchange of all Convertible Securities issued and outstanding
at such time (provided that if any such securities qualify as both Options
and Convertible Securities, they shall be counted only once), plus (C) the
number of shares of Common Stock which the Issuer is otherwise obligated to
issue or sell under any agreement, understanding or arrangement, regardless
of whether such agreement, arrangement or understanding is oral or in
writing, and regardless of whether the number of shares of Common Stock
which the Issuer is obligated to issue thereunder is based on the
satisfaction, occurrence, fulfillment or lapsing of any present or future
contingency, condition or time period, or otherwise. Where any Convertible
Security does not indicate a specific or fixed number of shares of Common
Stock to be issued or sold thereunder or in connection therewith, the
number of shares of Common Stock issuable thereunder or in connection
therewith for purposes of
8
calculating Fully-Diluted Common Stock shall equal the greater of (I) the
maximum number of shares of Common Stock described as issuable thereunder
or in connection therewith or (II) such number of shares of Common Stock as
would represent any profit sharing, liquidation preference amount,
appreciation right, share or percentage of the Issuer's value as if such
Convertible Security was converted (at the then-applicable Market Price if
no conversion price is otherwise provided in such Convertible Security)
into shares of Common Stock. Fully-Diluted Common Stock shall not include
any securities owned or held by or for the account of the Issuer.
"Market Price" of Common Stock shall mean the average of the daily
market prices of Common Stock over a period of 20 consecutive business days
prior to the day as of which "Market Price" is being determined. The market
price for each such business day shall be the average of the closing sales
prices on such day of the Common Stock on the principal domestic stock
exchange on which the Common Stock is then listed, or if there shall have
been no sales on any such exchange on such day, the average of the highest
bid and lowest asked prices on such exchange at the end of such day, or, if
the Common Stock shall not be so listed, the average of the closing sales
prices in the NASDAQ System on such day, or if there shall have been no
sales in the NASDAQ System on such day, the average of the highest bid and
lowest asked prices on the NASDAQ System on such day, or if the Common
Stock shall not be quoted in the NASDAQ System, the average of the high and
low bid and asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization. If the Common Stock is listed on any
domestic exchange the term "business days" as used in this paragraph shall
mean business days on which such exchange is open for trading.
If at any time the Common Stock is not listed on any domestic exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair market value of a share of Common Stock as
determined in good faith by the Board of Directors of the Issuer (giving
due regard to any recent sales or valuations of Common Stock) or, if the
holders of a majority of the Warrants shall, in the exercise of their sole
discretion, object to such determination, as determined by appraisal
pursuant to the following paragraph of this definition; provided, that if
any valuation or appraisal has been made of the Issuer or its Common Stock
for any reason within six months prior to any date as of which the Market
Price is to be determined hereunder, then the Holders shall be entitled, at
their option, to rely on such appraisal and such valuation or appraisal
shall be binding on the Issuer unless any event shall have occurred since
the date of such valuation or appraisal which, in the reasonable opinion of
the Holders of a majority of the Warrants, manifestly affects the continued
validity of such appraisal.
If the Holders of a majority of the Warrants shall object to the
determination of Market Price made by the Issuer's Board of Directors
pursuant to the preceding paragraph, then Market Price shall be determined
as of the end of the most recent complete fiscal quarter of the Issuer
ended prior to the date of determination (taking into account actual
performance subsequent thereto and projections for future periods), and
shall be determined by appraisal as follows: Within fifteen (15) days after
receipt by the Issuer of notice that an appraisal is desired, the Issuer
and the Holders of a majority of the Warrants shall jointly appoint an
appraiser for the purpose of determining Market Price. Such appraiser shall
be an investment banking or advisory
9
firm with experience in valuing companies of a comparable size, and in a
comparable industry, as the Issuer, which investment banking or advisory
firm shall be either a firm of recognized national standing or a regional
firm of good national reputation. If there shall be a dispute as to the
selection of such appraiser, then the appraiser shall be appointed by the
American Arbitration Association upon application by the Issuer or the
Holders of a majority of the Warrants. The Issuer and the Holders of a
majority of the Warrants shall be afforded reasonable opportunities to
discuss the appraisal with such appraiser. The determination of Market
Price by such appraiser shall be final and binding upon the Issuer and the
Holders of Warrants. The fees and expenses of the appraiser and, if any, of
the American Arbitration Association, shall be borne by the Issuer unless
the determination of Market Price by such appraiser is the same as the
determination of Market Price made by the Board of Directors (or less
favorable to the Holders), in which case the fees and expenses of such
appraiser shall be borne equally by the Issuer and the Holders of Warrants.
"Options" shall mean any warrants (including the Warrants), options
(including options granted pursuant to any stock option plan), agreements
or other rights to subscribe for or to purchase, directly or indirectly,
shares of Common Stock (whether or not such warrants, options or other
rights are immediately exercisable or are "in the money"). Options shall
include any warrants, options or other agreements or rights to subscribe
for or to purchase, directly or indirectly, Convertible Securities or other
Options (whether or not such warrants, options or other rights are
immediately exercisable or are "in the money") and agreements or plans
under which the Issuer may issue Common Stock, Options or Convertible
Securities in exchange for services of any kind, whether to be rendered by
an employee, consultant, individual, entity or third party of any kind.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability
company, association, corporation, institution, entity, party, or
government (whether national, federal, state, county, city, municipal or
otherwise, including without limitation any instrumentality, division,
agency, body or department thereof).
"Securities Act" shall have the meaning given thereto in Section 11.
"Settlement Closing" shall have the meaning given thereto in the
Settlement Agreement.
"Transaction" shall have the meaning given thereto in the Settlement
Agreement.
"Warrant" shall mean a Warrant certificate, in the form of Exhibit A
hereto, and shall also mean the right upon exercise thereof to acquire one
Warrant Share.
"Warrant Office" shall mean the office or agency of the Issuer at
which the Warrant Register shall be maintained and where the Warrants may
be presented for exercise, exchange, substitution and transfer, which
office or agency will be the office of the Issuer at 000 Xxxxxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, XX 00000. The Warrant Office may be changed by the Issuer
pursuant to notice in writing to the registered Holders of the Warrants.
10
"Warrant Register" shall mean the register, in the form of Exhibit B
hereto, maintained by the Issuer at the Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock issuable or
issued upon exercise of the Warrants, and any other Common Stock,
Convertible Securities, capital stock, equity interest, or other securities
issuable or issued in respect of Warrants or Warrant Shares by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or other
transaction of the character referred to in Section 9(e).
SECTION 2A. Representations and Warranties. The Issuer hereby represents
and warrants as follows:
(a) the Issuer's authorized Capital Stock consists of 75,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock, $.001 par
value;
(b) of such authorized shares of Common Stock, ________ shares of
Common Stock are outstanding;
(c) the Warrant Shares issuable to the Holders upon exercise of the
Warrants would, if issued on the date hereof, represent the sum of (A)
50,000 Warrant Shares, plus (B) the greater of (x) 3.75% of the
Fully-Diluted Common Stock on the day of the Settlement Closing (provided
that the foregoing computation of Fully-Diluted Common Stock shall exclude
up to 300,000 shares of Common Stock if, and to the extent that such shares
of Common Stock are actually issued in connection with the consummation of
the Transaction (and at the closing thereof) to certain legal
representatives, investment banking representatives, and financing sources
as payment for services rendered in connection with the Transaction, in
lieu of a payment of cash; provided that the shares of Common Stock
actually issued as aforesaid shall not be valued at less than $.50 per
share based on the fair value of the services paid for by such issuance),
and (y) 940,466 Warrant Shares (in each case in this clause (B) less such
number of Warrants exercised from the date of the Settlement Agreement
through the Settlement Closing);(5)
(d) other than the Warrants and any Options or Convertible Securities
taken into account in determining the number of shares referred to in
Section 2A(c)(B) above, there are no outstanding Options or Convertible
Securities or obligations to issue any Options or Convertible Securities;
and
(e) Schedule 2A(e) hereto correctly sets forth the outstanding Capital
Stock of the Issuer, including Common Stock issuable upon exercise of
Options or conversion or exchange of Convertible Securities.
----------
(5) With respect to the calculation of the number of Warrant Shares issuable to
the Holders upon exercise of the Warrants on the date hereof as described in
Section 2A(c) above, the parties acknowledge and agree that the share amounts
set forth in subparagraph (c) shall be adjusted consistent with the provisions
of Section 9(a) (and with respect to the minimum valuation of $.50 per share,
Section 9(d)) to reflect events occurring during the period commencing on the
date of execution of the Settlement Agreement through and including the date
hereof.
11
SECTION 2B. Issuance of Warrants. The Warrants give the Holders the right
to purchase [insert number from 2A(c)] shares of Common Stock, subject to
adjustment as provided in Section 9. The Warrants shall be exercisable at any
time until 5:00 P.M. (local time at the Warrant Office) on the Expiration Date.
SECTION 3. Exercise Price. The price (the "Exercise Price") at which a
Holder may purchase each Warrant Share issuable upon exercise of such Holder's
Warrants shall be [insert the lowest of (i) $0.37 and (ii) the arithmetic
average of the two lowest of the closing bid prices of the Common Stock as
reported by NASDAQ on each of the three consecutive trading days immediately
preceding the date of the Settlement Closing], provided that such exercise price
shall be subject to adjustment as provided in Sections 8 and 9.(6)
SECTION 4. Exercise of Warrants.
(a) The rights represented by any Warrant issued pursuant hereto may
be exercised by the Holder thereof, in whole or in part, by delivering to
the Warrant Office:
(i) the Warrant, together with a properly completed Election to
Purchase in the form attached thereto;
(ii) at the Holders' option, either a check or bank draft in the
amount of the aggregate Exercise Price for the shares of Common Stock
to be purchased, Common Stock, preferred stock, or Warrants or other
securities of the Issuer having a Market Price equal to the aggregate
Exercise Price for the shares of Common Stock to be purchased. For
purposes of this Section 4: (I) the Market Price per share of Common
Stock at any time shall be determined in accordance with the
definition of Market Price, (II) the Market Price per Warrant at any
time shall be the Market Price per share of Common Stock minus the
Exercise Price then in effect, and (III) the Market Price of other
securities shall be as reasonably determined by the Issuer's Board of
Directors in accordance with the principles set forth in the
definition of Market Price; and
(iii) any representations or documents or information from the
Holder of the Warrants that the Issuer may reasonably require in order
comply with the requirements of the Securities Act with respect of
such issuance and in order to comply with the provisions of Section
7(c) of this Agreement.
Upon such exercise the Issuer shall issue and deliver to or to the order of the
registered Holder(s) of such Warrant, and in such name or names as such
registered Holder(s) may designate, one or more stock certificate(s) for the
Warrant Shares to be issued upon such exercise of such Warrant. Any person(s) so
designated to be named therein shall be deemed to have become the Holder(s) of
record of such Warrant Shares as of the date of delivery to the Issuer at the
Warrant Office of the Warrant and the Exercise Price therefor as provided in
clauses (i) and (ii) above.
----------
(6) With respect to the calculation of Exercise Price, the parties acknowledge
and agree that appropriate adjustments shall be made consistent with the
provisions of Section 9(d), and consistent with the adjustments set forth in
Note 1.
12
(b) If a Warrant is exercised in part at any time, a new Warrant or
Warrants shall be issued for the unexercised portion of such Warrant. Each
new Warrant so issued shall bear any legend required by Section 11.3 of the
Purchase Agreement, if the Warrant presented in connection with a partial
exercise thereof bore such legend. All Warrants surrendered upon exercise
shall be canceled.
(c) The Issuer will pay all taxes (other than any applicable income or
similar taxes payable by the Holders) attributable to the initial issuance
of Warrant Shares upon the exercise of the Warrants; provided, that the
Issuer shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue of any Warrant or any certificate for
Warrant Shares in a name other than that of the registered Holder of the
Warrant surrendered for exercise.
SECTION 5. Registration, Transfer and Exchange of Certificates.
(a) The Issuer shall maintain at the Warrant Office a Warrant Register
for registration of the Warrants and transfers thereof. The Issuer may deem
and treat the registered Holder(s) of the Warrants as the absolute owner(s)
thereof for the purpose of any exercise thereof or any distribution to the
Holder(s) thereof, and for all other purposes.
(b) The Issuer shall register the transfer of any outstanding Warrant
in the Warrant Register upon surrender to the Issuer at the Warrant Office
of such Warrant, accompanied (if so required by it) by one or more duly
executed instruments of transfer in form satisfactory to the Issuer. Upon
any such registration of transfer, one or more new Warrant(s) evidencing
such transferred Warrant shall be issued to the transferee(s) and the
surrendered Warrant shall be canceled. If less than all of a surrendered
Warrant is to be transferred, new Warrant(s) shall be issued to the
surrendering Holder evidencing the remaining balance of the surrendered
Warrant.
(c) Each Warrant may, at the option of the Holder(s) thereof, be
surrendered to the Issuer at the Warrant Office to be exchanged for one or
more new Warrants of like tenor and exercisable in the aggregate for a like
number of Warrant Shares. Warrants surrendered for exchange shall be
canceled.
(d) No charge shall be made for any such transfer or exchange except
for any tax or other governmental charge imposed in connection therewith.
Except as provided in Section 11 or 12 of the Purchase Agreement, each
Warrant issued upon transfer or exchange shall bear any legend required by
Section 11.3 of the Purchase Agreement if the Warrant presented for
transfer or exchange bore such legend.
SECTION 6. Mutilated or Missing Warrant. If any Warrant is mutilated, lost,
stolen or destroyed, the Issuer shall issue, in exchange and substitution for
and upon cancellation of the mutilated Warrant, or in lieu of and substitution
for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and
representing rights to acquire an equivalent share in the Issuer, but only upon
receipt of evidence satisfactory to the Issuer of such loss, theft or
destruction of such Warrant and, if requested, indemnity satisfactory to it. No
service charge shall be made for any such substitution, but all reasonable
charges associated with any stamp, tax or other
13
governmental duty that may be imposed in relation thereto shall be borne by the
Holder of such Warrant. Each Warrant issued in any such substitution shall bear
any legend required by Section 11.3 of the Purchase Agreement if the Warrant for
which such substitution was made bore such legend.
SECTION 7. Reservation and Issuance of Warrant Shares; Governmental
Approvals and Stock Exchange Listings.
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from pre-emptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the
Warrants, the aggregate Warrant Shares issuable upon exercise of all
outstanding Warrants.
(b) The Issuer covenants that all Warrant Shares will, upon issuance
in accordance with the terms of this Agreement, be fully paid and
nonassessable and free from all taxes with respect to the issuance thereof
and from all liens, charges and security interests created by the Issuer.
(c) The Issuer will, at its own expense, (i) obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities which may from time to time be required of the Issuer in order
to issue Warrant Shares upon exercise of the Warrants, and otherwise to
perform its obligations hereunder, and (ii) take all action which may be
necessary so that the Warrant Shares, immediately upon their issuance upon
the exercise of Warrants, will be listed on the principal securities
exchange, if any, on which shares of the Common Stock of the Issuer are
then listed.
SECTION 8. Dividends and Distributions. In the event that the Issuer
declares a stock split, stock dividend, or dividend of any kind, whether in
cash, securities or other property, upon the Common Stock (including any
dividend payable in Common Stock, Options or Convertible Securities), then, at
the option of each Holder of Warrants:
(i) lawful and adequate provisions shall be made whereby the Issuer
shall maintain in reserve and available such dividend property, and such
Holder shall thereafter have the right to purchase and/or receive, as the
case may be, upon exercise of its Warrants (on the terms and conditions
specified in this Agreement, and in addition to the Warrant Shares
purchasable by such Holder immediately prior to the declaration of such
dividend), such shares of stock, securities or property as are
distributable with respect to outstanding shares of Common Stock equal to
the number of Warrant Shares purchasable by such Holder immediately prior
to such declaration, to the end that the provisions hereof (including
without limitation provisions for adjustments of the number of shares
receivable upon exercise) shall thereafter be applicable, as nearly as may
be, in relation to such shares of stock, securities or property; or
(ii) the Exercise Price of such Holder's Warrants shall be reduced by
the per share amount of such dividend.
14
SECTION 9. Adjustment of Number of Warrant Shares Purchasable and Exercise
Price. Prior to the Expiration Date, the number of Warrant Shares purchasable
upon the exercise of each Warrant is subject to adjustment from time to time
upon the occurrence of any of the events enumerated in this Section 9, and the
Exercise Price is subject to adjustment as provided in Section 9(d).
(a) In the event that the Issuer shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock in shares or
other securities of the Issuer, other than a dividend described in Section
8 hereof, (ii) split or subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares, or
(iv) issue by reclassification of its Common Stock any shares or other
securities of the Issuer (other than as a result of a change from par to no
par value stock or from no par to par value stock or with respect to an
issuance pursuant to Section 8 hereof); then, in each such event, the
number of Warrant Shares purchasable upon exercise of each Warrant
immediately prior thereto shall be adjusted so that the holder shall be
entitled to receive the kind and number of such shares or other securities
of the Issuer which the holder would have owned or have been entitled to
receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event (or
any record date with respect thereto). Such adjustment shall be made
whenever any of the events listed above shall occur. Without limiting the
foregoing, if, at any time after the date of this Agreement, the Issuer
shall merge or consolidate (or the Issuer shall enter into a transaction
substantially similar in purpose or effect to a merger or a consolidation)
with an Affiliate and following such merger or consolidation or
substantially similar transaction, the Issuer is the surviving entity (an
"Affiliated Transaction"), an adjustment to the number of Warrant Shares
issuable to the Holders upon exercise of the Warrants (the "Issuable
Warrant Shares") shall be made such that the ratio of (x) Issuable Warrant
Shares to Fully-Diluted Common Stock immediately prior to such Affiliated
Transaction shall be identical to (y) the ratio of Issuable Warrant Shares
to Fully-Diluted Common Stock immediately following such Affiliated
Transaction. An adjustment made pursuant to this Section 9(a) shall become
effective immediately after the effective date of the event retroactive to
the record date, if any, for the event.
(b) No adjustment in the number of Warrant Shares shall be required
unless such adjustment would require an increase or decrease of at least 1%
in the aggregate number of Warrant Shares purchasable upon exercise of all
Warrants provided that any adjustments which by reason of this Section 9(b)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment; provided, however, that notwithstanding the
foregoing, all such adjustments shall be made no later than three years
from the date of the first event that would have required an adjustment but
for this Section 9(b). All calculations under this Section 9 shall be made
to the nearest cent or to the nearest hundredth of a share, as the case may
be.
(c) If at any time, as a result of an adjustment made pursuant to this
Section 9, the Holder of any Warrant thereafter exercised shall become
entitled to receive any securities of the Issuer other than shares of
Common Stock, thereafter the number of such other securities so receivable
upon exercise of any Warrant shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in this Section 9,
and the provisions of this Agreement with respect to the Warrant Shares
shall apply on like terms to such other securities.
15
(d) Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant is adjusted, the Exercise Price per Warrant Share
payable upon exercise of each Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of Warrant Shares purchasable upon
the exercise of each Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares purchasable
immediately after such adjustment.
(e) In the event of any capital reorganization of the Issuer, or of
any reclassification of the Common Stock (other than a reclassification
referred to in Section 9(a)(iv) above), or in case of the consolidation of
the Issuer with or the merger of the Issuer with or into any other
corporation or of the sale of the properties and assets of the Issuer as,
or substantially as, an entirety to any other corporation, each Warrant
shall, after such capital reorganization, reclassification of Common Stock,
consolidation, merger or sale, and in lieu of being exercisable for Warrant
Shares, be exercisable, upon the terms and conditions specified in this
Amended and Restated Warrant Agreement, for the number of shares of stock
or other securities or assets to which a holder of the number of Warrant
Shares purchasable (at the time of such capital reorganization,
reclassification of Common Stock, consolidation, merger or sale) upon
exercise of such Warrant would have been entitled upon such capital
reorganization, reclassification of Common Stock, consolidation, merger or
sale; and in any such case, if necessary, the provisions set forth in this
Section 9 with respect to the rights thereafter of the holders of the
Warrants shall be appropriately adjusted so as to be applicable, as nearly
as they may reasonably be, to any shares of stock or other securities or
assets thereafter deliverable on the exercise of the Warrants. The Issuer
shall not effect any such consolidation, merger or sale, unless prior to or
simultaneously with the consummation thereof, the successor corporation (if
other than the Issuer) resulting from such consolidation or merger or the
corporation purchasing such assets or the appropriate corporation or entity
shall assume, by written instrument, the obligation to deliver to the
holder of each Warrant the shares of stock, securities or assets to which,
in accordance with the foregoing provisions, such holder may be entitled
and all other obligations of the Issuer under this Amended and Restated
Warrant Agreement. The provisions of this Section 9(e) shall apply to
successive reorganizations, reclassifications, consolidations, mergers and
sales.
(f) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of the Warrants, any
Warrant certificate theretofore or thereafter issued may continue to
express the same Exercise Price per share and number and kind of shares as
are stated on the Warrant certificates initially issuable pursuant to this
Agreement.
(g) If any question shall at any time arise with respect to the
adjusted Exercise Price of the Warrants or the number of Warrant Shares
issuable upon exercise of the Warrants, such question shall be determined
by an investment banking or advisory firm of the type described in, and
selected in the manner provided in, the last paragraph of the definition of
"Market Price". The Issuer and the Holders of a majority of the Warrants
shall be afforded reasonable opportunities to discuss matters relating to
such adjustment with such firm. The determination of such firm shall be
final and binding upon the Issuer and the Holders of Warrants. The fees and
expenses of such firm (and any incurred in the selection of such firm)
shall be borne by the Issuer unless the computation by such firm of such
adjusted Exercise Price
16
or number of Warrant Shares is the same as the computations thereof made by
the Issuer (or less favorable to the Holders), in which case the fees and
expenses of such firm shall be borne equally by the Issuer and the Holders
of Warrants.
SECTION 10. Notices to Warrant Holders. (a) Upon any adjustment of the
Exercise Price or number of Warrant Shares issuable upon exercise pursuant to
Section 9, the Issuer shall promptly, but in any event within 10 Business Days
thereafter, cause to be given to each of the registered holders of the Warrants,
at its address appearing on the Warrant Register by first-class mail, postage
prepaid, a certificate signed by its chief financial officer setting forth the
Exercise Price as so adjusted and/or the number of shares of Common Stock
issuable upon the exercise of each Warrant as so adjusted and describing in
reasonable detail the facts accounting for such adjustment and the method of
calculation used. Where appropriate, such certificate may be given in advance
and included as a part of the notice required to be mailed under the other
provisions of this Section 10.
(b) In case at any time the Issuer proposes:
(i) to declare a cash dividend upon Common Stock;
(ii) to declare or pay, or set apart any funds for the payment
of, any dividends on any shares of its Common Stock or make any other
Distribution (as defined in the Purchase Agreement) to the holders of
its Common Stock;
(iii) to apply any of its funds, property or assets to, or set
apart any funds, property or assets for, the purchase, redemption or
retirement of, or make any Distribution, by reduction of capital or
otherwise, in respect of any of its shares of Common Stock or in
respect of any Options or Convertible Securities exercisable or
exchangeable for or convertible into shares of Common Stock, whether
now or hereinafter outstanding;
(iv) to offer for subscription pro rata to the holders of any of
its capital stock or Convertible Securities any additional shares of
stock of any class or other rights;
(v) to effect any capital reorganization, or reclassification of
the Capital Stock of the Issuer, or consolidation or merger of the
Issuer with another Person, or sale or other disposition of greater
than 25% of the net value of its assets; or
(vi) to effect a voluntary or involuntary dissolution,
liquidation or winding up of the Issuer,
then, in any one or more of said cases, the Issuer shall give the Holder of any
Warrant (x) at least 10 Business Days' (but not more than 90 days') prior
written notice of the date on which the books of the Issuer shall close or a
record shall be taken for such dividend, redemption, Distribution or
subscription rights or for determining rights to vote in respect of any such
issuance, reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, and (y) in the case of any such
issuance, reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least 10 Business Days'
17
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (x) shall
also specify, in the case of any such dividend, redemption, Distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (y)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be. The failure to
give the notice required by this Section 10 or any defect therein shall not
affect the legality or validity of any Distribution, right, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up, or the vote upon any action.
SECTION 11. Securities Law Matters; Transfers; Rule 144 and Rule 144A
Covenants.
(a) The provisions of Section 11 (Securities Law Matters) and 12
(Transfers) of the Purchase Agreement are hereby incorporated by reference
herein as if set forth in full herein.
(b) With a view to making available certain rules and regulations of
the Securities and Exchange Commission (the "Commission") which may permit
the sale of Warrants and Warrant Shares without registration, the Issuer
agrees that at any time when its securities are registered under that
Securities and Exchange Act of 1934 (the "Exchange Act") that it will:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), or any successor provision thereto;
(ii) so long as Rule 144A is available to the Holders, make and
keep available the information specified in Rule 144A(d)(4) under the
Securities Act or any successor provision thereto;
(iii) file with the Commission in a timely manner all reports and
other documents required of the Issuer under the Exchange Act; and
(iv) furnish to each Holder upon request a written statement by
the Issuer as to its compliance with the information or reporting
requirements of Rule 144 and Rule 144A or any successor provision
thereto, and of the Securities Act and the Exchange Act, and a copy of
the most recent annual or quarterly report of the Issuer filed with
the Commission.
SECTION 12. Registration Rights. The parties hereto agree to be bound by
the provisions of Exhibit C hereto as if such provisions were set forth in full
herein.
SECTION 13. Covenants of Issuer. So long as any Holder shall hold a Warrant
or any Warrant Shares, the Issuer shall abide by all of the covenants and
agreements set forth in the
18
Purchase Agreement, other than those set forth in the following Sections of the
Purchase Agreement: Sections 3.1 through 3.5, 6.1 through 6.7, 6.8(a) and (b),
6.9 through 6.14, 7.1 through 7.8, 7.9(a), the provisions regarding
Distributions (as such term is defined in the Purchase Agreement) on the Trust
Preferred Securities (as such term is defined in the Settlement Agreement) set
forth in 7.9(c) but only as they related to dividend distributions (provided
that the Issuer shall no longer have any obligations under the remaining
provisions of Section 7.9(c), such remaining obligations to be the obligation of
the holder of the Trust Preferred Securities subject to the Amended and Restated
Option Agreement (as such term is defined in the Settlement Agreement)), 7.10
through 7.13, 7.15 through 7.19, 9.1 and 9.2. So long as any Holder shall hold a
Warrant or any Warrant Shares, the Issuer shall not, unless the Warrant Shares
are eligible for sale under Rule 144 without regard to any volume limitations
thereunder, without the prior written consent of the Holders of a majority of
the Warrant Shares issued or issuable upon exercise of all outstanding Warrants,
enter into any agreement with any holder or prospective holder of any securities
of the Issuer which would allow such holder or prospective holder to include
such securities in any registration referred to in Section 12 hereof, unless
under the terms of such agreement, such holder or prospective holder may include
such securities in any such registration only to the extent that the inclusion
of its securities will not reduce the number of Warrant Shares which are
included.
SECTION 14. Effectiveness of Certain Provisions of the Purchase Agreement.
Any Holder shall be deemed a "Purchaser" under, and as that term is defined in,
the Purchase Agreement.
SECTION 15. Amendments and Waivers. Any provision of this Agreement may be
amended, supplemented, waived, discharged or terminated by a written instrument
signed by the Issuer and the Holders of a majority of the Warrant Shares issued
or issuable upon exercise of all outstanding Warrants; provided, that the
Exercise Price may not be increased, the number of shares of Common Stock
issuable upon exercise of the Warrants may not be reduced, the Expiration Date
may not be changed to an earlier date and this Section may not be amended except
with the consent of each Holder which would be affected thereby.
SECTION 16. Provisions of Other Agreements. Whenever the Purchase Agreement
or any provision thereof is referred to herein or in any instrument furnished
hereunder as expressing or constituting a covenant, term, condition or
limitation of this Agreement or of such instrument or as expressing or
constituting a representation herein or therein (a) any such provision shall be
regarded as though incorporated herein or therein at length, (b) except as
otherwise provided herein or in such instrument the terms used in such agreement
or the provision thereof referred to shall have the meanings set forth in such
agreement, and (c) any covenant or other provision incorporated herein by
reference from such agreement shall continue in effect for the benefit of the
Holders so long as this Agreement shall remain in effect. Except as otherwise
specifically provided herein, and except for amendments or modifications to
which the Holders consent in writing in accordance with Section 15, no
modification of or amendment to, or waiver or termination of, any provision of
any of said agreement and no payment of the indebtedness outstanding thereunder
or satisfaction or cancellation thereof, or termination of said agreement, shall
modify, amend, waive, terminate or otherwise affect any provision thereof as
referred to in
19
this Agreement or in any instrument furnished hereunder, which provision, for
the purpose of this Agreement and such instrument, shall remain unmodified and
in full force and effect.
SECTION 17. Specific Performance. The Holders of the Warrants and/or
Warrant Shares shall have the right to specific performance by the Issuer of the
provisions of this Agreement. The Issuer hereby irrevocably waives, to the
extent that it may do so under applicable law, any defense based on the adequacy
of a remedy at law which may be asserted as a bar to the remedy of specific
performance in any action brought against the Issuer for specific performance of
this Agreement by the Holders.
SECTION 18. Notices. All notices, requests, demands or other communications
to or upon the respective parties hereto shall be in writing and shall be deemed
to have been given or made, and all financial statements, information and the
like required to be delivered hereunder shall be deemed to have been delivered,
either (a) three (3) Business Days after deposited in the United States
certified mail, return receipt requested, with postage prepaid, or (b) one (1)
Business Day after delivery to a nationally recognized courier, designated for
overnight delivery with all fees prepaid, in either case addressed to the Issuer
at the Warrant Office, Attn: Chief Executive Officer, and to the Holders at
their respective addresses set forth on the Warrant Register, or to such other
address as any of them shall specify in writing to the others. The Issuer shall
cause the Warrant Register to contain current addresses for each of the Holders.
SECTION 19. Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the benefit of the Issuer, its successors and assigns, the
Holders and the registered Holders from time to time of the Warrants and the
Warrant Shares.
SECTION 20. Termination. This Agreement shall terminate and be of no
further force and effect at the close of business on the Expiration Date or the
date on which none of the Warrants shall be outstanding, except that the
provisions of Sections 15 (Amendments and Waivers), 17 (Specific Performance),
18 (Notices), 19 (Binding Effect; Assignability), 17 (Termination) and 22
(Governing Law) shall continue in full force and effect after such termination.
SECTION 21. Counterparts. This Agreement may be executed in one or more
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
SECTION 22. Governing Law. This Agreement and each Warrant shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 23. Effective Date. For purposes of this Agreement, all of the
provisions set forth herein shall be deemed to be effective as of November 15,
2001.
SECTION 24. Headings. The headings of the sections of this Agreement and
Exhibits (as defined below) hereto are included for convenience of reference
only and shall not form a part of this Agreement or such Exhibits. As used
herein, the term "Exhibits" shall mean
20
collectively Exhibit A, the form of Warrant, Exhibit B, the Warrant Register,
and Exhibit C, Registration Rights attached hereto.
[Remainder of page intentionally left blank; signature page follows]
21
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Warrant Agreement of U.S. Home & Garden Inc. to be duly executed and
delivered by their proper and duly authorized officers, as of the date and year
first above written.
Issuer:
U.S. HOME & GARDEN INC.
By:
----------------------------------
Name/Title:
Holders:
By:
----------------------------------
By:
----------------------------------
By:
----------------------------------
22
EXHIBIT A
TO AMENDED AND RESTATED WARRANT AGREEMENT
[FORM OF WARRANT]
THIS WARRANT AND THE UNDERLYING SHARES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THIS WARRANT AND THE
UNDERLYING SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THE AMENDED AND RESTATED WARRANT AGREEMENT DATED ___________, 200_
BETWEEN THE ISSUER AND THE INITIAL HOLDERS OF THE WARRANTS THEREIN NAMED, A COPY
OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND
WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
WARRANT
to Purchase Common Stock of
U.S. HOME & GARDEN INC.
No. WS- ____________, 20__
This Warrant certifies that , or registered assigns, is the registered
holder of a warrant (the "Warrant") to purchase from U.S. HOME & GARDEN INC., a
Delaware corporation (the "Issuer"), up to _______ shares of the Issuer's Common
Stock, $.001 par value ("Common Stock"), subject to adjustment as provided in
the Amended and Restated Warrant Agreement referred to below). This Warrant may
be exercised at any time prior to 5:00 P.M., local time of the Warrant Office,
on the Expiration Date (as defined in the Amended and Restated Warrant
Agreement), by surrender of this Warrant, execution and delivery of an Election
to Purchase in the form attached hereto and payment of the Exercise Price at the
office of the Issuer at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx XX 00000, or such
other address as the Issuer may specify in writing to the registered holder of
this Warrant (the "Warrant Office").
The aggregate Exercise Price for the shares of Common Stock being purchased
may be paid by delivery of either (i) a certified check or bank draft or (ii)
certain stock, notes or securities of the Issuer or the Company, all as provided
in Section 4(a) of the Amended and Restated Warrant Agreement.
The Issuer may deem and treat the registered holder(s) of this Warrant as
the absolute owner(s) hereof (notwithstanding any notation of ownership or other
writing hereon
A-1
made by anyone), for the purpose of any exercise hereof and of any distribution
to the holder(s) hereof, and for all other purposes, and the Issuer shall not be
affected by any notice to the contrary.
This Warrant is one of the Warrants referred to in the Amended and Restated
Warrant Agreement dated as of ___________, 200_ between the Issuer and the
initial Holders named therein (the "Amended and Restated Warrant Agreement")
entered into from and as of November 15, 2001 in connection with the Settlement
Agreement. The Amended and Restated Warrant Agreement is hereby incorporated by
reference in and made a part of this Warrant and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities of the Issuer and the Holder. Unless otherwise defined herein, all
capitalized terms used in this Warrant have the meanings assigned to them in or
pursuant to the Amended and Restated Warrant Agreement.
IN WITNESS WHEREOF, the Issuer has caused this Warrant to be signed by its
duly authorized officers and has caused its corporate seal to be affixed
hereunto.
U.S. HOME & GARDEN INC.
By:
----------------------------------
Name
Title:
(CORPORATE SEAL)
ATTEST:
----------------------------------
, Secretary
A-2
ANNEX I
TO WARRANT
[Form of]
ELECTION TO PURCHASE
[To be executed upon exercise of Warrant]
The undersigned hereby elects to exercise the right, represented by the
attached Warrant of U.S. Home & Garden Inc., a Delaware corporation (the
"Issuer"), to purchase _____ shares of Common Stock of the Issuer ("Warrant
Shares"), and further elects to pay the aggregate Exercise Price therefor by
delivery of [a check or bank draft] [stock, notes or securities of the Issuer or
the Company], as provided in Section 4(a) of the Amended and Restated Warrant
Agreement referred to in the attached Warrant.
The undersigned requests that a certificate for such Warrant Shares be
registered in the name of _______________ whose address is ______________ and
that such certificate be delivered to _______________ whose address is
_______________.
If said number of Warrant Shares is less than all of the Warrant Shares
purchasable under the attached Warrant, the undersigned requests that a new
Warrant representing the remaining balance of the Warrant Shares be registered
in the name of _________________ whose address is _________________ and that
such Warrant be delivered to __________________ whose address is
_________________.
Signature:
----------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
Date:_______________, 20___
A-3
EXHIBIT B
TO AMENDED AND RESTATED WARRANT AGREEMENT
U.S. HOME & GARDEN INC.
Warrant Register
Warrant Original No. of
Certificate No. Name and Address of Holder Warrant Shares
--------------- -------------------------- --------------
NW-1
XX-0
XX-0
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
27.1 Attn: Xxxxxxx X. Xxxxxxx
Telecopier No.: 000-000-0000
TOTAL: XXXXX
=====
B-1
EXHIBIT C
REGISTRATION RIGHTS
SECTION 1. Definitions. The following term used in this Exhibit C shall
have the meanings indicated below:
"Registrable Securities" shall mean (i) the Warrants and Warrant Shares and
(ii) Common Stock and any other capital stock, equity interest or other
securities issuable or issued by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or other transaction of the character referred to in
Section 9(b) of the Amended and Restated Warrant Agreement; provided, however,
that Issuer shall have no obligation to register any Warrants, and each holder
of Warrants who desires to include in a registration any shares of Common Stock
issuable upon exercise of such Warrants will (if requested to do so by ISSUER)
exercise all or part of its Warrants prior to the effectiveness of such
registration as required to permit the inclusion therein of such underlying
shares.
SECTION 2. Registration.
(a) Incidental Registration Rights. In the case of any proposed
registration of Common Stock or other securities of Issuer under the Securities
Act, whether or not for sale for its own account, on any form which can include
Registrable Securities (other than Form S-8 or S-4 or successor forms), Issuer
will give at least 30 days' prior written notice of the filing thereof to all
Holders.
(1) Issuer's notice shall afford the Holders an opportunity to elect
within 15 days after receipt thereof to include in such filing all or any
part of their Registrable Securities; provided, that, in the case of an
underwritten public offering, the managing underwriter administering such
offering may reduce the number of Registrable Securities to be included in
such offering if, in the reasonable opinion of such managing underwriter,
the inclusion in such offering of all Registrable Securities requested to
be registered would materially and adversely affect the marketing of the
entire offering (the number of Registrable Securities to be included in
such offering being herein referred to as the "Permissible Securities"). If
the aggregate number of Registrable Securities which the Holders thereof
desire to include in such filing exceeds the number of Permissible
Securities, then each such Holder shall be entitled to include that number
of Registrable Securities which bears the same ratio to the number of
Permissible Securities (other than Permissible Securities offered and sold
by the Issuer) as the number of Registrable Securities such Holder desires
to include bears to the number of Registrable Securities all such Holders
desire to include.
(2) Issuer agrees that any Holder entitled to include Registrable
Securities in any such registration may assign or transfer such right to
include such Registrable Securities to any other Holder or Holders.
C-1
(3) Issuer shall be obligated under this Section 2(a) to afford the
Holders the right to participate in each and every such registration taking
place until all Registrable Securities have been included in registrations
and sold or sold pursuant to Rule 144.
(b) Short Form Registrations. In addition to the registration rights
provided in Section 2(a) above, the holders of a majority of the Registrable
Securities shall be entitled to request by written notice to Issuer from time to
time that Issuer register the offering and sale of all or a portion of the
Registrable Securities on Form S-3 (or any successor or similar short form
registration), provided that Issuer is eligible for such registration. Upon
receipt of such written notice, if Issuer is then eligible to use Form S-3 (or
any successor or similar short form registration), Issuer will thereupon notify
all other Purchasers of such request. Upon the written request of any such other
Purchasers after receipt from Issuer of such notification, Issuer will use its
best efforts to cause such of the Registrable Securities as may be requested by
any Purchasers (including the Purchaser giving the initial notice of intent to
register hereunder) to be registered under the Securities Act in accordance with
the terms of this Section 2. Issuer will use its best efforts to qualify for use
of a registration statement on Form S-3 (or any successor or similar short form
registration) as early as practicable. Issuer shall not be required to file more
than one registration statement pursuant to this Section 2(b) in any 12 month
period or more than two registration statements pursuant to this Section 2(b) in
all.
(c) Expenses of Registration. The costs and expenses of all registrations
and qualifications under the Securities Act and applicable state securities laws
and of all other actions, which Issuer is required to take or effect pursuant to
this Section 2 (including without limitation all registration and filing fees,
printing expenses and reasonable fees and disbursements of counsel) shall be
paid by Issuer, except that the Holders shall bear their pro rata share of any
underwriting discount or commission, or other similar selling expenses;
provided, that Issuer shall not be required to pay the fees and expenses of more
than one counsel for the selling Holders.
(d) Opinion of Counsel as Alternative. The registration rights granted to
the Holders under this Section 2 shall be subject to the condition that any
registration of Registrable Securities proposed to be effected need not be
effected if Issuer shall deliver to the Holders requesting such registration an
opinion, satisfactory to such Holders and their counsel, of Blank Rome Xxxxxxx &
XxXxxxxx LLP or other counsel satisfactory to such Holders to the effect that
the proposed sale or disposition for which registration was requested does not
require registration under the Securities Act, but such opinion shall not rely
on the availability of sales utilizing the provisions of Rule 144 if doing so
would impose on the Holder any volume restrictions, or any pre-sale notification
or similar restriction on the free sale of the Registrable Securities. Issuer
hereby indemnifies the Holders, and each of them, against and holds them
harmless from all damages, losses, liabilities (including liability for
rescission), costs and expenses which they may incur under the Securities Act or
otherwise by reason of their proceeding in accordance with such opinion of
counsel.
(e) Issuer's Registration Obligations. If and whenever Issuer is obligated
by the provisions of this Section 2 to effect the registration of any
Registrable Securities under the
C-2
Securities Act, as expeditiously as reasonably possible Issuer will, or will use
its best efforts to, as the case may be, to:
(1) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities.
(2) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective until the
earlier of the sale of all Registrable Securities covered thereby and the
expiration of a period of nine months after the date such registration
statement became effective (except that any registration statement on Form
S-3 or similar short-form shall be maintained for not less than two years),
and comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement.
(3) Furnish to each selling Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Holder may reasonably request.
(4) Register or qualify the Registrable Securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions (subject to the approval of any managing underwriter
involved) as the selling Holders shall request, and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such Holders to consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that Issuer shall not be
obligated, by reason thereof, to qualify as a foreign corporation or
subject itself to taxation as doing business in any such jurisdiction.
(5) Notify the selling Holders and their counsel promptly after Issuer
shall receive notice that any registration statement, supplement or
amendment has become effective, or that any registration statement is
required to be amended or supplemented, or that any stop order has been
issued.
(f) Indemnification. Issuer agrees to indemnify and hold harmless each
Holder, its officers or directors, affiliates and each Person, if any, who
controls such Holder within the meaning of the Securities Act, from and against
any losses, claims, damages, liabilities and expenses (under such Act, at common
law or otherwise) caused by any untrue statement or alleged untrue statement of
a material fact or omission to state a material fact required to be stated or
necessary to make the statements therein not misleading in any registration
statement or preliminary or final prospectus or filing for state registration or
qualification, or any amendment or supplement thereto, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement contained in or omission from information furnished in writing to
Issuer by such Holder expressly for use therein.
(g) Agreement as to Underwriters. If the offering pursuant to any
registration statement provided for under this Section 2 is made, at the
election of Issuer, through
C-3
underwriters, Issuer agrees to enter into an underwriting agreement in customary
form with such underwriters and to indemnify such underwriters, their officers
and directors, if any, and each Person who controls such underwriters within the
meaning of the Securities Act, to the same extent as provided in Section 2(f)
with respect to the indemnification of a Holder.
(h) No Special Audit. Issuer shall not be required to conduct any special
audit (or any audit not in the ordinary course of its business) in connection
with any registration hereunder.
C-4
Schedule 2A(e)
Schedule of Fully-Diluted Common Stock
To be provided.
Exhibit 9A (USHG - Xxxxx on Signing)
GENERAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN KNOW THAT:
U.S. Home & Garden Inc., a Delaware corporation and Easy Gardener, Inc., a
Delaware corporation, and for and on behalf of each of their respective
employees, subsidiaries, parent, affiliates, officers, directors, heirs,
executors, administrators, successors and assigns, in their capacities as such,
collectively "RELEASORS," in consideration of the sum of ten dollars ($10.00)
and other good and valuable consideration received from LEG Partners Debenture
SBIC, L.P., a Delaware limited partnership (and the transferee of all of the
rights title and interest of LEG Partners III, L.P.), LEG Partners III, L.P., a
Delaware limited partnership, LEG Partners III SBIC, L.P., a Delaware limited
partnership, LEG Co-Investors, LLC, a Delaware limited liability company, 555
Madison Investors II, LLC (f/k/a LEG Co-Investors II, LLC), a Delaware limited
liability company, 555 Madison Investors, LLC, a Delaware limited liability
company, Xxxxx Associates LLC, a New York limited liability company and Xxxxx
Associates Incorporated, a New York corporation (collectively, the "Xxxxx
Parties"), receipt whereof is hereby acknowledged, unconditionally and
irrevocably and irrespective of any future events release and forever discharge
each of the Xxxxx Parties and each of their respective officers, directors,
affiliates, shareholders (whether past or present), parents, subsidiaries,
heirs, executors, administrators, successors, assigns and employees, in their
capacities as such, (collectively, the "RELEASEES"), from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
3
variances, trespasses, damages, judgments, extents, executions, claims and
demands whatsoever, in law, admiralty or equity (collectively, "Claims"), which
against the RELEASEES, the RELEASORS ever had, now have or hereafter can, shall
or may have, for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the day of the date of this RELEASE, except
for Claims arising out of (a) the obligations of the Xxxxx Parties that accrue
after the date hereof under the Settlement Agreement dated as of November 1,
2002, by and among the RELEASORS and the Xxxxx Parties (the "Settlement
Agreement") and (b) the obligations of Xxxxx Associates LLC that accrue after
the date hereof under the Consulting Agreement (as defined in the Settlement
Agreement).
Each of the RELEASORS further agrees that it has not and will not file or
institute any civil actions, complaints, or any other proceeding against any
RELEASEE before any court, administrative agency or any other forum based upon
or arising out of any Claims that it has against such RELEASEE other than the
matters set forth in the exception clause of the preceding paragraph. Each of
the RELEASORS further agrees not to participate and to waive any right to
participate in any charge or complaint which may be made by any other person or
organization on such RELEASOR'S behalf before any federal, state or local court
or administrative agency against any RELEASEE except as such waiver is
prohibited by law and except to the extent that such participation is pursuant
to subpoena or order of a court of competent jurisdiction. Should any charge be
filed, each such RELEASOR agrees that it will not accept any relief or recovery
therefrom.
Each of the RELEASORS hereby represents and warrants that it has not
assigned or otherwise transferred (voluntarily, involuntarily or by operation of
law) any right, title or interest
4
in any Claim which it has, may have or may have had and which is the subject of
this RELEASE.
In this RELEASE the use of the singular shall include the plural and the
use of the plural shall include the singular.
This RELEASE can only be changed in a writing executed by the RELEASORS and
RELEASEES.
IN WITNESS WHEREOF, the RELEASORS have executed this RELEASE on November 1,
2002.
U.S. HOME & GARDEN INC.
By:
--------------------------
Name:
Title:
EASY GARDENER, INC.
By:
--------------------------
Name:
Title:
5
STATE OF )
: ss.:
COUNTY OF )
On the _____ day of ____________, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the __________of U.S. Home & Garden Inc., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
-----------------------------
Notary Public
6
STATE OF )
: ss.:
COUNTY OF )
On the _____ day of ____________, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the __________of Easy Gardener, Inc., the corporation described
in and which executed the above instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
-----------------------------
Notary Public
7
Exhibit 9B (Xxxxx - USHG on Settlement Closing)
GENERAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN KNOW THAT:
LEG Partners Debenture SBIC, L.P., a Delaware limited partnership (and the
transferee of all of the rights title and interest of LEG Partners III, L.P.),
LEG Partners III, L.P., a Delaware limited partnership, LEG Partners III SBIC,
L.P., a Delaware limited partnership, LEG Co-Investors, LLC, a Delaware limited
liability company, 555 Madison Investors II LLC (f/k/a LEG Co-Investors II,
LLC), a Delaware limited liability company, 555 Madison Investors, LLC, a
Delaware limited liability company, Xxxxx Associates LLC, a New York limited
liability company ("Xxxxx LLC") and Xxxxx Associates Incorporated, a New York
corporation, and for and on behalf of each of their respective employees,
subsidiaries, parents, affiliates, officers, directors, heirs, executors,
administrators, successors and assigns, in their capacities as such,
collectively "RELEASORS," in consideration of the sum of ten dollars ($10.00)
and other good and valuable consideration received from U.S. Home & Garden Inc.,
a Delaware corporation ("USHG") and Easy Gardener, Inc., a Delaware corporation
("EGI"), receipt whereof is hereby acknowledged, unconditionally and irrevocably
and irrespective of any future events release and forever discharge each of USHG
and EGI and each of their respective officers, directors, affiliates,
shareholders (whether past or present), parents, subsidiaries, heirs, executors,
administrators, successors, assigns and employees, in their capacities as such,
(collectively, "RELEASEES"), from all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises,
8
variances, trespasses, damages, judgments, extents, executions, claims and
demands whatsoever, in law, admiralty or equity (collectively, "Claims"), which
against the RELEASEES, the RELEASORS ever had, now have or hereafter can, shall
or may have, for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the day of the date of this RELEASE, except
for the obligations of the RELEASEES that accrue on or after the date hereof
under (a) the Settlement Agreement dated as of November 1, 2002, by and among
the RELEASORS, USHG and EGI (the "Settlement Agreement"); (b) the Amended and
Restated Warrant Agreement and Warrant (each as defined in the Settlement
Agreement), (c) the Note Purchase Agreement (as defined in the Settlement
Agreement) as amended by the Settlement Agreement, (d) the Settlement Option
Agreements and the Settlement Options (each as defined in the Settlement
Agreement), and (e) the Consulting Agreement (as defined in the Settlement
Agreement).
Each of the RELEASORS further agrees that it has not and will not file or
institute any civil actions, complaints, or any other proceeding against any
RELEASEE before any court, administrative agency or any other forum based upon
or arising out of any Claims that it has against such RELEASEE other than the
matters set forth in the exception clause of the preceding paragraph. Each of
the RELEASORS further agrees not to participate and to waive any right to
participate in any charge or complaint which may be made by any other person or
organization on such RELEASOR'S behalf before any federal, state or local court
or administrative agency against any RELEASEE except as such waiver is
prohibited by law and except to the extent that such participation is pursuant
to subpoena or order of a court of competent jurisdiction. Should any charge be
filed, each such RELEASOR agrees that it will not accept any relief or recovery
therefrom.
9
Each of the RELEASORS hereby represents and warrants that it has not
assigned or otherwise transferred (voluntarily, involuntarily or by operation of
law) any right, title or interest in any Claim which it has, may have or may
have had and which is the subject of this RELEASE.
In this RELEASE the use of the singular shall include the plural and the
use of the plural shall include the singular.
This RELEASE can only be changed in a writing executed by the RELEASORS and
RELEASEES.
IN WITNESS WHEREOF, the RELEASORS have executed this RELEASE on _________,
200_.
LEG PARTNERS DEBENTURE SBIC, L.P.
By: Xxxxx Debenture GP, LLC, its General Partner
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG PARTNERS III, L.P.
By: Xxxxx XX III, LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
LEG PARTNERS III SBIC, L.P.
By: Xxxxx XX-XX, LLC, its general partner
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
10
LEG CO-INVESTORS, LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS II LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS, LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Manager
XXXXX ASSOCIATES LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
XXXXX ASSOCIATES INCORPORATED
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Principal
11
STATE OF )
: ss.:
COUNTY OF )
On this _____ day of ______, 200_, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the _____________________ of Xxxxx Debenture GP, LLC, the general
partner of LEG Partners Debenture SBIC, L.P., a Delaware limited partnership
described in and which executed the above instrument; and that he signed his
name thereto, being duly authorized so to do by his co-partners in said
partnership.
-----------------------------
Notary Public
12
STATE OF )
: ss.:
COUNTY OF )
On this _____ day of ______, 200_, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the _____________________ of Xxxxx XX III, LLC, the general
partner of LEG Partners III, L.P., a Delaware limited partnership described in
and which executed the above instrument; and that he signed his name thereto,
being duly authorized so to do by his co-partners in said partnership.
-----------------------------
Notary Public
13
STATE OF )
: ss.:
COUNTY OF )
On this _____ day of ______, 200_, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the _____________________ of Xxxxx XX-XX, LLC, the general
partner of LEG Partners III SBIC, L.P., a Delaware limited partnership described
in and which executed the above instrument; and that he signed his name thereto,
being duly authorized so to do by his co-partners in said partnership.
-----------------------------
Notary Public
14
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 200_, before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of LEG Co-Investors, LLC, a Delaware limited liability
company, and that he has authority to sign the same, and acknowledged that he
executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
15
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 200_, before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of 555 Madison Investors II LLC, a Delaware limited
liability company, and that he has authority to sign the same, and acknowledged
that he executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
16
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 200_, before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of 555 Madison Investors, LLC, a Delaware limited liability
company, and that he has authority to sign the same, and acknowledged that he
executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
17
STATE OF )
: ss.:
COUNTY OF )
On the __day of ____, 200_, before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of Xxxxx Associates LLC, a New York limited liability
company, and that he has authority to sign the same, and acknowledged that he
executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
18
STATE OF )
: ss.:
COUNTY OF )
On the __day of ____, 200_, before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of Xxxxx Associates Incorporated, a New York corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation..
-----------------------------
Notary Public
19
Exhibit 9C (USHG-Xxxxx on Settlement Closing)
GENERAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN KNOW THAT:
U.S. Home & Garden Inc., a Delaware corporation and Easy Gardener, Inc., a
Delaware corporation, and for and on behalf of each of their respective
employees, subsidiaries, parent, affiliates, officers, directors, heirs,
executors, administrators, successors and assigns, in their capacities as such,
collectively "RELEASORS," in consideration of the sum of ten dollars ($10.00)
and other good and valuable consideration received from LEG Partners Debenture
SBIC, L.P., a Delaware limited partnership (and the transferee of all of the
rights title and interest of LEG Partners III, L.P.), LEG Partners III, L.P., a
Delaware limited partnership, LEG Partners III SBIC, L.P., a Delaware limited
partnership, LEG Co-Investors, LLC, a Delaware limited liability company, 555
Madison Investors II, LLC (f/k/a LEG Co-Investors II, LLC), a Delaware limited
liability company, 555 Madison Investors, LLC, a Delaware limited liability
company, Xxxxx Associates LLC, a New York limited liability company and Xxxxx
Associates Incorporated, a New York corporation (collectively, the "Xxxxx
Parties"), receipt whereof is hereby acknowledged, unconditionally and
irrevocably and irrespective of any future events release and forever discharge
each of the Xxxxx Parties and each of their respective officers, directors,
affiliates, shareholders (whether past or present), parents, subsidiaries,
heirs, executors, administrators, successors, assigns and employees, in their
capacities as such, (collectively, the "RELEASEES"), from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims and
demands whatsoever,
20
in law, admiralty or equity (collectively, "Claims"), which against the
RELEASEES, the RELEASORS ever had, now have or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever from the
beginning of the world to the day of the date of this RELEASE, except for Claims
arising out of (a) the obligations of the Xxxxx Parties that accrue after the
date hereof under the Settlement Agreement dated as of November 1, 2002, by and
among the RELEASORS and the Xxxxx Parties (the "Settlement Agreement") and (b)
the obligations of Xxxxx Associates LLC that accrue after the date hereof under
the Consulting Agreement (as defined in the Settlement Agreement).
Each of the RELEASORS further agrees that it has not and will not file or
institute any civil actions, complaints, or any other proceeding against any
RELEASEE before any court, administrative agency or any other forum based upon
or arising out of any Claims that it has against such RELEASEE other than the
matters set forth in the exception clause of the preceding paragraph. Each of
the RELEASORS further agrees not to participate and to waive any right to
participate in any charge or complaint which may be made by any other person or
organization on such RELEASOR'S behalf before any federal, state or local court
or administrative agency against any RELEASEE except as such waiver is
prohibited by law and except to the extent that such participation is pursuant
to subpoena or order of a court of competent jurisdiction. Should any charge be
filed, each such RELEASOR agrees that it will not accept any relief or recovery
therefrom.
Each of the RELEASORS hereby represents and warrants that it has not
assigned or otherwise transferred (voluntarily, involuntarily or by operation of
law) any right, title or interest in any Claim which it has, may have or may
have had and which is the subject of this RELEASE.
21
In this RELEASE the use of the singular shall include the plural and the
use of the plural shall include the singular.
This RELEASE can only be changed in a writing executed by the RELEASORS and
RELEASEES.
IN WITNESS WHEREOF, the RELEASORS have executed this RELEASE on __________,
200_.
U.S. HOME & GARDEN INC.
By:
--------------------------
Name:
Title:
EASY GARDENER, INC.
By:
--------------------------
Name:
Title:
22
STATE OF )
: ss.:
COUNTY OF )
On the _____ day of ____________, 200_, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the __________of U.S. Home & Garden Inc., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
-----------------------------
Notary Public
23
STATE OF )
: ss.:
COUNTY OF )
On the _____ day of ____________, 200_, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the __________of Easy Gardener, Inc., the corporation described
in and which executed the above instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
-----------------------------
Notary Public
24
Exhibit 9D (USHG - Xxxxx on Refinancing)
GENERAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN KNOW THAT:
U.S. Home & Garden Inc., a Delaware corporation and Easy Gardener, Inc., a
Delaware corporation, and for and on behalf of each of their respective
employees, subsidiaries, parent, affiliates, officers, directors, heirs,
executors, administrators, successors and assigns, in their capacities as such,
collectively "RELEASORS," in consideration of the sum of ten dollars ($10.00)
and other good and valuable consideration received from LEG Partners Debenture
SBIC, L.P., a Delaware limited partnership (and the transferee of all of the
rights title and interest of LEG Partners III, L.P.), LEG Partners III, L.P., a
Delaware limited partnership, LEG Partners III SBIC, L.P., a Delaware limited
partnership, LEG Co-Investors, LLC, a Delaware limited liability company, 555
Madison Investors II, LLC (f/k/a LEG Co-Investors II, LLC), a Delaware limited
liability company, 555 Madison Investors, LLC, a Delaware limited liability
company, Xxxxx Associates LLC, a New York limited liability company and Xxxxx
Associates Incorporated, a New York corporation (collectively, the "Xxxxx
Parties"), receipt whereof is hereby acknowledged, unconditionally and
irrevocably and irrespective of any future events release and forever discharge
each of the Xxxxx Parties and each of their respective officers, directors,
affiliates, shareholders (whether past or present), parents, subsidiaries,
heirs, executors, administrator, successors, assigns and employees, in their
capacities as such, (collectively, the "RELEASEES"), from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
25
variances, trespasses, damages, judgments, extents, executions, claims and
demands whatsoever, in law, admiralty or equity (collectively, "Claims"), which
against the RELEASEES, the RELEASORS ever had, now have or hereafter can, shall
or may have, for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the day of the date of this RELEASE, except
for Claims arising out of (a) the obligations of the Xxxxx Parties that accrue
after the date hereof under the Settlement Agreement dated as of November 1,
2002, by and among the RELEASORS and the Xxxxx Parties (the "Settlement
Agreement") and (b) the obligations of Xxxxx Associates LLC that accrue after
the date hereof under the Consulting Agreement (as defined in the Settlement
Agreement).
Each of the RELEASORS further agrees that it has not and will not file or
institute any civil actions, complaints, or any other proceeding against any
RELEASEE before any court, administrative agency or any other forum based upon
or arising out of any Claims that it has against such RELEASEE other than the
matters set forth in the exception clause of the preceding paragraph. Each of
the RELEASORS further agrees not to participate and to waive any right to
participate in any charge or complaint which may be made by any other person or
organization on such RELEASOR'S behalf before any federal, state or local court
or administrative agency against any RELEASEE except as such waiver is
prohibited by law and except to the extent that such participation is pursuant
to subpoena or order of a court of competent jurisdiction. Should any charge be
filed, each such RELEASOR agrees that it will not accept any relief or recovery
therefrom.
Each of the RELEASORS hereby represents and warrants that it has not
assigned or otherwise transferred (voluntarily, involuntarily or by operation of
law) any right, title or interest in any Claim which it has, may have or may
have had and which is the subject of this RELEASE.
26
In this RELEASE the use of the singular shall include the plural and the
use of the plural shall include the singular.
This RELEASE can only be changed in a writing executed by the RELEASORS and
RELEASEES.
IN WITNESS WHEREOF, the RELEASORS have executed this RELEASE on November 1,
2002.
U.S. HOME & GARDEN INC.
By:
--------------------------
Name:
Title:
EASY GARDENER, INC.
By:
--------------------------
Name:
Title:
27
STATE OF )
: ss.:
COUNTY OF )
On the _____ day of ____________, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the __________of U.S. Home & Garden Inc., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
-----------------------------
Notary Public
28
STATE OF )
: ss.:
COUNTY OF )
On the _____ day of ____________, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the __________of Easy Gardener, Inc., the corporation described
in and which executed the above instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
-----------------------------
Notary Public
29
Exhibit 9E (Xxxxx - USHG on Refinancing)
GENERAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN KNOW THAT:
LEG Partners Debenture SBIC, L.P., a Delaware limited partnership (and the
transferee of all of the rights title and interest of LEG Partners III, L.P.),
LEG Partners III, L.P., a Delaware limited partnership, LEG Partners III SBIC,
L.P., a Delaware limited partnership, LEG Co-Investors, LLC, a Delaware limited
liability company, 555 Madison Investors II, LLC (f/k/a LEG Co-Investors II,
LLC), a Delaware limited liability company, 555 Madison Investors, LLC, a
Delaware limited liability company, Xxxxx Associates LLC, a New York limited
liability company and Xxxxx Associates Incorporated, a New York corporation, and
for and on behalf of each of their respective employees, subsidiaries, parents,
affiliates, officers, directors, heirs, executors, administrators, successors
and assigns, in their capacities as such, collectively "RELEASORS," in
consideration of the sum of ten dollars ($10.00) and other good and valuable
consideration received from U.S. Home & Garden Inc., a Delaware corporation
("USHG") and Easy Gardener, Inc., a Delaware corporation ("EGI"), receipt
whereof is hereby acknowledged, unconditionally and irrevocably and irrespective
of any future events release and forever discharge each of USHG and EGI and each
of their respective officers, directors, affiliates, shareholders (whether past
or present), parents, subsidiaries, heirs, executors, administrators,
successors, assigns and employees, in their capacities as such, (collectively,
"RELEASEES"), from all actions, causes of action, suits, debts, dues, sums of
money, accounts, reckonings,
30
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions, claims
and demands whatsoever, in law, admiralty or equity (collectively, "Claims"),
which against the RELEASEES, the RELEASORS ever had, now have or hereafter can,
shall or may have, for, upon, or by reason of any (i) Default (as defined below)
or Event of Default (as defined below) under the Note Purchase Agreement (as
defined below), whether known or unknown, relating to or arising in connection
with any Expiring Provision (as defined below), or (ii) Default or Event of
Default under the Note Purchase Agreement, the existence of which is known by
the RELEASORS, relating to or arising in connection with any Surviving Provision
(as defined below), from the beginning of the world to the day of the date of
this RELEASE.
Each of the RELEASORS further agrees that it has not and will not file or
institute any civil actions, complaints, or any other proceeding against any
RELEASEE before any court, administrative agency or any other forum based upon
or arising out of any Claims that it has against such RELEASEE other than the
matters set forth in the exception clause of the preceding paragraph. Each of
the RELEASORS further agrees not to participate and to waive any right to
participate in any charge or complaint which may be made by any other person or
organization on such RELEASOR'S behalf before any federal, state or local court
or administrative agency against any RELEASEE except as such waiver is
prohibited by law and except to the extent that such participation is pursuant
to subpoena or order of a court of competent jurisdiction. Should any charge be
filed, each such RELEASOR agrees that it will not accept any relief or recovery
therefrom.
Each of the RELEASORS hereby represents and warrants that it has not
assigned or otherwise transferred (voluntarily, involuntarily or by operation of
law) any right, title or interest
31
in any Claim which it has, may have or may have had and which is the subject of
this RELEASE.
As used herein, the term (i) "Note Purchase Agreement" shall mean that
certain Note and Warrant Purchase, Guaranty and Security Agreement, dated as of
November 15, 2001 by and among certain of the RELEASORS and certain of the
RELEASEES, as amended by the Settlement Agreement and as further amended from
time to time, (ii) "Expiring Provision" shall mean any provision of the Note
Purchase Agreement that, pursuant to Section 13 of the Note Purchase Agreement,
amended by the Settlement Agreement, dated November 1, 2002 by and among the
RELEASORS, USHG and EGI, and as further amended from time to time, expressly
terminates and is of no further force or effect on and after payment in full of
the Notes (as defined in the Note Purchase Agreement) and obligations in respect
of the Notes owing under any of the Purchaser Documents (as defined in the Note
Purchase Agreement), (iii) "Surviving Provision" shall mean any provision of the
Note Purchase Agreement that is not an Expiring Provision, and (iv) "Default" or
"Event of Default" shall have the meaning given to each such term in the Note
Purchase Agreement.
In this RELEASE the use of the singular shall include the plural and the
use of the plural shall include the singular.
This RELEASE can only be changed in a writing executed by the RELEASORS and
RELEASEES.
32
IN WITNESS WHEREOF, the RELEASORS have executed this RELEASE on November 1,
2002.
LEG PARTNERS DEBENTURE SBIC, L.P.
By: Xxxxx Debenture GP, LLC, its General Partner
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG PARTNERS III, L.P.
By: Xxxxx XX III, LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
LEG PARTNERS III SBIC, L.P.
By: Xxxxx XX-XX, LLC, its general partner
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
LEG CO-INVESTORS, LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS II LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
555 MADISON INVESTORS, LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Manager
XXXXX ASSOCIATES LLC
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Authorized Signatory
XXXXX ASSOCIATES INCORPORATED
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Principal
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of ______, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the _____________________ of Xxxxx Debenture GP, LLC, the general
partner of LEG Partners Debenture SBIC, L.P., a Delaware limited partnership
described in and which executed the above instrument; and that he signed his
name thereto, being duly authorized so to do by his co-partners in said
partnership.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of ______, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the _____________________ of Xxxxx XX III, LLC, the general
partner of LEG Partners III, L.P., a Delaware limited partnership described in
and which executed the above instrument; and that he signed his name thereto,
being duly authorized so to do by his co-partners in said partnership.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of ______, 2002, before me personally came
_____________________ to me known, who, being by me duly sworn, did depose and
say that he is the _____________________ of Xxxxx XX-XX, LLC, the general
partner of LEG Partners III SBIC, L.P., a Delaware limited partnership described
in and which executed the above instrument; and that he signed his name thereto,
being duly authorized so to do by his co-partners in said partnership.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 2002 , before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of LEG Co-Investors, LLC, a Delaware limited liability
company, and that he has authority to sign the same, and acknowledged that he
executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 2002 , before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of 555 Madison Investors II LLC, a Delaware limited
liability company, and that he has authority to sign the same, and acknowledged
that he executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 2002 , before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of 555 Madison Investors, LLC, a Delaware limited liability
company, and that he has authority to sign the same, and acknowledged that he
executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 2002 , before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of Xxxxx Associates LLC, a New York limited liability
company, and that he has authority to sign the same, and acknowledged that he
executed the same as the act and deed of said limited liability company.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __day of ____, 2002, before me personally came
_____________________to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
___________________ of Xxxxx Associates Incorporated, a New York corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation..
-----------------------------
Notary Public
EXHIBIT 17
AMENDED AND RESTATED CONSULTING AGREEMENT
This AMENDED AND RESTATED CONSULTING AGREEMENT (this "Agreement"), dated as
of ______________, 2002 by and among U.S. Home & Garden Inc. and Easy Gardener,
Inc. (collectively, the "Company"), and Xxxxx Associates, LLC (the
"Consultant").
WHEREAS, the Company has previously retained the Consultant to provide
certain management and financial consulting services pursuant to that certain
Consulting Agreement dated as of November 15, 2001 (the "Original Consulting
Agreement"); and
WHEREAS, the Company and Consultant desire to amend and restate the
Original Consulting Agreement in connection with the settlement and closing of
certain other transactions.
NOW, THEREFORE, in consideration of the promises and commitments set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition having the
meanings given thereto in the Note and Warrant Purchase, Guaranty and Security
Agreement dated as of the date hereof among the Company, its Subsidiaries and
the Purchasers named therein, as amended from time to time.
2. Term. (a) The Company shall retain the Consultant hereunder for a period
commencing on the Closing Date and ending on the Termination Date, unless sooner
terminated by mutual written agreement of the parties hereto. The period during
which this Agreement remains in effect shall be referred to hereinafter as the
"Term".
(b) The "Termination Date" shall mean the earlier of (i) the date on which
the Consultant terminates by notifying the Company of such termination, or (ii)
the date on which the Company terminates by notifying the Consultant of such
termination; provided, that no termination by the Company shall occur so long as
any of the initial Purchasers or any of their respective Affiliates owns any
Notes, Warrants or Warrant Securities.
3. Duties of Consultant. (a) As used in this Section, the term "Consultant"
shall include employees of the Consultant or its Affiliates and any other
individuals providing services on behalf of the Consultant or its Affiliates.
(b) During the Term, the Consultant shall be reasonably available from time
to time to consult with, and provide financial and strategic advice to,
management of the Company on matters involving and relating to the Company's
corporate, financial and management structure and operation, subject to the
limits of the Consultant's experience and expertise. In
particular, the Consultant shall review, and respond to management requests
concerning, the following matters:
(i) the Company's capital and overall financial structure, including
equity and/or debt capitalization, cash flow considerations and
strategic plans for capital spending and asset financing;
(ii) terms and conditions of third-party financing, but not in the role of
a broker, investment banker, financial advisor, underwriter or
similar representative representing the Company in negotiating and
effecting a transaction with third parties;
(iii) review of quarterly and annual financial results; and
(iv) such other financial and/or strategic management and financial
consulting services as the parties may agree upon from time to time.
(c) Consultant shall be reasonably available to management of the Company
for telephone consultations and, as reasonably and mutually acceptable to the
parties, periodic meetings with management of the Company.
4. Compensation; Payment of Expenses; Further Retention. (a) The Company
shall pay the Consultant annually in advance for the services of the Consultant
hereunder at the rate of $54,500 per annum, with the first such payment due on
the Closing Date and subsequent payments due on each annual anniversary of the
Closing Date.
(b) If the Company shall perform work or provide services at the Company's
request, and if the cost of performing such work or providing such services,
calculated at the Consultant's standard hourly or per diem rates, as applicable,
would exceed $4,500 in any month, the Consultant shall so notify the Company
(prior to performing such work) and be entitled to additional compensation for
such work or services before having any obligation to continue to perform such
work or provide such services.
(c) If the Company shall engage any employee of the Consultant on a full or
part time basis, the Consultant shall be separately compensated for providing
the services of such employee, on an hourly, per diem or other mutually agreed
basis.
(d) The Company also shall reimburse the Consultant, promptly upon demand,
for reasonable out-of-pocket expenses incurred by the Consultant and/or its
employees and agents in connection with the performance of the Consultant's
duties under this Agreement, including expenses for travel, lodging, meals and
transportation; provided, that, at the Company's request, the Consultant shall
submit to the Company documentation and invoices reasonably acceptable to the
Company prior to reimbursement.
(e) The Company shall pay the annual amount referred to in paragraph (a)
above on the due dates specified therein, without the need for any invoice
therefor from the Consultant. The Consultant will submit to the Company invoices
setting forth any additional amounts due hereunder, which shall be payable
within 30 days of the invoice date.
(f) Any amounts payable pursuant to paragraph (b), (c) or (d) above shall
be in addition to the compensation payable pursuant to paragraph (a) above.
5. Limitation on Liability of Consultant; Indemnification. (a) None of the
Consultant or any of its Affiliates, or any of their respective members,
managers, directors, officers, employees, consultants, contractors, agents or
Affiliates, shall be liable, responsible or accountable in damages or otherwise
to the Company or any of its members, managers, directors, officers, employees,
agents or Affiliates for any error of judgment by the Consultant or for any loss
suffered by the Company arising out of services provided by the Consultant
pursuant to this Agreement, except for such errors or losses resulting from
willful misfeasance or gross negligence of the Consultant in the performance of
its duties under this Agreement. Without limitation of the foregoing, the
maximum aggregate liability of Consultant hereunder shall be the lesser of (i)
$54,500; and (ii) the actual dollar amount paid to Consultant as compensation
pursuant to this Agreement in the twelve month period immediately preceding the
date of a final non-appealable determination by a court of competent
jurisdiction of such liability, or the date of settlement, as applicable.
(b) To the fullest extent permitted by applicable law, the Company shall
indemnify and hold harmless the Consultant and its Affiliates, and each of their
respective members, managers, directors, officers, employees, consultants,
contractors, agents or Affiliates (each such individual or entity to be referred
to hereinafter as an "Indemnified Person"), from and against any loss, claim,
damage or liability, joint or several, and any action in respect thereof, to
which an Indemnified Person may be subject, insofar as such loss, claim, damage,
liability or action relates to, arises out of or results from any Covered Event
(as such term is defined below) or alleged Covered Event, and will reimburse
such Indemnified Person on a current basis for all expenses (including without
limitation reasonable fees and disbursements of not more than one counsel)
incurred by such Indemnified Person in connection with investigating, defending
or preparing to defend against any such loss, claim, damage, liability or
action, as such expenses are incurred or paid.
(c) The term "Covered Event" shall mean (i) any action taken, or services
performed, by an Indemnified Person, related to or consistent with the terms of
this Agreement, or (ii) any action taken, or omitted to be taken, by the Company
or any of its managers, directors, officers, employees, agents or Affiliates, in
connection with any matter in which an Indemnified Person has been involved
pursuant to this Agreement; provided, that the term "Covered Event", with
respect to an Indemnified Person, shall exclude any loss, claim, damage,
liability or expense that is determined by the final non-appealable judgment of
a court of competent jurisdiction to have been caused from the willful
misfeasance or gross negligence of such Indemnified Person.
6. Non-Solicitation. (a) From the Closing Date until the second anniversary
of the date of termination of this Agreement, neither party shall, without the
prior written consent of the other party, directly or indirectly employ or
engage the services of any employee or consultant of the other party or any of
its Affiliates, or recruit, solicit or otherwise induce or influence any
employee or consultant of the other party or any of its Affiliates to
discontinue his or her relationship with such other party or any of its
Affiliates.
(b) In the event of a breach or a threatened breach of the covenant set
forth in Section 6(a), the affected party shall, in addition to the remedies
provided by law, have the right
and remedy to have such covenant specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that a breach of such
covenant will cause irreparable injury to the affected party, and that money
damages will not provide an adequate remedy.
7. Confidentiality. Except in the course of the performance of its duties
hereunder, the Consultant agrees not to disclose any trade secrets, know-how or
other proprietary or material non-public information not in the public domain
learned as a result of this Agreement unless and until such information becomes
publicly available other than through the actions of the Consultant.
8. Amendments, Etc. This Agreement amends and restates the Original
Consulting Agreement in its entirety and upon execution hereof, the Original
Consulting Agreement shall be of no further force or effect. Any waiver of any
term or condition of, or any consent or discharge under, this Agreement shall be
effective only if in writing and signed by the party against whom it is sought
to be enforced. Any amendment or supplementation of this Agreement shall be
effective only if in writing and signed by both parties.
9. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns. No assignment shall be effective without the prior written consent of
the non-assigning party.
10. Notices. All notices, requests, demands or other communications to or
upon a party hereto shall be in writing and shall be deemed to have been given
or made five (5) days after deposited in the mails, registered or certified with
postage prepaid, addressed to the Company at 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX 00000, Attn: Xxxxxx Xxxxxx, Chief Executive Officer (Telecopier
No.: (000) 000-0000), and to the Consultant at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000, Attn: Xxxxxxx X. Xxxxxxx (Telecopier No.: (000) 000-0000),
or to such other address or addresses as either party shall specify in writing
to the other. No other method of giving notice is hereby precluded.
11. Captions. Captions and section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, and all of which taken
together shall constitute one and the same instrument.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflict of laws principles.
14. Entire Agreement. This Agreement represents the entire agreement and
understanding of the parties hereto with respect to the subject matter and
supersedes all prior agreements and understandings, whether oral or written,
with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
Company: Consultant:
U.S. HOME & GARDEN INC. XXXXX ASSOCIATES, LLC
By: By:
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Name/Title: Xxxxxxx X. Xxxxxxx, Vice President
EASY GARDENER, INC.
By:
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Name/Title:
