Exhibit 10.22
AMENDMENT NO. 2 TO
SETTLEMENT AGREEMENT
THIS AMENDMENT NO. 2 ("Amendment No. 2") dated as of August 8, 2003, to
the Settlement Agreement entered into as of November 1, 2002 (the "Settlement
Agreement") 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, Golub Associates LLC, a New York limited liability
company, and Golub Associates Incorporated, a New York corporation (the
preceding seven entities to be referred to herein as the "Golub Entities").
Capitalized terms not otherwise defined herein shall have their respective
meanings ascribed in the Settlement Agreement.
WHEREAS, the parties desire to amend the Settlement Agreement as
described below;
NOW THEREFORE, pursuant to Section 16 of the Settlement Agreement and
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. Section 1.1 of the Settlement Agreement is hereby amended such that
(a) the term "Asset Purchase Agreement" as used in the Settlement Agreement
shall be defined as the Asset Purchase Agreement dated December 11, 2002, by and
between Easy Gardener Products, Ltd., EYAS International, Inc , U.S. Home &
Garden Inc., Easy Gardener, Inc., AMPRO Industries, Inc. and Weed Wizard
Acquisition Corp., as amended by Amendment No. 1
thereto dated May 23, 2003 and Amendment No. 2 thereto dated July 31, 2003, (b)
the amount $16.5 million in such Section 1.1 is hereby amended to read $11.0
million, (c) the term "Proxy Statement" as used in the Settlement Agreement
shall be defined as the Proxy Statement/Prospectus included in the Registration
Statement filed by EGP on December 31, 2002 and all pre and post effective
amendments thereto, and (d) the following proviso is hereby inserted at the end
of Section 1.1(a):
"provided, however, that if USHG receives immediately
available cash proceeds under the Asset Purchase Agreement
(net of applicable transaction expenses) (the "Received
Proceeds") of less than $11 million (less the amounts set
forth in the parenthetical immediately preceding this proviso)
(the "Minimum Proceeds"), the consent contained in this
Section 1.1 shall be effective (provided the other conditions
to the Settlement Closing set forth in Section 1.2 of this
Settlement Agreement have been satisfied) and the number $0.25
to Section 3(i.) of the form of Amended and Restated Warrant
Agreement (as amended by Section 7 of this Amendment No. 2)
shall be decreased by a percentage equal to the percentage
that the Received Proceeds is lower than the Minimum
Proceeds."
2. Section 1.2 is hereby amended To add the following provisions
as subsections (c) and (d) respectively.
"(c) Any and all payments to be made by EGP to Robert Kassel,
whether in cash or otherwise, as part of the Transaction,
whether under his non-compete agreement and non-disclosure
covenants, as referred to in the Proxy Statement, or
otherwise, shall in no event exceed $1,250,000, in the
aggregate (excluding the payments of up to $4,000 per month,
under his two-year consulting agreement, for services rendered
in his capacity as consultant to EGP).
(d) As part of the financing of the Transaction, EGP shall
have received no less than $2,675,000 in capital contributions
from its beneficial owners and $2,675,000 in subordinated
loans from its subordinated lender, as described in the Proxy
Statement."
3. Section 2 of the Settlement Agreement is hereby amended such that
the Deferred Prepayment Amount shall be $450,000, subject to increase in
accordance with Section 5 of this Amendment No. 2, (i) $50,000 of which has been
previously paid contemporaneously with the execution of the Settlement Agreement
(and which payment was not contingent or conditional on the Transaction Closing)
and (ii) $400,000 of which shall be paid contemporaneously with the Settlement
Closing (such amount to be allocated among the Golub Entities at the direction
of Golub Inc., provided that neither USHG nor EGI shall be liable to any party
for such allocation).
4. Notwithstanding anything contained in the Settlement Agreement, as
amended hereby, to the contrary, the $400,000 payment of the Deferred Prepayment
Amount to be paid on the Settlement Closing, shall not be reduced pursuant to
Section 3.2 of the Settlement Agreement, or otherwise, by or in respect of any
amount of default interest previously paid to the Golub Entities.
5. Section 2 of the Settlement Agreement is also hereby amended to add
the following to the end of the Section: "In the event the amount payable in
cash at the Transaction Closing to Robert Kassel under or in connection with his
non-compete agreement and nondisclosure covenants, as referred to in the Proxy
Statement (the "Closing Cash Payment"), is reduced below $1,250,000, the
Deferred Prepayment Amount shall be increased by an amount equal to the product
of (i).50 multiplied by (ii) the difference between (A) $1,250,000 minus (B) the
Closing Cash Payment. For purposes of clarification, the "Closing Cash Payment"
shall only include the cash consideration received by Robert Kassel at the
Transaction Closing, and shall not include (I) any other forms of payment or
consideration, whether in the form of cash equivalents, negotiable instruments,
promissory notes, other instruments or securities or (II) any cash to be
received other than at the Transaction Closing."
6. Section 3.6 of the Settlement Agreement is hereby amended and
restated in its entirety to read, "The Golub 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."
7. Section 3(i) of the Amended and Restated Warrant Agreement (set
forth as Exhibit 5.1 to the Settlement Agreement) shall be modified such that
the number $0.37 shall be deleted and replaced by the number $0.25.
8. The Golub Entities, on the one hand, and USHG and EGI, on the other
hand, hereby acknowledge that, other than any Expenses due to Golub Inc.
pursuant to Section 23 of the Settlement Agreement, they are not aware (it being
acknowledged that none of the parties has conducted an independent
investigation) of any Obligations (as defined in the Note Purchase Agreement)
due, outstanding or accrued from USHG or EGl to any of the Golub Entities as of
the date hereof; provided, however, that this representation shall not preclude
the Golub Entities from exercising any rights for collection or otherwise with
respect to any Obligations that are due, outstanding or accrued from USHG or EGI
to any Golub Entities and that are unknown to the Golub Entities on the date
hereof.
9. The Golub Entities shall, upon reasonable request, provide letters
of confirmation to EGP's financing sources stating that the conditions to the
Settlement Closing have been satisfied, provided that the letters of
confirmation requested shall be in form and substance reasonably satisfactory to
the Golub Entities.
10. Section 10 of the Settlement Agreement is hereby amended such that
the reference to July 31, 2003 in the first sentence of Section 10 which, prior
to Amendment No. 1 to the Settlement Agreement was June 30, 2003, shall be
deleted and replaced by October 31, 2003.
11. Except as expressly provided herein (i) this Amendment No. 2 shall
not constitute a consent, waiver or amendment of any other provision of the
Settlement Agreement, or a waiver of any other rights (legal, equitable,
contractual or otherwise) that the Golub Entities may have in relation to USHG
or EGI, and (ii) the Settlement Agreement shall remain in full force and effect
in all respects, without modification.
12. The Settlement Agreement, together with the Exhibits thereto, as
amended by this Amendment No. 2, sets forth the entire agreement among the
parties with respect to the matters addressed in the Settlement Agreement and
supersedes all prior agreements between the patties with respect to such subject
matters. References hereafter to the Settlement Agreement shall mean the
Settlement Agreement, as amended by this Amendment No. 2.
13. This Amendment No. 2 may be executed in one or more counterparts.
Facsimile signatures shall be sufficient to bind the parties signing thereby.
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 2 to
be executed by their officers thereunto duly authorized as of the 8th day of
August, 2003.
U.S. HOME & GARDEN, INC.
By: Robert Kassel
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Name: Robert Kassel
Title: CEO
EASY GARDENER, INC.
By: /s/ Robert Kassel
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Name: Robert Kassel
Title: CEO
LEG PARTNERS DEBENTURE SBIC, L.P.
By: Golub Debenture GP, LLC,
its General Partner
By: /s/ Gregory W. Cashman
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Gregory W. Cashman, Vice President
LEG PARTNERS III SBIC, L.P.
By: Golub PS-GP, LLC its general partner
By: /s/ Gregory W. Cashman
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Gregory W. Cashman, Vice President
LEG CO-INVESTORS, LLC
By: /s/ Gregory W. Cashman
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Gregory W. Cashman,
Authorized Signatory
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 2 to
be executed by their officers thereunto duly authorized as of the 8th day of
August, 2003.
U.S. HOME & GARDEN, INC.
By:
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Name:
Title:
EASY GARDENER, INC.
By:
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Name:
Title:
LEG PARTNERS DEBENTURE SBIC, L.P.
By: Golub Debenture GP, LLC,
its General Partner
By: /s/ Gregory W. Cashman
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Gregory W. Cashman, Vice President
LEG PARTNERS III SBIC, L.P.
By: Golub PS-GP, LLC, its general partner
By: /s/ Gregory W. Cashman
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Gregory W. Cashman, Vice President
LEG CO-INVESTORS, LLC
By: /s/ Gregory W. Cashman
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Gregory W. Cashman
Authorized Signatory
555 MADISON INVESTORS II LLC
By: /s/ Gregory W. Cashman
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Gregory W. Cashman
Authorized Signatory
555 MADISON INVESTORS, LLC
By: /s/ Gregory W. Cashman
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Gregory W. Cashman, Manager
GOLUB ASSOCIATES LLC
By: /s/ Gregory W. Cashman
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Gregory W. Cashman
Authorized Signatory
GOLUB ASSOCIATES INCORPORATED
By: /s/ Gregory W. Cashman
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Gregory W. Cashman, Principal