<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
____________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of Earliest Event Reported): Commission File Number:
JULY 30, 1996 0-21282
____________________
SWISHER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 56-1541396
(State of incorporation) (I.R.S. Employer
Identification Number)
6849 FAIRVIEW ROAD
CHARLOTTE, NORTH CAROLINA 28210
704/364-7707
---------------------------------
(Address of principal executive
offices and telephone number)
____________________
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 30, 1996, Swisher International, Inc. (the "Company")
entered into and closed an Asset Purchase Agreement (the "Agreement") with
Professional Carpet Systems, Inc. ("PCS") and Old Dixie Supply Company ("ODS").
PCS and ODS are Georgia-based companies owned by Joseph R. Lunsford.
Pursuant to the Agreement, the Company acquired from PCS and
ODS substantially all of the assets (the "Assets") of an operating division of
PCS known as Surface Doctor. Surface Doctor provides kitchen and bath
restoration services through approximately 100 domestic franchisees and 9
foreign franchisees. The Assets consist generally of all of PCS' rights as
franchisor under Surface Doctor franchise agreements, trademarks and service
marks, accounts and notes receivable in the amount of $200,000 (net of
estimated allowance for doubtful accounts), inventories and equipment.
The purchase price paid for the Assets consisted of 200,000
shares of the Company's restricted Common Stock, an Option to purchase 75,000
shares of the Company's Common Stock at an exercise price of $6.00 per share,
and the assumption of approximately $82,000 in liabilities relating to the
Surface Doctor business. Pursuant to the terms and conditions of certain
Registration Rights Agreements entered into by the Company, PCS and ODS, the
Company is obligated to promptly file a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to 70,000 shares.
Commencing July 30, 1997, PCS and ODS have the right to demand that the Company
register the remaining 130,000 shares of Common Stock under the Act.
Registration of the Common Stock is to be completed at the Company's expense.
The 200,000 shares represent approximately 10.3% of the Company's issued and
outstanding Common Stock.
The Agreement provides that the Company's acquisition of
Surface Doctor shall be effective as of July 1, 1996. As a result, all
revenues and expenses generated or incurred by the Surface Doctor business
subsequent to July 1, 1996 shall be attributed to the Company.
Surface Doctor has conducted business as a franchisor since
November 1993. Surface Doctor currently has approximately 100 domestic and 9
foreign franchisees which provide kitchen and bath restoration services,
particularly with respect to resurfacing appliances, counter tops and fixtures.
Franchisees provide such services in designated markets to the apartment
industry, hotels, other commercial customers and homeowners. Surface Doctor's
revenues are derived from franchise sales, royalty fees, marketing fees and
sales of supplies. Based upon its unaudited financial statements, Surface
Doctor had total revenues of $837,000 and pre-tax income of $122,000 during the
six months ended June 30, 1996, as compared to total revenues of $1,897,000 and
pre-tax income of $228,000 for the year ended December 31, 1995.
The Company intends to operate Surface Doctor as a division or
wholly-owned subsidiary. The Company expects to retain approximately eight PCS
employees engaged in Surface Doctor operations.
PCS and ODS are wholly-owned by Joseph R. Lunsford. Mr.
Lunsford has served as a director of the Company since May, 1996. Mr. Lunsford
did not participate in any actions taken by the Company's Board of Directors
with respect to the transactions described herein. There were no other
affiliations between the Company, PCS or ODS.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements of Surface Doctor required by
Item 7(a) of Form 8-K shall be filed as an amendment
to this report as soon as practicable but in any event
within 60 days of the date on which this report is
due.
(b) The pro forma financial information concerning the
Company and Surface Doctor required by Item 7(a) of
Form 8-K shall be filed as an amendment to this report
as soon as practicable but in any event within 60 days
of the date on which this report is due.
(c) The following exhibit is furnished herewith in
accordance with the provisions of Item 601 of
Regulations S-K:
<TABLE>
<CAPTION>
REG. S-K
EXHIBIT NO. DESCRIPTION ITEM NO.
- ----------- ----------- --------
<S> <C> <C>
2.1 Asset Purchase Agreement by and among the Company, 2
Professional Carpet Systems, Inc. and Old Dixie Supply Company, dated
July 31, 1996, including the Option and Registration Rights Agreements
attached thereto as Exhibits 2.1(b), 3.1 and 3.2, respectively.
(Pursuant to Item 601(b)(2) of Regulation S-K, the remaining exhibits
and schedules are listed in the Asset Purchase Agreement and will be
furnished supplementally upon request by the Commission.)
</TABLE>
-3-
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SWISHER INTERNATIONAL, INC.
Date: August 8, 1996 By: /s/ PATRICK L. SWISHER
-------------------------------------
Patrick L. Swisher, President
-4-
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EXHIBIT INDEX
<TABLE>
<CAPTION>
REG. S-K
EXHIBIT NO. DESCRIPTION ITEM NO.
- ----------- ----------- --------
<S> <C> <C>
2.1 Asset Purchase Agreement by and among the Company, 2
Professional Carpet Systems, Inc. and Old Dixie Supply Company, dated
July 31, 1996, including the Option and Registration Rights Agreements
attached thereto as Exhibits 2.1(b), 3.1 and 3.2, respectively.
(Pursuant to Item 601(b)(2) of Regulation S-K, the remaining exhibits
and schedules are listed in the Asset Purchase Agreement and will be
furnished supplementally upon request by the Commission.)
</TABLE>
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ASSET PURCHASE AGREEMENT
Effective July 1, 1996
By and Between
SWISHER INTERNATIONAL, INC.
AND
PROFESSIONAL CARPET SYSTEMS, INC.
AND
OLD DIXIE SUPPLY COMPANY
<PAGE> 2
ASSET PURCHASE
TABLE OF CONTENTS
Contents
- --------
Recitals
1. Definitions
2. Assets Purchase and Stock Exchange; Other Agreements
3. Manner and Time of Share Distribution
4. Assumption of Liabilities
5. Representations and Warranties of PCS
6. Representations and Warranties of Swisher
7. Entire Agreement
8. Indemnity
9. Miscellaneous
Schedules and Exhibits
- ----------------------
Schedule 1.1 Surface Doctor Assets
Exhibit 1.3 Unaudited Financial Statements
Schedule 1.6 Surface Doctor Liabilities
Schedule 1.10 ODS/SD Inventory
Schedule 1.11 ODS/SD Accounts Receivable
Schedule 1.12 ODS/SD Accounts Payable
Exhibit 2.1 PCS Bill of Sale
Exhibit 2.1(b) Option Agreement
Exhibit 2.2 ODS Bill of Sale
Exhibit 2.3 Fair Market Value of Transaction
Exhibit 3.1 Registration Rights of Closing Date Stock
Exhibit 3.2 Registration Rights of Balance of Stock
Schedule 4.3 Vehicles
Schedule 5.5 PCS UCC Search
Schedule 5.5(a) Additions to PCS UCC Search
Schedule 5.7 Tax Matters
Schedule 5.8(a) Intellectual Property
Schedule 5.8(b) Disputes to Intellectual Property
Schedule 5.9 Key Employees
Schedule 5.10(a) Franchisor Obligations Outside Franchise Agreements
Exhibit 6.3 Information Statement
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, effective as of the 1st day of July, 1996, is by and
between SWISHER INTERNATIONAL, INC., a Nevada Corporation with its principal
place of business at 6849 Fairview Road, Charlotte, North Carolina, 28210
("Swisher"), PROFESSIONAL CARPET SYSTEMS, INC. a Georgia corporation, with its
principal place of business at 5182 Old Dixie Highway, Forest Park, Georgia,
("PCS") and OLD DIXIE SUPPLY COMPANY, a Georgia corporation, with its principal
place of business at 5182 Old Dixie Highway, Forest Park, Georgia, ("ODS").
W I T N E S S E T H:
WHEREAS, PCS is engaged in the business of franchising the Surface Doctor
system of kitchen and bath restoration as a division of PCS and is the owner of
certain assets, as defined below, associated with such system, and more fully
described in Schedule 1.1 and has incurred certain liabilities as defined below
with such system and more fully described in Schedule 1.6; and
WHEREAS, ODS is engaged in the business of providing chemicals, equipment
and supplies to franchisees of PCS and is the owner of certain inventory and
Accounts Receivable, associated with such business, and more fully described in
Schedule 1.10 and
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Schedule 1.11 respectively and has incurred certain Accounts Payable as defined
below with such business and more fully described in Schedule 1.12; and
WHEREAS, as of the Effective Date, as hereinafter defined, Swisher wishes
to acquire PCS' Surface Doctor Business and Surface Doctor Assets and assume
the Surface Doctor Liabilities directly related to PCS' Surface Doctor system
as hereinafter defined, and PCS wishes to tender such Surface Doctor Business
and Surface Doctor Assets to Swisher, in exchange for Stock and other
consideration, upon the terms and conditions herein set forth.
WHEREAS, as of the Effective Date, as hereinafter defined, Swisher wishes
to acquire ODS' Surface Doctor Inventory and Surface Doctor Accounts Receivable
and assume the Surface Doctor Liabilities directly related to ODS' Surface
Doctor sales as hereinafter defined, and ODS wishes to tender such Surface
Doctor Inventory and Surface Doctor Accounts Receivable to Swisher, in exchange
for Stock and other consideration, upon the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the above recitals, mutual promises and
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following
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meanings:
1.1 The "Surface Doctor Assets" (or "SD Assets") shall mean that portion
of PCS' business pertaining to the Surface Doctor Business, Name, Logos,
Franchisee Related Records, trademarks, servicemarks, tradenames, telephone
numbers, equipment, trade accounts receivables, lists of suppliers and all
other assets as they exist, where they exist as of the Effective Date and
assumption and assignment of any and all of the franchising rights and
franchise agreements and franchisees and assumption of the direct or indirect
obligations related to the franchise agreements of the Surface Doctor Business
listed on Schedule 1.1.
1.2 The "Surface Doctor Franchisee Related Records" (or "SD Franchisee
Related Records") shall mean all the PCS records pertaining to the Surface
Doctor Business relating to undertaking and fulfilling the obligations and
rights of the Surface Doctor Business, including but not limited to franchise
documents and correspondence and any and all other records and files related to
the Surface Doctor Business.
1.3 The "Surface Doctor Business" (or "SD Business") shall mean that
portion of PCS' business pertaining to Surface Doctor operating as a division
of PCS since January, 1994. Unaudited financial statements including PCS and
ODS information regarding the Surface Doctor segment of each of their
businesses are attached hereto as Exhibit 1.3.
1.4 The "Effective Date" shall be July 1, 1996, and the transactions
described in this Agreement shall be effective as of that date.
1.5 The "Closing Date" shall be the date on which this Agreement is
executed by the parties hereto.
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1.6 The "Surface Doctor Liabilities" ("SD Liabilities") shall mean
liabilities of that portion of PCS pertaining to the SD Business incurred in
connection with the SD Business up to the day prior to the Effective Date, as
listed on Schedule 1.6 and assumption of the direct or indirect obligations of
the franchisor of the SD Business.
1.7 The "Agreement" means this Asset Purchase Agreement by and between
PCS, ODS and Swisher, including all Schedules and Exhibits hereto, as such
agreement, Schedules and Exhibits may be amended from time to time.
1.8 "Stock" means Swisher International, Inc. Common Stock issued and
authorized without restriction except as provided for herein.
1.9 The "Act" means the Securities Act of 1933, as amended.
1.10 The "ODS Surface Doctor Inventory" (or "ODS/SD Inventory") shall
mean that portion of ODS' inventory pertaining to Surface Doctor supplies,
equipment and chemicals listed on Schedule 1.10, as they exist, where they
exist as of the Effective Date.
1.11 The "ODS Surface Doctor Accounts Receivable" ("ODS/SD Accounts
Receivable") shall mean that portion of ODS' Accounts Receivable due from
Surface Doctor franchisees listed on Schedule 1.11, as they exist, where they
exist as of the Effective Date.
1.12 The "ODS Surface Doctor Accounts Payable" ("ODS/SD Accounts
Payable") shall mean that portion of ODS' Accounts Payable resulting from
Surface Doctor purchases made by ODS listed on Schedule 1.12, as they exist,
where they exist as of the Effective Date.
1.13 The "Stock Price" is Six and xx/100 dollars ($6.00).
4
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2. Assets Purchase and Stock Exchange; Other Agreements.
2.1 As of the Effective Date, PCS shall tender to Swisher, and Swisher
shall accept, the SD Assets as evidenced by a Bill of Sale attached hereto as
Exhibit 2.1 and shall assume the SD Liabilities in exchange for:
(a) 179,302 shares of Stock in favor of PCS; and
(b) An option for PCS to purchase 75,000 shares of Stock under
the terms and conditions of an Option Agreement, attached hereto as Exhibit
2.1(b).
2.2 As of the Effective Date, ODS shall tender to Swisher, and Swisher
shall accept, the ODS/SD Inventory and ODS/SD Accounts Receivable as evidenced
by a Bill of Sale attached hereto as Exhibit 2.2 and shall assume the ODS/SD
Accounts Payable in exchange for 20,698 shares of Stock in favor of ODS.
2.3 Notwithstanding anything to the contrary contained herein, PCS, ODS
and Swisher agree the fair market value of the transaction contemplated in this
Agreement on the Closing Date is accurately represented on Exhibit 2.3.
Neither party will take a position contrary to this value.
3. Manner and Time of Share Disbursement.
3.1 Stock Distributed at Closing.
(a) Of the 179,302 shares of Stock which makes up consideration
to PCS, Swisher shall provide 62,790 shares of Stock to PCS at the Closing Date
and such Stock shall be subject to the Registration Rights Agreement attached
hereto as Exhibit 3.1.
(b) Of the 20,698 shares of Stock which makes up consideration to
ODS,
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Swisher shall provide 7,210 shares of Stock to ODS at the Closing Date and such
Stock shall be subject to the Registration Rights Agreement attached hereto as
Exhibit 3.1.
(c) The Stock to be delivered at the Closing Date identified in
3.1(a) and 3.1(b) above is intended for use as payment of estimated taxes which
are the consequence of the transaction contemplated in this Agreement.
3.2 Stock Subject to Lock-Up.
(a) Of the 179,302 shares of Stock which makes up consideration
to PCS, PCS agrees that 116,512 shares of Stock provided for in 3.1(a) shall be
subject to a Registration Rights Agreement attached hereto as Exhibit 3.2.
(b) Of the 20,698 shares of Stock which makes up consideration to
ODS, ODS agrees that 13,488 shares of Stock provided for in 3.1(b) shall be
subject to a Registration Rights Agreement attached hereto as Exhibit 3.2.
4. Assumption of Liabilities.
4.1 Swisher shall assume all SD Liabilities identified on Schedule 1.6
as of the Effective Date.
4.2 Swisher shall assume all ODS/SD Accounts Payable identified on
Schedule 1.12 as of the Effective Date.
4.3 Swisher shall lease the vehicles identified on Schedule 4.3
through October 31, 1996 for consideration equal to the cost of insurance,
maintenance and upkeep on such vehicles. Prior to November 1, 1996, the
parties shall agree to a revised consideration for the lease of such vehicles.
Should agreement not be reached as to the revised
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consideration, PCS may dispose of such vehicles at the sole discretion of PCS.
5. Representations and Warranties of PCS and ODS. As indicated item by item,
PCS and/or ODS make the following representations and warranties, to and for
the benefit of Swisher, each of which is made on and as of the Effective Date
and reiterated on the Closing Date unless otherwise expressly stated herein.
5.1 PCS and ODS are each a corporation organized and in good standing
in the state of Georgia.
5.2 PCS and ODS each have all requisite corporate and other power and
authority, including (but not limited to) approval of the Board of Directors
and Shareholder of PCS and ODS to enter into this Agreement.
5.3 This Agreement has been duly and validly authorized, executed and
delivered by PCS and ODS and constitutes a valid, legal and binding obligation
of PCS and ODS, enforceable against PCS and/or ODS in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws related to or limiting creditors' rights generally or by
equitable principles.
5.4 Neither PCS nor ODS have any parent or subsidiary company.
5.5 PCS' and ODS' Title to the Assets.
a. PCS owns and has good and marketable title to the SD Assets
defined in Schedule 1.1, free and clear of any liens, encumbrances and other
imperfections in title whatsoever, and has full power, authority and capacity
to sell and transfer such assets to Swisher and to otherwise consummate the
transactions contemplated hereby. PCS shall
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present to Swisher on or before the Effective Date a UCC search, attached
hereto as Schedule 5.5, from the state and counties in which PCS is domiciled
and/or operates and dated within thirty business days of the Effective Date,
showing any liens or encumbrances filed against the SD Business or the SD
Assets, except as defined in Schedule 5.5(a). ODS owns and has good and
marketable title to the ODS/SD Inventory and Accounts Receivable identified in
Schedules 1.10 and 1.11, free and clear of any liens, encumbrances and other
imperfections in title whatsoever, and has full power, authority and capacity
to sell and transfer such Inventory to Swisher and to otherwise consummate the
transactions contemplated hereby.
b. There are no outstanding obligations, options, first refusal
rights or the like under contracts or agreements to which PCS is bound which
prohibit PCS's transfer of SD Assets hereunder.
5.6 The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in a
breach of PCS's articles of incorporation, By-laws or other organizational
documents or to the best of PCS's knowledge, any applicable laws or
regulations, any judgment, decree or order of any court or governmental body
applicable to PCS.
5.7 Tax Matters. There is no pending, and to the best of PCS'
knowledge, no threatened, suit, claim, investigation or audit by any
governmental or quasi-governmental authority against PCS except as set forth in
Schedule 5.7.
5.8 Intellectual Property.
a. PCS owns or controls all of the trade names, logos,
trademarks and
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servicemarks used by such company in the conduct of its SD Business
("Intellectual Property") as set forth in Schedule 5.8(a).
b. Except as set forth in Schedule 5.8(b), with respect to each
item listed in Schedule 5.8(a) PCS has no knowledge of any material dispute as
to PCS's right of ownership.
5.9 Employees.
a. Except as set forth in Schedule 5.9, no Key Employee of
the SD Business has resigned his or her position or employment with PCS since
the execution of the letter of intent. PCS is not aware of any Key Employee
who intends to leave his or her position with the SD Business, except for
Joseph R. Lunsford.
5.10 For each Surface Doctor Franchise Agreement currently issued and
outstanding naming PCS (or the former Surface Doctor, Inc.) as the franchisor,
PCS makes the following representations and warranties:
(a) Except as set forth on Schedule 5.10(a), the Franchise
Agreements accurately reflect all obligations of PCS as franchisor of the
Surface Doctor system and there are no outstanding oral commitments or promises
to perform outside of the signed writings.
(b) There is no restriction to transfer of PCS's rights as
franchisor under the Franchise Agreements.
(c) PCS is not knowingly in material default under any terms of the
franchise agreements with Surface Doctor franchisees.
5.11 To the best of the knowledge of PCS and ODS, the financial
statements
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presented as Exhibit 1.3 hereto represent reasonably accepted accounting
policies.
6. Representations and Warranties of SWISHER. Swisher represents and
warrants, as of the Effective Date and reiterated on the Closing Date, to PCS
that:
6.1 Swisher is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has requisite power to make
and perform this Agreement and the transactions contemplated herein.
6.2 The making and performance by Swisher of this Agreement and the
transactions contemplated herein:
(a) have been duly authorized by all necessary action(s) by its
board of directors excluding Joseph R. Lunsford, an Outside Director of
SWISHER and President of PCS, who was excluded from participating in any
corporate decisions regarding the Asset Purchase memorialized herein; and
(b) have been memorialized in the corporate minutes of Swisher,
expressly indicating that Joseph R. Lunsford was excluded from participating in
any corporate decisions regarding the Asset Purchase memorialized herein; and
(c) will not violate any provision of law or of its Articles of
Incorporation or By-Laws.
6.3 The information statement and documents incorporated therein in
Exhibit 6.3 were true and correct as of the date of issue and there have been
no material adverse changes since such date.
6.4 Swisher agrees to pay all PCS and ODS liabilities assumed under the
terms of
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this Agreement on a timely basis.
6.5 No material claims or judgments are pending against Swisher.
7. Entire Agreement. This Agreement and Schedules and Exhibits hereto contain
the entire understanding of the parties hereto and it is acknowledged by all
parties that, except as expressly provided in this Agreement, there are no
representations, warranties or other Agreements expressed or implied in any way
relating to the provisions hereof. This Agreement, when fully executed shall
supersede all prior and existing agreements and representations between the
parties having to do with the subject matter of this Agreement. This Agreement
shall not be modified, altered or amended except in writing signed by all
parties.
8. Indemnity.
8.1 PCS and ODS shall indemnify and hold Swisher harmless from any and
all losses, costs, attorney fees, charges, claims, fees, demands, verdicts,
judgments, awards, penalties and/or interest of any nature whatsoever resulting
directly or indirectly from any breach of warranty, untrue representations or
nonfulfillment of any covenant, agreement or indemnity made by PCS and ODS.
8.2 Swisher shall indemnity and hold harmless the PCS and/or ODS from
any and all losses, costs, attorney fees, charges, claims, fees, demands,
verdicts, judgments, awards, penalties and/or interest of any nature whatsoever
resulting from any breach of warranty, untrue representation or nonfulfillment
of any covenant, agreement or
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indemnity made by Swisher.
9. Miscellaneous.
9.1 Alternative Dispute Resolution. Any controversy, dispute, question
or claim arising out of or relating to the this Agreement or the transactions
contemplated herein, or its interpretation, performance, or non-performance, or
any breach hereof, including, without limitation, any claim that this Agreement
or any part thereof is invalid, illegal or otherwise voidable or void, shall be
submitted to non-binding mediation. The substantive law of the state of
Georgia shall be applied by the mediator. The parties agree that such mediation
shall be conducted at a site designated by the responding party and shall
remain confidential between the parties except as required by law.
9.2 Governing Law. This Agreement shall be interpreted and construed
under the laws of the State of Georgia and any dispute between the parties
shall be governed by and determined in accordance with the substantive law of
the State of Georgia, which laws shall prevail in the event of any conflict.
9.3 Headings. The section headings herein are for convenience only and
shall not affect the construction hereof.
9.4 Notices. All notices, requests and demands shall be in writing and
mailed, postage prepaid, or sent by facsimile to the respective parties as
follows:
SWISHER: Swisher International, Inc.
6849 Fairview Road
Charlotte, North Carolina 28210
PCS: PROFESSIONAL CARPET SYSTEMS, INC.
5182 Old Dixie Highway
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<PAGE> 15
Forest Park, Georgia 30050
ODS: OLD DIXIE SUPPLY COMPANY
5182 Old Dixie Highway
Forest Park, Georgia 30050
or to such other address as any party shall furnish to the other party by
notice in writing.
9.5 Multiple Copies. This Agreement may be signed in multiple copies,
each of which shall be considered an original and the entire document.
IN WITNESS WHEREOF, the parties have caused the Asset Purchase memorialized
by this Agreement to be executed as of the 30th day of July, 1996 which
shall be the Closing Date of this Agreement.
SWISHER: SWISHER INTERNATIONAL, INC.
By: /s/ PAT SWISHER
----------------------------------------
By: Pat Swisher
President and Chief Executive Officer
PCS: PROFESSIONAL CARPET SYSTEMS, INC.
By: /s/ JOSEPH R. LUNSFORD
----------------------------------------
By: Joseph R. Lunsford
Chairman and President
ODS: OLD DIXIE SUPPLY COMPANY
By: /s/ PAT SWISHER
----------------------------------------
By: Joseph R. Lunsford
Chairman and President
13
<PAGE> 1
OPTION FOR THE PURCHASE OF SHARES OF COMMON STOCK OF
SWISHER INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
THIS CERTIFIES THAT, for value received, Swisher International, Inc.
(the "Company") hereby grants to Professional Carpet Systems, Inc., or assigns
who become holders pursuant to the limited transferability permitted in Section
3 hereof (the "Optionee"), subject to the terms and conditions set forth or
incorporated herein, an Option to subscribe for, purchase and receive from the
Company all or any part of an aggregate of 75,000 fully paid and nonassessable
shares of Common Stock of the Company (the "Option Shares"), as such Common
Stock is now constituted, at a purchase price of $6.00 per Option Share.
1. The Option evidenced hereby shall be exercisable in whole or
in part (but only in multiples of 100 Shares unless such exercise is as to the
remaining balance of this Option) at any time after the date hereof; provided,
however, that upon the occurrence of any of the events specified in Section 4
below, the number of Option Shares shall be adjusted as specified herein. This
Option must be exercised on or before July 31, 2001. If not exercised by July
31, 2001, all rights granted herein shall be extinguished, void and of no
further force or effect.
2. The Option granted hereby shall be exercisable by the delivery
to and receipt by the Company of (i) a written notice of election to purchase,
specifying the number of Option Shares to be purchased; (ii) payment of the
full purchase price thereof in cash or certified check payable to the order of
the Company, or by fully-paid and nonassessable shares of Common Stock of the
Company properly endorsed over to the Company, or a combination thereof; and
(iii) this Option Agreement for endorsement of exercise by the Company. In the
event shares of Common Stock are submitted as whole or partial payment for
Option Shares to be purchased hereunder, such shares will be valued at their
Fair Market Value on the date such Shares received by the Company are applied
to payment of the exercise price. For purposes of this Option, "Fair Market
Value" means, with respect to the date concerned (or the next following trading
day if the date concerned is not a trading day): (a) if the Common Stock is
then reported on by The Nasdaq Stock Market, Inc., the average between the bid
and asked prices on such date; or (b) if the Common Stock is then listed on a
national securities exchange, the closing price on such date; or (c) the
average of the highest or lowest reported sales prices of the Common Stock, as
reported by such other responsible reporting service as the Company
<PAGE> 2
may select, or (d) if the Common shares are not publicly traded, then such
value as may be determined in the good faith judgment of the Company. In the
event this Option is exercised in part only, the Company shall cause to be
delivered to the Optionee a new Option of like tenor evidencing the right of
the Optionee to purchase the number of Option Shares purchasable hereunder as
to which this Option has not been exercised.
3. This Option may not be transferred or assigned, except to
shareholders of Professional Carpet Systems, Inc., a spouse, parent, sibling or
lineal descendant of any such shareholder, any trust for the benefit of such
persons, or any distributee, legatee or devisee of the such shareholder who
acquires the shares by will or operation of law upon the death or such
shareholder. The Company may deem and treat the Optionee as the absolute owner
of this Option (notwithstanding any notation of ownership or other writing
hereon made by anyone) for all purposes and the Company shall not be affected
by any notice to the contrary. The Optionee, as such, shall not have any
rights of a shareholder of the Company, either at law or at equity, and the
rights of the Optionee, as such, are limited to those rights expressly provided
in this Option.
4.a. If at any time prior to the expiration of this Option by its
terms or by exercise, the Company increases or decreases the number of
its issued and outstanding shares of Common Stock, or changes in any
way the rights and privileges of such shares of Common Stock, by means
of (i) the payment of a share dividend or the making of any other
distribution on such shares of Common Stock payable in its shares of
Common Stock, (ii) a split or subdivision of shares of Common Stock,
or (iii) a consolidation or combination of shares of Common Stock,
then the Exercise Price in effect at the time of such action and the
number of Option Shares purchasable at that time shall be
proportionately adjusted so that the numbers, rights and privileges
relating to the Option Shares then purchasable upon the exercise of
this Option shall be increased, decreased or changed in like manner,
for the same aggregate purchase price set forth herein, as if the
Option Shares purchasable upon the exercise of the Option immediately
prior to the event had been issued, outstanding, fully paid and
nonassessable at the time of that event. Any dividend paid or
distributed on the shares of Common Stock in shares of any other class
of shares of the Company or securities convertible into shares of
Common Stock shall be treated as a dividend paid in shares of Common
Stock to the extent shares of Common Stock are issuable on the payment
or conversion thereof.
b. In the event, prior to the expiration of this Option
by exercise or by its terms, the Company shall be recapitalized by
reclassifying its outstanding shares of Common Stock into shares with
a different par value, or by changing its outstanding shares of Common
Stock to shares without par value or in the event of any other
material change of the capital
<PAGE> 3
structure of the Company or of any successor corporation by reason of
any reclassification, recapitalization, merger or conveyance, prompt,
proportionate, equitable, lawful and adequate provision shall be made
whereby the Optionee shall thereafter have the right to purchase, on
the basis and the terms and conditions specified herein, in lieu of
the Option Shares theretofore purchasable on the exercise of this
Option, such securities or assets as may be issued or payable with
respect to or in exchange for the number of Option Shares theretofore
purchasable on exercise of this Option had such reclassification,
recapitalization, merger or conveyance not taken place; and in any
such event, the rights of the Optionee to any adjustment in the number
of Option Shares purchasable on exercise of this Option, as set forth
above, shall continue and be preserved in respect of any stock,
securities or assets which the Optionee becomes entitled to purchase.
c. In the event the Company, at any time while this
Option shall remain unexpired and unexercised, shall sell all or
substantially all of its property, or dissolve, liquidate or wind up
its affairs, prompt, proportionate, equitable, lawful and adequate
provision shall be made as part of the terms of such sale,
dissolution, liquidation or winding up such that the Optionee may
thereafter receive, on exercise hereof, in lieu of each Option Share
which the Optionee would have been entitled to receive, the same kind
and amount of any stock, securities or assets as may be issuable,
distributable or payable on any such sale, dissolution, liquidation or
winding up with respect to each share of Common Stock of the Company;
provided, however, that in the event of any such sale, dissolution,
liquidation or winding up, the right to exercise the Option shall
terminate on a date fixed by the Company, such date to be not earlier
than 5:00 P.M., Eastern Time, on the 45th day next succeeding the date
on which notice of such termination of the right to exercise the
Option has been given by mail to the Optionee.
d. On exercise of this Option, the Company shall not be
required to deliver fractions of Option Shares; provided, however,
that the Company shall make prompt, proportionate, equitable, lawful
and adequate provisions in respect of any such fraction of one Option
Share either on the basis of adjustment in the then applicable
Exercise Price or a purchase of the fractional interest at the price
of the Company's shares of Common Stock or such other reasonable basis
as the Company may determine.
e. In the event, prior to expiration of this Option by
exercise or by its terms, the Company shall determine to take a record
of the holders of its Common Stock for the purpose of determining
shareholders entitled to receive any stock dividend, distribution or
other right
-3-
<PAGE> 4
which will cause any change or adjustment in the number, amount, price
or nature of the Common Stock or other stock, securities or assets
deliverable on exercise of the Options pursuant to the foregoing
provisions, the Company shall give to the Optionee at least 30 days'
prior written notice to the effect that it intends to take such a
record. Such notice shall specify the date as of which such record is
to be taken; the purpose for which such record is to be taken; and the
number, amount, price and nature of the Common Stock or other stock,
securities or assets which will be deliverable on exercise of this
Option after the action for which such record will be taken has been
completed. Without limiting the obligation of the Company to provide
notice to the Optionee of any corporate action hereunder, the failure
of the Company to give notice shall not invalidate such corporate
action of the Company.
f. No adjustment of the Exercise Price shall be made as
a result of or in connection with (i) the issuance of Common Stock of
the Company pursuant to options, warrants, employee stock ownership
plans and share purchase agreements outstanding or in effect on the
date hereof, (ii) the establishment of additional option plans of the
Company, the modification, renewal or extension of any plan now in
effect or hereafter created, or the issuance of Common Stock on
exercise of any options pursuant to such plans, and (iii) the issuance
of Common Stock in connection with compensation arrangements for
officers, employees or agents of the Company or any subsidiary, and
the like. 5.a. If the Company shall file a registration statement
(other than on Form S-4, Form S-8, or any successor form) with the
Securities and Exchange Commission (the "Commission") while Option
Shares are available for purchase upon exercise of this Option or
while any Option Shares (which have not been so registered) are
outstanding, the Company shall give the Optionee and all the then
holders of such Option Shares at least 30 days prior written notice of
the filing of such registration statement. If requested by the
Optionee or by any such holder in writing within 20 days after receipt
of any such notice, the Company shall, at the Company's sole expense
(other than the fees and disbursements of counsel for the Optionee or
such holder, the underwriting discounts, if any, payable in respect of
the Option Shares sold by the Optionee or any such holder and any
share of fees required by the "blue sky" laws of the state in which
the Optionee or any such holder reside), register or qualify the
Option Shares to the extent requisite to permit the public offering
and sale of the Option Shares through the facilities of all
appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors
and counsel to cause such registration statement to become effective
as promptly as practicable.
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<PAGE> 5
Notwithstanding the foregoing, if the managing underwriter of any such
offering shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Option Shares requested to be
included in the registration statement concurrently with the
securities being registered by the Company would materially adversely
affect the distribution of such securities by the Company for its own
account, then the Optionee or any such holder who shall have requested
registration of the Option Shares shall delay the offering and sale of
such Option Shares (or the portions thereof so designated by such
managing underwriter) for such period, not to exceed 90 days, as the
managing underwriter shall request, provided that no such delay shall
be required as to any Option Shares if any securities of the Company
are included in such registration statement for the account of any
person other than the Company and the Optionee or any such holder
unless the securities included in such registration statement for such
other person shall have been reduced pro rata to the reduction of the
Option Shares which were requested to be included in such
registration.
b. If at any time after July 31, 1997, the Company shall
receive a written request from the Optionees who, in the aggregate,
own (or upon exercise of this Option will own) a majority of the total
Option Shares issuable upon exercise of this Option, the Company
shall, as promptly as practicable, prepare and file with the
Commission a registration statement sufficient to permit the public
offering and sale of the Option Shares through the facilities of all
appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors
and counsel to cause such registration statement to become effective
as promptly as practicable; provided, however, that (i) the Company
shall only be obligated to file and obtain effectiveness of one such
registration statement and (ii) in the event the Option Shares are
registered pursuant to paragraph 5.a. above, then the rights granted
to the Option holder under this paragraph 5.b. shall be extinguished,
void and of no further force or effect. All expenses incurred in
connection with such registration, including fees and expenses
incurred for preparation, printing, filing and distribution of the
registration statement and related documents; issuance and sale of the
Option Shares; qualification of the Option Shares under state "blue
sky" or securities laws; legal and accounting fees and disbursements;
and all filing fees payable to the Securities and Exchange Commission,
the National Association of Securities Dealers, Inc. and state
jurisdictions, shall be borne by the Company.
c. In the event of a registration pursuant to the
provisions of this paragraph 5, the Company shall use its best efforts
to cause the Option Shares so registered to be registered
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<PAGE> 6
or qualified for sale under the securities or blue sky laws of such
jurisdictions as the Optionee or such holders may reasonably request;
provided, however, that the Company shall not be required to qualify
to do business in any state by reason of this paragraph 5(c) in which
it is not otherwise required to qualify to do business.
d. The Company shall keep effective any registration or
qualification contemplated by this paragraph 5 and shall from time to
time amend or supplement each applicable registration statement,
preliminary prospectus, final prospectus, application, document and
communication for such period of time as shall be required to permit
the Optionee or such holders to complete the offer and sale of the
Option Shares covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for
a period in excess of nine months from the date on which the Optionee
and such holders are first free to sell such Option Shares; provided,
however, that if the Company is required to keep any such registration
or qualification in effect with respect to securities other than the
Option Shares beyond such period, the Company shall keep such
registration or qualification in effect as it relates to the Option
Shares for so long as such registration or qualification remains or is
required to remain in effect in respect of such other securities.
e. In the event of a registration pursuant to the
provisions of this paragraph 5, the Company shall furnish to the
Optionee and to each such holder such number of copies of the
registration statement and of each amendment and supplement thereto
(in each case, including all exhibits), such reasonable number of
copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary
prospectus), all of which shall conform to the requirements of the Act
and the rules and regulations thereunder, and such other documents, as
the Optionee or such holders may reasonably request in order to
facilitate the disposition of the Option Shares included in such
registration.
6. Upon receipt by the Corporation of evidence satisfactory to
it (in the exercise of its reasonable discretion) of the ownership of and the
loss, theft, destruction, or mutilation of this Option, the Corporation will
execute and deliver, in lieu thereof, a new Option of like tenor.
7. This Option shall not entitle the Optionee to any of the
rights of shareholders or to any dividend declared on the Common Stock unless
the Option is exercised and the Option Shares purchased prior to the record
date fixed by the Board of Directors of the Company for the determination of
holders of Common Stock entitled to such dividend or other right.
-6-
<PAGE> 7
8. All notices and other communications from the Corporation to
the owner of this Option shall be mailed by first class, certified mail,
postage prepaid, to the address furnished to the Corporation in writing by the
owner of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by
its duly authorized officers.
Dated: July 30, 1996 SWISHER INTERNATIONAL, INC.
/S/ W. THOMAS REEDER /S/ PATRICK L. SWISHER
- -------------------------------- -----------------------------
Secretary President
-7-
<PAGE> 8
ELECTION TO PURCHASE
The undersigned hereby elects irrevocably to exercise the within
Option and to purchase ___________ shares of Common Stock of Swisher
International, Inc., and hereby makes payment of $_____________ (at the rate of
$_____ per share) in payment of the Exercise Price pursuant hereto. Please
issue the shares as to which this Option is exercised in accordance with the
instructions given below.
Dated:_____________, 19___
----------------------------------------
(Optionee's Name)
By:
-------------------------------------
Title:
----------------------------------
INSTRUCTIONS FOR REGISTRATION OF OPTION SHARES
Name
----------------------------------------------------------------------------
(Print in Block Letters)
Address
-------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
TRANSFER OF THIS OPTION IS LIMITED AS DESCRIBED IN SECTION 3 HEREOF.
ASSIGNMENT
The undersigned, for value received, does hereby sell, assign and
transfer unto _______________________________ the right to purchase __________
shares of Common Stock of Swisher International, Inc., evidenced by the within
Option, and does hereby irrevocably constitute and appoint
________________________ attorney to transfer such right on the books of
Swisher International, Inc., with full power of substitution in the premises.
Dated: _______________, 199_.
----------------------------------------
(Optionee's Name)
By:
-------------------------------------
Title:
----------------------------------
NOTICE: THE SIGNATURE TO THE ELECTION TO PURCHASE OR ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN OPTION IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. SIGNATURE(S) MUST
BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION WHICH IS A PARTICIPANT IN A
SECURITIES TRANSFER ASSOCIATION RECOGNIZED PROGRAM.
----------------------------------------
Signature Guarantee
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of July 30, 1996 between
SWISHER INTERNATIONAL, INC., a Nevada corporation ("Swisher"), and Professional
Carpet Systems, Inc., a Georgia corporation ("PCS").
The parties agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) "Common Stock" means Swisher's Common Stock, $.01 par
value;
(b) "Holder" means PCS and any of its successors or
assigns which hold Registrable Securities;
(c) "Registrable Securities" means (i) 130,000 shares of
Common Stock issued by Swisher to PCS pursuant to the Asset Purchase Agreement
effective July 1, 1996 by and between PCS and Swisher (the "Purchase
Agreement") and (ii) any Common Stock of Swisher issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the 130,000 shares of Common Stock described above;
(d) "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document; and
(e) The number of shares of "Registrable Securities then
outstanding" shall be equal to the number of shares of Common Stock of Swisher
outstanding which are, and the number of shares of Common Stock of Swisher
issuable pursuant to then exercisable or convertible securities which upon
issuance would be, Registrable Securities.
Section 2. Demand Registration.
(a) If at any time on and after July 31, 1997, Swisher
receives a written request from Holders of at least 75% of the Registrable
Securities then outstanding that Swisher file a registration statement under
the Act covering the registration of Registrable Securities held by them, then
Swisher shall, subject to the limitations of this Section 2, use its best
efforts to effect within 120 days of such request or as soon as practicable
thereafter, the registration under the Act of all Registrable Securities which
such Holders have requested be registered and will keep such registration
statement effective for a minimum of six months. Swisher shall be obligated to
effect only one (1) registration pursuant to this Section 2(a).
(b) If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise Swisher as a part of their request made pursuant to this Section 2. The
Holders shall (together with Swisher as provided in Section 3) enter into an
underwriting agreement in customary form with a mutually acceptable underwriter
or underwriters. Notwithstanding any other provision of this Section 2, if the
managing underwriter advises the Holders in writing that marketing factors
require a limitation of the number of shares to
<PAGE> 2
be underwritten, then the number of shares of Registrable Securities of the
Holders that may be included in the underwriting shall be so limited pro rata.
Section 3. "Piggyback" Rights. If (but without any obligation
to do so) during the period of three years from the date hereof, Swisher
proposes to register any Common Stock under the Act in connection with a public
offering for cash proceeds payable in whole or in part to Swisher (other than
with respect to a Registration Statement filed on Form S-8 or Form S-4 or such
other similar form then in effect under the Act), Swisher shall, at such time,
subject to the provisions of Section 6 and 7 hereof and upon request of the
Holders who wish to participate, cause to be registered under the Act all of
the Registrable Securities which the Holders have requested be registered;
provided, however, if the managing underwriter of the public offering of shares
proposed to be registered by Swisher advises the Holder in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the number of shares of Registrable Securities of the
Holders that may be included in the underwriting shall be so limited pro rata.
Section 4. Registration Procedure. Whenever required under this
Agreement to effect the registration of any Registrable Securities, Swisher
shall, as expeditiously as is reasonably possible:
(a) Furnish to the Holders of the Registrable Securities
covered by such registration statement such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by them.
(b) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
selling Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(c) Notify each holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Act, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
Section 5. Furnish Information. The Holders shall promptly
furnish to Swisher in writing such reasonable information regarding themselves,
the Registrable Securities held by them, and the intended method of disposition
of such securities as shall be required to effect the registration of their
Registrable Securities.
Section 6. Expenses of Registration. All of the foregoing
expenses relating to the Registrable Securities incurred in connection with
registration, filing or qualification pursuant to Section 2 of this Agreement,
including (without limitation) all registration, filing and qualification fees,
printers' bills, mailing and delivery expenses, accounting fees, and the fees
and disbursements of counsel for Swisher and the Holders shall be borne by
Swisher. All expenses, other than underwriting discounts, relating to
Registrable Securities incurred in connection with registration, filing or
qualification pursuant to Section 3 of this Agreement, including (without
limitation) all
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<PAGE> 3
registration, filing and qualification fees, printers' bills, mailing and
delivery expenses, accounting fees, and the fees and disbursements of counsel
for Swisher and the Holder shall be borne pro rata by Swisher and the Holder.
Section 7. Indemnification and Contribution. In the event any
Registrable Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, Swisher will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Act) for such holder, and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the Securities Exchange Act of 1934 (the "Exchange Act"), against
any losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
Swisher will reimburse each such Holder, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of Swisher (which consent shall not be unreasonably
withheld), nor shall Swisher be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus or
final prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided, further, however, that if any losses, claims, damages or liabilities
arise out of or are based upon any untrue statement, alleged untrue statement,
omission or alleged omission contained in any preliminary prospectus, and made
in reliance upon and in conformity with written information furnished by such
Holder expressly for use therein, which did not appear in the final prospectus,
Swisher shall not have any such liability with respect thereto to such Holder,
any person who controls such Holder within the meaning of the Act, or any
director of such Holder, if such Holder delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended or
supplemented if it has been amended or supplemented, to such person at or prior
to the written confirmation of the sale to such person, provided that such
Holder had an obligation to deliver a copy of the final prospectus to such
person; and
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless Swisher, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls Swisher within the meaning of the Act, any underwriter and any other
Holder selling securities in such registration statement or any of its
directors or officers or any person who controls such Holder or underwriter,
against any losses, claims, damages or liabilities (joint or several) to which
Swisher or any such director, officers, controlling person, or underwriter or
controlling person, or other such Holder or director, officer or controlling
person may become
-3-
<PAGE> 4
subject, under the Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if the untrue
statement or omission or alleged untrue statement or omission in respect of
which such loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by Swisher or
any such director, officer, controlling person, underwriter or controlling
person, or other Holder, officer, director, or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action, if such settlement is effected without the
consent of the Holder (which consent shall not be unreasonably withheld);
provided, further that the maximum liability of any selling Holder under this
Section 7(b) in regard to any registration statement shall in no event exceed
the amount of the proceeds received by such selling Holder from the sale of
securities under such registration statement; provided, further, however, that
if any losses, claims, damages or liabilities arise out of or are based upon an
untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus, such seller shall not have any such liability with respect thereto
to Swisher, any person who controls Swisher within the meaning of the Act, any
officer of Swisher who signed the registration statement or any director of
Swisher, if Swisher delivered a copy of the preliminary prospectus to the
person alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or supplemented if it has
been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person, provided that Swisher had an
obligation to deliver a copy of the final prospectus to such person.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties. An indemnified party shall have the right to
retain its own counsel, however, the fees and expenses of such counsel shall be
at the expense of the indemnified party, unless (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party,
(ii) the indemnifying party has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one
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<PAGE> 5
separate firm of attorneys for all indemnified parties). The failure to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party under this Agreement.
(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities or actions in respect thereof
referred to therein, then each indemnifying party shall in lieu of indemnifying
such indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
Swisher, on the one hand, and selling Holders, on the other, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable considerations,
including the failure to give any required notice. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by Swisher, on the one
hand, or by such selling Holders on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto acknowledge and agree that it
would not be just and equitable if contribution pursuant to this subparagraph
(d) were determined by pro rata allocation (even if all of the selling Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subparagraph (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
actions in respect thereof referred to above in this subparagraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subparagraph (d), the amount
the selling Holders shall be required to contribute shall not exceed the
amount, if any, by which the total price at which the securities sold by each
of them were offered to the public exceeds the amount of any damages which they
would have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, or other violation of law.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of fraudulent misrepresentation.
Section 8. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the original parties hereto and each person
who becomes a party hereto, and their respective heirs, personal
representatives, successors and assigns.
(b) Notices. Except as otherwise provided herein, any
notice, consent or request to be given in connection with any term or provision
of this Agreement shall be deemed to have been given sufficiently if sent by
hand, registered or certified mail, postage prepaid, facsimile transmission or
courier (next day delivery), to Swisher or to PCS at their respective addresses
as designated in, or from time to time pursuant to the Purchase Agreement.
(c) Integration. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereby and no party shall be bound by, nor shall any party be deemed to have
made, any covenants, representations, warranties, undertakings or agreements
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<PAGE> 6
except those contained in such entire Agreement. The section and paragraph
headings contained in this Agreement are for the reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same agreement.
(e) Amendment. This Agreement may be amended, changed,
waived or terminated only in writing by Swisher and PCS.
(f) Governing Law. This Agreement and the rights and
remedies of the parties hereto shall be governed by and construed in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written.
SWISHER INTERNATIONAL, INC.
By: /S/ PATRICK L. SWISHER
-------------------------------------
PROFESSIONAL CARPET SYSTEMS, INC.
By: /S/ JOSEPH R. LUNSFORD
-------------------------------------
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<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of July 30, 1996 between
SWISHER INTERNATIONAL, INC., a Nevada corporation ("Swisher"), and Professional
Carpet Systems, Inc., a Georgia corporation ("PCS").
The parties agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) "Common Stock" means Swisher's Common Stock, $.01 par
value;
(b) "Holder" means PCS and any of its successors or
assigns which hold Registrable Securities;
(c) "Registrable Securities" means (i) 70,000 shares of
Common Stock issued by Swisher to PCS pursuant to the Asset Purchase Agreement
effective July 1, 1996 by and between PCS and Swisher (the "Purchase
Agreement") and (ii) any Common Stock of Swisher issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the 70,000 shares of Common Stock described above;
(d) "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document; and
(e) The number of shares of "Registrable Securities then
outstanding" shall be equal to the number of shares of Common Stock of Swisher
outstanding which are, and the number of shares of Common Stock of Swisher
issuable pursuant to then exercisable or convertible securities which upon
issuance would be, Registrable Securities.
Section 2. Demand Registration.
(a) If at any time on and after July 31, 1996, Swisher
receives a written request from Holders of at least 75% of the Registrable
Securities then outstanding that Swisher file a registration statement under
the Act covering the registration of Registrable Securities held by them, then
Swisher shall, subject to the limitations of this Section 2, use its best
efforts to effect within 45 days of such request or as soon as practicable
thereafter, the registration under the Act of all Registrable Securities which
such Holders have requested be registered and will keep such registration
statement effective for a minimum of six months. Swisher shall be obligated to
effect only one (1) registration pursuant to this Section 2(a).
(b) If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise Swisher as a part of their request made pursuant to this Section 2. The
Holders shall (together with Swisher as provided in Section 3) enter into an
underwriting agreement in customary form with a mutually acceptable underwriter
or underwriters. Notwithstanding any other provision of this Section 2, if the
managing underwriter advises the Holders in writing that marketing factors
require a limitation of the number of shares to
<PAGE> 2
be underwritten, then the number of shares of Registrable Securities of the
Holders that may be included in the underwriting shall be so limited pro rata.
Section 3. "Piggyback" Rights. If (but without any obligation
to do so) during the period of three years from the date hereof, Swisher
proposes to register any Common Stock under the Act in connection with a public
offering for cash proceeds payable in whole or in part to Swisher (other than
with respect to a Registration Statement filed on Form S-8 or Form S-4 or such
other similar form then in effect under the Act), Swisher shall, at such time,
subject to the provisions of Section 6 and 7 hereof and upon request of the
Holders who wish to participate, cause to be registered under the Act all of
the Registrable Securities which the Holders have requested be registered;
provided, however, if the managing underwriter of the public offering of shares
proposed to be registered by Swisher advises the Holder in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the number of shares of Registrable Securities of the
Holders that may be included in the underwriting shall be so limited pro rata.
Section 4. Registration Procedure. Whenever required under this
Agreement to effect the registration of any Registrable Securities, Swisher
shall, as expeditiously as is reasonably possible:
(a) Furnish to the Holders of the Registrable Securities
covered by such registration statement such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by them.
(b) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
selling Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(c) Notify each holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Act, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
Section 5. Furnish Information. The Holders shall promptly
furnish to Swisher in writing such reasonable information regarding themselves,
the Registrable Securities held by them, and the intended method of disposition
of such securities as shall be required to effect the registration of their
Registrable Securities.
Section 6. Expenses of Registration. All of the foregoing
expenses relating to the Registrable Securities incurred in connection with
registration, filing or qualification pursuant to Section 2 of this Agreement,
including (without limitation) all registration, filing and qualification fees,
printers' bills, mailing and delivery expenses, accounting fees, and the fees
and disbursements of counsel for Swisher and the Holders shall be borne by
Swisher. All expenses, other than underwriting discounts, relating to
Registrable Securities incurred in connection with registration, filing or
qualification pursuant to Section 3 of this Agreement, including (without
limitation) all
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<PAGE> 3
registration, filing and qualification fees, printers' bills, mailing and
delivery expenses, accounting fees, and the fees and disbursements of counsel
for Swisher and the Holder shall be borne pro rata by Swisher and the Holder.
Section 7. Indemnification and Contribution. In the event any
Registrable Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, Swisher will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Act) for such holder, and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the Securities Exchange Act of 1934 (the "Exchange Act"), against
any losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
Swisher will reimburse each such Holder, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of Swisher (which consent shall not be unreasonably
withheld), nor shall Swisher be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus or
final prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided, further, however, that if any losses, claims, damages or liabilities
arise out of or are based upon any untrue statement, alleged untrue statement,
omission or alleged omission contained in any preliminary prospectus, and made
in reliance upon and in conformity with written information furnished by such
Holder expressly for use therein, which did not appear in the final prospectus,
Swisher shall not have any such liability with respect thereto to such Holder,
any person who controls such Holder within the meaning of the Act, or any
director of such Holder, if such Holder delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended or
supplemented if it has been amended or supplemented, to such person at or prior
to the written confirmation of the sale to such person, provided that such
Holder had an obligation to deliver a copy of the final prospectus to such
person; and
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless Swisher, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls Swisher within the meaning of the Act, any underwriter and any other
Holder selling securities in such registration statement or any of its
directors or officers or any person who controls such Holder or underwriter,
against any losses, claims, damages or liabilities (joint or several) to which
Swisher or any such director, officers, controlling person, or underwriter or
controlling person, or other such Holder or director, officer or controlling
person may become
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<PAGE> 4
subject, under the Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if the untrue
statement or omission or alleged untrue statement or omission in respect of
which such loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by Swisher or
any such director, officer, controlling person, underwriter or controlling
person, or other Holder, officer, director, or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action, if such settlement is effected without the
consent of the Holder (which consent shall not be unreasonably withheld);
provided, further that the maximum liability of any selling Holder under this
Section 7(b) in regard to any registration statement shall in no event exceed
the amount of the proceeds received by such selling Holder from the sale of
securities under such registration statement; provided, further, however, that
if any losses, claims, damages or liabilities arise out of or are based upon an
untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus, such seller shall not have any such liability with respect thereto
to Swisher, any person who controls Swisher within the meaning of the Act, any
officer of Swisher who signed the registration statement or any director of
Swisher, if Swisher delivered a copy of the preliminary prospectus to the
person alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or supplemented if it has
been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person, provided that Swisher had an
obligation to deliver a copy of the final prospectus to such person.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties. An indemnified party shall have the right to
retain its own counsel, however, the fees and expenses of such counsel shall be
at the expense of the indemnified party, unless (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party,
(ii) the indemnifying party has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one
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<PAGE> 5
separate firm of attorneys for all indemnified parties). The failure to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party under this Agreement.
(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities or actions in respect thereof
referred to therein, then each indemnifying party shall in lieu of indemnifying
such indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
Swisher, on the one hand, and selling Holders, on the other, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable considerations,
including the failure to give any required notice. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by Swisher, on the one
hand, or by such selling Holders on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto acknowledge and agree that it
would not be just and equitable if contribution pursuant to this subparagraph
(d) were determined by pro rata allocation (even if all of the selling Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subparagraph (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
actions in respect thereof referred to above in this subparagraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subparagraph (d), the amount
the selling Holders shall be required to contribute shall not exceed the
amount, if any, by which the total price at which the securities sold by each
of them were offered to the public exceeds the amount of any damages which they
would have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, or other violation of law.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of fraudulent misrepresentation.
Section 8. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the original parties hereto and each person
who becomes a party hereto, and their respective heirs, personal
representatives, successors and assigns.
(b) Notices. Except as otherwise provided herein, any
notice, consent or request to be given in connection with any term or provision
of this Agreement shall be deemed to have been given sufficiently if sent by
hand, registered or certified mail, postage prepaid, facsimile transmission or
courier (next day delivery), to Swisher or to PCS at their respective addresses
as designated in, or from time to time pursuant to the Purchase Agreement.
(c) Integration. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereby and no party shall be bound by, nor shall any party be deemed to have
made, any covenants, representations, warranties, undertakings or agreements
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<PAGE> 6
except those contained in such entire Agreement. The section and paragraph
headings contained in this Agreement are for the reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same agreement.
(e) Amendment. This Agreement may be amended, changed,
waived or terminated only in writing by Swisher and PCS.
(f) Governing Law. This Agreement and the rights and
remedies of the parties hereto shall be governed by and construed in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written.
SWISHER INTERNATIONAL, INC.
By: /S/ PATRICK L. SWISHER
-------------------------------------
PROFESSIONAL CARPET SYSTEMS, INC.
By: /S/ JOSEPH R. LUNSFORD
-------------------------------------
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