UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Super Vision International, Inc.
---------------------------------
(Name of Issuer)
Class A Common Stock, $.001 par value
-------------------------------------
(Title of Class of Securities)
868042 10 2
-----------
(CUSIP Number)
Howard Kailes, Esq., Krugman, Chapnick & Grimshaw
Park 80 West - Plaza Two, Saddle Brook, New Jersey 07663
(201) 845-3434
----------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
September 25, 1996
------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(b)(3) or
(4), check the following box.
-------
Check the following box if a fee is being paid with the statement.
X
- -------
(A fee is not required only if the reporting person: (a) has
a previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
<PAGE>
<PAGE>
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
<PAGE>
<PAGE>
CUSIP NO. 868042 10 2
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hayward Industries, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
-----
(b)
-----
Not applicable
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) -----
Not applicable
6 CITIZENSHIP OR PLACE OR ORGANIZATION
New Jersey
7 SOLE VOTING POWER
249,480
8 SHARED VOTING POWER
-0-
9 SOLE DISPOSITIVE POWER
249,480
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
249,480
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
see footnote 1
<PAGE>
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (1)
14.8% (see footnote 2)
14 TYPE OF REPORTING PERSON*
CO
(1) Excludes: (x) up to 249,480 shares issuable upon exercise of
warrants, subject to satisfaction of certain contingencies set
forth in a distributorship agreement with the issuer; (y) up
to 522,000 shares issuable upon exercise of warrants, subject
to exercise of the issuer's other outstanding rights to
purchase stock; and (z) up to 289,187 shares issuable upon
exercise of an option granted by the issuer's principal
stockholder, subject to release of certain shares held in
escrow with the issuer.
(2) Based upon an aggregate of 1,680,946 shares of class A common
stock, $.001 pr value, outstanding.<PAGE>
<PAGE>
Item 1. Security and Issuer.
The securities to which this statement relates are shares of
the class A common stock, $.001 par value ("Class A Common Stock"),
of the Corporation. The principal executive offices of the
Corporation are located at 2442 Viscount Row, Orlando, Florida
32809.
Item 2. Identity and Background.
This statement is filed by Hayward Industries, Inc., a New
Jersey corporation, which is engaged, through its subsidiaries, in
the manufacture, development, design and marketing of pool
products, industrial strainers and other related products. The
principal business and offices of Hayward are located at 900
Fairmount Avenue, Elizabeth, New Jersey 07207. The controlling
person of Hayward is Oscar Davis. The name, citizenship, business
or residence address and principal occupation of each executive
officer and director of Hayward, including Mr. Davis, are set forth
in Annex 1 attached hereto, which information is incorporated
herein by reference.
During the last five years neither Hayward nor, to the best of
the knowledge of Hayward, any executive officer or director of
Hayward (including Mr. Davis), has (a) been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors)
or (b) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, and as a result of
which he was or is subject to a judgment decree of final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding
any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Effective September 25, 1996, Hayward entered into and
contemporaneously closed under a Stock Purchase Agreement with the
Corporation dated such date (the "Purchase Agreement"), pursuant to
which: (i) Hayward acquired 249,480 shares (the "Shares") of Class
A Common Stock, for a purchase price of $2,000,000 (the "Closing
Payment"); (ii) the Corporation issued to Hayward ten-year warrants
(the "Initial Warrants") to purchase up to 249,480 shares of Class
A Common Stock, exercisable at a price per share of $8.02, subject
to satisfaction of certain contingencies hereinafter described;
(iii) the Corporation issued to Hayward additional warrants (the
"Protective Warrants"), expiring May 15, 1999, to purchase up to
522,000 shares of Class A Common Stock, subject to exercise of the
Corporation's other outstanding rights to purchase stock as
hereinafter described; and (iv) the Corporation extended to Hayward
Pool Products, Inc. ("HPPI"), a wholly-owned subsidiary of Hayward,
a Distributorship Agreement dated September 25, 1996 (the
"Distributorship Agreement"), whereunder it appointed HPPI as its
exclusive, worldwide distributor for the marketing, sale and
<PAGE>
distribution of its products in the pool, spa and hot tub market.
Hayward obtained the amount of the Closing Payment from its loan
facility provided by The Chase Manhattan Bank and The Bank of New
York.
Upon delivery of the Purchase Agreement and effective at
Closing, Brett Kingstone, the principal stockholder of the
Corporation, entered into an option agreement dated September 25,
1996 (the "Option Agreement") with Hayward pursuant to which, in
each event of the release to Mr. Kingstone of any of the 2,891,870
shares of class B common stock, $.001 par value ("Class B Common
Stock"), of the Corporation owned by Mr. Kingstone and held in
escrow by the Corporation through April 15, 1999 pursuant to the
Escrow Agreement dated as of January 21, 1994 among the
Corporation, American Stock Transfer & Trust Company and Mr.
Kingstone (and other stockholders of the Corporation), as amended,
Hayward has an option, in each case within 45 days, to purchase up
to ten percent of the shares so released. Under paragraph (d) of
Article Fourth of the Corporation's certificate of incorporation,
upon transfer shares of Class B Common Stock are automatically
converted into shares of Class A Common Stock.
Item 4. Purpose of the Transaction.
Hayward acquired the Shares, the Initial Warrants, the
Protective Warrants and its other rights under the Option Agreement
and the Purchase Agreement contemporaneously with the grant to HPPI
of its exclusive rights under the Distributorship Agreement. Under
the Purchase Agreement, Hayward has the right to designate one
member of the Board of Directors of the Corporation, and under the
Option Agreement Mr. Kingstone has committed to vote his shares for
the election of such party. Pursuant to such arrangements, Hayward
has designated Anthony Castor, its President, for election to the
Corporation's Board of Directors.
Subject to the foregoing, Hayward intends to hold the
securities of the Corporation it has acquired as an investment in
the performance of the Corporation, seeking appreciation thereof
through the efforts of current management of the Corporation.
Hayward intends to continue to review its investment in the
Corporation, and may in the future change its present course of
action with a view toward influencing the goals or operations of
the Corporation, and may acquire additional shares of Class A
Common Stock pursuant to the Initial Warrants, the Protective
Warrants, the Option Agreement, its other rights under the Purchase
Agreement, or in open market transactions or otherwise. On the
other hand, Hayward may determine to dispose of all or a portion of
the Class A Common Stock which it may acquire. As more fully
described under Item 6, pursuant to a registration rights agreement
extended by the Corporation at Closing, the Corporation has
committed to file a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), covering certain
securities held by Hayward. In reaching any conclusions as to the
<PAGE>
foregoing, Hayward will take into account various factors,
including the Corporation's business and prospects, general
economic conditions and money and stock market conditions.
Except as stated in response to this Item 4, Hayward does not
have any plans or proposals which relate to or would result in any
other action specified in clauses (a) through (f) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of October 3, 1996, Hayward beneficially owned, for
purposes of Rule 13d-3 under the Securities and Exchange Act of
1934, as amended, 249,480 shares of Class A Common Stock,
constituting, to the best of the knowledge of Hayward, 14.8% of the
issued and outstanding shares of Class A Common Stock. Such shares
excludes shares issuable upon exercise by Hayward of any rights
under the Initial Warrants, the Protective Warrants, the Option
Agreement or its other rights under the Purchase Agreement.
As disclosed by such persons to Hayward, none of the executive
officers or directors of Hayward set fourth on Annex 1 (including
Oscar Davis) beneficially own any shares of Class A Common Stock.
(b) All of the Shares are held by Hayward with sole power to
vote and to direct the vote thereof, and with sole power to dispose
or to direct the disposition thereof.
(c) Effective September 25, 1996, in a privately negotiated
transaction, Hayward entered into the Purchase Agreement with the
Corporation, under which the Corporation issued the Shares, the
Initial Warrants and the Protective Warrants to Hayward, and Mr.
Kingstone entered into the Option Agreement with Hayward. The terms
of such arrangements are more fully described under Items 3, 4 and
6 herein, which information is incorporated herein by reference.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Undertakings or Relationships
with Respect to Securities of the issuer.
As described under Item 4, pursuant to the Purchase Agreement
Hayward has the right to designate one member of the Corporation's
Board of Directors, and, under the Option Agreement, Mr. Kingstone
has committed to vote his shares for the election of such party to
the Corporation's Board of Directors.
Under the Purchase Agreement, in addition to Hayward's rights
to acquire additional shares under the Initial Warrants, the
Protective Warrants and the Option Agreement, the Corporation has
agreed that, in the event prior to September 25, 2006 it issues any
<PAGE>
shares of Class A Common Stock to parties other than Hayward
(except in specified exempted transactions, which extend to shares
issued upon exercise of outstanding rights to purchase stock), and
subsequent to such transaction the percentage of the Class A Common
Stock represented by the Shares would be below 10% (as such
percentage may be reduced pursuant to the Purchase Agreement),
Hayward will have the right to acquire up to a number of shares of
Class A Common Stock calculated pursuant to the Purchase Agreement,
at a price per share equal to the lesser of the Market Price (as
hereinafter described) or the price offered in the new transaction.
Under the Purchase Agreement, the Corporation has also granted
to Hayward a right-of-first refusal to acquire any securities
proposed to be sold by the Corporation to companies engaged in the
production, sale, marketing and distribution of products
competitive with those of Hayward in the pool, spa and hot tub
markets. Under the Option Agreement, Mr. Kingstone has extended a
similar right to Hayward.
The Initial Warrants, by their terms, are not exercisable
prior to the later of the first anniversary of the Closing and the
satisfaction by HPPI of its first minimum purchase commitment set
forth under the Distributorship Agreement, and further, provided
that Hayward shall not be entitled to exercise in excess of, 20%,
40%, 60% or 80% of the Initial Warrants prior to the later of,
respectively, the second, third, fourth or fifth anniversaries of
Closing and the satisfaction by HPPI of, respectively, its second,
third, fourth or fifth minimum purchase commitments set forth under
the Distributorship Agreement. The Initial Warrants are subject to
customary anti-dilution protection.
The Protective Warrants will be exercisable from time to time
during the period through the date which falls 45 days after the
later of (x) the date of expiration of the last to expire of any
warrant, option or other right (collectively, the "Eligible
Warrants") to acquire any shares of Class A Common Stock from the
Corporation, or any securities convertible into or exchangeable for
Class A Common Stock, outstanding at Closing or issuable directly
or indirectly pursuant to warrants, options or other rights
outstanding at Closing (subject to exception), or (y) the issuance
of the last share of Class A Common Stock issued pursuant to any
Eligible Warrant; provided that the Protective Warrants are
exercisable only upon the issuance of shares of Class A Common
Stock pursuant to exercise of any Eligible Warrants and with
respect to the number of shares equal to ten percent of the number
of shares so issued. The price per share upon each exercise of the
Protective Warrants is a price (the "Market Price") calculated as
the average of specified market prices of the Class A Common Stock
over 30 consecutive business days ending within 15 days of the
event giving rise to exercise.
<PAGE>
Under the Option Agreement, the exercise by Hayward of its
rights thereunder upon each release of shares from escrow to Mr.
Kingstone is at a price per share calculated as the average of
specified market prices of the Class A Common Stock over 30
consecutive business days prior to Hayward's notice of exercise.
At Closing, Hayward and the Corporation also entered into a
Registration Rights Agreement dated September 25, 1996, under which
the Corporation is obligated, at appropriate specified times, to
register, under the Securities Act, the offer and sale of the
Shares, and also of any shares of Class A Common Stock acquired by
Hayward under the Protective Warrants, the Initial Warrants and the
Option Agreement. Hayward also has the right to participate in
other registrations effected by the Corporation, subject to
customary underwriters' cut-back provisions.
Except as stated in response to this Item 6, neither Hayward
nor, to the best of the knowledge of Hayward, any of the persons
listed in Annex 1, is a party to any contract, arrangement,
understanding or relationship (legal or otherwise) with any person
with respect to any securities of the Corporation, including, but
not limited to, the transfer or voting of any such securities,
finder's fees, joint ventures, loan or option arrangements, puts or
calls, guaranties of profits, divisions of profit or loss, or the
giving or withholding of proxies.
Item 7. Materials to be Filed as Exhibits.
Exhibit A - Stock Purchase Agreement dated September 25, 1996
between the Corporation and Hayward.
Exhibit B - Warrant Certificate dated September 25, 1996 issued
by the Corporation to Hayward
Exhibit C - Warrant Certificate dated September 25, 1996 issued
by the Corporation to Hayward
Exhibit D - Registration Rights Agreement dated September 25,
1996 issued between the Corporation and Hayward
Exhibit E - Option Agreement dated September 25, 1996 between
Hayward and Brett Kingstone.
<PAGE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, we hereby certify that the information set forth in this
statement is true, complete and correct.
Dated: October 3, 1996 HAYWARD INDUSTRIES, INC.
By s/Anthony T. Castor
--------------------------
Anthony T. Castor, III
President
<PAGE>
<PAGE>
Annex 1
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Occupation,
Name and Business Employer and Address
or Residence Address Citizenship Position with Hayward of Employer
- -------------------- ----------- --------------------- ---------------------
Oscar Davis United States Chairman of the Board Chairman of the Board
Hayward Industries, Inc. of America and Director Hayward Industries, Inc.
900 Fairmount Avenue 900 Fairmount Avenue
Elizabeth, NJ 07207 Elizabeth, NJ 07207
Anthony T. Castor, III United States President and Chief President and Chief
Hayward Industries, Inc. of America Executive Officer Executive Officer and
900 Fairmount Avenue and Director Director
Elizabeth, NJ 07207 Hayward Industries, Inc.
900 Fairmount Avenue
Elizabeth, NJ 07207
Robert Davis United States Vice President- President
Hayward Industrial of America Industrial and Hayward Industrial
Products, Inc. Director Products, Inc.
900 Fairmount Avenue 900 Fairmount Avenue
Elizabeth, NJ 07207 Elizabeth, NJ 07207
Wayne P. Wilson United States Vice President- Vice President-
Hayward Industries, Inc. of America Corporate Affairs Corporate Affairs
900 Fairmount Avenue Hayward Industries, Inc.
Elizabeth, NJ 07207 900 Fairmount Avenue
Elizabeth, NJ 07207
Bruce S. Fisher United States Vice President- Vice President-
Hayward Industries, Inc. of America Pool Products Pool Products
900 Fairmount Avenue Hayward Industries, Inc.
Elizabeth, NJ 07207 900 Fairmount Avenue
Elizabeth, NJ 07207
Stanley E. Erman United States Vice President- Vice President-
Hayward Industries, Inc. of America Operations Operations
900 Fairmount Avenue Hayward Industries, Inc.
Elizabeth, New Jersey 07207 900 Fairmount Avenue
Elizabeth, NJ 07207
Reuven Har-Even United States Chief Financial Vice President-
Hayward Industries, Inc. of America Officer Finance
900 Fairmount Avenue Hayward Industries, Inc.
Elizabeth, NJ 07207 900 Fairmount Avenue
Elizabeth, NJ 07207
Edward C. Teter United States Vice President- Vice President-
Hayward Industries, Inc. of America Technology & Quality Technology & Quality
900 Fairmount Avenue Hayward Industries, Inc.
Elizabeth, NJ 07207 900 Fairmount Avenue
Elizabeth, NJ 07207
James D. Krugman United States Director Partner
Krugman, Chapnick & of America Krugman, Chapnick &
Grimshaw Grimshaw
Park 80 West - Plaza Two Park 80 West -
Saddle Brook, NJ 07663 Plaza Two
Saddle Brook, NJ 07663
Sidney A. Lewis United States Director Retired
28 Parkside of America
Upper Montclair, NJ 07043
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit A - Stock Purchase Agreement dated
September 25, 1996 between the
Corporation and Hayward
Exhibit B - Warrant Certificate dated
September 25, 1996 issued
by the Corporation to Hayward
Exhibit C - Warrant Certificate dated
September 25, 1996 issued
by the Corporation to Hayward
Exhibit D - Registration Rights Agreement
dated September 25, 1996 issued
between the Corporation and Hayward
Exhibit E - Option Agreement dated September
25, 1996 between Hayward and
Brett Kingstone
<PAGE> EXHIBIT A
=================================================================
SUPER VISION INTERNATIONAL, INC.
______________________________________
STOCK PURCHASE AGREEMENT
Dated as of September 25, 1996
_______________________________________
Class A Common Stock
$.001 Par Value
================================================================== <PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES AND WARRANTS. . . . 2
1.1 Purchase and Sale of Shares and Warrants. . . . 2
1.2 Purchase Price. . . . . . . . . . . . . . . . . 2
1.3 Warrants. . . . . . . . . . . . . . . . . . . . 2
1.4 Issue Taxes . . . . . . . . . . . . . . . . . . 3
ARTICLE II REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION . . . . . . . . . . 3
2.1 Incorporation; Subsidiaries . . . . . . . . . . 3
2.2 Authorization . . . . . . . . . . . . . . . . . 3
2.3 Conflicts . . . . . . . . . . . . . . . . . . . 4
2.4 Capitalization. . . . . . . . . . . . . . . . . 4
2.5 Securities Filings. . . . . . . . . . . . . . . 6
2.6 Financial Statements. . . . . . . . . . . . . . 6
2.7 Taxes . . . . . . . . . . . . . . . . . . . . . 8
2.8 Title; Sales Arrangements; Defaults . . . . . . 8
2.9 Employee Benefit Plans. . . . . . . . . . . . . 9
2.10 Insurance . . . . . . . . . . . . . . . . . . . 9
2.11 Disputes and Litigation . . . . . . . . . . . . 9
2.12 Compliance With Law; Licenses; Franchises . . . 10
2.13 Distributorship Agreement . . . . . . . . . . . 11
2.14 Private Placement . . . . . . . . . . . . . . . 11
2.15 Disclosure. . . . . . . . . . . . . . . . . . . 11
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER. . . . . . . . . . . . . . . . 11
3.1 Incorporation . . . . . . . . . . . . . . . . . 11
3.2 Authorization . . . . . . . . . . . . . . . . . 11
3.3 Conflicts . . . . . . . . . . . . . . . . . . . 12
3.4 Private Placement . . . . . . . . . . . . . . . 12
ARTICLE IV PRE-CLOSING COVENANTS . . . . . . . . . . . . . 13
4.1 General Conduct of Business . . . . . . . . . . 13
4.2 Capitalization. . . . . . . . . . . . . . . . . 13
4.3 Due Diligence; SEC Filings. . . . . . . . . . . 14
4.4 Lien Searches . . . . . . . . . . . . . . . . . 14
4.5 Notification of Certain Matters . . . . . . . . 15
4.6 Termination/Modification of Sales Agreements. . 15
4.7 Forbearance . . . . . . . . . . . . . . . . . . 15
ARTICLE V CLOSING . . . . . . . . . . . . . . . . . . . . 16
5.1 Time and Place of Closing . . . . . . . . . . . 16
5.2 Delivery of Shares; Warrants. . . . . . . . . . 16
5.3 Delivery of Purchase Price. . . . . . . . . . . 16
ARTICLE VI CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PURCHASER. . . . . . . . . . 16
6.1 Opinion of Counsel to the Corporation . . . . . 16
<PAGE>
6.2 Representations; Warranties; Covenants. . . . . 18
6.3 Certified Resolutions . . . . . . . . . . . . . 18
6.4 Consents. . . . . . . . . . . . . . . . . . . . 19
6.5 Registration Rights Agreement . . . . . . . . . 19
6.6 Distributorship Agreement . . . . . . . . . . . 19
6.7 Sales Agreements. . . . . . . . . . . . . . . . 19
6.8 Litigation. . . . . . . . . . . . . . . . . . . 19
6.9 Other Certificates. . . . . . . . . . . . . . . 19
ARTICLE VII CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE CORPORATION. . . . . . . . . 20
7.1 Opinion of Counsel to the Purchaser . . . . . . 20
7.2 Representations; Warranties; Covenants. . . . . 21
7.3 Certified Resolutions . . . . . . . . . . . . . 21
7.4 Distributorship Agreement . . . . . . . . . . . 21
7.5 Other Certificates. . . . . . . . . . . . . . . 21
ARTICLE VIII POST-CLOSING COVENANTS OF THE CORPORATION . . . 21
8.1 Rights to Purchase Additional Stock.. . . . . . 21
8.2 Right of First Refusal. . . . . . . . . . . . . 23
8.3 Board Representation. . . . . . . . . . . . . . 25
8.4 Sales Agreements. . . . . . . . . . . . . . . . 25
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . 25
9.1 Termination . . . . . . . . . . . . . . . . . . 25
9.2 Effect of Termination . . . . . . . . . . . . . 26
ARTICLE X INDEMNIFICATION . . . . . . . . . . . . . . . . 26
10.1 Basis of Indemnity. . . . . . . . . . . . . . . 26
10.2 Procedures for Indemnification. . . . . . . . . 26
10.3 Payment of Indemnity. . . . . . . . . . . . . . 27
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . 27
11.1 Notices . . . . . . . . . . . . . . . . . . . . 27
11.2 Survival of Representations . . . . . . . . . . 28
11.3 Entire Agreement. . . . . . . . . . . . . . . . 28
11.4 Further Action. . . . . . . . . . . . . . . . . 28
11.5 Benefit of Agreement. . . . . . . . . . . . . . 29
11.6 Expenses. . . . . . . . . . . . . . . . . . . . 29
11.7 Governing Law . . . . . . . . . . . . . . . . . 29
11.8 Captions. . . . . . . . . . . . . . . . . . . . 29
11.9 Brokerage . . . . . . . . . . . . . . . . . . . 29
11.10 Counterparts. . . . . . . . . . . . . . . . . . 29
Exhibit A: Initial Warrant Certificate
Exhibit B: Supplemental Warrant Certificate
Exhibit C: Registration Rights Agreement
Exhibit D: Distributorship Agreement
Schedule 1: Capitalization
Schedule 2: Sales Agreements
Schedule 3: Liens<PAGE>
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of the 25th day of
September, 1996, by and between SUPER VISION INTERNATIONAL, INC.,
a corporation duly organized and validly existing under the laws of
the State of Delaware (hereinafter referred to as the
"Corporation"), and HAYWARD INDUSTRIES, INC., a corporation duly
organized and validly existing under the laws of the State of New
Jersey (hereinafter referred to as the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in the business of
manufacturing, developing, designing and marketing fiber optic
products with application in, among other areas, the pool, spa and
hot tub business (hereinafter referred to as the "Products"); and
WHEREAS, contemporaneously with Closing (as hereinafter
defined) pursuant to this Agreement, the Corporation desires, among
other matters, to appoint Hayward Pool Products, Inc., a wholly-
owned subsidiary of the Purchaser, as its exclusive, worldwide
distributor for the Products through the swimming pool, spa and hot
tub business, and the Purchaser desires to procure such appointment
upon the terms and subject to the provisions of a distributorship
agreement (hereinafter defined as the "Distributorship Agreement")
as hereinafter provided; and
WHEREAS, in order to provide funds for the operation and
expansion of its business, without limitation so as to enable the
Corporation to fulfill its obligations under the Distributorship
Agreement, the Corporation desires to issue, sell and deliver to
the Purchaser the number of shares (hereinafter referred to as the
"Shares") of the class A common stock, $.001 par value (hereinafter
referred to as the "Class A Common Stock"), of the Corporation
hereinafter identified, and, in consideration of the covenants and
agreements of the Purchaser hereunder, to issue and deliver to the
Purchaser warrants (hereinafter referred to, collectively, as the
"Warrants"), respectively, to acquire an equal number of shares
(hereinafter referred to as the "Initial Warrant Shares") of Class
A Common Stock, and further to acquire certain additional shares
(together with the Initial Warrant Shares, hereinafter referred to
as the "Warrant Shares") of Class A Common Stock in the event of
exercise of the rights to acquire securities of the Corporation
specified therein, and the Purchaser desires to purchase and
acquire the Shares, together with Warrants, upon the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties
hereto hereby agree as follows:
<PAGE>
<PAGE>
ARTICLE I
PURCHASE AND SALE OF SHARES AND WARRANTS
1.1 Purchase and Sale of Shares and Warrants.
Subject to the terms and conditions of this Agreement, and on
the basis of the representations, warranties and covenants herein
contained, effective at Closing the Corporation hereby agrees to
issue, sell and deliver to the Purchaser 249,480 shares of Class A
Common Stock, and the Purchaser hereby agrees to purchase, acquire
and accept the Shares from the Corporation.
1.2 Purchase Price.
(a) The purchase price (hereinafter referred to as the
"Purchase Price") for the Shares shall be $2,000,000.
(b) The Purchaser has heretofore delivered to Messrs.
Krugman, Chapnick & Grimshaw, as escrow agent (hereinafter referred
to as the "Escrow Agent"), the amount of $250,000 (hereinafter
referred to as the "Deposit"), which shall be held pursuant to the
terms and conditions set forth in Section 1 (hereinafter referred
to as the "Escrow Agreement") of the letter dated June 24, 1996
(hereinafter referred to as the "Letter of Intent"), and which
shall be applied as hereinafter set forth (subject to the terms of
the Escrow Agreement). In the event of the occurrence of Closing:
(i) the Corporation and the Purchaser shall, jointly, so notify the
Escrow Agent, in writing, and the Deposit shall be delivered to the
Corporation by wire transfer of funds directed to the Corporation's
account specified in such notice by the Corporation, and (ii) the
Purchaser shall deliver to the Corporation, by wire transfer of
funds directed to the Corporation's account specified as aforesaid,
the amount of the difference between the Purchase Price and the
Deposit (exclusive of all interest thereon, if any). The parties
acknowledge and agree that the foregoing instructions contemplated
under clause (i) immediately preceding are intended in furtherance
of the Escrow Agreement, the provisions of which remain and shall
remain in full force and effect (except that the reference under
Paragraph (b) thereof to "expiration of the Settlement Period"
shall be deemed to refer to the Termination Date [as hereinafter
defined]).
1.3 Warrants.
In consideration of the covenants and agreements of the
Purchaser set forth herein, including, without limitation, the
execution and delivery of the Distributorship Agreement at Closing,
the Corporation shall issue and deliver the Warrants to the
Purchaser, such Warrants to be evidenced by: (x) the form of the
warrant certificate attached hereto as Exhibit A (the Warrants
evidenced by the Warrant Certificate contemplated by Exhibit A
hereinafter referred to as the "Initial Warrants"); and (y) the
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form of warrant certificate attached hereto as Exhibit B (the
Warrants evidenced by the Warrant Certificate contemplated by
Exhibit B hereinafter referred to as the "Protective Warrants";
both such warrant certificates hereinafter referred to,
collectively, as the "Warrant Certificates").
1.4 Issue Taxes.
The Corporation shall pay the taxes and governmental fees in
connection with: (a) the issuance, sale, or delivery by the
Corporation to the Purchaser of the Shares and the Warrants and (b)
the execution and delivery of this Agreement and any other
documents or instruments executed and delivered at the Closing. The
Corporation shall hold each holder of the Shares and the Warrants
harmless, without limitation as to time, against any and all
liabilities with respect to any such taxes and fees. The
obligations under this Section 1.4 shall survive any transfer of
the Shares and the Warrants, or any of them, and the termination of
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION
The Corporation hereby represents, warrants and covenants
that:
2.1 Incorporation; Subsidiaries.
The Corporation is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to own or hold under lease the assets
and properties which it owns or holds under lease and to perform
all its obligations under the agreements to which it is a party,
including, without limitation, this Agreement and the other
Principal Documents (as hereinafter defined). The Corporation is
qualified as a foreign corporation in good standing in each other
jurisdiction wherein the failure so to qualify would, individually
or in the aggregate, have a material adverse effect on its
business, properties, operations, income, assets, prospects or
condition, financial or otherwise (hereinafter referred to as the
"Corporation's business or condition"). The copies of the
certificate of incorporation and by-laws of the Corporation which
have been delivered to the Purchaser by the Corporation are
complete and correct. The Corporation does not, directly or
indirectly, hold any capital stock or other proprietary interest,
beneficially or of record, in any corporation, partnership, joint
venture, business trust or other legal entity.
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2.2 Authorization.
The execution and delivery by the Corporation of this
Agreement, the Distributorship Agreement, the Warrant Certificates,
and each of them, and (as hereinafter defined) the Registration
Rights Agreement (this Agreement, the Distributorship Agreement,
the Warrant Certificates and the Registration Rights Agreement
being herein referred to, collectively, as the "Principal
Documents"), the performance by the Corporation of its covenants
and agreements under the Principal Documents, and each of them, and
the consummation by the Corporation of the transactions
contemplated by the Principal Documents, and each of them, have
been duly authorized by all necessary corporate action. When
executed and delivered by the Corporation, the Principal Documents,
and each of them, shall constitute the valid and legally binding
obligations of the Corporation enforceable against the Corporation
in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the
availability of equitable remedies, whether considered in an action
at law or a proceeding in equity.
2.3 Conflicts.
Neither the execution and delivery of the Principal
Documents,
nor any of them, nor the consummation of the transactions
contemplated in the Principal Documents, or any of them, will
violate any provision of the certificate of incorporation or
by-laws of the Corporation or any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order
of any court, government, or governmental agency or
instrumentality, domestic or foreign, binding upon the Corporation,
or conflict with or result in any breach of or event of termination
under any of the terms of, or the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature pursuant to, the terms of any
contract or agreement to which the Corporation is a party or by
which the Corporation or any of its properties or assets is bound.
No consents, approvals or authorizations or filings or
registrations with any governmental agency or authority or any
other person or entity are required in connection with the
execution and delivery of the Principal Documents, or any of them,
by the Corporation or the consummation by the Corporation of the
transactions contemplated hereby or thereby.
2.4 Capitalization.
(a) The authorized capital stock of the Corporation consists
of: (x) 5,000,000 shares of preferred stock, $.001 par value
(hereinafter referred to as the "Preferred Stock"), none of which
are issued and outstanding as of the date of this Agreement; (y)
16,610,866 shares of Class A Common Stock, of which 1,431,466
shares are issued and outstanding as of the date of this Agreement
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and an aggregate of 5,656,891 shares (prior to giving effect to the
issuance of the Shares) are reserved for issuance pursuant to
exercise of the warrants and options hereinafter identified; and
(z) 3,389,134 shares of class B common stock, $.001 par value
(hereinafter referred to as the "Class B Common Stock", and,
together with the Class A Common Stock, the "Common Stock"), of
which 3,375,134 are issued and outstanding as of the date of this
Agreement. All of the outstanding shares of Common Stock have been
validly issued and are fully-paid and non-assessable, and the
Shares, when issued and delivered in accordance with this
Agreement, will be validly issued, fully-paid and non-assessable
shares of Common Stock, free and clear of any mortgage, deed of
trust, pledge, lien, security interest or any charge or encumbrance
of any nature granted by the Corporation. The Corporation does not
hold any shares of Preferred Stock, or any shares of Common Stock,
as treasury stock. The Corporation has duly reserved for issuance
from the authorized but unissued Common Stock such number of shares
thereof sufficient for issuance under this Agreement. There are no
preemptive rights with respect to any shares of the capital stock
of the Corporation, including, without limitation, the Shares or
the Warrant Shares, or any of them.
(b) There are no subscriptions, warrants, options, calls,
commitments by or agreements to which the Corporation is bound
relating to the issuance or purchase of any shares of Preferred
Stock, and no such subscriptions, warrants, options, calls,
commitments by or agreements to which the Corporation is bound
relating to the issuance or purchase of any shares of Common Stock
except for: (w) 139,391 shares of Class A Common Stock reserved for
issuance upon exercise of outstanding options as of the date hereof
(hereinafter referred to as the "Employee Options") granted under
the Corporation's existing stock option plan, (x) 120,000 shares of
Class A Common Stock reserved for issuance upon exercise of the
Corporation's Unit Purchase Options identified on Schedule 1
attached hereto (hereinafter referred to as the "Unit Purchase
Options"), (y) 1,797,500 shares of Class A Common Stock reserved
for issuance upon exercise of the Corporation's Class A Warrants
identified on Schedule 1 attached hereto (hereinafter referred to
as the "Class A Warrants"), including Class A Warrants issuable
upon exercise of Unit Purchase Options, and (z) 3,300,000 shares of
Class A Common Stock reserved for issuance upon exercise of the
Class B Warrants identified on Schedule 1 attached hereto
(hereinafter referred to as the "Class B Warrants"), including
Class B Warrants issuable upon exercise of Class A Warrants and
Unit Purchase Options. Except as set forth on Schedule 1, no event
has occurred which will cause any adjustment in any conversion or
exercise price or ratio with respect to any such securities
pursuant to any anti-dilution provisions thereunder, nor, as a
result of any such event, will the number of shares of Common Stock
issuable upon such conversion or such exercise, as the case may be,
be subject to adjustment. Except as set forth on Schedule 1, no
such conversion or exercise price or ratio will be subject to
adjustment as a consequence of the transactions contemplated by the
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Principal Documents, nor, as a consequence of such consummation,
will the numbers of shares of Common Stock issuable upon such
conversion or such exercise, as the case may be, be subject to
adjustment. There are no contracts, agreements, arrangements
(written or oral) or other documents to which the Corporation is a
party regulating or controlling or otherwise affecting the voting
or disposition of any shares of stock of the Corporation, or the
management thereof, except as set forth in Schedule 1. The
Corporation has not extended any demand or incidental registration
rights under the Securities Act of 1933, as amended (hereinafter
referred to as the "Securities Act"), except as set forth in
Schedule 1.
2.5 Securities Filings.
The Corporation has, on a timely basis, since March 24, 1994,
made all filings with the Securities and Exchange Commission
(hereinafter referred to as the "Commission") that it has been
required to make under the Securities Act of 1933, as amended
(hereinafter referred to as the "Securities Act") and the rules and
regulations thereunder and the Securities and Exchange Act of 1934,
as amended (hereinafter referred to as the "Exchange Act"), and the
rules and regulations thereunder. The Corporation has provided to
the Purchaser a complete and correct copy of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995, its Quarterly Reports on Form 10-Q for the quarters ended,
respectively, March 31 and June 30, 1996 and its proxy statement
dated May 20, 1996 (hereinafter referred to, collectively, as the
"Current SEC Reports"). The Current SEC Reports comply in all
material respects with the requirements of the Exchange Act, and
none of the Current SEC Reports contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
2.6 Financial Statements.
(a) The Corporation has delivered to the Purchaser (i) the
balance sheets of the Corporation as and at December 31, 1995 and
1994, and the related statements of operations for the fiscal years
then ended, accompanied, in each case, by the report of Coopers &
Lybrand, L.L.P. (hereinafter referred to as the "Accountant") with
respect thereto (hereinafter referred to as the "Audited Financial
Statements") and (ii) the unaudited balance sheets of the
Corporation as and at June 30, 1996 and 1995, and the related
unaudited statements of operations for the six months then ended,
respectively (hereinafter referred to as the "Interim Financial
Statements", and together with the Audited Financial Statements,
the "Financial Statements"). The Financial Statements have been
prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods to which
such financial statements relate, except as otherwise indicated
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therein and except, in the case of the Interim Financial
Statements, as permitted by the requirements of Form 10-Q. The
Financial Statements fully and fairly present, in conformity with
such principles as so utilized, the financial position and results
of operations of the Corporation, and the changes in their cash
flows, at the dates shown and for the periods therein specified.
The balance sheets constituting a part of the Financial Statements
fully and fairly present as and at the dates thereof all
liabilities of the Corporation of the types normally reflected in
balance sheets as and at the dates thereof. Other than (in the case
of the Interim Financial Statements) year-end audit adjustments on
a basis comparable to past practice, all adjustments necessary to
present fully and fairly the financial position and results of
operations of the Corporation, and the changes in its financial
position, for such periods have been included in the Financial
Statements. Except to the extent disclosed in the Financial
Statements, the Corporation does not have any liabilities, whether
accrued, absolute, contingent, or otherwise, whether due or to
become due and whether the amount thereof is readily ascertainable
or not, which, individually or in the aggregate, might be
materially adverse to the Corporation's business or condition.
(b) Subsequent to June 30, 1996, the Corporation has not:
(i) declared, set aside or made any payment or
distribution upon any capital stock or, directly or
indirectly, purchased, redeemed or otherwise acquired or
disposed of any shares of capital stock;
(ii) incurred any liability or obligation under
agreements or otherwise, except current liabilities
entered into or incurred in the ordinary course of
business consistent with past practice; issued any equity
securities or rights with respect to equity securities;
issued any notes or other corporate debt securities or
paid or discharged any outstanding indebtedness, except
in the ordinary course of business consistent with past
practice; or mortgaged, pledged or subjected to any Lien
(as hereinafter defined) any of its assets or properties;
(iii) entered into any transaction other than in the
ordinary course of business consistent with past
practice, except in connection with the execution and
performance of this Agreement or the other Principal
Documents and the transactions contemplated hereby and
thereby;
(iv) suffered any damage, destruction, or loss to
any of its assets or properties (whether or not covered
by insurance); or
(v) suffered any material adverse change in the
Corporation's business or condition;
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and, since June 30, 1996, there has been no occurrence,
circumstance or combination thereof which, individually or in the
aggregate, might be expected to result in any such material adverse
change. For purposes of this Agreement, the term "Lien" shall be
defined to mean any mortgage, deed of trust, security interest,
pledge, lien, or other charge or encumbrance of any nature except:
(a) liens for taxes, assessments, or governmental charges or levies
not yet due and delinquent, (b) liens consisting of zoning or
planning restrictions, easements, permits, any other restrictions
or limitations on the use of real property or irregularities in
title thereto which do not materially detract from the value of, or
impair the use of, such property by the Corporation or the
Subsidiaries, respectively, and (c) as expressly set forth in the
Financial Statements (or the notes thereto).
2.7 Taxes.
The Corporation has filed or caused to be filed all federal,
state, municipal and other tax returns, reports and declarations
required to be filed by it, so as to prevent any valid Lien on its
assets or properties and has paid or shall pay all taxes which have
been or shall become due with respect to the periods covered by
said returns or pursuant to any assessment received by it in
connection therewith. All assessments and charges (including
penalties and interest, if any) related to periods ended on or
before December 31, 1995 have been or will be paid by the
Corporation, including any necessary adjustments with state and
local tax authorities, and no deficiency in payment of any taxes
for any period has been asserted by any taxing authority which
remains unsettled at the date hereof. Adequate provision has been
made in the Financial Statements for the payment of all then
accrued and unpaid federal and other taxes of the Corporation and
the Subsidiaries whether or not yet due and payable and whether or
not disputed by the Corporation or any Subsidiary.
2.8 Title; Sales Arrangements; Defaults.
The Corporation has good, valid, and marketable title to all
of its assets and properties, in each case, except as set forth on
Schedule 3 annexed hereto, free and clear of all Liens; and,
without limiting the foregoing, has good, valid and marketable
title to all of its assets and properties shown on the consolidated
balance sheet as and at June 30, 1996 included in the Interim
Financial Statements, in each case free and clear of all Liens,
except for such assets and properties disposed of in the ordinary
course of business since that date. The Corporation leases or owns
all properties and assets necessary for the operation of its
business as currently conducted. No event has occurred, or, is
alleged to have occurred, which constitutes, or with lapse of time
or giving of notice or both would constitute, a default or a basis
for a claim of force majeure or other claim of excusable delay or
non-performance under any contract or other arrangement to which
the Corporation is a party, which, individually or in the
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aggregate, would have a material adverse effect on the
Corporation's business or condition. Set forth on Schedule 2
annexed hereto is a list of all sales agency, distributorship,
manufacturer's representative and similar arrangements with respect
to the Products, or any of them (hereinafter referred to as the
"Sales Agreements"), together with the territory and products
covered thereby and the expiration date thereof, true and complete
copies of which have been delivered by the Corporation to the
Purchaser.
2.9 Employee Benefit Plans.
All pension, profit-sharing, bonus, incentive, welfare, or
other employee benefit plans within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
(hereinafter referred to as "ERISA"), in which the employees of the
Corporation participate (such plans and related trusts, insurance,
and annuity contracts, funding media, and related agreements and
arrangements, other than any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) being hereinafter referred to as
the "Benefit Plans", and such multiemployer plans being hereinafter
referred to as the "Multiemployer Plans") comply in all material
respects with all requirements of the Department of Labor and the
Internal Revenue Service promulgated under ERISA and with all other
applicable laws. The Corporation has not taken or failed to take
any action with respect to either the Benefit Plans or the
Multiemployer Plans which might create any liability on the part of
the Corporation; no Benefit Plan which is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA)(hereinafter referred
to as the "Defined Benefit Plans") or Multiemployer Plan has
incurred an "accumulated funding deficiency" (within the meaning of
section 412(a) of the Internal Revenue Code of 1986, as amended
[hereinafter referred to as the "Code"]), whether or not waived; no
"reportable event" (within the meaning of section 4043 of ERISA)
has occurred with respect to any Defined Benefit Plan or any
Multiemployer Plan; no "prohibited transaction" (within the meaning
of section 406 of ERISA or section 4975(c) of the Code) has
occurred with respect to any Benefit Plan or any Multiemployer
Plan; and the excess of the aggregate present value of accrued
benefits of the Defined Benefit Plans is not more than the
aggregate value of the assets of such plans. Each "fiduciary"
(within the meaning of section 3(21)(A) of ERISA) as to each
Benefit Plan and as to each Multiemployer Plan has complied in all
material respects with the requirements of ERISA and all other
applicable law in respect of each such Plan.
2.10 Insurance.
The Corporation maintains insurance policies covering all of
its assets and properties and general public liability insurance
and product liability insurance, providing such coverage and in
such amounts as are customarily carried by companies engaged in
similar businesses and owning similar properties and assets in the
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same general areas in which the Corporation competes. Such policies
are in full force and effect, all premiums due thereon have been
paid, and the Corporation has complied with the provisions of such
policies.
2.11 Disputes and Litigation.
There is no action, suit, proceeding, or claim, pending or
threatened before any court, government or governmental agency or
instrumentality, domestic or foreign, and no investigation by any
court or government or governmental agency or instrumentality,
domestic or foreign, pending or threatened, against the
Corporation, nor is there any outstanding order, writ, judgment,
stipulation, injunction, decree, determination, award, or other
order of any court or government or governmental agency or
instrumentality, domestic or foreign, against the Corporation, in
each case which would, individually or in the aggregate, have a
material adverse effect on the Corporation's business or condition.
The use by the Corporation of its assets and the conduct of its
business do not involve infringement or, to the best of the
Corporation's knowledge, claimed infringement, of any patent,
trademark, servicemark, tradename, copyright, license or similar
right.
2.12 Compliance With Law; Licenses; Franchises.
(a) The Corporation has (or has made timely application for)
all franchises, licenses, permits and other governmental and
non-governmental approvals necessary to enable it to carry on its
business as currently conducted. All such franchises, licenses,
permits, and governmental and other approvals (other than those
with respect to which timely application is pending) are in full
force and effect, there has been no default or breach thereunder,
and there is no pending or, to the best of the Corporation's
knowledge, threatened proceeding under which any may be revoked,
terminated or suspended. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated
hereby, will not conflict with, contravene or terminate any such
franchises, licenses, permits or governmental or other approvals.
The Corporation has not violated, nor, to the best of the
Corporation's knowledge, is it alleged to have violated, any law,
rule, regulation, judgment, stipulation, injunction, decree,
determination, award or other order of any government, or
governmental agency or instrumentality, domestic or foreign,
binding upon the Corporation which violation, individually or in
the aggregate, might have a materially adverse effect on the
Corporation's business or condition.
(b) The Corporation: (i) has not filed any notice under any
federal, state or local law, or regulation, indicating past or
present treatment, storage or disposal of a hazardous waste or
reporting a spill or release of a hazardous or toxic waste,
substance or constituent, or other substance into the environment,
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and (ii) does not have any liability, contingent or otherwise,
under any such law or regulation in connection with any release of
any hazardous or toxic waste, substance or constituent, or other
substance into the environment, or the placement of any hazardous
or toxic waste, substance or constituent, or other substance on
property, now or formerly owned or leased by the Corporation. No
hazardous materials and no hazardous substances have been
generated, treated, stored or disposed of by the Corporation or
placed by the Corporation in violation of any applicable law or
regulation on any property owned or leased by the Corporation.
2.13 Distributorship Agreement.
All representations and warranties made by the Corporation
contained in the Distributorship Agreement are true and correct on
the date hereof as if made on the date hereof, and are hereby
incorporated by reference herein.
2.14 Private Placement.
Neither the Corporation nor anyone acting on its behalf has
directly or indirectly offered any shares of Common Stock or any
other securities for sale to, or solicited any offer to buy any of
the same from, anyone so as to bring the offer, sale, issuance
and/or delivery of the Shares or Warrants, or any of them, or the
Warrant Shares, within the registration requirements of the
Securities Act. Neither the offer, sale, issuance and/or delivery
of the Shares or Warrants, or the Warrant Shares, nor any of them,
hereunder will result in any contravention of any applicable
federal or state securities laws, and will not require any approval
or consent of any governmental authority, commission or agency.
2.15 Disclosure.
No representation or warranty made under any provisions of
the
Principal Documents, or any of them, and none of the information
furnished by the Corporation set forth herein, in the exhibits or
schedules hereto or in any document delivered to the Purchaser, or
any authorized representative of the Purchaser, pursuant to this
Agreement, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents, warrants and covenants that:
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3.1 Incorporation.
The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Jersey, and has full corporate power and authority to acquire the
Shares and the Warrants hereunder.
3.2 Authorization.
The execution and delivery of this Agreement by the
Purchaser,
the performance by the Purchaser of its covenants and agreements
hereunder, and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action. When executed and delivered by the
Purchaser this Agreement will constitute the valid and legally
binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, except as may be limited by
bankruptcy, insolvency, or other laws affecting generally the
enforceability of creditors' rights and by limitations on the
availability of equitable remedies, whether considered in an action
at law or a proceeding in equity.
3.3 Conflicts.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein will violate
any provision of the certificate of incorporation or by-laws of the
Purchaser or any law, rule, regulation, writ, judgment, injunction,
decree, determination, award, or other order of any court,
government or governmental agency or instrumentality, domestic or
foreign, binding upon the Purchaser, or conflict with or result in
any breach of or event of termination under any of the terms of, or
constitute a default under or result in the termination of or the
creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any
nature pursuant to, the terms of any contract or agreement to which
the Purchaser is a party or by which the Purchaser or any of its
assets and properties is bound. No consents, approvals or
authorizations or filings or registrations with any government
agency or authority or any other person or entity are required in
connection with the execution and delivery of the Principal
Documents to which it is party, or any of them, by the Purchaser or
the consummation by the Purchaser of the transactions contemplated
hereby or thereby.
3.4 Private Placement.
Without limiting the scope of the representations and
warranties of the Corporation set forth in Article II of this
Agreement, the Purchaser acknowledges that it has received such
financial and other information from the Corporation and that it
has had the opportunity to ask representatives of the Corporation
such questions in connection with the purchase of the Shares and
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the transactions contemplated hereby which it has deemed material
in connection with an investment in the Corporation, and to verify
the accuracy of the information so received. The Purchaser is an
"accredited investor" as defined under Regulation D promulgated by
the Commission. Except as contemplated by the Registration Rights
Agreement and as permitted by Section 9.5 hereof, the Purchaser
will acquire the Shares and the Warrants for its own account and
not with a view to, or for sale in connection with, the
distribution thereof within the meaning of the Securities Act.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 General Conduct of Business.
The Corporation hereby covenants and agrees that from and
after the date of this Agreement and until the Closing, the
Corporation shall:
(a) Make no purchase, sale, or lease in respect of,
nor
introduce any method of management or operation in respect of, its
business or its assets and properties, except in a manner
consistent with prior practice, this Agreement and the
Distributorship Agreement.
(b) Preserve its present business organization intact
and not merge into, or consolidate with, any other entity.
(c) Maintain its books and records in accordance with
good business practices, on a basis consistent with prior practice.
(d) Comply in all material respects with all laws,
rules, regulations, writs, statutes, ordinances, judgments,
injunctions, decrees, determinations, awards, and other orders of
every court, government and governmental agency and
instrumentality, domestic or foreign, applicable to it and to the
conduct of its business and perform in all material respects all
its obligations without default.
(e) Not mortgage, pledge, or subject to Lien any of
its
assets and properties.
(f) Maintain and pay all premiums with respect to all
policies of insurance relating to its business, and its assets and
properties, as are presently held in its name and timely renew all
such policies.
(g) Not take any action or fail to take any action
which
would result in any material breach of any of its representations,
warranties or covenants contained herein.
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4.2 Capitalization.
From and after the date of this Agreement and until the
Closing:
(a) No change shall be made or proposed in the certificate
of
incorporation or by-laws of the Corporation.
(b) The Corporation shall not: (i) issue, grant or sell any
shares of its capital stock, (ii) issue, grant or sell any
security, option, warrant, put, call, subscription or other right
of any kind, fixed or contingent, that directly or indirectly calls
for the acquisition, issuance, sale, pledge or other disposition of
any shares of capital stock or other equity interests of the
Corporation, (iii) enter into any agreement, commitment or
understanding calling for any transaction referred to in clauses
(i) or (ii) of this Section 4.2(b), or (iv) make any other changes
in its equity capital structure, in each case except as required
pursuant to the Employee Options, Unit Purchase Options, Class A
Warrants and Class B Warrants outstanding on the date of this
Agreement or issuable directly or indirectly pursuant to any such
rights outstanding on the date of this Agreement.
(c) The Corporation shall not split, combine or reclassify
any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock, securities,
indebtedness, rights or property or any combination thereof) in
respect of any shares of its capital stock or other equity
interests, or redeem or otherwise acquire any shares of the capital
stock or other equity interests (except Class A Warrants and Class
B Warrants which may be called for redemption in accordance with
their terms).
4.3 Due Diligence; SEC Filings.
The Corporation hereby agrees that, from and after the date
of
this Agreement and until the Closing, the Corporation shall furnish
to the Purchaser, and its authorized representatives, such
financial, legal and other information with respect to the
Corporation and its business as the Purchaser, and its authorized
representatives, may from time to time reasonably request, and
shall permit the Purchaser, and its authorized representatives,
full access during normal business hours and upon reasonable
advance notice to all properties, contracts and documents relating
to the Corporation and its business and a full opportunity to make
such investigations as it shall desire to make with respect to the
Corporation and its business. The Corporation shall furnish the
Purchaser with copies of all filings with the Commission subsequent
to the date hereof, which shall be prepared in accordance with the
rules and regulations promulgated by the Commission, if any such
filings are made prior to the Closing.
<PAGE>
<PAGE>
4.4 Lien Searches.
Within five business days prior to the Closing, the
Corporation, at its sole cost and expense, shall furnish to the
Purchaser Uniform Commercial Code, judgment and tax lien searches
of state records in each jurisdiction in which the Corporation is
qualified to transact business and in state and county records
where filing of financing statements would be effective to perfect
a lien or security interest in any material assets or properties of
the Corporation.
4.5 Notification of Certain Matters.
Between the date hereof and the Closing, the Corporation will
give prompt notice in writing to the Purchaser, of: (i) the
occurrence, or failure to occur, of any event, which occurrence or
failure would cause any representation or warranty of the
Corporation contained in this Agreement to be untrue or inaccurate
in any material respect from the date hereof to the Closing, (ii)
any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement, (iii) any notice or
other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this
Agreement, (iv) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened
against the Corporation or relating to or involving or otherwise
affecting the Corporation or which relate to the consummation of
the transactions contemplated by this Agreement, and (v) any
material failure of the Corporation to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it hereunder. The giving of any such notice under this Section
4.5 shall in no way change or modify the representations and
warranties or the conditions to the Corporation's obligations
contained herein or otherwise affect the remedies available to the
Purchaser hereunder.
4.6 Termination/Modification of Sales Agreements.
Promptly after the date of this Agreement, the Corporation
shall take any and all action as shall be necessary (i) to
terminate, effective as soon as possible, the fourth and fifth and
sixth Sales Agreements identified on Part 2 of Schedule 2, pursuant
to such notices and agreements as shall in form and substance be
reasonably satisfactory to the Purchaser, and (ii) to amend,
effective as soon as possible, any and all Sales Agreements
identified on Part 1 of Schedule 2, and on Part 3 of Schedule 2, so
as to exclude therefrom any rights to the Exclusive Market (as
defined in the Distributorship Agreement), pursuant to such
agreements as shall in form and substance be reasonably
satisfactory to the Purchaser.
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<PAGE>
4.7 Forbearance.
The Corporation agrees that, from and after the date hereof
and until the earlier of the Closing or the termination of this
Agreement, it shall not, and it shall not authorize any officers,
directors, employees, agents or representatives of the Corporation
to, directly or indirectly, solicit enter into or pursue any
discussions or negotiations with any other party with respect to
any distributorship or sales agency arrangement relating to the
sale of the Products, or any of them, or the disposition of the
Corporation's assets pertinent thereto, except for this Agreement
and the transactions contemplated hereby. The parties further
acknowledge that the agreements contained under Paragraph (a) of
Section 8 of the Letter of Intent shall be extended through the
Termination Date; and that the provisions of Section 9 of the
Letter of Intent shall have no further effect.
ARTICLE V
CLOSING
5.1 Time and Place of Closing.
The closing of the purchase and sale of the Shares as set
forth herein (herein referred to as the "Closing") shall be held at
the offices of Krugman, Chapnick & Grimshaw, Park 80 West - Plaza
Two, Saddle Brook, New Jersey 07663 at 10:00 a.m., local time, on
September 25, 1996, or such other time and date as may be agreed
upon by the Corporation and the Purchaser.
5.2 Delivery of Shares; Warrants.
At the Closing, the Corporation shall deliver to the
Purchaser, against payment of the Purchase Price, a certificate or
certificates representing the Shares registered in the name of the
Purchaser or its designated nominee, together with the Warrant
Certificates, each dated the date of Closing and completed to
insert the date of Closing as the Issuance Date thereunder.
5.3 Delivery of Purchase Price.
Delivery of the Purchase Price shall be made at the Closing
by
the Purchaser in the manner set forth in Section 1.2 hereof.
ARTICLE VI
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to acquire and accept the
Shares at the Closing is subject to the following conditions
precedent, any or all of which may be waived by the Purchaser in
its sole discretion, and each of which the Corporation hereby
<PAGE>
agrees to use its best efforts to satisfy at or prior to the
Closing:
6.1 Opinion of Counsel to the Corporation.
The Purchaser shall have received an opinion of Messrs.
Bachner, Tally, Polevoy & Misher LLP, counsel for the Corporation,
dated the date of the Closing, in form and substance satisfactory
to the Purchaser and its counsel, Messrs. Krugman, Chapnick &
Grimshaw, to the effect that:
(a) The Corporation is duly organized, validly existing and
in good standing under the laws of the State of Delaware. The
Corporation is duly qualified in each other jurisdiction wherein
the failure so to qualify would have a material adverse effect on
the ability of the Corporation to conduct its business and has full
corporate power and authority to own or hold under lease the assets
and properties which it owns or holds under lease and to perform
all its obligations under the agreements to which it is a party,
including, without limitation, the Principal Documents, and each of
them.
(b) The authorized capital stock of the Corporation consists
of: (x) 5,000,000 shares of Preferred Stock, none of which are
issued and outstanding; (y) 16,610,866 shares of Class A Common
Stock, of which 1,431,466 shares (together with any shares issued
upon exercise of Employee Options, Class A Warrants or Class B
Warrants between the date of this Agreement and the date of
Closing) are issued and outstanding prior to giving effect to the
issuance of the Shares; and (z) 3,389,134 shares of Class B Common
Stock, of which 3,375,134 are issued and outstanding. All of the
outstanding shares of Common Stock have been validly issued and are
fully-paid and non-assessable, and the Shares, when issued and
delivered in accordance with this Agreement, will be validly
issued, fully-paid and non-assessable shares of Common Stock. The
Corporation does not hold any shares of Preferred Stock, or any
shares of Common Stock, as treasury stock. There are no preemptive
rights with respect to any shares of the capital stock of the
Corporation, including, without limitation, the Shares or the
shares to be issued in connection with the Warrants, or any of
them. To the best of the knowledge of such counsel, there are no
subscriptions, warrants, options, calls, commitments by, or
agreements to which the Corporation is bound relating to the
issuance of any shares of Preferred Stock, or, except as identified
under Section 2.4(b) of this Agreement, any shares of Common Stock.
(c) The Principal Documents, and each of them, have been
duly
authorized, executed and delivered by the Corporation and
constitute the valid and legally binding obligations of the
Corporation enforceable against the Corporation in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of
<PAGE>
equitable remedies, whether considered in an action at law or
proceeding in equity.
(d) The execution and delivery of the Principal Documents,
and the consummation of the transactions contemplated therein, will
not violate any provision of the certificate of incorporation or
by-laws of the Corporation or any law, rule, regulation, or, to the
best of the knowledge of such counsel, any writ, judgment,
injunction, decree, determination, award or other order of any
court or government or governmental agency or instrumentality,
domestic or foreign, binding upon the Corporation, or, to the best
of the knowledge of such counsel, conflict with or result in any
breach of any of the terms of or constitute a default under or
result in the termination of or the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other
charge or encumbrance of any nature pursuant to the terms of any
contract or agreement to which the Corporation is a party or by
which the Corporation or any of its assets and properties is bound
(the opinion regarding such contracts and agreements not set forth
on Schedule 2 and not relating to any securities of the Corporation
to be given in reasonable reliance upon the opinion of Mark
Ossinsky, Esq., counsel for the Corporation, dated the date of
Closing, in form and substance satisfactory to the Purchaser and
its counsel as aforesaid).
(e) There is no action, suit, proceeding, or claim pending
or, to the best of the knowledge of such counsel, threatened, and
no investigation by any court or government or governmental agency
or instrumentality, domestic or foreign, pending or, to the best of
the knowledge of such counsel, threatened, against the Corporation,
or any of its properties or assets, or its business, before any
court, government or governmental agency or instrumentality,
domestic or foreign, nor is there any outstanding order, writ,
judgment, stipulation, injunction, decree, determination, award or
other order of any court or government or governmental agency or
instrumentality, domestic or foreign, against the Corporation, or
any of its assets or properties, or its business.
(f) Assuming the accuracy of the Purchaser's representations
and warranties contained in Section 3.4 hereof, the issuance and
delivery to the Purchaser of the Shares and the Warrants hereunder
is, and the issuance and delivery of the Warrant Shares under the
Warrant Certificates will be, exempt from registration under the
Securities Act by virtue of Section 4(2) thereof.
6.2 Representations; Warranties; Covenants.
The representations and warranties of the Corporation
contained under Article II hereof shall be true and correct in all
material respects at and as of the Closing with the same effect as
though all such representations and warranties were made at and as
of the Closing (except for representations and warranties which are
as of a specific date or which relate to a specific period other
<PAGE>
<PAGE>
than or not including the date of the Closing, as the case may be,
and except for changes therein contemplated or permitted by this
Agreement) and the Corporation shall have complied in all material
respects with all of its covenants contained in Article IV hereof;
and the Corporation shall have delivered to the Purchaser a
certificate to that effect, dated the date of the Closing and
executed by its President or any Vice President.
6.3 Certified Resolutions.
The Purchaser shall have received a certificate of the
Secretary of the Corporation, in form and substance satisfactory to
the Purchaser, with respect to the authorization by the board of
directors of the Corporation of this Agreement and the Principal
Documents to which the Corporation is a party and the consummation
of the transactions contemplated hereby and thereby, the number of
authorized shares of capital stock of the Corporation as of the
date of Closing and the number of issued and outstanding shares
thereof, and the number of shares subject to outstanding Employee
Options, Class A Warrants and Class B Warrants as of such date.
6.4 Consents.
All consents, acknowledgments, approvals, permits and orders
with respect to the transactions contemplated by the Principal
Documents shall have been obtained.
6.5 Registration Rights Agreement.
The Corporation shall have entered into a registration rights
agreement (herein referred to as the "Registration Rights
Agreement") with the Purchaser, dated the date of the Closing, in
the form of Exhibit C attached hereto.
6.6 Distributorship Agreement.
The Corporation shall have entered into the Distributorship
Agreement with Hayward Pool Products, Inc., dated the date of the
Closing, in the form of Exhibit D attached hereto, with Schedule 1
thereto completed as contemplated pursuant to the provisions of
Section 3.2 of such agreement.
6.7 Sales Agreements.
The Corporation shall have terminated the fourth and fifth
and
sixth Sales Agreements identified on Part 2 of Schedule 2 (in the
first such case, effective prior to Closing, and in the second and
third such cases, effective no later than 30 days after Closing)
and shall have modified, in the manner contemplated by clause (ii)
of Section 4.6 hereof, all Sales Agreements identified on Part 1 of
Schedule 2, and on Part 3 of Schedule 2, that extend to the United
States, Canada or Mexico, or any part thereof.
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<PAGE>
6.8 Litigation.
No action, suit or proceeding against the Corporation or the
Purchaser relating to the consummation of any of the transactions
contemplated by this Agreement nor any governmental action seeking
to delay or enjoin any such transactions shall be pending or
threatened.
6.9 Other Certificates.
The Purchaser shall have received such additional
certificates, instruments and other documents, in form and
substance satisfactory to the Purchaser and counsel for the
Purchaser, as it shall have reasonably requested in connection with
the transactions contemplated hereunder.
ARTICLE VII
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE CORPORATION
The obligation of the Corporation to sell and deliver the
Shares and the Warrants at the Closing are subject to the following
conditions precedent, any or all of which may be waived by the
Corporation in its sole discretion, and each of which the Purchaser
hereby agrees to use its best efforts to satisfy at or prior to the
Closing:
7.1 Opinion of Counsel to the Purchaser.
The Corporation shall have received an opinion of Messrs.
Krugman, Chapnick & Grimshaw, counsel for the Purchaser, dated the
date of the Closing, in form and substance satisfactory to the
Corporation and its counsel, Messrs. Bachner, Talley, Polevoy &
Misher LLP, to the effect that:
(a) The Purchaser is duly organized, validly existing and in
good standing under the laws of the State of New Jersey. The
Purchaser has full corporate power and authority to acquire the
Shares and the Warrants hereunder.
(b) This Agreement and the other Principal Documents to
which
the Purchaser is a party have been duly authorized, executed and
delivered by the Purchaser and constitute the valid and legally
binding obligation of the Purchaser enforceable against the
Purchaser in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency or other laws affecting
generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies, whether
considered in an action at law or proceeding in equity.
<PAGE>
<PAGE>
(c) The execution and delivery of this Agreement and the
other Principal Documents to which the Purchaser is a party and the
consummation of the transactions contemplated herein and therein,
will not violate any provision of the certificate of incorporation
or by-laws of the Purchaser or any law, rule, regulation, or, to
the best of the knowledge of such counsel, any writ, judgment,
injunction, decree, determination, award or other order of any
court or government or governmental agency or instrumentality,
domestic or foreign, binding upon the Purchaser, or, to the best of
the knowledge of such counsel, conflict with or result in any
breach of any of the terms of or constitute a default under or
result in the termination of or the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other
charge or encumbrance of any nature pursuant to the terms of any
contract or agreement to which the Purchaser is a party or by which
the Purchaser or any of its assets and properties is bound.
7.2 Representations; Warranties; Covenants.
The representations and warranties of the Purchaser contained
under Article III hereof shall be true and correct in all material
respects at and as of the Closing with the same effect as though
all such representations and warranties were made at and as of the
Closing (except for representations and warranties which are as of
a specific date or which relate to a specific period other than or
not including the date of the Closing, as the case may be, and
except for changes therein contemplated or permitted by this
Agreement); and the Purchaser shall have delivered to the
Corporation a certificate to that effect, dated the date of the
Closing executed by its President or one of its Vice Presidents.
7.3 Certified Resolutions.
The Corporation shall have received a certificate of the
Secretary of the Purchaser in form and substance satisfactory to
the Corporation, with respect to the authorization by the board of
directors of the Purchaser of this Agreement and the other
Principal Documents to which the Purchaser is a party and the
consummation of the transactions contemplated hereby and thereby.
7.4 Distributorship Agreement.
The Purchaser shall have entered into the Distributorship
Agreement with the Corporation, dated the date of the Closing, in
the form of Exhibit D attached hereto, with Schedule 1 thereto
completed as aforesaid.
7.5 Other Certificates.
The Corporation shall have received such additional
certificates, instruments and other documents, in form and
substance satisfactory to the Corporation and counsel for the
<PAGE>
<PAGE>
Corporation, as it shall have reasonably requested in connection
with the transactions contemplated hereunder.
ARTICLE VIII
POST-CLOSING COVENANTS OF THE CORPORATION
8.1 Rights to Purchase Additional Stock.
(a) Upon the issuance (except for Excluded Issuances
[as hereinafter defined]) by the Corporation of any shares of Class
A Common Stock, whether pursuant to exercise of rights or options
or otherwise, to any person other than the Purchaser (each such
issuance, hereinafter referred to as a "Non-excluded Issuance"),
the Purchaser shall have the right to subscribe for additional
shares of Class A Common Stock for the purpose of maintaining the
Protected Percentage Interest. For purposes hereof, the "Protected
Percentage Interest" shall mean 10% (hereinafter referred to as the
"Original Percentage Interest"), as such Original Percentage
Interest may be appropriately reduced from time to time by reason
of (i) the election or deemed election of the Purchaser not to
purchase additional shares of Class A Common Stock pursuant to this
Section 8.1, (ii) the election or deemed election of the Purchaser
not to purchase additional shares of Common Stock pursuant to the
Protective Warrants, (iii) sales, transfers or other dispositions
by the Purchaser of any Shares or any shares of Class A Common
Stock purchased pursuant to this Section 8.1 and (iv) Excluded
Issuances. In the event that subsequent to a Non-excluded Issuance
the percentage of shares of Class A Common Stock represented by the
Shares owned beneficially or of record by the Purchaser would be
below the Protected Percentage Interest, the Purchaser shall have
the right to purchase that number of shares (hereinafter referred
to as the "Additional Shares") of Class A Common Stock as shall be
represented by X in the following computation:
X = (O) (OS) - D
------------------
O'- O
where:
X = the number of shares of Class A Common Stock
to be issued to the Purchaser to maintain
its
Protected Percentage Interest
O = the number of shares of Class A Common Stock
held by the Purchaser prior to the Non-
excluded Issuance (counting as issued all
shares in which the Warrants are then
exercisable)
<PAGE>
<PAGE>
O'= the numbers of shares of Class A Common
Stock
outstanding immediately prior to the Non-
excluded Issuance (counting as issued all
shares in which the Warrants are then
exercisable)
OS= the number of shares of Class A Common Stock
issued in the Non-excluded Issuance
D = the number of additional shares of Class A
Common Stock for which the Initial Warrants
are or may become exercisable as a result of
any adjustment in the Initial Warrants
caused by such Non-excluded Issuance
For purposes of this Section 8.1, "Excluded Issuances" shall mean
(i) issuances of Class A Common Stock which trigger the right of
the Purchaser to exercise, in whole or in part, the Protective
Warrants, and (ii) issuances of Class A Common Stock pursuant to
the exercise of options under any employee stock option plan
approved by the stockholders of the Corporation now or hereafter in
effect, as any such plan may be amended from time to time.
(b) In the event the Corporation shall propose to
issue Class A Common Stock in a Non-excluded Issuance, the
Corporation shall give written notice (hereinafter referred to as
the "Protection Offer") to the Purchaser, which shall set forth the
number of shares of Class A Common Stock proposed to be issued in
the Non-excluded Issuance, the price therefor in the Non-excluded
Issuance and the number of shares of Class A Common Stock to be
offered to the Purchaser in connection therewith pursuant to this
Section 8.1. Such notice shall be given at least 20 days prior to
the issuance of such Class A Common Stock in the Non-excluded
Issuance.
(c) The Protection Offer by its terms shall remain
open and irrevocable for a period of 20 days from the date of its
delivery to the Purchaser (hereinafter referred to as the
"Protection Offer Period").
(d) The Purchaser may accept the Protection Offer by
delivering a written notice (hereinafter referred to as the
"Protection Notice"), signed by the Purchaser setting forth the
number of Additional Shares which the Purchaser elects, in its sole
discretion, to purchase. The Protection Notice must be delivered
to the Corporation prior to the end of the Protection Offer Period.
Failure so to deliver a Protection Notice shall conclusively be
deemed to constitute the election of the Purchaser not to accept
the Protection Offer.
(e) Upon the closing of the sale of shares of Class A
Common Stock in a Non-excluded Issuance, the Purchaser shall
purchase from the Corporation, and the Corporation shall issue and
<PAGE>
sell to the Purchaser any Additional Shares for which the Purchaser
timely tendered a Protection Notice at a price, in cash, equal per
share to the lesser of the Market Price (as defined in the Initial
Warrants) of such Additional Shares and the dollar price per share
at which the shares of Common Stock offered in the Non-excluded
Issuance are sold (which, in the case of any non-cash consideration
shall be the Fair Market Value thereof determined on a timely basis
consistent with the principles set forth in Paragraph (b) of
Section 8.2 hereof).
(f) The rights provided by this Section 8.1 shall
terminate on the earlier of (i) ten years from the date of Closing,
(ii) the date on which the Distributorship Agreement terminates,
and (iii) the date of which the Protected Percentage Interest is
equal to or less than 2%.
(g) The rights provided by this Section 8.1 may not be
assigned or otherwise transferred by the Purchaser.
8.2 Right of First Refusal.
(a) The Corporation agrees that, in the event the
Corporation shall, from time to time, determine to sell any
securities of the Corporation, pursuant to a bona fide offer
(hereinafter referred to as the "Bona Fide Offer"), to any Hayward
Competitor (as hereinafter defined), the Corporation shall, in each
instance, first offer such securities (hereinafter referred to as
the "Offered Shares") to the Purchaser by written notice
(hereinafter referred to as the "Initial Sale Notice") to the
Purchaser to that effect. The Purchaser shall have the right and
option to purchase all, but not less than all the Offered Shares by
giving written notice of exercise (hereinafter referred to as an
"Acceptance Notice") to the Corporation within ten days after the
receipt of the Initial Sale Notice, or such longer period as shall
expire ten days after calculation of the purchase price as
hereinafter set forth, in each case for a purchase price calculated
as hereinafter set forth. Failure to respond within such period
shall conclusively be deemed notice of rejection. In the event the
Purchaser shall not timely have exercised its right and option
under this Section 8.2, the Corporation shall be free, for a period
of 60 days after the expiration of such right and option, to sell
all, but not less than all, securities to which such right and
option related pursuant to the Bona Fide Offer theretofore
communicated to the Purchaser, free of the restrictions of this
Section 8.2. In the event that the Purchaser duly delivers an
Acceptance Notice to the Corporation, then the Acceptance Notice,
taken in conjunction with the Initial Sale Notice, shall constitute
a valid and legally binding purchase and sale agreement, and
payment in cash for the Offered Shares purchased shall be made
within ten days following the receipt by the Corporation of the
Acceptance Notice. In the event the Corporation fails to complete
the proposed sale, assignment, transfer or other disposition within
60 days after the rejection or deemed rejection of the offer
contained in the Initial Sale Notice, sale of the Offered Shares
shall again be subject to the provisions of this Section 8.2.
<PAGE>
(b) The purchase price for each security offered to the
Purchaser pursuant to this Section 8.2 shall be the dollar value of
the consideration per security offered to the Corporation pursuant
to the Bona Fide Offer, which, in the case of any non-cash
consideration, shall be the fair market value thereof determined by
the Corporation and the Purchaser or, should the Corporation and
the Purchaser fail to agree thereon within three days of receipt by
the Purchaser of the Initial Sale Notice, by an independent
appraiser, qualified in such matters, selected by the Corporation
and the Purchaser. For purposes hereof: (x) "Hayward Competitor"
means any person or entity engaged in the production, sale,
marketing and distribution in the Target Markets of products or
equipment competitive with those produced, sold, marketed and
distributed by the Purchaser or its Affiliates; (y) "Target
Markets" means the swimming pool, spa and hot tub markets; and (z)
an "Affiliate" of any person or entity shall mean any other person
or entity controlled by, under common control with or controlling
such person or entity.
8.3 Board Representation.
From and after Closing, the Purchaser shall have the right to
designate one member of the Board of Directors of the Corporation
(and any successor or successors to such member) reasonably
acceptable to the Corporation (the first of whom the parties agree
shall be Anthony Castor), and the Corporation shall use its best
efforts from time to time to take all such action as may be
necessary to effectuate the election or appointment to its Board of
Directors of such designee and any such successor or successors
(without limitation, including the expansion of the size of the
current Board of Directors to include such designee and any such
successor or successors). The parties understand and agree that the
board member designated by the Purchaser as aforesaid (x) shall be
required to execute and deliver to the Corporation a
confidentiality agreement in all material respects in the form of
those executed and delivered to the Corporation by the other
members of the Board of Directors of the Corporation, and (y)
together with the Corporation shall enter into an indemnification
agreement in all material respects in the form of those executed
and delivered by the Corporation and the other members of the Board
of Directors of the Corporation.
8.4 Sales Agreements.
Promptly upon Closing and thereafter, the Corporation shall
take all such additional action as shall be necessary, appropriate
or reasonably requested by the Purchaser in order to confirm or
complete termination of all Sales Agreements identified under Part
2 of Schedule 2 (effective in each case no later than 30 days after
Closing), and to modify all Sales Agreements identified on Part 1
<PAGE>
<PAGE>
of Schedule 2, and on Part 3 of Schedule 2, so as to exclude
therefrom any rights to the Exclusive Market. Without limiting the
foregoing, in the event any Sales Agreements identified on Schedule
2 intended to be modified as aforesaid are not so modified prior to
the expiration of the respective current terms thereof, the
Corporation shall take all such action as is required so that such
agreements do not renew in a manner so as to extend to any rights
to the Exclusive Market.
ARTICLE IX
TERMINATION
9.1 Termination.
This Agreement may be terminated at any time prior to the
Closing:
(a) by either party if there has been a misrepresentation or
breach of a covenant or a warranty in any material
respect on the part of the other party under this
Agreement; or
(b) by either the Purchaser or the Corporation if the
Closing
shall not have occurred prior to September 25, 1996
(herein referred to as the "Termination Date").
9.2 Effect of Termination.
In the event of termination of this Agreement pursuant to
Section 9.1(a) hereof, all rights of all parties hereto shall cease
and terminate, except for such rights as any party may otherwise
have for breach of contract, including, without limitation, rights
for breach of any representations, warranties or covenants
contained herein.
ARTICLE X
INDEMNIFICATION
10.1 Basis of Indemnity.
(a) The Corporation hereby agrees to indemnify and hold
harmless the Purchaser, Hayward Pool Products, Inc., and their
respective directors, officers, employees, agents and respective
legal representatives, successors and assigns, from and against all
damages, costs, expenses, losses, claims, demands, liabilities
and/or obligations, including, without limitation, reasonable
counsel fees (hereinafter referred to, collectively, as "Damages"),
resulting from or sustained or incurred by reason of (i) any breach
of any warranty, representation, agreement or covenant of the
Corporation set forth in this Agreement, or (ii) any termination,
amendment or modification of, or any failure to pay commissions or
<PAGE>
<PAGE>
any other amounts under, any distributorship, sales agency or
manufacturer's representative agreement entered into by the
Corporation prior to the date hereof.
(b) The Purchaser hereby agrees to indemnify and hold
harmless the Corporation, its directors, officers, employees,
agents and their respective legal representatives, successors and
assigns from and against any and all Damages resulting from or
sustained or incurred by reason of any breach of any warranty,
representation, agreement or covenant of the Purchaser set forth in
this Agreement.
10.2 Procedures for Indemnification.
Promptly after receipt by an Indemnified Party (as
hereinafter
defined) under Sections 10.1(a) or (b) of notice of the
commencement of any action by any person not an Indemnified Party
(hereinafter referred to as a "Third Party Claim") for which
indemnification is available under Section 10.1(a) or (b), such
Indemnified Party shall, if a claim in respect thereof is to be
made against any Indemnifying Party (as hereinafter defined) under
such section, give notice to the Indemnifying Party of the
commencement thereof, but the failure so to notify the Indemnifying
Party shall not relieve it of any liability that it may have to any
Indemnified Party except to the extent the Indemnifying Party
demonstrates that the defense of such Third Party Claim is
prejudiced thereby. In case any such Third Party Claim shall be
brought against an Indemnified Party and it shall give notice to
the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate in the defense
(including negotiation and/or resolution) of such Third Party
Claim. Furthermore, unless the Indemnifying Party shall have failed
to participate in such defense of a Third Party Claim after notice
as aforesaid, the Indemnified Party shall from time to time consult
with the Indemnifying Party with respect to any material actions
taken with respect to the conduct of the defense (including
negotiation and/or resolution of such Third Party Claim) and,
without limitation, shall give the Indemnifying Party an additional
notice not less than ten days prior to entering into any settlement
thereof. Each Indemnified Party shall use all reasonable efforts to
mitigate the amount of any Damages.
10.3 Payment of Indemnity.
In the event that any party entitled to indemnification
hereunder (herein referred to as an "Indemnified Party") shall
incur any Damages in respect of which indemnity may be sought
pursuant to this Agreement, the party responsible for
indemnification (herein referred to as an "Indemnifying Party")
shall be given written notice thereof promptly by such Indemnified
Party, which notice shall, to the extent reasonably available to
such Indemnified Party, specify the amount and nature of the
Damages and include the request of such Indemnified Party for
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indemnification therefor. The Indemnifying Party shall promptly pay
to such Indemnified Party the amount of the Damages so specified.
ARTICLE XI
MISCELLANEOUS
11.1 Notices.
All notices, requests or instructions hereunder shall be in
writing and delivered personally or sent by registered or certified
mail, postage prepaid, as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
Attention: President
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
(2) if to the Purchaser:
620 Division Street
Elizabeth, New Jersey 07207
Attention: President
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
11.2 Survival of Representations.
Each representation, warranty, covenant and agreement of the
parties hereto herein contained, or contained in any certificate
delivered pursuant hereto, shall survive the Closing notwith-
standing any investigation at any time made by or on behalf of any
party hereto.
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11.3 Entire Agreement.
This Agreement and the documents referred to herein contain
the entire agreement between the parties hereto with respect to the
transactions contemplated hereby, and supersede all prior
understandings, arrangements and agreements with respect to the
subject matter hereof. No modification hereof shall be effective
unless in writing and signed by the party against which it is
sought to be enforced.
11.4 Further Action.
Each of the parties hereto shall use its best efforts to take
such actions as may be necessary or reasonably requested by the
other party hereto to carry out and consummate the transactions
contemplated by this Agreement.
11.5 Benefit of Agreement.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns,
except that neither party may assign its rights or obligations
hereunder without the prior written approval of the other party
having first been obtained.
11.6 Expenses.
Except as otherwise provided herein, each of the parties
hereto shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
11.7 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey applicable in
the case of agreements made and to be performed entirely within
such State.
11.8 Captions.
The captions appearing herein are for the convenience of the
parties only and shall not be construed to affect the meaning of
the provisions of this Agreement.
11.9 Brokerage.
Each party hereto shall indemnify and hold harmless the other
party against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements
or understandings made or claimed to have been made by the
indemnifying party with any third party.
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11.10 Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
* * * * *
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
ATTEST: SUPER VISION INTERNATIONAL, INC.
s/Michelle F. Ames By s/Brett Kingstone
- ---------------------- -----------------------------
Name: Brett Kingstone
Title: President
ATTEST: HAYWARD INDUSTRIES, INC.
s/Reuven Har-Even By s/Anthony T. Castor
- ----------------------- -----------------------------
Name: Anthony T. Castor
Title: President
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EXHIBIT A
THE WARRANTS EVIDENCED HEREBY, AND THE SHARES
OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF
SUCH WARRANTS, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT.
WARRANT CERTIFICATE
249,480 Warrants
To Subscribe for and Purchase Class A Common Stock,
$.001 Par Value, of
SUPER VISION INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, HAYWARD INDUSTRIES,
INC., or its registered successors or assigns, is the owner of the
number of Warrants set forth above, each of which entitles the
owner thereof to purchase, subject to clauses (a) through (d),
inclusive, immediately succeeding, from SUPER VISION INTERNATIONAL,
INC., a Delaware corporation (hereinafter referred to as the
"Corporation"), from time to time during the period from September
25, 1996 (hereinafter referred to as the "Issuance Date") through
5:00 P.M., New York time, on the tenth anniversary of the Issuance
Date, one fully paid and nonassessable share of Class A Common
Stock (as hereinafter defined), as such stock is constituted on the
Issuance Date, subject to adjustment from time to time pursuant to
the provisions hereinafter set forth, at the initial price of $8.02
(hereinafter referred to as the "Exercise Price"), subject further
to the conditions hereinafter set forth; provided, however, that
the registered holder hereof:
(a) shall not be entitled to exercise any Warrants
evidenced hereby prior to the later of the first anniversary
hereof and the satisfaction by Hayward Pool Products, Inc.
(hereinafter referred to as the "Distributor") of the first
Minimum Purchase Commitment (in the manner set forth under
Section 3.3 of the Distributorship Agreement dated the
Issuance Date [the "Distributorship Agreement"] between the
Distributor and the Corporation) or satisfaction of any
deficiency with respect thereto in the manner thereunder
provided, and
(b) shall not be entitled to exercise in excess of 20%
of the Warrants originally evidenced hereby prior to the later
of the second anniversary hereof and the satisfaction by the
Distributor of the second Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
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Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
(c) shall not be entitled to exercise in excess of 40%
of the Warrants originally evidenced hereby prior to the later
of the third anniversary hereof and the satisfaction by the
Distributor of the third Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
(d) shall not be entitled to exercise in excess of 60%
of the Warrants originally evidenced hereby prior to the later
of the fourth anniversary hereof and the satisfaction by the
Distributor of the fourth Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
(e) shall not be entitled to exercise in excess of 80%
of the Warrants originally evidenced hereby prior to the later
of the fifth anniversary hereof and the satisfaction by the
Distributor of the fifth Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement.
This Warrant Certificate is subject to the following
provisions, terms and conditions:
1. The Warrants evidenced hereby may be exercised by the
registered holder hereof, in whole or in part, by the surrender of
this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Corporation), at the principal executive office of
the Corporation, 2442 Viscount Row, Orlando, Florida 32809 and upon
payment to it by certified or official bank check or checks of the
purchase price of the shares of Class A Common Stock purchased. The
Corporation agrees that the shares of Class A Common Stock so
purchased shall be deemed to be issued to the registered holder
hereof on the date on which this Warrant Certificate shall have
been surrendered and payment made for such shares as aforesaid. The
certificates for such shares shall be delivered to the registered
holder hereof within a reasonable time, not exceeding ten business
days, after Warrants evidenced hereby shall have been exercised,
and a new Warrant Certificate evidencing the number of the
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Warrants, if any, remaining unexercised shall also be issued to the
registered holder within such time unless such Warrants have
expired. No fractional shares of capital stock of the Corporation,
or scrip for any such fractional shares, shall be issued upon the
exercise of any Warrants.
2. The number and kind of shares of Class A Common Stock of
the Corporation subject to each Warrant evidenced hereby, and the
Exercise Price, shall be subject to adjustment as follows:
(a) Upon each adjustment of the Exercise Price as
provided herein, the holder of the Warrants evidenced hereby shall
thereafter be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of shares of Class A Common Stock
(calculated to the nearest tenth of a share) obtained by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) No fractional shares of Class A Common Stock or
scrip shall be issued upon exercise of the Warrants evidenced
hereby. Instead of any fractional shares of Class A Common Stock
which would otherwise be issuable upon exercise of the Warrants
evidenced hereby (or portion hereof), the Corporation shall pay a
cash adjustment in respect of such fractional share of Class A
Common Stock in an amount equal to the same fraction of the then
current fair value of a share of Class A Common Stock, as
determined in good faith by the Board of Directors of the
Corporation.
(c) In case the Corporation shall at any time subdivide
its outstanding shares of Class A Common Stock into a greater
number of shares of Class A Common Stock, the Exercise Price in
effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding
shares of Class A Common Stock of the Corporation shall be combined
into a smaller number of shares of Class A Common Stock, the
Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
(d) If and whenever after the Issuance Date the
Corporation shall issue or sell any shares of its Class A Common
Stock for a consideration per share less than the Market Price (as
hereinafter defined) in effect immediately prior to the time of
such issue or sale, or without consideration, then, forthwith upon
each such issue or sale, the Exercise Price shall be reduced (but
not increased) to the price (calculated to the nearest cent) equal
to the quotient obtained by dividing (i) the amount equal to the
sum of (a) the number of shares of Class A Common Stock outstanding
immediately prior to such issue or sale multiplied by the then
existing Exercise Price, and (b) the consideration, if any,
received by the Corporation upon such issue or sale by (ii) the
total number of shares of Class A Common Stock outstanding
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immediately after such issue or sale. "Market Price" for purposes
hereof shall mean (i) the average closing sale price for 30
consecutive business days (or such other period as the holder
hereof may consent to), ending within 15 days of the date of the
subject event, of the Class A Common Stock as reported by the
Nasdaq National Market System, if the Class A Common Stock is so
reported, or (ii) if not so reported, the average last reported
sale price for 30 consecutive business days (or such other period
as the holder hereof may consent to), ending within 15 days of the
date of the subject event, of the Class A Common Stock on the
primary exchange on which the Class A Common Stock is traded, if
the Class A Common Stock is traded on a national securities
exchange, or (iii) if not so reported or traded, the average of the
last reported bid and asked prices of the Class A Common Stock for
30 consecutive business days (or such other period as the holder
hereof may consent to), ending within 15 days of the date of the
subject event, of the Class A Common Stock, as reported by the
Nasdaq SmallCap Market or other automated quotation system of a
registered national securities association, or (iv) if not so
reported or traded, as determined by the Board of Directors of the
Corporation in its reasonable discretion. Any average calculated as
aforesaid shall be proportionately adjusted for any stock split,
stock dividend, combination or reclassification that took effect
during the relevant period. No adjustment of the Exercise Price,
however, shall be made in an amount less than $.001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount
to $.001 per share or more. In addition, the provisions of this
Paragraph (d) shall not apply upon: (w) issuance by the Corporation
of shares of Class A Common Stock upon the exercise of the Warrants
evidenced hereby or any other warrants issued to Hayward
Industries, Inc. on the Issuance Date, (x) issuance by the
Corporation of Class A Common Stock upon the exercise of any
Eligible Warrants (as hereinafter defined), (y) issuance by the
Corporation of stock options, or the issuance by the Corporation of
shares upon the exercise of such stock options, under any employee
stock option plan approved by the stockholders of the Corporation
now or hereafter in effect, as any such plan may be amended from
time to time, or (z) issuance by the Corporation of shares for cash
pursuant to an underwritten public offering registered under the
Act (as hereinafter defined). "Eligible Warrants" for purposes
hereof shall mean any and all warrants, options or other rights to
acquire shares of Class A Common Stock from the Corporation, or any
securities convertible into or exchangeable for Class A Common
Stock, in each case outstanding on the Issuance Date or issuable
directly or indirectly pursuant to warrants, options or other
rights outstanding on the Issuance Date. For purposes of this
Paragraph (d) the following additional sub-paragraphs shall apply:
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(i) Issuance of Rights or Options. In case at any time
the Corporation shall in any manner grant (whether directly or
by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase
of, Class A Common Stock or any stock or securities
convertible into or exchangeable for Class A Common Stock
(such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein
called "Convertible Securities") whether or not such Options
or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per
share for which Class A Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options,
plus the aggregate amount of additional consideration payable
to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible
Securities, the aggregate amount of additional consideration,
if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by
(ii) the total maximum number of shares of Class A Common
Stock issuable upon the exercise of such options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Market Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of
shares of Class A Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon
the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of
such Options and thereafter shall be deemed to be outstanding.
Except as otherwise provided in Sub-Paragraph (iii) of this
Paragraph (d), no adjustment of the Exercise Price shall be
made upon the actual issue of such Class A Common Stock or of
such Convertible Securities upon exercise of such Options or
upon the actual issue of such Class A Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
any such Convertible Securities are immediately exercisable,
and the price per share for which Class A Common Stock is
issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such
Convertible Securities, plus the aggregate amount of
additional consideration, if any, payable to the Corporation
upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Class A Common Stock issuable upon
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the conversion or exchange of all such Convertible Securities)
shall be less than the Market Price in effect immediately
prior to the time of such issue or sale, then the total
maximum number of shares of Class A Common Stock issuable upon
conversion or exchange of all such Convertible Securities
shall be deemed to have been issued for such price per shares
of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding,
provided that (x) except as otherwise provided in Sub-
Paragraph (iii) of this Paragraph (d), no adjustment of the
Exercise Price shall be made upon the actual issue of such
Class A Common Stock upon conversion or exchange of such
Convertible Securities, and (y) if any such issue or sale of
such Convertible Securities is made upon exercises of any
Options to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Sub-Paragraph (ii), no
further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Exercise Rate. Upon the
happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in
Sub-Paragraph (i) of this Paragraph (d), the additional
consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in Sub-Paragraphs
(i) or (ii) of this Paragraph (d), or the rate at which any
Convertible Securities referred to in Sub-Paragraphs (i) or
(ii) of this Paragraph (d) are convertible into or
exchangeable for Class A Common Stock shall change at any time
(other than under or by reason of provisions designed to
protect against dilution), the Exercise Price in effect at the
time of such event shall forthwith be readjusted to the
Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; and on the expiration
of any such Option or the termination of any such right to
convert or exchange such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be increased to
the Exercise Price which would have been in effect at the time
of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued,
and the Class A Common Stock issuable thereunder shall no
longer be deemed to be outstanding. If the purchase price
provided for in any such Option referred to in Sub-Paragraph
(i) of this Paragraph (d) or the rate at which any Convertible
Securities referred to in Sub-Paragraphs (i) or (ii) of this
Paragraph (d) are convertible into or exchangeable for Class
A Common Stock shall be reduced at any time under or by reason
of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Class A Common
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Stock upon the exercise of any such Option or upon conversion
or exchange of any such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be adjusted to
such respective amount as would have been obtained had such
Option or Convertible Securities never been issued as to such
Class A Common Stock and had adjustments been made upon the
issuance of the shares of Class A Common Stock delivered as
aforesaid, but only if as a result of such adjustment the
Exercise Price then in effect hereunder is thereby reduced.
(iv) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any
stock of the Corporation payable in Class A Common Stock,
Options or Convertible Securities, any Class A Common Stock,
Options or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be
deemed to have been issued in a subdivision of outstanding
shares as provided in Paragraph (c) immediately preceding.
(v) Consideration for Stock. In case any shares of Class
A Common Stock, Options or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Corporation
therefor, without deduction therefrom of any expenses incurred
or any underwriting commissions or concessions paid or allowed
by the Corporation in connection therewith. In case any shares
of Class A Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by
the Corporation shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of
Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the
Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to have
been issued without consideration.
(vi) Record Date. In case the Corporation shall take a
record of the holders of its Class A Common Stock for the
purpose of entitling them (i) to receive a dividend or other
distribution payable in Class A Common Stock, Options or
Convertible Securities, or (ii) to subscribe for or purchase
Class A Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue
or sale of the shares of Class A Common Stock deemed to have
been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the
case may be.
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(vii) Treasury Shares. The number of shares of Class A
Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Corporation,
and the disposition of any such shares shall be considered an
issue or sale of Class A Common Stock for the purposes of this
Paragraph (d).
(e) No adjustment in the number of shares of Class A
Common Stock issuable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an
increase or decrease of at least two percent in the number of
shares of Class A Common Stock at the time issuable upon exercise
of the Warrants evidenced hereby; provided, however, that any
adjustments which by reason of this clause (e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. Except as otherwise set forth herein, all
computations made pursuant to the provisions of this paragraph 2
shall be made to the nearest cent or to the nearest one hundredth
of a share, as the case may be.
(f) For purposes of this Warrant Certificate, the term
"Class A Common Stock" shall mean shares of the class A common
stock, $.001 par value, of the Corporation, and shall also include
any shares of capital stock of any class of the Corporation
hereinafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the
voluntary liquidation, dissolution or winding-up of the
Corporation; provided, however, that the shares of Class A Common
Stock receivable upon exercise of the Warrants evidenced hereby
shall include only shares of Class A Common Stock as constituted on
the Issuance Date including any stock into which it may be changed,
reclassified or converted.
3. If any consolidation or merger of the Corporation with
another corporation after the Issuance Date, or the sale of all or
substantially all of its assets to another corporation shall be
effected after the Issuance Date or in case of any capital
reorganization or reclassification of the capital stock of the
Corporation, then, as a condition of such consolidation, merger or
sale, reorganization or reclassification, lawful and adequate
provision shall be made whereby the holder of this Warrant
Certificate shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Class A Common Stock immediately
theretofore purchasable and receivable upon the exercise of each
Warrant evidenced hereby, such shares of stock, securities or
assets as may be issuable or payable with respect to or in exchange
for a number of outstanding shares of Class A Common Stock of the
Corporation equal to the number of shares of Class A Common Stock
immediately theretofore purchasable and receivable upon the
exercise of one Warrant evidenced hereby had such consolidation,
merger, sale, reorganization, or reclassification not taken place,
and in any such case appropriate provision shall be made with
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respect to the rights and interest of the registered holder of this
Warrant Certificate to the end that the provisions hereof
(including without limitation provisions for adjustment of the
Exercise Price) shall thereafter be applicable, as nearly as may
be, in relation of any shares of stock, securities or assets
thereafter deliverable upon the exercise of the Warrants evidenced
hereby.
4. Upon any adjustment of the Exercise Price or the number
of shares of Class A Common Stock subject to the Warrants evidenced
hereby, then and in each such case the Corporation shall give
written notice thereof, by first class mail, postage prepaid, to
the holder hereof, which notice shall state the Exercise Price
and/or the number of shares of Class A Common Stock subject to the
Warrants evidenced hereby resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts
upon which such calculation is based.
5. In case at any time:
(a) the Corporation shall declare any dividend upon its
shares of Class A Common Stock payable in stock or make any
special dividend or other distribution (other than a cash
dividend to the holders of its shares of Class A Common
Stock);
(b) the Corporation shall offer for subscription pro rata
to the holders of its shares of Class A Common Stock any
additional shares of stock of any class or other rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of
all or substantially all its assets to, another corporation;
or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give
written notice, by first class mail, postage prepaid, to the holder
hereof, of the date on which (i) the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or
subscription rights, or (ii) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up
shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of shares of Class A
Common Stock of record shall participate in such dividend,
distribution or subscription rights or shall be entitled to
exchange their shares of Class A Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and
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not less than 30 days prior to the record date or the date on which
the Corporation's transfer books are closed in respect thereto.
6. The Corporation shall at all times reserve and keep
available out of its authorized shares of Class A Common Stock,
solely for the purpose of its issue upon the exercise of the
Warrants evidenced hereby as herein provided, such number of shares
of Class A Common Stock as shall then be issuable upon the exercise
of the Warrants evidenced hereby.
7. The issuance of certificates of shares for Class A Common
Stock upon the exercise of the Warrants evidenced hereby shall be
made without charge to the holders of such Warrants for any
issuance tax in respect thereto; provided, however, that the
Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder
of the Warrants evidenced hereby.
8. The Corporation will at no time close its transfer books
against the transfer of any Class A Common Stock issued or issuable
upon the exercise of the Warrants evidenced hereby in any manner
which interferes with the timely exercise of such Warrants.
9. The shares of Class A Common Stock issuable hereunder
shall be subject to the registration rights set forth in the
Registration Rights Agreement dated this date between the
Corporation and Hayward Industries, Inc. to the same extent as if
the provisions of said Agreement were reproduced in their entirety
in this Warrant Certificate.
10. The person in whose name this Warrant Certificate is
registered shall be deemed the owner hereof and of the Warrant
evidenced hereby for all purposes. The registered holder of this
Warrant Certificate shall not be entitled to any rights whatsoever
as a stockholder of the Corporation except as herein provided.
11. Upon receipt by the Corporation of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in case of loss, theft or destruction) of
indemnity reasonably satisfactory to it, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the
Corporation, upon reimbursement to it of all reasonable expenses
incidental thereto, will make and deliver a new Warrant
Certificate, of like tenor, in lieu of this Warrant Certificate.
12. This Warrant Certificate and the Warrants evidenced
hereby may not be transferred unless such transfer would not result
in a violation of the provisions of the Securities Act of 1933, as
amended (herein referred to as the "Act"). Any transfer of this
Warrant Certificate and the Warrants evidenced hereby, in whole or
in part, shall be effected upon surrender of this Warrant
Certificate, duly endorsed (unless endorsement is waived by the
<PAGE>
<PAGE>
Corporation), at the principal office or agency of the Corporation
referred to in paragraph 1.
13. All notices, requests or instructions hereunder shall be
in writing and delivered personally or sent by registered or
certified mail, postage prepaid as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
Attention: President
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
(2) if to the holder of the Warrants evidenced hereby:
620 Division Street
Elizabeth, New Jersey 07207
Attention: President
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663-5835
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
IN WITNESS WHEREOF, Super Vision International, Inc. has
caused this Warrant Certificate to be signed by its duly authorized
officers and this Warrant Certificate to be dated as of September
25, 1996.
ATTEST: SUPER VISION INTERNATIONAL, INC.
- ------------------------ By
--------------------------------
<PAGE>
<PAGE>
FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises Warrants to
subscribe for and purchase shares of Class A common stock, $.001
par value ("Class A Common Stock"), of Super Vision International,
Inc. evidenced by the within Warrant Certificate and herewith makes
payment of the purchase price in full. Kindly issue certificates
for shares of class A Common Stock in accordance with the
instructions given below. The certificate for the unexercised
balance of the Warrants evidenced by the within Warrants
Certificate, if any, will be registered in the name of the
undersigned.
Dated:
--------------------------------
Instructions for registration of stock
- ----------------------------------
Name (please print)
Social Security or Other Identifying Number:
- -----------------------------------
Address:
- -----------------------------------
Street
- -----------------------------------
City, State and Zip Code
<PAGE>
<PAGE>
EXHIBIT B
THE WARRANTS EVIDENCED HEREBY, AND THE SHARES
OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF
SUCH WARRANTS, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT.
WARRANT CERTIFICATE
522,000 Warrants
To Subscribe for and Purchase Class A Common Stock,
$.001 Par Value, of
SUPER VISION INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, HAYWARD INDUSTRIES,
INC., or its registered successors or assigns, is the owner of the
number of Warrants set forth above, each of which entitles the
owner thereof to purchase, subject to the provisions contained at
the end of this sentence, from SUPER VISION INTERNATIONAL, INC., a
Delaware corporation (hereinafter referred to as the
"Corporation"), from time to time during the period from September
25, 1996 (hereinafter referred to as the "Issuance Date") through
5:00 P.M., New York time, on the Final Expiration Date (as
hereinafter defined), one fully paid and nonassessable share of
Class A Common Stock (as hereinafter defined), as such stock is
constituted on the Issuance Date, subject to adjustment from time
to time pursuant to the provisions hereinafter set forth, at the
Exercise Price (as hereinafter defined), subject further to the
conditions hereinafter set forth; provided, however, that the
registered holder hereof shall not be entitled to exercise any
Warrants evidenced hereby unless in each case an Exercise Event (as
hereinafter defined) shall have occurred and, then, solely during
the applicable Exercise Period (as hereinafter defined) and with
respect to the number of shares equal to up to ten percent of the
Subject Shares (as hereinafter defined). For purposes hereof, the
following terms shall have the meanings set forth below:
(a) "Eligible Warrants" shall mean any and all warrants,
options or other rights to acquire any shares of Class A Common
Stock from the Corporation, or any securities convertible into or
exchangeable for Class A Common Stock, in each case outstanding on
the Issuance Date or issuable directly or indirectly pursuant to
warrants, options or other rights outstanding on the Issuance Date,
and except for: (x) options issued pursuant to the Corporation's
1994 employee stock option plan, (y) the Warrants evidenced hereby
and any other warrants issued to Hayward Industries, Inc. on the
Issuance Date, and (z) rights to acquire from the Corporation
shares held in escrow pursuant to an Escrow Agreement dated as of
January 24, 1994, as amended March 17, 1994, among the Corporation,
American Stock Transfer & Trust Company and certain stockholders of
the Corporation;
<PAGE>
(b) "Exercise Event" shall mean each and every issuance of
shares of Class A Common Stock pursuant to exercise of any Eligible
Warrants;
(c) "Subject Shares" shall in each case mean the number of
shares of Class A Common Stock issued pursuant to exercise of any
Eligible Warrants upon an Exercise Event;
(d) "Final Expiration Date" shall mean the date which falls
45 days after the later of the date of expiration of the last
Eligible Warrant to expire or the issuance of the last share of
Class A Common Stock issued pursuant to exercise of any Eligible
Warrants; and
(e) "Exercise Price" shall mean (i) the average closing sale
price for 30 consecutive business days (or such other period as the
holder hereof may consent to), ending within 15 days of the date of
exercise of the Eligible Warrants in the related Exercise Event, of
the Class A Common Stock as reported by the Nasdaq National Market
System, if the Class A Common Stock is so reported, or (ii) if not
so reported, the last reported sale price for 30 consecutive
business days (or such other period as the holder hereof may
consent to), ending within 15 days of the date of exercise of the
Eligible Warrants in the related Exercise Event, of the Class A
Common Stock on the primary exchange on which the Class A Common
Stock is traded, if the Class A Common Stock is traded on a
national securities exchange, or (iii) if not so reported or
traded, the average of the last reported bid and asked prices of
the Class A Common Stock for 30 consecutive business days (or such
other period as the holder hereof may consent to), ending within 15
days of the date of exercise of the Eligible Warrants in the
related Exercise Event, of the Class A Common Stock, as reported by
the Nasdaq SmallCap Market or other automated quotation system of
a registered national securities association, or (iv) if not so
reported or traded, as determined by the Board of Directors of the
Corporation in its reasonable discretion (any average calculated as
aforesaid to be proportionately adjusted for any stock split, stock
dividend, combination or reclassification that took effect during
the relevant period).
This Warrant Certificate is subject to the following
provisions, terms and conditions:
1. Promptly upon each Exercise Event, the Corporation shall
give written notice thereof, by first class mail, postage prepaid,
to the holder hereof, which notice shall set forth in reasonable
detail the nature of such Exercise Event, the number of Subject
Shares applicable thereto, the number of Warrants then exercisable
as a result thereof and the Exercise Price of such Warrants.
2. The Warrants evidenced hereby then exercisable may be
exercised by the registered holder hereof, in whole or in part, by
the surrender of this Warrant Certificate, duly endorsed (unless
endorsement is waived by the Corporation), at the principal
<PAGE>
<PAGE>
executive office of the Corporation, 2442 Viscount Row, Orlando,
Florida 32809 and upon payment to it by certified or official bank
check or checks of the purchase price of the shares of Class A
Common Stock purchased, in each case within 30 days of receipt of
notice from the Corporation of an Exercise Event as aforesaid (each
such period herein referred to as an "Exercise Period"). Any
Warrants not exercised during the applicable Exercise Period shall
be deemed to have expired. The Corporation agrees that the shares
of Class A Common Stock so purchased shall be deemed to be issued
to the registered holder hereof on the date on which this Warrant
Certificate shall have been surrendered and payment made for such
shares as aforesaid. The certificates for such shares shall be
delivered to the registered holder hereof within a reasonable time,
not exceeding ten business days, after Warrants evidenced hereby
shall have been exercised, and a new Warrant Certificate evidencing
the number of the Warrants, if any, remaining unexercised shall
also be issued to the registered holder within such time unless
such Warrants have expired. No fractional shares of capital stock
of the Corporation, or scrip for any such fractional shares, shall
be issued upon the exercise of any Warrants.
3. The number and kind of shares of Class A Common Stock of
the Corporation subject to each Warrant evidenced hereby shall be
subject to adjustment as follows:
(a) Upon each adjustment of the number of shares of
Class A Common Stock directly or indirectly subject to the Eligible
Warrants, or any of them (whether as a consequence of any stock
split, stock dividend, combination, reclassification, issuance of
securities, or otherwise), the number of shares of Class A Common
Stock issuable upon exercise hereof shall be similarly adjusted by
an amount equal to ten percent of such adjustment in the Eligible
Warrants.
(b) No fractional shares of Class A Common Stock or
scrip shall be issued upon exercise of the Warrants evidenced
hereby. Instead of any fractional shares of Class A Common Stock
which would otherwise be issuable upon exercise of the Warrants
evidenced hereby (or portion hereof), the Corporation shall pay a
cash adjustment in respect of such fractional share of Class A
Common Stock in an amount equal to the same fraction of the then
current fair value of a share of Class A Common Stock, as
determined in good faith by the Board of Directors of the
Corporation.
(c) No adjustment in the number of shares of Class A
Common Stock issuable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an
increase or decrease of at least two percent in the number of
shares of Class A Common Stock at the time issuable upon exercise
of the Warrants evidenced hereby; provided, however, that any
adjustments which by reason of this clause (c) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. Except as otherwise set forth herein, all
<PAGE>
<PAGE>
computations made pursuant to the provisions of this paragraph 2
shall be made to the nearest cent or to the nearest one hundredth
of a share, as the case may be.
(d) For purposes of this Warrant Certificate, the term
"Class A Common Stock" shall mean shares of the Class A common
stock, $.001 par value, of the Corporation, and shall also include
any shares of capital stock of any class of the Corporation
hereinafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the
voluntary liquidation, dissolution or winding-up of the
Corporation; provided, however, that the shares of Class A Common
Stock receivable upon exercise of the Warrants evidenced hereby
shall include only shares of Class A Common Stock as constituted on
the Issuance Date including any stock into which it may be changed,
reclassified or converted.
4. If any consolidation or merger of the Corporation with
another corporation after the Issuance Date, or the sale of all or
substantially all of its assets to another corporation shall be
effected after the Issuance Date or in case of any capital
reorganization or reclassification of the capital stock of the
Corporation, then, as a condition of such consolidation, merger or
sale, reorganization or reclassification, lawful and adequate
provision shall be made whereby the holder of this Warrant
Certificate shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Class A Common Stock immediately
theretofore purchasable and receivable upon the exercise of each
Warrant evidenced hereby, such shares of stock, securities or
assets as may be issuable or payable with respect to or in exchange
for a number of outstanding shares of Class A Common Stock of the
Corporation equal to the number of shares of Class A Common Stock
immediately theretofore purchasable and receivable upon the
exercise of one Warrant evidenced hereby had such consolidation,
merger, sale, reorganization, or reclassification not taken place,
and in any such case appropriate provision shall be made with
respect to the rights and interest of the registered holder of this
Warrant Certificate to the end that the provisions hereof
(including without limitation provisions for adjustment of the
Exercise Price) shall thereafter be applicable, as nearly as may
be, in relation of any shares of stock, securities or assets
thereafter deliverable upon the exercise of the Warrants evidenced
hereby.
5. Upon any adjustment of the number of shares of Class A
Common Stock subject to the Warrants evidenced hereby, then and in
each such case the Corporation shall give written notice thereof,
by first class mail, postage prepaid, to the holder hereof, which
notice shall state the number of shares of Class A Common Stock
subject to the Warrants evidenced hereby resulting from such
adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
<PAGE>
6. In case at any time:
(a) the Corporation shall declare any dividend upon its
shares of Class A Common Stock payable in stock or make any
special dividend or other distribution (other than a cash
dividend to the holders of its shares of Class A Common
Stock);
(b) the Corporation shall offer for subscription pro rata
to the holders of its shares of Class A Common Stock any
additional shares of stock of any class or other rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of
all or substantially all its assets to, another corporation;
or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give
written notice, by first class mail, postage prepaid, to the holder
hereof, of the date on which (i) the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or
subscription rights, or (ii) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up
shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of shares of Class A
Common Stock of record shall participate in such dividend,
distribution or subscription rights or shall be entitled to
exchange their shares of Class A Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and
not less than 30 days prior to the record date or the date on which
the Corporation's transfer books are closed in respect thereto.
7. The Corporation shall at all times reserve and keep
available out of its authorized shares of Class A Common Stock,
solely for the purpose of its issue upon the exercise of the
Warrants evidenced hereby as herein provided, such number of shares
of Class A Common Stock as shall then be issuable upon the exercise
of the Warrants evidenced hereby.
8. The issuance of certificates of shares for Class A Common
Stock upon the exercise of the Warrants evidenced hereby shall be
made without charge to the holders of such Warrants for any
issuance tax in respect thereto; provided, however, that the
Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder
of the Warrants evidenced hereby.
<PAGE>
9. The Corporation will at no time close its transfer books
against the transfer of any Class A Common Stock issued or issuable
upon the exercise of the Warrants evidenced hereby in any manner
which interferes with the timely exercise of such Warrants.
10. The shares of Class A Common Stock issuable hereunder
shall be subject to the registration rights set forth in the
Registration Rights Agreement dated this date between the
Corporation and Hayward Industries, Inc. to the same extent as if
the provisions of said Agreement were reproduced in their entirety
in this Warrant Certificate.
11. The person in whose name this Warrant Certificate is
registered shall be deemed the owner hereof and of the Warrant
evidenced hereby for all purposes. The registered holder of this
Warrant Certificate shall not be entitled to any rights whatsoever
as a stockholder of the Corporation except as herein provided.
12. Upon receipt by the Corporation of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in case of loss, theft or destruction) of
indemnity reasonably satisfactory to it, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the
Corporation, upon reimbursement to it of all reasonable expenses
incidental thereto, will make and deliver a new Warrant
Certificate, of like tenor, in lieu of this Warrant Certificate.
13. This Warrant Certificate and the Warrants evidenced
hereby may not be transferred unless such transfer would not result
in a violation of the provisions of the Securities Act of 1933, as
amended (herein referred to as the "Act"). Any transfer of this
Warrant Certificate and the Warrants evidenced hereby, in whole or
in part, shall be effected upon surrender of this Warrant
Certificate, duly endorsed (unless endorsement is waived by the
Corporation), at the principal office or agency of the Corporation
referred to in paragraph 2.
14. All notices, requests or instructions hereunder shall be
in writing and delivered personally or sent by registered or
certified mail, postage prepaid as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
Attention: President
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
<PAGE>
<PAGE>
(2) if to the holder of the Warrants evidenced hereby:
620 Division Street
Elizabeth, New Jersey 07207
Attention: President
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663-5835
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
IN WITNESS WHEREOF, Super Vision International, Inc. has
caused this Warrant Certificate to be signed by its duly authorized
officers and this Warrant Certificate to be dated as of September
25, 1996.
ATTEST: SUPER VISION INTERNATIONAL, INC.
- ------------------ By
------------------------------
<PAGE>
<PAGE>
FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises Warrants to
subscribe for and purchase shares of class A common stock, $.001
par value ("Class A Common Stock"), of Super Vision International,
Inc. evidenced by the within Warrant Certificate and herewith makes
payment of the purchase price in full. Kindly issue certificates
for shares of Class A Common Stock in accordance with the
instructions given below. The certificate for the unexercised
balance of the Warrants evidenced by the within Warrants
Certificate, if any, will be registered in the name of the
undersigned.
Dated:
-------------------------------
Instructions for registration of stock
- ----------------------------
Name (please print)
Social Security or Other Identifying Number:
- -----------------------------
Address:
- -----------------------------
Street
- -----------------------------
City, State and Zip Code
<PAGE>
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of September 25, 1996,
between Super Vision International, Inc., a corporation duly
organized and validly existing under the laws of the State of
Delaware (hereinafter referred to as the "Corporation") and Hayward
Industries, Inc., a corporation duly organized and validly existing
under the laws of the State of New Jersey (hereinafter referred to
as the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Corporation and the Purchaser are parties to a
Stock Purchase Agreement dated as of September 25, 1996
(hereinafter referred to as the "Purchase Agreement") providing
for, among other matters, the issuance and delivery by the
Corporation to the Purchaser of certain shares (hereinafter
referred to as the "Closing Shares") of the class A common stock,
$.001 par value (as the same may be constituted from time to time
hereinafter referred to as the "Common Stock"), of the Corporation
and its Initial Warrants and Protective Warrants (as defined in the
Purchase Agreement), each dated this date (hereinafter referred to
as the "Warrants") exercisable with respect to the number of shares
of Common Stock specified therein (hereinafter referred to as the
"Warrant Shares" and, together with the Closing Shares, the
"Transaction Shares") of Common Stock; and
WHEREAS, the Purchaser has also entered into an agreement
dated as of September 25, 1996 (hereinafter referred to as the
"Option Agreement") with Brett Kingstone (hereinafter referred to
as the "Seller") providing for the purchase, at the election of the
Purchaser, of certain securities of the Corporation covered thereby
(hereinafter referred to as the "Option Shares"); and
WHEREAS, it is a condition to the acquisition and acceptance
by the Purchaser of the Closing Shares and the Warrants that the
Corporation execute and deliver this Agreement to the Purchaser;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following additional terms
shall have the following respective meanings:
The term "Mandatory Registration" shall have the meaning set
forth in Paragraph A of Article III hereof.
The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
<PAGE>
The term "Incidental Registration" shall have the meaning set
forth in Paragraph A of Article IV.
The term "a majority of the Registrable Securities" shall mean
more than 50% of the number of shares of the Registrable Secu-
rities, and shall apply mutatis mutandi whenever a percentage of
Registrable Securities greater than a majority is required in this
Agreement.
The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
The term "Prospectus" shall mean the prospectus included in
any Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
The term "Registration Expenses" shall have the meaning set
forth in Article VII.
The term "Registrable Securities" shall mean (i) the
Transaction Shares, (ii) the Option Shares, and (iii) any
securities issued or issuable with respect to the securities
referred to in clauses (i) and/or (ii) immediately preceding by way
of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization; provided, however, that a security ceases to
be a Registrable Security when it is no longer a Restricted
Security.
The term "Registration Statement" shall mean any registration
statement of the Corporation which covers Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments (including post-effective amendments) and
supplements to such Registration Statement.
The term "Restricted Securities" shall mean any security
unless or until: (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public
pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; or (iii) it has otherwise been
transferred and a new certificate or other evidence of ownership
for it not bearing a restrictive legend pursuant to the Securities
Act and not subject to any stop transfer order has been delivered
by or on behalf of the Corporation.
The term "Securities Act" shall mean the Securities Act of
1933, as amended, as amended from time to time.
<PAGE>
The term "Selling Expenses" shall have the meaning set forth
in Article VII.
The term "SEC" shall mean the Securities and Exchange
Commission.
The term "underwritten registration" or "underwritten
offering" shall mean a registration in which securities of the
Corporation are sold pursuant to a firm commitment underwriting to
an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with an underwriter.
ARTICLE II
SECURITIES SUBJECT TO THIS AGREEMENT
A. Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
B. Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such Registrable
Securities, whether or not such acquisition has actually been
effected, and whether or not such Registrable Securities or such
rights are in the name of a nominee or custodian, and disregarding
any contractual conditions relating to the exercise of such right.
Without limiting the generality of the foregoing, each holder of
the Warrants shall be deemed a holder of Registrable Securities.
Notwithstanding the foregoing, no beneficiary of any rights under
the Option Agreement shall be deemed to hold any Option Shares
unless and until the conditions to release thereof to the Seller
pursuant to the escrow agreement dated January 21, 1994 between the
Seller and the Corporation have been met.
ARTICLE III
MANDATORY REGISTRATION
A. Required Registration. The Corporation covenants that:
(i) as promptly as practicable subsequent to the date
hereof (but in no event later than the first anniversary of
the date hereof), and
(ii) as promptly as practicable after the exercise of
any Warrants (but in no event later than the first anniversary
of the date of such exercise), and
(iii) as promptly as practicable after the acquisition
of any Option Shares pursuant to the Option Agreement (but in
no event later than the first anniversary of such
acquisition),
it shall prepare and file with the Securities and Exchange
Commission a Registration Statement covering the proposed offer and
<PAGE>
sale of such Registrable Securities (each herein referred to as a
"Mandatory Registration"); provided, however, that, subject to
compliance with applicable securities laws, the Corporation, at its
option, may in any such case earlier prepare and file with the
Securities and Exchange Commission a Registration Statement with
respect to all such Registrable Securities at any time after the
date of this Agreement (it being understood and agreed that the
obligations of the Corporation under clauses (ii) and (iii)
immediately preceding shall not be deemed satisfied under such
earlier filed Registration Statement unless such Registration
Statement is kept effective through the period required under
Paragraph B of Article VI hereof (but with the applicable period
measured by initial reference in each case to the date of exercise
of the Warrants, or acquisition of the Option Shares, requiring
such Mandatory Registration), failing which an additional Mandatory
Registration or Mandatory Registrations shall be effectuated as
contemplated without reference to this proviso).
B. Expenses. The Corporation shall pay all Registration
Expenses related to each such registration, whether or not the
Registration Statement with respect to such registration has become
effective, and all other expenses incurred by the Corporation in
complying with this Article III. All Selling Expenses related to
such registration shall be borne by the participating sellers
(including the Corporation, if a seller), in proportion to the
number of shares sold by each, or by such sellers as they may
agree.
C. Incidental Rights to Mandatory Registrations
The Corporation and any of its securityholders shall have
the right to include any of the Corporation's securities in any
registration initiated under Paragraph A of this Article III. If
any securityholders of the Corporation (other than the holders of
Registrable Securities in such capacity) register securities of the
Corporation in a Mandatory Registration (in accordance with the
provisions of this Paragraph C), such holders shall pay the fees
and expenses of counsel to such holders and the incremental amount
of Registration Expenses incurred as a result of their
participation unless the Corporation has agreed to pay such
expenses and, in the opinion of counsel to the Corporation, such
payment shall not affect the ability of the Registrable Shares to
be qualified under the blue sky laws of any jurisdiction.
ARTICLE IV
INCIDENTAL REGISTRATIONS
A. Notice and Request for Incidental Registration. Whenever
the Corporation proposes to register any of its securities under
the Securities Act, other than pursuant to a Mandatory Registration
or a registration on Forms S-4 or S-8 or comparable forms
(hereinafter referred to as an "Incidental Registration"), the
Corporation shall give written notice to all holders of Registrable
Securities of its intention to effect such a registration not later
<PAGE>
than the earlier to occur of (i) the tenth day following receipt by
the Corporation of notice of exercise of other demand registration
rights or (ii) 45 days prior to the anticipated filing date.
Subject to the provisions of Paragraphs C and D of this Article IV,
the Corporation shall include in such Incidental Registration all
Registrable Securities with respect to which the Corporation has
received written requests for inclusion therein within 15 business
days after the receipt by the applicable holder of the
Corporation's notice. If an Incidental Registration is an
underwritten offering effected:
(i) under Paragraph C of this Article IV hereof, all
Persons whose securities are included in the Incidental
Registration shall be obligated to sell their securities on
the same terms and conditions as apply to the securities being
issued and sold by the Corporation; or
(ii) under Paragraph D of this Article IV hereof, all
Persons whose securities are included in the Incidental
Registration shall be obligated to sell their securities on
the same terms and conditions as apply to the securities being
sold by the Person or Persons who initiated the Incidental
Registration under said paragraph.
B. Incidental Registration Expenses. The Corporation shall
pay all Registration Expenses related to such registration, or
incurred as a result of the participation in an Incidental
Registration of the holders of Registrable Securities, whether or
not the Registration Statement with respect to such registration
has become effective,and all other expenses incurred by the
Corporation in complying with this Article IV. Any Selling
Expenses related to such registration shall be borne by the
participating sellers (including the Corporation, if a seller), in
proportion to the number of shares sold by each, or by such sellers
as they may agree.
C. Priority on Underwritten Primary Registration. If an
Incidental Registration is an underwritten primary registration on
behalf of the Corporation, and the managing underwriters advise the
Corporation in writing that in their sole discretion the total
number or dollar amount of securities requested to be included in
such registration would reduce the number of shares to be offered
by the Corporation or interfere with the successful marketing of
the shares of stock offered by the Corporation, the Corporation
shall include in such registration:
(i) first, all securities the Corporation proposes to
sell; and
(ii) second, the Registrable Securities and such other
securities (provided such securities are of the same class as
the securities being sold by the Corporation) requested to be
included in such registration in excess of the number of
securities the Corporation proposes to sell which, in the sole
discretion of such underwriters, would not interfere with the
<PAGE>
successful marketing of the shares of stock offered by the
Corporation (allocated pro rata among the holders of such
Registrable Securities and other securities on the basis of
the number of securities requested to be included therein by
each such holder).
D. Priority on Underwritten Secondary Registration. If an
Incidental Registration is an underwritten secondary registration
on behalf of holders of the Corporation's securities, and the
managing underwriters advise the Corporation in writing that in
their sole discretion the number of securities requested to be
included in such registration would reduce the number of shares to
be offered by the securityholders initiating such registration or
interfere with the successful marketing of the shares of stock
offered by the securityholders initiating such registration, the
Corporation shall include in such registration:
(i) first, all securities requested to be included in
such registration by the securityholders initiating such
registration; and
(ii) second, up to the full number of Registrable
Securities and such other securities (provided such securities
are of the same class as the securities being sold by the
Corporation) requested to be included in such registration in
excess of the number of securities the securityholders
initiating such registration propose to sell which, in the
sole discretion of such underwriters, would not interfere with
the successful marketing of the shares of stock offered by the
securityholders initiating such registration (allocated pro
rata among the holders of such Registrable Securities and
other securities on the basis of the number of securities
requested to be included therein by each such holder).
E. Selection of Underwriters. If any Incidental Registration
is an underwritten offering, the Corporation shall have the right
to select the investment banker or investment bankers and manager
or managers to administer the offering.
ARTICLE V
HOLDBACK AGREEMENTS
Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant
to Article IV hereof agrees, if requested by the managing
underwriters, not to effect any public sale or distribution of
securities of the Corporation of the same class as the securities
included in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such
underwritten registration) during the 30-day period prior to, and
during the 180-day period beginning on, the closing date of each
underwritten offering of Registrable Securities made pursuant to
such Registration Statement, to the extent timely notified in
writing by the Corporation or the managing underwriters. The
<PAGE>
foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or
regulation from entering any such agreement.
ARTICLE VI
REGISTRATION PROCEDURES
Whenever Registrable Securities are required to be registered
pursuant to this Agreement, the Corporation shall use its best
efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the
Corporation shall as expeditiously as possible:
A. prepare and file with the SEC, not later than twelve
months after required to file a Registration Statement for a
Mandatory Registration, a Registration Statement on a form for
which the Corporation then qualifies which is satisfactory to the
Corporation and the holders of a majority of the Registrable
Securities being registered and which form shall be available for
the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof, and use its
best efforts to cause such Registration Statement to become
effective; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial
filing of the Registration Statement, the Corporation shall furnish
to a representative designated by the holders of a majority of the
Registrable Securities covered by such Registration Statement
copies of all such documents proposed to be filed, which documents
will be subject to the review of such holders, and the Corporation
shall not file any Registration Statement or amendment thereto or
any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which the holders of a majority of
the Registrable Securities covered by such Registration Statement,
if any, shall reasonably object;
B. prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for a period
of not less than six months (or, in the event of a Mandatory
Registration, and subject to the provisions with respect to
measurement of such period under the proviso contained in Paragraph
A of Article III hereof, three years), or such shorter period which
will terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act (except that, in each case upon prior
written notice to the holders of Registrable Securities covered by
such Prospectus, the Corporation shall not be obligated to maintain
the currentness of the Prospectus for up to three periods not in
excess of 90 days in the aggregate in each calendar year after
registration, if the Board of Directors of the Corporation in good
<PAGE>
faith determines that the best interests of the Corporation would
be materially impaired by disclosure at that time in the Prospectus
of material, non-public information with respect to the
Corporation); and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance
with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement or supplement to the
Prospectus;
C. notify the selling holders of Registrable Securities
promptly,
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment,
when the same has become effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or
for additional information;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose;
(iv) of the receipt by the Corporation of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event which makes any
statement made in the Registration Statement, the Prospectus
or any document incorporated therein by reference untrue or
which requires the making of any changes in the Registration
Statement, the Prospectus or any document incorporated therein
by reference in order to make the statements therein not
misleading;
D. make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
E. if requested by a holder of Registrable Securities being
sold, immediately incorporate in a Prospectus supplement or
post-effective amendment such information as the holders of a
majority of the Registrable Securities being sold and their
respective counsel reasonably conclude should be included in the
Registration Statement, so that such Registration Statement
conforms in both form and substance to the requirements of the
Securities Act, and make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or
posteffective amendment; in each case under this Paragraph E
<PAGE>
subject to the exception contained under Paragraph B of this
Article VI;
F. promptly prior to the filing of any document which is to
be incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement)
provide copies of such document to a representative designated by
the holders of a majority of Registrable Securities covered by the
Registration Statement, make the Corporation's representatives
available for discussion of such document and make such changes in
such document prior to the filing thereof as counsel for such
selling holders may reasonably request;
G. furnish to each selling holder of Registrable Securities,
without charge, at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including those incorporated
by reference);
H. deliver to each selling holder of Registrable Securities
without charge, a reasonable number of copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request (and the
Corporation hereby consents to the use of the Prospectus or any
amendment or supplement thereto by each of the selling holders of
Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto);
I. prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, and their respective counsel in connection
with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any seller reasonably requests in writing
and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided,
however, that the Corporation shall not be required to qualify
generally to do business in any jurisdiction where it is not then
so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is not
then so subject;
J. cooperate with the selling holders of Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any restrictive legends;
K. upon the occurrence of any event contemplated by clause
(v) of Paragraph C of this Article VI, prepare a supplement or
post-effective amendment to the Registration Statement or the
Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered
<PAGE>
to the purchasers of the Registrable Securities, the Prospectus
shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading; in each case under this Paragraph K subject to the
exception contained under Paragraph B of this Article VI;
L. cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Corporation are then listed
if requested by the holders of a majority of such Registrable
Securities if the listing of such securities is then permitted
under the rules of such exchange;
M. take all such other actions in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities as may be reasonably requested by the selling holders of
Registrable Securities;
N. make available for inspection by a representative of the
sellers of Registrable Securities, and any attorney, accountant or
other agent retained by the sellers, all financial and other
records, pertinent corporate documents and properties of the
Corporation, and cause the Corporation's officers, directors and
employees to supply all information reasonably requested by any
such representative, attorney, accountant or agent solely for use
in connection with such registration statement; provided, however,
that any records, information or documents that are designated by
the Corporation in writing as confidential shall be kept
confidential by such Persons pursuant to such reasonable
confidentiality agreements as the Corporation may request;
O. otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any twelve-month period (or 90 days,
if such period is a fiscal year) beginning with the first month of
the Corporation's first fiscal quarter commencing after the
effective date of the Registration Statement, which statements
shall cover said twelve-month periods.
ARTICLE VII
REGISTRATION AND SELLING EXPENSES
For purposes of this Agreement, all underwriting discounts and
selling commissions, and transfer taxes and fees and expenses of
counsel to the holders of Registrable Securities, applicable to the
sale of Registrable Securities (all such expenses being herein
referred to as "Selling Expenses"), and all expenses incident to
the Corporation's performance of or compliance with this Agreement,
including without limitation:
<PAGE>
<PAGE>
A. all registration and filing fees (including with respect
to filings required to be made with the National Association of
Securities Dealers, Inc.);
B. fees and expenses of compliance with securities or blue
sky laws;
C. printing, messenger, telephone and delivery expenses;
D. fees and disbursements of counsel for the Corporation;
E. fees and disbursements of all independent certified
public accountants of the Corporation; and
F. fees and expenses of other Persons retained by the
Corporation;
(all such expenses being herein called "Registration Expenses")
shall be borne as provided in this Agreement; it being understood
and agreed that the Corporation shall, in any event, pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit conducted at
the end of the Corporation's fiscal year in the ordinary course of
business, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities
exchange and securities association.
ARTICLE VIII
INDEMNIFICATION
A. Indemnification by Corporation. The Corporation agrees to
indemnify, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and
agents and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to
deliver a copy of the Registration Statement or Prospectus after
the Corporation has furnished such holder with a sufficient number
of copies of the same.
B. Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of
Registrable Securities is participating, each such holder will
furnish to the Corporation in writing such information and
affidavits as the Corporation reasonably requests for use in
connection with any Registration Statement or Prospectus and agrees
<PAGE>
to indemnify, to the full extent permitted by law, the Corporation,
its directors, officers, employees and agents and each Person who
controls the Corporation (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact
required to be stated in the Registration Statement or Prospectus
or preliminary Prospectus or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder to the
Corporation specifically for inclusion in such Registration
Statement or Prospectus. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds received by such
holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
C. Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of
such claim, but the reasonable fees and expenses of such counsel
shall be at the expense of such Person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such
claim and employ counsel reasonably satisfactory to such Person, or
(c) in the reasonable judgment of any such Person and the
indemnifying party, based upon advice of their respective counsel,
a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if
the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such Person). If
such defense is not assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnifying party shall be required to
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume
the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest
may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
<PAGE>
indemnifying party shall be obligated to pay the reasonable fees
and expenses of such additional counsel or counsels.
D. Contribution. If the indemnification provided for in this
Article VIII is unavailable or insufficient to hold harmless an
indemnified party under Paragraphs A or B immediately preceding,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in said Paragraphs A or
B, in such proportion as is appropriate to reflect the relative
fault of the Corporation, on the one hand, and the participating
holders of Registrable Securities, on the other, in connection with
the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. 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 the
Corporation on the one hand or such holders on the other, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable
if contributions pursuant to this Paragraph D were to be determined
by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to
in the prior provisions of this Paragraph D. The amount paid by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in the prior provisions of this Paragraph
D shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating
or defending against any action or claim that is the subject of
this Paragraph D. Notwithstanding the provisions of this Paragraph
D, no participating holder of Registrable Securities shall be
required to contribute any amount in excess of the amount by which
the net proceeds received from the sale of its shares exceeds the
amount of any damages that it has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. For purposes of this Paragraph D no person guilty
of fraudulent misrepresentation (within the meaning of Section V(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
ARTICLE IX
RULE 144
The Corporation covenants that it shall file the reports
required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC
thereunder, all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may
be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC.
<PAGE>
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No holder of Registrable Securities may participate in any
underwritten registration under Article IV hereof unless such
holder (i) agrees to sell such holder's securities on the basis and
pursuant to the terms provided in any underwriting approved by the
Corporation or the Persons entitled to approve such arrangements
and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
ARTICLE XI
MISCELLANEOUS
A. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, shall be entitled
to specific performance of its rights under this Agreement. The
Corporation agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law
would be adequate.
B. Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered
or certified mail, postage prepaid, as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
(2) if to the Purchaser:
900 Fairmount Avenue
Elizabeth, New Jersey 07207
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80-West Plaza Two
Saddle Brook, New Jersey 07663-5835
<PAGE>
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
C. Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement of the parties
hereto with respect to the transactions contemplated hereby, and
supersede all prior understandings, arrangements, and agreements
with respect to the subject matter hereof. No modification hereof
shall be effective unless in writing and signed by the party
against Which it is sought to be enforced.
D. Further Action. Each of the parties hereto shall use such
party's best efforts to take such actions as may be necessary or
reasonably requested by the other party hereto to carry out and
consummate the transactions contemplated by this Agreement.
E. Successors and Assigns. The registration rights granted
to the Purchaser under Article III and under Article IV may be
transferred to a transferee who acquires any Transaction Shares or
the Warrants, or any of them, or the Purchaser's rights under the
Option Agreement, which transfer shall be effective when the
Corporation is given written notice by the transferor at the time
of such transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under
Article III and IV are being assigned; provided, however, that the
rights granted hereunder shall not inure to the benefit of any
subsequent holder of Registrable Securities who purchased such
Registrable Securities in a registered public offering or pursuant
to Rule 144 promulgated under the Securities Act.
F. Notice of Shares. All references herein to numbers of
shares of Registrable Securities shall be subject to appropriate
adjustment for stock splits, stock dividends and recapitalizations
of the Corporation.
G. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable in the case of agreements made and to be performed
entirely within such State.
H. Captions. The captions appearing herein are for the
convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
I. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ATTEST: SUPER VISION INTERNATIONAL, INC.
- ---------------------- By
------------------------------
ATTEST: HAYWARD INDUSTRIES, INC.
- ----------------------- By
-----------------------------
<PAGE>
<PAGE>
EXHIBIT D
================================================================
______________________________________
DISTRIBUTORSHIP AGREEMENT
dated as of September 25, 1996
______________________________________
SUPER VISION INTERNATIONAL, INC.
_______________________________________
================================================================<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I APPOINTMENT OF DISTRIBUTOR . . . . . . . . . . 1
1.1 Appointment . . . . . . . . . . . . . . . . . . 1
ARTICLE II TERM. . . . . . . . . . . . . . . . . . . . . . 2
2.1 Term of Appointment . . . . . . . . . . . . . . 2
2.2 Consequences of Expiration or Termination . . . 3
ARTICLE III PURCHASE ORDERS; PRICES; COVENANTS. . . . . . . 3
3.1 Purchase Orders . . . . . . . . . . . . . . . . 3
3.2 Purchase Prices; Payment. . . . . . . . . . . . 3
3.3 Minimum Purchases . . . . . . . . . . . . . . . 5
3.4 Forecasts . . . . . . . . . . . . . . . . . . . 6
3.5 Product Improvements; New Products; Product
Warranty. . . . . . . . . . . . . . . . . . . . 7
3.6 Packaging; Shipment . . . . . . . . . . . . . . 7
3.7 Training. . . . . . . . . . . . . . . . . . . . 7
3.8 Insurance . . . . . . . . . . . . . . . . . . . 8
3.9 Tradenames. . . . . . . . . . . . . . . . . . . 8
3.10 Taxes; Compliance with Laws . . . . . . . . . . 9
3.11 Protection of Rights. . . . . . . . . . . . . . 9
3.12 Exclusivity . . . . . . . . . . . . . . . . . . 10
3.13 Confidential Material.. . . . . . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION. . . . . . . . . . . . . . . 11
4.1 Incorporation . . . . . . . . . . . . . . . . . 11
4.2 Authorization . . . . . . . . . . . . . . . . . 11
4.3 Conflicts . . . . . . . . . . . . . . . . . . . 11
4.4 Adequacy of Facilities. . . . . . . . . . . . . 12
4.5 Proprietary Rights in Products. . . . . . . . . 12
4.6 Infringement. . . . . . . . . . . . . . . . . . 12
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE DISTRIBUTOR. . . . . . . . . . . . . . . 13
5.1 Incorporation . . . . . . . . . . . . . . . . . 13
5.2 Authorization . . . . . . . . . . . . . . . . . 13
5.3 Conflicts . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI INDEMNIFICATION . . . . . . . . . . . . . . . . 14
6.1 Basis of Indemnity. . . . . . . . . . . . . . . 14
6.2 Procedures for Indemnification. . . . . . . . . 14
6.3 Payment of Indemnity. . . . . . . . . . . . . . 15
ARTICLE VII RELATIONSHIP OF THE PARTIES . . . . . . . . . . 15
7.1 Independent Contractors . . . . . . . . . . . . 15
<PAGE>
ARTICLE VIII EMPLOYMENT OF SUPER VISION STAFF. . . . . . . . 15
8.1 No-Raid . . . . . . . . . . . . . . . . . . . . 15
8.2 Indirect Action Prohibited. . . . . . . . . . . 16
8.3 Survival. . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . 16
9.1 Notices . . . . . . . . . . . . . . . . . . . . 16
9.2 Entire Agreement. . . . . . . . . . . . . . . . 17
9.3 Further Action. . . . . . . . . . . . . . . . . 17
9.4 Most Favored Customer . . . . . . . . . . . . . 17
9.5 Benefit of Agreement. . . . . . . . . . . . . . 17
9.6 Expenses. . . . . . . . . . . . . . . . . . . . 17
9.7 Governing Law . . . . . . . . . . . . . . . . . 17
9.8 Captions. . . . . . . . . . . . . . . . . . . . 18
9.9 Counterparts. . . . . . . . . . . . . . . . . . 18
Schedule 1 - Product Warranty
<PAGE>
<PAGE>
DISTRIBUTORSHIP AGREEMENT
AGREEMENT dated as of the 25th day of September, 1996 by and
between SUPER VISION INTERNATIONAL, INC., a corporation duly
organized and validly existing under the laws of the State of
Delaware (hereinafter referred to as the "Corporation"), and
HAYWARD POOL PRODUCTS, INC., a corporation duly organized and
validly existing under the laws of the State of New Jersey
(hereinafter referred to as the "Distributor").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in the business of
manufacturing, developing, designing and marketing products with
application in, among other areas, the pool, spa and hot tub
markets, including, without limitation, any and all applications in
or related to pools, spas and hot tubs and the design, construction
and installation thereof (such products, whether hereinbefore or
hereinafter developed, referred to herein as the "Products" and
such markets hereinafter referred to as the "Exclusive Market");
and
WHEREAS, the Corporation desires, among other matters, to
appoint the Distributor as the exclusive, worldwide distributor for
the Products in the Exclusive Market, and the Distributor desires
to accept such appointment upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties
hereto hereby agree as follows:
ARTICLE I
APPOINTMENT OF DISTRIBUTOR
1.1 Appointment.
(a) Subject to the terms and provisions of this
Agreement, the Corporation hereby appoints the Distributor as its
exclusive, worldwide distributor for the marketing, sale and
distribution of the Products and each of them: (x) to and through
any and all other distributors, agents, representatives and other
parties who market, sell and distribute products or services in or
to the Exclusive Market, and (y) to end users of the Products
insofar as applied in the Exclusive Market.
(b) Notwithstanding any other provision contained in
this Agreement, the parties understand and agree that: the
Distributor shall, in each case, direct its efforts pursuant hereto
to the marketing, sale and distribution of the Products to
distributors, agents, representatives and other parties who the
Distributor believes intend to market, sell and distribute the
Products in or to the Exclusive Market, and/or to end users who the
Distributor believes intend to use the Products insofar as applied
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in the Exclusive Market; provided, however, that the Distributor
shall have no liability or obligation in the event any Product sold
hereunder shall be marketed, distributed or sold other than in or
to the Exclusive Market or utilized for any applications other than
in the Exclusive Market unless such marketing, distribution, sale
or utilization occurs as a result of the gross negligence or wilful
misconduct of the Distributor.
(c) For as long as the Corporation shall not have
breached its obligations hereunder in any material respect and the
term of this Agreement shall remain in effect (and until prior
written notice in each event by the Distributor to the Corporation
of any purchases theretofore covered by this paragraph (c)), the
Distributor shall not purchase or manufacture or distribute any
fiber optic lighting products as are within the design and
manufacturing capabilities of the Corporation except insofar as
incorporated into the Products acquired hereunder from the
Corporation and other than molded components, light source housings
and landscape fixtures.
ARTICLE II
TERM
2.1 Term of Appointment.
(a) The initial term of this Agreement shall expire on
December 31, 2001, subject to earlier termination pursuant to the
provisions hereinafter set forth. On each December 31 commencing
with December 31, 1997, the term of this Agreement shall be
automatically extended so as to expire five years thereafter
unless, on or prior to the September 30 immediately prior to any
such December 31, the Distributor shall have delivered written
notice to the Corporation that this Agreement shall not be so
extended beyond its then current term and provided that on such
December 31 the Distributor shall theretofore not have breached its
obligations under Article 3.3 hereof (unless such breach shall have
been cured or waived).
(b) Notwithstanding any other provision contained
herein, this Agreement shall be terminable by either party upon ten
days' prior written notice to the other party upon: (i) the
liquidation or dissolution of the other party; (ii) the filing by
the other party of a petition in bankruptcy or for reorganization
or the adoption of any arrangement under the bankruptcy laws at any
time in effect in any jurisdiction, or any admission seeking the
relief therein provided; (iii) the making by the other party of any
assignment for the benefit of its creditors; (iv) the consent by
the other party to the appointment of a receiver or trustee for all
or a substantial part of its property or to the filing of a
petition against it under said bankruptcy laws; or (v) the
adjudication of the other party as a bankrupt.
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(c) Notwithstanding any other provision contained
herein, this Agreement shall further be terminable by either party
(hereinafter referred to as the "Non-Defaulting Party"), without
prejudice to any of its other legal and equitable rights and
remedies, in the event that the other party (hereinafter referred
to as the "Defaulting Party") shall have breached any of the
material terms or conditions and agreements contained herein to be
kept, observed or performed by it, by giving the Defaulting Party
90 days' prior notice in writing, specifying the breach; provided,
however, that the Defaulting Party shall have the right to cure
such breach within such 90-day period (or if such breach is capable
of cure, but such cure cannot reasonably be completed within such
period, the Defaulting Party shall have the right to cure such
breach within a reasonable time thereafter), in which case this
Agreement shall not terminate.
2.2 Consequences of Expiration or Termination.
Upon expiration or termination of this Agreement, the
Corporation shall be required to deliver and the Distributor shall
be required to accept only such Products theretofore ordered from
the Corporation pursuant to purchase orders placed in accordance
with the terms of this Agreement before such expiration or
termination becomes effective.
ARTICLE III
PURCHASE ORDERS; PRICES; COVENANTS
3.1 Purchase Orders.
Subject to the provisions of this Agreement (including,
without limitation, Section 3.3 hereof), during the term of this
Agreement the Distributor shall have the right to place orders with
the Corporation for such quantities of the Products, and each of
them, as in the Distributor's sole discretion it may require from
time to time for sales pursuant thereto, and the Corporation shall
promptly manufacture and deliver all such quantities of Products in
accordance with the terms of this Agreement.
3.2 Purchase Prices; Payment.
(a) The purchase price to the Distributor for each
Product during the term of this Agreement, f.o.b. the Corporation's
facility in Orlando, Florida, shall be as set forth in the schedule
exchanged by the parties contemporaneously herewith, calculated in
each case at the date hereof so as to provide to the Distributor a
gross margin of 25% (determined in accordance with generally
accepted accounting principles), as if the Distributor's prices to
customers on the date hereof were equal to the Corporation's
selling prices to its other distributors in effect immediately
prior to the effectiveness of this Agreement. In the event that,
subsequent to the date of this Agreement, any Products become
covered by this Agreement that are not identified on said schedule,
the purchase price to the Distributor therefor, f.o.b. the
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Corporation's facility in Orlando, Florida, shall initially be
determined by the parties in good faith so as to provide to the
Distributor a gross margin of 25% (determined as aforesaid) based
upon competitive selling prices to the Distributor's customers
reasonably calculated. All purchase prices shall be exclusive of
local, state and federal taxes, which amounts shall be included in
each invoice delivered by the Corporation to the Distributor as a
separate charge to be paid by the Distributor.
(b) During the term of this Agreement, all purchase
prices hereunder shall be subject to downward adjustment from time
to time in each case upon written notice by the Distributor to the
Corporation that the Distributor's gross margin (determined in
accordance with generally accepted accounting principles) in
respect thereof during any fiscal quarter is less than 23%. Each
such reduction shall be in an amount sufficient to maintain for the
Distributor a gross margin (as so determined) in respect thereof of
25%, based on the Distributor's then current selling price. In each
such case, the Distributor shall furnish to the Corporation,
together with its written notice, reasonably detailed evidence of
its calculations as aforesaid, and the Corporation shall have the
right to inspect the books and records of the Distributor related
thereto, upon reasonable prior notice and during reasonable
business hours, in order to substantiate such calculation.
(c) Payment by the Distributor to the Corporation of the
net amount of each invoice in respect of Products delivered
hereunder shall in each case be made within 30 days of the date of
the invoice of such shipment; provided, however, that, the
Distributor shall have the right (at its election), in respect of
purchase orders submitted by the Distributor during the last
calendar quarter of any year during the term hereof, to defer the
amount of any related invoice, which amount shall be payable in two
equal installments on the ensuing May 25 and June 25; provided,
however, that the aggregate amount of all such deferred payments
(hereinafter referred to as "Early Buy Payments") shall not exceed
25% of any Minimum Purchase Commitment (as hereinafter defined) in
effect for such ensuing year. All invoices in respect of Products
delivered hereunder by the Corporation to the Distributor shall be
dated the date of shipment, and shall not contain any term or
condition inconsistent with or supplementing those set forth in
this Agreement. Upon discovery by the Distributor that the
materials, goods or work furnished contain any defect, patent or
latent, or that they fail to conform to any applicable warranties,
the Distributor shall, notwithstanding any prior payment therefor
and without limiting any other rights available to the Distributor,
have the right to reject the materials, goods and work or, if
materials or goods have been accepted, to return them to the
Corporation, subject to the Corporation's form of product warranty
annexed to this Agreement as Schedule 1 except as otherwise set
forth in this Agreement. In the event of Catastrophic Failure (as
hereinafter defined), the Distributor will further have the right
to recover all freight, storage, handling or other expense incurred
by the Distributor and be relieved of any payment for the purchase
price so paid and/or cancel the order with respect thereto, and
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Products so returned shall not be replaced without the
Distributor's written replacement order. The rights of the
Distributor under the immediately preceding sentence shall not
extend to end users of the Products, whose rights shall be governed
by the form of product warranty hereinafter described. For purposes
hereof, "Catastrophic Failure" shall mean a full or partial recall
or field service/replacement by the Corporation of any Product,
such determination to be made by the Corporation in good faith in
the exercise of its reasonable judgment with respect to the
existence of any defect, patent or latent, or the failure to
conform to any applicable warranties, subject to consultation with
the Distributor.
3.3 Minimum Purchases.
(a) The Distributor hereby agrees that it shall, during each
period set forth below, purchase hereunder Products covering in the
aggregate at least the minimum purchase commitment (each
hereinafter referred to as a "Minimum Purchase Commitment")
identified opposite such period:
Minimum
Period Purchase Commitment
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through December 27, 1997 $1,600,000
December 28, 1997 through December 26, 1998 2,000,000
December 27, 1998 through December 25, 1999 2,400,000
December 26, 1999 through December 30, 2000 2,800,000
December 31, 2000 through December 29, 2001 3,200,000
; provided, however, that in the event the Distributor does not
purchase from the Corporation with respect to any such period an
amount equal to or greater than the applicable Minimum Purchase
Commitment but purchases from the Corporation with respect to such
period an amount equal to or greater than 75% of such Minimum
Purchase Commitment, the Distributor shall not be liable to the
Corporation in respect thereof and shall not be deemed in breach of
this Agreement, provided that there are no outstanding uncovered
shortfalls with respect to prior periods and the Distributor
purchases from the Corporation an amount which satisfies the
deficiency in the next such period (failing which the Distributor
shall pay to the Corporation within 30 days after the expiration of
such next period an amount equal to 40% of the amount of such
deficiency not so satisfied; and, provided, further that, if,
during any period (or portion thereof) the Corporation shall not
have completed modification of the Sales Agreements (as defined in
the Stock Purchase Agreement dated September 25, 1996 between the
Corporation and Hayward Industries, Inc. [hereinafter referred to
as the "Purchase Agreement"]) identified on Schedule 2 of the
Purchase Agreement in the manner contemplated by clause (ii) of
Section 4.6 and Section 8.4 of the Purchase Agreement, the amount
of the Minimum Purchase Commitment applicable to such period shall
be reduced by an amount equal to (x) the aggregate amount of all
sales quotas, minimum purchase targets or similar amounts pursuant
to all such Sales Agreement containing exclusive rights plus (y)
the aggregate sales in the Excluded Market of all parties to the
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remaining such Sales Agreements (all amounts described by clauses
(x) and (y) immediately preceding in each case to be promptly
communicated by the Corporation to the Distributor, and be subject
to review by the Distributor pursuant to the procedures described
under the final sentence of Paragraph (b) of Section 3.2 hereof).
The parties acknowledge and agree that any purchases of Products
hereunder in any period, may, at the election of the Distributor,
be allocated toward achievement of a Minimum Purchase Commitment
with respect to the next subsequent period in an amount (exclusive
of Early Buy Payments) not to exceed 20% of the Minimum Purchase
Commitment for any such period. The parties further acknowledge and
agree that the Distributor shall not be liable to the Corporation
in respect of an amount (hereinafter referred to as the "Forgiven
Shortfall") of the applicable Minimum Purchase Commitment for any
period equal in each case to the purchase price of purchase orders
with respect to which the Distributor has submitted its purchase
order or orders during such period and shipment thereof is unduly
delayed beyond the expiration of such period or shipment consists
of non-conforming goods. Purchases under purchase orders giving
rise to any Forgiven Shortfall shall not be credited toward the
Minimum Purchase Commitment for any period subsequent to that in
which the Forgiven Shortfall occurs.
(b) In the event of the extension of the term of this
Agreement pursuant to paragraph (a) of Section 2.1 hereof, the
parties shall, on or prior to August 30 immediately preceding each
of the Distributor's additional annual fiscal year periods of such
extended term beyond December 29, 2001, consult with each other so
as to determine the Minimum Purchase Commitment applicable to such
ensuing fiscal year, which shall be equal to 80% of the
Distributor's sales forecast for such year determined in good faith
based upon its reasonable evaluation of such criteria as market
size, competitive factors and industry and Distributor growth
trends; subsequent to which all provisions applicable to Minimum
Purchase Commitments set forth in paragraph (a) of this Section 3.3
shall apply to such Minimum Purchase Commitment determined under
this paragraph (b).
3.4 Forecasts.
On the first business day of each calendar quarter during
the term of this Agreement, the Distributor shall prepare and
deliver to the Corporation a forecast of its anticipated purchases
of Products during the ensuing twelve-month period (or such shorter
period as shall expire with the expiration of the term of this
Agreement). The parties understand and agree that each such
forecast shall constitute the Distributor's good faith estimate of
such purchases but shall not in any manner be construed as a
purchase commitment or be binding upon the Distributor.
3.5 Product Improvements; New Products; Product Warranty.
(a) The Corporation hereby covenants that the Products,
and each of them, conform to the product specifications therefor
heretofore delivered to the Distributor, and that the Corporation
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shall maintain a program of regular Product improvements and
Product development, it being understood and agreed that any and
all improvements on, modifications to, substitutions in and
extensions of the Products, or any of them, and any and all new
Products, shall be submitted in writing to the Distributor (in each
instance in such detail as shall reasonably be required by the
Distributor for its evaluation thereof) for approval thereby. In no
event shall such approval be deemed to confer on the Distributor
any responsibility or liability of any nature whatsoever therefor
or for the design or development of any Products. In addition, the
Distributor may from time to time propose modifications to the
Products, or any of them, and new Products, in each case consistent
with the fiber optic lighting expertise of the Corporation, which
the Corporation shall use its reasonable commercial efforts to
design, develop and manufacture for distribution hereunder.
(b) Subject to the provisions of paragraph (c) of
Section 3.2 hereof, the Corporation shall warrant the Products, and
each of them, sold hereunder pursuant to the form of product
warranty annexed to this Agreement as Schedule 1.
3.6 Packaging; Shipment.
All Products shall be packaged in accordance with
specifications approved by the Distributor, and shall be forwarded
in accordance with the Distributor's instructions. Specialized
packaging requirements of the Distributor not subject to written
agreement between the Corporation and the Distributor shall be at
the Distributor's expense. When usual terms of tariffs do not
include insurance, shipments shall be forwarded properly insured to
their full sales price hereunder with the cost of insurance borne
by the Distributor. A packing slip bearing a complete record of the
shipment, including the number of the purchase order to which it
applies, shall be required with each shipment hereunder.
3.7 Training.
The Corporation shall, during the term of this Agreement,
be responsive to all requests by the Distributor for information
relative to the marketing and sale of the Products, including,
without limitation, making its facilities, management and employees
available to respond to such requests on reasonable prior notice
and during regular business hours. Without limiting the generality
of the foregoing, subject to the Distributor's providing a training
schedule reasonably satisfactory to both parties, the Corporation,
at the Corporation's expense (except for international travel
expenses incurred at the request of, and approved in advance by,
the Distributor, which shall be borne by the Distributor), shall
for a period of six months from the date hereof provide adequate
training to such personnel as shall be designated by the
Distributor in the use and sale of the Products.
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3.8 Insurance.
The Corporation shall, at its sole cost and expense,
secure and maintain a policy or policies of liability insurance
providing itself and the Distributor coverage thereunder and
insuring itself and the Distributor against any liability to the
public or any users for defects in the design or manufacture of the
Products sold. Such policy or policies shall be on an occurrence
form per occurrence and in the aggregate in an amount not less than
$2,000,000 and upon terms providing coverage which are at least as
extensive as those terms which the Distributor shall reasonably
deem necessary or appropriate, and shall be issued by insurers of
recognized responsibility which are highly rated by a national
rating organization. The Corporation shall promptly furnish to the
Distributor a copy of each such policy, which policy shall provide,
inter alia, written notice to the Distributor of each notice of
cancellation of each such policy no less than 30 days prior to the
effective date of cancellation.
3.9 Tradenames.
The Distributor shall, in its sole discretion, formulate
its marketing plans and systems with respect to the Products, and
each of them. The Corporation hereby grants to the Distributor, for
the term of this Agreement, the non-exclusive, worldwide royalty-
free right and license to utilize any and all of the Corporation's
trademarks, tradenames, service marks, labels and copyrights
(hereinafter referred to, collectively, as the "Trademarks") in the
Exclusive Market in connection with the Products (it being
acknowledged and agreed that no other party shall hold any such
right with respect to the Exclusive Market during such term). The
Products, and each of them, shall be marketed and distributed by
the Distributor utilizing the designation "Supervision by Hayward",
or variant thereof, singly or in combination with any other term.
Subject to the foregoing, the Distributor shall determine the
trademarks and related indicia accompanying Products sold pursuant
hereto. All proprietary rights in the Trademarks (exclusive of any
trademarks, tradenames, service marks, labels and copyrights of the
Distributor utilized in conjunction therewith) shall remain the
exclusive property of the Corporation, subject to the Distributor's
license to use such Trademarks. The Distributor hereby agrees that,
during the term of this Agreement, the Corporation shall have the
right to utilize the Distributor's corporate name and logo in
connection with identification by the Corporation of the
appointment of the Distributor hereunder. Notwithstanding the
foregoing: (i) contemporaneously with the execution and delivery of
this Agreement, the Distributor shall acquire the Corporation's
entire inventory of sales and marketing materials in exchange for
a payment in the amount of $100,000; and (ii) the Distributor shall
thereafter, during the term of this Agreement, include the fiber
optic lighting category in its builder (MIP) program as from time
to time in effect. In addition, the Distributor agrees that, in the
event it receives a refund, in whole or in part, of the
Corporation's deposit in the amount of $6,200 made with respect to
the NSPI trade show, the Distributor shall remit all such amounts
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to the Corporation, in the same form as received (together with any
endorsement necessary for transfer by delivery), and the
Corporation shall be entitled to retain same.
3.10 Taxes; Compliance with Laws.
The Corporation shall promptly pay when due all taxes and
assessments against the premises or the equipment used in
connection with its business, and all liens or encumbrances of
every kind or character created or placed upon or against any of
said property, and all accounts and other indebtedness of every
kind incurred by the Corporation in the conduct of said business.
The Corporation shall comply with all applicable federal, state,
county and municipal laws and regulations, now in effect or
hereafter enacted, including, without limitation, all environmental
laws and all occupational safety and health laws and shall timely
obtain any and all permits, certificates, or licenses necessary for
the full and proper conduct of its business.
3.11 Protection of Rights.
The Corporation shall give prompt notice to the
Distributor: (i) of any litigation, arbitration or governmental
proceeding, or any threatened litigation, arbitration or
governmental proceeding, involving or affecting the Products in any
material respect, or any of them; and (ii) any notice received by
the Corporation of any lapse, termination, expiration or forfeiture
of any right with respect to the Products, or any of them. In
addition, in the event failure to do so would have a material
adverse effect on the economic benefits conferred on the
Distributor under this Agreement in any jurisdiction, and the
Distributor requests that the Corporation take such action, the
Corporation shall, at its expense, promptly and diligently: (x)
pursue filing and prosecuting any and all patent applications based
on inventions included within the Products, or any of them, whether
made prior or subsequent to the date hereof, and the filing and
prosecution of all divisions, continuations, continuations-in-part,
reissues or re-examinations thereof, and file, pursue, maintain and
renew the registrations of all registered Trademarks and perform
all other acts which the Distributor may reasonably request in
order to maintain and renew such registrations for use hereunder;
and (y) prosecute all such actions or proceedings as are required
to terminate infringement on any rights to the Products, the
Trademarks, or any of them. In the event the Corporation shall fail
to perform any obligation under this Section 3.11, the Distributor
may perform such obligation at the expense of the Corporation and
upon consultation with the Corporation.
3.12 Exclusivity.
In order to enhance the efficiency of the Distributor's
exclusive marketing efforts hereunder and avoid realization by
third parties of any benefits of the Distributor's efforts to
achieve sales of the Products in the Exclusive Market, the
Corporation hereby agrees that: (i) it shall not, directly or
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indirectly, market, sell or distribute the Products to any party
who intends, to the best of the Corporation's knowledge, directly
or indirectly, to market, sell or distribute products in or to the
Exclusive Market, or to any customer who intends, to the best of
the Corporation's knowledge, directly or indirectly, to apply the
Products in the Exclusive Market; and (ii) in all agreements
entered into by it with respect to the distribution of Products, it
shall provide for the termination thereof if, after written notice
delivered by the Corporation to cease all activities in conflict
with the appointment hereunder, such activities continue, and it
shall forthwith in each case terminate any such agreement in the
event Products continue to be marketed thereunder subsequent to the
delivery of such notice.
3.13 Confidential Material.
(a) In the event that either party to this Agreement
(hereinafter referred to as the "Restricted Party") shall come into
possession or obtain knowledge of Confidential Material (as
hereinafter defined) of the other party (hereinafter referred to as
the "Confidential Party"), such Confidential Material shall be held
in absolute secrecy and treated confidentially, and shall not be
disclosed, reproduced, published, distributed or by any other means
disseminated, in whole or in part, by the Restricted Party or in
any manner used for its benefit or the benefit of others, except as
shall be specifically necessary for a party to disclose
Confidential Material to its directors, officers, employees, agents
or representatives to exercise its rights and perform its
obligations under this Agreement. Notwithstanding the foregoing,
if, as a consequence of no action taken by a Restricted Party in
violation of this Section 3.13, such party shall be compelled, by
subpoena, civil investigative demand or similar process, to
disclose any Confidential Material, such party may disclose such
information without liability hereunder, subject to written notice
thereof to the Confidential Party. For purposes hereof,
"Confidential Material" shall mean all information furnished to the
Restricted Party by the Confidential Party, or any of its
directors, officers, employees, agents or representatives;
provided, however, that the term "Confidential Material" shall not
include information which:
(i) becomes generally available to the trade or public
other than as a result of a disclosure by any Restricted
Party;
(ii) was available to any Restricted Party on a non-
confidential basis prior to its disclosure to a Restricted
Party by the Confidential Party or any of its directors,
officers, employees, agents or representatives; or
(iii) becomes available to any Restricted Party on a non-
confidential basis from a source other than the Confidential
Party or any of its directors, officers, employees, agents or
representatives and, to the knowledge of such Restricted
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Party, such source has a lawful and unrestricted right to
convey such information.
(b) The parties acknowledge and agree that their
respective agreements contained under this Section 3.13 are of a
special, unique, and extraordinary nature and that the non-
breaching party would suffer irreparable injury as a consequence of
the violation thereof, and by reason thereof each party consents
and agrees that, if it should in any way violate such provisions,
the other party shall be entitled to an injunction to be issued by
any court of competent jurisdiction, restraining the violator from
committing or continuing any such violation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION
The Corporation hereby represents, warrants and covenants
that:
4.1 Incorporation.
The Corporation is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has
full corporate power and authority to enter into this Agreement and
to carry out the provisions hereof.
4.2 Authorization.
The execution and delivery by the Corporation of this
Agreement, the performance by the Corporation of its covenants and
agreements hereunder, and the consummation by the Corporation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action. When executed and delivered by the
Corporation, this Agreement shall constitute the valid and legally
binding obligation of the Corporation enforceable against the
Corporation in accordance with its terms, except as may be limited
by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the
availability of equitable remedies.
4.3 Conflicts.
Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will
violate any provision of the certificate of incorporation or
by-laws of the Corporation or any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order
of any court, government, or governmental agency or
instrumentality, domestic or foreign, binding upon the Corporation,
or conflict with or result in any breach of or event of termination
under any of the terms of, or the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature pursuant to, the terms of any
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contract or agreement to which the Corporation is a party or by
which the Corporation or any of its properties or assets is bound.
4.4 Adequacy of Facilities.
The Corporation owns, licenses or leases, and has the
unimpaired use of, all properties, assets and facilities necessary
for the fulfillment of its obligations under this Agreement, and
shall continue ownership, license or lease of such properties,
assets and facilities, as the case may be, and such use, in effect
for as long as its obligations hereunder remain outstanding.
Without limiting the generality of the foregoing, the Corporation
shall utilize all proceeds from the sale of securities to the
Distributor, or to any person or entity controlling, controlled by
or under common control with the Distributor, solely in furtherance
of its performance under this Agreement.
4.5 Proprietary Rights in Products.
Neither the Corporation, nor any of its agents, employees
or independent contractors, has taken or shall take any action in
any way inconsistent with the exclusive ownership by the
Corporation of all right, title and interest in and to the
Products, as heretofore developed or as hereafter may be developed,
free and clear of any encumbrance, lien or charge of any nature
whatsoever. No party other than the Corporation has or shall have
any right, title or interest whatsoever in the Products which in
any way prohibits or restricts the use thereof or any transaction
contemplated hereunder, and the Corporation, its agents, employees
or independent contractors shall not enter into any arrangement
which would have such effect. There are no outstanding options,
licenses or agreements of any kind whatsoever entered into by the
Corporation, or any agent, employee or independent contractor of
the Corporation, relating to the Products, or any of them, or the
development thereof. Any and all patents relating to the Products,
or any of them, or the manufacture thereof, are valid and in full
force and effect, and no event has occurred and is continuing
which, after notice or lapse of time or otherwise, would result in
the invalidity or forfeiture of any such patents, or any part
thereof, or any of the Corporation's rights thereto.
4.6 Infringement.
There are no claims, disputes, actions, suits or
proceedings, including, without limitation, suits for infringement,
pending or, to the best of the Corporation's knowledge, threatened
against or affecting the Products, or any of them, or the
manufacture, marketing, distribution, sale or use thereof. Neither
the Products, nor any of them, nor the manufacture, marketing,
distribution, sale or use thereof by the Corporation or by the
Distributor in the manner contemplated by this Agreement, will
infringe or conflict with any patents, patent applications, know-
how, processes, trade secrets, techniques, procedures or other
proprietary property rights held by any third party. The
Corporation has not failed to comply with any law, rule,
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regulation, writ, judgment, injunction, decree, determination,
award or other order of any court or other governmental agency or
instrumentality, which relates to the Products, or any of them, or
any part thereof, and there is no basis for any claim for
compensation, damages or otherwise arising out of any violation of
the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE DISTRIBUTOR
The Distributor represents, warrants and covenants that:
5.1 Incorporation.
The Distributor is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Jersey, and has full corporate power and authority to enter into
this Agreement and to carry out the provisions hereof.
5.2 Authorization.
The execution and delivery of this Agreement by the
Distributor, the performance by the Distributor of its covenants
and agreements hereunder, and the consummation by the Distributor
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action. When executed and delivered by
the Distributor this Agreement will constitute the valid and
legally binding obligation of the Distributor enforceable against
the Distributor in accordance with its terms, except as may be
limited by bankruptcy, insolvency, or other laws affecting
generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies.
5.3 Conflicts.
Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein will
violate any provision of the certificate of incorporation or
by-laws of the Distributor or any law, rule, regulation, writ,
judgment, injunction, decree, determination, award, or other order
of any court, government or governmental agency or instrumentality,
domestic or foreign, binding upon the Distributor or conflict with
or result in any breach of or event of termination under any of the
terms of, or constitute a default under or result in the
termination of or the creation or imposition of any mortgage, deed
of trust, pledge, lien, security interest or other charge or
encumbrance of any nature pursuant to, the terms of any contract or
agreement to which the Distributor is a party or by which the
Distributor or any of its assets and properties is bound.
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ARTICLE VI
INDEMNIFICATION
6.1 Basis of Indemnity.
(a) The Corporation hereby agrees to indemnify and hold
harmless the Distributor, its directors, officers, employees,
agents and their respective legal representatives, successors and
assigns, from and against all damages, costs, expenses, losses,
claims, demands, liabilities and/or obligations, including, without
limitation, reasonable counsel fees (hereinafter referred to,
collectively, as "Damages"), resulting from or sustained or
incurred by reason of (i) any breach of any warranty,
representation, agreement or covenant of the Corporation set forth
in this Agreement, or (ii) any allegation that the Products, or any
of them, infringe upon any patents, patent applications, know-how,
technology, procedures or process of any third party.
(b) The Distributor hereby agrees to indemnify and hold
harmless the Corporation, its directors, officers, employees,
agents and their respective legal representatives, successors and
assigns from and against any and all Damages resulting from or
sustained or incurred by reason of any breach of any warranty,
representation, agreement or covenant of the Distributor set forth
in this Agreement.
6.2 Procedures for Indemnification.
Promptly after receipt by an Indemnified Party (as hereinafter
defined) under Sections 6.1(a) or (b) of notice of the commencement
of any action by any person not an Indemnified Party (hereinafter
referred to as a "Third Party Claim") for which indemnification is
available under Section 6.1(a) or (b), such Indemnified Party
shall, if a claim in respect thereof is to be made against any
Indemnifying Party (as hereinafter defined) under such section,
give notice to the Indemnifying Party of the commencement thereof,
but the failure so to notify the Indemnifying Party shall not
relieve it of any liability that it may have to any Indemnified
Party except to the extent the Indemnifying Party demonstrates that
the defense of such Third Party Claim is prejudiced thereby. In
case any such Third Party Claim shall be brought against an
Indemnified Party and it shall give notice to the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in the defense (including negotiation
and/or resolution) of such Third Party Claim. Furthermore, unless
the Indemnifying Party shall have failed to participate in such
defense of a Third Party Claim after notice as aforesaid, the
Indemnified Party shall from time to time consult with the
Indemnifying Party with respect to any material actions taken with
respect to the conduct of the defense (including negotiation and/or
resolution of such Third Party Claim) and, without limitation,
shall give the Indemnifying Party an additional notice not less
than ten days prior to entering into any settlement thereof. Each
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Indemnified Party shall use all reasonable efforts to mitigate the
amount of any Damages.
6.3 Payment of Indemnity.
In the event that any party entitled to indemnification
hereunder (herein referred to as an "Indemnified Party") shall
incur any Damages in respect of which indemnity may be sought
pursuant to this Agreement, the party responsible for
indemnification (herein referred to as an "Indemnifying Party")
shall be given written notice thereof promptly by such Indemnified
Party, which notice shall, to the extent reasonably available to
such Indemnified Party, specify the amount and nature of the
Damages and include the request of such Indemnified Party for
indemnification therefor. The Indemnifying Party shall promptly pay
to such Indemnified Party the amount of the Damages so specified.
Notwithstanding any provision contained under this Article VI to
the contrary, no Indemnified Party shall assert any claim for
indemnification of any amount if and to the extent entitled to
recovery thereof under the insurance described under Section 3.8
hereof.
ARTICLE VII
RELATIONSHIP OF THE PARTIES
7.1 Independent Contractors.
This Agreement does not constitute either party as an
agent, legal representative, joint venturer, partner, employee or
servant of the other party for any purpose whatsoever and it is
understood between the parties that the relationship is that of
independent contractors and under no circumstances shall the
employees or consultants of one party be deemed to be employees of
the other party. This Agreement shall not be construed as authority
for either party to act for, or make any commitment on behalf of,
the other party.
ARTICLE VIII
EMPLOYMENT OF SUPER VISION STAFF
8.1 No-Raid.
The Distributor agrees that, for a period commencing on
the date hereof and ending five years following termination of this
Agreement, the Distributor shall not, on behalf of any person,
firm, corporation, association or any other entity, including
itself, directly or indirectly, employ or seek to employ any person
who is known to the Distributor, after reasonable inquiry, to be an
employee of the Corporation or any of its subsidiaries.
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8.2 Indirect Action Prohibited.
The Distributor agrees that, during the term of this
Agreement, it will not, directly or indirectly, assist or encourage
any other person or entity in carrying out, directly or indirectly,
any activity that would be prohibited by the provisions of Section
8.1 if such activity were carried out by the Distributor either
directly or indirectly and in particular, the Distributor agrees
that it will not, directly or indirectly, induce any employee of
the Corporation to carry out directly or indirectly any such
activity.
8.3 Survival.
The provisions of this Article VIII shall survive the
termination of this Agreement for any reason.
ARTICLE IX
MISCELLANEOUS
9.1 Notices.
All notices, requests or instruction hereunder shall be
in writing and delivered personally or sent by registered or
certified mail, postage prepaid, as follows:
(1) if the Corporation
2442 Viscount Row
Orlando Florida 32809
Attention: President
(2) if to the Distributor
620 Division Street
Elizabeth, New Jersey 07207
Attention: President
Any of the above addresses may be changed at any time by notice
delivered to the other party as provided above; provided, however,
that any such notice with respect to change of address shall be
effective only upon receipt.
9.2 Entire Agreement.
This Agreement contains the entire agreement between the
parties hereto with respect to the transaction contemplated hereby,
and supersedes all prior understandings, arrangements and
agreements with respect to the subject matter hereof. No
modification hereof shall be effective unless in writing and signed
by the party against which it is sought to be enforced.
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9.3 Further Action.
Each of the parties hereto shall use its best efforts to
take such actions as may be necessary or reasonably requested by
the other party hereto to carry out and consummate the transactions
contemplated by this Agreement.
9.4 Most Favored Customer.
In the event the Corporation is or becomes party to any
distributorship or similar arrangement, and such arrangements
contain terms materially more favorable to the purchaser or agent
thereunder than are contained herein with respect to the
Distributor, then, at the option of the Distributor, this Agreement
shall be amended to incorporate such more favorable terms. The
Corporation shall as soon as practicable deliver notice to the
Distributor of the existence of any such distributorship or similar
arrangement, identifying any such more favorable terms or the
absence thereof.
9.5 Benefit of Agreement.
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns, except that, other than as provided hereunder, neither
party may assign or subcontract its rights or obligations hereunder
without the prior written approval of the other party.
9.6 Expenses.
Except as otherwise provided herein, each of the parties
hereto shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
9.7 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey applicable in
the case of agreements made and to be performed entirely within
such state.
9.8 Captions.
The captions appearing in this Agreement are inserted for
the convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
9.9 Counterparts.
This Agreement may be executed in counterparts, each of
which shall be deemed an original, but both of which taken together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement had duly executed by the
parties hereto as of the date first above written.
ATTEST: SUPER VISION INTERNATIONAL, INC.
By
- ------------------ ------------------------------
Name:
Title:
ATTEST: HAYWARD POOL PRODUCTS, INC.
- ------------------ By
-------------------------------
Name:
Title:
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<PAGE> SCHEDULE 1
LIMITED WARRANTY
SUPERVISION(R) International, Inc. warranties its products,
excluding lamps, to be free from defects in material and/or
workmanship, under normal use, conditions and service, for a period
of ONE YEAR from the date of original purchase.
In the event of a defect in material or workmanship during the
warranty period, SUPERVISION(R) will repair or replace (at its
discretion) its products under the conditions of the Warranty.
SUPERVISION(R) will do so as its expense for the materials but not
for shipping. THIS REMEDY IS THE SOLE AND EXCLUSIVELY REMEDY FOR
ANY AND ALL CLAIMS RELATING TO ANY BREACH OF WARRANTY BY
SUPERVISION(R).
LIMITATIONS, EXCLUSIONS AND OTHER RIGHTS:
1. Except as provided herein, SUPERVISION(R) makes no other
warranties, express or implied, including but not limited
to the implied warranties of merchantability or fitness
for a particular purpose, and all such warranties are
expressly disclaimed. Some states do not allow the
exclusion of an implied warranty, so the above exclusion
may not apply to you.
2. SUPERVISION(R) is not responsible for defects or
malfunctions in and/or damage to Lighting Systems where
a sale is specifically made without warranty. In such
sales the disclaimers of warranty and liability; set
forth above, shall continue to apply.
3. The Warranty covers normal consumer use and does not
cover damage which occurs in shipment or damage or
failure which results from alteration, accident, theft,
misuse, abuse, abnormal use, negligent installation,
improper maintenance or where adequate care has not been
taken to prevent damage to the Lighting System.
4. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS, AND YOU
MAY ALSO HAVE OTHER RIGHTS WHICH VARY FROM STATE TO
STATE.
If you discover a defect or malfunction during the period to which
this Warranty applies, write or phone SUPERVISION(R) for
information on receiving warranty service.
EXHIBIT B
THE WARRANTS EVIDENCED HEREBY, AND THE SHARES
OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF
SUCH WARRANTS, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT.
WARRANT CERTIFICATE
249,480 Warrants
To Subscribe for and Purchase Class A Common Stock,
$.001 Par Value, of
SUPER VISION INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, HAYWARD INDUSTRIES,
INC., or its registered successors or assigns, is the owner of the
number of Warrants set forth above, each of which entitles the
owner thereof to purchase, subject to clauses (a) through (d),
inclusive, immediately succeeding, from SUPER VISION INTERNATIONAL,
INC., a Delaware corporation (hereinafter referred to as the
"Corporation"), from time to time during the period from September
25, 1996 (hereinafter referred to as the "Issuance Date") through
5:00 P.M., New York time, on the tenth anniversary of the Issuance
Date, one fully paid and nonassessable share of Class A Common
Stock (as hereinafter defined), as such stock is constituted on the
Issuance Date, subject to adjustment from time to time pursuant to
the provisions hereinafter set forth, at the initial price of $8.02
(hereinafter referred to as the "Exercise Price"), subject further
to the conditions hereinafter set forth; provided, however, that
the registered holder hereof:
(a) shall not be entitled to exercise any Warrants
evidenced hereby prior to the later of the first anniversary
hereof and the satisfaction by Hayward Pool Products, Inc.
(hereinafter referred to as the "Distributor") of the first
Minimum Purchase Commitment (in the manner set forth under
Section 3.3 of the Distributorship Agreement dated the
Issuance Date [the "Distributorship Agreement"] between the
Distributor and the Corporation) or satisfaction of any
deficiency with respect thereto in the manner thereunder
provided, and
(b) shall not be entitled to exercise in excess of 20%
of the Warrants originally evidenced hereby prior to the later
of the second anniversary hereof and the satisfaction by the
Distributor of the second Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
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Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
(c) shall not be entitled to exercise in excess of 40%
of the Warrants originally evidenced hereby prior to the later
of the third anniversary hereof and the satisfaction by the
Distributor of the third Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
(d) shall not be entitled to exercise in excess of 60%
of the Warrants originally evidenced hereby prior to the later
of the fourth anniversary hereof and the satisfaction by the
Distributor of the fourth Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
(e) shall not be entitled to exercise in excess of 80%
of the Warrants originally evidenced hereby prior to the later
of the fifth anniversary hereof and the satisfaction by the
Distributor of the fifth Minimum Purchase Commitment (in the
manner set forth under Section 3.3 of the Distributorship
Agreement) or satisfaction of any deficiency with respect
thereto in the manner thereunder provided, and, in either
case, satisfaction of any deficiency amounts with respect to
Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement.
This Warrant Certificate is subject to the following
provisions, terms and conditions:
1. The Warrants evidenced hereby may be exercised by the
registered holder hereof, in whole or in part, by the surrender of
this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Corporation), at the principal executive office of
the Corporation, 2442 Viscount Row, Orlando, Florida 32809 and upon
payment to it by certified or official bank check or checks of the
purchase price of the shares of Class A Common Stock purchased. The
Corporation agrees that the shares of Class A Common Stock so
purchased shall be deemed to be issued to the registered holder
hereof on the date on which this Warrant Certificate shall have
been surrendered and payment made for such shares as aforesaid. The
certificates for such shares shall be delivered to the registered
holder hereof within a reasonable time, not exceeding ten business
days, after Warrants evidenced hereby shall have been exercised,
and a new Warrant Certificate evidencing the number of the
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Warrants, if any, remaining unexercised shall also be issued to the
registered holder within such time unless such Warrants have
expired. No fractional shares of capital stock of the Corporation,
or scrip for any such fractional shares, shall be issued upon the
exercise of any Warrants.
2. The number and kind of shares of Class A Common Stock of
the Corporation subject to each Warrant evidenced hereby, and the
Exercise Price, shall be subject to adjustment as follows:
(a) Upon each adjustment of the Exercise Price as
provided herein, the holder of the Warrants evidenced hereby shall
thereafter be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of shares of Class A Common Stock
(calculated to the nearest tenth of a share) obtained by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) No fractional shares of Class A Common Stock or
scrip shall be issued upon exercise of the Warrants evidenced
hereby. Instead of any fractional shares of Class A Common Stock
which would otherwise be issuable upon exercise of the Warrants
evidenced hereby (or portion hereof), the Corporation shall pay a
cash adjustment in respect of such fractional share of Class A
Common Stock in an amount equal to the same fraction of the then
current fair value of a share of Class A Common Stock, as
determined in good faith by the Board of Directors of the
Corporation.
(c) In case the Corporation shall at any time subdivide
its outstanding shares of Class A Common Stock into a greater
number of shares of Class A Common Stock, the Exercise Price in
effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding
shares of Class A Common Stock of the Corporation shall be combined
into a smaller number of shares of Class A Common Stock, the
Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
(d) If and whenever after the Issuance Date the
Corporation shall issue or sell any shares of its Class A Common
Stock for a consideration per share less than the Market Price (as
hereinafter defined) in effect immediately prior to the time of
such issue or sale, or without consideration, then, forthwith upon
each such issue or sale, the Exercise Price shall be reduced (but
not increased) to the price (calculated to the nearest cent) equal
to the quotient obtained by dividing (i) the amount equal to the
sum of (a) the number of shares of Class A Common Stock outstanding
immediately prior to such issue or sale multiplied by the then
existing Exercise Price, and (b) the consideration, if any,
received by the Corporation upon such issue or sale by (ii) the
total number of shares of Class A Common Stock outstanding
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immediately after such issue or sale. "Market Price" for purposes
hereof shall mean (i) the average closing sale price for 30
consecutive business days (or such other period as the holder
hereof may consent to), ending within 15 days of the date of the
subject event, of the Class A Common Stock as reported by the
Nasdaq National Market System, if the Class A Common Stock is so
reported, or (ii) if not so reported, the average last reported
sale price for 30 consecutive business days (or such other period
as the holder hereof may consent to), ending within 15 days of the
date of the subject event, of the Class A Common Stock on the
primary exchange on which the Class A Common Stock is traded, if
the Class A Common Stock is traded on a national securities
exchange, or (iii) if not so reported or traded, the average of the
last reported bid and asked prices of the Class A Common Stock for
30 consecutive business days (or such other period as the holder
hereof may consent to), ending within 15 days of the date of the
subject event, of the Class A Common Stock, as reported by the
Nasdaq SmallCap Market or other automated quotation system of a
registered national securities association, or (iv) if not so
reported or traded, as determined by the Board of Directors of the
Corporation in its reasonable discretion. Any average calculated as
aforesaid shall be proportionately adjusted for any stock split,
stock dividend, combination or reclassification that took effect
during the relevant period. No adjustment of the Exercise Price,
however, shall be made in an amount less than $.001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount
to $.001 per share or more. In addition, the provisions of this
Paragraph (d) shall not apply upon: (w) issuance by the Corporation
of shares of Class A Common Stock upon the exercise of the Warrants
evidenced hereby or any other warrants issued to Hayward
Industries, Inc. on the Issuance Date, (x) issuance by the
Corporation of Class A Common Stock upon the exercise of any
Eligible Warrants (as hereinafter defined), (y) issuance by the
Corporation of stock options, or the issuance by the Corporation of
shares upon the exercise of such stock options, under any employee
stock option plan approved by the stockholders of the Corporation
now or hereafter in effect, as any such plan may be amended from
time to time, or (z) issuance by the Corporation of shares for cash
pursuant to an underwritten public offering registered under the
Act (as hereinafter defined). "Eligible Warrants" for purposes
hereof shall mean any and all warrants, options or other rights to
acquire shares of Class A Common Stock from the Corporation, or any
securities convertible into or exchangeable for Class A Common
Stock, in each case outstanding on the Issuance Date or issuable
directly or indirectly pursuant to warrants, options or other
rights outstanding on the Issuance Date. For purposes of this
Paragraph (d) the following additional sub-paragraphs shall apply:
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(i) Issuance of Rights or Options. In case at any time
the Corporation shall in any manner grant (whether directly or
by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase
of, Class A Common Stock or any stock or securities
convertible into or exchangeable for Class A Common Stock
(such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein
called "Convertible Securities") whether or not such Options
or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per
share for which Class A Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options,
plus the aggregate amount of additional consideration payable
to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible
Securities, the aggregate amount of additional consideration,
if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by
(ii) the total maximum number of shares of Class A Common
Stock issuable upon the exercise of such options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Market Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of
shares of Class A Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon
the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of
such Options and thereafter shall be deemed to be outstanding.
Except as otherwise provided in Sub-Paragraph (iii) of this
Paragraph (d), no adjustment of the Exercise Price shall be
made upon the actual issue of such Class A Common Stock or of
such Convertible Securities upon exercise of such Options or
upon the actual issue of such Class A Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
any such Convertible Securities are immediately exercisable,
and the price per share for which Class A Common Stock is
issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such
Convertible Securities, plus the aggregate amount of
additional consideration, if any, payable to the Corporation
upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Class A Common Stock issuable upon
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the conversion or exchange of all such Convertible Securities)
shall be less than the Market Price in effect immediately
prior to the time of such issue or sale, then the total
maximum number of shares of Class A Common Stock issuable upon
conversion or exchange of all such Convertible Securities
shall be deemed to have been issued for such price per shares
of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding,
provided that (x) except as otherwise provided in Sub-
Paragraph (iii) of this Paragraph (d), no adjustment of the
Exercise Price shall be made upon the actual issue of such
Class A Common Stock upon conversion or exchange of such
Convertible Securities, and (y) if any such issue or sale of
such Convertible Securities is made upon exercises of any
Options to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Sub-Paragraph (ii), no
further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Exercise Rate. Upon the
happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in
Sub-Paragraph (i) of this Paragraph (d), the additional
consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in Sub-Paragraphs
(i) or (ii) of this Paragraph (d), or the rate at which any
Convertible Securities referred to in Sub-Paragraphs (i) or
(ii) of this Paragraph (d) are convertible into or
exchangeable for Class A Common Stock shall change at any time
(other than under or by reason of provisions designed to
protect against dilution), the Exercise Price in effect at the
time of such event shall forthwith be readjusted to the
Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; and on the expiration
of any such Option or the termination of any such right to
convert or exchange such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be increased to
the Exercise Price which would have been in effect at the time
of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued,
and the Class A Common Stock issuable thereunder shall no
longer be deemed to be outstanding. If the purchase price
provided for in any such Option referred to in Sub-Paragraph
(i) of this Paragraph (d) or the rate at which any Convertible
Securities referred to in Sub-Paragraphs (i) or (ii) of this
Paragraph (d) are convertible into or exchangeable for Class
A Common Stock shall be reduced at any time under or by reason
of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Class A Common
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Stock upon the exercise of any such Option or upon conversion
or exchange of any such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be adjusted to
such respective amount as would have been obtained had such
Option or Convertible Securities never been issued as to such
Class A Common Stock and had adjustments been made upon the
issuance of the shares of Class A Common Stock delivered as
aforesaid, but only if as a result of such adjustment the
Exercise Price then in effect hereunder is thereby reduced.
(iv) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any
stock of the Corporation payable in Class A Common Stock,
Options or Convertible Securities, any Class A Common Stock,
Options or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be
deemed to have been issued in a subdivision of outstanding
shares as provided in Paragraph (c) immediately preceding.
(v) Consideration for Stock. In case any shares of Class
A Common Stock, Options or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Corporation
therefor, without deduction therefrom of any expenses incurred
or any underwriting commissions or concessions paid or allowed
by the Corporation in connection therewith. In case any shares
of Class A Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by
the Corporation shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of
Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the
Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to have
been issued without consideration.
(vi) Record Date. In case the Corporation shall take a
record of the holders of its Class A Common Stock for the
purpose of entitling them (i) to receive a dividend or other
distribution payable in Class A Common Stock, Options or
Convertible Securities, or (ii) to subscribe for or purchase
Class A Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue
or sale of the shares of Class A Common Stock deemed to have
been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the
case may be.
<PAGE>
(vii) Treasury Shares. The number of shares of Class A
Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Corporation,
and the disposition of any such shares shall be considered an
issue or sale of Class A Common Stock for the purposes of this
Paragraph (d).
(e) No adjustment in the number of shares of Class A
Common Stock issuable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an
increase or decrease of at least two percent in the number of
shares of Class A Common Stock at the time issuable upon exercise
of the Warrants evidenced hereby; provided, however, that any
adjustments which by reason of this clause (e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. Except as otherwise set forth herein, all
computations made pursuant to the provisions of this paragraph 2
shall be made to the nearest cent or to the nearest one hundredth
of a share, as the case may be.
(f) For purposes of this Warrant Certificate, the term
"Class A Common Stock" shall mean shares of the class A common
stock, $.001 par value, of the Corporation, and shall also include
any shares of capital stock of any class of the Corporation
hereinafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the
voluntary liquidation, dissolution or winding-up of the
Corporation; provided, however, that the shares of Class A Common
Stock receivable upon exercise of the Warrants evidenced hereby
shall include only shares of Class A Common Stock as constituted on
the Issuance Date including any stock into which it may be changed,
reclassified or converted.
3. If any consolidation or merger of the Corporation with
another corporation after the Issuance Date, or the sale of all or
substantially all of its assets to another corporation shall be
effected after the Issuance Date or in case of any capital
reorganization or reclassification of the capital stock of the
Corporation, then, as a condition of such consolidation, merger or
sale, reorganization or reclassification, lawful and adequate
provision shall be made whereby the holder of this Warrant
Certificate shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Class A Common Stock immediately
theretofore purchasable and receivable upon the exercise of each
Warrant evidenced hereby, such shares of stock, securities or
assets as may be issuable or payable with respect to or in exchange
for a number of outstanding shares of Class A Common Stock of the
Corporation equal to the number of shares of Class A Common Stock
immediately theretofore purchasable and receivable upon the
exercise of one Warrant evidenced hereby had such consolidation,
merger, sale, reorganization, or reclassification not taken place,
and in any such case appropriate provision shall be made with
<PAGE>
respect to the rights and interest of the registered holder of this
Warrant Certificate to the end that the provisions hereof
(including without limitation provisions for adjustment of the
Exercise Price) shall thereafter be applicable, as nearly as may
be, in relation of any shares of stock, securities or assets
thereafter deliverable upon the exercise of the Warrants evidenced
hereby.
4. Upon any adjustment of the Exercise Price or the number
of shares of Class A Common Stock subject to the Warrants evidenced
hereby, then and in each such case the Corporation shall give
written notice thereof, by first class mail, postage prepaid, to
the holder hereof, which notice shall state the Exercise Price
and/or the number of shares of Class A Common Stock subject to the
Warrants evidenced hereby resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts
upon which such calculation is based.
5. In case at any time:
(a) the Corporation shall declare any dividend upon its
shares of Class A Common Stock payable in stock or make any
special dividend or other distribution (other than a cash
dividend to the holders of its shares of Class A Common
Stock);
(b) the Corporation shall offer for subscription pro rata
to the holders of its shares of Class A Common Stock any
additional shares of stock of any class or other rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of
all or substantially all its assets to, another corporation;
or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give
written notice, by first class mail, postage prepaid, to the holder
hereof, of the date on which (i) the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or
subscription rights, or (ii) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up
shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of shares of Class A
Common Stock of record shall participate in such dividend,
distribution or subscription rights or shall be entitled to
exchange their shares of Class A Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and
<PAGE>
not less than 30 days prior to the record date or the date on which
the Corporation's transfer books are closed in respect thereto.
6. The Corporation shall at all times reserve and keep
available out of its authorized shares of Class A Common Stock,
solely for the purpose of its issue upon the exercise of the
Warrants evidenced hereby as herein provided, such number of shares
of Class A Common Stock as shall then be issuable upon the exercise
of the Warrants evidenced hereby.
7. The issuance of certificates of shares for Class A Common
Stock upon the exercise of the Warrants evidenced hereby shall be
made without charge to the holders of such Warrants for any
issuance tax in respect thereto; provided, however, that the
Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder
of the Warrants evidenced hereby.
8. The Corporation will at no time close its transfer books
against the transfer of any Class A Common Stock issued or issuable
upon the exercise of the Warrants evidenced hereby in any manner
which interferes with the timely exercise of such Warrants.
9. The shares of Class A Common Stock issuable hereunder
shall be subject to the registration rights set forth in the
Registration Rights Agreement dated this date between the
Corporation and Hayward Industries, Inc. to the same extent as if
the provisions of said Agreement were reproduced in their entirety
in this Warrant Certificate.
10. The person in whose name this Warrant Certificate is
registered shall be deemed the owner hereof and of the Warrant
evidenced hereby for all purposes. The registered holder of this
Warrant Certificate shall not be entitled to any rights whatsoever
as a stockholder of the Corporation except as herein provided.
11. Upon receipt by the Corporation of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in case of loss, theft or destruction) of
indemnity reasonably satisfactory to it, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the
Corporation, upon reimbursement to it of all reasonable expenses
incidental thereto, will make and deliver a new Warrant
Certificate, of like tenor, in lieu of this Warrant Certificate.
12. This Warrant Certificate and the Warrants evidenced
hereby may not be transferred unless such transfer would not result
in a violation of the provisions of the Securities Act of 1933, as
amended (herein referred to as the "Act"). Any transfer of this
Warrant Certificate and the Warrants evidenced hereby, in whole or
in part, shall be effected upon surrender of this Warrant
Certificate, duly endorsed (unless endorsement is waived by the
<PAGE>
Corporation), at the principal office or agency of the Corporation
referred to in paragraph 1.
13. All notices, requests or instructions hereunder shall be
in writing and delivered personally or sent by registered or
certified mail, postage prepaid as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
Attention: President
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
(2) if to the holder of the Warrants evidenced hereby:
620 Division Street
Elizabeth, New Jersey 07207
Attention: President
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663-5835
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
IN WITNESS WHEREOF, Super Vision International, Inc. has
caused this Warrant Certificate to be signed by its duly authorized
officers and this Warrant Certificate to be dated as of September
25, 1996.
ATTEST: SUPER VISION INTERNATIONAL, INC.
s/Michelle F. Ames
- ------------------------ By s/Brett Kingstone
--------------------------------
<PAGE>
<PAGE>
FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises Warrants to
subscribe for and purchase shares of Class A common stock, $.001
par value ("Class A Common Stock"), of Super Vision International,
Inc. evidenced by the within Warrant Certificate and herewith makes
payment of the purchase price in full. Kindly issue certificates
for shares of class A Common Stock in accordance with the
instructions given below. The certificate for the unexercised
balance of the Warrants evidenced by the within Warrants
Certificate, if any, will be registered in the name of the
undersigned.
Dated:
--------------------------------
Instructions for registration of stock
- ----------------------------------
Name (please print)
Social Security or Other Identifying Number:
- -----------------------------------
Address:
- -----------------------------------
Street
- -----------------------------------
City, State and Zip Code
<PAGE>
EXHIBIT C
THE WARRANTS EVIDENCED HEREBY, AND THE SHARES
OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF
SUCH WARRANTS, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT.
WARRANT CERTIFICATE
522,000 Warrants
To Subscribe for and Purchase Class A Common Stock,
$.001 Par Value, of
SUPER VISION INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, HAYWARD INDUSTRIES,
INC., or its registered successors or assigns, is the owner of the
number of Warrants set forth above, each of which entitles the
owner thereof to purchase, subject to the provisions contained at
the end of this sentence, from SUPER VISION INTERNATIONAL, INC., a
Delaware corporation (hereinafter referred to as the
"Corporation"), from time to time during the period from September
25, 1996 (hereinafter referred to as the "Issuance Date") through
5:00 P.M., New York time, on the Final Expiration Date (as
hereinafter defined), one fully paid and nonassessable share of
Class A Common Stock (as hereinafter defined), as such stock is
constituted on the Issuance Date, subject to adjustment from time
to time pursuant to the provisions hereinafter set forth, at the
Exercise Price (as hereinafter defined), subject further to the
conditions hereinafter set forth; provided, however, that the
registered holder hereof shall not be entitled to exercise any
Warrants evidenced hereby unless in each case an Exercise Event (as
hereinafter defined) shall have occurred and, then, solely during
the applicable Exercise Period (as hereinafter defined) and with
respect to the number of shares equal to up to ten percent of the
Subject Shares (as hereinafter defined). For purposes hereof, the
following terms shall have the meanings set forth below:
(a) "Eligible Warrants" shall mean any and all warrants,
options or other rights to acquire any shares of Class A Common
Stock from the Corporation, or any securities convertible into or
exchangeable for Class A Common Stock, in each case outstanding on
the Issuance Date or issuable directly or indirectly pursuant to
warrants, options or other rights outstanding on the Issuance Date,
and except for: (x) options issued pursuant to the Corporation's
1994 employee stock option plan, (y) the Warrants evidenced hereby
and any other warrants issued to Hayward Industries, Inc. on the
Issuance Date, and (z) rights to acquire from the Corporation
shares held in escrow pursuant to an Escrow Agreement dated as of
January 24, 1994, as amended March 17, 1994, among the Corporation,
American Stock Transfer & Trust Company and certain stockholders of
the Corporation;
<PAGE>
(b) "Exercise Event" shall mean each and every issuance of
shares of Class A Common Stock pursuant to exercise of any Eligible
Warrants;
(c) "Subject Shares" shall in each case mean the number of
shares of Class A Common Stock issued pursuant to exercise of any
Eligible Warrants upon an Exercise Event;
(d) "Final Expiration Date" shall mean the date which falls
45 days after the later of the date of expiration of the last
Eligible Warrant to expire or the issuance of the last share of
Class A Common Stock issued pursuant to exercise of any Eligible
Warrants; and
(e) "Exercise Price" shall mean (i) the average closing sale
price for 30 consecutive business days (or such other period as the
holder hereof may consent to), ending within 15 days of the date of
exercise of the Eligible Warrants in the related Exercise Event, of
the Class A Common Stock as reported by the Nasdaq National Market
System, if the Class A Common Stock is so reported, or (ii) if not
so reported, the last reported sale price for 30 consecutive
business days (or such other period as the holder hereof may
consent to), ending within 15 days of the date of exercise of the
Eligible Warrants in the related Exercise Event, of the Class A
Common Stock on the primary exchange on which the Class A Common
Stock is traded, if the Class A Common Stock is traded on a
national securities exchange, or (iii) if not so reported or
traded, the average of the last reported bid and asked prices of
the Class A Common Stock for 30 consecutive business days (or such
other period as the holder hereof may consent to), ending within 15
days of the date of exercise of the Eligible Warrants in the
related Exercise Event, of the Class A Common Stock, as reported by
the Nasdaq SmallCap Market or other automated quotation system of
a registered national securities association, or (iv) if not so
reported or traded, as determined by the Board of Directors of the
Corporation in its reasonable discretion (any average calculated as
aforesaid to be proportionately adjusted for any stock split, stock
dividend, combination or reclassification that took effect during
the relevant period).
This Warrant Certificate is subject to the following
provisions, terms and conditions:
1. Promptly upon each Exercise Event, the Corporation shall
give written notice thereof, by first class mail, postage prepaid,
to the holder hereof, which notice shall set forth in reasonable
detail the nature of such Exercise Event, the number of Subject
Shares applicable thereto, the number of Warrants then exercisable
as a result thereof and the Exercise Price of such Warrants.
2. The Warrants evidenced hereby then exercisable may be
exercised by the registered holder hereof, in whole or in part, by
the surrender of this Warrant Certificate, duly endorsed (unless
endorsement is waived by the Corporation), at the principal
<PAGE>
executive office of the Corporation, 2442 Viscount Row, Orlando,
Florida 32809 and upon payment to it by certified or official bank
check or checks of the purchase price of the shares of Class A
Common Stock purchased, in each case within 30 days of receipt of
notice from the Corporation of an Exercise Event as aforesaid (each
such period herein referred to as an "Exercise Period"). Any
Warrants not exercised during the applicable Exercise Period shall
be deemed to have expired. The Corporation agrees that the shares
of Class A Common Stock so purchased shall be deemed to be issued
to the registered holder hereof on the date on which this Warrant
Certificate shall have been surrendered and payment made for such
shares as aforesaid. The certificates for such shares shall be
delivered to the registered holder hereof within a reasonable time,
not exceeding ten business days, after Warrants evidenced hereby
shall have been exercised, and a new Warrant Certificate evidencing
the number of the Warrants, if any, remaining unexercised shall
also be issued to the registered holder within such time unless
such Warrants have expired. No fractional shares of capital stock
of the Corporation, or scrip for any such fractional shares, shall
be issued upon the exercise of any Warrants.
3. The number and kind of shares of Class A Common Stock of
the Corporation subject to each Warrant evidenced hereby shall be
subject to adjustment as follows:
(a) Upon each adjustment of the number of shares of
Class A Common Stock directly or indirectly subject to the Eligible
Warrants, or any of them (whether as a consequence of any stock
split, stock dividend, combination, reclassification, issuance of
securities, or otherwise), the number of shares of Class A Common
Stock issuable upon exercise hereof shall be similarly adjusted by
an amount equal to ten percent of such adjustment in the Eligible
Warrants.
(b) No fractional shares of Class A Common Stock or
scrip shall be issued upon exercise of the Warrants evidenced
hereby. Instead of any fractional shares of Class A Common Stock
which would otherwise be issuable upon exercise of the Warrants
evidenced hereby (or portion hereof), the Corporation shall pay a
cash adjustment in respect of such fractional share of Class A
Common Stock in an amount equal to the same fraction of the then
current fair value of a share of Class A Common Stock, as
determined in good faith by the Board of Directors of the
Corporation.
(c) No adjustment in the number of shares of Class A
Common Stock issuable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an
increase or decrease of at least two percent in the number of
shares of Class A Common Stock at the time issuable upon exercise
of the Warrants evidenced hereby; provided, however, that any
adjustments which by reason of this clause (c) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. Except as otherwise set forth herein, all
<PAGE>
computations made pursuant to the provisions of this paragraph 2
shall be made to the nearest cent or to the nearest one hundredth
of a share, as the case may be.
(d) For purposes of this Warrant Certificate, the term
"Class A Common Stock" shall mean shares of the Class A common
stock, $.001 par value, of the Corporation, and shall also include
any shares of capital stock of any class of the Corporation
hereinafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the
voluntary liquidation, dissolution or winding-up of the
Corporation; provided, however, that the shares of Class A Common
Stock receivable upon exercise of the Warrants evidenced hereby
shall include only shares of Class A Common Stock as constituted on
the Issuance Date including any stock into which it may be changed,
reclassified or converted.
4. If any consolidation or merger of the Corporation with
another corporation after the Issuance Date, or the sale of all or
substantially all of its assets to another corporation shall be
effected after the Issuance Date or in case of any capital
reorganization or reclassification of the capital stock of the
Corporation, then, as a condition of such consolidation, merger or
sale, reorganization or reclassification, lawful and adequate
provision shall be made whereby the holder of this Warrant
Certificate shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Class A Common Stock immediately
theretofore purchasable and receivable upon the exercise of each
Warrant evidenced hereby, such shares of stock, securities or
assets as may be issuable or payable with respect to or in exchange
for a number of outstanding shares of Class A Common Stock of the
Corporation equal to the number of shares of Class A Common Stock
immediately theretofore purchasable and receivable upon the
exercise of one Warrant evidenced hereby had such consolidation,
merger, sale, reorganization, or reclassification not taken place,
and in any such case appropriate provision shall be made with
respect to the rights and interest of the registered holder of this
Warrant Certificate to the end that the provisions hereof
(including without limitation provisions for adjustment of the
Exercise Price) shall thereafter be applicable, as nearly as may
be, in relation of any shares of stock, securities or assets
thereafter deliverable upon the exercise of the Warrants evidenced
hereby.
5. Upon any adjustment of the number of shares of Class A
Common Stock subject to the Warrants evidenced hereby, then and in
each such case the Corporation shall give written notice thereof,
by first class mail, postage prepaid, to the holder hereof, which
notice shall state the number of shares of Class A Common Stock
subject to the Warrants evidenced hereby resulting from such
adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
<PAGE>
6. In case at any time:
(a) the Corporation shall declare any dividend upon its
shares of Class A Common Stock payable in stock or make any
special dividend or other distribution (other than a cash
dividend to the holders of its shares of Class A Common
Stock);
(b) the Corporation shall offer for subscription pro rata
to the holders of its shares of Class A Common Stock any
additional shares of stock of any class or other rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of
all or substantially all its assets to, another corporation;
or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give
written notice, by first class mail, postage prepaid, to the holder
hereof, of the date on which (i) the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or
subscription rights, or (ii) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up
shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of shares of Class A
Common Stock of record shall participate in such dividend,
distribution or subscription rights or shall be entitled to
exchange their shares of Class A Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and
not less than 30 days prior to the record date or the date on which
the Corporation's transfer books are closed in respect thereto.
7. The Corporation shall at all times reserve and keep
available out of its authorized shares of Class A Common Stock,
solely for the purpose of its issue upon the exercise of the
Warrants evidenced hereby as herein provided, such number of shares
of Class A Common Stock as shall then be issuable upon the exercise
of the Warrants evidenced hereby.
8. The issuance of certificates of shares for Class A Common
Stock upon the exercise of the Warrants evidenced hereby shall be
made without charge to the holders of such Warrants for any
issuance tax in respect thereto; provided, however, that the
Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder
of the Warrants evidenced hereby.
<PAGE>
9. The Corporation will at no time close its transfer books
against the transfer of any Class A Common Stock issued or issuable
upon the exercise of the Warrants evidenced hereby in any manner
which interferes with the timely exercise of such Warrants.
10. The shares of Class A Common Stock issuable hereunder
shall be subject to the registration rights set forth in the
Registration Rights Agreement dated this date between the
Corporation and Hayward Industries, Inc. to the same extent as if
the provisions of said Agreement were reproduced in their entirety
in this Warrant Certificate.
11. The person in whose name this Warrant Certificate is
registered shall be deemed the owner hereof and of the Warrant
evidenced hereby for all purposes. The registered holder of this
Warrant Certificate shall not be entitled to any rights whatsoever
as a stockholder of the Corporation except as herein provided.
12. Upon receipt by the Corporation of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in case of loss, theft or destruction) of
indemnity reasonably satisfactory to it, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the
Corporation, upon reimbursement to it of all reasonable expenses
incidental thereto, will make and deliver a new Warrant
Certificate, of like tenor, in lieu of this Warrant Certificate.
13. This Warrant Certificate and the Warrants evidenced
hereby may not be transferred unless such transfer would not result
in a violation of the provisions of the Securities Act of 1933, as
amended (herein referred to as the "Act"). Any transfer of this
Warrant Certificate and the Warrants evidenced hereby, in whole or
in part, shall be effected upon surrender of this Warrant
Certificate, duly endorsed (unless endorsement is waived by the
Corporation), at the principal office or agency of the Corporation
referred to in paragraph 2.
14. All notices, requests or instructions hereunder shall be
in writing and delivered personally or sent by registered or
certified mail, postage prepaid as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
Attention: President
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
<PAGE>
(2) if to the holder of the Warrants evidenced hereby:
620 Division Street
Elizabeth, New Jersey 07207
Attention: President
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663-5835
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
IN WITNESS WHEREOF, Super Vision International, Inc. has
caused this Warrant Certificate to be signed by its duly authorized
officers and this Warrant Certificate to be dated as of September
25, 1996.
ATTEST: SUPER VISION INTERNATIONAL, INC.
s/Michelle F. Ames
- ------------------ By s/Brett Kingstone
------------------------------
<PAGE>
<PAGE>
FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises Warrants to
subscribe for and purchase shares of class A common stock, $.001
par value ("Class A Common Stock"), of Super Vision International,
Inc. evidenced by the within Warrant Certificate and herewith makes
payment of the purchase price in full. Kindly issue certificates
for shares of Class A Common Stock in accordance with the
instructions given below. The certificate for the unexercised
balance of the Warrants evidenced by the within Warrants
Certificate, if any, will be registered in the name of the
undersigned.
Dated:
-------------------------------
Instructions for registration of stock
- ----------------------------
Name (please print)
Social Security or Other Identifying Number:
- -----------------------------
Address:
- -----------------------------
Street
- -----------------------------
City, State and Zip Code
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of September 25, 1996,
between Super Vision International, Inc., a corporation duly
organized and validly existing under the laws of the State of
Delaware (hereinafter referred to as the "Corporation") and Hayward
Industries, Inc., a corporation duly organized and validly existing
under the laws of the State of New Jersey (hereinafter referred to
as the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Corporation and the Purchaser are parties to a
Stock Purchase Agreement dated as of September 25, 1996
(hereinafter referred to as the "Purchase Agreement") providing
for, among other matters, the issuance and delivery by the
Corporation to the Purchaser of certain shares (hereinafter
referred to as the "Closing Shares") of the class A common stock,
$.001 par value (as the same may be constituted from time to time
hereinafter referred to as the "Common Stock"), of the Corporation
and its Initial Warrants and Protective Warrants (as defined in the
Purchase Agreement), each dated this date (hereinafter referred to
as the "Warrants") exercisable with respect to the number of shares
of Common Stock specified therein (hereinafter referred to as the
"Warrant Shares" and, together with the Closing Shares, the
"Transaction Shares") of Common Stock; and
WHEREAS, the Purchaser has also entered into an agreement
dated as of September 25, 1996 (hereinafter referred to as the
"Option Agreement") with Brett Kingstone (hereinafter referred to
as the "Seller") providing for the purchase, at the election of the
Purchaser, of certain securities of the Corporation covered thereby
(hereinafter referred to as the "Option Shares"); and
WHEREAS, it is a condition to the acquisition and acceptance
by the Purchaser of the Closing Shares and the Warrants that the
Corporation execute and deliver this Agreement to the Purchaser;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following additional terms
shall have the following respective meanings:
The term "Mandatory Registration" shall have the meaning set
forth in Paragraph A of Article III hereof.
The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
<PAGE>
The term "Incidental Registration" shall have the meaning set
forth in Paragraph A of Article IV.
The term "a majority of the Registrable Securities" shall mean
more than 50% of the number of shares of the Registrable Secu-
rities, and shall apply mutatis mutandi whenever a percentage of
Registrable Securities greater than a majority is required in this
Agreement.
The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
The term "Prospectus" shall mean the prospectus included in
any Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
The term "Registration Expenses" shall have the meaning set
forth in Article VII.
The term "Registrable Securities" shall mean (i) the
Transaction Shares, (ii) the Option Shares, and (iii) any
securities issued or issuable with respect to the securities
referred to in clauses (i) and/or (ii) immediately preceding by way
of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization; provided, however, that a security ceases to
be a Registrable Security when it is no longer a Restricted
Security.
The term "Registration Statement" shall mean any registration
statement of the Corporation which covers Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments (including post-effective amendments) and
supplements to such Registration Statement.
The term "Restricted Securities" shall mean any security
unless or until: (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public
pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; or (iii) it has otherwise been
transferred and a new certificate or other evidence of ownership
for it not bearing a restrictive legend pursuant to the Securities
Act and not subject to any stop transfer order has been delivered
by or on behalf of the Corporation.
The term "Securities Act" shall mean the Securities Act of
1933, as amended, as amended from time to time.
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The term "Selling Expenses" shall have the meaning set forth
in Article VII.
The term "SEC" shall mean the Securities and Exchange
Commission.
The term "underwritten registration" or "underwritten
offering" shall mean a registration in which securities of the
Corporation are sold pursuant to a firm commitment underwriting to
an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with an underwriter.
ARTICLE II
SECURITIES SUBJECT TO THIS AGREEMENT
A. Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
B. Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such Registrable
Securities, whether or not such acquisition has actually been
effected, and whether or not such Registrable Securities or such
rights are in the name of a nominee or custodian, and disregarding
any contractual conditions relating to the exercise of such right.
Without limiting the generality of the foregoing, each holder of
the Warrants shall be deemed a holder of Registrable Securities.
Notwithstanding the foregoing, no beneficiary of any rights under
the Option Agreement shall be deemed to hold any Option Shares
unless and until the conditions to release thereof to the Seller
pursuant to the escrow agreement dated January 21, 1994 between the
Seller and the Corporation have been met.
ARTICLE III
MANDATORY REGISTRATION
A. Required Registration. The Corporation covenants that:
(i) as promptly as practicable subsequent to the date
hereof (but in no event later than the first anniversary of
the date hereof), and
(ii) as promptly as practicable after the exercise of
any Warrants (but in no event later than the first anniversary
of the date of such exercise), and
(iii) as promptly as practicable after the acquisition
of any Option Shares pursuant to the Option Agreement (but in
no event later than the first anniversary of such
acquisition),
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it shall prepare and file with the Securities and Exchange
Commission a Registration Statement covering the proposed offer and
sale of such Registrable Securities (each herein referred to as a
"Mandatory Registration"); provided, however, that, subject to
compliance with applicable securities laws, the Corporation, at its
option, may in any such case earlier prepare and file with the
Securities and Exchange Commission a Registration Statement with
respect to all such Registrable Securities at any time after the
date of this Agreement (it being understood and agreed that the
obligations of the Corporation under clauses (ii) and (iii)
immediately preceding shall not be deemed satisfied under such
earlier filed Registration Statement unless such Registration
Statement is kept effective through the period required under
Paragraph B of Article VI hereof (but with the applicable period
measured by initial reference in each case to the date of exercise
of the Warrants, or acquisition of the Option Shares, requiring
such Mandatory Registration), failing which an additional Mandatory
Registration or Mandatory Registrations shall be effectuated as
contemplated without reference to this proviso).
B. Expenses. The Corporation shall pay all Registration
Expenses related to each such registration, whether or not the
Registration Statement with respect to such registration has become
effective, and all other expenses incurred by the Corporation in
complying with this Article III. All Selling Expenses related to
such registration shall be borne by the participating sellers
(including the Corporation, if a seller), in proportion to the
number of shares sold by each, or by such sellers as they may
agree.
C. Incidental Rights to Mandatory Registrations
The Corporation and any of its securityholders shall have
the right to include any of the Corporation's securities in any
registration initiated under Paragraph A of this Article III. If
any securityholders of the Corporation (other than the holders of
Registrable Securities in such capacity) register securities of the
Corporation in a Mandatory Registration (in accordance with the
provisions of this Paragraph C), such holders shall pay the fees
and expenses of counsel to such holders and the incremental amount
of Registration Expenses incurred as a result of their
participation unless the Corporation has agreed to pay such
expenses and, in the opinion of counsel to the Corporation, such
payment shall not affect the ability of the Registrable Shares to
be qualified under the blue sky laws of any jurisdiction.
ARTICLE IV
INCIDENTAL REGISTRATIONS
A. Notice and Request for Incidental Registration. Whenever
the Corporation proposes to register any of its securities under
the Securities Act, other than pursuant to a Mandatory Registration
or a registration on Forms S-4 or S-8 or comparable forms
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<PAGE>
(hereinafter referred to as an "Incidental Registration"), the
Corporation shall give written notice to all holders of Registrable
Securities of its intention to effect such a registration not later
than the earlier to occur of (i) the tenth day following receipt by
the Corporation of notice of exercise of other demand registration
rights or (ii) 45 days prior to the anticipated filing date.
Subject to the provisions of Paragraphs C and D of this Article IV,
the Corporation shall include in such Incidental Registration all
Registrable Securities with respect to which the Corporation has
received written requests for inclusion therein within 15 business
days after the receipt by the applicable holder of the
Corporation's notice. If an Incidental Registration is an
underwritten offering effected:
(i) under Paragraph C of this Article IV hereof, all
Persons whose securities are included in the Incidental
Registration shall be obligated to sell their securities on
the same terms and conditions as apply to the securities being
issued and sold by the Corporation; or
(ii) under Paragraph D of this Article IV hereof, all
Persons whose securities are included in the Incidental
Registration shall be obligated to sell their securities on
the same terms and conditions as apply to the securities being
sold by the Person or Persons who initiated the Incidental
Registration under said paragraph.
B. Incidental Registration Expenses. The Corporation shall
pay all Registration Expenses related to such registration, or
incurred as a result of the participation in an Incidental
Registration of the holders of Registrable Securities, whether or
not the Registration Statement with respect to such registration
has become effective,and all other expenses incurred by the
Corporation in complying with this Article IV. Any Selling
Expenses related to such registration shall be borne by the
participating sellers (including the Corporation, if a seller), in
proportion to the number of shares sold by each, or by such sellers
as they may agree.
C. Priority on Underwritten Primary Registration. If an
Incidental Registration is an underwritten primary registration on
behalf of the Corporation, and the managing underwriters advise the
Corporation in writing that in their sole discretion the total
number or dollar amount of securities requested to be included in
such registration would reduce the number of shares to be offered
by the Corporation or interfere with the successful marketing of
the shares of stock offered by the Corporation, the Corporation
shall include in such registration:
(i) first, all securities the Corporation proposes to
sell; and
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(ii) second, the Registrable Securities and such other
securities (provided such securities are of the same class as
the securities being sold by the Corporation) requested to be
included in such registration in excess of the number of
securities the Corporation proposes to sell which, in the sole
discretion of such underwriters, would not interfere with the
successful marketing of the shares of stock offered by the
Corporation (allocated pro rata among the holders of such
Registrable Securities and other securities on the basis of
the number of securities requested to be included therein by
each such holder).
D. Priority on Underwritten Secondary Registration. If an
Incidental Registration is an underwritten secondary registration
on behalf of holders of the Corporation's securities, and the
managing underwriters advise the Corporation in writing that in
their sole discretion the number of securities requested to be
included in such registration would reduce the number of shares to
be offered by the securityholders initiating such registration or
interfere with the successful marketing of the shares of stock
offered by the securityholders initiating such registration, the
Corporation shall include in such registration:
(i) first, all securities requested to be included in
such registration by the securityholders initiating such
registration; and
(ii) second, up to the full number of Registrable
Securities and such other securities (provided such securities
are of the same class as the securities being sold by the
Corporation) requested to be included in such registration in
excess of the number of securities the securityholders
initiating such registration propose to sell which, in the
sole discretion of such underwriters, would not interfere with
the successful marketing of the shares of stock offered by the
securityholders initiating such registration (allocated pro
rata among the holders of such Registrable Securities and
other securities on the basis of the number of securities
requested to be included therein by each such holder).
E. Selection of Underwriters. If any Incidental Registration
is an underwritten offering, the Corporation shall have the right
to select the investment banker or investment bankers and manager
or managers to administer the offering.
ARTICLE V
HOLDBACK AGREEMENTS
Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant
to Article IV hereof agrees, if requested by the managing
underwriters, not to effect any public sale or distribution of
securities of the Corporation of the same class as the securities
included in such Registration Statement, including a sale pursuant
<PAGE>
to Rule 144 under the Securities Act (except as part of such
underwritten registration) during the 30-day period prior to, and
during the 180-day period beginning on, the closing date of each
underwritten offering of Registrable Securities made pursuant to
such Registration Statement, to the extent timely notified in
writing by the Corporation or the managing underwriters. The
foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or
regulation from entering any such agreement.
ARTICLE VI
REGISTRATION PROCEDURES
Whenever Registrable Securities are required to be registered
pursuant to this Agreement, the Corporation shall use its best
efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the
Corporation shall as expeditiously as possible:
A. prepare and file with the SEC, not later than twelve
months after required to file a Registration Statement for a
Mandatory Registration, a Registration Statement on a form for
which the Corporation then qualifies which is satisfactory to the
Corporation and the holders of a majority of the Registrable
Securities being registered and which form shall be available for
the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof, and use its
best efforts to cause such Registration Statement to become
effective; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial
filing of the Registration Statement, the Corporation shall furnish
to a representative designated by the holders of a majority of the
Registrable Securities covered by such Registration Statement
copies of all such documents proposed to be filed, which documents
will be subject to the review of such holders, and the Corporation
shall not file any Registration Statement or amendment thereto or
any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which the holders of a majority of
the Registrable Securities covered by such Registration Statement,
if any, shall reasonably object;
B. prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for a period
of not less than six months (or, in the event of a Mandatory
Registration, and subject to the provisions with respect to
measurement of such period under the proviso contained in Paragraph
A of Article III hereof, three years), or such shorter period which
will terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
<PAGE>
under the Securities Act (except that, in each case upon prior
written notice to the holders of Registrable Securities covered by
such Prospectus, the Corporation shall not be obligated to maintain
the currentness of the Prospectus for up to three periods not in
excess of 90 days in the aggregate in each calendar year after
registration, if the Board of Directors of the Corporation in good
faith determines that the best interests of the Corporation would
be materially impaired by disclosure at that time in the Prospectus
of material, non-public information with respect to the
Corporation); and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance
with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement or supplement to the
Prospectus;
C. notify the selling holders of Registrable Securities
promptly,
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment,
when the same has become effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or
for additional information;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose;
(iv) of the receipt by the Corporation of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event which makes any
statement made in the Registration Statement, the Prospectus
or any document incorporated therein by reference untrue or
which requires the making of any changes in the Registration
Statement, the Prospectus or any document incorporated therein
by reference in order to make the statements therein not
misleading;
D. make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
E. if requested by a holder of Registrable Securities being
sold, immediately incorporate in a Prospectus supplement or
post-effective amendment such information as the holders of a
majority of the Registrable Securities being sold and their
respective counsel reasonably conclude should be included in the
<PAGE>
Registration Statement, so that such Registration Statement
conforms in both form and substance to the requirements of the
Securities Act, and make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or
posteffective amendment; in each case under this Paragraph E
subject to the exception contained under Paragraph B of this
Article VI;
F. promptly prior to the filing of any document which is to
be incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement)
provide copies of such document to a representative designated by
the holders of a majority of Registrable Securities covered by the
Registration Statement, make the Corporation's representatives
available for discussion of such document and make such changes in
such document prior to the filing thereof as counsel for such
selling holders may reasonably request;
G. furnish to each selling holder of Registrable Securities,
without charge, at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including those incorporated
by reference);
H. deliver to each selling holder of Registrable Securities
without charge, a reasonable number of copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request (and the
Corporation hereby consents to the use of the Prospectus or any
amendment or supplement thereto by each of the selling holders of
Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto);
I. prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, and their respective counsel in connection
with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any seller reasonably requests in writing
and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided,
however, that the Corporation shall not be required to qualify
generally to do business in any jurisdiction where it is not then
so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is not
then so subject;
J. cooperate with the selling holders of Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any restrictive legends;
<PAGE>
K. upon the occurrence of any event contemplated by clause
(v) of Paragraph C of this Article VI, prepare a supplement or
post-effective amendment to the Registration Statement or the
Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus
shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading; in each case under this Paragraph K subject to the
exception contained under Paragraph B of this Article VI;
L. cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Corporation are then listed
if requested by the holders of a majority of such Registrable
Securities if the listing of such securities is then permitted
under the rules of such exchange;
M. take all such other actions in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities as may be reasonably requested by the selling holders of
Registrable Securities;
N. make available for inspection by a representative of the
sellers of Registrable Securities, and any attorney, accountant or
other agent retained by the sellers, all financial and other
records, pertinent corporate documents and properties of the
Corporation, and cause the Corporation's officers, directors and
employees to supply all information reasonably requested by any
such representative, attorney, accountant or agent solely for use
in connection with such registration statement; provided, however,
that any records, information or documents that are designated by
the Corporation in writing as confidential shall be kept
confidential by such Persons pursuant to such reasonable
confidentiality agreements as the Corporation may request;
O. otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any twelve-month period (or 90 days,
if such period is a fiscal year) beginning with the first month of
the Corporation's first fiscal quarter commencing after the
effective date of the Registration Statement, which statements
shall cover said twelve-month periods.
ARTICLE VII
REGISTRATION AND SELLING EXPENSES
For purposes of this Agreement, all underwriting discounts and
selling commissions, and transfer taxes and fees and expenses of
counsel to the holders of Registrable Securities, applicable to the
sale of Registrable Securities (all such expenses being herein
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<PAGE>
referred to as "Selling Expenses"), and all expenses incident to
the Corporation's performance of or compliance with this Agreement,
including without limitation:
A. all registration and filing fees (including with respect
to filings required to be made with the National Association of
Securities Dealers, Inc.);
B. fees and expenses of compliance with securities or blue
sky laws;
C. printing, messenger, telephone and delivery expenses;
D. fees and disbursements of counsel for the Corporation;
E. fees and disbursements of all independent certified
public accountants of the Corporation; and
F. fees and expenses of other Persons retained by the
Corporation;
(all such expenses being herein called "Registration Expenses")
shall be borne as provided in this Agreement; it being understood
and agreed that the Corporation shall, in any event, pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit conducted at
the end of the Corporation's fiscal year in the ordinary course of
business, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities
exchange and securities association.
ARTICLE VIII
INDEMNIFICATION
A. Indemnification by Corporation. The Corporation agrees to
indemnify, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and
agents and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to
deliver a copy of the Registration Statement or Prospectus after
the Corporation has furnished such holder with a sufficient number
of copies of the same.
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<PAGE>
B. Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of
Registrable Securities is participating, each such holder will
furnish to the Corporation in writing such information and
affidavits as the Corporation reasonably requests for use in
connection with any Registration Statement or Prospectus and agrees
to indemnify, to the full extent permitted by law, the Corporation,
its directors, officers, employees and agents and each Person who
controls the Corporation (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact
required to be stated in the Registration Statement or Prospectus
or preliminary Prospectus or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder to the
Corporation specifically for inclusion in such Registration
Statement or Prospectus. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds received by such
holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
C. Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of
such claim, but the reasonable fees and expenses of such counsel
shall be at the expense of such Person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such
claim and employ counsel reasonably satisfactory to such Person, or
(c) in the reasonable judgment of any such Person and the
indemnifying party, based upon advice of their respective counsel,
a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if
the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such Person). If
such defense is not assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnifying party shall be required to
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume
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<PAGE>
the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest
may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees
and expenses of such additional counsel or counsels.
D. Contribution. If the indemnification provided for in this
Article VIII is unavailable or insufficient to hold harmless an
indemnified party under Paragraphs A or B immediately preceding,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in said Paragraphs A or
B, in such proportion as is appropriate to reflect the relative
fault of the Corporation, on the one hand, and the participating
holders of Registrable Securities, on the other, in connection with
the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. 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 the
Corporation on the one hand or such holders on the other, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable
if contributions pursuant to this Paragraph D were to be determined
by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to
in the prior provisions of this Paragraph D. The amount paid by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in the prior provisions of this Paragraph
D shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating
or defending against any action or claim that is the subject of
this Paragraph D. Notwithstanding the provisions of this Paragraph
D, no participating holder of Registrable Securities shall be
required to contribute any amount in excess of the amount by which
the net proceeds received from the sale of its shares exceeds the
amount of any damages that it has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. For purposes of this Paragraph D no person guilty
of fraudulent misrepresentation (within the meaning of Section V(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
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ARTICLE IX
RULE 144
The Corporation covenants that it shall file the reports
required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC
thereunder, all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may
be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No holder of Registrable Securities may participate in any
underwritten registration under Article IV hereof unless such
holder (i) agrees to sell such holder's securities on the basis and
pursuant to the terms provided in any underwriting approved by the
Corporation or the Persons entitled to approve such arrangements
and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
ARTICLE XI
MISCELLANEOUS
A. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, shall be entitled
to specific performance of its rights under this Agreement. The
Corporation agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law
would be adequate.
B. Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered
or certified mail, postage prepaid, as follows:
(1) if to the Corporation:
2442 Viscount Row
Orlando, Florida 32809
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<PAGE>
with a copy to:
Alison Newman, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
(2) if to the Purchaser:
900 Fairmount Avenue
Elizabeth, New Jersey 07207
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80-West Plaza Two
Saddle Brook, New Jersey 07663-5835
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
C. Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement of the parties
hereto with respect to the transactions contemplated hereby, and
supersede all prior understandings, arrangements, and agreements
with respect to the subject matter hereof. No modification hereof
shall be effective unless in writing and signed by the party
against Which it is sought to be enforced.
D. Further Action. Each of the parties hereto shall use such
party's best efforts to take such actions as may be necessary or
reasonably requested by the other party hereto to carry out and
consummate the transactions contemplated by this Agreement.
E. Successors and Assigns. The registration rights granted
to the Purchaser under Article III and under Article IV may be
transferred to a transferee who acquires any Transaction Shares or
the Warrants, or any of them, or the Purchaser's rights under the
Option Agreement, which transfer shall be effective when the
Corporation is given written notice by the transferor at the time
of such transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under
Article III and IV are being assigned; provided, however, that the
rights granted hereunder shall not inure to the benefit of any
subsequent holder of Registrable Securities who purchased such
Registrable Securities in a registered public offering or pursuant
to Rule 144 promulgated under the Securities Act.
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F. Notice of Shares. All references herein to numbers of
shares of Registrable Securities shall be subject to appropriate
adjustment for stock splits, stock dividends and recapitalizations
of the Corporation.
G. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable in the case of agreements made and to be performed
entirely within such State.
H. Captions. The captions appearing herein are for the
convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
I. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ATTEST: SUPER VISION INTERNATIONAL, INC.
s/Michelle F. Ames
- ---------------------- By s/Brett Kingstone
------------------------------
ATTEST: HAYWARD INDUSTRIES, INC.
s/Reuven Har-Even
- ----------------------- By s/Anthony T. Castor
-----------------------------
EXHIBIT E
HAYWARD INDUSTRIES, INC.
900 Fairmount Avenue
Elizabeth, NJ 07207
September 25, 1996
Mr. Brett Kingstone
Super Vision International, Inc.
2442 Viscount Row
Orlando, Florida 32809
Dear Mr. Kingstone:
Reference is hereby made to:
(i) the Escrow Agreement dated as of January 21, 1994
(the "Escrow Agreement") among Super Vision International,
Inc. (the "Corporation"), American Stock Transfer & Trust
Company and you (the "Seller") and other stockholders of the
Corporation, as amended by amendment dated as of March 17,
1994 among such stockholders, pursuant to which, among other
matters, a number of shares (the "Escrow Shares") of the class
B common stock, $.001 par value, of the Corporation owned by
the Seller are held in escrow, subject to release in
accordance with the terms and conditions set forth therein;
and
(ii) the Agreement dated as of even date herewith (the
"Purchase Agreement") between the Corporation and Hayward
Industries, Inc. ("Hayward"), pursuant to which Hayward has
agreed to acquire shares of the Corporation's class A common
stock, $.001 par value (the "Class A Common Stock"), and,
through a subsidiary, to enter into certain distributorship
arrangements with the Corporation.
In connection with the execution and delivery of the Purchase
Agreement, and in exchange for payment by Hayward to the Seller of
the amount of $1.00 and other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by the
Seller), the Seller hereby grants to Hayward, or its designated
affiliate, an option with respect to a portion of the Escrow Shares
(and all Escrow Property [as defined in the Escrow Agreement]
attributable to such shares) pursuant to the terms hereinafter set
forth:
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1. Grant of Option.
(a) Subject to Closing under the Purchase Agreement, in each
event of the release of Escrow Shares to the Seller (a "Release")
the Seller shall immediately notify Hayward thereof, specifying the
number of Escrow Shares subject to such Release, whereupon Hayward
shall have the right and option, exercisable at any time prior to
45 days from and after such Release (each, a "Termination Date"),
to purchase up to ten (10%) percent of the Escrow Shares (at
Hayward's election, together with the Escrow Property attributable
to such shares) released to the Seller (such Escrow Shares,
together with such Escrow Property, in each case the "Option
Shares"), at a purchase price calculated as hereinafter set forth
(the "Purchase Price"). Any right of Hayward to purchase such
Options Shares shall expire upon the applicable Termination Date
and such shares shall no longer be deemed Option Shares for
purposes of this Agreement.
(b) The Purchase Price shall in each instance be calculated
by the Seller and Hayward as the fair market value of the relevant
Option Shares, with each share of Class A Common Stock included
therein valued with reference to the average Bid Price thereof (as
defined in the Escrow Agreement, as in effect on the date hereof)
for 30 consecutive business days prior to the date of the Exercise
Notice (as hereinafter defined), appropriately modified by the
parties to reflect any stock splits, stock dividends,
reclassifications, or similar events; and should the Seller and
Hayward fail promptly to agree as aforesaid, by an appraiser
independent of the Seller, Hayward or the Corporation, qualified in
such matters, upon when the Seller and Hayward shall promptly
agree.
2. Exercise of Option. Hayward shall, at its election, in
each case exercise the foregoing right and option by giving written
notice to the Seller (each, an "Exercise Notice") specifying the
time and date, no earlier than five nor later than 15 days after
the delivery of such notice to the Seller (the "Closing Date"), at
which payment of the Purchase Price for the Option Shares will be
made, at the offices of Messrs. Krugman, Chapnick & Grimshaw, Park
80 West-Plaza Two, Saddle Brook, New Jersey 07663, by delivery to
the Seller of such Purchase Price by certified or bank cashiers'
check or wire transfer, against delivery of certificates for the
Option Shares, duly endorsed in blank by the Seller (each such
certificate accompanied by any requisite documentary or stock
transfer tax stamps), or other documentation in form and substance
satisfactory to Hayward and effective to transfer the Option Shares
to Hayward. Subject to the terms and conditions hereof, Hayward
hereby agrees to purchase such Option Shares from the Seller and
the Seller hereby agrees to sell such Option Shares to Hayward, in
each event that Hayward delivers such Exercise Notice to the Seller
as aforesaid.
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3. Registration of Shares. In each event of exercise of the
foregoing right and option, and of the transfer of any Option
Shares as aforesaid, the Corporation shall, as promptly as
practicable subsequent to the Closing Date and in no event later
than twelve months from such date, register such Option Shares as
shall form part of a class of securities of the Corporation then
registered under the Securities Exchange Act of 1934, at the
Corporation's expense, pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). The foregoing registration shall be
effectuated by the Corporation by execution and delivery to Hayward
of the Registration Rights Agreement (as defined in the Purchase
Agreement).
4. Representations and Warranties and Agreements of the
Seller. The Seller hereby represents and warrants to, and agrees
with Hayward, as follows:
(a) The Seller has full and unrestricted power and authority
to enter into this agreement and to perform all of his covenants
and agreements hereunder. When executed and delivered by him, the
terms hereof shall constitute his valid and legally binding
agreement enforceable against him in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors rights and by
limitations on the availability of equitable remedies.
(b) The Seller has good and marketable title to the Escrow
Shares, which, with the exception of the Escrow Agreement, are free
and clear of all mortgages, deeds of trust, security interests,
pledges, liens and other charges and encumbrances of any nature,
and has the right to sell and transfer all Option Shares to Hayward
hereunder upon the release, if ever, of such Option Shares from
escrow pursuant to the Escrow Agreement. As of the date hereof, no
Escrow Property is held pursuant to the provisions of the Escrow
Agreement. Hayward shall, upon delivery of any Option Shares in
accordance with this agreement, hold good and marketable title
thereto, free and clear of any lien, security interest, voting
trust or other claim, charge or encumbrance.
(c) Neither the execution and delivery hereof, nor the
consummation of any or all of the transactions contemplated herein,
will violate any law, rule, regulation, writ, judgment, injunction,
decree, determination, award or other order of any court or
governmental agency, or conflict with or result in any breach of or
constitute a default under, or result in the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature pursuant to the terms of,
any contract or agreement to which he is a party or by which he or
any of his assets is bound.
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(d) Neither the Seller nor anyone acting on behalf of the
Seller has directly or indirectly offered any securities for sale
to, or solicited any offer to buy any of the same from, anyone so
as to bring the delivery and sale of the Option Shares hereunder
within the registration requirements of the Securities Act.
(e) The representations and warranties contained in this
Section 4 shall be true and correct on and as of each Closing Date
with the same effect as if made on and as of such date and such
representations and warranties shall survive each Closing Date
notwithstanding any investigation made by or on behalf of Hayward;
and the Seller shall, on each Closing Date, deliver its certificate
to Hayward to the foregoing effect in form and substance
satisfactory to Hayward.
5. Representations and Warranties of Hayward. Hayward
hereby represents and warrant to, and agrees with the Seller, as
follows:
(a) It is a corporation duly organized and validly existing
under the laws of the State of New Jersey and has the full
corporate power and authority to enter into the agreements
contained herein, to acquire the Option Shares elected by it, and
to carry out the provisions hereof.
(b) The execution and delivery hereof by it and the
performance by it of its covenants and agreements hereunder have
been duly authorized by all necessary corporate action. When
executed and delivered by it the terms hereof shall constitute
Hayward's valid and legally binding obligation enforceable against
it in accordance therewith, except as may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of
equitable remedies.
(c) Neither the execution and delivery hereof, nor the
consummation of the transactions contemplated herein, will violate
any provision of its certificate of incorporation or by-laws, or
any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any court or governmental
agency, or conflict with or result in any breach of any of the
terms of or constitute a default under, or result in the creation
or imposition of any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance of any nature
pursuant to the terms of any contract or agreement to which it is
a party or by which it or any of its assets is bound.
(d) Except as otherwise permitted by applicable law (without
limitation, including in the exercise of any rights contemplated by
Section 3 hereof), Hayward will acquire the Option Shares purchased
by it hereunder for its own account and not with a view to, or for
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sale in connection with, the distribution thereof within the
meaning of the Securities Act.
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(e) The representations and warranties contained in this
Section 5 shall be true and correct on and as of each Closing Date
with the same effect as if made on and as of such date, and such
representations and warranties shall survive each Closing Date
notwithstanding any investigation made by or on behalf of the
Seller; and Hayward shall, on each Closing Date, deliver its
certificate to the Seller to the foregoing effect in form and
substance satisfactory to the Seller.
6. Right-of-First Refusal.
(a) In addition to the right and option hereinabove set
forth, the Seller agrees that, in the event the Seller shall, from
time to time, determine to sell any securities of the Corporation
owned by him, pursuant to a bona fide offer (the "Bona Fide
Offer"), to any Hayward Competitor (as defined in the Purchase
Agreement), and provided that no Change in Control (as hereinafter
defined) in respect of Hayward shall have occurred subsequent to
the date hereof, the Seller shall, in each instance, first offer
such shares (the "Offered Shares") to Hayward, by written notice
(each an "Initial Sale Notice") to Hayward to that effect. Hayward
shall have the right and option to purchase all, but not less than
all, securities specified in the Initial Sale Notice by giving
written notice of exercise (an "Acceptance Notice") to the Seller
within ten days after the receipt of the Initial Sale Notice for a
purchase price calculated as hereinafter set forth. Failure to
respond within such period shall conclusively be deemed notice of
rejection. In the event Hayward shall not timely have exercised any
right and option under this Section 6, the Seller shall be free,
for a period of sixty days after the expiration of such right and
option, to sell all, but not less than all, securities to which
such right and option related pursuant to the Bona Fide Offer
theretofore communicated to Hayward, free of the restrictions of
this Section 6. In the event that Hayward duly delivers an
Acceptance Notice to the Seller, then the Acceptance Notice, taken
in conjunction with the Initial Sale Notice, shall constitute a
valid and legally binding purchase and sale agreement, and payment
in cash for the Offered Shares purchased be made within ten days
following the receipt by the Seller of the Acceptance Notice. In
the event the Seller fails to complete the proposed sale,
assignment, transfer or other disposition within 60 days after the
rejection or deemed rejection of the offer contained in the Initial
Sale Notice, sale of the Offered Shares shall again be subject to
the provisions of this Section 6.
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(b) The purchase price for each security offered to Hayward
pursuant to this Section 6 shall be the dollar value of the
consideration per security offered to the Seller pursuant to the
Bona Fide Offer, which, in the case of any non-cash consideration,
shall be the fair market value thereof determined by the Seller and
Hayward or should the Seller and Hayward fail to agree thereon
within three days of receipt by Hayward of the Initial Sale Notice,
the purchase price shall be determined by an independent appraiser,
qualified in such matters selected by the Seller and Hayward.
(c) The provisions of this Section 6 shall be binding upon
any Affiliate of either the Seller or of his Immediately Family (as
hereinafter defined), and upon any member of his Immediate Family,
to whom the Seller may transfer any securities of the Corporation
after the date hereof, who shall agree in writing to be bound as
aforesaid as a condition to any such transfer.
(d) For purposes of this Section 6: (x) an "Affiliate" of any
person or entity shall mean any other person or entity controlled
by, under common control with or controlling such person or entity;
(y) "Immediate Family" shall mean the spouse, siblings, children
(and the direct lineal descendants of such children) and parents
(and the direct lineal ancestors of such parents) of the subject
person, and any trust for the benefit thereof; and (z) "Change in
Control" shall mean a change in control of Hayward occurring after
the date of execution of this agreement of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar
schedule or form) promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), whether or not Hayward is then subject
to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have
occurred if any "person" (as defined under Section 13(d) of the
Exchange Act) subsequent to the date hereof becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 50% of the outstanding shares of any
class or series of securities entitled to elect more than one-half
of the board of directors of Hayward.
7. Certain Covenants.
The Seller hereby covenants and agrees that, except as
consented in writing by Hayward, from and after the date of this
Agreement, he shall:
(a) not sell, transfer or in any way convey, or agree to
sell, transfer or in any way convey, any of the Option Shares or
grant, or agree to grant, an option or other right to acquire any
of the Option Shares, except pursuant to this Agreement;
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(b) not suffer or permit any pledge, lien, security interest
or other charge or encumbrance of any nature to be created with
respect to the Option Shares, nor shall such Option Shares be
subject to any voting agreements or to any proxies, except for this
Agreement or as expressly permitted or required by this Agreement;
(c) take such action so that all shares of capital stock of
the Corporation legally or beneficially owned by him shall be voted
to effectuate the election to the Board of Directors of the
Corporation of the designee contemplated by Section 8.3 of the
Purchase Agreement and against any proposal inconsistent therewith;
and
(d) use his best efforts to cooperate with Hayward in
effectuating the purposes of this Agreement and to consummate the
transactions contemplated hereby.
8. Termination. In the event the closing under the Purchase
Agreement shall not have occurred on or prior to September 25,
1996, this Agreement shall have no further force or effect.
9. Notices. Any notice pursuant to the terms hereof shall
be deemed to have been sufficiently given to either party hereto if
sent by registered, certified or overnight express mail, postage
prepaid, addressed, as the case may be, to the parties at their
respective addresses hereinabove set forth or such other address as
may hereafter be designated by a party by notice to the other party
given in such manner. Unless otherwise provided herein, all notices
shall be deemed to have been given when sent.
10. Successors. Hayward may not assign its rights under this
Agreement without the prior written consent of the Seller having
first been obtained (except that Hayward may assign its rights
hereunder without such consent to any wholly-owned subsidiary of
Hayward). The terms, covenants and conditions hereof shall inure to
the benefit of and be binding upon the parties hereto and their
respective heirs, legal representatives, successors and assigns.
11. Expenses. Except as otherwise provided herein, each of
the parties hereto shall bear such party's own expenses in
connection with this Agreement and the transactions contemplated
hereby.
12. Governing Law. This agreement and the terms hereof shall
be governed by and construed in accordance with the laws of the
State of New Jersey applicable to agreements made and to be
performed entirely within such state.
13. Counterparts. This agreement may be signed in one or
more counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one agreement.
* * *
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If the foregoing terms are acceptable to you, kindly so
indicate by executing the enclosed copy of this letter in the space
below provided for that purpose, and returning such copy to the
undersigned.
Very truly yours,
HAYWARD INDUSTRIES, INC.
By s/Anthony T. Castor
-----------------------------
ACCEPTED AND AGREED:
s/Brett Kingstone
- -------------------------
Brett Kingstone
The undersigned hereby executes this agreement solely so as to be
bound by the provisions of Section 3 hereinabove set forth:
SUPER VISION INTERNATIONAL, INC.
By s/John Stanney
- ---------------------------
