<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
-----------------
[x] QUARTERLY REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
Commission File No. 0-23590
SUPER VISION INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 59-3046866
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
8210 Presidents Drive
Orlando, Florida 32809
(Address of Principal Executive Offices)
(407) 857-9900
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at November 23, 1998:
Class A Common Stock, $.001
par value 1,770,049 shares
Class B Common Stock, $.001
par value 483,264 shares
Transitional Small Business Disclosure Format
Yes No X
--- ---
<PAGE> 2
SUPER VISION INTERNATIONAL, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements
Condensed Financial Statements:
Condensed Balance Sheets as of September 30, 1998 (unaudited) 1
and December 31, 1997
Condensed Statements of Operations for the Nine Months Ended
September 30, 1998 and 1997 (unaudited) 2
Condensed Statement of Stockholders' Equity (unaudited) 3
Condensed Statements of Cash Flows for the Nine Months Ended
September 30, 1998 and 1997 (unaudited) 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
<PAGE> 3
SUPER VISION INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,178,194 $ 2,478,145
Investments -- 102,121
Trade accounts receivable, less allowance for
doubtful accounts of $93,611 and $156,517 895,231 1,501,340
Inventory 2,901,722 2,142,754
Advances to employees 9,946 14,313
Deferred income taxes 61,899 119,185
Other assets 187,479 98,812
------------ ------------
Total current assets 5,234,471 6,456,670
Property & Equipment 6,066,537 5,873,909
Accumulated depreciation and amortization (911,270) (526,436)
------------ ------------
Net property & equipment 5,155,267 5,347,473
Deposits on Equipment 96,520 --
Deferred Income Taxes -- 39,631
Other Assets 204,765 183,034
------------ ------------
$ 10,691,023 $ 12,026,808
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 436,543 $ 935,943
Accrued compensation and benefits 66,758 45,225
Deposits 61,283 97,839
Accrued warranty 3,000 --
------------ ------------
Total current liabilities 567,584 1,079,007
Obligation Under Capital Lease 3,178,449 3,148,359
Stockholders' Equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, none issued -- --
Class A common stock, $.001 par value, authorized
16,610,866 shares authorized, 1,770,049 issued and
outstanding 1,770 1,770
Class B common stock, $.001 par value, 3,389,134 shares
authorized, 483,264 issued and outstanding 483 483
Additional paid-in capital 8,237,279 8,201,040
Retained earnings (deficit) (1,294,542) (403,851)
------------ ------------
Total stockholders' equity 6,944,990 7,799,442
------------ ------------
$ 10,691,023 $ 12,026,808
============ ============
</TABLE>
See accompanying notes to condensed financial statements
1
<PAGE> 4
SUPER VISION INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 1,547,701 $ 1,881,038 $ 6,461,681 $ 6,626,760
Cost and Expenses:
Cost of sales 1,114,936 1,121,451 4,144,158 3,966,066
Selling, general and administrative 864,893 443,813 2,581,748 1,744,251
Research and development 124,452 95,034 276,331 227,029
----------- ----------- ----------- -----------
Total costs and expenses 2,104,281 1,660,298 7,002,237 5,937,346
----------- ----------- ----------- -----------
Operating Income (Loss) (556,580) 220,740 (540,556) 689,414
----------- ----------- ----------- -----------
Non-Operating Income (Expense):
Interest income 17,821 38,830 75,140 114,602
Interest expense (106,338) (123,991) (325,325) (123,991)
Loss on disposal of assets (131) (100,879) (3,033) (100,879)
----------- ----------- ----------- -----------
Total non-operating income (expense) (88,648) (186,040) (253,218) (110,268)
----------- ----------- ----------- -----------
Income (Loss) Before Income Taxes (645,228) 34,700 (793,774) 579,146
Income Tax Expense (150,000) (1,322) (96,917) (169,160)
----------- ----------- ----------- -----------
Net Income (Loss) $ (795,228) $ 33,378 $ (890,691) $ 409,986
=========== =========== =========== ===========
Income (Loss) Per Common Share:
Basic $ (0.36) $ 0.02 $ (0.40) $ 0.19
=========== =========== =========== ===========
Diluted $ (0.36) $ 0.01 $ (0.40) $ 0.19
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 5
SUPER VISION INTERNATIONAL, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------------------
CLASS A CLASS B ADDITIONAL RETAINED
------------------------ ----------------------- PAID-IN EARNINGS
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT)
--------- -------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 1,770,049 $1,770 483,264 $483 $8,201,040 $ (403,851)
Issue common stock warrants -- -- -- -- 36,239 --
Net loss for the nine
months ended September 30, 1998 -- -- -- -- -- (890,691)
--------- ------ ------- ---- ---------- -----------
Balance, September 30, 1998 1,770,049 $1,770 483,264 $483 $8,237,279 $(1,294,542)
========= ====== ======= ==== ========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 6
SUPER VISION INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
1998 1997
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (890,691) $ 409,986
----------- -----------
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation 395,942 215,830
Loss on disposal of fixed assets 3,303 100,879
Accretion of capital lease obligation 30,090 35,476
Deferred income taxes 96,917 --
Issuance cost 36,239 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable, net 606,109 619
Inventory (758,968) (505,189)
Other assets (84,300) 153,512
Increase (decrease) in:
Accounts payable and accrued warranty (496,400) (164,863)
Accrued compensation and benefits 21,533 --
Accrued and other liabilities -- (290,747)
Deposits (36,556) 20,018
----------- -----------
Total adjustments (186,091) (434,465)
----------- -----------
Net cash used in operating activities (1,076,782) (24,479)
----------- -----------
Cash Flows from Investing Activities:
Purchase of investments -- 7,093
Proceeds from the sale of investments 102,121 --
Purchase of property, plant and equipment (200,786) (1,003,117)
Acquisition of patents and trademarks (27,984) (12,498)
Deposits on equipment (96,520) (79,786)
----------- -----------
Net cash used in investing activities (223,169) (1,088,308)
----------- -----------
Cash Flows from Financing Activities:
Issuance costs -- (15,000)
Proceeds from exercise of warrants -- 79,076
Proceeds from exercise of employee stock options -- 267,600
Payments on capital lease obligation -- (20,351)
----------- -----------
Net cash provided by financing activities -- 311,325
----------- -----------
Net Decrease in Cash and Cash Equivalents (1,299,951) (801,462)
Cash and Cash Equivalents, beginning of period 2,478,145 3,327,965
----------- -----------
Cash and Cash Equivalents, end of period $ 1,178,194 $ 2,526,503
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 7
SUPER VISION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION:
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the Company's financial position,
results of operations and cash flows for the periods presented. The results
of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
The condensed financial statements should be read in conjunction with the
financial statements and the related disclosures contained in the Company's
Form 10-KSB dated April 13, 1998, filed with the Securities and Exchange
Commission.
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net loss or
shareholders' equity for 1998 or 1997.
2. STOCK OPTION PLAN:
The Company has a stock option plan that provides for the grant of
incentive stock options and nonqualified stock options for up to 450,000
shares of the Company's Class A common stock. The option price must be at
least 100% of market value at the date of the grant.
The following table summarizes activity of the stock option plan for the
nine-month period ended September 30, 1998:
<TABLE>
<CAPTION>
SHARES SHARES
AVAILABLE FOR SUBJECT TO OPTION
FUTURE OPTION EXISTING PRICE
GRANTS OPTIONS PER SHARE
-------------------- ------------------- --------------------
<S> <C> <C> <C>
Balance, January 1, 1998 22,702 272,095 $5.00 - $9.25
Options authorized 100,000 - -
Options granted (17,000) 17,000 $3.00 - $9.25
Options exercised - -
Options cancelled 23,200 (23,200) $5.00 - $9.13
------------ -------
Balance, September 30, 1998 128,902 265,895
============ =======
</TABLE>
Options granted vest ratably over a three-year period or vest based on
achievement of performance criteria. As of September 30, 1998, 158,802
options were vested and exercisable.
5
<PAGE> 8
SUPER VISION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
3. INCOME TAXES:
The components of the net deferred tax asset recognized in the accompanying
balance sheet at September 30, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Deferred tax $(133,834) $(133,834)
liability
Deferred tax asset 674,976 376,279
Valuation allowance (479,243) (83,629)
--------- ---------
$ 61,899 $ 158,816
========= =========
</TABLE>
The types of temporary differences between the tax basis of assets and
liabilities and their financial statement reporting amounts are
attributable principally to depreciation methods, deferred gains, and
different accounting methods used.
As of September 30, 1998, the Company had approximately $1,458,000 in net
operating loss carryforwards for federal and state income tax purposes,
which expire in 2012.
4. INVENTORY:
Inventory at September 30, 1998 and December 31, 1997 consisted of the
following components:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
Raw materials $ 2,257,123 $ 1,635,278
Work in progress 80,954 --
Finished goods 615,690 559,521
----------- -----------
2,953,767 2,194,799
Less: Reserve for excess inventory (52,045) (52,045)
----------- -----------
$ 2,901,722 $ 2,142,754
=========== ===========
</TABLE>
6
<PAGE> 9
SUPER VISION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
5. CAPITAL LEASE:
The Company leases its operating facility from a corporation owned by the
Company's Chief Executive Officer. The lease has a fifteen-year term, and
became effective June 15, 1997, extending through June 15, 2012.
Assets recorded under capital lease and included in Property, Plant and
Equipment are as follows:
<TABLE>
<S> <C>
Office/Warehouse building $ 3,081,000
Less accumulated amortization (256,328)
-----------
$ 2,824,672
===========
</TABLE>
Future minimum annual lease payments for the five years subsequent to
September 30, 1998 and in the aggregate are as follows:
<TABLE>
<S> <C>
1999 $ 256,650
2000 570,150
2001 581,520
2002 605,750
2003 610,596
2004 and thereafter 6,407,679
-----------
Minimum lease payments 9,032,345
Less amount representing interest and executory costs (5,853,896)
-----------
Present value of net minimum lease payments under capital lease $ 3,178,449
===========
</TABLE>
Deposits paid under this lease agreement totaled $58,167 at September 30,
1998.
7
<PAGE> 10
SUPER VISION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
6. EARNINGS (LOSS) PER SHARE:
In 1997, the FASB issued SFAS No. 128, Earnings per Share. This statement
replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share are very
similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented, and where
appropriate, restated to conform to the Statement 128 requirements. The
following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) (numerator for basic and
diluted earnings per share) $ (795,228) $ 33,378 $ (890,691) $ 409,986
----------- ---------- ----------- ----------
Denominator:
Denominator for basic earnings per share
-weighted average shares 2,227,183 2,182,671 2,227,183 2,152,952
Effect of dilutive securities:
Options -- 37,971 -- 13,328
Warrants -- 488,182 -- 47,943
----------- ---------- ----------- ----------
Dilutive potential shares -- 526,153 -- 61,271
Denominator for diluted earnings per share 2,227,183 2,708,824 2,227,183 2,214,223
-adjusted weighted average shares
Basic earnings (loss) per share $ (0.36) $ 0.02 $ (0.40) $ 0.19
=========== ========== =========== ==========
Diluted earnings (loss) per share $ (0.36) $ 0.01 $ (0.40) $ 0.19
=========== ========== =========== ==========
</TABLE>
Certain warrants and escrowed shares are not included in the computation of
earnings per share because the related shares are contingently issuable or
to do so would have been anti-dilutive for the periods presented.
8
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto appearing elsewhere in this report.
The following discussion contains certain forward-looking statements, within the
meaning of the "safe-harbor" provisions of the Private Securities Litigation
Reform Act of 1995, the attainment of which involve various risks and
uncertainties. Forward-looking statements may be identified by the use of
forward-looking terminology such as "may", "will", "expect", "believe",
"estimate", "anticipate", "continue", or similar terms, variations of those
terms or the negative of those terms. The Company's actual results may differ
materially from those described in these forward-looking statements due to,
among other factors, competition in each of the Company's product areas,
dependence on suppliers, the Company's limited manufacturing experience and the
evolving nature of the Company's fiber optic technology.
Results of Operations
The net loss for the 1998 quarter and 1998 nine months was approximately
$(795,000) and $(891,000), respectively, or $(.36) and $(.40) per diluted common
share, respectively, as compared to net income of approximately $33,000, or $.01
per diluted common share, in the 1997 quarter and $410,000, or $.19 per diluted
common share for the 1997 nine months. The decrease is primarily due to sales
volume that was below projected levels in the areas of pool and spas and export
markets.
REVENUES. Revenues are derived primarily from the sale of fiber optic side
glow(R) and end glow(TM) cable and light sources, point of purchase fiber optic
signs and displays and sales of fiber optic landscape and task lighting systems.
Total revenues for the three months ("1998 quarter") and nine months ended
September 30, 1998 ("1998 nine months") were approximately $1,548,000 and
$6,462,000, respectively, as compared to approximately $1,881,000 and $6,627,000
for the three months ("1997 quarter") and nine months ended September 30, 1997
("1997 nine months"). This represented decreases of 18% and 3%, respectively.
The Company experienced revenue growth in the domestic lighting market, and is
planning to expand efforts in this market. Subsequent to the end of the 1998
quarter, the Company entered into an exclusive distribution agreement
("Agreement") with Cooper Lighting, Inc. ("Cooper"), a subsidiary of Cooper
Industries, Inc. whereby Cooper acquired the exclusive rights to market and sell
the Company's products in the United States and Canadian architectural lighting
market (the "Market"). Subject to the specific terms of the Agreement, over a
five year period Cooper has minimum purchase targets of up to an aggregate of
$47,000,000 of the Company's products for resale in the Market. Management
believes this Agreement will expand the domestic market for the Company's
products, and may contribute to the worldwide acceptance of fiber optic
technology in the lighting market. Management further believes that broader
acceptance of fiber optic technology in significant markets like the United
States and Canada could help to stimulate future revenue growth in export and
other markets.
Export sales were well below expectations in the 1998 quarter and 1998 nine
months, primarily due to the relative strength of the U.S. dollar overseas,
which raised the relative price of the Company's products as compared to other
types of lighting products. Management noted that the majority of the Company's
export sales were tied to new and renovation construction; consequently, as
foreign markets have experienced economic difficulties, construction funding has
slowed and sales of product through the Company's distribution channels have
fallen. In response, Management has sought to expand distribution in targeted
areas that have not suffered economic reversals, such as Europe and portions of
South America. In the Asian market, the Company has suspended planned marketing
activities, believing that the Company's products cannot compete effectively
until such time as U.S. dollar stabilizes in relation to the currencies of the
Company's Asian distributors.
Revenues in the pool and spa market were below forecast, as the Company's
exclusive partner in the pool and spa industry did not achieve the market
penetration originally anticipated. Management believes that the Company's
products must be upgraded to differentiate the Company from competitive
products. A new generation of higher performance products was released at the
recent National Spa and Pool Institute trade show which Management believes may
result in increased market recognition and revenues in future periods.
Revenues during the 1997 nine months included approximately $830,000 of revenue
recognized under a long-term contract completed in May 1997 for what the Company
believes to be the world's largest custom fiber optic display. Management
believes the overall market available to fiber optic lighting products continues
to increase as the commercial, sign and pool and spa industries become aware of
the benefits and applications of fiber optics in these market segments.
9
<PAGE> 12
COST OF SALES. Cost of sales were approximately $1,115,000, or 72% of revenues,
during the 1998 quarter and $4,144,000, or 64% of revenues, for the 1998 nine
months as compared to approximately $1,121,000, or 60% of revenues, for the 1997
quarter and $3,966,000, or 60% or revenues, for the 1997 nine months. The gross
margin was 28% and 36%, respectively, for the 1998 quarter and 1998 nine months
as compared to 40% for the both 1997 quarter and 1997 nine months. Gross margins
for the 1998 quarter and 1998 nine months were adversely affected by a sales mix
that favored light sources as opposed to lighting systems and fiber products.
The Company released several new light source products for the pool and spa
industry which provide superior performance and have been designed to realize
better unit profit margins. In addition, the Company plans to introduce several
new light sources targeted at the commercial and sign markets which are also
designed to improve gross margins on the light source lines. Gross margins were
also affected by the lower than anticipated sales volume which increased fixed
overhead costs per unit produced. Decreases in material costs were more than
offset by fixed operating costs. The increase in overall fixed operating costs
resulted from the Company's relocation in August 1997 from its previous
facilities totaling 27,000 square feet to its new facility of 70,000 square
feet. As revenue projections have fallen, Management has implemented cost
control programs including reduction of personnel in production and
administration areas through attrition, and programs designed to reduce indirect
manufacturing costs. Management believes that the increased costs associated
with the new facility are necessary for the Company to service the volume
increases associated with the Company's recent Agreement with Cooper as well as
anticipated growth in the pool and spa product lines. Further, Management
intends to pursue additional distribution partners in targeted industries, and
believes the future benefits of the integrated manufacturing facility are
necessary to demonstrate the Company's ability to service such partners.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $865,000 and $2,582,000 during the
1998 quarter and 1998 nine months, respectively, as compared to approximately
$444,000 and $1,744,000 for the 1997 quarter and 1997 nine months, respectively.
This represented increases of 95% and 48%, respectively. During the 1998 nine
months, commission expenses were significantly increased due to the growth of
the Company's domestic lighting business that is supported by lighting agents
across the country. Commissions are payable upon receipt of payment in full on
customer accounts. In addition, the Company attended numerous international and
domestic trade shows compared to the 1997 nine months. As a result, advertising
expenditures for trade publication placements were significantly increased to
support these trade events. Literature expenses and educational training
seminars were also increased as the Company received greatly increased inquiries
for product catalogs and requests for applications training, which Management
believes is a result of the trade advertising and show attendance. As revenue
projections decreased, several planned trade events were canceled, particularly
in the Asian and Australian markets; however, many of the planned trade events
in the 1998 quarter were planned in late 1997 to secure early commitment
discounts, so the effect of these cancellations was minimal in the 1998 quarter.
To further reduce costs, the Company has restructured its internal sales groups,
and engaged commissioned manufacturer's representatives to decrease internal
costs of selling. Management has also engaged an out source marketing group to
aid in reducing the costs of advertising and to provide more targeted direction
in the Company's marketing efforts. Management also believes the recent
Agreement with Cooper will reduce selling and marketing expenses as Cooper will
assume responsibility for all costs of selling and marketing the Company's
products in the Market throughout the United States and Canada. While Management
believes these marketing and sales expenses are critical to potential future
revenue growth, Management is implementing more cost effective methods of
developing and delivering these materials and training services including
utilization of electronic catalogs and internet based systems.
The Company also experienced increase legal costs during the 1998 quarter.
Management became aware of a foreign competitor which the Company believes has
infringed the Company's fiber optic cable patents, and incurred expenses in
investigating the extent of the infringement and in pursuing remedial and
enforcement actions with various trade bodies. In addition, the Company filed a
lawsuit against several former employees who Management believes may be in
violation of certain covenants in their employment agreements. Management
intends to aggressively enforce the covenants of confidentiality and
non-competition in such agreements against the former employees.
10
<PAGE> 13
RESEARCH AND DEVELOPMENT. Research and development costs were approximately
$124,000 and $276,000, respectively, during the 1998 quarter and 1998 nine
months as compared to approximately $95,000 and $227,000, respectively, during
the 1997 quarter and 1997 nine months. This represented increases of 31% and
22%, respectively. During the 1998 quarter, the Company continued several joint
product development efforts with key vendors and technology partners to attempt
to reduce fixed research and development costs. Management believes that these
relationships may allow the Company to accelerate product development while
reducing development costs and cycle times. During the 1998 nine months, the
Company increased personnel levels in the area of research and development in
order to shorten development time of several new light sources and to accelerate
a cost reduction and re-engineering program in several core product categories
to reduce manufacturing costs of these product lines. The initial results of
these efforts were the introduction of a new line of high performance products
targeted to the pool and spa industry in the 1998 quarter to increase
penetration of this market through Hayward Pool Products. The Company also plans
to release several new product lines in the fourth quarter of 1998 and the first
quarter of 1999 which Management believes will be critical to future revenue
growth in the lighting and signage markets. Management believes the increased
expenditures for engineering and research and development are necessary to
ensure that the Company continues to expand its product offerings to the market
and to maintain a leadership position in fiber optic lighting technology.
INTEREST. Interest income is derived from the short-term investments of liquid
cash balances in low risk commercial paper and money market funds. Interest
income for the 1998 quarter and 1998 nine months was approximately $18,000 and
$75,000, respectively, as compared to approximately $39,000 and $115,000,
respectively, for the 1997 quarter and 1997 nine months. The decrease is
attributable to lower average cash balances available for investment during the
1998 nine months. The Company utilized cash during the 1998 nine months to
expand inventory in advance of the traditional summer building season in the
pool and spa and architectural lighting markets.
Interest expense increased from approximately $124,000 for the 1997 quarter and
1997 nine months to approximately $106,000 and $325,000 for the 1998 quarter and
1998 nine months. The increase is attributable to the accounting treatment for
the lease on the Company's new facility as a capital lease under Statement of
Financial Accounting Standards No. 13, Accounting for Leases.
TAXES. Provision for income taxes included charges of approximately $150,000 and
$97,000, respectively, for the 1998 quarter and 1998 nine months compared to
income tax expense of $1,322 and $169,000, respectively, for the 1997 quarter
and 1997 nine months. Income taxes for the 1998 nine months included a provision
for income taxes of $150,000, which was offset by tax benefits of approximately
$53,000. The charge to income during the 1998 nine months was due to the
accounting treatment of the net deferred tax asset resulting from prior years'
net operating loss carryforwards and the associated valuation allowance against
this asset. Income taxes for the 1997 nine months included a provision for
income taxes of approximately $174,000, which was offset by tax benefits of
approximately $38,000 as a result of the carryforward of prior year tax losses.
Liquidity and Capital Resources
At September 30, 1998, the Company had working capital of approximately
$4,667,000.
Cash and investments decreased by approximately $1,300,000 during the 1998 nine
months. Inventory increased by approximately $759,000 during the 1998 nine
months. Inventory was expanded based on planned revenue growth. As projections
for revenue growth were reduced, material orders have been postponed or canceled
to match new forecasts. The inventory on hand consists mainly of raw materials
for the Company's core optical products lines, and will be used to support
future revenue growth in the domestic lighting market in furtherance of the
Agreement with Cooper. Accounts Receivable decreased by approximately $606,000
as extended credit term sales to major customers became due. Other assets
increased by approximately $84,000. The increase was primarily due to
prepayments on tooling for new products and tooling to reduce unit costs and
improve margins on core product lines. Deposits on orders decreased by
approximately $37,000. In the past, the Company had required deposits on orders
prior to order acceptance. As the Company's customer mix has evolved, the
Company has modified its credit terms to industry standards for qualified
customers. Accounts payable decreased by approximately $499,000 as extended
credit term purchases from major vendors became due. Net equipment and furniture
decreased by approximately $192,000. Acquisitions of fixed assets and computer
equipment were exceeded by depreciation on existing assets. Planned capital
expansions, other than
11
<PAGE> 14
the aforementioned tooling projects, were postponed as revenue projections were
revised downward. The Company plans to continue to make tooling changes in core
product lines to increase the unit profitability of these products and to
install a new information system which will allow real time updating and
streamlining of databases that are currently unrelated and stored on multiple
information systems, which may reduce internal administrative costs and increase
revenue per employee.
Subsequent to the 1998 quarter, the Company entered into an Agreement with
Cooper for the distribution of its products in certain Markets located in the
United States and Canada. Concurrent with the Agreement, Cooper Lighting, Inc.
purchased Class A common stock directly from the Company equivalent to
approximately 10% of the total outstanding stock of the Company. The acquisition
price of the common stock was $7.98 per common share, resulting in net proceeds
to the Company of approximately $1,960,000. Under the terms of the stock
purchase agreement, Cooper is entitled to nominate one director to the Board of
Directors of the Company, and received certain registration rights and warrants
in conjunction with the transaction.
Escrowed Shares
In January 1994, the Company and certain stockholders of the Company entered
into an agreement providing for the escrow of 2,918,000 shares held by such
individuals (the "Escrow Shares"). In the event any of the shares were released
from escrow to officers, directors and other employees of the Company,
compensation expense would be recorded for financial reporting purposes as
required by generally accepted accounting principles. As of March 31, 1997,
Brett Kingstone, the President and Chairman, voluntarily retired 2,891,870
shares of Class B Common Stock previously held in the escrow account. These
shares were returned to the Company treasury and cancelled. The Company
currently has 26,130 shares of Class A Common Stock held in escrow. In the event
the Company attains certain earnings thresholds, or the Company's Class A Common
Stock meets certain minimum bid prices required for the release of the remaining
26,130 Escrow Shares, the Company may, in the event of the release of such
shares from escrow, recognize during the period in which the earnings thresholds
are met or are probable of being met or such minimum bid prices attained,
charges to earnings as compensation expense which would have the effect of
reducing the Company's earnings at such time.
Year 2000 Issue
As year 2000 approaches, an issue impacting all companies has emerged regarding
how existing application software programs and operating systems can accommodate
this date value. In brief, many existing application software products in the
marketplace were designed to only accommodate a two digit date position which
represents the year (i.e., "98" is stored on the system and represents the year
1998). As a result, the year 1999 (i.e., "99") could be the maximum date value
systems will be able to accurately process. Significant uncertainty exists in
the software industry concerning the potential effects associated with such
compliance. Management is in the process of working with its software vendors to
assure that the Company is prepared for the year 2000. The Company does not
anticipate incurring additional expenditures to upgrade its current software and
hardware equipment in relation to the "Year 2000" issue. The developers of the
accounting software and operating systems that the Company currently uses have
submitted written statements assuring the Company that the software has the
capability to handle Year 2000 issues and the Company will not have to incur
further costs for upgrades.
The Company relies on its customers, suppliers, utility providers, financial
institutions and other partners in order to continue normal business operations.
At this time, it is impossible to assess the impact of the Year 2000 issue on
each of these organizations. There can be no guarantee that the systems of other
unrelated entities on which the Company relies will be corrected on a timely
basis and will not have a material adverse effect on the Company. The Company
has identified the other organizations which are critical to its' continued
operations and intends to survey these organizations to determine the impact of
the Year 2000 on their operations and their plans for addressing any potential
concerns. The estimated cost of review and assessment efforts is not expected to
be material to the Company's financial position or any year's result of
operations, although there can be no assurance of this result.
12
<PAGE> 15
PART II
Item 5. Other Information
On November 23, 1998, Registrant entered into a Stock Purchase Agreement with
Cooper Lighting, Inc. ("Cooper"), a subsidiary of Cooper Industries, Inc. (a
New York Stock Exchange Company trading under the symbol "CBE") pursuant to
which Registrant sold to Cooper 250,369 shares of its Class A Common Stock,
$.001 par value per share ("Class A Common Stock") for a purchase price of
$2,000,000. In addition, the Registrant entered into a Distributorship Agreement
(the "Distributorship Agreement") with Cooper and Cooper Industries (Canada),
Inc., ("Cooper Canada") another subsidiary of Cooper Industries, Inc., pursuant
to which Cooper and Cooper Canada were granted the exclusive distribution rights
in the United States and Canada to Registrant's fiber optic products in the
commercial, residential, industrial, institutional and public transportation
markets, including but not limited to, any and all lighting applications in or
related to architectural lighting, accent lighting, down lighting, display
cases, landscaping, confinement, explosion-proof, clean rooms, traffic signals,
signage, outdoor area and emergency/exit lighting. In consideration for these
rights, Cooper has agreed, in accordance with the terms of the Distributorship
Agreement, to purchase up to $47,000,000 of the Registrant's products over a
five year period, renewable after such period. Cooper was also granted a ten
year warrant to purchase an additional 250,369 shares of Class A Common Stock of
the Registrant at $8.02 per share, and a warrant to purchase an additional
517,950 shares of Class A Common Stock at fair market value if the number of
outstanding shares of Class A Common Stock of Registrant is increased as a
result of the exercise of Registrant's currently outstanding warrants (the
"Warrants"). Cooper was granted registration rights with respect to the shares
of Class A Common Stock sold pursuant to the Stock Purchase Agreement and the
shares of Class A Common Stock issuable upon exercise of the Warrants. Cooper
also has the right to designate one director to Registrant's Board of Directors.
13
<PAGE> 16
SUPER VISION INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -- As stated in the Registrant's quarterly report filed on
Monday, November 23, 1998, attached to this Amended
quarterly report is Exhibit 10.8.
10.8 Stock Purchase Agreement between Registrant and
Cooper Lighting, Inc., dated November 23, 1998,
including exhibits (filed herewith).
27 Financial data schedule (Filed previously).
99.1 Press release dated November 23, 1998 (filed previously).
(b) The Company filed one current report on Form 8-K on August 13, 1998.
14
<PAGE> 17
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunder duly authorized.
SUPER VISION INTERNATIONAL, INC.
By: /s/Brett M. Kingstone Date: November 30, 1998
-------------------------------------------
Brett M. Kingstone, Chief Executive Officer
(Principal Executive Officer)
By: /s/John P. Stanney Date: November 30, 1998
---------------------------------------------
John P. Stanney, President and Chief Financial Officer
(Principal Financial and Accounting Officer)
15
<PAGE> 1
================================================================================
SUPER VISION INTERNATIONAL, INC.
-----------------------------------
STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 23, 1998
------------------------------------
CLASS A COMMON STOCK
$.001 PAR VALUE
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
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...................................................................................-2-
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.............................................-3-
2.1 Incorporation; Subsidiaries...................................................................-3-
2.2 Authorization.................................................................................-3-
2.3 Conflicts.....................................................................................-3-
2.4 Capitalization................................................................................-4-
2.5 Securities Filings............................................................................-5-
2.6 Financial Statements..........................................................................-6-
2.7 Taxes.........................................................................................-7-
2.8 Title; Sales Arrangements; Defaults...........................................................-8-
2.9 Employee Benefit Plans........................................................................-8-
2.10 Insurance.....................................................................................-9-
2.11 Disputes and Litigation.......................................................................-9-
2.12 Compliance With Law; Licenses; Franchises.....................................................-9-
2.13 Distributorship Agreement....................................................................-10-
2.14 Private Placement............................................................................-10-
2.15 Disclosure...................................................................................-10-
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..............................................-11-
3.1 Incorporation................................................................................-11-
3.2 Authorization................................................................................-11-
3.3 Conflicts....................................................................................-11-
3.4 Private Placement............................................................................-12-
3.5 Clayton Act..................................................................................-12-
ARTICLE IV PRE-CLOSING COVENANTS, ETC...................................................................-12-
4.1 General Conduct of Business..................................................................-12-
4.2 Capitalization...............................................................................-13-
4.3 Due Diligence; SEC Filings...................................................................-13-
4.4 Lien Searches................................................................................-14-
4.5 Notification of Certain Matters..............................................................-14-
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C> <C>
4.6 Termination of Sales Agreements..............................................................-14-
4.7 Forbearance..................................................................................-15-
ARTICLE V CLOSING......................................................................................-15-
5.1 Time and Place of Closing....................................................................-15-
5.2 Delivery of Shares; Warrants.................................................................-15-
5.3 Delivery of Purchase Price...................................................................-15-
5.4 Other Matters................................................................................-15-
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER.........................................-16-
6.1 Opinion of Counsel to the Corporation........................................................-16-
6.2 Representations; Warranties; Covenants.......................................................-16-
6.3 Certified Resolutions........................................................................-16-
6.4 Consents.....................................................................................-16-
6.5 Registration Rights Agreement................................................................-17-
6.6 Distributorship Agreement....................................................................-17-
6.7 Sales Agreements.............................................................................-17-
6.8 Litigation...................................................................................-17-
6.9 Other Certificates...........................................................................-17-
6.10 Board Approval...............................................................................-17-
6.11 Kingstone Agreement..........................................................................-17-
6.12 Reconciliation Agreement.....................................................................-18-
6.13 Option Agreement.............................................................................-18-
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
CORPORATION..................................................................................-18-
7.1 Representations; Warranties; Covenants.......................................................-18-
7.2 Certified Resolutions........................................................................-18-
7.3 Distributorship Agreement....................................................................-18-
7.4 Other Certificates...........................................................................-19-
7.5 Reconciliation Agreement.....................................................................-19-
ARTICLE VIII POST-CLOSING COVENANTS OF THE CORPORATION....................................................-19-
8.1 Rights to Purchase Additional Stock..........................................................-19-
8.2 Right of First Refusal.......................................................................-20-
8.3 Board Representation.........................................................................-21-
8.4 Sales Agreements.............................................................................-22-
8.5 No Issuance of Class B Stock.................................................................-22-
8.6 Carry Out of Business Plan Supplement........................................................-22-
</TABLE>
-iii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE IX TERMINATION..................................................................................-22-
9.1 Termination..................................................................................-22-
9.2 Effect of Termination........................................................................-22-
ARTICLE X INDEMNIFICATION..............................................................................-23-
10.1 Basis of Indemnity...........................................................................-23-
10.2 Procedures for Indemnification...............................................................-23-
10.3 Payment of Indemnity.........................................................................-25-
10.4 Limitation...................................................................................-25-
ARTICLE XI MISCELLANEOUS................................................................................-25-
11.1 Notices......................................................................................-25-
11.2 Survival of Representations..................................................................-26-
11.3 Entire Agreement.............................................................................-26-
11.4 Further Action...............................................................................-26-
11.5 Benefit of Agreement.........................................................................-26-
11.6 Expenses.....................................................................................-27-
11.7 Governing Law................................................................................-27-
11.8 Captions.....................................................................................-27-
11.9 Brokerage....................................................................................-27-
11.10 Hart-Scott-Rodino Compliance.................................................................-27-
11.11 Press Releases...............................................................................-28-
11.12 Counterparts.................................................................................-28-
Exhibit A: Initial Warrant Certificate
Exhibit B: Protective Warrant Certificate
Exhibit C: Registration Rights Agreement
Exhibit D: Distributorship Agreement
Exhibit E: Kingstone Agreement
Exhibit F: Reconciliation Agreement
Exhibit G: Option Agreement
Schedule 1: Capitalization
Schedule 2: Sales Agreements
Schedule 3: Liens
</TABLE>
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<PAGE> 5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of the 23th day of November, 1998,
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 COOPER LIGHTING, INC., a corporation
duly organized and validly existing under the laws of the State of Delaware
(hereinafter referred to as the "Purchaser").
WITNESSETH:
WHEREAS, the Corporation is engaged in the business of manufacturing,
developing, designing and marketing Products (as defined in the Distributorship
Agreement attached hereto); and
WHEREAS, contemporaneously with Closing (as hereinafter defined)
pursuant to this Agreement, the Corporation desires, among other matters, to
appoint the Purchaser, as its exclusive distributor in the Territory (as
defined in the Distributorship Agreement) for the Products in the Exclusive
Market (as defined in the Distributorship Agreement) 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 herein provided; and
WHEREAS, in order to provide funds for the operation and expansion of
its business in accordance with the Business Plan Supplement (as hereinafter
defined), 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:
-1-
<PAGE> 6
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 250,369 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.
The purchase price (hereinafter referred to as the "Purchase Price")
for the Shares, the Warrants and other covenants and representations set forth
in the Principal Documents (as hereinafter defined) shall be $2,000,000, which
shall be delivered by the Purchaser to the Corporation as set forth in Section
5.3 hereof.
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 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 resulting from their
initial issuances or any stamp tax arising from the issuances of stock upon the
exercise of the Warrants. 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.
-2-
<PAGE> 7
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.
2.2 Authorization.
The execution and delivery by the Corporation of this Agreement, the
Distributorship Agreement, the Warrant Certificates, and each of them, the
Registration Rights Agreement, the Kingstone Agreement and the Reconciliation
Agreement (all of which are 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,
-3-
<PAGE> 8
rule, regulation, or any 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, except with respect to the Lightingagent Agreements set forth on Part
II of Schedule 2 attached hereto, 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 1,770,049 shares are issued and outstanding as of the date of this
Agreement and an aggregate of 7,378,119 shares (prior to giving effect to the
issuance of the Shares) are reserved for issuance pursuant to exercise of the
warrants and options, including those 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 483,264 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. Except for the rights contemplated pursuant to the Hayward Stock
Purchase Agreement, there are no preemptive rights with respect to any shares
of the capital stock of the Corporation, including, without limitation, the
Shares of 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: (t) 483,264 shares of Class A Common Stock to be
reserved for issuance upon the potential conversion of the Class B Common
Stock, (u) 771,480 shares of Class A Common Stock reserved for issuance upon
exercise of warrants issued to Hayward Industries, Inc., (v) 289,187 shares of
Class A Common Stock reserved for issuance upon exercise of a warrant issued to
Brett
-4-
<PAGE> 9
Kingstone, (w) 265,895 shares and 25,800 shares of Class A Common Stock
reserved and to be reserved, respectively, 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") at the exercise
price set forth on Schedule 1, (y) 1,759,500 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") at the exercise price set forth on Schedule 1, 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) at the exercise price set forth on Schedule 1, 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 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 is under no commitment or obligation to effectuate the election or
appointment to its Board of Directors of any person other than pursuant to
Section 8.3 hereof and the designee of Hayward Industries, Inc. 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.
(c) Neither Brett Kingstone nor the Kingstone Family Limited
Partnership II, which is also known as the Kingstone Family Limited Partnership
II Family Limited Partnership, is a holder of any shares of Class A or Class B
Common Stock that are subject to the Escrow Agreement dated as of January 11,
1994, among the Corporation, American Stock Transfer and Trust Company, Brett
Kingstone and/or certain other shareholders of the Corporation.
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
and the rules and regulations thereunder and the Securities 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
-5-
<PAGE> 10
complete and correct copy of the Corporation's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1997, its Quarterly Reports on Form 10-QSB
for the quarters ended respectively, March 31 and June 30, 1998 and its proxy
statement dated April 3, 1998 (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, 1997 and 1996, and the related
statements of operations for the fiscal years then ended, accompanied by the
report of Ernst & Young L.L.P. and Coopers & Lybrand, L.L.P., respectively with
respect thereto (hereinafter referred to as the "Audited Financial Statements")
and (ii) the unaudited balance sheets of the Corporation as and at September
30, 1998 and 1997, and the related unaudited statements of operations for the
nine 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 therein and except, in the case of the Interim Financial
Statements, as permitted by the requirements of Form 10-QSB. 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 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 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 or that exceeds $100,000.
(b) Subsequent to June 30, 1998, 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;
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(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;
and, since June 30, 1998, 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, 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 foreign, federal,
state, municipal and other tax returns, reports and declarations required to be
filed by it and has paid or has sufficient accruals on its books to 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, 1997, 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 foreign, federal and other taxes of the
Corporation whether or not yet due and payable and whether or not disputed by
the Corporation.
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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 September 30, 1998 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 to the Corporation's knowledge,
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 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 sold in the Exclusive Market, 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 and the Corporation
does not have liability in excess of $100,000 for any failure to comply with
such 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
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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 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 that has been
served or for which the Corporation has received written notice or, to the best
of the Corporation's knowledge, 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 that has been served or for which
the Corporation has received written notice or, to the best of the
Corporation's knowledge, 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 or under which a
claim of damages exceeds $100,000 or injunctive relief is sought. 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 proceeding that has been served or for
which the Corporation has received written notice 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
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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 or which violation results in liabilities exceeding $100.000.
(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, 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 or into any property,
including that 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, including that now or formerly
owned or leased by the Corporation.
2.13 Distributorship Agreement.
Subject to Section 11.2, 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 or 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
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not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents, warrants and covenants that:
3.1 Incorporation.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, 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, assuming
the accuracy of the representations and warranties of the Corporation herein,
any law, rule, regulation, or any 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. Assuming the
accuracy of the representations and warranties of the Corporation herein, 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
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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 has had the opportunity to ask representatives of the
Corporation such questions in connection with the purchase of the Shares and
the transactions contemplated hereby, in each case to the extent it believes is
necessary, 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 11.5 hereof, the Purchaser will acquire the Shares and the Warrants for
its own account and not with a view to, or for resale in connection with, the
distribution thereof within the meaning of the Securities Act.
3.5 Clayton Act.
The appointment of Fritz Zeck upon the Closing shall not violate
Section 8 of the Clayton Act because at the time of execution and Closing
hereof the jurisdictional requirements are not met or an exception applies.
ARTICLE IV
PRE-CLOSING COVENANTS, ETC.
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, ordinance, judgments, injunctions, decrees,
determinations, awards, and other orders of every
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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.
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 and the Hayward Warrants
described on Schedule 1 hereto 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
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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.
4.4 Lien Searches.
Within thirty 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 of 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
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 of Sales Agreements.
Promptly after the execution and delivery of this Agreement, the
Corporation shall take, at its sole cost and expense, any and all action as
shall be necessary (i) to terminate, effective as soon as possible (but not
later than December 31, 1998) pursuant to such notices and agreements as shall
in form and substance be reasonably satisfactory to the Purchaser, the Sales
Agreements identified in Part 1 of Schedule 2, and (ii) to terminate, effective
as soon as possible (but not later
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than by the expiration date, as set out in Part 2 of Schedule 2), in form and
substance be reasonably satisfactory to the Purchaser, the Sales Agreements
identified in Part 2 of Schedule 2.
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.
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 Cooper
Industries, Inc., 600 Travis, Suite 5800, Houston, Texas 77002 at 10:00 a.m.,
local time, on November 23, 1998, or such other place, 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 by wire transfer of immediately available federal funds sent to Super
Vision International, Inc., Account No. 2832617970, Nations Bank, Routing No.
063100277, Swift I.D. No NABKUS3B, Orlando, Florida 32811.
5.4 Other Matters.
Delivery of the Distributor Agreement, Kingstone Agreement,
Registration Rights Agreement, Reconciliation Agreement, shall be made,
presented or sent by the applicable parties.
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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 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. Greenberg
Traurig, P.A., counsel for the Corporation dated the date of the Closing, in
form and substance reasonably satisfactory to the Purchaser.
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 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, Unit Purchase
Options, Class A Warrants and Class B Warrants and the warrants issued to
Hayward Industries, Inc. as of such date.
6.4 Consents.
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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 Purchaser, dated the date of the Closing, in the form of Exhibit D
attached hereto, and shall have exchanged the pricing schedule thereto as
contemplated pursuant to the provisions of Section 4.2 of such agreement.
6.7 Sales Agreements.
The Corporation shall have sent the notices terminating the Sales
Agreements in accordance with Section 4.6 hereof.
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, as it shall have reasonably requested in connection with the
transactions contemplated hereunder.
6.10 Board Approval.
The Board of Directors of the Corporation shall have approved the
supplement to the Business Plan (the "Business Plan Supplement") of the
Corporation, which supplement is as set forth in a memorandum sent by John P.
Stanney to legal counsel to Cooper Industries, Inc. on October 1, 1998.
6.11 Kingstone Agreement.
Brett Kingstone and the Kingstone Family Limited Partnership II shall
have executed and
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delivered to Purchaser the letter agreement in the form attached hereto as
Exhibit E (the "Kingstone Agreement").
6.12 Reconciliation Agreement.
The parties to that certain Reconciliation Agreement in the form of
Exhibit F attached hereto (the "Reconciliation Agreement"), shall have executed
and delivered it to one another.
6.13 Option Agreement.
The Kingstone Family Limited Partnership shall have executed and
delivered to Purchaser that certain Option Agreement in the form of Exhibit G
attached hereto.
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 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.
7.2 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.
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7.3 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, and shall have exchanged the pricing schedule thereto as
contemplated pursuant to the provisions of Section 4.2 of such agreement.
7.4 Other Certificates.
The Corporation shall have received such additional certificates,
instruments and other documents, in form and substance satisfactory to the
Corporation, as it shall have reasonably requested in connection with the
transactions contemplated hereunder.
7.5 Reconciliation Agreement.
The parties to the Reconciliation Agreement shall have executed and
delivered it to one another.
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
or purchase additional shares of Class A Common Stock up to an amount necessary
to maintain 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.
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.
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(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 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) Subject to Section 11.10, 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, or (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 except to an Affiliate of 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 or issue any securities of the
Corporation, pursuant to a bona fide offer (hereinafter referred to as the
"Bona Fide Offer"), to any Cooper Lighting 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
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the "Initial Sale Notice") to the Purchaser to that effect, which notice shall
include the name of the Cooper Lighting Competitor. 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.
(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 of
this Agreement: (x) "Cooper Lighting Competitor" means any person or entity
engaged in the production, sale, marketing and distribution in the Exclusive
Market (as defined in the Distributorship Agreement) of products or equipment
competitive with those produced, sold, marketed and distributed by the
Purchaser or its Affiliates; and (y) 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 Fritz Zeck), 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 and
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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. Upon written notice
by the Purchaser to the Corporation, the Purchaser may waive or cancel its
right to designate such member.
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 in accordance with Section 4.6
8.5 No Issuance of Class B Stock.
From and after the Closing, the Corporation shall not, without
Purchaser's prior written consent, issue or sell any Class B Stock or other
security convertible or exchangeable into Class B Stock. The Corporation
acknowledges that the Purchaser required this covenant to protect the Purchaser
from having its equity interest diluted.
8.6 Carry Out of Business Plan Supplement.
From and after the Closing, the Corporation shall carry out the
Business Plan Supplement with such changes as the Board of Directors of the
Corporation deems reasonably necessary taking into account the commitment by
the Corporation to use the Purchase Price to improve the Products or the
Corporation's ability to manufacture the Products for the benefit of the
Exclusive Market. Purchaser acknowledges that other markets may also benefit
from any such improvement, but that any changes that might be made will
principally take into account the Exclusive Market. Any change to the Business
Plan Supplement resulting in greater that $50,000 not being expended in a
matter addressed therein will be approved by such Board at the next regularly
scheduled Board meeting in accordance with the foregoing.
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 material
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
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prior to November 30, 1998 (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
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, Cooper Industries, Inc., and their respective directors,
officers, employees, agents and respective legal representatives, successors
and assigns (the "Purchaser Indemnified Group"), 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, the Warrant Certificates, the
Kingstone Agreement and the Reconciliation Agreement, or (ii) any termination,
amendment or modification of, or any failure to pay commissions or any other
amounts under, any Sales 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, the Warrant Certificates, the Kingstone Agreement and the
Reconciliation 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 or
assertion of a claim by any person not an Indemnified Party for which
indemnification is available under Section 10.1(a) or (b) (hereinafter referred
to as a "Third Party Claim"), 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 or assertion 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
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of such Third Party Claim is prejudiced thereby.
(a) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Damages the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(b) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with ss.10.2(a) above, (A) the Indemnified
Party may retain separate co- counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party, and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not to
be withheld unreasonably).
(c) However, in the event the condition (A) in ss.10.2(a) above is
or becomes unsatisfied, the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it may deem appropriate (and the Indemnified
Party need not consult with, or obtain any consent from, any Indemnifying Party
in connection therewith). In the event the condition (E) in ss.10.2(a) above is
or becomes unsatisfied, the Indemnified Party may defend against, and, upon not
less than three days written notice to the Indemnifying party, consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim in any manner it may deem appropriate. Moreover, in the event the
conditions (B) - (D) in ss.10.2 (a) above is or becomes unsatisfied, the
Indemnified Party may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third Party Claim provided
that the Indemnified Parties will consult with the Indemnifying Party and will
not consent to the entry of any judgment or settlement without the Indemnifying
Party's prior consent, which shall not be unreasonably withheld. In any such
event, the Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the reasonable costs of defending against the Third Party
Claim (including attorneys' fees and expenses), and the Indemnifying Party will
remain responsible for
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any Damages the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim.
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 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, 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 it was prejudiced thereby. The Indemnifying Party shall
promptly pay to such Indemnified Party the amount of the Damages so specified.
10.4 Limitation.
The Corporation's obligation hereunder to defend, indemnify and hold
harmless the Purchaser Indemnified Group for Damages resulting from or
sustained by any breach of any representation or warranty shall be limited to
the Purchase Price.
ARTICLE XI
MISCELLANEOUS
11.1 Notices.
All notices, requests or instructions hereunder shall be in writing
and delivered personally (including by courier) or sent by registered or
certified mail, postage prepaid, as follows:
(1) if to the Corporation:
8210 Presidents Drive
Orlando, Florida 32809
Attention: President
with a copy to:
Frank Ioppolo
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, Florida 32801
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(2) if to the Purchaser:
400 Busse Road
Elk Grove Village, Illinois 60007-2195
Attention: President
with a copy to:
Law Department
Cooper Industries, Inc.
600 Travis, Suite 5800
Houston, Texas 77002
Attention: General Counsel
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 (except the representations and warranties under the Distributorship
Agreement, which shall survive as set forth in the Distributorship Agreement,
shall survive the Closing notwithstanding any investigation at any time made by
or on behalf of any party hereto for two years.
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 effort 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.
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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 except by Purchaser to
an Affiliate of Purchaser.
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 Delaware 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.
11.10 Hart-Scott-Rodino Compliance.
Notwithstanding anything herein to the contrary, to the extent that
any purchase by Purchaser of any stock of the Corporation after the Closing
requires prior notification pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), or any similar law, such
purchase shall be subject to all applicable waiting periods (and any extensions
thereto) under the HSR Act or such similar law having expired or otherwise
being terminated. Each of the Purchaser and Corporation shall (and each shall
cause its ultimate parent entity as defined in the HSR Act, to the extent
appropriate, to) file any Notification and Report Forms and related material
that it or he may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the HSR Act
or other governmental body under similar law, will use its or his reasonable
best efforts to obtain early termination of the applicable waiting period, and
make any further filings pursuant thereto that
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may be necessary or advisable. In furtherance of the foregoing, but without
limitation, the Purchaser's acceptance of any Protective Offer pursuant to
Section 8.1 hereof and its delivery of an Acceptance Notice pursuant to Section
8.2 (notwithstanding the language in Section 8.2 which indicates that such
notice constitutes a valid and legally binding purchase and sale agreement) is
subject to the condition precedent of the expiration or early termination of
any waiting period without final adverse action by the applicable governmental
body. Therefore, any obligation to make payment or right to make such a
purchase is tolled until such expiration or early termination of all applicable
waiting periods and the existence of such waiting period shall not adversely
affect the parties' obligations to consummate the transaction provided that the
condition precedent is satisfied.
11.11 Press Releases.
Neither party shall issue any press release or make any public
announcement relating to the Principal Documents or the subject thereof without
the prior approval of the other.
11.12 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.
* * * * * * *
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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.
- ------------------------------- By
------------------------------
Name: John Stanney
Title: President
ATTEST: COOPER LIGHTING, INC.
- ------------------------------- By
------------------------------
Name:
Title:
<PAGE> 34
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
250,369 Warrants
To Subscribe for and Purchase Class A Common Stock,
$.001 Par Value, of
SUPER VISION INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, COOPER LIGHTING, 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 November 23, 1998
(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 Cooper Lighting, 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 Minimum Purchase Commitments for prior years under, and in
accordance with the Distributorship Agreement, and
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<PAGE> 35
(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 froth 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, 8210 Presidents Drive,
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 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:
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<PAGE> 36
(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
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 the date prior
to 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 the date prior to 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 the date prior to 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
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<PAGE> 37
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 Cooper Lighting, 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:
(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
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<PAGE> 38
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 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
share as 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) and (ii) of this Paragraph (d) are convertible into or
exchangeable for Class A Common Stock shall be reduced at
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<PAGE> 39
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 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.
(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).
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<PAGE> 40
(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
prior theretofore purchasable and receivable upon the exercise of each Warrant
(assuming the satisfaction of all conditions including the passing of time)
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 prior theretofore purchasable and receivable upon
the exercise of one Warrant (assuming the satisfaction of all conditions
including the passing of time) 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.
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
7
<PAGE> 41
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 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
8
<PAGE> 42
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 Cooper Lighting, 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 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 (including by courier) or sent by registered
or certified mail, postage prepaid as follows:
(1) if to the Corporation:
8210 Presidents Drive
Orlando, Florida 32809
Attention: President
with a copy to:
Frank Ioppolo
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, Florida 32801
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<PAGE> 43
(2) if to the holder of the Warrants evidenced
hereby:
400 Busse Road
Elk Grove Village, Illinois 60007-2195
Attention: President
with a copy to:
Law Department
Cooper Industries, Inc.
600 Travis, Suite 5800
Houston, Texas 77002
Attention: General Counsel
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 November 23, 1998.
ATTEST: SUPER VISION INTERNATIONAL, INC.
By
- ------------------------------ ------------------------------
John Stanney, President
<PAGE> 44
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> 45
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
517,950 Warrants
To Subscribe for and Purchase Class A Common Stock,
$.001 Par Value, of
SUPER VISION INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, COOPER LIGHTING, 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 November 23, 1998
(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: (w) the warrant issued to
Brett Kingstone to acquire 289,187 shares of Class A Common Stock, (x) options
issued pursuant to the Corporation's 1994 employee stock option plan, (y) the
Warrants evidenced hereby and any other warrants issued to Cooper Lighting,
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
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<PAGE> 46
Corporation;
(b) "Exercise Event" shall mean each and every issuance of shares
of Class A Common Stock pursuant to (a) exercise of any Eligible Warrants, or
(b) the exercise, conversion, or exchange of securities derived from any
Eligible Warrant;
(c) "Subject Shares" shall in each case mean the number of shares
of Class A Common Stock issued pursuant to (a) exercise of any Eligible
Warrants, or (b) the exercise, conversion, or exchange of securities derived
from any Eligible Warrant 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 (or
security derived from an Eligible Warrant from which Class A Common Stock can
be obtained) to expire or the issuance of the last share of Class A Common
Stock issued pursuant to (a) exercise of any Eligible Warrants, or (b) the
exercise, conversion, or exchange of securities derived from any Eligible
Warrant; and
(e) "Exercises 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 the date prior to 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 the date prior to 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 the date prior to 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 executive office of the
Corporation, 8210
2
<PAGE> 47
Presidents Drive, Orlando, Florida 32809 and upon payment to it by certified or
official bank check or checks of the Exercise 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 30 day 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.
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 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
3
<PAGE> 48
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
prior theretofore purchasable and receivable upon the exercise of each Warrant
(assuming the satisfaction of all conditions including the passage of time)
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 prior theretofore purchasable and receivable upon
the exercise of one Warrant (assuming the satisfaction of all conditions
including the passage of time) 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.
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
4
<PAGE> 49
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.
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 Cooper Lighting, 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.
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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 (including by courier) or sent by registered
or certified mail, postage prepaid as follows:
(1) if to the Corporation:
8210 Presidents Drive
Orlando, Florida 32809
Attention: President
with a copy to:
Frank Ioppolo
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, Florida 32801
(2) if to the holder of the Warrants evidenced hereby:
400 Busse Road
Elk Grove Village, Illinois 60007-2195
Attention: President
with a copy to:
Law Department
Cooper Industries, Inc.
600 Travis, Suite 5800
Houston, Texas 77002
Attention: General Counsel
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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 November 23, 1998.
ATTEST: SUPER VISION INTERNATIONAL, INC.
By
- ---------------------------------- ----------------------------------
John Stanney, President
<PAGE> 52
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> 53
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of November 23, 1998, 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 Cooper Lighting, Inc., a corporation duly organized and
validly existing under the laws of the State of Delaware (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 November 23, 1998 (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
November 23, 1998 (hereinafter referred to as the "Option Agreement") with Brett
Kingstone, Kingstone Family Limited Partnership II, and the Corporation
(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.
<PAGE> 54
The term "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
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 Securities, 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 or underwriters at a fixed
price for reoffering or pursuant to agency or best efforts arrangements with an
underwriter or underwriters.
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
including the passage of time. 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 upon the written request of
the Purchaser (but in no event later than 120 days after the date of
such request), 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), 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
than the
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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 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).
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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 manger 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
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.
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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, 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 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;
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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 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;
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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 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;
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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 securityholders,
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:
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
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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 ("Damages") 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 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 Damages 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 but the failure to
so notify the indemnifying party shall not relieve it of any liability that it
may have to the indemnified party except to the extent the indemnifying party
demonstrates that it is prejudicial thereby, and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party;
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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 or 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).
So long as the indemnifying party is conducting the defense of the
claim in accordance with Article VIII.C above, the indemnified party will not
consent to the entry of any judgment or enter into any settlement with respect
to a third party claim without the prior written consent of the indemnifying
party, and the indemnifying party will not consent to the entry of any judgment
or enter into any settlement with respect to the third party claim without the
prior written consent of the indemnified party (not to be withheld
unreasonably). However, in the event the indemnifying party shall have failed to
notify the indemnified party in writing within 15 days after the indemnified
party has given notice of the claim that the indemnifying party will indemnify
the indemnified party from and against the entirety of any Damages the
indemnified party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the claim, (A) the indemnified party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the claim in any manner it may deem appropriate (and the indemnified
party need not consult with, or obtain any consent from, any indemnifying party
in connection therewith), (B) the indemnifying party will reimburse the
indemnified party promptly and periodically for the costs of defending against
the claim (including attorneys' fees and expenses), and (C) the indemnifying
party will remain responsible for any Damages the indemnified party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
claim. No indemnifying party shall 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 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
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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.
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
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of attorney, indemnities, underwriting agreements and other documents required
under the termsof 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 (including by courier) or sent by registered or
certified mail, postage prepaid, as follows:
(1) if to the Corporation:
8210 Presidents Drive
Orlando, Florida 32809
Attention: President
with a copy to:
Frank Ioppolo
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, Florida 32801
(2) if to the Purchaser:
400 Busse Road
Elk Grove Village, Illinois 60007-2195
Attention: President
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with a copy to:
Law Department
Cooper Industries, Inc.
600 Travis, Suite 5800
Houston, Texas 77002
Attention: General Counsel
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.
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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.
By:
- ------------------------------- ------------------------------------------
John Stanney, President
ATTEST: COOPER LIGHTING, INC.
By:
- ------------------------------- ------------------------------------------
Name:
----------------------------------------
Title:
--------------------------------------
<PAGE> 69
EXHIBIT D
===============================================================================
DISTRIBUTORSHIP AGREEMENT
BY & AMONG
SUPER VISION INTERNATIONAL, INC.
COOPER LIGHTING, INC.
AND
COOPER INDUSTRIES (CANADA), INC.
DATED: NOVEMBER 23, 1998
===============================================================================
<PAGE> 70
- -------------------------------------------------------------------------------
DISTRIBUTORSHIP AGREEMENT
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS-------------------------------------------------------------------------------------------1
ARTICLE II
APPOINTMENT OF DISTRIBUTOR----------------------------------------------------------------------------2
2.1 Appointment.--------------------------------------------------------------------------------------2
ARTICLE III
TERM--------------------------------------------------------------------------------------------------4
3.1 Term of Appointment.------------------------------------------------------------------------------4
3.2 Consequences of Expiration or Termination.--------------------------------------------------------4
ARTICLE IV
PURCHASE ORDERS; PRICES; COVENANTS--------------------------------------------------------------------5
4.1 Purchase Orders.----------------------------------------------------------------------------------5
4.2 Purchase Prices; Payment.-------------------------------------------------------------------------5
4.3 Minimum Purchases.--------------------------------------------------------------------------------8
4.4 Forecasts.---------------------------------------------------------------------------------------10
4.5 Product Improvements; New Products; Product Warranty.--------------------------------------------11
4.6 Packaging.---------------------------------------------------------------------------------------12
4.7 Training.----------------------------------------------------------------------------------------12
4.8 Insurance.---------------------------------------------------------------------------------------12
4.9 Tradenames.--------------------------------------------------------------------------------------12
4.10 Taxes; Compliance with Laws.--------------------------------------------------------------------13
4.11 Protection of Rights.---------------------------------------------------------------------------13
4.12 Exclusivity.------------------------------------------------------------------------------------14
4.13 Confidential Material.--------------------------------------------------------------------------14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION----------------------------------------------------16
5.1 Incorporation.-----------------------------------------------------------------------------------16
</TABLE>
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<TABLE>
<S> <C>
5.2 Authorization.-----------------------------------------------------------------------------------16
5.3 Conflicts.---------------------------------------------------------------------------------------16
5.4 Adequacy of Facilities.--------------------------------------------------------------------------16
5.5 Proprietary Rights in Products.------------------------------------------------------------------17
5.6 Infringement.------------------------------------------------------------------------------------17
5.7 Survival of Ryder Stations.----------------------------------------------------------------------18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR----------------------------------------------------18
6.1 Incorporation.-----------------------------------------------------------------------------------18
6.2 Authorization.-----------------------------------------------------------------------------------18
6.3 Conflicts.---------------------------------------------------------------------------------------18
6.4 Survival of Representations.---------------------------------------------------------------------19
ARTICLE VII
INDEMNIFICATION--------------------------------------------------------------------------------------19
7.1 Basis of Indemnity.------------------------------------------------------------------------------19
7.2 Procedures for Indemnification.------------------------------------------------------------------19
7.3 Payment of Indemnity.----------------------------------------------------------------------------21
ARTICLE VIII
RELATIONSHIP OF THE PARTIES--------------------------------------------------------------------------21
8.1 Independent Contractors.-------------------------------------------------------------------------21
ARTICLE IX
EMPLOYMENT OF SUPERVISION STAFF----------------------------------------------------------------------21
9.1 No-Raid.-----------------------------------------------------------------------------------------21
9.2 Indirect Action Prohibited.----------------------------------------------------------------------22
9.3 Survival.----------------------------------------------------------------------------------------22
ARTICLE X
MISCELLANEOUS----------------------------------------------------------------------------------------22
10.1 Notices.----------------------------------------------------------------------------------------22
</TABLE>
ii
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<TABLE>
<S> <C>
10.2 Entire Agreement.-------------------------------------------------------------------------------23
10.3 Further Action.---------------------------------------------------------------------------------23
10.4 Most Favored Customer.--------------------------------------------------------------------------23
10.5 Benefit of Agreement.---------------------------------------------------------------------------23
10.6 Expenses.---------------------------------------------------------------------------------------24
10.7 Governing Law.----------------------------------------------------------------------------------24
10.8 Captions.---------------------------------------------------------------------------------------24
10.9 Counterparts.-----------------------------------------------------------------------------------24
10.10 Dispute Resolution.----------------------------------------------------------------------------24
SCHEDULE 2.1 - Sales Agent Agreements-----------------------------------------------------------------2
SCHEDULE 4.2(C) - Limited Warranty----------------------------------------------------------------7, 11
SCHEDULE 4.5(C) - Distributor's Field Service Practices----------------------------------------------11
</TABLE>
iii
<PAGE> 73
DISTRIBUTORSHIP AGREEMENT
THIS AGREEMENT dated as of the 23th day of November, 1998, by and among
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 COOPER LIGHTING, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware, its existing
subsidiaries or those subsidiaries of it in the future, and COOPER INDUSTRIES
(CANADA), INC., an Ontario corporation (hereinafter collectively 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 the Products (as defined in Article I
hereinafter) with application in the Exclusive Market (as defined in Article I
hereinafter);
WHEREAS, the Corporation desires, among other matters, to appoint the
Distributor as the exclusive distributor for the Product in the Exclusive Market
within the Territory (as defined in Article I hereinafter), provided that the
Distributor shall not have breached its obligations under this Agreement in any
material respect, and the Distributor desires to accept such appointment upon
the terms and conditions hereinafter set forth; and
WHEREAS, the Distributor desires, among other matters, to purchase
exclusively from the Company all its fiber optic lighting needs in accordance
with the terms and conditions hereinafter set forth, provided that the
Corporation shall not have breached its obligations under this Agreement in any
material respect.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms are defined as set forth
below and such definitions shall be applicable to both the singular and the
plural forms of such terms.
1.1 The term "Exclusive Market" shall mean lighting for commercial, residential,
industrial, institutional and public transportation markets, including but not
limited to, any and all lighting applications in or related to architectural
lighting, accent lighting, down lighting, display cases, landscaping,
confinement, explosion-proof, clean rooms, traffic signals, signage, outdoor
area and emergency/exit; but excluding commercial and residential swimming
pools, spas or hot tubs; ship building or nautical lighting; aircraft lighting;
automotive lighting; cemetery/mausoleum lighting; refrigerated display case or
vending machine lighting; and commercial sign supply and sign companies.
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1.2 The term "Products" shall mean light sources, (also referred to as
illuminators), fiber optic cables and end fittings that each use fiber optic
technology.
1.3 The term "Territory" shall mean, collectively, the United States (consisting
only of the continental United States, Alaska and Hawaii) and Canada.
1.4 The term "Reconciliation Agreement" shall mean that certain agreement dated
even herewith by and among the Corporation, the Distributor, Hayward Industries,
Inc. Hayward Pool Products, Inc., Kingstone Family Limited Partnership II, and
Brett M. Kingstone.
1.5 The term "Stock Purchase Agreement" shall mean that certain agreement dated
even herewith by and among the Corporation and the Distributor.
ARTICLE II
APPOINTMENT OF DISTRIBUTOR
2.1 Appointment.
a. Subject to the terms and provisions of this Agreement and those
obligations and rights granted in the Reconciliation Agreement (as
defined in Article I above), the Corporation hereby appoints the
Distributor as its exclusive distributor within the Territory for
the marketing, sale, and distribution of the Products within the
Exclusive Market, 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 as applied in the
Exclusive Market. The exclusive nature of this appointment shall be
subject to early termination pursuant to the provisions of Article
III and those certain sales agent agreements (the "Sales Agent
Agreements") identified in Schedule 2.1, attached hereto, which
shall be terminated in accordance with Section 8.4 of the Stock
Purchase Agreement (as defined in Article I above).
b. Subject to the Reconciliation 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 in the Exclusive Market; provided, however, that the
Distributor shall have no liability or obligation to the Corporation
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 willful misconduct of the
Distributor.
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c. For as long as the Corporation shall not have breached its
obligations hereunder in any material respect and the term of the
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 Products (in the
Territory) that are manufactured by any entity or party other than
the Corporation except (i) insofar as incorporated into the Products
acquired hereunder from the Corporation and, (ii) end-fittings,
molded parts and landscape fixtures.
d. The Distributor will not be in breach of Section 2.1(c) by acquiring
a business that makes or sells Products exclusively outside the
Territory or in the Territory but not within the Exclusive Market.
Further, the Distributor will not be in breach of Section 2.1(c) by
acquiring a business that makes or sells Products in the Territory
and into the Exclusive Market (an "Affected Acquisition") provided
that Distributor, upon such Affected Acquisition, offers at
Distributor's election, (i) to sell the assets related to the
business of making and selling the Products to the Corporation,
provided that the Corporation assumes the liabilities associated
with such assets on terms mutually agreeable to the parties, or (ii)
to sell all the common stock of the company that makes or sells the
Products, as mutually agreed to by the parties. The Distributor's
obligation to offer the business of an Affected Acquisition and the
Corporations right to purchase such shares or assets shall be
subject to terms and conditions mutually acceptable to each party.
If the Corporation elects not to purchase such shares or assets or
the Corporation and Distributor are unable to agree upon terms and
conditions mutually satisfactory to each, the Distributor will use
reasonable efforts to sell, at Distributor's option, either such
shares or such assets to a third party upon terms and conditions
mutually satisfactory to Distributor and such third party. If
Distributor has not sold the applicable shares or assets of an
Affected Acquisition within two years after Distributor's
acquisition of such business and provided that the term of this
Agreement is still in effect, the Distributor shall commence an
orderly liquidation of the assets related to the Products sold into
the Exclusive Market in the Territory. Notwithstanding any such
Affected Acquisition, Distributor shall during the term hereof,
continue to promote and sell the Products of the Corporation into
the Exclusive Market in the Territory using the Distributor's
distribution channels (whether through agents or distributors) as it
had before the acquisition, which channels would not be used to
promote the Products of the Affected Acquisition in the Exclusive
Market in the Territory. In lieu of offering the business acquired
pursuant to an Affected Acquisition for sale to the Distributor,
selling it to a third party, or orderly liquidating the applicable
assets, Distributor may, at its option, either (i) cause the
business to discontinue its sales into the Exclusive Market in the
Territory or (ii) pay Corporation $750,000 and not be in breach of
Section 2.1(c) or this Section 2.1(d); provided that if the
Distributor elects such option (ii) immediately above, the
Corporation shall immediately be entitled to terminate this
Agreement.
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<PAGE> 76
ARTICLE III
TERM
3.1 Term of Appointment.
a. The initial term of this agreement shall expire on December 31,
2003. On December 31, 2003, and each December 31 thereafter, the
Agreement shall be automatically extended one (1) year to the
following December 31 unless the Distributor has delivered written
notice to the Corporation by no later than the preceding June 30
that they do not desire for the Agreement to be extended.
b. Notwithstanding any other provision contained herein, this Agreement
shall be terminable by either party upon thirty 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 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. This Agreement may be immediately terminated by the
Corporation if, after receiving written notice by the Corporation to
cease all activities that conflict with Hayward Pool Products,
Inc.'s exclusive rights to market, sell and distribute the Products
in the exclusive market (as defined in that certain Distributorship
Agreement between the Corporation and Hayward Pool Products, Inc.
dated September 25, 1996), such activities continue beyond 30 days
from the notice.
c. Notwithstanding any other provisions 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.
3.2 Consequences of Expiration or Termination.
a. Upon expiration or termination of this Agreement, the Corporation
shall be required to deliver and the Distributor shall be required
to accept only such
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conforming Products, as such item is defined by the Uniform
Commercial Code, 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 IV
PURCHASE ORDERS; PRICES; COVENANTS
4.1 Purchase Orders.
Subject to the provisions of this Agreement (including,
without limitation, Section 4.3 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.
4.2 Purchase Prices; Payment.
a. The purchase price to the Distributor for the Products (the
"Purchase Price") 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
(the "Price Schedule"), calculated at the date hereof so as to
target a minimum gross margin for the Distributor on the sale of
Products to customers as shall be determined by mutual agreement of
the parties. The parties recognize and agree that the process of
determining Purchase Prices and minimum gross margins for both
companies will critically impact the competitiveness of the Products
in the Exclusive Market. The parties agree to negotiate in good
faith to set Purchase Prices on the sales of the Products to
Distributor such that each of the parties can realize a reasonable
minimum gross margin on its sale. For the purposes of this Agreement
the minimum gross margin shall be determined by taking a weighted
average of all the Products sold by the party during the immediately
preceding twelve (12) month period. The target minimum gross margins
for each party shall be set forth in a binding letter between the
parties to be delivered no later than two (2) business days
following the Closing hereof. Such minimum gross margin targets
shall be determined in accordance with generally accepted accounting
principals and shall serve as goals, not as guarantees. In the event
that, subsequent to the date of this Agreement, any Products become
covered by this Agreement that are not identified on the Price
Schedule, the Purchase Price to the Distributor therefor, f.o.b. the
Corporation's facility in Orlando, Florida, shall initially be
determined by the parties in good faith so as to attempt to provide
(i) to the Distributor the agreed to minimum gross margin
(determined as aforesaid) based upon competitive selling prices to
the Distributor's customers (the "Sales Price")
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reasonably calculated, and (ii) to the Corporation the agreed to
minimum gross margin (determined as aforesaid) based upon the
Corporation's cost of production. 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. The
Purchase Price to the Distributor of any Products ordered hereunder,
or bids submitted (provided the bid has been submitted by the
Distributor prior to its receipt of the Corporation's notice of
adjustment to the Purchase Price and that written notice of such bid
is delivered to the Corporation within 30 days from receipt of such
notice of adjustment), shall be subject to change by the Corporation
only in accordance with the terms of subsection b below. The
Purchase Price for Products ordered by the Distributor for delivery
after the effective date of any Purchase Price adjustment shall be
the Purchase Price in effect on the date of acceptance of such order
by the Corporation. Unless the Corporation transmits a written
objection to the order within five business days of its receipt
thereof, such order shall be deemed accepted by the Corporation.
b. During the term of this Agreement, the Purchase Prices hereunder
shall be subject to adjustment from time to time in each case upon
written notice (the "Request") by:
(i) the Distributor to the Corporation stating that the
Distributor's gross margin in respect thereof during any
fiscal quarter is less than the agreed to threshold, which
threshold shall be set forth in the aforementioned binding
letter between the parties. Each such adjustment shall be in
an amount targeted to maintain for the Distributor its
agreed to minimum gross margin (as so determined by Section
4.2) in respect thereof, based on the Distributor's then
current Sales Price;
(ii) the Corporation to the Distributor stating that the
production costs, labor costs, purchase prices of necessary
supplies or components of the Products (the "Corporation's
Cost") have increased beyond the point where the Corporation
can obtain the targeted minimum gross margin on the sale of
its Products to the Distributor. Each such adjustment shall
be in an amount targeted to maintain for the Corporation its
agreed to minimum gross margin (as so determined by Section
4.2) in respect thereof, based on the Corporation's then
current Purchase Price to the Distributor; and
(iii) in the event a requested adjustment to the Purchase Price is
not objected to by the receiving party within ten (10)
business days after receipt then it shall be deemed accepted
and become effective on the ninetieth (90th) day following
the receiving party's receipt of the written Request. If the
party receiving the Request timely objects to the adjusted
Purchase Price then it shall submit a written objection (the
"Objection") to the requesting party notifying it of the
specific objections the objecting party has to the Request.
A party may object to any adjustment if either: (x) the
objecting party
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disputes the requesting party's determination of its minimum
gross margin; or (y) as a result of the proposed adjustment,
the objecting party would be below its own targeted minimum
gross margin. If the parties are not able to settle any
dispute concerning the requested adjustments to the Purchase
Price within ten (10) business days following receipt of the
objections by the requesting party, then the parties agree
to submit the dispute to the national accounting firm of
Arthur Anderson & Company, or its successor (the "Expert"),
for its review and written determination of the adjustment
to the Purchase Price. In the event that a proposed
adjustment to the Purchase Price would result in the
objecting party failing to meet its targeted minimum gross
margin, then the Expert shall determine the Purchase Price
such that it reflects the sum of the Corporation's Costs and
4/7ths of the total margin available to the Distributor and
the Corporation (the difference between the Corporation's
Costs and the Sales Price). The review may include, upon
prior written notice to the affected party, an inspection of
such party's books, records or calculations related to the
adjustment, provided that such inspection occurs during
normal business hours. The party requesting the Adjustment
shall bear all the costs associated with such review by a
third party and inspection of records. Adjustments to the
Purchase Price shall become effective on the 90th day
following the receipt of the Request by the non-requesting
Party, and shall be retroactive to such date in the event a
determination by the Expert is not made by such date, except
for those Products already ordered by the Distributor and
accepted by the Corporation or those bids submitted by the
Distributor to customers for which notice has been given by
the Distributor to the Corporation in accordance with
subsection (a) above.
c. Payment by the Distributor to the Corporation of the net amount
of each invoice in respect of Products delivered shall in each
case be made within 45 days of the date of the invoice of such
shipment. No right of set off or deduction of any kind shall be
applicable unless set forth by the Corporation on its invoice.
All invoices for Products delivered 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 thereof 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 4.2(c) and as otherwise set forth in
this Agreement or pursuant to such purchase orders as may be in
effect from time to time.
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<PAGE> 80
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
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 Products, such determination to be made by the Corporation in
good faith in the exercise of its reasonable judgement 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.
d. The Distributor acknowledges that the Corporation, upon the
written request of the Distributor and in reliance that this
Agreement and the transactions contemplated hereby would be
consummated promptly, has entered into an agreement and may
continue to enter into certain written agreements with other
third parties involving the private label manufacture of certain
products for the Corporation or the distribution by the
Corporation of products, subject to the Distributor's exclusive
distribution rights for the Products, manufactured by third
parties (the "Third Party Agreements"). Notwithstanding anything
else herein to the contrary, the Purchase Prices of all products
obtained pursuant to the Third Party Agreements shall not be
subject to the provisions of this Article IV or any minimum,
fixed or targeted price, profit or margin amounts.
e. The parties acknowledge that the Distributor has, is or may
manufacture certain component or accessory products for use with
the Products. The Distributor shall sell any such components or
products, if any, to the Corporation at the same minimum gross
margin (as determined above) as the Corporation sells the
Products to the Distributor. Further, the Corporation shall have
the non-exclusive right to market, sell and distribute these
specific products and components as manufactured by the
Distributor, for its own accounts or through its other
distributors, in all markets outside the Exclusive Market in the
Territory.
4.3 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:
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<TABLE>
<CAPTION>
MINIMUM
PERIOD PURCHASE COMMITMENT
------ -------------------
<S> <C>
through December 31, 1999 $3,700,000.
year ending December 31, 2000 $5,200,000.
year ending December 31, 2001 $8,375,000.
year ending December 31, 2002 $13,000,000.
year ending December 31, 2003 $16,800,000.
</TABLE>
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, the Distributor has the following options to avoid
breach of this Agreement:
(i) The Distributor purchases from the Corporation an amount
which satisfies the deficiency in the next such period, in
addition to the then current period's Minimum Purchase
Commitment. If the Distributor fails to meet this Commitment
in the next such period, the Distributor may pay to the
Corporation within 30 calendar days after the expiration of
such next period an amount equal to 40% of the amount of such
remaining deficiency not so satisfied or the Distributor will
be in breach of the Agreement. The next period shall then
commence as though there was no deficiency in the preceding
period; or
(ii) The Distributor and the Corporation reach an agreement that
the deficiency resulted despite the good faith effort made by
both parties to reach the Minimum Purchase Commitment for a
given period, and the Corporation elects to excuse the
deficiency for the given period.
If the Distributor fails to satisfy the Minimum Purchase
Commitment, and the options to avoid breach of the Agreement
are either not chosen or not achieved, the Corporation, at
its option and as its exclusive remedy for such breach, may
terminate the Distributor's exclusive rights to distribute,
market and sell the Products within the Territory's Exclusive
Market. The Distributor can continue to sell Products in the
Territory's Exclusive Market, on a non-exclusive basis, but
the Corporation shall be free to negotiate with and reach a
non-exclusive agreement with other distributors for the sale
of Products in the Territory's Exclusive Market.
Upon ninety (90) days written notice by the Corporation to
the Distributor following the twenty-first month after the
Corporation terminates Distributor's exclusive rights granted
herein, the Corporation may, in its sole and exclusive
discretion, repurchase all the shares of its common stock
held by the Distributor at the purchase price set forth at
Section 1.2 of the Stock Purchase Agreement dated even
herewith (as defined in Article I
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<PAGE> 82
hereinabove). This Agreement shall be deemed to have
terminated simultaneously with the closing of such a
repurchase transaction.
The parties acknowledge and agree that any purchases of
Product in excess of a given period's Minimum Purchase
Commitment hereunder in any period, may, at the election of
the Distributor, be allocated toward achievement of a Minimum
Purchase Commitment only with respect to the next subsequent
period in an amount 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 deemed to have failed to have
satisfied its minimum Purchase Requirement 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. The Corporation shall ship Products in accordance with the
shipping dates specified on the Distributor's purchase orders. The
Distributor acknowledges that a lead time of thirty (30) calendar
days is necessary between the date the Corporation receives the
purchase order and the date of shipment.
c. The Corporation shall credit the Distributor's Minimum Purchase
Commitment by the greater of: (i) the amount sales of any party to
the Sales Agent Agreements in the Territory within the Exclusive
Market from the date hereof until such agreements are terminated;
or (ii) the amount of sales of the same such party during the
equivalent period of the immediately preceding year.
4.4 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, provided, however, that if the total value of Products
actually ordered by the Distributor exceeds the forecasts, then the
Corporation's refusal to accept additional purchase orders shall not be
deemed to be a breach of this Agreement.
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<PAGE> 83
4.5 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 shall maintain a
program of regular Product improvements and Product development, it
being understood and agreed that any and all improvements on,
modifications to, substitution in and extensions of the Product, or
any of them, and any and all new Product 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 Product. 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. The Distributor shall not acquire any of the
Corporation's right, title or interest to such improvements or to
any of the Corporation's Products, and, to the extent that the
Distributor may have acquired any right, title or interest to any
improvement to the Products, the Distributor hereby irrevocably
grants to the Corporation a non-royalty bearing, non-exclusive
license, and right to use, make and sell Products incorporating any
such improvement.
b. It is the responsibility of the Corporation to remain competitive in
the pricing, design and performance of the Product and its
manufacture. If the Product is not competitive with the market, the
Minimum Purchase Commitments are voided. The determination of
"competitive with the market" shall be jointly determined by the
Corporation and the Distributor on a good faith basis, using
competitive fiber optics products as the benchmark.
c. Subject to the provisions of paragraph (c) of Section 4.2 and this
Section 4.5(c) 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 4.2(c). All warranty
claims are at the expense of the Corporation, provided that the
Distributor obtains authorization from the Corporation, and provided
that the Distributor has made a reasonable attempt to provide field
service consistent with the Distributor's past practices, as such
are enumerated in Schedule 4.5(c) attached hereto. The Corporation
shall make available to the Distributor the applicable warranty
period for parts, materials and components related to the Products
as provided by the Corporation's vendors. Notwithstanding anything
to the contrary set forth herein, the Corporation shall have no
obligations or liability under the warranties related to the parts,
materials or components of the Products beyond those covered by the
warranties of the vendors except as provided in its product warranty
attached hereto as Schedule 4.2(c).
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<PAGE> 84
4.6 Packaging.
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 recorded of the
shipment, including the number of the purchase order to which it
applies, shall be required with each shipment hereunder.
4.7 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 twelve 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.
4.8 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, shall include coverage
of up to $4,000,000 under an umbrella policy, 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.
4.9 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
12
<PAGE> 85
grants to the Distributor, for the term of this Agreement, the
non-exclusive, royalty-free right and license to utilize in a manner
reasonably calculated not to harm the goodwill and reputation of the
Corporation, 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 for the United States and Canada (it being
acknowledged and agreed that no other party shall hold any such right
with respect to the Exclusive Market during such 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 only during the term hereof, and such further period, not to
exceed 180 days, following the termination or expiration hereof, during
which the Distributor shall be permitted to dispose of any remaining
Products held by the Distributor. 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.
4.10 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.
4.11 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,
13
<PAGE> 86
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 4.11, the Distributor may
perform such obligation at the expense of the Corporation and upon
consultation with the Corporation.
The Corporation will continue to pay the necessary fees to
maintain all existing patents through their full term. The Corporation
shall not allow any registered patent to lapse without obtaining the
prior written approval from the Distributor.
4.12 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 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.
4.13 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 4.13, such party shall be compelled, by subpoena, civil
investigative demand or similar process, to
14
<PAGE> 87
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, in whatever
form, furnished to the Restricted Party by the Confidential Party,
or any of its directors, officers, employees, agents or
representatives provided the information is designated in writing,
or marked by an appropriate stamp or legend, by the Confidential
Party to be of a proprietary or confidential nature. In order to be
protectible hereunder, data which is first disclosed orally or by
demonstration must be identified as proprietary or confidential at
the time of disclosure and must be reduced to writing or other
tangible form, marked as proprietary and a copy delivered to the
Restricted Party by the Confidential Party within thirty (30) days
after such disclosure or demonstration of any such data.
Notwithstanding the foregoing 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;
(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 Party, such source has a lawful and
unrestricted right to convey such information;
(iv) is independently developed by the Restricted Party; or
(v) is disclosed after 3 years from the expiration or termination
date of this Agreement.
b. The parties acknowledge and agree that their respective
agreements contained under this Section 4.13 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.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION
The Corporation hereby represents, warrants and covenants that:
5.1 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.
5.2 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.
5.3 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 contract or agreement to which the Corporation is a party
or by which the Corporation or any of its properties or assets is
bound.
5.4 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.
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<PAGE> 89
5.5 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. To the best
knowledge of the Corporation, 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. To the best knowledge of the Corporation, 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. Notwithstanding anything else contained in this Agreement to
the contrary, the Distributor acknowledges that the Corporation has, in
reliance upon the completion of the transactions contemplated by this
Agreement, entered into an agreement , and may in the future, at the
written request of the Distributor, enter into other agreements with
third parties for the private label manufacturing of or right to
distribute certain products which the Corporation does not manufacture,
and in which the Corporation has no proprietary rights. In the event
such products should become unavailable due to circumstances beyond the
control of the Corporation, the Corporation shall not be in breach of
any portion of this Agreement.
5.6 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,
regulation, writ, judgment, injunction, decree, determination, award or
other order of any court or other governmental agency or
instrumentality, within the Territory and effecting the Exclusive
Market, which relates to the Products, or any of them, or any part
thereof, and to the best knowledge of the Corporation there is no basis
for any claim for compensation, damages or otherwise arising out of any
violation of the foregoing.
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<PAGE> 90
5.7 Survival of Representations.
Such representations and warranties of the Corporation contained
at Sections 5.4, 5.5 and 5.6 shall survive the Closing for a period of
two years.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE DISTRIBUTOR
The Distributor represents, warrants and covenants that:
6.1 Incorporation.
The Distributor is a corporation 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.
6.2 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.
6.3 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 any
other charge or encumbrance of any nature pursuant to, the terms of any
contract or agreement to the Distributor is a party or by which the
Distributor is a party or by which the Distributor or any of its assets
and properties is bound.
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<PAGE> 91
6.4 Survival of Representations.
Each representation and warranty of the Distributor contained herein
shall survive the Closing for a period of two years.
ARTICLE VII
INDEMNIFICATION
7.1 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 sustained or incurred by
reason of any breach of any warranty, representation, agreement or
covenant of the Distributor set forth in this Agreement.
7.2 Procedures for Indemnification.
a. Promptly after receipt by an Indemnified Party (as hereinafter
defined) under Sections 7.1 (a) or (b) of notice of the commencement
of any action by any person not an Indemnified Party for which
indemnification is available under Section 7.1 (a) or (b)
(hereinafter referred to as a "Third Party Claim"), 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.
b. Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the
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Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the
Indemnifying Party will Indemnify the Indemnified Party from and
against the entirety of any Damages the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim eligible for indemnification
hereunder, (B) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief,
(D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
c. So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance withss.7.2(b) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying
Party, and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
d. However, in the event the condition (A) inss. 7.2(b) above is or
becomes unsatisfied, the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or
obtain any consent from any Indemnifying Party in connection
therewith). In the event the condition (E) in Section 7.2(a) above
is or becomes unsatisfied, the Indemnified Party may defend against,
and, upon not less than three days written notice to the
Indemnifying Party, consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim in any
manner it may deem appropriate. Moreover, in the event the
conditions (B)-(D) inss.7.2(b) above is or becomes unsatisfied, the
Indemnified Party may defend against and consent to the entry of any
judgment or enter into any settlement with respect to, the Third
Party Claim, provided that the Indemnified Parties will consult with
the Indemnifying Party and will not consent to the entry of any
judgment or settlement without the Indemnifying Party's prior
written consent, which shall not be unreasonably withheld. In such
an event, the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the reasonable costs of
defending against the Third Party Claim (including attorneys' fees
and expenses), and the Indemnifying Parties will remain responsible
for any Damages the Indemnified Party may suffer resulting
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from, arising out of, relating to, in the nature of, or caused by a
Third Party Claim.
7.3 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 "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, 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 it was prejudiced thereby. The
Indemnifying Party shall promptly pay to such Indemnified Party the
amount of the Damages so specified. Notwithstanding any provision
contained under this Article VII to the contrary, no Indemnified Party
shall assert any claim for indemnification of any amount if and to the
extent such party actually recovers money for such claim under the
insurance described under Section 4.8 hereof.
ARTICLE VIII
RELATIONSHIP OF THE PARTIES
8.1 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 IX
EMPLOYMENT OF SUPERVISION STAFF
9.1 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
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the Distributor, after reasonable inquiry, to be an employee of the
Corporation or any of its subsidiaries, unless prior permission is
given by the Corporation.
9.2 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 9.1 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.
9.3 Survival.
The provisions of this Article IX shall survive the
termination or expiration of this Agreement for any reason.
ARTICLE X
MISCELLANEOUS
10.1 Notices.
All notices, requests or instruction hereunder shall be in
writing and delivered personally (including facsimile with confirmation
of receipt) or sent by registered or certified mail, postage prepaid,
as follows:
(1) if Super Vision International, Inc.
8210 President's Drive
Orlando, Florida 32809
Attention: President
Facsimile: (407) 857-0050
With a copy to:
Frank S. Ioppolo, Jr.
Greenberg Traurig, P.A.
20th Floor
111 North Orange Avenue
Orlando, Florida 32801
Facsimile: (407) 420-5909
22
<PAGE> 95
(2) if to Cooper Lighting
400 Busse Road
Elk Grove Village, Illinois 60007
Attention: President
Facsimile: (713) 209-8991
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.
10.2 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.
10.3 Further Action.
Each of the parties hereto shall use all commercially
reasonable 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.
10.4 Most Favored Customer.
In the event the Corporation is or becomes party to any
distributorship or similar arrangement in the Territory, 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. Notwithstanding anything herein to the contrary, it shall not
be deemed a materially more favorable agreement if the agreement or
transaction contemplated thereby relate to a one time or non-recurring
transaction which is priced on a per job (as opposed to line item)
basis.
10.5 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.
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<PAGE> 96
10.6 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.
10.7 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable in the
case of agreements made and to be performed entirely within such state.
10.8 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.
10.9 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.
10.10 Dispute Resolution.
a. Settlement Attempt. Each of the Distributor and the Corporation
agrees that any claim or dispute between the parties hereto arising
out of or in connection with this Agreement or any alleged breach
hereof (a "Claim") shall be submitted promptly to an executive of
each of the Distributor and the Corporation who shall have authority
to settle the Claim, and who shall meet in Orlando, Florida within
30 days of such submission to seek in good faith an amicable
settlement. In seeking an amicable settlement, the Distributor and
the Corporation agree to the contrary in writing, any advice or
decision of the mediator shall not be binding.
b. Binding Arbitration. Each of the Distributor and the Corporation
agrees any Claim not settled by the Distributor and the Corporation
within 60 days after notice of the Claim is first given by either
party to the other in accordance with Section 10.10(a) above shall
be finally settled by arbitration under the Commercial Arbitration
Rules and the Guidelines for Expediting Larger Complex Commercial
Arbitrations of the American Arbitration Association, and judgement
upon the award rendered by the arbitrators may be entered in any
court having jurisdiction over it. There shall be three arbitrators,
all of whom shall be fully active in their respective occupations
and shall conduct themselves as neutrals, and whose chairman shall
be an attorney experienced in arbitrating
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<PAGE> 97
large commercial disputes. Each party shall appoint one arbitrator,
and the two arbitrators shall appoint the third. All arbitrators
shall be compensated at their normal hourly or per diem rates for
all time spent by them in connection with the arbitration
proceedings. The arbitrators shall actively manage the arbitration
to make it fair, expeditious, economical and less burdensome and
adversarial than litigation, and the award rendered shall not
include punitive damages but shall state its reasoning. Any party
may request a court to provide interim relief without waiving the
agreement to arbitrate.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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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: John P. Stanney
Title: President
ATTEST: COOPER LIGHTING, INC.
- -------------------------------- By
---------------------------------
Name:
Title:
ATTEST: COOPER INDUSTRIES (CANADA), INC.
- -------------------------------- By
---------------------------------
Name:
Title:
26
<PAGE> 99
EXHIBIT E
November 23, 1998
Mr. Brett Kingstone, Individually
8210 Presidents Drive
Orlando, Florida 32809
Kingstone Family Limited Partnership II
Attention: Brett Kingstone, General Partner
Super Vision International, Inc.
Attention: Brett Kingstone, President
Dear Mr. Kingstone:
Reference is hereby made to the Agreement dated as of even date
herewith (the "Purchase Agreement") between Super Vision International, Inc.
(the "Corporation") and Cooper Lighting, Inc. ("Cooper"), pursuant to which
Cooper has agreed to acquire shares of the Corporation's class A common stock,
$.001 par value (the "Class A Common Stock"), and 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 Cooper to each of Brett Kingstone and
Kingstone Family Limited Partnership II (the "Sellers") and the Corporation of
the amount of $1.00 and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged by the Sellers and the Corporation),
Cooper, the Sellers and the Corporation agree as follows:
1. Definitions: All capitalized terms, not otherwise defined herein,
shall have the meaning ascribed to them in the Purchase Agreement
2. Representations and Warranties and Agreements of the Seller. The
Sellers, jointly and severally, hereby represent and warrant to, and agree with
Cooper, as follows:
(a) Each 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 or it, the terms hereof shall
constitute his or its valid and legally binding agreement enforceable against
him or it in accordance with its terms, except as may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of creditors
rights and
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<PAGE> 100
by limitations on the availability of equitable remedies.
(b) Kingstone Family Limited Partnership II has good and marketable
title to 483,264 shares of Class B Common Stock of the Corporation. Brett
Kingstone does not own any shares of stock of the Corporation, although he has a
beneficial interest in 322,187 shares of Class A Common Stock (together with the
shares held by Kingstone Family Limited Partnership II, the "Shares"). All such
Shares are free and clear of all mortgages, deeds of trust, security interests,
pledges, liens and other charges and encumbrances of any nature, and each Seller
has the right to sell and transfer all such Shares held by him or it to Cooper
hereunder. Cooper shall, upon delivery of any such 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 of 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 or it is a party or by which he or it or any of his or its assets is
bound.
(d) Neither Seller nor anyone acting on behalf of either 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 Shares hereunder within the registration requirements of the Securities
Act.
(e) The representations and warranties contained in this Section 2
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 Cooper; and each Seller shall, on each Closing Date, deliver its certificate
to Cooper to the foregoing effect in form and substance satisfactory to Cooper.
3. Representations and Warranties of Cooper. Cooper hereby represents
and warrant to, and agrees with the Sellers, as follows:
(a) It is a corporation duly organized and validly existing under the
laws of the State of Delaware 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 Cooper's valid and legally binding
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<PAGE> 101
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 4
hereof), Cooper will acquire the Shares purchased by it pursuant to Section 4,
if any, 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.
(e) The representations and warranties contained in this Section 3
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 Cooper shall, on each Closing Date, deliver its certificate
to the Seller to the foregoing effect in form and substance satisfactory to the
Seller.
4. Right-of-First Refusal.
(a) Each Seller agrees that, in the event such Seller shall, from time
to time, determine to sell any securities of the Corporation owned by him or it,
pursuant to a bona fide offer (the "Bona Fide Offer"), to any Cooper Lighting
Competitor (as defined in the Purchase Agreement), and provided that no Change
in Control (as hereinafter defined) in respect of Cooper shall have occurred
subsequent to the date hereof, such Seller shall, in each instance, first offer
such shares (the "Option Shares") to Cooper, by written notice (each an "Initial
Sale Notice") to Cooper to that effect. Cooper 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 such
Seller within ten days after the receipt of the Initial Sale Notice for a
purchase price calculated as hereinafter set forth (the date of such receipt
being herein referred to as a "Closing Date"). Failure to respond within such
period shall conclusively be deemed notice of rejection. In the event Cooper
shall not timely have exercised any right and option under this Section 4, such
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 Cooper, free of the restrictions of this Section 4. In the event
that Cooper duly delivers an Acceptance Notice to such Seller, then the
Acceptance Notice, taken in conjunction with the Initial Sale Notice, shall
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<PAGE> 102
constitute a valid and legally binding purchase and sale agreement, and payment
in cash for the Option Shares purchased be made within ten days following the
receipt by such 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 Option Shares shall again be subject to the
provisions of this Section 4.
(b) The purchase price for each security offered to Cooper pursuant to
this Section 4 shall be the dollar value of the consideration per security
offered to such 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
such Seller and Cooper or should such Seller and Cooper fail to agree thereon
within three days of receipt by Cooper of the Initial Sale Notice, the purchase
price shall be determined by an independent appraiser, qualified in such matters
selected by such Seller and Cooper.
(c) The provisions of this Section 4 shall be binding upon any
Affiliate of either Seller and upon Brett Kingstone's Immediate 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 4: (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 Cooper 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 Cooper is then subject to such
reporting requirement; provided, however, that, without limitations, 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 Cooper Industries.
5. Certain Covenants.
Each Seller hereby covenants and agrees that except as consented in
writing by Cooper, from and after the date of this Agreement, he or it shall:
(a) not sell, transfer or in any way convey, or agree to sell, transfer
or in any way
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<PAGE> 103
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;
(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 or it shall be voted (i) 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 (ii) against any amendment to the
Corporation's Certificate of Incorporation that would not cause the Class B
Common Stock to be converted automatically into Class A Common Stock upon a
transfer (except as permitted as of the date hereof or with Cooper's prior
consent); and
(d) use his or its best efforts to cooperate with Cooper in
effectuating the purposes of this Agreement and to consummate the transactions
contemplated hereby.
6. Termination. In the event the closing under the Purchase Agreement
shall not have occurred on or prior to November 30, 1998, this Agreement shall
have no further force or effect.
7. 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.
8. Successors. Cooper may not assign its rights under this Agreement
without the prior written consent of the Seller having first been obtained
(except that Cooper may assign its rights hereunder without such consent to any
direct or indirect subsidiary of Cooper Industries). 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.
9. 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.
10. Governing Law. This agreement and the terms hereof shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed entirely within such state.
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<PAGE> 104
11. Hart-Scott-Rodino Compliance. Notwithstanding anything herein to
the contrary, to the extent that any purchase by Cooper of any shares of a
Seller under this agreement requires prior notification pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or any similar law, such purchase shall be subject to all applicable
waiting periods (and any extensions thereto) under the HSR Act or such similar
law having expired or otherwise being terminated. Each of the Cooper and each
Seller shall (and each shall cause its ultimate parent entity as defined in the
HSR Act, to the extent appropriate, to) file any Notification and Report Forms
and related material that it or he may be required to file with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act or other governmental body under similar law, will use
its or his reasonable best efforts to obtain early termination of the applicable
waiting period, and make any further filings pursuant thereto that may be
necessary or advisable. In furtherance of the foregoing, but without limitation,
the Cooper's delivery of an Acceptance Notice pursuant to Section 4
(notwithstanding the language in Section 4 which indicates that such notice
constitutes a valid and legally binding purchase and sale agreement) is subject
to the condition precedent of the expiration or early termination of any waiting
period without final adverse action by the applicable governmental body.
Therefore, any obligation to make payment or right to make such a purchase is
tolled until such expiration or early termination of all applicable waiting
periods and the existence of such waiting period shall not adversely affect the
parties' obligations to consummate the transaction provided that the condition
precedent is satisfied.
12. 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.
* * *
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,
COOPER LIGHTING, INC.
By
------------------------------------
<PAGE> 105
ACCEPTED AND AGREED:
KINGSTONE FAMILY LIMITED PARTNERSHIP II
By:
----------------------------------------
Brett Kingstone, General Partner
----------------------------------------
Brett Kingstone, Individually
The undersigned hereby executes this agreement solely so as to be bound by the
provisions of Section 7 hereinabove set forth:
SUPER VISION INTERNATIONAL, INC.
By:
---------------------------------------
John Stanney, President
<PAGE> 106
EXHIBIT F
RECONCILIATION AGREEMENT
This Reconciliation Agreement is made as of this ___ day of November,
1998, by and among Brett Kingstone, Kingstone Family Limited Partnership II
(individually and collectively with Brett Kingstone, as applicable,
"Kingstone"), Super Vision International, Inc. (the "Corporation"), Cooper
Lighting, Inc. ("Cooper"), Hayward Industries, Inc. ("Hayward") and Hayward Pool
Products, Inc. ("HPP").
WHEREAS, Cooper desires to purchase 250,369 shares of Class A Common
Stock for $2,000,000 and obtain Initial Warrants and Protective Warrants;
WHEREAS, the parties hereto desire to reconcile and address certain
features of the Principal Documents as set forth herein;
NOW, THEREFORE, for the mutual covenants herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Cooper and Hayward are collectively referred to as the
"Purchasers" and each a "Purchaser." All capitalized terms used herein, unless
otherwise defined herein, shall have the meaning ascribed to them in the
applicable Stock Purchase Agreement between Corporation and the applicable
Purchaser.
2. Section 8.1 Rights.
(a) Hayward agrees not to exercise its rights pursuant to Section 8.1
of the Hayward Stock Purchase Agreement arising from the Corporation's issuance
of 250,369 shares of Class A Common Stock to Cooper pursuant to the Cooper Stock
Purchase Agreement. Hayward reserves its rights pursuant to Section 8.1 of the
Hayward Stock Purchase Agreement with respect to any shares of Class A Common
Stock issued to Cooper upon its exercise of its warrants, including, without
limitation, the Cooper Initial Warrants and the Cooper Protective Warrants.
(b) Notwithstanding Section 8.1 of the Hayward Stock Purchase Agreement
and the Cooper Stock Purchase Agreement, the parties hereto agree that upon any
Non-excluded Issuance by the Corporation of any shares of Class A Common Stock,
each of Cooper and Hayward's right to subscribe for additional shares of Class A
Common Stock shall be limited by the Protected Percentage Interest applicable to
such Purchaser. Because the number of shares which either party may purchase
will vary depending on whether and the extent to which the other party exercises
its rights under Section 8.1 of its Stock Purchase Agreement, each party may in
lieu of setting forth a specific numbers of Additional Shares, notify the
Corporation that it elects to purchase the maximum amount permissible to
maintain its then existing Protected Percentage Interest. The Corporation shall
honor each Purchaser's election, if any, to subscribe for additional shares of
Class A Common Stock up to such Purchaser's Protected Percentage
<PAGE> 107
Interest and shall take into account the other Purchaser's election of its
Section 8.1 rights in making the determination of the proper number of shares
available for subscription by each Purchaser.
3. Section 8.2 Rights. Hayward agrees that, as of the date hereof, Cooper
is not a Hayward Competitor. Cooper agrees that, as of the date hereof, Hayward
is not a Cooper Lighting Competitor.
4. Warrants. The exercise by either Purchaser of its Initial Warrants
shall be deemed a Non-excluded Issuance pursuant to the other Purchaser's Stock
Purchase Agreement. The Cooper Initial Warrants are deemed Eligible Warrants
under the Hayward Initial Warrant Certificate. The Hayward Initial Warrants are
deemed Eligible Warrants under the Cooper Initial Warrant Certificate.
The Cooper Initial Warrants and the Cooper Protective Warrants are
deemed not to be Eligible Warrants under the Hayward Protective Warrant
Certificate. The Hayward Initial Warrants and the Hayward Protective Warrants
are deemed not to be Eligible Warrants under the Cooper Protective Warrant.
5. Rights of First Refusal. Hayward and Cooper agree that, in the event
the Corporation or Kingstone shall, from time to time, determine to sell or
issue any securities of the Corporation, pursuant to a bona fide offer, to any
person or entity that is both a Cooper Lighting Competitor and a Hayward
Competitor (as defined in the Cooper Stock Purchase Agreement and Hayward Stock
Purchase Agreement, respectively) and if both Cooper and Hayward deliver to the
Corporation and/or Kingstone, as applicable, an Acceptance Notice within ten
days after the receipt of the applicable Initial Sale Notice, the Corporation
and Kingstone shall sell and Hayward and Cooper shall purchase the Offered
Shares pro rata based on the number of shares of Class A Common Stock held by
each (counting as issued, all shares in which the Warrants are then
exercisable).
6. Distribution. Each of HPP and Cooper hereby release the Corporation of
any liability for lost profits (assuming that it is determined that the
Corporation has liability for such lost profits) solely related to the sale by
the other Purchaser (including by such Purchaser's affiliates, agents,
distributors and representatives) of products of the Corporation into the
Exclusive Market granted HPP or Cooper, respectively; provided that the
Corporation is not in breach of a material term of the Distributorship Agreement
with such party (including, without limitation, Section 3.12 of the Hayward
Distributorship Agreement and Section 4.12 of the Cooper Distributorship
Agreement). HPP and Cooper each covenant to the other that it shall not and
shall use all reasonable efforts to prevent its affiliates, agents, distributors
and representatives) from selling products of the Corporation into the Exclusive
Market and Territory of the other, including exercising any right it may have to
terminate its relationship with any such affiliates, agent, distributor or
representative if the restricted activity continues for a period of thirty (30)
days after notice, but not including any requirement that either implement
written agreements with such persons restricting such activities; provided,
however, that neither Cooper nor HPP shall have any liability or obligation to
the other in the event any Products of the Corporation are sold
<PAGE> 108
into the Exclusive Market and Territory of the other unless such sale occurs as
a result of gross or willful misconduct. The Corporation shall credit the
Purchaser who was prejudiced by the other Purchaser's sales into the prejudiced
Purchaser's Exclusive Market with the corresponding purchases of products of the
Corporation for purposes of determining the satisfaction of the Minimum Purchase
Commitments and correspondingly the Corporation will not credit such purchases
when determining the satisfaction of the Minimum Purchase Commitment of the
breaching Purchaser.
7. Miscellaneous Provisions.
Except as expressly provided in this Reconciliation Agreement, this
Reconciliation shall not operate as an amendment or modification to any of the
Principal Documents as referenced in each Purchaser's respective Stock Purchase
Agreement, which remain in full force and effect.
This Reconciliation Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together will constitute
one and the same instrument.
WHEREFOR, each of the parties hereto duly executes this Reconciliation Agreement
as of the date and year first above written.
HAYWARD INDUSTRIES, INC. HAYWARD POOL PRODUCTS, INC.
By: By:
---------------------------- ------------------------------
James D. Krugman James D. Krugman
President President
SUPER VISION INTERNATIONAL, INC.
By:
--------------------------------
Name:
------------------------------
Title:
----------------------------
COOPER LIGHTING, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
- -----------------------------------
Brett Kingstone, Individually
Kingstone Family Limited Partnership II
By:
--------------------------------
Brett Kingstone, General Partner
<PAGE> 109
Exhibit G
AGREEMENT
THIS AGREEMENT ("Agreement") entered into as of this 23rd day of November,
1998, between Kingstone Family Limited Partnership II, a Nevada limited
partnership ("Seller"), and Cooper Lighting, Inc. ("Cooper").
WITNESSETH:
WHEREAS, Super Vision International, Inc. (the "Corporation") and Cooper
entered into an agreement (the "Purchase Agreement"), dated November 20, 1998,
relating to the sale of 250,369 shares of the Corporation's Class A Common
Stock, par value $.001 (the "Class A Common Stock"), which represented
approximately ten percent (10%) of the Corporation's issued and outstanding
Common Stock; and
WHEREAS, as part of that transaction, Brett M. Kingstone ("Kingstone"), an
officer, director and shareholder of the Corporation), agreed to grant Cooper an
option to purchase up to ten percent (10%) of the shares of Common Stock which
Kingstone has the right to acquire pursuant to the exercise of that certain
warrant issued to Kingstone on or about March 31, 1997, to purchase 289,187
shares of Class A Common Stock ("Warrant Shares") of the Corporation, at an
exercise price of $7.00 per share (the "Warrant"); and
WHEREAS, Kingstone transferred the Warrant to Seller, a family limited
partnership, for estate planning purposes on June 30, 1998; and
WHEREAS, in connection with the foregoing, Seller agrees to grant an option
(the "Option") to Cooper and Cooper agrees to accept such Option in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is hereby agreed as follows:
1. Grant of Option. In connection with the execution and delivery of the
Purchase Agreement, and in exchange for payment by Cooper 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 Cooper, or its designated affiliate, an option with respect to a
portion of the Warrant Shares pursuant to the terms hereinafter set forth:
(a) In each event of the exercise of the Warrant by the Seller (an
"Exercise"), the Seller shall immediately notify Cooper thereof, specifying the
number of Warrant Shares subject to such Exercise, whereupon Cooper shall have
the right and option, exercisable at any time prior to 45 days from and after
the delivery of notice of such Exercise by the Seller to Cooper (each, a
"Termination Date"), to purchase ten percent (10%) of the Warrant Shares issued
to the Seller
<PAGE> 110
upon such Exercise, which in no event shall exceed up to a total of 28,918 of
the Warrant Shares at any time under this Agreement (such Warrant Shares, in
each case the "Option Shares"), at a purchase price calculated as hereinafter
set forth (the "Purchase Price"). Any right of Cooper 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 Cooper 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
Market Price thereof (as defined in the Initial Warrants, and as that term is
defined in the Purchase Agreement, which certificate is attached as Exhibit A
to the Purchase Agreement) for thirty 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; provided, however, that should the Seller and Cooper fail
promptly to agree as aforesaid, then the Purchase Price shall be calculated by
an appraiser independent of the Seller, Cooper or the Corporation, qualified in
such matters, upon whom the Seller and Cooper shall promptly agree.
2. Exercise of Option. Cooper shall, at its election, in each case
exercise the foregoing right and option only by giving written notice to the
Seller (each, an "Exercise Notice") specifying the time and date, no earlier
than five nor later than fifteen days after the delivery of such notice to the
Seller (the "Closing Date"), at which time payment of the Purchase Price for
the Option shares will be made, at the offices of Greenberg Traurig, P.A., 20th
Floor, 111 North Orange Avenue, Orlando, Florida 32801, 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 Cooper and effective to transfer the Option Shares to
Cooper. Subject to the terms and conditions hereof, Cooper hereby agrees to
purchase such Option Shares from the Seller and the Seller hereby agrees to
sell such Option Shares to Cooper, in each event that Cooper delivers such
Exercise Notice to the Seller as aforesaid.
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 part of a class of securities of the Corporation then registered
under the Securities and Exchange Act of 1934 (the "Exchange Act"), 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 pursuant to the terms of the Registration Rights Agreement (as that
term is defined in the Purchase Agreement). Cooper and Seller hereby agree that
the Option Shares referenced in the Registration Rights Agreement shall refer
to the same Option Shares as defined herein.
4. Representations and Warranties and Agreements of the Seller. The
Seller hereby represents, warrants and agrees with Cooper as follows:
2
<PAGE> 111
(a) The Seller has full and unrestricted power and authority to enter
into this agreement to perform all of its covenants and agreements hereunder.
When executed and delivered by it, the terms hereof shall constitute its valid
and legally binding agreement enforceable against it 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 the right to sell and transfer all Option Shares to
Cooper hereunder upon the exercise, if ever, of the Warrant. Cooper 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
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 it is a party or by which it or any of its assets is bound.
(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 Cooper; and the Seller shall, on each Closing Date, deliver its
certificate to Cooper to the foregoing effect in form and substance
satisfactory to Cooper.
(5) Representations and Warranties of Cooper. Cooper hereby represents,
warrants and agrees with the Seller as follows:
(a) It is a corporation duly organized and validly existing under the
laws of the State of Delaware, 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 provision 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 Cooper'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.
3
<PAGE> 112
(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 (including, without
limitation, the exercise of any rights contemplated by Section 3 hereof),
Cooper will acquire the Option Shares purchased by it hereunder 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.
(e) The representations and warranties contained in this Section 5 shall
be true and correct 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 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 Cooper Lighting Competitor (as that term
is defined in the Purchase Agreement), and provided that no Change in Control
(as hereinafter defined) in respect of Cooper shall have occurred subsequent to
the date hereof, the Seller shall, in each instance, first offer such shares
(the "Offered Shares") to Cooper, by written notice (each an "Initial Sale
Notice") to Cooper to that effect. Cooper 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
Cooper 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 Cooper, free of the restrictions of this Section 6. In the
event that Cooper 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 shall 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 sixty 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.
4
<PAGE> 113
(b) The Purchase Price for each security offered to Cooper 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 Cooper, or should the Seller and Cooper fail to agree thereon within
three days of receipt by Cooper of the Initial Sale Notice, the Purchase Price
shall be determined by an independent appraiser, qualified in such matters and
selected by the Seller and Cooper.
(c) The provisions of this Section 6 shall be binding upon any Affiliate
of either the Seller or of Kingstone's Immediate Family (as hereinafter defined)
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 Cooper 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 Exchange
Act, whether or not Cooper 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, or 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 Cooper.
7. Certain Covenants.
The Seller hereby covenants and agrees that, except as consented to in
writing by Cooper, from and after the date of this Agreement, it 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;
(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 of the designee contemplated
5
<PAGE> 114
by Section 8.3 of the Purchase Agreement, to the Board of Directors of the
Corporation, and against any proposal inconsistent therewith; and
(d) use his best efforts to cooperate with Cooper in effectuating the
purposes of this Agreement and to consummate the transactions contemplated
hereby.
8. 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.
9. Successors. Cooper may not assign its rights under this Agreement
without the prior written consent of the Seller having first been obtained
(except that Cooper may assign its rights hereunder without such consent to any
wholly-owned subsidiary of Cooper Industries, Inc.). 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.
10. 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.
11. Governing Law. This agreement and the terms hereof shall be governed
by and construed in accordance with the laws of the State of Florida applicable
to agreements made and to be performed entirely within such state, without
giving effect to the principles of conflict of law.
12. 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.
13. Hart-Scott-Rodino Compliance. Notwithstanding anything herein to the
contrary, to the extent that any purchase by Cooper of any stock of the
Corporation hereunder requires prior notification pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or any similar law, such purchase shall be subject to all applicable
waiting periods (and any extensions thereto) under the HSR Act or such similar
law having expired or otherwise being terminated. Each of cooper and the Seller
shall (and each shall cause its ultimate parent entity as defined in the HSR
Act, to the extent appropriate, to) file any Notification and Report Forms and
related material that it or they may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act or other governmental body under similar law, will use its or
their reasonable best efforts to obtain early termination of the applicable
waiting period, and make any further filings pursuant thereto that may be
necessary or advisable. In furtherance of the foregoing, but without limitation,
Cooper's exercise of any Option pursuant to this Agreement and its delivery
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<PAGE> 115
of an Exercise Notice pursuant hereto (notwithstanding the language in Section
2) is subject to the condition precedent of the expiration or early termination
of any waiting period without final adverse action by the applicable
governmental body. Therefore, any obligation to make payment or right to make
such a purchase is tolled until such expiration or early termination of all
applicable waiting periods and the existence of such waiting period shall not
adversely affect the parties' obligations to consummate the transaction,
provided that the condition precedent is satisfied.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 116
14. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the matters herein and supersedes all prior
agreements and understandings, written and oral, between the parties with
respect to the subject matter hereof. Neither this agreement nor any term
hereof amy be changed, waived or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver
or termination is sought.
IN WITNESS WHEREOF the parties have executed this agreement as of the
date first written above.
COOPER LIGHTING, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
KINGSTONE FAMILY LIMITED
PARTNERSHIP II
By:
-----------------------------------------
Brett M. Kingstone,
General Partner
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: John P. Stanney
Title: President
8
