STANDSTILL AGREEMENT
AGREEMENT, dated as of March 1, 1999, by and between INTERIORS, INC., a
Delaware corporation ("Interiors"), and CSL LIGHTING MANUFACTURING, INC., a
Delaware corporation ("CSL").
Interiors and CSL have entered into a Stock Purchase Agreement dated as of
the date hereof (the "Stock Purchase Agreement"), pursuant to which CSL has
issued and sold to Interiors, and Interiors has purchased 1,191,752 shares of
the Common Stock, par value $0.01 per share, of CSL (the "CSL Common Stock"),
representing fifty-one (51%) percent of the outstanding shares of CSL Common
Stock as at the Closing Date, giving effect to such issuance. For purposes of
this Agreement, "Voting Securities" shall mean all classes of capital stock of
the Company which are then entitled to vote generally in the election of
directors. Capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the Stock Purchase Agreement. In order to provide a
constructive and mutually beneficial relationship between Interiors and CSL, the
parties agree as follows:
1. TERM OF AGREEMENT
Except as otherwise expressly provided herein, the respective covenants
and agreements of Interiors and CSL contained in this Agreement will continue in
full force and effect until 5:00 p.m., New York City time, on July 28, 1999 (the
"Termination Date").
2. COVENANTS OF INTERIORS
(a) Prior to the Termination Date or earlier termination of this Agreement
and subject to the further provisions hereof, neither Interiors, nor any
"affiliate" (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended), executive officer or director of Interiors
(collectively, the "Interiors Group"), will, directly or indirectly, acquire any
Voting Securities (except by way of stock dividends or other distributions or
offerings made available to holders of Voting Securities generally) if the
effect of such acquisition would be to increase the aggregate voting power in
the election of directors of all Voting Securities then owned by all members of
the Interiors Group to greater than 51% of such total combined voting power of
all the Voting Securities then outstanding; provided that no member of the
Interiors Group shall be obligated to dispose of any Voting Securities if the
aggregate percentage ownership of the Interiors Group is increased as a result
of a recapitalization of CSL or any other action taken by CSL or its affiliates
other than the Interiors Group. Notwithstanding anything herein to the contrary,
in the event the Interiors Group shall own less than 51% of all outstanding
Voting Securities during the term of this Agreement, the Interiors Group may
acquire additional Voting Securities during the term of this Agreement; provided
that the effect of such acquisition would not increase the aggregate voting
power in the election of directors of all Voting Securities then owned by all
members of the Interiors Group to greater than 51% of such total combined voting
power of all the Voting Securities then outstanding.
(b) Interiors will not cause its designees on CSL's Board of Directors to
take any action during the term of this Agreement which would violate any
provision of this Agreement or contravene the intent of the parties hereto.
(c) Interiors will comply with all of its obligations under the Stock
Purchase Agreement of even date herewith between Interiors and CSL, and will use
its best efforts to ensure that its designees on CSL's Board of Directors will
not contravene the intent of the parties under the Stock Purchase Agreement.
3. COVENANTS OF CSL
Prior to the Termination Date or earlier termination of this Agreement and
subject to the further provisions hereof:
(a) CSL will not take or recommend to its shareholders any action during
the term of this Agreement which would impose limitations on the legal rights of
the Interiors Group as CSL shareholders other than those imposed pursuant to the
express terms of this Agreement, including, without limitation, any action which
would impose restrictions (i) based upon the size of security holding,
nationality of a security holder, the business in which a security holder is
engaged or other considerations applicable to the Interiors Group and not to
security holders generally; or (ii) with reference to Common Stock generally, by
means of the issuance of or proposal to issue any other class of securities
having voting power disproportionately greater than the equity investment in CSL
represented by such securities.
(b) CSL will furnish to Interiors' designees on CSL's Board of Directors
all information that is provided to the other directors of CSL; provided such
information is held in strict confidence by such recipient.
(c) CSL will furnish to Interiors all information that is required by
generally accepted accounting principles to enable Interiors to account for its
investment in CSL. To the extent reasonably requested by interiors, CSL will,
and will cause its employees, independent public accountants and other
representatives to, at CSL's expense, provide information regarding CSL to, and
otherwise cooperate with, Interiors so as to enable Interiors to prepare
financial statements in accordance with generally accepted accounting principles
in the United States, and to comply with its reporting requirements and other
disclosure obligations under applicable United States securities laws and
regulations; provided that, to the extent such information regarding CSL is not
regularly prepared for or provided to CSL in the ordinary course of business,
such information shall be furnished at Interiors' expense.
(d) CSL will comply with all of its obligations under the Stock Purchase
Agreement of even date herewith between CSL and interiors.
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4. TERMINATION
Notwithstanding any other provision of this Agreement, either party may
terminate this Agreement, in its sole discretion, if the other party fails to
perform or observe any of its obligations pursuant to this Agreement or the
Stock Purchase Agreement (a "Terminating Breach"); provided, however, that if
such Terminating Breach is curable by the breaching party through the exercise
of its best efforts and such breaching party continues to exercise such best
efforts, the other party may not terminate this Agreement under this Section 4
for a period of 10 days from the date on which such party delivers to the
breaching party written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Breach.
5. MISCELLANEOUS
(a) Interiors, on the one hand, and CSL, on the other, acknowledge and
agree that irreparable damage would occur in the event any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which they may be entitled at law or equity.
(b) If any provision of this Agreement is in violation of any statute,
rule, regulation, order or decree of any governmental authority, court or
agency, or subjects any member of the Interiors Group to governmental regulation
to which it is not now subject, which violation or regulation would have a
material adverse impact on the operations of the Interiors Group taken as a
whole, then such member of the Interiors Group shall be relieved of its
obligations under such provision to the minimum extent necessary to cure such
violation or eliminate the applicability of such regulation; provided that this
subparagraph shall not apply to any such violation or regulation resulting in
part from activities or operations of any member of the Interiors Group other
than its ownership of Voting Securities and the consummation of the transactions
contemplated by this Agreement.
(c) As used herein, the term "affiliate" shall have the meaning set forth
in Rule 12b-9 under the Exchange Act and the term "person" shall mean any
individual, partnership, corporation, trust or other entity.
(d) This Agreement and the Stock Purchase Agreement contain the entire
understanding of the parties with respect to the transactions contemplated
hereby and this Agreement may be amended only by an agreement in writing
executed by the parties hereto.
(e) Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
(f) For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
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(g) All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personal]y, by
fax (except for legal process) or sent by registered mail, postage prepaid, if
to:
INTERIORS:
Interiors, Inc.
000 Xxxxxxxxxx Xxxxxx
Xx. Xxxxxx, XX 00000
Attention: Xxx Xxxx, Chief Executive Officer and President
Telephone: (000) 000-0000 (x8Ol)
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx
000 Xxxx Xxxxxx - 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier:(000) 000-0000
CSL:
CSL Lighting Manufacturing, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxx, President
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with a copy to:
Morse, Zelnick, Rose & Lander LLP
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
Telephone:(000) 000-0000
Telecopier:(000) 000-0000
or to such other address or fax number as any party may, from time to time,
designate in a written notice given in a like manner. Notice given by fax shall
be deemed delivered on the day the sender receives fax confirmation that such
notice was received at the fax number of the addressee. Notice given by mail as
set out above shall be deemed delivered five days after the date the same is
postmarked.
(h) From and after the Termination Date or earlier termination of this
Agreement, the covenants of the parties set forth herein shall be of no further
force or effect and the parties shall be under no further obligation with
respect thereto.
(i) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein, without regard to the choice of laws principles
thereof.
(j) No failure or delay on the part of either party in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
IN WITNESS WHEREOF, Interiors and CSL have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized, all
as of the day and year first above written.
INTERIORS, INC.
By /s/ Xxx Xxxx
------------------------------------
Xxx Xxxx
Chief Executive Officer and President
CSL LIGHTING MANUFACTURING, INC.
By /s/ Xxxx Xxxxx
------------------------------------
Xxxx Xxxxx
Chief Executive Officer
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