EXHIBIT E
HAYWARD INDUSTRIES, INC.
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September 25, 1996
▇▇. ▇▇▇▇▇ Kingstone
Super Vision International, Inc.
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Dear Mr. Kingstone:
Reference is hereby made to:
(i) the Escrow Agreement dated as of January 21, 1994
(the "Escrow Agreement") among Super Vision International,
Inc. (the "Corporation"), American Stock Transfer & Trust
Company and you (the "Seller") and other stockholders of the
Corporation, as amended by amendment dated as of March 17,
1994 among such stockholders, pursuant to which, among other
matters, a number of shares (the "Escrow Shares") of the class
B common stock, $.001 par value, of the Corporation owned by
the Seller are held in escrow, subject to release in
accordance with the terms and conditions set forth therein;
and
(ii) the Agreement dated as of even date herewith (the
"Purchase Agreement") between the Corporation and Hayward
Industries, Inc. ("Hayward"), pursuant to which Hayward has
agreed to acquire shares of the Corporation's class A common
stock, $.001 par value (the "Class A Common Stock"), and,
through a subsidiary, to enter into certain distributorship
arrangements with the Corporation.
In connection with the execution and delivery of the Purchase
Agreement, and in exchange for payment by Hayward to the Seller of
the amount of $1.00 and other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by the
Seller), the Seller hereby grants to Hayward, or its designated
affiliate, an option with respect to a portion of the Escrow Shares
(and all Escrow Property [as defined in the Escrow Agreement]
attributable to such shares) pursuant to the terms hereinafter set
forth:
1. Grant of Option.
(a) Subject to Closing under the Purchase Agreement, in each
event of the release of Escrow Shares to the Seller (a "Release")
the Seller shall immediately notify Hayward thereof, specifying the
number of Escrow Shares subject to such Release, whereupon Hayward
shall have the right and option, exercisable at any time prior to
45 days from and after such Release (each, a "Termination Date"),
to purchase up to ten (10%) percent of the Escrow Shares (at
Hayward's election, together with the Escrow Property attributable
to such shares) released to the Seller (such Escrow Shares,
together with such Escrow Property, in each case the "Option
Shares"), at a purchase price calculated as hereinafter set forth
(the "Purchase Price"). Any right of Hayward to purchase such
Options Shares shall expire upon the applicable Termination Date
and such shares shall no longer be deemed Option Shares for
purposes of this Agreement.
(b) The Purchase Price shall in each instance be calculated
by the Seller and Hayward as the fair market value of the relevant
Option Shares, with each share of Class A Common Stock included
therein valued with reference to the average Bid Price thereof (as
defined in the Escrow Agreement, as in effect on the date hereof)
for 30 consecutive business days prior to the date of the Exercise
Notice (as hereinafter defined), appropriately modified by the
parties to reflect any stock splits, stock dividends,
reclassifications, or similar events; and should the Seller and
Hayward fail promptly to agree as aforesaid, by an appraiser
independent of the Seller, Hayward or the Corporation, qualified in
such matters, upon when the Seller and Hayward shall promptly
agree.
2. Exercise of Option. Hayward shall, at its election, in
each case exercise the foregoing right and option by giving written
notice to the Seller (each, an "Exercise Notice") specifying the
time and date, no earlier than five nor later than 15 days after
the delivery of such notice to the Seller (the "Closing Date"), at
which payment of the Purchase Price for the Option Shares will be
made, at the offices of Messrs. Krugman, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Park
80 West-Plaza Two, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, by delivery to
the Seller of such Purchase Price by certified or bank cashiers'
check or wire transfer, against delivery of certificates for the
Option Shares, duly endorsed in blank by the Seller (each such
certificate accompanied by any requisite documentary or stock
transfer tax stamps), or other documentation in form and substance
satisfactory to Hayward and effective to transfer the Option Shares
to Hayward. Subject to the terms and conditions hereof, Hayward
hereby agrees to purchase such Option Shares from the Seller and
the Seller hereby agrees to sell such Option Shares to Hayward, in
each event that Hayward delivers such Exercise Notice to the Seller
as aforesaid.
3. Registration of Shares. In each event of exercise of the
foregoing right and option, and of the transfer of any Option
Shares as aforesaid, the Corporation shall, as promptly as
practicable subsequent to the Closing Date and in no event later
than twelve months from such date, register such Option Shares as
shall form part of a class of securities of the Corporation then
registered under the Securities Exchange Act of 1934, at the
Corporation's expense, pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). The foregoing registration shall be
effectuated by the Corporation by execution and delivery to Hayward
of the Registration Rights Agreement (as defined in the Purchase
Agreement).
4. Representations and Warranties and Agreements of the
Seller. The Seller hereby represents and warrants to, and agrees
with Hayward, as follows:
(a) The Seller has full and unrestricted power and authority
to enter into this agreement and to perform all of his covenants
and agreements hereunder. When executed and delivered by him, the
terms hereof shall constitute his valid and legally binding
agreement enforceable against him in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors rights and by
limitations on the availability of equitable remedies.
(b) The Seller has good and marketable title to the Escrow
Shares, which, with the exception of the Escrow Agreement, are free
and clear of all mortgages, deeds of trust, security interests,
pledges, liens and other charges and encumbrances of any nature,
and has the right to sell and transfer all Option Shares to Hayward
hereunder upon the release, if ever, of such Option Shares from
escrow pursuant to the Escrow Agreement. As of the date hereof, no
Escrow Property is held pursuant to the provisions of the Escrow
Agreement. Hayward shall, upon delivery of any Option Shares in
accordance with this agreement, hold good and marketable title
thereto, free and clear of any lien, security interest, voting
trust or other claim, charge or encumbrance.
(c) Neither the execution and delivery hereof, nor the
consummation of any or all of the transactions contemplated herein,
will violate any law, rule, regulation, writ, judgment, injunction,
decree, determination, award or other order of any court or
governmental agency, or conflict with or result in any breach of or
constitute a default under, or result in the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature pursuant to the terms of,
any contract or agreement to which he is a party or by which he or
any of his assets is bound.
(d) Neither the Seller nor anyone acting on behalf of the
Seller has directly or indirectly offered any securities for sale
to, or solicited any offer to buy any of the same from, anyone so
as to bring the delivery and sale of the Option Shares hereunder
within the registration requirements of the Securities Act.
(e) The representations and warranties contained in this
Section 4 shall be true and correct on and as of each Closing Date
with the same effect as if made on and as of such date and such
representations and warranties shall survive each Closing Date
notwithstanding any investigation made by or on behalf of Hayward;
and the Seller shall, on each Closing Date, deliver its certificate
to Hayward to the foregoing effect in form and substance
satisfactory to Hayward.
5. Representations and Warranties of Hayward. Hayward
hereby represents and warrant to, and agrees with the Seller, as
follows:
(a) It is a corporation duly organized and validly existing
under the laws of the State of New Jersey and has the full
corporate power and authority to enter into the agreements
contained herein, to acquire the Option Shares elected by it, and
to carry out the provisions hereof.
(b) The execution and delivery hereof by it and the
performance by it of its covenants and agreements hereunder have
been duly authorized by all necessary corporate action. When
executed and delivered by it the terms hereof shall constitute
Hayward's valid and legally binding obligation enforceable against
it in accordance therewith, except as may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of
equitable remedies.
(c) Neither the execution and delivery hereof, nor the
consummation of the transactions contemplated herein, will violate
any provision of its certificate of incorporation or by-laws, or
any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any court or governmental
agency, or conflict with or result in any breach of any of the
terms of or constitute a default under, or result in the creation
or imposition of any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance of any nature
pursuant to the terms of any contract or agreement to which it is
a party or by which it or any of its assets is bound.
(d) Except as otherwise permitted by applicable law (without
limitation, including in the exercise of any rights contemplated by
Section 3 hereof), Hayward will acquire the Option Shares purchased
by it hereunder for its own account and not with a view to, or for
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 on and as of each Closing Date
with the same effect as if made on and as of such date, and such
representations and warranties shall survive each Closing Date
notwithstanding any investigation made by or on behalf of the
Seller; and Hayward shall, on each Closing Date, deliver its
certificate to the Seller to the foregoing effect in form and
substance satisfactory to the Seller.
6. Right-of-First Refusal.
(a) In addition to the right and option hereinabove set
forth, the Seller agrees that, in the event the Seller shall, from
time to time, determine to sell any securities of the Corporation
owned by him, pursuant to a bona fide offer (the "Bona Fide
Offer"), to any Hayward Competitor (as defined in the Purchase
Agreement), and provided that no Change in Control (as hereinafter
defined) in respect of Hayward shall have occurred subsequent to
the date hereof, the Seller shall, in each instance, first offer
such shares (the "Offered Shares") to Hayward, by written notice
(each an "Initial Sale Notice") to Hayward to that effect. Hayward
shall have the right and option to purchase all, but not less than
all, securities specified in the Initial Sale Notice by giving
written notice of exercise (an "Acceptance Notice") to the Seller
within ten days after the receipt of the Initial Sale Notice for a
purchase price calculated as hereinafter set forth. Failure to
respond within such period shall conclusively be deemed notice of
rejection. In the event Hayward shall not timely have exercised any
right and option under this Section 6, the Seller shall be free,
for a period of sixty days after the expiration of such right and
option, to sell all, but not less than all, securities to which
such right and option related pursuant to the Bona Fide Offer
theretofore communicated to Hayward, free of the restrictions of
this Section 6. In the event that Hayward duly delivers an
Acceptance Notice to the Seller, then the Acceptance Notice, taken
in conjunction with the Initial Sale Notice, shall constitute a
valid and legally binding purchase and sale agreement, and payment
in cash for the Offered Shares purchased be made within ten days
following the receipt by the Seller of the Acceptance Notice. In
the event the Seller fails to complete the proposed sale,
assignment, transfer or other disposition within 60 days after the
rejection or deemed rejection of the offer contained in the Initial
Sale Notice, sale of the Offered Shares shall again be subject to
the provisions of this Section 6.
(b) The purchase price for each security offered to Hayward
pursuant to this Section 6 shall be the dollar value of the
consideration per security offered to the Seller pursuant to the
Bona Fide Offer, which, in the case of any non-cash consideration,
shall be the fair market value thereof determined by the Seller and
Hayward or should the Seller and Hayward fail to agree thereon
within three days of receipt by Hayward of the Initial Sale Notice,
the purchase price shall be determined by an independent appraiser,
qualified in such matters selected by the Seller and Hayward.
(c) The provisions of this Section 6 shall be binding upon
any Affiliate of either the Seller or of his Immediately Family (as
hereinafter defined), and upon any member of his Immediate Family,
to whom the Seller may transfer any securities of the Corporation
after the date hereof, who shall agree in writing to be bound as
aforesaid as a condition to any such transfer.
(d) For purposes of this Section 6: (x) an "Affiliate" of any
person or entity shall mean any other person or entity controlled
by, under common control with or controlling such person or entity;
(y) "Immediate Family" shall mean the spouse, siblings, children
(and the direct lineal descendants of such children) and parents
(and the direct lineal ancestors of such parents) of the subject
person, and any trust for the benefit thereof; and (z) "Change in
Control" shall mean a change in control of Hayward occurring after
the date of execution of this agreement of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar
schedule or form) promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), whether or not Hayward is then subject
to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have
occurred if any "person" (as defined under Section 13(d) of the
Exchange Act) subsequent to the date hereof becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 50% of the outstanding shares of any
class or series of securities entitled to elect more than one-half
of the board of directors of Hayward.
7. Certain Covenants.
The Seller hereby covenants and agrees that, except as
consented in writing by Hayward, from and after the date of this
Agreement, he shall:
(a) not sell, transfer or in any way convey, or agree to
sell, transfer or in any way convey, any of the Option Shares or
grant, or agree to grant, an option or other right to acquire any
of the Option Shares, except pursuant to this Agreement;
(b) not suffer or permit any pledge, lien, security interest
or other charge or encumbrance of any nature to be created with
respect to the Option Shares, nor shall such Option Shares be
subject to any voting agreements or to any proxies, except for this
Agreement or as expressly permitted or required by this Agreement;
(c) take such action so that all shares of capital stock of
the Corporation legally or beneficially owned by him shall be voted
to effectuate the election to the Board of Directors of the
Corporation of the designee contemplated by Section 8.3 of the
Purchase Agreement and against any proposal inconsistent therewith;
and
(d) use his best efforts to cooperate with Hayward in
effectuating the purposes of this Agreement and to consummate the
transactions contemplated hereby.
8. Termination. In the event the closing under the Purchase
Agreement shall not have occurred on or prior to September 25,
1996, this Agreement shall have no further force or effect.
9. Notices. Any notice pursuant to the terms hereof shall
be deemed to have been sufficiently given to either party hereto if
sent by registered, certified or overnight express mail, postage
prepaid, addressed, as the case may be, to the parties at their
respective addresses hereinabove set forth or such other address as
may hereafter be designated by a party by notice to the other party
given in such manner. Unless otherwise provided herein, all notices
shall be deemed to have been given when sent.
10. Successors. Hayward may not assign its rights under this
Agreement without the prior written consent of the Seller having
first been obtained (except that Hayward may assign its rights
hereunder without such consent to any wholly-owned subsidiary of
Hayward). The terms, covenants and conditions hereof shall inure to
the benefit of and be binding upon the parties hereto and their
respective heirs, legal representatives, successors and assigns.
11. Expenses. Except as otherwise provided herein, each of
the parties hereto shall bear such party's own expenses in
connection with this Agreement and the transactions contemplated
hereby.
12. Governing Law. This agreement and the terms hereof shall
be governed by and construed in accordance with the laws of the
State of New Jersey applicable to agreements made and to be
performed entirely within such state.
13. Counterparts. This agreement may be signed in one or
more counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one agreement.
* * *
If the foregoing terms are acceptable to you, kindly so
indicate by executing the enclosed copy of this letter in the space
below provided for that purpose, and returning such copy to the
undersigned.
Very truly yours,
HAYWARD INDUSTRIES, INC.
By s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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ACCEPTED AND AGREED:
s/▇▇▇▇▇ Kingstone
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▇▇▇▇▇ Kingstone
The undersigned hereby executes this agreement solely so as to be
bound by the provisions of Section 3 hereinabove set forth:
SUPER VISION INTERNATIONAL, INC.
By s/▇▇▇▇ ▇▇▇▇▇▇▇
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