EXHIBIT 9.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT made this ___ day of February, 1996 by and
between RGB COMPUTER & VIDEO, INC., a Florida corporation (the
"Company"), and XXXXX X. XXXXXX.
Recitals:
A. Concurrently herewith, the Company, Sphere Enterprises Inc.,
a Florida corporation wholly-owned by the Company ("Sub"), and
Saf T Lok Corporation, a Florida corporation predominantly owned
by the Xxxxxx family ("STL"), are consummating a merger (the
"Merger") pursuant to which Sub will be merged with and into STL
whereby (i) each common share of STL issued and outstanding im
mediately prior to the Merger shall be converted into the right
to receive common shares of the Company, and (ii) each common
share of Sub issued and outstanding immediately prior to the Mer-
ger shall be converted into a common share of STL.
X. Xxxxxx holds an option to acquire STL common shares, which
he has agreed to surrender.
C. RGB has agreed to xxxxx Xxxxxx the Option (hereinbelow def-
ined) on the following terms and conditions.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinbelow set forth and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Option to Purchase Shares.
1.1 Grant. The Company hereby grants to Xxxxxx an irrevo-
cable option to purchase up to one million (1,000,000) shares of
its common stock, no par value ("Shares"), on the terms and sub
ject to the conditions set forth herein (the "Option").
1.2 Exercisability. The Option may be exercised by Xxxxxx
on or before December 31, 1999 in accordance with the following
restrictions. The Option will become exercisable ("Vest") with
respect to three hundred thirty three thousand three hundred
thirty three and one third (333,333.33) Shares on January 1st of
each year beginning in 1997 (the "Annual Maximum"). On each Jan-
uary 1st beginning January 1, 1997 the Option shall Vest with
respect to the number of Shares, up to the Annual Maximum, cal
culated by multiplying
(a) the Annual Maximum by
(b) a fraction (which shall not exceed one (1)) the
numerator of which is STL's net income as determined in accor
dance with generally accepted accounting principals before inter
est, taxes, depreciation and amortization ("Earnings") for the
year most recently ended less the Low Earnings Target for such
year (set forth on the schedule below) and the denominator of
which is the difference obtained by subtracting the Low Earnings
Target for any year from the High Earnings Target for such year
(set forth on the schedule below).
Earnings Range
Year Low Earnings Target High Earnings Target
1996 $2,500,000 $ 4,500,000
1997 $4,000,000 $ 7,500,000
1998 $8,000,000 $15,000,000
In the event that Options with respect to the full one million
(1,000,000) Shares awarded have not Vested by January 1, 1999,
Options will Vest with respect to an additional number of Shares
calculated by multiplying
(a) one million (1,000,000) Shares by
(b) a fraction (which shall not exceed one (1)) the
numerator of which is the amount by which STL's aggregate Earn
ings for 1996, 1997 and 1998 exceed $14,500,000 (being the sum of
the Low Earnings Target for such three year period) and the den-
ominator of which is $12,500,000 (being the sum of the ranges for
such three year period)
and subtracting from that product the number of Shares with res-
pect to which Options have previously Vested in accordance with
the above.
1.3 Procedure. In the event Xxxxxx wishes to exercise the
Option, he must send a written notice to the Company of his in
tention to exercise (a "Notice") specifying the number of Shares
to be purchased and the date, time and place of the closing of
such purchase (the "Closing Date" or the "Closing"), which date
shall not be less than twenty (20) days nor more than forty (40)
days from the date of delivery of the Notice. At the Closing the
Company shall deliver to Xxxxxx all of the Shares purchased by
delivery of a certificate evidencing such Shares. Xxxxxx shall,
at Closing, deliver to the Company an amount equal to two dollars
($2.00) (the "Exercise Price") multiplied by the number of Shares
purchased pursuant to this Section 1, which will be paid by
check.
2. Investment Representation. Any Shares acquired by Xxxxxx
upon exercise of the Option will not be taken with a view to the
public distribution thereof and will not be transferred or other-
wise disposed of except in a transaction registered or exempt
from registration under federal and state securities laws.
3. Reservation Representation. The Company has taken all nec-
xxxxxx corporate and other action to authorize and reserve for
issuance, and to permit it to issue, and at all times from the
date hereof until such time as the obligation to deliver Shares
hereunder terminates, will have reserved for issuance, upon ex
ercise of the Option one million (1,000,000) Shares. All of such
Shares upon issuance pursuant hereto, shall be duly authorized,
validly issued, fully paid and non-assessable with no personal
liability attached to the ownership thereof, shall be delivered
free and clear of all claims, liens, encumbrances, security in
terests and charges of any nature whatsoever, and shall not be
subject to any preemptive right.
4. Adjustment Upon Changes in Capitalization. In the event of
any change in the number of issued and outstanding Shares by rea-
son of any stock dividend, split-up, merger, recapitalization,
combination, exchange of Shares, spin-off or other change in the
corporate or capital structure of the Company which could have
the effect of diminishing Xxxxxx' rights hereunder, the number
and kind of Shares or other securities subject to the Option and
the Exercise Price therefor shall be appropriately adjusted so
that Xxxxxx shall receive upon exercise (or, if such a change
occurs between exercise and Closing, upon Closing) of the Option
the number and kind of Shares or other securities or property
that Xxxxxx would have received in respect of the Shares that
Xxxxxx is entitled to purchase upon exercise of the Option if the
Option had been exercised (or the purchase thereunder had been
consummated, as the case may be) immediately prior to such event.
5. Registration of Shares Under the Securities Act.
5.1 Demand Registration. If the Option is exercised and if
Xxxxxx shall request in writing on or before December 31, 1999,
the Company shall use its best efforts to effect the registration
under the Securities Act of 1933, as amended (the "Securities
Act"), or any successor statute then in effect, and any applic-
able state law (a "Demand Registration"), of such number of
Shares owned by Xxxxxx as Xxxxxx shall request and to keep such
Demand Registration effective for a period of not less than nine-
ty (90) days, unless, in the written opinion of counsel to the
Company, which opinion shall be delivered to Xxxxxx and which
shall be satisfactory in form and substance to Xxxxxx and his
counsel, such Demand Registration is not required in order law
fully to sell and distribute such Shares in the manner contempla-
xxx by Xxxxxx. The Company may delay the filing of a Demand Reg-
istration required hereunder for a period of up to ninety (90)
days if it believes in good faith that it would be disadvantag
eous to the Company for such Demand Registration to be effected
at the time requested by Xxxxxx.
5.2 Shelf Registration. In lieu of effecting any Demand
Registration for Xxxxxx, the Company may use its best efforts to
effect a "shelf" registration pursuant to Rule 415 under the Sec-
urities Act (or any similar rule that may be adopted) with res-
pect to such number of Shares owned by Xxxxxx as Xxxxxx shall re-
quest and to keep such registration continuously effective for a
period of at least two (2) years (a "Shelf Registration"). If
Xxxxxx desires to sell or otherwise transfer any Shares pursuant
to the Shelf Registration during the period in which the Company
is required to keep the Shelf Registration effective pursuant to
this Section 5, Xxxxxx shall notify the Company of his intention
to do so by written notice received by the Company at least ten
(10) days prior to such sale or transfer. Xxxxxx may thereafter
effect such sale or transfer within forty (40) days of the deliv-
ery of such notice unless at least one (1) day prior thereto the
Company elects to delay such sale or transfer (for a period of up
to ninety (90) days) as a result of a good faith determination
that it would be disadvantageous to the Company to prepare a Pro-
spectus or any amendment to the Registration Statement with res-
pect to the Shelf Registration to permit such sale or transfer.
6. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto
shall execute and deliver such additional documents and take all
such further action as may be reasonably necessary or desirable
to consummate the transactions contemplated by this Agreement, in
cluding, without limitation, to vest in Xxxxxx good title to any
Shares purchased hereunder.
7. Survival of Representations and Warranties. The respective
representations and warranties of the Company and Xxxxxx con
tained in Sections 2 and 3 herein shall not be deemed waived or
otherwise affected by any investigation made by the other party
hereto and shall survive the Closing of the transactions contem-
plated hereby through December 31, 1999.
8. Miscellaneous.
8.1 Entire Agreement; Assignment. This Agreement (a) con
stitutes the entire agreement between the parties with respect to
the subject matter hereof and (b) shall not be assigned by opera
tion of law or otherwise, provided that Xxxxxx may assign his
rights but not his obligations hereunder to any relative subject
to a Voting Trust Agreement of even date, and no such assignment
shall relieve Xxxxxx of his obligations hereunder. Subject to
the foregoing, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by the parties hereto and their
respective successors (including any successor in interest by
merger, sale of all or substantially all of the assets or other-
wise) and assigns.
8.2 Amendments. This Agreement may not be modified, amen-
ded, altered or supplemented, except upon the execution and del-
xxxxx of a written agreement executed by the parties hereto.
8.3 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally or sent by over
night courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Xxxxxx, to
Xxxxx X. Xxxxxx
0000 X.X. Xxxxxx Xxxx Xx.
Xxxxxxx, XX 00000
With a copy to
Mirkin & Xxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx. #000
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
(b) If to the Company, to
RGB Computer & Video, Inc.
00000 X.X. Xxxxxxx Xxx.
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx III
With a copy to
Boose, Casey, Ciklin et al.
000 X. Xxxxxxx Xx. #0000
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Beer, Esq.
8.4 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida,
regardless of the laws that might otherwise govern under applic-
able principles of conflicts of laws thereof.
8.5 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original,
but both of which shall constitute one and the same Agreement.
8.6 Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation
of this Agreement.
8.7 Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law but
if any provision or portion of any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provis-
ion or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such juris
diction as if such invalid, illegal or unenforceable provision or
portion of any provision had never been contained herein. With-
out limiting the generality of the foregoing, in the event that
the number of Shares issuable upon exercise of the Option is held
to be invalid, illegal or unenforceable for any reason (including
as a result of the failure to obtain any required vote of share-
holders to authorize such issuance), the number of Shares so is-
suable shall be reduced to that number which could validly and
legally be issued.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
RGB COMPUTER & VIDEO, INC.
By:________________________________
Xxxxxx X. Xxxxxxx III, President
___________________________________
XXXXX X. XXXXXX
