Common use of Exercise Price Adjustment Clause in Contracts

Exercise Price Adjustment. The Exercise Price shall be subject to adjustment from time to time as follows; provided, however, that no adjustment of the Exercise Price shall have the effect of increasing such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): (i) Upon each issuance (or deemed issuance pursuant to the provisions hereof) by the Company of any Additional Stock (as defined below) after the Original Issue Date, without consideration or for an Effective Price (as defined below) per share less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional Stock, then the Exercise Price in effect immediately prior to each issuance (or deemed issuance) shall be adjusted to a price determined by multiplying such Exercise Price by a fraction, (1) the numerator of which shall be the number of Common Stock Equivalents Outstanding immediately prior to such issuance plus the number of shares of Common Stock which the aggregate consideration received (or deemed received) by the Company for such issuance would purchase at such Exercise Price; and (2) the denominator of which shall be the number of Common Stock Equivalents Outstanding immediately after such issuance. (ii) No adjustment of the Exercise Price shall be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price. (iii) In the case of the issuance of securities of the Company for cash, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to the fair market value of such non-cash consideration as determined by the Board of Directors, irrespective of any accounting treatment thereof. (v) In the case of the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below), the following provisions shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stock, the aggregate maximum number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 9.1(a)(iii) and (iv), if any, received by the Company for such Options plus the minimum exercise price provided in such Options for the Common Stock covered thereby. (B) With respect to Convertible Securities and Options to purchase Convertible Securities, the aggregate maximum number of shares of Common Stock deliverable upon the conversion or exchange of any such Convertible Securities and the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal to the consideration, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv). (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities. “Excluded Securities” means the Company’s Series A Convertible Preferred Stock, the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc.

Exercise Price Adjustment. The (i) If and whenever the Company issues or sells, or is deemed to have issued or sold, any Additional Shares of Common Stock for an effective consideration per share of less than the then Exercise Price or for no consideration (such lower price, the "Base Share Price" and such issuances collectively, a "Dilutive Issuance"), then, the Exercise Price shall be subject to adjustment from time to time as follows; provided, however, that no adjustment of the Exercise Price shall have the effect of increasing such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): (i) Upon each issuance (or deemed issuance pursuant to the provisions hereof) by the Company of any Additional Stock (as defined below) after the Original Issue Date, without consideration or for an Effective Price (as defined below) per share less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional Stock, then the Exercise Price in effect immediately prior to each issuance (or deemed issuance) shall be adjusted to a price determined by multiplying such Exercise Price multiplied by a fraction, (1) fraction of which the numerator of which shall be the number of shares of Common Stock Equivalents Outstanding immediately prior to such issuance the Dilutive Issuance plus the number of shares of Common Stock which the aggregate consideration received offering price for such Dilutive Issuance (or deemed received) assuming receipt by the Company for in full of all consideration payable upon exercise of such issuance rights, options or warrants) would purchase at such the Exercise Price; , and (2) the denominator of which shall be the number sum of Common Stock Equivalents Outstanding immediately after such issuance. (ii) No adjustment of the Exercise Price shall be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price. (iii) In the case of the issuance of securities of the Company for cash, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to the fair market value of such non-cash consideration as determined by the Board of Directors, irrespective of any accounting treatment thereof. (v) In the case of the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below), the following provisions shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stock, the aggregate maximum number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 9.1(a)(iii) and (iv), if any, received by the Company for such Options plus the minimum exercise price provided in such Options for the Common Stock covered thereby. (B) With respect to Convertible Securities and Options to purchase Convertible Securities, the aggregate maximum number of shares of Common Stock deliverable upon the conversion or exchange of any such Convertible Securities and the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal to the consideration, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv). (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable Outstanding immediately prior to the CompanyDilutive Issuance plus the number of shares of Common Stock so issued or issuable in connection with the Dilutive Issuance; provided, that for purposes hereof, all shares of Common Stock that are issuable upon conversion, exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, Capital Share Equivalents shall be recomputed to reflect deemed outstanding immediately after the issuance of such change, but no further Common Stock. Such adjustment shall be made for the actual issuance whenever such shares of Common Stock or any payment Capital Share Equivalents are issued. For purposes of such consideration this Section 11(b), "Common Stock Outstanding" as of a given date shall be the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 11(b), the number of Warrant Shares issuable upon the exercise of any this Warrant shall be adjusted to the nearest full amount by multiplying a number equal to the Exercise Price in effect immediately prior to such Options or adjustment by the conversion or exchange number of Warrant Shares issuable upon exercise of the Warrants immediately prior to such Convertible Securities. “Excluded Securities” means adjustment and dividing the Company’s Series A Convertible Preferred Stock, product so obtained by the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc.adjusted Exercise Price.

Exercise Price Adjustment. The If the Company at any time prior to the third anniversary of the Initial Exercise Date shall issue, or be deemed to have issued, Additional Shares of Common Stock (as hereinafter defined) without consideration or for consideration per share of Common Stock less than the then applicable Exercise Price (the "Dilutive Price") in effect immediately prior to such issuance, then forthwith upon the occurrence of any such event (the "Dilutive Event") the Exercise Price shall be subject to adjustment from time to time as follows; provided, however, reduced so that no adjustment of the Exercise Price shall have the effect of increasing such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): following the Dilutive Event will equal (i) Upon each issuance (or deemed issuance pursuant to in the provisions hereof) by event the Company of Dilutive Event shall occur at any Additional Stock (as defined below) after the Original Issue Date, without consideration or for an Effective Price (as defined below) per share less than the Exercise Price in effect immediately time prior to the issuance first anniversary of the Initial Exercise Date, the Dilutive Price; and (ii) in the event the Dilutive Event shall occur at any time on or deemed issuance) after the first anniversary of such Additional Stock, then the Initial Exercise Price in effect immediately Date and prior to each issuance (or deemed issuance) shall be adjusted to a price determined by multiplying such the third anniversary of the Initial Exercise Price by Date, a fraction, (1x) the numerator of which shall be (1) the total number of shares of Common Stock Equivalents Outstanding immediately prior to the issuance of such issuance Additional Shares of Common Stock, plus (2) the number of shares of Common Stock which the aggregate consideration received (or deemed received) by the Company for such issuance would purchase at such Exercise Price; and (2) the denominator of which shall be the number of Common Stock Equivalents Outstanding immediately after such issuance. (ii) No adjustment of the Exercise Price shall be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price. (iii) In the case of the issuance of securities of the Company for cash, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to the fair market value of such non-cash consideration as determined by the Board of Directors, irrespective of any accounting treatment thereof. (v) In the case of the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below), the following provisions shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stock, the aggregate maximum number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 9.1(a)(iii) and (iv), if any, received by the Company for such Options plus the minimum exercise price provided in such Options for the Common Stock covered thereby. (B) With respect to Convertible Securities and Options to purchase Convertible Securities, the aggregate maximum number of shares of Common Stock deliverable upon the conversion or exchange of any such Convertible Securities and the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal to the consideration, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange total number of such Convertible Securities or Additional Shares of Common Stock so issued upon such issuance would purchase at the exercise of Exercise Price in effect immediately prior to such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) issuance, and (iv). y) the denominator of which shall be (C1) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable Outstanding immediately prior to the Company, upon exercise issuance of such Options or upon conversion or exchange Additional Shares of Common Stock, plus (2) the number of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance Additional Shares of Common Stock or any payment so issued. For the avoidance of such consideration upon doubt, in no event shall the exercise Exercise Price be adjusted pursuant to this Section 11(b) as a result of any such Options issuances of Additional Shares of Common Stock at any time on or after the conversion or exchange third anniversary of such Convertible Securitiesthe Initial Exercise Date. “Excluded Securities” means For purposes of this Section 11(b), "Common Stock Outstanding" as of a given date shall be the Company’s Series A Convertible Preferred Stocknumber of shares of Common Stock (excluding treasury shares, the Company’s Series B Convertible Preferred Stock if any) issued and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc.outstanding.

Exercise Price Adjustment. The Exercise Price shall be subject (a) Subject to adjustment subparagraph (d) below, if at any time or from time to time as follows; providedprior to the Expiration Date (i) the Company shall issue shares of Common Stock in any public or private transaction or series of transactions, directly or indirectly (excluding, however, that no adjustment of the Exercise Price shall have the effect of increasing such Exercise Price above the Exercise Price any direct or indirect issuance made in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): (i) Upon each issuance (connection with any incentive stock option plan or deemed issuance pursuant to the provisions hereof) other equity incentive or compensation program maintained by the Company of any Additional Stock (as defined belowfrom time to time) after the Original Issue Date, date hereof and without consideration or for an Effective Price (as defined below) a consideration per share less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional Common Stock, or (ii) Xxxxxxxx X. Xxxxxxxx, chairman of the Company, shall, directly or indirectly after the date hereof dispose of shares of Common Stock granted to him by the Company through any stock option or similar stock compensation plan without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the disposition of such Common Stock, then the Exercise Price in effect immediately prior to after each such issuance (or deemed issuance) disposition shall be adjusted decreased to a price determined by multiplying such Exercise Price by a fraction, be an amount equal to (1) the numerator sum of which shall be (x) the number of Common Stock Equivalents Outstanding product derived by multiplying the Exercise Price in effect immediately prior to such issuance plus or disposition by the number of shares of Common Stock which outstanding, on a fully diluted basis, immediately prior to such issuance or disposition, plus (y) the aggregate consideration consideration, if any, received (or deemed received) by the Company for upon such issuance would purchase at such Exercise Price; and or for the shares so disposed divided by (2) the denominator number of which shall be the number shares of Common Stock Equivalents Outstanding immediately outstanding, on a fully diluted basis, after such issuanceissuance or disposition; provided, however, that the Exercise Price shall never be less than the par value per share of Common Stock. (iib) No For the purposes of any adjustment of the Exercise Price pursuant to this Section 2, the following provisions shall be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price.applicable: (iiii) In the case of the issuance of securities of the Company Common Stock for cash, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before after deducting therefrom any discounts, commissions or other similar expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (ivii) In the case of the issuance of securities of the Company Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to be the fair market value of such non-cash consideration thereof as determined by the Board of DirectorsHolder, irrespective of any accounting treatment thereoftreatment. (vc) In Whenever the case Exercise Price shall be adjusted as provided in this Section 2, subject to receipt of any information or instructions necessary from the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below)Holder, the following provisions Company shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stock, the aggregate maximum number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined forthwith file in the manner provided in Section 9.1(a)(iii) and (iv)custody of its Secretary or an Assistant Secretary at its principal office, if any, received an officer’s certificate showing the adjusted Exercise Price determined as herein provided and setting forth in reasonable detail the facts requiring such adjustment and the calculation thereof. Each such officer’s certificate shall be made available at all reasonable times for inspection by the Holder and the Company for shall, forthwith after each such Options plus adjustment, mail a copy of such certificate to the minimum exercise price provided in such Options for the Common Stock covered therebyHolder. (Bd) With respect Notwithstanding any provision of this Amendment to Convertible Securities the contrary, upon indefeasible payment in cash in full of all obligations owing to one or more affiliates of the Holder pursuant to that certain Second Lien Loan and Options to purchase Convertible SecuritiesSecurity Agreement dated as of January 31, 2007, as amended, the aggregate maximum number provisions of shares this Section 2 shall terminate and be of Common Stock deliverable upon no further force and effect; provided, however, the conversion or exchange Holder shall retain the benefit of any such Convertible Securities and the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal adjustments made to the consideration, if any, received by the Company for any Exercise Price pursuant to this Amendment prior to such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration indefeasible payment in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv)full. (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities. “Excluded Securities” means the Company’s Series A Convertible Preferred Stock, the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc.

Exercise Price Adjustment. The Exercise Price shall be subject In the event that on or subsequent to adjustment from time the Closing Date, the Company issues or sells any securities which are convertible into or exchangeable for its Common Stock or any convertible securities, or any warrants or other rights to time as follows; provided, however, that no adjustment subscribe for or to purchase or any options for the purchase of the Exercise Price shall have the effect of increasing its Common Stock or any such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): convertible securities (other than (i) Upon each issuance (or deemed issuance shares which are issued pursuant to the provisions hereofNote, (ii) shares of Common Stock or options to purchase such shares issued to employees, consultants, officers or directors in accordance with stock plans approved by the Company Board of any Additional Directors, and shares of Common Stock issuable under options or warrants that are outstanding as of the date of the Purchase Agreement, (iii) shares of Common Stock issued pursuant to a stock dividend, split or other similar transaction, (iv) shares of Common Stock issued to Growell Metal Co., Ltd. pursuant to the Settlement Agreement, dated on or about January 10, 2004, between Growell Metal Co., Ltd. and the Company's South Korean subsidiary, and (v) shares of Common Stock that are issued in lieu of cash in the payment of interest under the Middlebury Notes, as defined belowin the Purchase Agreement) after the Original Issue Date, without consideration or for at an Effective Price (as defined below) effective price per share which is less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional StockPrice, then the Exercise Price in effect immediately prior to each issuance (such issue or deemed issuance) sale shall be adjusted reduced effective concurrently with such issue or sale to a price an amount determined by multiplying such the Exercise Price then in effect by a fraction, (1x) the numerator of which shall be the sum of (1) the number of shares of Common Stock Equivalents Outstanding outstanding immediately prior to such issuance issue or sale, plus (2) the number of shares of Common Stock which the aggregate consideration received (or deemed received) by the Company for such issuance additional shares would purchase at such the Exercise PricePrice then in effect; and (2y) the denominator of which shall be the number of shares of Common Stock Equivalents Outstanding of the Company outstanding immediately after such issuance. issue or sale. In the event that the Company issues or sells any Common Stock (iiother than (i) No adjustment of the Exercise Price shall shares issued or which may be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment issued pursuant to the Exercise Price. (iii) In the case of the issuance of securities of the Company for cash, the amount of consideration received by the Company for such securities shall be deemed Purchase Agreement or pursuant to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to the fair market value of such non-cash consideration as determined by the Board of Directors, irrespective of any accounting treatment thereof. (v) In the case of the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below), (ii) shares of Common Stock or options to purchase such shares issued to employees, consultants, officers or directors in accordance with stock plans approved by the following provisions shall apply for all purposes Board of Sections 9.1(aDirectors, and shares of Common Stock issuable under options or warrants that are outstanding as of the date of the Purchase Agreement, (iii) shares of Common Stock issued pursuant to a stock dividend, split or other similar transaction, (iv) shares of Common Stock issued to Growell Metal Co., Ltd. pursuant to the Settlement Agreement, dated on or about January 10, 2004, between Growell Metal Co., Ltd. and the Company's South Korean subsidiary, and (b). (Av) With respect to Options to purchase shares of Common StockStock that are issued in lieu of cash in the payment of interest under the Middlebury Notes, as defined in the Purchase Agreement) at an effective price per share which is less than the Exercise Price, then in each such case, the aggregate maximum Exercise Price in effect immediately prior to such issue or sale shall be reduced effective concurrently with such issue or sale to an amount determined by multiplying the Exercise Price then in effect by a fraction, (x) the numerator of which shall be the sum of (1) the number of shares of Common Stock deliverable upon exercise outstanding immediately prior to such issue or sale, plus (2) the number of such Option shall be deemed to have been issued at shares of Common Stock which the time such Options were issued and for a aggregate consideration equal to the consideration (determined in the manner provided in Section 9.1(a)(iii) and (iv), if any, received by the Company for such Options plus additional shares would purchase at the minimum exercise price provided Exercise Price then in such Options for effect; and (y) the Common Stock covered thereby. (B) With respect to Convertible Securities and Options to purchase Convertible Securities, denominator of which shall be the aggregate maximum number of shares of Common Stock deliverable upon of the conversion Company outstanding immediately after such issue or sale. For the purposes of the foregoing adjustments, in the case of the issuance of any convertible securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of any such Convertible Securities and Common Stock ("CONVERTIBLE Securities"), the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent exercise, exchange or conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal to the considerationbe outstanding, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv). (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but that no further adjustment shall be made for upon the actual issuance of Common Stock upon exercise, exchange or any payment of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities. “Excluded Securities” means the Company’s Series A Convertible Preferred Stock, the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc..

Exercise Price Adjustment. HDC agrees to establish a hypothetical account on its books and records to provide Investor an adjustment (the “Exercise Price Adjustment”) to be used against the aggregate exercise price of the Settlement Warrants. The Exercise Price Adjustment shall be subject to adjustment from time to time as follows; provided, however, that no adjustment of the Exercise Price shall have the effect of increasing such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): (i) Upon each issuance (or deemed issuance pursuant to the provisions hereof) by the Company of any Additional Stock (as defined below) after the Original Issue Date, without consideration or for an Effective Price (as defined below) per share less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional Stock, then the Exercise Price in effect immediately prior to each issuance (or deemed issuance) shall be adjusted to based upon a price determined by multiplying such Exercise Price by a fraction, (1) the numerator of which shall be the number of Common Stock Equivalents Outstanding immediately prior to such issuance plus the number of shares of Common Stock which the aggregate consideration received (or deemed received) by the Company for such issuance would purchase at such Exercise Price; and (2) the denominator of which shall be the number of Common Stock Equivalents Outstanding immediately after such issuance. (ii) No adjustment of the Exercise Price shall be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price. (iii) In the case of the issuance of securities of the Company for cash, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value valuation equal to the fair market value of a hypothetical 2,000,000 shares of HDC common stock (subject to adjustment to reflect any stock dividend, stock split, or reverse stock split, or any capital reorganization or recapitalization of HDC affecting its common stock), as if such nonshares were being held in the account, and may be applied by Investor, in whole or in part, to the exercise of all or part of the Settlement Warrants (i.e. upon exercise of one or more of the Settlement Warrants, any unused portion of the Exercise Price Adjustment shall carry over to, and may be used in, any subsequent exercises of any of the Settlement Warrants). The fair market value of each hypothetical share of HDC common stock pursuant to this Section 3 shall be the closing price of HDC’s common stock on the over-cash consideration as the-counter bulletin board (or upon Nasdaq or any other exchange if HDC’s shares shall then be so listed) on the day immediately preceding the date of notice by Investor that Investor intends to exercise all or a portion of the Settlement Warrants (or if no such trade occurs or if HDC’s common stock is not then traded, then the fair market value of each share shall be determined by the Board definition of Directors, irrespective “Current Market Price” in the form of Settlement Warrant attached hereto as Exhibit A). Immediately following the application of some or all of the Exercise Price Adjustment to an exercise of any accounting treatment thereof. (v) In amount of one or more of Settlement Warrants, the case number of hypothetical shares of HDC common stock used to determine the then current amount of the issuance on or after available balance of the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below), the following provisions Exercise Price Adjustment shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stock, the aggregate maximum be reduced by that number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration (including factional shares, if any) equal to the consideration following amount: (determined i) the dollar value of the Exercise Price Adjustment applied to the exercise, divided by (ii) the fair market value per share used in calculating the manner provided in Section 9.1(a)(iii) and (iv), if any, received by the Company Exercise Price Adjustment for such Options plus exercise. If Investor does not request the minimum use of the entire Exercise Price Adjustment to offset the exercise price provided in such Options of all or a portion of the Settlement Warrants prior to the second anniversary of the effective date of this Settlement Agreement, then Investor will receive no value for the Common Stock covered thereby. (B) With respect remaining balance of the Exercise Price Adjustment and HDC will reverse any entry on its books and records for the remaining balance of the Exercise Price Adjustment. Investor’s right to Convertible Securities the Exercise Price Adjustment under this Section is personal to Investor and Options may not be transferred to purchase Convertible Securitiesanother person notwithstanding any transfer of all or a portion of the related Settlement Warrants, provided, however, that the aggregate maximum number of shares of Common Stock deliverable right to the Exercise Price Adjustment shall, upon the conversion or exchange of any such Convertible Securities Investor’s death, transfer to Investor’s estate and the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal exercisable by his personal representative. Investor’s right to the consideration, if any, received by the Company for Exercise Price Adjustment under this Section shall not entitle Investor to any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange rights as a stockholder of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv). (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible SecuritiesHDC, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below)without limitation, the Exercise Priceright to vote, to the extent in any way affected by receive dividends and other distributions or computed using such Options to receive notice of or Convertible Securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance attend meetings of Common Stock stockholders or any payment other proceedings of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities. “Excluded Securities” means the Company’s Series A Convertible Preferred Stock, the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc.HDC.

Exercise Price Adjustment. The Exercise Price shall be subject (i) Whenever the number of Warrant Shares purchasable upon the exercise of the Warrants is adjusted as provided pursuant to adjustment from time to time as follows; providedthis Section 11, however, that no adjustment of the Exercise Price payable upon the exercise of a Warrant shall have the effect of increasing be adjusted by multiplying such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): (i) Upon each issuance (or deemed issuance pursuant to the provisions hereof) by the Company of any Additional Stock (as defined below) after the Original Issue Date, without consideration or for an Effective Price (as defined below) per share less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional Stock, then the Exercise Price in effect immediately prior to each issuance (or deemed issuance) shall be adjusted to a price determined by multiplying such Exercise Price by a fraction, (1) the numerator of which shall be the number of Common Stock Equivalents Outstanding Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such issuance plus the number of shares of Common Stock which the aggregate consideration received (or deemed received) by the Company for such issuance would purchase at such Exercise Price; adjustment, and (2) the denominator of which shall be the number of Common Stock Equivalents Outstanding Warrant Shares purchasable immediately after thereafter; provided, however, that the Exercise Price for each Warrant Share shall in no event be less than the par value of such issuanceWarrant Share. (ii) No adjustment of If at any time after the Exercise Price shall be made in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price. (iii) In the case date of the issuance of securities a Warrant, the Company shall pay to holders of record of Common Stock any cash dividends or other cash distributions, then, on the date of the Company for cash, the amount payment of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions dividend or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. distribution (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal retroactive to the fair market value of such non-cash consideration as determined by the Board of Directors, irrespective of any accounting treatment thereof. (v) In the case of the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined belowrecord date), the following provisions shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stock, the aggregate maximum number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 9.1(a)(iii) and (iv), if any, received by the Company for such Options plus the minimum exercise price provided in such Options for the Common Stock covered thereby. (B) With respect to Convertible Securities and Options to purchase Convertible Securities, the aggregate maximum number of shares of Common Stock deliverable upon the conversion or exchange of any such Convertible Securities and the aggregate maximum number of shares of Common Stock issuable Exercise Price payable upon the exercise of such Option to purchase Convertible Securities and Warrant shall be adjusted by reducing the subsequent conversion or exchange Exercise Price by the amount of such Convertible Securities dividend or distribution applicable to one share of Common Stock; provided, however, that the applicable Exercise Price for each Warrant Share shall in no event be deemed to have been issued at less than the time such Convertible Securities or such Options were issued and for a consideration equal to the consideration, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange par value of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv)Warrant Share. (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities. “Excluded Securities” means the Company’s Series A Convertible Preferred Stock, the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc.

Exercise Price Adjustment. The Exercise Price shall be subject In the event that on or subsequent to adjustment from time the Closing Date, the Company issues or sells any Common Stock, any securities which are convertible into or exchangeable for its Common Stock or any convertible securities, or any warrants or other rights to time as follows; provided, however, that no adjustment subscribe for or to purchase or any options for the purchase of the Exercise Price shall have the effect of increasing its Common Stock or any such Exercise Price above the Exercise Price in effect immediately prior to such adjustment except as provided pursuant to Section 9.l(d): convertible securities (other than (i) Upon each issuance (or deemed issuance shares which are issued pursuant to the provisions hereofNote, (ii) shares of Common Stock or options to purchase such shares issued to employees, consultants, officers or directors in accordance with stock plans approved by the Company Board of any Additional Directors, and shares of Common Stock issuable under options or warrants that are outstanding as of the date of the Purchase Agreement, (as defined belowiii) after shares of Common Stock issued pursuant to a stock dividend, split or other similar transaction, (iv) shares of Common Stock issued to Growell Metal Co., Ltd. pursuant to the Original Issue DateSettlement Agreement, without consideration dated on or for about January 10, 2004, between Growell Metal Co., Ltd. and the Company's South Korean subsidiary, and (v) shares of Common Stock that are issued in lieu of cash in the payment of interest under the Notes) at an Effective Price (as defined below) effective price per share which is less than the Exercise Price in effect immediately prior to the issuance (or deemed issuance) of such Additional StockPrice, then the Exercise Price in effect immediately prior to each issuance (such issue or deemed issuance) sale shall be adjusted reduced effective concurrently with such issue or sale to a price an amount determined by multiplying such the Exercise Price then in effect by a fraction, (1x) the numerator of which shall be the sum of (1) the number of shares of Common Stock Equivalents Outstanding outstanding immediately prior to such issuance issue or sale, plus (2) the number of shares of Common Stock which the aggregate consideration received (or deemed received) by the Company for such issuance additional shares would purchase at such the Exercise PricePrice then in effect; and (2y) the denominator of which shall be the number of shares of Common Stock Equivalents Outstanding of the Company outstanding immediately after such issuance. (ii) No adjustment issue or sale. For the purposes of the Exercise Price shall be made foregoing adjustments, in an amount less than $0.01 per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be taken into account in any subsequent adjustment to the Exercise Price. (iii) In the case of the issuance of securities of the Company for cashany convertible securities, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor before deducting any discountswarrants, commissions options or other expenses allowed, paid rights to subscribe for or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (iv) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to the fair market value of such non-cash consideration as determined by the Board of Directors, irrespective of any accounting treatment thereof. (v) In the case of the issuance on or after the Original Issue Date of Options (as defined below) or Convertible Securities (as defined below), the following provisions shall apply for all purposes of Sections 9.1(a) and (b). (A) With respect to Options to purchase Common Stockor exchange for, the aggregate maximum number of shares of Common Stock deliverable upon exercise of such Option shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 9.1(a)(iii) and (iv"Convertible Securities"), if any, received by the Company for such Options plus the minimum exercise price provided in such Options for the Common Stock covered thereby. (B) With respect to Convertible Securities and Options to purchase Convertible Securities, the aggregate maximum number of shares of Common Stock deliverable upon the conversion or exchange of any such Convertible Securities and the aggregate maximum number of shares of Common Stock issuable upon the exercise of such Option to purchase Convertible Securities and the subsequent exercise, exchange or conversion or exchange of such Convertible Securities shall be deemed to have been issued at the time such Convertible Securities or such Options were issued and for a consideration equal to the considerationbe outstanding, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 9.1(a)(iii) and (iv). (C) In the event of any change in the number of shares of Common Stock deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, other than the Excluded Securities (defined below), the Exercise Price, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but that no further adjustment shall be made for upon the actual issuance of Common Stock upon exercise, exchange or any payment of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities. “Excluded Securities” means the Company’s Series A Convertible Preferred Stock, the Company’s Series B Convertible Preferred Stock and the Secured Convertible Note dated August 25, 1999, payable to Protection One Alarm Monitoring, Inc..