EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ULTIMATE ELECTRONICS, INC.,
AS ISSUER
AND
XXXX XXXXXXX ENTERPRISES, LLC,
AS INVESTOR
January 11, 2005
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of January 11, 2005 by and between ULTIMATE ELECTRONICS, INC., a
Delaware corporation (the "Company"), and XXXX XXXXXXX ENTERPRISES, LLC, a
Delaware limited liability company (the "Investor").
WHEREAS, the Company desires to issue and sell to the
Investor, and the Investor desires to purchase and acquire from the Company, the
Shares (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
SECTION 1. Definitions.
(a) For the purposes of this Agreement, the following terms
have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly, through one or more intermediaries, has
control of or is controlled by, or is under common control with, the first
Person on the date hereof, but prior to giving effect to the consummation of the
transactions contemplated hereby.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Business" means all business operations and activities
currently conducted by the Company and its Subsidiaries.
"Common Stock" means the Common Stock, par value $0.01 per
share, of the Company.
"Company Option" means the option to purchase shares of Common
Stock of the Company granted pursuant to the Company Option Agreement.
"Company Option Agreement" means the Option Agreement, dated
as of the date hereof, between the Investor and the Company.
"DGCL" means the Delaware General Corporation Law.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind.
"Material Adverse Effect" means a material adverse effect on
the business, operations, financial condition, operating results, assets or
liabilities of the Company and its Subsidiaries, taken as a whole; provided,
however, that no effect arising from any of the following events shall
constitute a material adverse effect hereunder (i) any actions taken by the
Company pursuant to the terms of this Agreement or the Company Option Agreement,
(ii) the failure of the Company to maintain the listing of its Common Stock on
the Nasdaq National Market, (iii) actions taken in good faith in anticipation of
the filing by the Company of a petition for relief under Chapter 11 of the
Bankruptcy Code, (iv) the information regarding the results of operations and
financial condition of the Company publicly disclosed by it in its Current
Report on Form 8-K dated January 10, 2005 and (v) any breach of or default under
the existing credit facilities of the Company publicly disclosed by it in its
Current Report on Form 8-K dated January 4, 2005.
"Person" means any individual, corporation, partnership,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Stockholder Option" means the option to purchase shares of
Common Stock of the Company granted pursuant to the Stockholder Option
Agreement.
"Stockholder Option Agreement" means the Option Agreement,
dated as of the date hereof, among the Investor on the one hand and Xxxxxxx X.
Xxxxxx and Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx, trustee, in their capacities
as holders of certain shares of Common Stock.
"Subsidiary" of any specified Person (excluding an individual)
means a corporation or other entity of which the majority of the voting power of
the equity securities having the right to vote for the election of directors or
any other class of equity securities that has a right to vote with respect to
matters submitted to the security holders of such
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Person is owned, directly or indirectly, by such specified Person or any
Subsidiary of such specified Person.
"Voting Agreements" means the Voting Agreements, dated as of
the date hereof, between the Investor on the one hand and (i) Xxxxxxx X. Xxxxxx
and Xxxxxxx X. Xxxxxx and (ii) Xxxxxx X. Xxxxxxx, as trustee, in each case in
their capacities as holders of certain shares of Common Stock.
(b) Each of the terms below has the meaning set forth in the
provision of this Agreement identified opposite such term in the following
table:
Term Provision
-------------------------- ----------------------
Agreement Introductory paragraph
Closing Section 2(b)
Closing Date Section 2(b)
Company Introductory paragraph
Company Reports Section 3(g)
DIP Facility Section 5(e)
DIP Summary of Terms Section 5(e)
Indemnified Person Section 6(d)
Indemnifying Party Section 6(d)
Investor Introductory paragraph
GAAP Section 3(g)
Independent Directors Section 5(c)
Liabilities Section 6(b)
Purchase Price Section 2(a)
Resigning Directors Section 5(c)
Rights Agreement Section 3(e)
Shares Section 2(a)
Supplemental D&O Insurance Section 5(d)
Third-Party Claim Section 6(d)
Xxxxx Fargo Section 5(e)
(c) For purposes of this Agreement, "knowledge" or "known" or
a similar phrase shall mean the actual knowledge of the officers of the Company
or its Subsidiaries.
(d) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
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(e) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(f) The term "dollars" and the symbol "$" shall be deemed to
refer to United States Dollars.
SECTION 2. Issuance and Sale; Closing.
(a) Issuance and Sale. Immediately upon the execution and
delivery of this Agreement, (i) the Company will issue and sell to the Investor
6,850,000 shares (the "Shares") of Common Stock and (ii) the Investor will
purchase such shares from the Company in exchange for aggregate consideration
consisting of $4,452,000 in cash (the "Purchase Price"), which consideration
will be paid by wire transfer of immediately available funds to the Company.
(b) Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Xxxxx & Xxxxxxx , 0000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 on the date of this
Agreement (the "Closing Date").
(c) Deliveries. At the Closing, the Company shall deliver, or
shall cause to be delivered, to the Investor the following:
(i) the certificates evidencing the Shares, duly registered in
the name of the Investor (which certificates may be temporary
certificates manually executed by the appropriate officers of the
Company);
(ii) the opinion of counsel referred to in Section 5(b);
(iii) evidence reasonably satisfactory to the Investor that
the restructuring of the Board of Directors of the Company contemplated
by Section 5(c) is being effected concurrently with the Closing,
including the resignations of directors obtained by it pursuant to
Section 5(c);
(iv) a certificate of the Secretary of the Company attesting
to (A) the resolutions of the Board of Directors of the Company
authorizing this Agreement and the transactions contemplated hereby and
(B) the incumbency and signature of the officer of the Company who
executed this Agreement; and
(v) a certificate of good standing of recent date issued by
the Secretary of State of the State of Delaware with respect to the
existence and good standing of the Company.
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SECTION 3. Representations and Warranties of the Company. As a
material inducement to the Investor to enter into this Agreement and purchase
the Common Stock hereunder, the Company hereby represents and warrants that:
(a) Organization; Corporate Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business in every
jurisdiction in which it is required to be qualified, except where the failure
to so qualify has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company possesses all requisite corporate power and
authority to enter into, and perform its obligations under this Agreement. The
Company has delivered to the Investor correct and complete copies of the charter
documents and bylaws of the Company reflecting all amendments made thereto at
any time prior to or on the date of this Agreement.
(b) Authorization; No Breach. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Company. The Agreement has been duly executed by the Company and constitutes a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. Except as set
forth on Schedule 3(b) hereto, the execution and delivery of this Agreement, the
fulfillment of and compliance with the terms hereof and the consummation of the
transactions contemplated hereby do not and will not conflict with or result in
a breach of the terms, conditions or provisions of, constitute a default under,
result in the creation of any Lien upon the Company's or any Subsidiary's
capital stock or assets pursuant to, give any third party the right to modify,
terminate or accelerate any obligation under, result in a violation of, or
require any authorization, consent, approval, exemption or other action by or
notice or declaration to, or filing with, any court or administrative or
governmental body or agency or other Person pursuant to, (i) the charter or
bylaws of the Company or any Subsidiary, (ii) any law, statute, rule,
regulation, order, judgment, decree to which the Company or any Subsidiary is
subject and which is material to the Business or (iii) any contract, agreement
or other instrument to which the Company or any Subsidiary is a party, except,
in the case of clause (iii) above, for any conflict, breach, default, Lien,
modification, termination, acceleration, violation or other matter referred to
above that could not reasonably be expected to have a Material Adverse Effect.
(c) Governmental Authorizations. Except as set forth on
Schedule 3(c) hereto, there is no requirement applicable to the Company to
obtain any consent, approval or authorization of, or to make or effect any
declaration, filing or registration with, any governmental agency or body for
the valid execution and delivery of this Agreement, the fulfillment of and
compliance with the terms hereof and the lawful consummation of the transactions
contemplated hereby.
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(d) Capital Stock.
(i) The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock, of which 15,110,323 shares are
outstanding as of the date hereof and no shares are held in the
treasury of the Company, and 10,000,000 shares of preferred stock, par
value $0.01 per share, none of which are issued or outstanding. All of
the outstanding shares of the Company's capital stock are duly
authorized, validly issued, fully paid and nonassessable. Except for
the Company Option and except as described in Schedule 3(d) hereto,
there are no outstanding options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character pursuant
to which the Company is or may be obligated to issue or sell any issued
or unissued shares of its capital stock or other equity securities or
to purchase or redeem any shares of its capital stock or other equity
securities or make any other payments in respect thereof, and there are
no shares of its capital stock or other equity securities reserved for
issuance for any purpose.
(ii) There are no statutory stockholders preemptive rights or
similar contractual rights to which the Company is subject or rights of
refusal to which the Company is subject with respect to the issuance of
capital stock of the Company. There are no agreements to which the
Company or, to the knowledge of the Company, any holders of the capital
stock of the Company is a party with respect to the voting or transfer
of the Company's capital stock, except for the Voting Agreements.
(iii) The issuance and sale of the Shares to the Investor
pursuant to this Agreement has been duly authorized by all necessary
corporate action on the part of the Company and all necessary action,
if any, on the part of its shareholders required pursuant to the DGCL
or the certificate or incorporation or bylaws of the Company. The
Shares, when issued and delivered to and paid for by the Investor, will
be validly issued, fully paid and nonassessable. None of the Shares
will be issued in violation of, or subject to, any statutory
stockholders preemptive or similar contractual rights. Assuming that
the representations and warranties of the Investor contained in Section
4(b) are true and correct, the offer, issuance and sale of the Shares
by the Company do not require registration under, and have been and
will be made in compliance with, the applicable securities laws of the
United States of America and any state or other political subdivision
thereof.
(e) Rights Agreement. The Board of Directors of the Company
has irrevocably and unconditionally amended the Rights Agreement, dated as of
January 31, 1994 (the "Rights Agreement"), by and between the Company and
Norwest Bank
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Minnesota, N.A. as rights agent, to provide that (i) upon execution and delivery
of this Agreement and issuance and delivery of the Shares and upon the execution
of the Company Option Agreement, the Voting Agreements and the Stockholder
Option Agreement and the consummation of the transactions contemplated hereby
and thereby, including, but not limited to the exercise of the Company Option
and the Stockholder Option, a Distribution Date (as such term is defined in the
Rights Agreement) shall not occur or be deemed to occur, and (ii) Investor, Xxxx
X. Xxxxxxx and any Person controlled by Xxxx X. Xxxxxxx shall not become an
Acquiring Persons (as such term is defined in the Rights Agreement), whether as
a result of the execution and delivery of this Agreement and issuance and
delivery of the Shares or the execution of the Company Option Agreement, the
Voting Agreements or the Stockholder Option Agreement or the consummation of the
transactions contemplated hereby and thereby, including, but not limited to the
exercise of the Company Option or the Stockholder Option, or any transaction or
series of transactions effected by the Investor, Xxxx X. Xxxxxxx or their
Affiliates subsequent to the Closing.
(f) State Takeover Statutes. The Board of Directors of the
Company has taken all necessary action to approve, for purposes of Section
203(a)(1) of the DGCL, the execution and delivery of this Agreement and issuance
and delivery of the Shares and the execution and delivery of the Company Option
Agreement, the Voting Agreements and the Stockholder Option Agreement and the
consummation of the transactions contemplated hereby and thereby. No state
takeover, anti-takeover, moratorium, fair price, interested stockholder,
business combination or similar statute or rule is applicable to the Investor,
this Agreement, and the issuance and delivery of the Shares.
(g) SEC Reports. The Company has made available to the
Investor each registration statement, report, proxy statement or information
statement filed by it with the SEC since January 1, 2004 in the form (including
exhibits, annexes and any amendments thereto) filed with the SEC (collectively,
the "Company Reports"). Except as set forth in Schedule 3(g) hereto, as of their
respective dates, the Company Reports complied as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as applicable, and the Company Reports did not, at the time of their
filing, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading. The Company has heretofore made available to the Investor a complete
and correct copy of all amendments or modifications to the Company Reports which
the Company currently proposes to file with the SEC but have not yet been filed
with the SEC. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents the consolidated financial position of the
Company and its consolidated subsidiaries as of its date and each of the
consolidated statements of operations and cash flows included in or incorporated
by reference into the Company Reports (including any related notes and
schedules) fairly presents the results of operations
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or cash flows of the Company and its consolidated subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to the absence
of notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as specifically noted therein.
(h) Litigation. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries or its officers or
directors at law or in equity, or before or by any court or other governmental
agency or body, any of which seek to enjoin or prevent the consummation of or
otherwise relate specifically to the transactions contemplated by this
Agreement.
(i) Compliance with Laws. Except with respect to the Nasdaq
Stock Marketplace rules and regulations, neither the Company, nor any of its
Subsidiaries has violated any law or any governmental rule, order or regulation
or requirement which violation has had or could reasonably be expected to have a
Material Adverse Effect, and neither the Company nor any Subsidiary has received
written notice of any such violation.
SECTION 4. Representations and Warranties of the Investor. As
a material inducement to the Company to enter into this Agreement and issue and
sell the Shares hereunder, the Investor hereby represents and warrants that:
(a) Execution; Authorization; No Contravention. The execution,
delivery and performance of this Agreement by the Investor have been duly
authorized by the Investor. The Agreement has been duly executed by the Investor
and constitutes a valid and legally binding obligation of the Investor,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. The execution and delivery of this Agreement, the fulfillment of and
compliance with the terms hereof and the consummation of the transactions
contemplated hereby do not and shall not conflict with or result in a breach of
the terms, conditions or provisions of, or require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency or other Person
pursuant to, (i) the organizational documents of the Investor, (ii) any law,
statute, rule, regulation, order, judgment, decree to which the Investor is
subject or (iii) any contract, agreement or other instrument to which the
Investor is a party, in each case with such exceptions as would not have a
material adverse effect on the ability of the Investor to fulfill and comply
with its obligations under this Agreement.
(b) Securities Act. The Investor is acquiring the Shares for
the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof
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in violation of the Securities Act. The Investor acknowledges that the Shares
are not registered under the Securities Act or any applicable state securities
law, and that it has no contractual right to require such registration. In
addition, the Investor acknowledges that the Shares may not be transferred or
sold except pursuant to the registration provisions of such Securities Act or
pursuant to an applicable exemption therefrom and pursuant to state securities
laws and regulations as applicable. The Investor is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act. The
Investor is knowledgeable, sophisticated and experienced in business and
financial matters of the type contemplated by this Agreement and is able to bear
the economic risks associated with its investment in the Company.
SECTION 5. Certain Covenants.
(a) Further Assurances. If at any time after the Closing Date
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers or directors of the Company or the Investor, as
the case may be, shall execute and deliver any further instruments or documents
and take all such necessary action that may reasonably be requested by the other
party.
(b) Delivery of Legal Opinion. Immediately prior to the
consummation of and as a condition to the obligations of the Investor to
consummate the purchase of the Shares, the Company shall cause to be delivered
to the Investor an opinion, dated as of the Closing Date, of Xxxxx & Xxxxxxx
L.L.P., counsel to the Company, to the effect set forth in Exhibit A hereto.
(c) Board of Directors. Immediately prior to the consummation
of and as a condition to the obligations of the Investor to consummate the
purchase of the Shares, the Company shall take all action required to cause the
total number of members of the Board of Directors to consist of five persons and
to cause the persons serving as members of the Board of Directors as of the
Closing to be three designees of the Investor, who shall be Xxxx X. Xxxxxxx,
Xxxxx Giesbreacht and Xxxxx Xxxxxx. In addition, within 30 days after the
Closing Date, the Board of Directors shall fill the remaining vacancy on the
Board of Directors with two additional persons who are serving as members of the
Board of Directors immediately prior to the Closing to the extent such persons
are willing to serve. Within 30 days after the Closing Date, at least two of the
individuals serving as members of the Board of Directors in accordance with the
foregoing provisions shall be "independent" within the meaning of the Nasdaq
listing standards applicable to the Company (the "Independent Directors"). The
Company has obtained resignations from all of the current members of the Board
of Directors (the "Resigning Directors") that are to become effective as of the
Closing Date.
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(d) Supplemental D&O Insurance. To the extent that the Company
has not already done so prior to the Closing, the Company shall use commercially
reasonable efforts after the Closing to obtain policies of insurance
("Supplemental D&O Insurance") from one or more insurers selected by it covering
the Resigning Directors; provided, however, that the premiums paid by the
Company for such Supplemental D&O Insurance shall not exceed $500,000 and that,
to the extent required, the purchase of such insurance shall be subject to
approval by the bankruptcy court in which the Company has filed a petition for
relief under Chapter 11 of the Bankruptcy Code; provided, further, that in the
event the approval of the bankruptcy court is required and the bankruptcy court
does not approve the Supplemental D&O Insurance then the Investor or its
Affiliates shall provide such Supplemental D&O Insurance for the benefit of the
Resigning Directors, but in no event shall the Investor or its Affiliate be
responsible for any Supplemental D&O Insurance premiums in excess of $500,000.
The Supplemental D&O Insurance shall have a term ending no earlier than three
years from the date of the expiration of the existing policies of insurance
listed in Schedule 5(d) and shall provide substantially the same coverage to the
Resigning Directors as such existing policies, with such exceptions as shall
have been approved by the Independent Directors. Except to the extent the
Supplemental D&O Insurance is rejected by the bankruptcy court and subject to
the limitation set forth above regarding the Investor's or its Affiliates'
financial obligations in such event, the premiums and other costs of obtaining
and maintaining in effect the Supplemental D&O Insurance shall be borne by the
Company.
(e) DIP Financing. The Investor has advised Xxxxx Fargo Retail
Finance, LLC ("Xxxxx Fargo") and the Company that it is willing to participate
by making loans in an amount equal to $5,547,500 in the proposed $118,600,000
secured super priority priming debtor in possession facility ("DIP Facility")
described in the Summary of Terms and Conditions provided to the Company on the
date hereof (the "DIP Summary of Terms"), on the terms and subject to the
conditions described therein. The Investor shall cooperate in a commercially
reasonable manner with Xxxxx Fargo in connection with (i) the submission of a
motion to the bankruptcy court for the District of Delaware seeking interim and
final approval of the DIP Facility, (ii) the documentation and negotiation of
all orders, agreements and other documents to be prepared, submitted to the
Bankruptcy Court or entered into in connection with such DIP Facility, including
all orders, agreements and other documents relating to the Tranche C Loans (as
defined in the DIP Summary of Terms) proposed to be made by the Investor or one
of its Affiliates to the Company and (iii) the effectuation of the transactions
contemplated by the DIP Summary of Terms, including the Tranche C Loans.
SECTION 6. Survival and Indemnification.
(a) Survival; Reliance. The representations and warranties of
each of the Investor and the Company, respectively, included or provided for
herein shall survive
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the execution and delivery of this Agreement until the expiration of the
applicable statute of limitations (including any waivers or extensions thereof)
with respect to such matters; provided, however, that the representations and
warranties of the Company contained in Sections 3(b)(iii) and 3(g) and (i) shall
only survive until the second anniversary of the Closing Date (and shall be
effective after such date only in respect of claims for indemnification
submitted by the Investor to the Company prior to such second anniversary). Each
covenant and agreement set forth in this Agreement to be performed after the
Closing Date shall survive the Closing in accordance with its terms.
(b) Indemnification by the Company. From and after the
Closing, the Company will indemnify and hold the Investor and its stockholders,
directors, officers, employees, agents and Affiliates, harmless against any and
all damages, losses, deficiencies, liabilities, obligations, commitments, costs
or expenses, including legal and other expenses reasonably incurred in
investigating and defending against the same (collectively, "Liabilities"),
which are asserted against, imposed on or incurred by any of them, whether or
not arising from any Third-Party Claim, as a result of or in connection with the
breach of any representation or warranty of the Company contained in this
Agreement or the Company Option Agreement. The indemnification provided for by
this Section 6(b) shall apply notwithstanding any investigation made by or on
behalf of the Investor in connection with the transactions contemplated by this
Agreement, except to the extent that any information provided to the Investor in
connection with such investigation is reflected as an exception to the
representations and warranties of the Company contained in this Agreement or is
contained in any filing made by the Company with the SEC. The maximum liability
of the Company to all Indemnified Persons pursuant to this Section 6(b) shall be
equal to the sum of (i) the Purchase Price paid to the Company by the Investor
pursuant to this Agreement and (ii) any amounts paid to the Company under the
Company Option Agreement.
(c) Indemnification by the Investor. From and after the
Closing, the Investor will indemnify and hold the Company and its directors,
officers, employees, agents and Affiliates, harmless against any and all
Liabilities asserted against, imposed on or incurred by any of them as a result
of or in connection with the breach of any representation or warranty of the
Investor contained in this Agreement.
(d) Procedures for Third-Party Claims. The following
procedures shall be applicable with respect to indemnification pursuant to
paragraphs (b) and (c) above for Liabilities arising from a claim, action or
cause of action asserted by a Person other than a party to this Agreement (a
"Third-Party Claim"):
(i) Promptly after receipt by the party seeking
indemnification hereunder (an "Indemnified Person") of written notice
of any Third-Party Claim with respect to any matter within the scope of
paragraphs (b) or (c) above, the
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Indemnified Party shall give written notice thereof to the party from
whom indemnification is sought hereunder (the "Indemnifying Party") and
shall thereafter keep the Indemnifying Party reasonably informed with
respect thereto; provided that the failure of the Indemnified Person to
give the Indemnifying Party prompt notice as provided herein shall not
relieve the Indemnifying Party of its obligations hereunder except to
the extent that such failure results in material prejudice to the
defense of such Third-Party Claim.
(ii) Promptly after notification of a Third-Party Claim as
contemplated by subparagraph (i) above, the Indemnifying Party may
assume the defense of such Third-Party Claim with counsel reasonably
acceptable to the Indemnified Person; provided, however, that (A) if
the Indemnifying Party fails, within a reasonable time after receipt of
written notice of such Third-Party Claim, to assume the defense
thereof, the Indemnified Person shall have the right to undertake the
defense, compromise and settlement of such Third-Party Claim on behalf
of and for the account and risk of the Indemnifying Party, to the
extent of and subject to the limitations applicable to the indemnity
provided by the Indemnifying Party herein, (B) if in the reasonable
judgment of the Indemnified Person, the assumption of the defense of
such Third-Party Claim could adversely affect in any material respect
the conduct of the defense of such Third-Party Claim, the Indemnified
Person shall (upon notifying the Indemnifying Party of its election to
do so) have the right to undertake the defense, compromise and
settlement of such Third-Party Claim on behalf of and for the account
and risk of the Indemnifying Party, to the extent of and subject to the
limitations applicable to the indemnity provided by the Indemnifying
Party herein (it being understood and agreed that the Indemnifying
Party shall not be entitled to control the defense of such Third-Party
Claim), (C) if the Indemnified Person in its sole discretion so elects,
it shall (upon notifying the Indemnifying Party of its election to do
so) be entitled to employ separate counsel and to participate in the
defense of such Third-Party Claim, but the fees and expenses of counsel
so employed shall (except as contemplated by clauses (A) and (B) above)
be borne solely by the Indemnified Person and (D) the Indemnifying
Party shall not settle or compromise any Third-Party Claim or consent
to the entry of any judgment without the prior written consent of the
Indemnified Party that does not include as an unconditional term
thereof the grant by the claimant or plaintiff to each Indemnified
Person of a release from any and all liability in respect thereof or
that requires an admission of fault or wrongdoing on the part of the
Indemnified Party.
(e) Decisions with Respect to Rights and Liabilities of the
Company. All material decisions with respect to the exercise by the Company of
its rights and performance by it of its obligations under this Section 6 at any
time from and after the Closing shall be made by the Company with the approval
of either (i) the Independent Directors or (ii) if there has been filed by or
against the Company a petition under Chapter
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11 or any other applicable section or chapter of the Bankruptcy Code that is
then pending, the bankruptcy court before which the applicable bankruptcy
proceedings are pending.
SECTION 7. Miscellaneous.
(a) Expenses. The Company shall bear all costs, expenses and
fees incurred by any of the parties in connection with this Agreement and the
transactions contemplated hereby (including, but not limited to, all fees and
expenses of counsel, financial advisors, consultants, actuaries and independent
accountants). Without limiting the generality of the foregoing, the Company
shall bear the fees and expenses of the financial advisor to the Investor
described in Schedule 7(a) hereto.
(b) Public Disclosure. Each of the parties to this Agreement
hereby agrees with the other parties hereto that, except as may be required by
the Exchange Act or other applicable provisions of applicable law or the rules
and regulations of each stock exchange or of the Nasdaq National Market or other
automated quotation system upon which the securities of one of the parties is
listed or to which such securities are admitted for trading, no press release or
similar public announcement or communication will be made or caused to be made
concerning the execution or performance of this Agreement unless specifically
approved in advance by both parties hereto; provided, however, that to the
extent that either party to this Agreement is required by law or the rules and
regulations of any stock exchange or of the Nasdaq National Market or other
automated quotation system upon which the securities of one of the parties is
listed or to which such securities are admitted for trading, to make such a
public disclosure, such public disclosure shall only be made after prior
consultation with the other party to this Agreement.
(c) Successors and Assigns; Assignment. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Investor may assign its rights hereunder
to an Affiliate of the Investor; provided, however, that no such designation
shall relieve the Investor of its obligations under this Agreement.
(d) Remedies. Any Person having any rights under any provision
of this Agreement will be entitled to proceed to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
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(e) Amendments and Waivers. This Agreement and any of the
terms contained herein may only be amended or modified by the Company and the
Investor in writing.
(f) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby.
(g) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to constitute one and the same agreement.
(h) Descriptive Headings. The headings of the sections
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not affect the meaning or
interpretation of this Agreement.
(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of
New York without
giving effect to the conflict of laws provisions thereof.
(j) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Investor and to the
Company at the addresses indicated below:
if to the Investor, to:
Xxxx Xxxxxxx Enterprises, LLC
0000 X. Xxxxxx #000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: 000-000-0000
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with a copy to:
Xxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
if to the Company, to:
Ultimate Electronics, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
0000 00xx Xxxxxx,
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(k) Entire Agreement. This Agreement and the Schedules hereto
represent the entire agreement between the Investor and the Company with respect
to the subject matter hereof, and such agreements supersede all prior agreements
between such parties with respect to the subject matter hereof.
[Signature page follows]
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-
IN WITNESS WHEREOF, the undersigned parties have duly executed
this Agreement as of the date first above written.
ULTIMATE ELECTRONICS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
XXXX XXXXXXX ENTERPRISES, LLC
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxx
---------------------------------------
Title: President
--------------------------------------
[Signature page to
Stock Purchase Agreement]
