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EXHIBIT 10.9
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WARRANT PURCHASE AGREEMENT
by and between
PETRUS FUND, L.P.
ULTRAK, INC.
and
XXXXXX X. XXXXXX
July 20, 1992
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TABLE OF CONTENTS
Article I - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Article II - The Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.01 The Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.02 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.03 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.04 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.05 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.06 Warrant Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.07 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.08 Cash in Lieu of Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.09 Lost, Stolen, Mutilated, or Destroyed Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Stock Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article III - Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.01 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.02 Dilution Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.03 Adjustments to Number of Shares Purchasable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Article IV - Put Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.01 Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.02 Put Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.03 Certain Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.05 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Article V - Co-Sale Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.01 Rights of Co-Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.02 Method of Electing Sale; Allocation of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.03 Sales to Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Article VI - Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.01 Required Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.02 Incidental Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.03 Form S-3 Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.04 Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.05 Allocation of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.06 Listing on Securities Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.07 Holdback Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.08 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Article VII - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.01 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.02 Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Article VIII - Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.02 Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.03 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.04 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.05 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.06 Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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8.07 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.08 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.10 Warrant Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Article IX - Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.01 Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.02 Loan Agreement Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.03 Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.04 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Article X - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.01 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.02 Nominees for Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.03 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.04 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.05 Headings; Section References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.06 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.07 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.08 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.09 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.10 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.13 Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.14 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.15 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT (the "Agreement") made as of July 20, 1992,
by and between Ultrak, Inc., a Colorado corporation (the "Company"), Xxxxxx X.
Xxxxxx (the "Shareholder"), and Petrus Fund, L.P., a Texas limited partnership
(the "Purchaser").
R E C I T A L S
1. Purchaser and the Company have made and entered into that
certain Loan Agreement dated of even date herewith (the "Loan Agreement"),
pursuant to which Purchaser has agreed to make certain advances to the Company;
and
2. Purchaser is willing to enter into and consummate the
transactions contemplated by the Loan Agreement only if, among other things,
the Company and the Shareholder enter into and perform under this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Purchaser, the Shareholder, and the Company, intending to be legally bound,
agree as follows:
Article I
Definitions
As used in this Agreement, the following terms have the meanings
indicated:
Affiliate. With respect to any Person, (a) a Person that directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person, (b) any
Person of which such Person or such Person's spouse is an officer,
director, partner, or, in the case of a trust, the beneficiary or
trustee, and (c) any Person that is an officer, director, partner, or,
in the case of a trust, the beneficiary or trustee of such Person.
The term "control" as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise.
Average Market Value. The average of the Closing Prices for the
security in question for the thirty (30) trading days immediately
preceding the date of determination.
Capital Stock. The Common Stock and any other capital stock of the
Company authorized from time to time, and any other shares, options, interests,
participation, or other equivalents (however designated) of or in the Company,
whether voting or nonvoting,
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including, without limitation, common stock, options, warrants, preferred,
stock, phantom stock, stock appreciation rights, preferred stock, convertible
debentures, stock purchase rights, and al agreements, instruments, documents,
and securities convertible, exercisable, or exchangeable, in whole or in part,
into any one or more of the foregoing.
Closing Date. July 20, 1992.
Closing Price.
(a) If the primary market for the security in question is
a national securities exchange registered under the Exchange Act, the
National Association of Securities Dealers Automated Quotation System
-- National Market System, or other market or quotation system in
which last sale transactions are reported on a contemporaneous basis,
the last reported sales price, regular way, of such security for such
day, or, if there is not a sale on such trading day, the highest
closing or last bid quotations therefor on such trading day; or
(b) If the primary market for such security is not an
exchange or quotation system in which last sale transactions are
contemporaneously reported, the highest closing or last bid or asked
quotation in the over-the-counter market on such trading day as
reported by the National Association of Securities Dealers through its
Automated Quotation system or its successor or such other generally
accepted source of publicly reported bid quotations as Purchaser
reasonably designates.
Common Stock. The common stock, without par value, for the Company.
Commission. The Securities and Exchange Commission and any successor
federal agency having similar powers.
Company. Ultrak, Inc. and any successor or assign, and, unless the
context requires otherwise, the term Company includes any Subsidiary.
Exchange Act. The Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
Exercise Price. The price per share specified in Section 2.03, as the
same are adjusted from time to time pursuant to the provisions of this
Agreement.
Fair Market Value.
(a) As to securities regularly traded in the organized
securities markets, the Average market Value; and
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(b) As to all securities not regularly traded in the
securities markets and other property, the fair market value thereof
as is determined in good faith by the Board of Directors of the
Company at the time of authorization of the transaction giving rise to
the right to receive such securities or property (the "Determination
Date"); provided, however, that, at the election of the Holder, the
Fair Market Value of such securities and other property will be
determined as set forth below. For a period of 30 days after the date
any notice of such transaction is given (the "Negotiation Period"),
the Company and each Holder will negotiate in good faith to reach
agreement on the Fair Market Value of such securities or property, as
of the date such notice was given. In the event that the parties are
unable to agree upon the Fair Market Value of such securities or other
property by the end of the Negotiation Period, the Fair Market Value
of such securities or property will be determined for purposes of this
Agreement by an appraiser selected by Purchaser and reasonably
acceptable to the Company (the "Appraiser") and whose appraisal will
be conclusive and binding on all Persons. Fair Market Value of each
share of Common Stock at a time when (i) the Company is not a
reporting company under the Exchange Act, and (ii) the Common Stock is
not traded in the organized securities markets will, in all cases, be
calculated by determining the Fair Market Value of the entire Company
taken as a whole and dividing that value by the sum of (x) the number
of shares of Common Stock then outstanding plus (y) the number of
shares of Common Stock then issuable upon exercise of the Warrant,
without premium for control or discount for minority interests or
restrictions on transfer. The costs of the Appraiser will be borne by
the Company. In no event will the Fair Market Value of the Common
Stock be less than the per share consideration received or receivable
with respect to the Common Stock in connection with any pending
transaction involving a sale, merger, or liquidation of the Company, a
sale of all or a majority of its assets, or similar transaction.
Holder. Purchaser and all Persons holding Registrable Securities.
Unless otherwise provided herein, in each instance that the Holder is
permitted to request or required to consent to an action to be taken
hereunder, the Holder will be deemed to have requested or consented to
such action if the holders of a majority-in-interest of the
Registrable Securities so request or consent.
Initial Holder. Purchaser and any Affiliate of Purchaser to which the
Warrant is assigned.
Issuable Warrant Shares. Shares of Common Stock or Other
Consideration issuable on exercise of the Warrant.
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Issued Warrant Shares. Shares of Common Stock or Other Consideration
issuable on exercise of the Warrant.
Loan Agreement. Loan Agreement, as defined in the recitals, and all
documents evidencing indebtedness thereunder or otherwise related
thereto, dated as of the Closing Date, as the same may be amended from
time to time, and any refinancing, refunding, or replacements of the
indebtedness thereunder.
Loan Agreement Termination. Termination of the Loan Agreement by the
Purchaser pursuant to Section 2.09(b) of the Loan Agreement at a time
when there is not Event of Default or Default (as such terms are
defined in the Loan Agreement).
New Securities. Any Capital Stock of the Company other than (a)
securities issued upon exercise of the Warrant; (b) the Permitted
Stock; (c) securities issued in a bona fide acquisition of the
business of an unaffiliated Person or all or a majority of such
person's assets; (d) securities issued on exchange or conversion of
the preferred stock of the Company issued and outstanding on the date
of this Agreement; (e) securities issued under the stock option plan
of the Company as in effect on the date of this Agreement; (f)
securities issued on exercise of warrants to acquire 170,270 shares of
Common Stock issued to Rocky Mountain Securities and Investments; and
(g) securities issued on exercise of the warrants to acquire 70,000
shares of Common Stock issued to Xxxxxx X. Xxxxxxxxx.
Note. All or any portion of any of the Revolving Credit Note (as
defined in the Loan Agreement, and any and all documents evidencing
the indebtedness thereunder and any refinancing, refunding, or
replacement thereof.
Other Consideration. Any stock, other securities, property, or other
consideration (other than Common Stock) that the Holder of the Warrant
becomes entitled to receive upon exercise of the Warrant.,
person. Will be interpreted broadly to include any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party, or
government (whether national, federal, state, county, city, municipal,
or otherwise, including, without limitation, any instrumentality,
division, agency, body, or department thereof).
Permitted Sales. Sales by the Shareholder of Capital Stock in
brokers' transactions (as defined in Rule 144 under the Act) in the
open market and sales by the Shareholder in other transactions not
exceeding five percent (5%) of the amount of
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any class of Capital Stock beneficially owned by the Shareholder
(determined as of the beginning of the twelve- month period referred
to below) during any twelve-month period.
Permitted Stock. Common Stock or options or warrants to acquire
Common Stock, constituting, in the aggregate, ten percent (10%) or
less of the outstanding Common Stock, issued or reserved for issuance
to present and future key management of the Company pursuant to a
management incentive program. I no event will the number of shares of
Permitted Stock issued or reserved for issuance, in the aggregate,
exceed the lesser of the number of shares constituting ten percent
(10%) of the outstanding Common Stock on the date hereof or on the
date issued.
Put Shares. The Warrant Shares.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
the effectiveness of such registration statement.
Registrable Securities. (a) The Issuable Warrant Shares and (b) the
Issued Warrant Shares that have not been previously sold to the
public.
Requesting Holder. Any Holder who requests registration of
Registrable Securities pursuant to Section 5.01 or 5.02.
Securities Act. the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
Senior Debt. All obligations of the Company under (a) that certain
Loan Agreement, dated June 15, 1992 amount the Company, LPEC, CCTV,
and American Federal Bank, F.S.B., as the same may be amended from
time to time, and any refinancing, refunding, or replacements of the
indebtedness thereunder and (b) that certain Loan and Security
Agreement, dated as of July 1, 1992, between Exxis and Transamerica
Commercial Finance Corporation.
Shareholder. This term is defined in the preamble.
Subsidiary. Loss Prevention Electronics Corporation, a Colorado
corporation ("LPEC"), CCTV Fourth International, Inc., a Texas
corporation ("CCTV"), Exxis Technologies, Inc., a Texas corporation
("ETI"), and each other Person of which or in which the Company and
its other Subsidiaries own directly or indirectly 50% or more of (i)
the combined voting power of all classes of stock having general
voting power under
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ordinary circumstances to elect a majority of the board of directors
or equivalent body of such Person, if it is a corporation; (ii) the
capital interest or profits interest of such Person, if it is a
partnership, joint venture or similar entity; or (iii) the beneficial
interest of such Person, if it is a trust, association, or other
unincorporated organization.
Warrant. The Warrant, as defined in Section 2.01, dated as of the
Closing Date, issued to Initial Holder, and all warrants issued upon
the transfer or division of or in substitution for such Warrant.
Warrant Shares. The Issued Warrant Shared and the Issuable Warrant
Shares.
Article II
The Warrant
2.01 The Warrant. On the Closing Date, Purchaser agrees to
purchase from the Company at an aggregate total purchase price of ten dollars
($10.00), and the Company agrees to issue to Purchaser, a warrant in
substantially the form of Exhibit A attached hereto and incorporated herein
(collectively, the "Warrant"), to purchase an aggregate of Nine Hundred
Twenty-Eight Thousand Five Hundred Seventy-One (928,571) shares of Common
Stock, all in accordance with the terms and conditions of this Agreement and
pursuant to the provisions set forth below.
2.02 Legend. The Company will deliver to Purchaser on the Closing
Date one or more certificates representing the Warrant in such denominations of
at least one hundred thousand (100,000) shares as Purchaser requests. Suc
certificates will be issued in Purchaser's name or in the name of Purchaser's
designee. It is understood and agreed that the certificates evidencing the
Warrant will bear the following legend:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN ACQUIRED FOR INVESTMENT ANDNOT WITH A VIEW TO OR FOR
SALE IN CONNECTION WITH THE DISTRIBUTION HEREOF. THIS WARRANT
AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY OT BE PLEDGED, SOLD,
OFFERED FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRAITON UNDER OR EXEMPTION FROM SUCH ACT AND
ALL APPLICABLE STATE SECURITIES LAWS."
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
ARE SUBJECT TO THE TERMS AND PROVISIONS OF A WARRANT PURCHASE
AGREEMENT DATED AS OF July 20, 1992, BETWEEN ULTRAK, INC. (THE
"COMPANY"), XXXXXX X. XXXXXX, AND PETRUS FUND, L.P. (AS SUCH
AGREEMENT MAY BE
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SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO
TIME, THE "AGREEMENT"). A COPY OF THE AGREEMENT IS AVAILABLE
AT THE EXECUTIVE OFFICES OF THE COMPANY."
2.03 Exercise Price. The Exercise Price per share will be $2.10
for each share of Common Stock covered by the Warrant; provided, however, that
in no event will the aggregate Exercise Price for all of the shares of Common
Stock covered by the Warrant exceed $1,949,999.10 except in the case of
adjustment pursuant to Section 3.03(d), whether as a result of any change in
the par value of the Common Stock or as a result of any change in the number of
shares purchasable as provided in this Article II or otherwise; and provided,
further, that such limitation on the aggregate Exercise Price will have no
effect whatsoever upon the number of shares of Common Stock for which this
Warrant may be exercised.
2.04 Exercise.
(a) The Warrant may be exercised at any time or from time
to time on or after the Closing Date until January 20, 1994, on any
day that is a business day, for all or any part of the number of
shares of Common Stock purchasable upon its exercise, but in no event
for fewer than one hundred thousan (100,000) shares of Common Stock
(subject to adjustment consistent with Section 2.08), except in
instances where the Warrant so exercised is exercisable for fewer than
one hundred thousan (1000,000) shares of Common Stock, in which case
such Warrant will be exercisable in full. In order to exercise the
Warrant, in whole or in part, the Holder will deliver to the Company
at the office of the Company listed in Section 10.07, (i) a written
notice of such Holder's election to exercise the Warrant, specifying
the number of shares of Common Stock to be purchased pursuant to such
exercise, (ii) payment of the Exericise Price, in any amount equal to
the aggregate purchase price for all shares of Common Stock to be
purchased pursuant to such exercise, (ii) payment of the Exercise
Price, in an amount equal to the aggregate purchase price for all
shares of Common Stock to be purchased pursuant to such exercise, and
(iii) the Warrant. Such notice will be substantially in the form of
the Subscription Form appearing at the end of the Warrant. Upon
receipt of the foregoing, the Company will, as promptly as
practicable, and in any event within five (5) business days of such
receipt, execute, or cause to be executed, and deliver to such Holder
a certificate or certificates representing the aggregate number of
full shares of Common Stock issuable upon such exercise, as provided
in this Agreement. The stock certificat or certificates so delivered
will be in such denominations in excess of one hundred thousand
(1000,000) shares (or such lessor number as is provided for in the
first sentence of this Section 2.04(a)) as may be specified in such
notice and will be registered in the name of such Holder, or such
other name as is designated
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in such notice. the Warrant will be deemed to have been exercised and
such certificate or certificates will be deemed to have been issued,
and such Holder or any other Person so designated or named in such
notice will be deemed to have become a holder of record of such shares
for all purposes, as of the date of such notice, together with such
cash or check or checks and the Warrant, is received by the Company.
If the Warrant has been exercised in part, the Company will, at the
time of delivery of such certificate of certificates, deliver to such
Holder a new Warrant evidencing the rights of such Holder to purchase
a number of shares of Common Stock with respect to which the Warrant
has been exercised, which new Warrant will, in all other respects, be
identical with the Warrant, or, at the request to such Holder,
appropriate notation may be made on the Warrant and returned to such
Holder.
(b) Payment of the Exercise Price will be made, at the option
of the Holder, by company or individual check, certified or official
bank check, or cancellation of any debt owed by the Company to the
Holder. If the Holder surrenders a combination of cash and
cancellation of any debt owed by the Company to the Holder, the Holder
will specify the respective number of shares of Common Stock to be
purchased with each form of consideration, and the foregoing
provisions will be applied to each form of consideration with the same
effect as if the Warrant were being separately exercised with respect
to each form of consideration; provided, however, that the Holder may
designate that any cash to be remitted to the Holder in payment of
debt be applied, together with other monies to the exercise of the
portion of the Warrant being exercised for cash.
2.05 Taxes. The issuance of any Common Stock or Other
Consideration upon the exercise of the Warrant will be made without charge to
the Holder for any tax, other than income taxes assessed on the Holder, in
respect of the issuance of such certificate.
2.06 Warrant Register. The Company will, at all times while the
Warrant remains outstanding and exercisable, keep and maintain at its principal
office a register in which the registration, transfer, and exchange of the
Warrant will be provided for. The Company will not at any time, except upon
the dissolution, liquidation, or winding up of the Company, close such register
so as to result in preventing or delaying the exercise or transfer of the
Warrant.
2.07 Transfer and Exchange. Subject to applicable securities laws
the Warrant and all options and rights under the Warrant are transferable, as
to all or any part of the number of shares of Common Stock and Other
Consideration purchasable upon its exercise, by the Holder of the Warrant, in
person or by duly authorized
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attorney, on the books of the Company upon surrender of the Warrant at the
principal offices of the Company, together with the form of transfer
authorization attached to the Warrant duly executed; provided, however, that
any transfer of rights under the Warrant will be for no fewer than the greater
of (a) one hundred thousand shares and (b) all Issuable Warrant Shares
represented by such Warrant. Absent any such transfer and subject to Section
10.02, the Company may deem and treat the registered Holder of the Warrant at
any time as the absolute owner of the Warrant for all purposes and will not be
affected by any notice to the contrary. If the Warrant is transferred in part,
the Company will at the time of surrender of the Warrant, issue to the
transferee a Warrant covering the number of shares of Common Stock transferred
and to the transferor a Warrant covering the number of shares not transferred.
2.08 Cash in Lieu of Fractional Shares. If the Holder of the
Warrant would be entitled, on the exercise of any rights evidenced thereby, to
receive a fractional interest in a share, the Holder may, at its sole option,
cause the Company to issue such fractional share or to purchase such fractional
interest for an amount in cash equal to the Average Market Value (or in the
absence thereof, the Fair Market Value) of such fractional interest, determined
as of the date on which the Holder exercises the Warrant.
2.09 Lost, Stolen, Mutilated, or Destroyed Warrants. If the
Warrant is lost, stolen, mutilated, or destroyed, the Company will issue a new
Warrant of like denomination, tenor, and date as the Warrant so lost, stolen,
mutilated, or destroyed upon presentation by the Holder of a reasonable
indemnity in customary form. Any such new Warrant will constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed Warrant is at any time enforceable by anyone.
2.10 Stock Legend. The Warrant and the securities issuable upon
exercise of the Warrant have not been registered under the Securities Act or
qualified under applicable state securities laws. Accordingly, unless there is
an effective registration statement and qualification respecting those
securities issued upon exercise of the Warrant under the Securities Act or
under applicable state securities laws at the time of exercise of the Warrant,
any stock certificate issued pursuant to the exercise of the Warrant will bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES
LAWS AND (B) ARE SUBJECT TO THE TERMS OF AND PROVISIONS OF A WARRANT
PURCHASE AGREEMENT
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DATED AS OF JULY 20, 1992 BETWEEN PETRUS FUND, L.P., ULTRAK, INC. (THE
"COMPANY"), and XXXXXX X. XXXXXX (AS SUCH AGREEMENT MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENT"). A COPY OF THE AGREEMENT IS AVAILABLE AT THE OFFICES OF
THE COMPANY."
2.10 Termination. Notwithstanding Section 2,04(a), this Agreement
and the Warrant will terminate and be of no further force and effect in the
event of a Loan Agreement Termination.
ARTICLE III
Anti-Dilution Provisions
3.01 Preemptive Rights. The Company will not issue or sell any New
Securities without first complying with this Section 3.01. The Company hereby
grants to the Holder the preemptive right to purchase, pro rata, all or any
part of the New Securities that the Company may, from time to time, propose to
sell or issue. The Holder's pro rata share for purposes of this Section 3.01
is the ratio that the number of Warrant Shares owned by such Holder immediately
prior to the issuance of the New Securities, bears to the sum of (i) the total
number of shares of Common Stock then outstanding, plus (ii) the number of
shares of Common Stock issuable upon exercise of all Warrants then outstanding.
In the event the Company proposes to issue or sell New Securities, it will give
each Holder written notice of its intention, describing the type of New
Securities and the price and terms upon which the Company proposes to issue or
sell the New Securities. Each Holder will have ten (10) days from the date of
receipt of any such notice to agree to purchase up to its respective pro rata
share of the New Securities for the price (valued at Fair Market Value) for any
noncash consideration) and upon the terms specified in the notice by giving
written notice to the Company and stating in such notice the quantity of New
Securities agreed to be purchased. In the event a Holder fails to exercise
such preemptive right within such ten (10) day period, the other Holders, if
any, will have an additional five (5) day period to purchase such Holder's
portion not so agreed to be purchased in the same proportion in which such
other Holders were entitled to purchase the New Securities (excluding for such
purposes such nonpurchasing Holder). Thereafter, the Company will have thirty
(30) days to consummate the sale of the New Securities not elected to be
purchased by the Holders at the same price and upon the same terms specified in
the Company's notice described above; provided; however, that the Company may
proceed with such sale prior to the expiration of the periods during which the
Holders may exercise their preemptive rights if the Company reserves sufficient
shares for such Holders to exercise such preemptive rights in full. In the
event the Company has not sold the New Securities within such thirty (30) day
period, the Company will not thereafter issue or sell any New Securities,
without first offering such securities in the manner provided above.
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3.02 Dilution Fee.
(a) Without limiting the ability of the Company to pay
dividends on its currently outstanding preferred stock, in case at any
time after the date of this Agreement, the Company declares a dividend
or makes a distribution upon the shares of Capital Stock otherwise
than out of consolidated earnings or consolidated earned surplus
(determined in accordance with generally accepted accounting
principles, including the making of appropriate deductions for a
minority interest, if any, in Subsidiaries), and otherwise than in
securities to which the provisions of Section 3.02(b) apply, and
provided that such dividend or distribution does not otherwise result
in an adjustment of the Exercise Price pursuant to any other provision
of this Agreement, the Company will immediately pay to each Holder,
the securities and other property (including cash) that such Holder
would have received (together will all distributions thereon) if such
Holder had exercised its Warrants on the record date fixed in
connection with such dividend or distribution.
(b) If at any time, or from time to time, on or after the
date of this Agreement the Company grants, issues, or sells any
options or rights to purchase Capital Stock pro rata to the Holders of
any class of Capital Stock, then if the Holders are entitled to an
adjustment pursuant to the provisions of this Article III, in lieu of
such adjustment, each Holder will be entitled, at such Holder's
option, to acquire (whether or not the Warrants have been exercised)
upon the terms applicable to such options or rights, the aggregate of
such options or rights that such Holder could have acquired if such
Holder had held the number of Warrant Shares issuable on exercise of
its Warrants immediately prior to the time at which the Company
granted, issued, or sold such options or rights.
3.03 Adjustments to Number of Shares Purchasable.
(a) The Warrant will be exercisable for the number of
shares of Common Stock in such manner that following the complete and
full exercise of the Warrant the amount of Common Stock issued to the
Holder will equal, to the nearest whole share, Nine Hundred
Twenty-Eight Thousand Five Hundred Seventy-One (928,571) shares of
Common Stock, as adjusted, to the extent necessary, to give effect to
the following events:
(i) In case at any time or from time to time, the
holders of any class of Capital Stock have received, or (on or
after the record date fixed for the determination of
shareholders eligible to receive) have become entitled to
receive, without payment therefor:
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(A) consideration (other than cash) by
way of dividend or distribution; or
(B) consideration (including cash) by
way of spin-off, split-up, reclassification
(including any reclassification in connection with a
consideration or merger in which the Company is the
surviving corporation), recapitalization, combination
of shares into a smaller number of shares, or similar
corporate restructuring);
other than additional shares of Common Stock issued as a stock
dividend or in a stock-split (adjustments in respect of which
are provided for in Sections 3.03(a)(ii) and (iii)), then, and
in each such case, the Holder of the Warrant, on the exercise
of the Warrant, will be entitled to receive for each share of
Common Stock issuable under the Warrant as of the record date
fixed for such distribution, the greatest per share amount of
consideration received by any holder of any class of Capital
Stock or to which such holder is entitled. All such
consideration receivable upon exercise of the Warrant with
respect to such a distribution will be deemed to be
outstanding and owned by such Holder for purposes of
determining the amount of consideration to which such Holder
is entitled upon exercise of the Warrant with respect to any
subsequent distribution or dividend.
(ii) If at any time there occurs any stock split,
stock dividend, reverse stock split, or other subdivision of
the Common Stock, then the number of shares of Common Stock to
be received by the Holder of the Warrant and the Exercise
Price, subject to the limitations set forth in this Agreement,
will be proportionately adjusted.
(iii) In case of any reclassification or change of
outstanding shares of any class of Capital Stock (other than a
change in par value, or from par value to no par value, or
from no par value to par value), or in the case of any
consolidation of the Company with, or merger of the Company
with or into, another Person, or in case of any sale of all,
or a majority of, the property, assets, business, or goodwill
of the Company, the Company, or such successor or other
Person, as the case may be, will provide that the Holder of
this Warrant will thereafter be entitled to receive the
highest per share kind and amount of consideration received or
receivable (including cash) upon such reclassification,
change, consolidation, merger, or sale by any holder of any
class of Common Stock that this Warrant entitles the Holder to
receive immediately prior to such reclassification, change,
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consolidation, merger, or sale (as adjusted pursuant to Section
3.03(a)(i) and otherwise in this Agreement). Any such
successor Person, which thereafter will be deemed to be the
Company for purposes of the Warrant, will provide for
adjustments that are nearly equivalent as may be practicable to
the adjustments provided for by this Section 3.30.
(iv) If at any time the Company issues or sells
any shares of any Capital Stock at a per unit or share price
less than the then current Fair Market Value per share of
Common Stock immediately prior to the time such Capital Stock
is issued or sold, then:
(A) the Exercise Price will be reduced
to the price calculated by multiplying the then
existing Exercise Price by a fraction, the numerator
of which is (x) the sum of (1) the number of shares
of Capital Stock outstanding immediately prior to
such issuance or sale, multiplied by the Fair Market
Value per share of Common Stock immediately prior to
such issuance or sale, plus (2) the aggregate
consideration received by the Company upon such
issuance or sale, divided by the total number of
shares of Capital Stock outstanding immediately after
such issuance or sale, and the denominator of which
is the (y) Fair Market Value per share of Common
Stock immediately prior to such issuance or sale (for
purposes of this subsection (A), the date as of which
the Fair Market Value per share of Common Stock will
be computed will be the earlier of the date upon
which the Company enters into a firm contract for the
issuance of such shares, or issues such shares); and
(B) the number of shares of Common Stock
for which the Warrant may be exercised at the
Exercise Price resulting from the adjustment
described in subsection (A) above will be equal to
the product of the number of shares of Common Stock
purchasable under the Warrant immediately prior to
such adjustment multiplied by a fraction, the
numerator of which is the Exercise Price in effect
immediately prior to such adjustment and the
denominator of which is the Exercise Price resulting
from such adjustment.
(v) In case any event occurs as to which the
preceding Sections 3.3(a)(i) through (iv) are not strictly
applicable, but as to which the failure to make any adjustment
would not fairly protect the purchase rights represented by
the Warrant in accordance with the
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essential intent and principles of this Agreement, then, in
each such case, the Holder may appoint an independent
investment bank or firm of independent public accountants
reasonably acceptable to the company, which will give its
opinion as to the adjustment, if any, on a basis consistent
with the essential intent and principles established in this
Agreement, necessary to preserve the purchase rights
represented by the Warrant. Upon receipt of such opinion, the
company will promptly deliver a copy thereof to the Holder and
will make the adjustments described in such opinion. The fees
and expenses of such investment bank or independent public
accountants will be borne equally by the Company, on the one
hand, and the Holders, on the other.
(b) The Company will not by any action including, without
limitation, amending its charter documents or through and
reorganization, reclassification, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other similar
voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement or the Warrant, but will at all
times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate
to protect the right of the Holder against impairment or dilution.
Without limiting the generality of the foregoing, the Company will (i)
take all such action as may be necessary or appropriate in order that
the company may validly and legally issue fully paid and nonassessable
shares of Common Stock and Other Consideration upon the exercise of
this Warrant, free and clear of all liens, encumbrances, equities and
claims and (ii) use its best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory
body having jurisdiction as may be necessary to enable the company to
perform its obligations under the Warrant. Without limiting the
generality of the foregoing, the Company represents and warrants that
the board of directors of the company has determined the Exercise
Price to be adequate and in the best interests of the company and its
shareholders.
(c) Any calculation under this Section 3.03 will be made
to the nearest one thousandth of a share and rounded upwards to the
nearest whole share.
(d) If each of the conditions listed in Sections
3.03(d)(i) through (iii) below are fulfilled at any time prior to
January 20, 1993, then the Exercise Price will be increased by fifteen
percent (15%). Such increase in Exercise Price will be subject to the
fulfillment of each of the following conditions:
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(i) There not having occurred at any time after
the date of this Agreement any default under this Agreement or
the Loan Agreement.
(ii) There not being any continuing Default or
Event of Default (as defined in the Loan Agreement) at the
time of the fulfillment of the condition set forth in Section
3.03(d)(iii).
(iii) All indebtedness (as defined in the Loan
Agreement) having been fully and unconditionally paid and
performed under the Loan Agreement and not subject to any
offset, recoupment, claim, or condition.
(iv) The Company having voluntarily terminated in
accordance with the terms of the Loan Agreement, the Loan
Agreement and the Revolving Credit Note.
Such increase in the Exercise Price will be deemed effective only upon
completion of the conditions specified above.
Article IV
Put Option
4.01 Grant of Option. The company hereby grants to the Holder an
option to sell to the company, and the Company is obligated to purchase from
the Holder under this option (the "Put Option"), all (or such portion as is
designated by the Holder) of the Put Shares. The Put Option will be effective
at any time or times with ninety (90) days after receipt of written notice of
the occurrence of any of the following events (the "Put Option Period"):
(a) a material change in the ownership of the Company;
for purposes of this subsection "material change" means the
Shareholder ceasing, directly or indirectly, to own thirty-three and
one third percent (33 1/3%) of the Common Stock on a fully diluted
basis (including in the computation of the amount so owned all Common
Stock equivalents held by the Shareholder and without giving effect to
the issuance of any shares of Common Stock under the Warrant); or
(b) a merger of the Company or sale of all or a majority
of the assets, business, or revenue or earnings generating operations
of the Company or any Subsidiary or any substantial change in the type
of business conducted by the Company or any Subsidiary.
4.02 Put Price. In the event that any Holder exercises the Put
Option, the price (the "Put Price") to be paid to each such Holder pursuant to
this Agreement will be cash in the sum of the amount determined by multiplying
the Fair Market Value per share of
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Common Stock times the number of shares of Common Stock for which the Put
Option is being exercised by such Holder together with the Fair Market Value of
the Other Consideration issuable upon exercise of the Warrant.
4.03 Certain Remedies.
(a) Except as otherwise provided in Section 4.04(b), in
the event that the Company defaults in its obligation to purchase all
or any portion of the Warrant and/or the Warrant Shares upon exercise
of the Put Option, in addition to any other rights or remedies of
Purchaser, the unpaid portion of the purchase price will bear interest
at the lesser of 13% or the highest rate permitted by applicable law.
(b) In the event that the payment of the exercise price
or any portion thereof in cash causes the Company to be in default on
the Senior Debt or in violation of any applicable law, the company
will (i) purchase or cash the maximum amount of the Put Shares
permissible, (ii) provide Purchaser a certificate and notice
satisfactory in form and substance to Purchaser describing in
reasonable detail the default resulting from payment of all or a
portion of the Put Price and/or the legal reasons why such payment may
not be made.
4.05 Closing. The closing for the purchase and sale of all or such
portion of the Put Shares as to which the Holder has notified the company of
its intention to exercise the Put Option, will occur at Purchaser's office,
which is located at the address set forth in Section 10.07 hereof, on the date
specified in such notice of exercise, no less than thirty (30) days from
delivery of such notice of exercise of such option (an "Option Closing"). At
any Option Closing, to the extent applicable, the Holder of the Put Shares will
deliver the certificate or certificates evidencing the Put Shares being
purchased, duly endorsed in blank. In consideration therefor, the company will
deliver to the Holder the Put Price, which will be payable in cash.
Article V
Co-Sale Rights
5.01 Rights of Co-Sale. In the event that the Shareholder intends
to sell or transfer any shares of any class of Capital Stock in excess of the
amount of Permitted Sales beneficially owned by him to any Person other than a
Related Party, directly or indirectly, each Holder will have the right to
participate in such sale or transfer on the terms set forth below; provided,
however, none of the provisions of this Agreement will apply to any sale by the
Shareholder of shares of Capital Stock in a bona fide underwritten public
offering under the Securities Act, so long as
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all Holders have had an opportunity to participate in such offering pursuant to
the registration rights under this Agreement.
5.02 Method of Electing Sale; Allocation of Sales. No sale or
transfer by the Shareholder of any shares of Capital Stock in excess of the
amount of Permitted Sales will be valid unless the transferee of such Capital
Stock first agrees in writing to be bound by the terms of this Agreement and to
have the liabilities and obligation of the "Shareholder," as such term is used
in this Agreement. No such sale or transfer by the Shareholder will effect any
delegation of its duties, obligations, or liabilities under this Agreement. In
addition, before any shares of Capital Stock in excess of the amount of
Permitted Sales held, directly or indirectly, by the Shareholder may be sold or
transferred to a Person other than a Related Party, such selling Shareholder
(as such, the "Selling Shareholder") will comply with the following provisions:
(a) The Selling Shareholder will deliver or cause to be
delivered a written notice (the "Notice of Sale") to each Holder as of
that time at least ten (10) days prior to making any such sale or
transfer. The Company agrees to provide the Selling Shareholder with
a list of the names and addresses of each such Holder for such
purpose. The Notice of Sale will sate (i) the Selling Shareholder's
bona fide intention to sell or transfer, (ii) the name and address of
the prospective transferee (the "Transferee"), (iii) the number of
shares of Capital Stock of the company to be sold or transferred, (iv)
the terms and conditions of the contemplated sale or transfer, (v) the
purchase price, in cash, that the Purchaser will pay for such shares
of Capital Stock, and (vi) the expected closing date of the
transaction. The Selling Shareholder will not sell or transfer any
shares of Capital Stock for consideration other than cash.
(b) Any Holder receiving the Notice of Sale may elect to
participate in the contemplated sale or transfer by exercising its
right to co-sell its Capital Stock pursuant to Section 5.02(c). Such
right may be exercised in the sole discretion of the Holder by
delivering a written notice (an "Election Notice") to the Company and
the Selling Shareholder within ten (10) days after receipt of such
Notice of Sale stating the election of the Holder to exercise its
right of co-sale pursuant to Section 5.02(c).
(c) Each Holder may elect to sell or transfer in the
contemplated transaction up to the total of the number of shares of
Warrant Shares then held by it. Promptly after the receipt of an
Election Notice exercising such right, the Selling Shareholder will
use his best efforts to cause the Transferee to amend its offer so as
to provide for the Transferee's purchase, upon the same terms and
conditions as
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those contained in the Notice of Sale, of all of the Warrant Shares
elected to be sole (the "Co-Sell Shares") in such Election Notices.
In the event that the Transferee is unwilling to amend its offer to
purchase all of the co-Sell Shares in addition to the shares of
Capital Stock described in the related Notice of Sale, if the Selling
Shareholder desires to proceed with the sale, the total number of
shares that such Transferee is willing to purchase will be allocated
to the Selling Shareholder and each Holder having given an Election
Notice exercising its right pursuant to this Section 5.02(d) (the
"Co-Sellers") in proportion to the aggregate number of Warrant Shares
held by each such Person; provided, however, that no such Person will
be so allocated a number of shares greater than the number of shares
that it sought to sell to such Transferee in the related Notice of
Sale or Election Notice.
All Capital Stock sold or transferred by the Selling
Shareholder and the co-Sellers with respect to a single Notice of Sale
under Section 5.02(b) will be sold or transferred to the Transferee in
a single closing on the terms described in such Notice of Sale, and
each such share will receive the same per share cash consideration.
In the event that the Transferee, for any reason, declines to purchase
any shares from any Holder delivering an Election Notice, then the
Selling Shareholder will not be permitted to sell or transfer any
shares of Capital Stock to such Transferee.
5.03 Sales to Related Parties.
(a) No sale or transfer of shares of Capital Stock by the
Shareholder to a Related Party will be subject to the provisions of
Section 5.02(a), (b), or (c); provided, however, that such Related
Party first agrees to assume the obligations of the Shareholder
(without relieving such Shareholder of any obligations under this
Agreement) under this Agreement with respect to the shares of Capital
Stock thereby acquired by it and to be a "Shareholder" as such term is
used in this Agreement in a written instrument in a form and substance
satisfactory to the Holders.
(b) For purposes of this Section 5.03, "Related Party"
means the spouse of lineal descendents of the Selling Shareholder or
an entity wholly owned by the Selling Shareholder and/or one or more
Related Parties or a trust solely for the benefit of the Selling
Shareholders or one or more Related Parties.
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Article VI
Registration Rights
6.01 Required Registration. At any time the Holders may, upon not
more than one (1) occasion, make a written request to the company requesting
that the company effect the registration of Registrable Securities. After
receipt of such a request, the Company will, as soon as practicable, notify all
Holders of such request and use its best efforts to effect the registration of
all Registrable Securities that the Company has been so requested to register
by the Holders for sale, all to the extent required to permit the disposition
(in accordance with the intended method or methods thereof) of the Registrable
Securities so registered. In no event will any Person other than a Holder be
entitled to include any shares of Capital Stock in any registration statement
filed pursuant to this Section 6.01. Notwithstanding the foregoing, the
Company will not be obligated to register any Registrable Securities as to
which counsel acceptable to the Holders renders an opinion in form and
substance satisfactory to the Holders to the effect that such Registrable
Securities are freely saleable under Rule 144 under the Securities Act.
6.02 Incidental Registration. If the Company at any time proposes
to file on its behalf or on behalf of any of its security holders a
registration statement under the Securities Act on any form (other than a
registration statement on Form S-4 or S-8 or any successor form) for any class
that is the same or similar to Registrable Securities, it will give written
notice to all holders of Registrable Securities at least thirty (30) days
before the initial filing with the Commission of such registration statement,
and offer to include in such filing such Registrable Securities as such Holders
may request. Each Holder of any such Registrable Securities desiring to have
Registrable Securities registered under this Section 6.02 will advise the
Company in writing within thirty (30) days after the date of receipt of such
offer from the Company, setting forth the amount of such Registrable Securities
for which registration is requested. The Company will thereupon include in
such filing the number of Registrable Securities for which registration is so
requested, and will use its best efforts to effect registration under the
Securities Act of such Registrable underwriter or underwriters, if any, of such
offering deliver a written opinion to the Holders of such Registrable
Securities that the success of the offering would be materially and adversely
affected by inclusion of the Registrable Securities requested to be included,
then the amount of securities to be offered for the accounts of Holders will be
reduced pro rata (according to the Registrable Securities proposed for
registration) to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
underwriter or underwriters; provided, that if securities are being offered for
the account of other Persons as well as the Company,
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then with respect to the Registrable Securities intended to be offered by
Holders, the proportion by which the amount of such class of securities
intended to be offered by Holders is reduced will not exceed the proportion by
which the amount of such class of securities intended to be offered by Holders
is reduced will not exceed the proportion by which the amount of such class of
securities intended to be offered by such other Persons (other than the
Company) is reduced.
6.03 Form S-3 Registrations. In addition to the registration rights
provided in Sections 6.01 and 6.02 above, if at any time the Company is
eligible to use Form S-3 (or any successor form) for registration of secondary
sales of capital stock, any Holder of Registrable Securities may request in
writing that the Company register shares of Registrable Securities on such
form. Upon receipt of such request, the Company will promptly notify all
holders of Registrable Securities in writing of the receipt of such request and
each such Holder may elect (by written notice sent to the Company within ten
(10) days of receipt of the Company's notice) to have its Registrable
Securities included in such registration pursuant to this Section 6.03.
Thereupon the Company will, as soon as practicable, use its best efforts to
effect the registration on Form S-3 of all Registrable Securities that the
Company has so been requested to register by such Holder for sale. The Company
will use its best efforts to qualify and maintain its qualification for
eligibility to use Form S-3 for such purposes.
6.04 Registration Procedures. In connection with any registration of
Registrable Securities hereunder, the Company will, as soon as practicable:
(a) prepare and file with the Commission a registration
statement with the respect to such securities and use its best efforts
to cause such registration statement to become and remain effective
for a period of time required for the disposition of such securities
by the holders thereof;
(b) prepare and file with the Commission such amendments
and company to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
securities covered by such registration statement until the earlier of
such time as all of such securities have been disposed of or the
expiration of one hundred eighty (180) days (except with respect to
registrations effected on Form S-3 or any successor form, as to which
no such period shall apply);
(c) furnish to the Holders such number of copies of the
registration statement and prospectus (including, without limitation,
a preliminary prospectus) in conformity with the
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requirements of the Securities Act (in each case including all
exhibits) and each amendment or supplement thereto, together with such
other documents as such Holders may reasonably request;
(d) use its best efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each Holder reasonably requests, and do such
other acts and things as may be reasonably required of it to enable
such Holder to consummate the disposition in such jurisdiction of the
securities covered by such registration statement;
(e) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its securities holders, as soon as practicable, an earnings
statement covering the period of at least twelve months beginning with
the first month after the effective date of such registration
statement, which earnings statement will satisfy the provisions of
Section 11(a) of the Securities Act;
(f) provide and cause to be maintained a transfer agent
and registrar for Registrable Securities covered by such statement
from and after a date not later than the effective date of such
registration statement;
(g) if requested by the underwriters for any underwritten
offering or Registrable Securities on behalf of a holder of
Registrable Securities pursuant to a registration requested under
Section 6.01, the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such other
terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, provisions with respect to indemnities and contribution as
are reasonably satisfactory to such underwriters and the Holders; the
Holders of on whose behalf Registrable Securities are to be
distributed by such underwriters will be parties to any such
underwriting agreement and the representations and warranties by, and
the other agreements on the part of, the Company to and for the
benefit of such underwriters, will also be made to and for the benefit
of such Holders of Registrable Securities; and no Holder of
Registrable Securities will be required by the Company to make any
representations or warranties to or agreements with the Company or the
underwriters other than reasonable and customary representations,
warranties, or agreements regarding such Holder, such Holder's
Registrable Securities, and such Holder's intended method or methods
of disposition and any other representation required by law;
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(h) furnish, at the written request of any Holder on the
date that such Registrable Securities are delivered to the
underwriters for sale pursuant to such registration or, if such
Registrable Securities are not being sold through underwriters, on the
d ate that the registration statement with respect to such Registrable
Securities becomes effective, (i) an opinion in form and substance
satisfactory to such Holders, and addressing matters customarily
addressed in underwritten public offering, of the counsel representing
the Company for the purposes of such registration (who will not be an
employee of the Company and who will be satisfactory to such Holders),
addressed to the underwriters, if any, and to the selling Holders; and
(ii) a letter (the "comfort letter") in form and substance
satisfactory to such Holders, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and
to the selling Holders making such request (and, if such accountants
refuse to deliver the comfort letter to such Holders, then the comfort
letter will be addressed to the Company and accompanied by a letter
addressed to such Holders stating that they may rely on the comfort
letter addressed to the Company); and
(i) during the period when the registration statement is
required to be effective, notify each selling Holder of the happening
of any event as a result of which the prospectus included in the
registration statement contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
It will be a condition precedent to the obligation of the
Company to take any action pursuant to this Article VI in respect of
the securities that are to be registered at the request of any Holder
of Registrable Securities that (i) such Holder furnish to the Company
such information regarding the Registrable Securities held by such
Holder and the intended method of disposition thereof as is required
in connection with the action taken by the Company and (ii) such
Holder agrees to enter into a customary indemnification agreement with
the Company and any underwriter agreeing to indemnify and hold
harmless such Persons against costs, damages, and liability arising
out of any misstatement of a material fact or omission to state a
material fact required to be stated in order to make such statements
not misleading to the extent such misstatement or omission is made by
such Holder in a
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written instrument expressly intended for inclusion in the
registration statement. The managing underwriter or underwriters, if
any, for any offering of Registrable Securities to be registered
pursuant to Section 6.01 or 6.03 will be selected by the Holders of a
majority of the Registrable Securities being so registered.
6.05 Allocation of Expenses. Except as provided in the
following sentence, the Company will bear all expenses arising or
incurred in connection with any of the transactions contemplated by
this Article VI, including, without limitation, (a) all expenses
incident to filing with the National Association of the Securities
Dealers, Inc., (b) registration fees, (c) printing expenses, (d)
accounting and legal fees and expenses, (e) expenses of any special
audits or comfort letters incident to or required by any such
registration or qualification, and (f) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with
such registration or qualification. Each Holder will bear the expense
of its underwriting fees, discounts, commissions relating to its sale
of Registrable Securities.
6.06 Listing on Securities Exchange. If the Company lists
any shares of Capital Stock on any securities exchange or on the
National Association of Securities Dealers, Inc. Automated Quotation
System, it will, at its expense, list thereon, maintain and, when
necessary, increase such listing of, all Registrable Securities.
6.07 Holdback Agreements.
(a) if any registration pursuant to Section 6.02 is in
connection with an underwritten public offering, each Holder of
Registrable Securities agrees, if so required by the managing
underwriter, not the effect any public sale or distribution of
Registrable Securities (other than as part of such underwritten public
offering) within seven (7) days prior to the effective date of such
registration statement or the earlier of the ninetieth (90th) day
after the effective date of such registration statement or the date
all securities registered under such registration statement are sold;
provided, however, that the Shareholder and each person that is an
officer, director, or owner of five percent (5%) or more of the
outstanding shares of any class of capital stock of Company entered
into similar agreements.
(b) The Company and the Shareholder agree (i) not to
effect any public sale or distribution within seven (7) days (or such
longer period as may be prohibited by Rule 10b-6 under the Exchange
Act) prior to the effective date of the registration statement
employed in any underwritten public
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offering and prior to the earlier of the ninetieth (90th) day after
any such registration statement contemplated by Section 5.01 and 5.03
has become effective and the date on which all securities registered
under such registration statement are sold, except as part of such
underwritten public offering pursuant to such registration statement
and except pursuant to securities registered on Forms S-4 or S-8 of
the Commission of any successor forms, and (ii) use their best efforts
to cause each holder of its equity securities or any securities
convertible into or exchangeable or exercisable for any of such
securities, in each case purchased from the Company at any time after
the date of this Agreement (other than in a public offering), to agree
not to effect any such public sale or distribution of such securities
during such period.
6.08 Rule 144. At all times the Company will take such action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell shares of Registrable Securities without
registration pursuant to and in accordance with (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
Article VII
Representations and Warranties
7.01 Representations and Warranties of the Company and the
Shareholder. The Company represents and warrants to the Purchaser that:
(a) The Company is a corporation duly organized and existing
and in good standing under the laws of the State of Colorado and is
qualified or licensed to do business in all other countries, states,
and jurisdictions the laws of which require it to be so qualified or
licensed, except where failure to do so would not have a material,
adverse effect on the Company. Each Subsidiary is a corporation duly
organized and existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified or licensed to do
business in all other countries, states, and jurisdictions the laws of
which require it to be so qualified or licensed, except where failure
to do so would not have a material, adverse effect on the Company.
The Company has no Subsidiaries or debt or equity investment in any
Person other than LPEC, ETI, and CCTV. Except for liens related to
the Senior Debt and the Loan Agreement, the Company owns 100% of the
equity interests of LPEC, ETI, and CCTV free and clear of all liens,
claims, and encumbrances, and no Person has any rights whether granted
by the Company or any Subsidiary to
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acquire any portion of the equity interest of any Subsidiary or the
assets of the Company or any Subsidiary.
(b) Each of the Company and the Shareholder has, and at all
times that this Agreement is in force will have, the right and power
and is duly authorized to enter into, execute, deliver, and perform
this Agreement and, in the case of the Company, the Warrant, and the
officers of Company executing and delivering this Agreement and the
Warrant are duly authorized to do so. This Agreement and the Warrant
have been duly and validly executed, issued, and delivered and
constitute the legal, valid, and binding obligations of Company and
the Shareholder, enforceable in accordance with their respective
terms.
(c) The execution, delivery, and performance of this
Agreement and the Warrant will not, by the lapse of time, the giving
of notice or otherwise, constitute a violation of any applicable
provisions contained in Company's Articles or Certificate of
Incorporation or Bylaws or any Subsidiary's charter or organizational
documents or contained in any agreement, instrument, or document to
which Company, any Subsidiary, or the Shareholder is a party or by
which any of them is bound.
(d) As of June 30, 1992, the Company's authorized capital
stock consists of 50,000,000 shares of common stock, without par
value, of which 38,920,085 shares are issued and outstanding and
928,571 shares of Common Stock are reserved for issuance on exercise
of the Warrant. The number of shares issued since June 30, 1992 is
not material. All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and nonassessable and
have been offered, issued, sold, and delivered by Company free from
preemptive or similar rights and in compliance with applicable federal
and state securities laws. Except (i) pursuant to this Agreement,
(ii) except for the Permitted Stock, and (iii) except as set forth in
Schedule II to the Loan Agreement on the date of this Agreement, the
Company is not obligated to issue or sell any Capital Stock.
(e) The shares of Common Stock issuable on exercise of the
Warrant have been duly and validly authorized and reserved for
issuance and, when issued in accordance with the terms of the Warrant
will be validly issued, fully paid, and nonassessable and free of
preemptive of similar rights.
(f) The Company has good, indefeasible, and merchantable
title to and ownership of all of its assets free and clear of all
liens, pledges, security interests, claims, or other encumbrances
except pursuant to the Senior Debt and the Loan Agreement.
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(g) There is not now, and at no time during the term of this
Agreement will there be, any agreement, arrangement, or understanding
involving the Company or the Shareholder, other than this Agreement,
modifying, restricting, or in any way affecting the rights of the
Shareholder to vote securities of the Company.
(h) Each of the representations and warranties made by the
Company pursuant to the Loan Agreement is true and correct.
7.02 Representations and Warranties of Purchaser. Purchaser
represents and warrants to the Company and the Shareholder that:
(a) Purchase is a limited partnership duly organized and
existing and in good standing under the laws of the State of Texas.
(b) Purchaser has the right and power and is duly authorized
to enter into, execute, deliver, and perform this Agreement, and the
agents of the Purchaser executing this Agreement, and the agents of
the Purchaser executing and delivering this Agreement are duly
authorized to do so. This Agreement has been duly and validly
executed, issued, and delivered and constitutes the legal, valid, and
binding obligation of Purchaser, enforceable in accordance with its
terms.
(c) The execution, delivery, and performance of this
Agreement will not, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any material applicable provision
contained in Purchaser's organizational documents or contained in any
material agreement, instrument, or document to which Purchaser is a
party or by which it is bound.
(d) Purchaser (i) is an "accredited investor," as that term
is defined in Regulation D under the Securities Act, or (ii) has such
knowledge, skill, and experience in business and financial matters,
based on actual participation, that it is capable of evaluating the
merits and risks of an investment in the Company and the suitability
thereof as an investment for Purchaser, and has received such
documents and information as it has requested and has had an
opportunity to ask questions of and receive satisfactory answers from
the Company concerning the terms and conditions of the investment
proposed herein and based thereon believes it can make an informed
investment decision.
(e) Except as otherwise contemplated by this Agreement,
Purchaser represents that it is acquiring the Warrant and any
securities issuable upon exercise thereof for investment for
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its own account and not with a view to any distribution thereof in
violation of applicable securities laws.
(f) Purchaser agrees that the certificates representing the
Warrants and any securities issuable upon exercise thereof will bear
the appropriate legends referencing restrictions on transfer and the
Warrant or securities issuable upon exercise thereof, as the case may
be, will not be offered, sold or transferred in the absence of
registration or exemption under applicable securities laws.
Article VIII
Covenants
The Company covenants and agrees that so long as the Purchaser or its
Affiliates own any Warrants or Warrant Shares:
8.01 Financial Statements. The Company will comply with Section 4.01
of the Loan Agreement and furnish to each Holder the information referred to
therein, and, in addition provide to each Holder:
(a) As soon as available, a copy of each (i) financial
statement, report, notice, or proxy statement sent by the Company to
its shareholders in their capacity as shareholders, (ii) regular,
periodic, or special report, registration statement, or prospectus
filed by the Company with any securities exchange, state securities
regulator, or the Commission, (iii) material order issued by any
court, governmental authority, or arbitrator in any material
proceeding to which the Company is a party, (iv) press release or
other statement made available generally by the Company to the public
generally concerning material developments in the business of the
Company, and (v) a copy of all correspondence, reports, and other
information sent by the Company to any holder of any indebtedness,
including the holders of Senior Debt.
(b) Promptly, such additional information concerning the
Company as Purchaser may reasonably request, including without
limitation auditor management letters or reports and audit "waiver"
lists and any information available to a director of the Company.
8.02 Laws. The Company and the Shareholder will comply with all
applicable statutes, regulations, and orders of the United States, domestic and
foreign states, and municipalities, and all agencies, and instrumentalities of
the foregoing applicable to the Company and the Shareholder, a violation of
which might materially and adversely affect the ability of the Company or the
Shareholder to perform their respective obligations under this Agreement.
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8.03 Inspection. The Company will permit any representative designed
by Purchaser (at the expense of Purchaser) upon reasonable notice and during
normal business hours, to (a) visit and inspect any of the properties of the
Company, (b) examine the corporate and financial records of Company and made
copies thereof or extracts therefrom, and (c) discuss the affairs, finances,
and accounts of the Company with the directors, officers, employees, and
independent accountants of the Company; provided, however, that any such visit,
inspection, examination, or discussion will not unreasonably disrupt the normal
business operations of the Company. In addition to any rights under this
Section 8.03, the Company will give Purchaser not less than twenty-four (24)
hours actual notice of all regular meetings and twenty-four (24) hours actual
notice of all special meetings of the Company's Board of Directors, will permit
a person designated from time to time by Purchaser to attend such meetings as
an observer and will provide such person with all information available to the
directors of the Company. Such regular meeting will be held at least
quarterly. The Company will reimburse such person for expenses incurred
traveling to and attending such meetings.
8.04 Certain Actions. Without the prior written consent of Purchaser,
which consent may be withheld in the sold discretion of Purchaser, the
Shareholder will not permit the Company or any Subsidiary to, and neither the
Company nor any Subsidiary will:
(a) except for Permitted Stock, enter into any transaction or
transactions with any director, officers, employee, or shareholder of
the Company or any Subsidiary, or any Affiliate or relative of the
foregoing except upon terms that, in the reasonable opinion of
Purchaser, are fair and reasonable and that, are, in any event, at
least as favorable as would result in a comparable arm's-length
transaction with a Person not a director, officer, employee,
shareholder, or Affiliate of the Company or any Affiliate or related
party of the foregoing, or advance any monies to any such Persons,
except for travel advances in the ordinary course of business;
(b) increase beyond the amounts permitted pursuant to the Loan
Agreement as of the date of this Agreement the amount of benefits
payable under any benefit plan in the aggregate, or increase the
aggregate amount of salary and any other direct and indirect
remuneration (including, but not limited to, employee benefits,
professional, management, and consulting fees and expenses, and
bonuses under any plans) paid or accrued by the Company or any
Subsidiary during any fiscal year to or for the direct or indirect
benefit of any of its or its Subsidiaries' officers, directors, or
shareholders;
(c) except as required by the Senior Debt ont he date hereof,
acquire any debt or equity interest in any Person or establish or
acquire a Subsidiary other than LPEC, ETI, and
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CCTV or make any additional capital contribution or purchase any
additional equity in LPEC, ETI, and CCTV or make any advances or loans
to any Subsidiary or transfer any technology or assets to any
Subsidiary;
(d) allow the aggregate par value of the Capital Stock subject
to the Warrant from time to time to exceed the price payable or
exercise of the Warrant, as adjusted from time t time; or
(e) obligate itself or otherwise agree to take, permit or
enter into any of the events described in subsections (a) through (d)
above.
8.05 Records. The Company will keep books and records of account in
which full, true, and correct entries will be made of all dealings and
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied to a consistent basis.
8.06 Accountants. The Company will retain independent public
accountants who will certify the Company's consolidated financial statements at
the end of each fiscal year, and in the event that the services of the
independent public accountants so selected, or any firm of independent public
accounts employed by Company, are terminated, the Company will promptly
thereafter notify Purchaser and upon Purchaser's request, the Company will
request the firm of independent public accountants whose services are
terminated to deliver to Purchaser a letter of such firm setting forth the
reasons for the termination of their services and in its notice to Purchaser
the Company will state whether the change of accountants was recommended or
approved by the Board of Directors of the Company or any committee thereof.
The Company, its Subsidiaries, and the Shareholder will release and indemnify
such accountants from and against any liability arising out of the delivery of
suc letter to Purchaser.
8.07 Existence. The Company and each Subsidiary will maintain in
full force and effect its corporate existence, rights, and franchises and all
licenses and other rights.
8.08 Notice.
(a) In the event of (i) any setting by the Company of a
record date with respect to the holders of any class of securities of
the company for the purpose of determining which of such holders are
entitled to dividends, repurchases of securities, or other
distributions, or any right to subscribe for, purchase, or otherwise
acquire any shares of Capital Stock or other property or to receive
any other right; or (ii) any capital reorganization of the Company, or
reclassification or recapitalization of the Capital Stock or any
transfer of
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all or a majority of the assets of the company to, or consolidation or
merger of the Company or any Subsidiary; or (iii) any voluntary or
involuntary dissolution, liquidation, or winding up of the Company; or
(iv) any proposed issue or grant by the Company of any Capital Stock,
or any right or option to subscribe for, purchase, or otherwise
acquire any Capital Stock (other than the issue of Capital Stock
pursuant to exercise of the Warrant), then and in each such event the
Company will deliver or cause to be delivered to the registered Holder
of the Warrant at the time outstanding a notice specifying, as the
case may be, (A) the date on which any such record is to be set for
the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution, or right; (B) the
date as of which the holders of record will be entitled to vote on any
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, conveyance, dissolution, liquidation, or
winding-up; (C) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
conveyance, dissolution, liquidation, or winding-up is to take place
and the time, if any is to be fixed, as of which the holders of record
of any class of Capital Stock (or such stock or securities receivable
upon the exercise of the Warrant) will be entitled to exchange their
shares of Capital Stock (or such other stock or securities) for
securities or other property deliverable upon such event; and (D) the
amount and character of any Capital Stock, property or rights proposed
to be issued or granted, the consideration to be received therefor
and, in the case of rights or options, the exercise price thereof, and
the date of such proposed issue or grant and the Persons or class of
Persons to whom such proposed issue or grant will be offered or made.
Any such notice will be deposited in the United States mail, postage
prepaid, at least thirty (30) days prior to the date therein
specified, and notwithstanding anything in this Agreement to the
contrary the registered Holder of the Warrant may exercise the Warrant
within thirty (30) days from the receipt of such Notice.
(b) If there is any adjustment as provided above in
Article III, or if securities or property other than shares of Common
Stock of the Company becomes purchasable in lieu of shares of such
Common Stock upon exercises of the Warrant, the Company will promptly
cause written notice of such occurrence to be sent to the registered
Holders, which notice will, upon request of the Purchaser, be
accompanied by a certificate of the independent public accountants or
other independent professional firm reasonably acceptable to the
Purchaser in form and substance satisfactory to Purchaser of the
Company setting forth in reasonable detail the basis for the Holder's
becoming entitled to purchase such shares and the number of shares
that may be purchased and the Exercise Price
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thereof, or the facts requiring any such adjustment and the Exercise
Price and number of shares purchasable after such adjustment, or the
kind and amount of any such securities or property so purchasable upon
the exercise of the Warrant, as the case may be. At the request of
Holder and upon surrender of the Warrant, the Company will reissue
this Warrant in a form conforming to such adjustments.
8.09 Taxes. The Company will file all required tax returns,
reports, and requests for refunds on a timely basis and will pay on a timely
basis all axes imposed on either of them or upon any of assets, income, or
franchises.
8.10 Warrant Rights. The Company covenants and agrees that during
the term of this Agreement and so long as the Warrant is outstanding, (a) the
Company will at all times have authorized and reserved a sufficient number of
shares of Capital Stock to provide for the exercise in full of the rights
represented by the Warrant, (b) the Company will not increase or permit to be
increased the par value per share or stated capital of its Common Stock or
other shares purchasable under the Warrant or the consideration receivable upon
issuance of its Capital Stock, and (c) in the event that the exercise of the
Warrant would require the payment by the Holder of consideration for the Common
Stock or Other Consideration receivable upon such exercise of less than the par
or stated value of such stock, the Company and the Shareholder will promptly
take, and use its best efforts to have its security holders take, such action
as may be necessary to change the par or stated value of such stock to an
amount less than or equal to such consideration.
Article IX
Conditions
The obligations of Purchaser to effect the transactions contemplated
by this Agreement will be subject to the following conditions:
9.01 Opinion. Purchaser shall have received favorable opinions,
dated the Closing Date, from Gardere & Xxxxx, a Registered Limited Liability
Partnership, counsel for Company, in form and substance satisfactory to
Purchaser and its counsel and addressing, without limitation, the matters set
forth in Sections 7.01(a), (b), (c), (d), and (e).
9.02 Loan Agreement Conditions. all of the conditions precedent to
the obligations of Purchaser under the Loan Agreement will have been satisfied
in full.
9.03 Material Change. There will have occurred no material adverse
change in the business prospects, results, operations, or condition, financial
or otherwise, of the Company.
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9.04 Proceedings. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all documents necessary to the
consummation of this Agreement, will be satisfactory in form and substance to
Purchaser and its counsel, and Purchaser and its counsel will have received
copies (executed or certified as may be appropriate) of all documents,
instruments, and agreements that Purchaser or such counsel may request in
connection with the consummation of such transactions.
Article X
Miscellaneous
10.01 Indemnification. In addition to any other rights or remedies
to which Purchaser may be entitled, the Company agrees to and will indemnify
and hold harmless Purchaser and its Affiliates and their successors, assigns,
officers, directors, employees, attorneys, and agents (individually and
collectively, and "Indemnified Party") from and against any and all losses,
claims, obligations, liabilities, penalties, causes of action, damages, costs,
and expenses (including, without limitation, cost of defense, reasonable
attorneys' fees and expenses, including, without limitation, those arising out
of the negligence of any Indemnified Party, that the Indemnified party may
suffer, incur, or be responsible for arising or resulting form any damage or
deficiency resulting from any misrepresentation, breach of warranty, or
nonfulfillment of any agreement on the part of the Company or the Shareholder
under this Agreement, the Loan Agreement or any other agreement to which the
Company or the Shareholder is a party in connection with this transaction, or
from any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished to Purchaser under this Agreement or
the Loan Agreement.
10.02 Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner, the
beneficial owner thereof, may, at its election, be treated as the Holder of
such Registrable Securities for purposes of any request or other action by any
Holder or Holders of Registrable Securities held by any Holder or Holders of
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities. In no event will a Holder be required to exercise the
Warrant as a condition to the registration of such Warrant of Registrable
Securities.
10.03 Default. It is agreed that a violation by any party of the
terms of this Agreement cannot be adequately measured or compensated in money
damages, and that any breach or threatened breach of this Agreement by a party
to this Agreement would do irreparable injury to the nondefaulting party. It
is, therefore, agreed that in the event of any breach or threatened breach by a
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party to this Agreement of the terms and conditions set forth in this
Agreement, the nondefaulting party will be entitled, in addition to any and all
other rights and remedies that it may have in law or in equity, to apply for
and obtain injunctive relief requiring the defaulting party to be restrained
from any such breach or threatened breach or to refrain from a continuation of
any actual breach. Unless otherwise specifically provided in this Agreement,
in the event that either party defaults on any obligation to make payments
under this Agreement, the unpaid amount will bear interest at an annual rate
equal to the lesser of 13% or the highest rate permitted by applicable law.
10.04 Integration. This Agreement constitutes the entire agreement
between the parties with respect to the written and all previous or
contemporaneous oral negotiations, understandings, and agreements. This
Agreement may not be amended or supplemented except by a writing signed by
Company, the Shareholder, and the Holders of Warrants for a majority of the
Warrant Shares.
10.05 Headings; Section References. The headings in this Agreement
are for convenience and reference only and are not part of the substance of
this Agreement. All references in the Agreement to the Sections, subsections,
and Articles are references to the Sections, subsections, and Articles of this
Agreement unless the context requires otherwise.
10.06 Severability. The parties to this Agreement expressly agree
that it is not the intention of any of them to violate any public policy,
statutory or common law rule, regulation, or decision of any governmental or
regulatory body. If any provision of this Agreement is judicially or
administratively interpreted or construed as being in such provision, section,
sentence, word, clause, or combination thereof will be inoperative (and in lieu
thereof or there will be inserted such provision, sentence, word, clause, or
combination thereof as may be valid and consistent with the intent of the
parties under this Agreement) and the remainder of this Agreement, as amended,
will remain binding upon the parties to this Agreement, unless the inoperative
provision would cause enforcement of the remainder of this Agreement to be
inequitable under the circumstances.
10.07 Notices. Whenever it is provided in this Agreement that any
notice, demand, request, consent, approval, declaration, or other communication
be given to or served upon any of the parties by another, such notice, demand,
request, consent, approval, declaration, or other communication will be in
writing and will be deemed to have been validly served, given or delivered (and
"the date of such notice" or words of similar effect will mean the date) three
(3) days after deposit in the United States mails, certified mail, return
receipt requested, with proper postage prepaid, or upon receipt thereof
(whether by non-certified mail,
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telecopy, telegram, express delivery or otherwise), whichever is earlier, and
addressed to the party to be notified as follows:
If to Purchaser, at: Petrus Fund, L.P.
0000 Xxxxxxxx Xxxxxx
00000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
FAX: 000-000-0000
Attn: Xxxxxx Xxxxxxxxxx Xxxx
with copies to: Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxx
FAX: 000-000-0000
If to the Company, at: Ultrak, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxx
FAX: 000-000-0000
with copies to: Gardere & Xxxxx
A Registered Limited Liability
Partnership
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
FAX: 000-000-0000
If to the Shareholder: Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
FAX: 000-000-0000
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than Purchaser will be delivered as set forth above
to the address shown on the stock transfer books of the Company or the Warrant
Register unless such Holder has advised the Company in writing of a different
address as to which notices will be sent under this Agreement.
Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies of the actual notice will not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration,
or other communication.
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10.08 Successors. This Agreement will be binding upon and inure to
the benefit of the parties and their respective successors and assigns.
10.09 Remedies. The failure of any party to enforce any right or
remedy under this Agreement, or promptly to enforce any such right or remedy,
will not constitute a waiveR thereof, nor give rise to any estoppel against
such party, nor excuse any other party from its obligation under this
Agreement. Any waiver of any such right or remedy by any party must be in
writing and signed by the party against which such waiver is sought to be
enforced.
10.10 Survival. All warranties, representations, and covenants made
by any party in this Agreement or in any certificate or other instrument
delivered by such party or on its behalf under this Agreement will be
considered to have been relied upon by the party to which it is delivered and
will survive the Closing Date, regardless of any investigation made by such
party or on its behalf. All statements in any such certificate or other
instrument will constitute warranties and representations under this Agreement.
10.11 Fees. Except for fees and expenses of preparation of this
Agreement, as to which each party will bear its own, any and all reasonable
fees, costs, and expenses, of whatever kind and nature, including reasonable
attorneys' fees and expenses, incurred by Purchaser in connection with the
defense or prosecution of any actions or proceedings arising out of or in
connection with this Agreement will be borne and paid by the Company within
then (10) days of demand by Purchaser.
10.12 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one
agreement.
10.13 Other Business. It is understood and accepted that Purchaser
and its Affiliates have interests in other business ventures that may be in
conflict with the activities of the Company and that nothing in this Agreement
limit the current or future business activities of such parties whether or not
such activities are competitive with those of the Company. The Company and the
Shareholder agree that all business opportunities in any field substantially
related to the business of the Company will be pursued exclusively through the
Company; provided, that Purchaser consents thereto; and, provided, further,
that if Purchaser does not consent to the Company's pursuing such opportunity,
that the Shareholder may pursue such opportunity through Person other than the
Company. In no event the Shareholder or any Affiliate of the Shareholder use
any of the trade secrets or confidential or proprietary information of the
Company or any of its assets or personnel for their own benefit, directly or
indirectly.
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10.14 Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED
AND ACCEPTED BY THE PARTIES IN THE STATE OF TEXAS, WILL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF TEXAS, AND WILL BE INTERPRETED AND THE RIGHTS OF THE
PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE
THERETO AND THE INTERNAL LAWS OF THE STATE OF TEXAS APPLICABLE TO AN AGREEMENT
EXECUTED, DELIVERED, AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO ANY
CHOICE-OF-LAW RULE OR OTHER POLICY THEREOF THAT MIGHT REQUIRE THE APPLICATION
OF THE LAWS OF ANY OTHER JURISDICTION.
10.15 Publicity. The Company and the Shareholder will not make any
press release or other public statement regarding this Agreement or the
transactions contemplated hereby without the prior written consent of the
Purchaser.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
PETRUS FUND, L.P.
By: Xxxxx Investments, Inc.
its General Partner
By: /s/ XXXXXX X. XXXXXXX
---------------------------
Xxxxxx X. Xxxxxxx,
President
UNTRAK, INC.
By: /s/ XXXXXX X. XXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------
Title: President
------------------------
/s/ XXXXXX X. XXXXXX
---------------------------
Xxxxxx X. Xxxxxx
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED
FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO
THE TERMS AND PROVISIONS OF A WARRANT PURCHASE AGREEMENT DATED AS OF JULY 20,
1992, BETWEEN ULTRAK, INC. (THE "COMPANY"), XXXXXX X. XXXXXX, AND PETRUS FUND,
L.P. (AS SUCH AGREEMENT MAY BE
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SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENT"). A COPY OF THE AGREEMENT IS AVAILABLE AT THE EXECUTIVE OFFICES OF
THE COMPANY.
928,571 shares of
Common Stock,
without par value,
of the Company Warrant No. [*]
WARRANT TO PURCHASE COMMON STOCK OF
Ultrak, Inc.
This is to certify that, in consideration of ten dollars ($10.00) and
other valuable consideration, which is hereby acknowledged as received, Petrus
Fund, L.P., its successors and registered assigns, is entitled at any time
after the Closing Date (as defined in the Agreement) to exercise this Warrant
to purchase Nine Hundred Twenty-Eight Thousand Five Hundred Seventy-One
(928,571) shares of the common stock, without par value, of Ultrak, Inc. (the
"company"), as the same is adjusted from time to time pursuant to the
provisions of the Agreement at a price per share as specified in the Agreement
and to exercise the other rights, powers, and privileges provided in the
Agreement, all on the terms and subject to the conditions specified herein and
in the Agreement.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions continued in the Agreement, to all terms
and provisions of which the registered holder of this Warrant, by acceptance of
this Warrant, assents. Reference is hereby made to the Agreement for a more
complete statement of the rights and limitations of rights of the registered
holder of this Warrant and the rights and duties of the Company under this
Warrant. Copies of the Agreement are on file at the office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed.
Dated as of July 20, 1992.
UNTRAK, INC.
By: ______________________________
Name:______________________________
Title:_____________________________
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SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocable exercises
this Warrant for an purchases __________ of the number of shares of Common
Stock of Ultrak, Inc. purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Capital Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to ____ whose address is
________________________________________________ and if such shares of Common
Stock do not include all of the shares of Common Stock issuable as provided in
this Warrant, that a new Warrant of like tenor and date for the balance of the
shares of Common Stock issuable thereunder to be delivered to the undersigned.
Dated: ____________________, 19___.
By: ______________________________
Name:______________________________
Title:_____________________________
Address: _________________________
_________________________
_________________________
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SUBSCRIPTION FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns, and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
No. of Shares Name and Address of Assignee
and does hereby irrevocably constitute and appoint as attorney
_________________________ to register such transfer on the books of Ultrak,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated: ____________________, 19___.
By: ______________________________
Name:______________________________
Title:_____________________________
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