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Exhibit 16
WARRANT ISSUANCE AND AMENDMENT AGREEMENT
WARRANT ISSUANCE AND AMENDMENT AGREEMENT ("Agreement"), dated
as of January 18, 2000, among Code Alarm Inc., a Michigan corporation (the
"Company") Pegasus Partners, L.P. and Pegasus Related Partners, L.P., each a
Delaware limited partnership (together "Pegasus"), General Electric Capital
Corporation ("GECC"), and CFE, Inc. ("CFE"), relating to (i) the issuance by the
Company to Pegasus of new warrants to purchase an aggregate of 1,250,000 shares
of common stock of the Company, no par value ("Common Stock") in the form
attached hereto as Exhibit A (the "New Warrants"), (ii) the amendment of the
various warrants (collectively, the "Existing Warrants") to purchase common
stock of the Company, issued by the Company to Pegasus on October 27, 1997 and
from time to time thereafter, as amended, pursuant to the Unit Purchase
Agreement (the "Purchase Agreement") dated as of October 27, 1997 among the
Company and Pegasus and (iii) the amendment of the warrant to
purchase common stock of the Company, issued by the Company to GECC on October
24, 1997, as amended, (the "GECC Warrant") pursuant to that certain warrant
Purchase Agreement (the "Warrant Purchase Agreement") dated as of October 24,
1997 among the Company and GECC, which warrant is being transferred by GECC to
CFE (the "GECC Holder," together with Pegasus, the "Holders") and (iv) the
amendment of the registration rights agreement dated as of October 27, 1997 (the
"Registration Rights Agreement"), by and among the Company and the Holders.
WHEREAS, pursuant to that certain letter agreement dated as of
August 20, 1999 among Pegasus and the Company (the "Letter Agreement"), Pegasus
is making financial accommodations to the Company.
WHEREAS, the transactions contemplated hereby require the
consent of GECC under the Credit Agreement dated as of October 24, 1997, by and
among the Company, the other "Credit Parties" from time to time party thereto,
the financial institutions from time to time party thereto, (the "Lenders")
and GECC, in its individual capacity and as the "Agent" (the "Agent") for the
lenders (the "Credit Agreement").
WHEREAS, in order to induce Pegasus to enter into the Letter
Agreement and to make financial accommodations thereunder, and in order to
induce GECC to consent to the transactions contemplated hereby, the parties
agreed to enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The terms hereinafter set forth when used
herein shall have the following meanings, and any terms not otherwise defined
herein that are defined in the Purchase Agreement shall have the respective
meanings specified in the Purchase Agreement:
"Current Warrant Price" shall have the meaning specified in
the Attached Warrants, the Shortfall Warrants or the Litigation Warrants, as the
context may require.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, properties, assets, prospects, goodwill or condition,
financial or otherwise, of the Company or (ii) the ability of the Company to
perform or the Holders to enforce the obligations of the Company under this
Agreement.
2. ISSUANCE OF NEW WARRANTS. The Company shall issue to the
Holders the New Warrants in the specific amounts set forth on Schedule 1 hereto.
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3. AMENDMENT OF ATTACHED WARRANTS AND SHORTFALL WARRANTS. Each
of the Attached Warrants and the Shortfall Warrants is hereby amended to change
the Current Warrant Price thereunder to the following:
(a) If, on January 31, 2000, any obligations (as defined in
the Credit Agreement dated as of March 31, 1999 by and among the
Holders and the Company) remain outstanding, then from and after such
date, the Current Warrant Price under each Attached Warrant and
Shortfall Warrant shall be $0.323505, subject to adjustment as provided
below.
(b) From and after April 30, 2000, the Current Warrant Price
under each Attached Warrant and Shortfall Warrant shall be $.0001.
4. AMENDMENT OF LITIGATION WARRANTS. Each of the Litigation
Warrants is hereby amended to change the Current Warrant Price under such
Litigation Warrant to the following:
(a) If, on January 31, 2000, any Obligations remain
outstanding, then from and after such date, the Current Warrant Price
under each Litigation Warrant shall be the lesser of (i) the Current
Warrant Price under such Litigation Warrant immediately prior to such
date and (ii) $.323505, subject to adjustment as provided below.
(b) From and after April 30, 2000, the Current Warrant Price
under each Litigation Warrant shall be $.0001.
5. AMENDMENT OF GECC WARRANT. The GECC Warrant is hereby
amended to change the "Exercise Price" thereunder (referred to as the "Current
Warrant Price" herein) to the following:
(a) If, on January 31, 2000, any obligations remain
outstanding, then from and after such date, the Current Warrant Price
under each GECC Warrant shall be $0.323505, subject to adjustment as
provided below.
(b) From and after April 30, 2000, the Current Warrant Price
under each GECC Warrant shall be $.0001.
6. AMENDED CURRENT WARRANT PRICE SUBJECT TO ANTI-DILUTION; NO
INCREASE IN CURRENT WARRANT PRICE. The Current Warrant Price of any of the
Attached Warrants, Shortfall Warrants, Litigation Warrants or GECC Warrants
as specified in paragraphs (a) through (b) of Section 3 hereof, paragraphs (a)
through (b) of Section 4 hereof and/or paragraphs (a) through (b) of Section 5
hereof shall be equitably further adjusted in accordance with the anti-dilution
provisions contained in such Warrants; provided, however, that no such
adjustment shall reduce the Current Warrant Price of any such Existing
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Warrant or GECC Warrant to an amount less than $.0001 per share of Common Stock.
No adjustment described in Section 3, 4, or 5 hereof to the Current Warrant
Price of any Existing Warrant or GECC Warrant shall result in an increase in the
Current Warrant Price of any Existing Warrant or GECC Warrant at any time.
7. LEGEND. Concurrently with the execution hereof, the
following legend shall be placed on the face of each of the Attached Warrants,
Shortfall Warrants, Litigation Warrants and GECC Warrant:
"This Warrant has been amended pursuant to the Warrant
Issuance and Amendment Agreement dated as of January 18, 2000
among Code Alarm Inc., Pegasus Partners, L.P., Pegasus
Related Partners, L.P., General Electric Capital Corporation
and CFE, Inc., a copy of which is available for inspection at
the offices of Code Alarm Inc."
8. EXISTING WARRANTS AND GECC WARRANT TO REMAIN IN FULL FORCE
AND EFFECT. Except as set forth herein, the Existing Warrants and GECC Warrant
shall continue in full force and effect in accordance with their terms and the
Existing Warrants and GECC Warrant, as amended hereby, are hereby ratified and
confirmed by the Company and accepted by the Holders.
9. AMENDMENT OF REGISTRATION RIGHTS AGREEMENT. The
Registration Rights Agreement is hereby amended to include the New Warrants in
the definition of "Warrants" set forth in Section 1 thereof. Except as set forth
herein, the Registration Rights Agreement shall continue in full force and
effect in accordance with its terms.
10. REPRESENTATIONS AND WARRANTIES. (a) The Company hereby
represents and warrants to the Holders as follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such governmental
approvals could not reasonably be expected to have a Material Adverse Effect.
The Company is duly qualified or licensed to do business and in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or prevent the Company from
consummating any of the transactions contemplated by the Agreement.
(ii) The Company has heretofore made available to the Holders
a complete and correct copy of its articles of incorporation, as amended, and
its by-laws, as currently in effect. Each such document is in full force and
effect and no other organizational documents are applicable to or binding upon
the Company.
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(iii) The Company has full corporate power and authority to
execute and deliver this Agreement and the New Warrants, to issue the New
Warrants and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by the Company of this Agreement and the New
Warrants, the issuance of the New Warrants and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors of the Company and no other corporate or shareholder
action on the part of the Company is necessary to authorize the execution,
delivery or performance by the Company of this Agreement or the New Warrants,
the issuance of the New Warrants or the consummation by the Company of the
transactions contemplated hereby or thereby. The Company has reserved 1,250,000
shares of Common Stock for issuance upon the exercise of the New Warrants. This
Agreement and the New Warrants have been duly executed and delivered by the
Company and (assuming due and valid authorization, execution and delivery hereof
by the other parties hereto and thereto) are valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally.
(iv) None of the execution, delivery or performance of this
Agreement or the New Warrants by the Company, the issuance of the New Warrants
or the consummation by the Company of the transactions contemplated hereby or
thereby, nor compliance by the Company with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provision of the
Company's articles of incorporation, as amended, or the by-laws or other
organizational documents of the Company, (ii) require on the part of the Company
any filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or other governmental or regulatory
authority or agency, including, without limitation, any consent or approval of
any federal, state, local or foreign insurance industry agency, commission or
other governing body, except for in the case of clause (ii) (A) filings,
permits, authorizations, consents and approvals as may be required under federal
and state securities laws, and the laws of other states in which the Company is
qualified to do or is doing business, and (B) where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect or prevent the Company from consummating the
transactions contemplated hereby, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any material indenture, mortgage, deed
of trust, credit agreement, note or other evidence of indebtedness or other
material agreement, instrument or obligation to which the Company is a party or
by which it or any of its properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its properties or assets.
(b) Each Pegasus entity hereby represents and warrants to
the Company as follows:
(i) Such Pegasus entity is an "Accredited Investor" within
the meaning of Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act").
(ii) The New Warrants are being acquired for such Pegasus
entity's own account for the purpose of investment and not with a present view
to or for sale in connection with any distribution thereof.
(iii) Such Pegasus entity understands that (i) the New
Warrants have not been registered under the Securities Act, (ii) a future
registration of the New Warrants is not contemplated at this time, (iii) the New
Warrants must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or an exemption from registration is
available under applicable securities laws then in effect, and (iv) the New
Warrants will bear a legend to such effect and the Company will make a notation
on its transfer books to such effect.
(iv) Such Pegasus entity understands that no public market
now exists for the New Warrants issued by the Company.
11. DELIVERIES. (a) Concurrently with the execution and
delivery of this Agreement, the Company shall deliver the New Warrants to
Pegasus;
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(b) Concurrently with the execution and delivery of this
Agreement, the Company shall deliver to the Holders the following documents:
(1) a certificate dated the date hereof, signed by the
appropriate authorized officers of the Company with respect to the certification
of the articles of incorporation of the Company, its By-Laws, resolutions
authorizing the transactions contemplated hereby, incumbency and such other
matters as the Holders shall reasonably request; and
(ii) a legal opinion of Xxxxxx Xxxxxxxx LLP, counsel for the
Company, in form acceptable to the Holders, opining that (i) the Company has
been duly incorporated and is validly existing and in good standing under the
laws of the State of Michigan, and has all requisite corporate power and
authority to own its properties and assets and conduct its business as currently
conducted, (ii) this Agreement and the New Warrants have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, (iii) the execution, delivery and
performance of this Agreement and the New Warrants, the issuance of the New
Warrants and the issuance of Common Stock upon exercise of the Existing
Warrants and GECC Warrant, as amended by this Agreement, and the New Warrants
will not (A) result in a breach of any of the terms, conditions or provisions
of, or constitute a default under, any material indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness or other
material agreement, instrument or obligation to which the Company is a party and
which is known to such counsel, (B) contravene the articles of incorporation, as
amended, or by-laws of the Company, or (C) to the knowledge of such counsel,
contravene any order binding on or judgment against the Company or its
properties or businesses, (iv) the Company has reserved 1,250,000 shares of
common stock for issuance upon the exercise of the New Warrants and (v) the
shares of common stock issuable upon exercise of the New Warrants will be, when
so issued, duly authorized, validly issued, fully paid and non-assessable.
12. Payment of Fees and Expenses. Concurrently with the
execution and delivery of this Agreement, the Company shall pay all fees,
expenses and disbursements of the Holders in connection with the transactions
contemplated by this Agreement and all outstanding fees, expenses and
disbursements of the Holders payable by the Company pursuant to the Purchase
Agreement, including in each case the outstanding fees and expenses of Xxxx,
Scholer, Fierman, Xxxx & Handler, LLP, counsel to Pegusus and Sidley & Austin,
councel to GECC.
13. WAIVER OF SECTION 6.5 OF CREDIT AGREEMENT. GECC hereby
waives compliance with Section 6.5 of the Credit Agreement solely for purposes
of the issuance of the New Warrants and the other transactions contemplated by
this Agreement, including, without limitation, the issuance of any securities of
the Company on account of anti-dilution adjustments triggered by the issuance of
the New Warrants. The Credit Agreement shall remain in full force and effect and
is hereby ratified and confirmed. Except as set forth in this Section 13,
neither the execution, delivery nor effectiveness of this Agreement shall
operate as a waiver of any right, power or remedy of the Agent or any Lender
under the Credit Agreement, all of which the Agent and the Lenders hereby
expressly reserve.
14. GOVERNING LAW. In all respects, including all matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of Michigan applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America.
15. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate, but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day and year first written above.
CODE ALARM, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President and
Secretary
PEGASUS PARTNERS, L.P.
By: Pegasus Investors, L.P., its
general partner
By: Pegasus Investors GP, Inc., its
general partner
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title:
PEGASUS RELATED PARTNERS, L.P.
By: Pegasus Investors, L.P., its
general partner
By: Pegasus Investors GP, Inc., its
general partner
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx X. XxXxx
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Name: Xxxxxxx X. XxXxx
Title: Duly Authorized
Signatory
CFE, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: SVP Equity Management
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Schedule 1
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Number of Shares
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Pegasus Partners, L.P. 347,159
Pegasus Related Partners, L.P. 902,841
