EXHIBIT 10.3
ULTRAK STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 11, 1997 (the "Agreement"),
by and between ULTRAK, INC., a Delaware corporation ("Issuer"), and CHECKPOINT
SYSTEMS, INC., a Pennsylvania corporation ("Grantee").
RECITALS
A. The Plan. Grantee and Issuer are concurrently herewith entering an
Agreement and Plan of Reorganization, dated as of the date hereof (the "Plan"),
providing for, among other things, the merger of Issuer with and into C U MERGER
CORP., a Delaware corporation ("Merger Sub"), with Merger Sub being the
surviving corporation.
B. Condition to Plan. As a condition and inducement to Grantee's
execution of the Plan, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase a number of shares of common stock, par value $0.01 per share ("Issuer
Common Stock"), of Issuer as shall, after exercise and as adjusted as set forth
herein, be equal to 19.9% of the issued and outstanding shares of Issuer Common
Stock (the "Option Shares") at a purchase price per Option Share (as adjusted as
set forth herein, the "Purchase Price") equal to $24.08.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the
agreements or covenants contained in this Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery
of shares covered by the Option issued by any court of competent
jurisdiction in the United States shall be in effect, the Holder may
exercise the Option in whole but not in part at any time and from time
to time following the occurrence of a Purchase Event (as hereinafter
defined); provided, however, that the Option shall terminate and be of
no further force or effect upon the earliest to occur of (A) the
Effective Time, (B) termination of the Plan in accordance with Section
8.1(a), Section 8.1(b) (so long as the failure of the Effective Time to
occur under clause (i) was not caused by Ultrak, and excluding clause
(iv) to the extent a termination fee is payable under Section 8.5), or
Sections 8.1(d)(i) thereof, prior to the occurrence of a Purchase
Event or a Preliminary Purchase Event (as hereinafter defined) or
(C) September 11, 1998; provided, further, however, that any purchase
of shares upon exercise of the Option shall be subject to compliance
with applicable law. Notwithstanding the termination of the Option,
Grantee or Holder, as the case may be, shall be entitled to purchase
the Option Shares if it has exercised the Option in accordance herewith
prior to the termination of the Option. The termination of the Option
shall not affect any rights hereunder which by their terms extend
beyond the date of such termination.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer
shall have recommended, publicly proposed, or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its subsidiaries the gross revenues of which
equaled or exceeded $25 million during its fiscal year most recently
ended (a "Significant Subsidiary") (other than transactions solely
between Issuer's subsidiaries that are not violative of the Plan),
(B) the disposition, by sale, lease, exchange or otherwise, of assets
of Issuer or any of its Significant Subsidiaries representing in either
case 25% or more of the consolidated assets of Issuer and its
subsidiaries or (C) the issuance, sale or other disposition by Issuer
of (including by way of merger, consolidation, share exchange or any
similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Significant Subsidiaries, other than, in
each case of (A), (B), or (C), any merger, consolidation, share
exchange or similar transaction involving Issuer or any of its
Significant Subsidiaries in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by either
remaining outstanding or being converted into the voting securities of
the surviving entity of any such transaction) at least 65% of the
combined voting power of the voting securities of the Issuer or the
surviving entity outstanding immediately after the consummation of such
merger, consolidation, or similar transaction (provided any such
transaction is not violative of the Plan) (each of (A), (B), or (C), an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any subsidiary
of Grantee and Xxxxxx X. Xxxxxx ("Xxxxxx"), to the extent of his
current ownership as of the date of this Agreement [and any increase in
such ownership up to an aggregate 40% of Issuer Common Stock]) shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act), other than a group of which
Grantee or any subsidiary of Grantee or Xxxxxx is a member, shall have
been formed which beneficially owns or has the right to acquire
beneficial ownership of 25% or more of the voting power of Issuer or
any of its Significant Subsidiaries; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) shall have commenced (as such term is defined in
Rule 14d-2 under the Exchange Act) or shall have filed a registration
statement under the Securities Act, with respect to, a tender offer or
exchange offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such person would own or control 25%
or more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(iv) the Ultrak special shareholders meeting required
under the Plan shall not have been held or shall have been canceled
prior to termination of the Plan, or Issuer's Board of Directors shall
have withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect to the
matters relating to the Plan requiring approval, in each case after it
shall have been publicly announced that any person (other than Grantee
or any subsidiary of Grantee) shall have disclosed an intention to
engage in any transaction described in clauses (i), (ii) or (iii)
above, or make a bona fide proposal to engage in a transaction pursuant
to an Acquisition Proposal, or (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an
Exchange Offer.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) Issuer has received, or there is a public
announcement of, a friendly or unsolicited tender offer or Ultrak
executes a formal letter of intent evidencing an Acquisition Proposal;
or
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(ii) any other event entitling Grantee to terminate
the Plan pursuant to Section 8.1 thereof and to receive a Termination
Fee as provided for in Section 8.5 of the Plan.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it
being understood that the giving of such notice by Issuer shall not be
a condition to the right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying a place and date not
earlier than three business days nor later than 15 business days from
the Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); provided, however, that if the Closing cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which such restriction
on consummation has expired or been terminated; and provided, further,
however, without limiting the foregoing, that if prior notification to
or approval of any Governmental Entity is required in connection with
such purchase, Issuer shall cooperate with Holder in the filing of the
required notice of application for approval and the obtaining of such
approval and the Closing shall occur immediately following such
regulatory approvals (and any mandatory waiting periods). Any exercise
of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) Notwithstanding Section 3(e), in no event shall any
Closing Date be more than 18 months after the related Notice Date, and
if the Closing Date shall not have occurred within 18 months after the
related Notice Date due solely to the failure to obtain any such
required approval, the exercise of the Option effected on the Notice
Date shall be deemed to have expired.
4. Payment and Delivery of Certificates.
(a) On the Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account
designated by Issuer, an amount equal to the Purchase Price multiplied
by the number of Option Shares to be purchased on such Closing Date,
and (ii) present and surrender this Agreement to the Issuer at the
address of the Issuer specified in Section 12(f).
(b) At the Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided
in Section 4(a), (i) Issuer shall deliver to Holder a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all Liens
(other than applicable federal and state securities laws restrictions
and restrictions contained in this Agreement) and subject to no
preemptive rights, and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of
such Option Shares in violation of applicable federal and state laws or
of the provisions of this Agreement. "Lien(s)" shall mean any lien,
encumbrance, encroachment, defect, mortgage, pledge, liability, option,
security interest, conditional sale or other title retention agreement,
assessment, license, covenant, charge, restriction, reservation, claim,
burden, right or interest whatsoever of any third party.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
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THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF MARCH 11, 1997. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that (i) the portion of the above
legend relating to the Securities Act shall be removed by delivery of a
substitute certificate(s) without such legend if Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required
for purposes of the Securities Act and (ii) the reference to
restrictions pursuant to this Agreement in the above legend shall be
removed by delivery of a substitute certificate(s) without such
reference if the Option Shares evidenced by a certificate(s) containing
such reference have been sold or transferred in compliance with
provisions of this Agreement under circumstances that do not require
the retention of such reference.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender
of the applicable Purchase Price in immediately available funds and the
tender of this Agreement to Issuer, Holder shall be deemed to be the
holder of record of the shares of Issuer Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that a certificate(s) representing such shares
of Issuer Common Stock shall not then be actually delivered to Holder.
Issuer shall pay all expenses, and any and all United States federal,
state, and local taxes (other than income taxes) and other charges that
may be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section 4(d) in the name of
Holder or its permitted assignee, transferee, or designee pursuant to
the terms hereof.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or
treasury shares of Issuer Common Stock so that the Option may be
exercised without additional authorization of Issuer Common Stock after
giving effect to all other options, warrants, convertible securities
and other rights to purchase Issuer Common Stock, (ii) that it will
not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act,
avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed
hereunder by Issuer, (iii) promptly to take all action as may from time
to time be required (including (A) complying with all premerger
notification, reporting and waiting period requirements and (B) in the
event prior approval of or notice to any Governmental Entity is
necessary before the Option may be exercised, cooperating fully with
Holder in preparing such application or notice and providing such
information to such Governmental Entity as it may require) in order to
permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the rights
of Holder against dilution.
5. Representations and Warranties and Covenants and Agreements of
Issuer. Issuer hereby represents and warrants to Grantee (and Holder, if
different than Grantee) as follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement and, subject to receiving any necessary approval from a
Governmental Entity, the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors
of Issuer, and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions
so contemplated; this Agreement has been duly and validly executed and
delivered by Issuer.
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(b) Beneficial Ownership. Other than with respect to the
shares of Issuer Common Stock owned directly and beneficially by Xxxxxx
X. Xxxxxx, to the best knowledge of Issuer, as of the date of this
Agreement, no person or group has beneficial ownership of more than 10%
of the issued and outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and
permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms, will have
reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time purchasable upon
exercise of the Option, and all such shares, upon issuance pursuant to
the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all Liens (other
than those created by this Agreement and applicable securities laws
restrictions) and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of
this Agreement does not and will not, and the consummation by Issuer of
any of the transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of, or a default under, its
certificate of incorporation or by-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) a breach or violation
of, or a default under, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment
decree, order, award or governmental or nongovernmental permit or
license to which it or any of its subsidiaries is subject, that would,
in any case give any other person the ability to prevent or enjoin
Issuer's performance under this Agreement in any material respect.
(e) Board Action. The Board of Directors of Issuer having
approved this Agreement and the consummation of the transactions
contemplated hereby by the vote of greater than 67% of the members of
the Issuer's Board of Directors, the provisions of Section 203 of the
DGCL do not and will not apply to this Agreement or the purchase of
shares of Issuer Common Stock pursuant to this Agreement.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer as follows:
(a) Corporate Authority. Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement to consummate the transactions
contemplated by this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Grantee; and this Agreement has been duly executed and delivered by
Grantee.
(b) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee or Holder upon exercise of the Option
will not be taken with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities
Act.
7. Adjustment upon Changes in Issuer Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares, exercise of stock purchase warrants or
rights or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in
the agreements governing such transaction so that Holder shall receive,
upon exercise of the Option, the number and class of shares or other
securities or property that Holder would have received in respect of
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Issuer Common Stock if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable. If any
additional shares of Issuer Common Stock are issued after the date of
this Agreement (other than pursuant to an event described in the first
sentence of this Section 7(a)), upon exercise of any option to purchase
Issuer Common Stock outstanding on the date hereof, the number of
shares of Issuer Common Stock subject to the Option shall be adjusted
so that, after such issuance, it, together with any shares of Issuer
Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Issuer Common Stock then issued and outstanding,
without giving effect to any shares subject to or issued pursuant to
the Option. No provision of this Section 7 shall be deemed to affect or
change, or constitute authorization for any violation of, any of the
covenants or representations in the Plan.
(b) In the event that Issuer shall enter into an agreement
(i) to consolidate with or merge into any person, other than Grantee or
one of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Issuer
Common Stock shall be changed into or exchanged for stock or other
securities of Issuer or any other person or cash or any other property
or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or
(iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its subsidiaries,
then, and in each such case, the agreement governing such transaction
shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Holder, of either (x) the
Acquiring Corporation (as hereinafter defined), (y) any person that
controls the Acquiring Corporation, or (z) in the case of a merger
described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided, that, if the terms of the Substitute Option cannot,
for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to Holder.
Substitute Option Issuer shall also enter into an agreement with Holder
in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as hereinafter defined) as is
equal to the Assigned Value (as hereinafter defined) multiplied by the
number of shares of Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as hereinafter
defined). The exercise price of Substitute Option per share of
Substitute Common Stock (the "Substitute Option Price") shall then be
equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option
is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (y) Issuer in a
merger in which Issuer is the continuing or surviving person,
or (z) the transferee of all or substantially all of Issuer's
assets (or a substantial part of the assets of its
subsidiaries taken as a whole).
(ii) "Substitute Common Stock" shall mean the shares
of capital stock (or similar equity interest) with the
greatest voting power in respect of the election of directors
(or persons similarly responsible for the direction of the
business and affairs) of Substitute Option Issuer.
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(iii) "Assigned Value" shall mean the highest of (w)
the price per share of Issuer Common Stock at which a Tender
Offer or an Exchange Offer therefor has been made, (x) the
price per share of Issuer Common Stock to be paid by any third
party pursuant to an agreement with Issuer, (y) the Average
Price and (z) in the event of a sale of all or substantially
all of Issuer's assets, an amount equal to (I) the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by
Holder divided by (II) the number of shares of Issuer Common
Stock outstanding at such time. In the event that a Tender
Offer or an Exchange Offer is made for Issuer Common Stock or
an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the
securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a
nationally recognized investment banking firm selected by
Holder.
(iv) "Average Price" shall mean the average closing
price of a share of Substitute Common Stock for the one year
immediately preceding the consolidation, merger, or sale in
question, but in no event higher than the closing price of the
shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided, however, that if
Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by
any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate of the shares of Substitute Common Stock outstanding prior to
exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock but for the limitation in the first
sentence of this Section 7(f), Substitute Option Issuer shall make a
cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of
this Section 7(f). This difference in value shall be determined by a
nationally-recognized investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that
controls the Acquiring Corporation shall assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force
and effect (including, without limitation, any action that may be
necessary so that the holders of the other shares of common stock
issued by Substitute Option Issuer are not entitled to exercise any
rights by reason of the issuance or exercise of the Substitute Option
and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any
diminution in value resulting from the fact that the Substitute Common
Stock are restricted securities, as defined in Rule 144 under the
Securities Act or any successor provision) than other shares of common
stock issued by Substitute Option Issuer).
8. [Intentionally Omitted].
9. Registration Rights.
(a) Demand Registration Rights. On not more than two (2)
occasions, Issuer shall, subject to the conditions of Section 9(c)
below, if requested by any Holder, including Grantee and any permitted
transferee ("Selling Shareholder"), as expeditiously as possible
prepare and file a registration statement under the Securities Act if
such registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable
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to the Selling Shareholder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by the
Selling Shareholder in such request, including without limitation a
"shelf" registration statement under Rule 415 under the Securities Act
or any successor provision, and Issuer shall use its best efforts to
qualify such shares or other securities for sale under any applicable
state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of
Issuer Common Stock under the Securities Act in connection with an
underwritten public offering of such Issuer Common Stock, Issuer will
promptly give written notice to the Selling Shareholder of its
intention to do so and, upon the written request of the Selling
Shareholder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer Common
Stock intended to be included in such underwritten public offering by
the Selling Shareholder), Issuer will cause all such shares for which
the Selling Shareholder requests participation in such registration, to
be so registered and included in such underwritten public offering;
provided, however, that Issuer may elect to not cause any such shares
to be so registered (i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration solely to
implement an employee benefit plan or a registration filed on Form S-4
of the Securities Act or any successor Form; provided, further,
however, that such election pursuant to (i) may only be made two times.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in
Section 9(a) above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective; provided, however, that Issuer may
delay any registration of Option Shares required pursuant to Section
9(a) above for a period not exceeding 90 days provided Issuer shall in
good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer, and
Issuer shall not be required to register Option Shares under the
Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the
Plan pursuant to Article VIII thereof, (b) failure to obtain
the requisite shareholder approval pursuant to Section 6.4 of
the Plan, and (c) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than one occasion during any calendar
year; and
(iii) within 90 days after the effective date of a
registration referred to in Section 9(b) above pursuant to
which the Selling Shareholder concerned were afforded the
opportunity to register such shares under the Securities Act
and such shares were registered as requested.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of
distribution for such shares; provided, however, that Issuer shall not
be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent
to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses
(including the fees and expenses of counsel), legal expenses, including
the reasonable fees and expenses of one counsel to the holder whose
Option Shares are being registered, printing expenses and the costs of
special audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions
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but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration
pursuant to Section 9(a) or 9(b) above (including the related offerings
and sales by holders of Option Shares) and all other qualifications,
notifications or exemptions pursuant to Section 9(a) or 9(b) above.
(e) Indemnification. In connection with any registration under
Section 9(a) or 9(b) above Issuer hereby indemnifies the Selling
Shareholder, and each underwriter thereof, including each person, if
any, who controls such holder or underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, losses, claims,
damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or
caused by any omission, or alleged omission, to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are
caused by any untrue statement or alleged untrue statement that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or
supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party
expressly for use therein, and Issuer and each officer, director and
controlling person of Issuer shall be indemnified by the Selling
Shareholder, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue,
or alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance
upon, and in conformity with, information furnished in writing to
Issuer by the Selling Shareholder or such underwriter, as the case may
be, expressly for such use.
Promptly upon receipt by a party indemnified under this
Section 9(e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be
sought against any indemnifying party under this Section 9(e), such
indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability, which it may
otherwise have to any indemnified party under this Section 9(e) unless
the failure so to notify the indemnified party results in substantial
prejudice thereto. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the
extent it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own expense, with
counsel chosen by it and satisfactory to such indemnified party. The
indemnified party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel
reasonably satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be
contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such
action notwithstanding its obligation to bear fees and expenses of such
counsel. No indemnifying party shall be liable for any settlement
entered into without its consent, which consent may not be unreasonably
withheld, conditioned or delayed.
If the indemnification provided for in this Section 9(e) is
unavailable to a party otherwise entitled to be indemnified in respect
of any expenses, losses, claims, damages or liabilities referred to
herein, then the indemnifying party, in lieu of indemnifying such party
otherwise entitled to be indemnified, shall contribute to the amount
paid or payable by such party to be indemnified as a result of such
expenses, losses, claims, damages or liabilities in such proportion as
is appropriate to reflect the relative benefits received by Issuer, the
Selling Shareholder and the underwriters from the offering of the
securities and also
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the relative fault of Issuer, the Selling Shareholder and the
underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The amount paid or
payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim;
provided, however, that in no case shall the Selling Shareholder be
responsible, in the aggregate, for any amount in excess of the net
offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any holder to indemnify shall be
several and not joint with other holders.
In connection with any registration pursuant to Section 9(a)
or 9(b) above, Issuer and the Selling Shareholder (other than Grantee)
shall enter into an agreement containing the indemnification provisions
of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all
reporting requirements and will do all such other things as may be
necessary to permit the expeditious sale at any time of any Option
Shares by the Selling Shareholder thereof in accordance with and to the
extent permitted by any rule or regulation promulgated by the SEC from
time to time, including, without limitation, Rule 144. Issuer shall at
its expense provide the Selling Shareholder with any information
necessary in connection with the completion and filing of any reports
or forms required to be filed by it under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the
rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection
with the issuance and the sale of the Option Shares and in connection
with the exercise of the Option, and will save the Selling Shareholder
harmless, without limitation as to time, against any and all
liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities
to be acquired in connection with the exercise of the Option are then authorized
for quotation or trading or listing on the NASDAQ National Market or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing, the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NASDAQ National Market or such other securities exchange
and will use its best efforts to obtain approval, if required, of such quotation
or listing as soon as practicable on the securities exchange on which Issuer
Common Stock trades.
11. New Agreement. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided for herein, each of
the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of
such provision. This Agreement may not be modified,
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amended, altered or supplemented except upon the execution and delivery
of a written agreement executed by the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Plan and the other
documents and instruments referred to herein and therein, between
Grantee and Issuer (i) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof and (ii) is not
intended to confer upon any person other than the parties hereto
(except for the indemnified parties under Section 9(e) and any
transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h)) any rights or remedies hereunder.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Governmental Entity to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the internal laws of the State of Delaware
without regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to the parties at the addresses set
forth in the Plan (or at such other address for a party as shall be
specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one
and the same agreement and shall become effective when both
counterparts have been signed, it being understood that both parties
need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except
that Holder may assign this Agreement to a wholly-owned subsidiary of
Grantee. The term "Holder" as used herein shall mean either Grantee or
the wholly-owned subsidiary of Grantee that possesses the Option at the
applicable time. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided
for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the
parties hereto may have for any failure to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ULTRAK, INC.
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President and CEO
CHECKPOINT SYSTEMS, INC.
By /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, President and CEO
