EXHIBIT 99.6
OPTION AGREEMENT
BY AND AMONG
XXXX XXXXXXX ENTERPRISES, LLC,
XXXXXXX X. XXXXXX
AND
XXXXXXX X. XXXXXX
Dated as of January 11, 2005
OPTION AGREEMENT
This OPTION AGREEMENT, entered into as of January 11, 2005
(the "Agreement") by and among Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx
(collectively, the "Stockholders") and Xxxx Xxxxxxx Enterprises, LLC, a Delaware
limited liability company (the "Investor"),
WITNESSETH:
WHEREAS, as of the date hereof, Xxxxxxx X. Xxxxxx is the sole
record holder and beneficial owner of 11,334 shares of common stock, par value
$.01 per share ("Common Stock"), of Ultimate Electronics, Inc. (the "Company");
WHEREAS, as of the date hereof, Xxxxxxx X. Xxxxxx and Xxxxxxx
X. Xxxxxx are the joint record holders and beneficial owners of 1,792,990 shares
of Common Stock (together with the shares held solely by Xxxxxxx X. Xxxxxx, the
"Shares");
WHEREAS, concurrently with the execution and delivery of this
Agreement, each Stockholder is entering into a Voting Agreement (the "Voting
Agreement") with the Investor, pursuant to which the Stockholders have agreed to
vote the Shares in accordance with the instructions received from the Investor
from time to time; and
WHEREAS, the Stockholders are willing to grant an option to
the Investor to acquire all or any part of the Shares;
NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Grant of Option. Upon the terms and subject to the
conditions set forth in this Agreement, each of the Stockholders hereby grants
to the Investor an option (the "Option") to purchase the Shares set forth
opposite the name of such Stockholder on Exhibit A hereto, or any securities or
property of any kind or character received or receivable in respect of such
Shares in connection with the Bankruptcy Proceedings (as hereinafter defined) in
exchange for the Exercise Price (as hereinafter defined), which Option shall be
exercisable at any time during the Exercise Period (as hereinafter defined).
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SECTION 2. Exercise of Option.
(a) The Option shall be exercisable during the period (the
"Exercise Period") commencing fourteen calendar days after the filing by or
against the Company of a petition under Chapter 11 or any other applicable
section or chapter of the United States Bankruptcy Code, as amended from time to
time (the "Bankruptcy Code"), and ending on the earlier of (i) two years after
the commencement of the Exercise Period or (ii) the effective date of any plan
or reorganization approved by the bankruptcy court in any bankruptcy proceedings
(the "Bankruptcy Proceedings") commenced by or against the Company under Chapter
11 or any other applicable section or chapter of the Bankruptcy Code. The Option
shall expire and be of no further effect if the Exercise Period has not
commenced prior to or on April 10, 2005.
(b) The Option may be exercised by the Investor with respect
to any Stockholder and any portion of the Shares at any time or from time to
time (subject to paragraph (c) below) during the Exercise Period by delivering a
written notice (the "Exercise Notice") to such Stockholder, which notice shall
state that the Investor irrevocably elects to exercise the Option with respect
to the Shares identified in such notice and pay the Exercise Price therefor. As
used herein, the term "Exercise Price" means $0.65 per Share; provided, however,
that if on the date the Exercise Notice is delivered by the Investor to a
Stockholder the Common Stock is traded on the Nasdaq National Market, the Nasdaq
SmallCap Market, the OTC Bulliten Board, any national securities exchange or any
other nationally recognized trading market, such term shall mean the lower of
(i) $0.65 per Share or (ii) the average of the per share last sale prices of the
Common Stock on the five most recent trading days prior to such date.
(c) The Option may not be exercised by the Investor on more
than two separate occasions. If any time the Option is exercised by the Investor
in part, the Investor will exercise the Option with respect to the Option Shares
held by the Stockholders on a pro rata basis, in proportion to the number of
shares set forth opposite their names on Exhibit A hereto.
SECTION 3. Closing. The closing of any exercise of the Option
pursuant to this Agreement (a "Closing") shall take place at the offices of
Xxxxx Xxxxx L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 at 10:00 a.m., Dallas,
Texas time, on the second business day following the delivery of the Exercise
Notice by the Investor pursuant to Section 2(b), or on such other date as shall
have been mutually agreed by the parties. At any Closing, (i) the Investor shall
make payment to the applicable Stockholder of the aggregate Exercise Price for
the Shares being purchased upon the exercise of the Option by wire transfer of
immediately available funds and (ii) such Stockholder shall deliver to the
Investor a stock certificate or certificates representing the aggregate number
of Shares being purchased by the Investor, together with duly executed blank
stock powers, in each case in proper form to transfer the Shares to the
Investor.
SECTION 4. Representations and Warranties of the Stockholders.
Each of the Stockholders hereby represents and warrants to the Investor as
follows:
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(a) Enforceability. Such Stockholder has all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by such Stockholder and constitutes a valid and binding
obligation of each such Stockholder, enforceable against such Stockholder in
accordance with its terms.
(b) No Conflict. The execution and delivery of this Agreement
by such Stockholder does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, (A) conflict with, or result in any violation of, any United
States or foreign Law (as hereinafter defined) applicable to such Stockholder or
by which any property or asset of such Stockholder is bound or affected or (B)
result in any breach of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or to a loss of a
material benefit under, or result in the creation of any liens in or upon any of
the properties or assets of such Stockholder, pursuant to any loan or credit
agreement, note, bond, mortgage, indenture, lease, license, sublease, easement,
covenant, condition, restriction, contract, instrument, permit, concession,
franchise license or other instrument or obligation. As used herein, the term
"Law" means any statute, law (including common law), ordinance, rule or
regulation.
(c) Consents, Approvals, Etc. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notification
to, any governmental authority or body is required by or with respect to such
Stockholder in connection with the execution and delivery of this Agreement by
such Stockholder or the consummation by such Stockholder of the transactions
contemplated by this Agreement, except the filing with the Securities and
Exchange Commission (the "SEC") of such reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated hereby.
(d) Absence of Litigation. As of the date of this Agreement,
there is no suit, action or proceeding ("Proceeding") pending or, to the
knowledge of such Stockholder, threatened against such Stockholder, or any
property or asset of such Stockholder, before any governmental authority or body
that seeks to delay or prevent the consummation of the transactions contemplated
by this Agreement.
(e) The Shares. Such Stockholder is the record and beneficial
owner (as defined in Rule 13d-3 under the Exchange Act, which meaning will apply
for all purposes of this Agreement) of, and has good and marketable title to
Shares shown as owned by such Stockholder on Schedule A hereto, free and clear
of any and all liens, claims and encumbrances. Such Stockholder has the sole
right to Transfer (as defined in the Voting Agreement) the Shares shown as owned
by such Stockholder on Schedule A hereto, and such Stockholder is not subject to
any agreements, understandings, arrangements or restrictions which prohibit or
restrict the Transfer of the Shares to the Investor upon the exercise of the
Option. Upon the exercise of the Option by the Investor
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with respect to the Shares shown as owned by such Stockholder on Schedule A in
accordance with the terms of this Agreement, the Investor will acquire good and
marketable title to such Shares, free and clear of all liens, claims and
encumbrances.
SECTION 5. Representations and Warranties of the Investor. The
Investor represents and warrants to each Stockholder as follows:
(a) Enforceability. This Agreement has been duly authorized,
executed and delivered by the Investor and constitutes a valid and binding
obligation of the Investor, enforceable against the Investor in accordance with
its terms.
(b) No Conflict. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement shall not conflict with, or
result in any violation of, any United States or foreign Law applicable to the
Investor or by which any property or asset of the Investor is bound or affected.
(c) Consents, Approvals, Etc. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notification
to, any governmental authority or body is required by or with respect to the
Investor in connection with the execution and delivery of this Agreement by the
Investor or the consummation by the Investor of the transactions contemplated by
this Agreement, except the filing with the SEC of such reports under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby.
(d) Securities Act. If the Investor exercises the Option, the
Investor will acquire the Option Shares for the purpose of investment and not
with a view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"). The
Investor acknowledges that any Option Shares to be acquired by it upon the
exercise of the Option will not be registered under the Securities Act or any
applicable state securities law, and that such Option Shares may not be
transferred or sold except pursuant to the registration provisions of such
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
state securities laws and regulations as applicable. The Investor is
knowledgeable, sophisticated and experienced in business and financial matters
of the type contemplated by this Agreement and is able to bear the economic
risks associated with any investment to be made by it in the Option Shares. In
addition, the Investor acknowledges that it is entering into this Agreement and
the Voting Agreement based on publicly available information and information
provided by the Company, and the Investor is not relying on any statements made
or information provided by the Stockholders other than the representations and
warranties contained in this Agreement. For avoidance of doubt and
notwithstanding any other provision of this agreement, the Investor acknowledges
that the Stockholders have not made and do not make any representation or
warranty to the Investor regarding or the Company, its results of operations,
financial condition, liquidity or prospects.
SECTION 6. Notices. All notices and other communications
hereunder shall be in writing and shall be given by delivery in person, by
registered or certified mail
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(return receipt requested and with postage prepaid thereon) or by cable, telex
or facsimile transmission to the parties at the following addresses (or at such
other address as either party shall have furnished to the other in accordance
with the terms of this Section 6):
if to the Investor:
Xxxx Xxxxxxx Enterpises, LLC
0000 X. Xxxxxx #000
Xxx Xxxxx, Xxxxxx 00000
Facs.: (000) 000-0000
with copies to:
Xxxxx & Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facs.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx
if to the Stockholders:
Xxxxxxx and Xxxxxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
with copies to:
Xxxxx & Xxxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
All notices and other communications hereunder that are addressed as provided in
or pursuant to this Section 6 shall be deemed duly and validly given (a) if
delivered in person, upon delivery, (b) if delivered by registered or certified
mail (return receipt requested and with postage paid thereon), 72 hours after
being placed in a depository of the United States mails and (c) if delivered by
cable, telex or facsimile transmission, upon transmission thereof and receipt of
the appropriate answerback.
SECTION 7. Further Assurances. Each of the Stockholders and
the Investor hereby covenant and agree to execute and deliver any additional
documents reasonably necessary to complete the sale and transfer of all or any
portion of the Shares with respect to which an Option is exercised and
consummate the other transactions contemplated by this Agreement. In the event
of any stock split, stock dividend, reclassification, merger, reorganization,
recapitalization or other change in the capital
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structure of the Company affecting the capital stock of the Company, the number
of Option Shares and the Exercise Price shall be adjusted appropriately, and the
parties shall execute and deliver such instruments as are necessary to evidence
any such adjustment.
SECTION 8. Amendments. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with the terms and provisions hereof
may be waived only by a written instrument executed by each party entitled to
the benefits of the same.
SECTION 9. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of each of the other parties; provided,
however, that the Investor shall be entitled to assign this Agreement to any
Person controlled by Xxxx X. Xxxxxxx without the prior written consent of any
other party. Any purported assignment in violation of this Section 9 shall be
null and void. Subject to the preceding sentences of this Section 9, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective successors and assigns..
SECTION 10. Governing Law. This Agreement shall be governed by
and construed and interpreted in accordance with the laws of the State of
Delaware, without regard to the principles of conflicts of law that would result
in the application of the laws of any other jurisdiction.
SECTION 11. Severability. In the event any provision contained
in this Agreement shall be held to be invalid, illegal or unenforceable for any
reason, the invalidity, illegality or unenforceability thereof shall not affect
any other provisions hereof, all of which shall remain in full force and effect.
SECTION 12. Interpretation. When a reference is made in this
Agreement to a party or to a Section or Schedule, such reference shall be to a
party to, or a Section of or a Schedule to, this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein," "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. The definitions contained
in this Agreement are applicable to the singular as well as the plural forms of
such terms.
SECTION 13. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; and (ii) is not intended to confer upon any Person other
than the parties any rights or remedies hereunder.
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SECTION 14. Non-Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance by
any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
SECTION 15. Counterparts; Effectiveness. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party.
[Signature page follows]
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IN WITNESS WHEREOF, each party hereto has signed this
Agreement, all as of the date first written above.
THE INVESTOR:
XXXX XXXXXXX ENTERPRISES, LLC
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
-----------------------------
Title: President
----------------------------
THE STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
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SCHEDULE A
SHARE OWNERSHIP
STOCKHOLDER NAME NUMBER OF SHARES OWNED
Xxxxxxx X. Xxxxxx 11,334
Xxxxxxx X. and Xxxxxxx X. Xxxxxx, in joint tenancy 1,792,990
