EXHIBIT 99.3
OPTION AGREEMENT
BY AND BETWEEN
ULTIMATE ELECTRONICS, INC.
AND
▇▇▇▇ ▇▇▇▇▇▇▇ ENTERPRISES, LLC
Dated as of January 11, 2005
OPTION AGREEMENT
This OPTION AGREEMENT, entered into as of January 11, 2005
(the "Agreement") by and between ULTIMATE ELECTRONICS, INC., a Delaware
corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇ ENTERPRISES, LLC, a Delaware
limited liability company (the "Investor").
WITNESSETH:
WHEREAS, as of the date hereof, the Company and the Investor
are entering into a Stock Purchase Agreement (the "Stock Purchase Agreement")
pursuant to which the Investor is agreeing to purchase from the Company certain
shares of its common stock, par value $.01 per share ("Common Stock");
WHEREAS, in order to induce the Investor to enter into the
Stock Purchase Agreement and consummate the transactions contemplated thereby,
the Company is willing to grant an option to the Investor to acquire certain
additional authorized but unissued shares of Common Stock from the Company upon
the terms and conditions set forth herein; and
WHEREAS, capitalized terms used herein without definition have
the respective meanings set forth in the Stock Purchase Agreement;
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, the Company hereby grants to the
Investor an option (the "Option") to purchase an aggregate of 1,850,000
authorized but unissued shares of Common Stock (the "Option Shares"), which
Option shall be exercisable in whole or in part at any time during the Exercise
Period (as hereinafter defined).
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
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any 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 the date that is six months from the date hereof.
(b) The Option may be exercised by the Investor with respect
to all or any part of the Option Shares at any time during the Exercise Period
by delivering a written notice (the "Exercise Notice") to the Company, which
notice shall state that the Investor irrevocably elects to exercise the Option
with respect to the Option Shares identified in such notice and pay the exercise
price therefor, which shall be equal to $0.65 per Option Share to be purchased
by the Investor (the "Exercise Price").
SECTION 3. Closing. The closing of any exercise of the Option
pursuant to this Agreement (a "Closing") shall take place at the offices of
▇▇▇▇▇ ▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 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 Company of the aggregate Exercise Price for the Option
Shares being purchased upon the exercise of the Option by delivery to the
Company of a certified bank cashier's check or wire transfer of funds and (ii)
the Company shall deliver, or shall cause to be delivered, to the Investor a
stock certificate or certificates representing the aggregate number of Option
Shares being purchased by the Investor, registered in the name of the Investor
(which certificate may be a temporary certificate manually executed by the
appropriate officers of the Company).
SECTION 4. Representations and Warranties of the Company. The
Company represents and warrants to the Investor as follows:
(a) Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) Authorization; No Breach. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Company. This Agreement has been duly executed by the Company and constitutes a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms. The execution and delivery of this Agreement, the fulfillment of
and compliance with the terms hereof and the consummation of the transactions
contemplated hereby do not and will not conflict with or result in a breach of
the terms, conditions or provisions of, constitute a default under, result in
the creation of any Lien upon the Company's or any Subsidiary's capital stock or
assets pursuant to, give any third party the right to modify, terminate or
accelerate any obligation under, result in a violation of, or require any
authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency or other Person pursuant to, (i) the charter or bylaws of the Company
or any
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Subsidiary, (ii) any law, statute, rule, regulation, order, judgment, decree to
which the Company or any Subsidiary is subject and which is material to the
business of the Company or any Subsidiary or (iii) any contract, agreement or
other instrument to which the Company or any Subsidiary is a party.
(c) Governmental Authorizations. There is no requirement
applicable to the Company to obtain any consent, approval or authorization of,
or to make or effect any declaration, filing or registration with, any
governmental agency or body for the valid execution and delivery of this
Agreement, the fulfillment of and compliance with the terms hereof and the
lawful consummation of the transactions contemplated hereby.
(d) Option Shares. The issuance and sale of the Option Shares
to the Investor upon the exercise of the Option has been duly authorized by all
necessary corporate action on the part of the Company and all necessary action,
if any, on the part of its shareholders. The Option Shares have been reserved
for issuance pursuant to this Agreement and, when issued and delivered to and
paid for by the Investor, will be validly issued, fully paid and nonassessable.
None of the Option Shares will be issued in violation of, or subject to, any
statutory stockholders preemptive or similar contractual rights. The offer,
issuance and sale of the Option Shares upon the exercise of the Option do not
require registration under, and have been and will be made in compliance with,
the applicable securities laws of the United States of America and any state or
other political subdivision thereof.
(e) Stock Purchase Agreement Representations. Each of the
representations and warranties of the Company contained in the Stock Purchase
Agreement is true and correct as of the date hereof (including all schedules
attached thereto).
SECTION 5. Representations and Warranties of the Investor. The
Investor represent and warrant to the Company 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 and 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
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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.
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 (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:
▇▇▇▇ ▇▇▇▇▇▇▇ Enterpises, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇ #▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
if to the Company, to:
Ultimate Electronics, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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
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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 Company and the
Investor hereby covenant and agree to execute and deliver any additional
documents reasonably necessary to complete the issuance and sale of all or any
portion of the Option Shares with respect to which an Option is exercised and
consummate the other transactions contemplated by this Agreement.
SECTION 8. Expenses. The Company shall bear all costs,
expenses and fees incurred by any of the parties in connection with this
Agreement and the transactions contemplated hereby (including, but not limited
to, all fees and expenses of counsel, financial advisors, consultants, actuaries
and independent accountants).
SECTION 9. 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 10. Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
SECTION 11. Governing Law. This Agreement shall be governed by
and construed and interpreted in accordance with the laws of the State of New
York, without regard to the principles of conflicts of law that would result in
the application of the laws of any other jurisdiction.
SECTION 12. 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 13. 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.
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SECTION 14. 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.
SECTION 15. 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 16. 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, the undersigned parties have duly executed
this Agreement as of the date first above written.
ULTIMATE ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President and Chief Executive Officer
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▇▇▇▇ ▇▇▇▇▇▇▇ ENTERPRISES, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President
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[Signature Page to Company Option Agreement]